Exhibit 10.93 


                             Dated April 30, 1996


                         READING & BATES DRILLING CO.,
                                   as Owner

                                     -and-

                       CHRISTIANIA BANK OG KREDITKASSE,
                               NEW YORK BRANCH,
                                 as Mortgagee


                                  J.W. McLEAN

                           -----------------------
                               DEED OF COVENANT
                           -----------------------

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                                     INDEX

CLAUSE                                                                    PAGE

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

         EXECUTION

EXHIBIT 1  FORM OF CREDIT AGREEMENT
==============================================================================

THIS DEED OF COVENANT is made on the 30th day of April, 1996
BETWEEN:

(1)    READING & BATES  DRILLING CO., a corporation incorporated  in the State
       of Oklahoma having its principal office at 901 Threadneedle, Suite 200,
       Houston, Texas  77079 (the "Owner"), and

(2)    CHRISTIANIA BANK OG  KREDITKASSE, NEW YORK BRANCH having  offices at 11
       West 42nd  Street, New  York, NY   10036,  as agent  for the Banks  (as
       hereinafter defined) (the "Mortgagee")

WHEREAS

(A)     By a Credit Agreement  dated as of April  30, 1996 (as in effect  from
time to  time the  "Credit Agreement")  among Reading  & Bates  Corporation, a
Delaware corporation ("Holdings"),  the Owner, the Banks party thereto, Credit
Lyonnais, New York  Branch, as co-agent, and Christiania  Bank og Kreditkasse,
New York Branch, (the  "Agent") (the form  of which Credit Agreement  together
with  Exhibit B  thereto but  without  the remaining  attachments is  attached
hereto as Exhibit 1),  it was agreed among  other things that the  Banks would
make available  to the Owner upon the terms and conditions therein described a
reducing revolving credit facility (the  "Facility") in an aggregate amount at
any  one  time  outstanding  of  One  Hundred  Million  United States  Dollars
(US$100,000,000) providing  for the making  of Loans and  the issuance of  and
participations in Letters of Credit as contemplated therein. 

(B)    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). 

(C)    It  is a condition  precedent to the Banks  advancing amounts under the
Credit  Facility  to the  Owner  that the  Owner  shall  execute, deliver  and
register a statutory mortgage in favor of the Mortgagee over sixty four sixty-
fourth shares in the Rig (as hereinafter defined) and shall  enter into a Deed
of Covenant supplemental thereto in the form of this Deed.

(D)    The  Owner has executed in favor  of the Mortgagee a statutory mortgage
in account current form  bearing the same date as this Deed and constituting a
first mortgage of sixty four sixty-fourth shares in the  said Rig and the said
statutory mortgage  and  this Deed  are  each entered  into  by the  Owner  in
consideration  of the  Banks agreeing, at  the request  of the  Owner, to make
Loans  to the Owner and  issue Letters of Credit for  the account of the Owner
under the Credit  Facility and as a  condition thereto and for other  good and
valuable consideration provided  by the Banks (the sufficiency  and receipt of
which the Owner hereby acknowledges).  The Mortgage and this Deed of Covenants
is made  for the benefit of the Mortgagee  and the other Secured Creditors (as
hereinafter defined) to secure (i) the full and prompt payment when due of (x)
the principal of and 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, 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, the Mortgage and  this Deed of Covenants) 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, the Mortgage and this Deed of Covenants); (ii)
any  and all sums advanced  by the Secured Creditors  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
Deed  of  Covenants  (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 Deed or extended from time to  time after the
date of this Deed.

(E)    This  Deed is supplemental  to the said  statutory mortgage and  to the
security thereby created.

NOW THIS DEED WITNESSETH AND IT IS HEREBY AGREED

1      DEFINITIONS AND INTERPRETATION

1.1    In  this  Deed unless  the  context otherwise  requires,  the following
expressions shall have the following meanings:

       "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 Annex 1  to the Credit
       Agreement (collectively, the "Banks");

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

       "Collateral Assignment of Insurances"  means the Collateral  Assignment
       of Insurance in  respect of the Rig  executed or to be  executed by the
       Owner in favor of the Agent;

       "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  April 30,
       1996, among  Holdings, the Owner,  the Banks, Credit Lyonnais  New York
       Branch, as  co-agent, and the  Agent first referred  to in Recital  (A)
       hereto;

       "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 Loans  and the  Unpaid
       Drawings  together with  interest, fees and  all other  obligations are
       paid in full; 

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

       "Default Rate" shall mean the rate of interest calculated in accordance
       with Section 1.07(b) 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   Laws"   means   all  applicable   laws,   regulations,
       conventions  and  agreements   whatsoever  relating  to   pollution  or
       protection of  the environment (including, without  limitation, the Oil
       Pollution  Act of 1990  (33 U.S.C.   2701 et  seq.), the Comprehensive
       Environmental  Response, Compensation,  and Liability  Act of  1980 (42
       U.S.C.  9601 et seq.),  the Hazardous Materials Transportation Act (49
       U.S.C.  1801 et seq.), the  Resource Conservation and Recovery Act  of
       1976 (42 U.S.C.  6901 et seq.), the Clean Air Act (42 U.S.C.  7401 et
       seq.), the Federal  Water Pollution Control  Act (33  U.S.C.  1251  et
       seq.) and the  Toxic Substances Control Act (15 U.S.C.   2601 et seq.)
       (all  of the  foregoing as  amended),  and any  comparable laws  of the
       individual States of the United States of America or any other state or
       nation); 

       "Fees" shall have the  same meaning for such terms 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 13.1;

       "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
       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 1.08 of the Credit Agreement;

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

       "Mortgage" means  the statutory  mortgage on the  Rig bearing  the same
       date as this Deed first referred to in Recital (D) hereto;

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

       "Obligations" shall have the meaning provided in Recital (D) 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
       offshore  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  6494  gross
       registered  tons  and  5834  net  registered tons;  (ii)  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; (iii) the offshore
       drilling rig CHARLEY GRAVES owned  by Reading and Bates Borneo Drilling
       Co., Ltd.  documented under the laws and flag of the Republic of Panama
       with Patente Number 6618-76-CH of 5,829 gross registered tons and 1,748
       net registered tons; (iv) the offshore 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; and (v) the offshore  drilling rig JACK
       BATES owned  by the Owner  documented under  the laws and  flag of  the
       United States with  Official Number 906283  of 19,928 gross  registered
       tons and 14,948 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 Agent,
       provide a bond or other security  satisfactory to the 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 Agent,
       provide a bond or other security satisfactory  to the 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 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 Agent have been made as evidenced by the
       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);

       "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  whole of the offshore drilling  J.W. McLEAN documented
       under  the laws and flag of the  Bahamas with Official Number 715954 of
       9199.01  gross registered  tons  and 7267.22  net  registered tons  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 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;

       "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.

1.2    In Clause 6.1:

       "excess risks"   means  the proportion of  claims for  general average,
       salvage  and  salvage  charges  not  recoverable  under  the  hull  and
       machinery  policies in respect of the Rig in consequence of her insured
       value  being less than the value  at which the Rig  is assessed for the
       purpose of such claims;

       "protection and  indemnity risks"   means the usual risks  covered by a
       protection and  indemnity association  managed in London  including the
       proportion (if any) of any sums  payable to any other person or persons
       in  case of  collision which  are not  recoverable under  the  hull and
       machinery policies by  reason of the incorporation therein  of Clause 1
       of  the  Institute Time  Clauses  (Hulls)  (1/10/83) or  the  Institute
       Amended Running Down Clause (1/10/71) or any equivalent provision;

1.3    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 Deed.

1.4    This Deed shall be read together with the other Security Documents.

1.5    Notwithstanding that this Deed is supplemental to the Mortgage it shall
continue in full force and effect after any discharge of the Mortgage.

1.6    In this Deed:

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

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

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

       (d)  references to assets include property,  rights and assets by 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   shall  include   re-enactments,
            amendments and extensions thereof.

2      REPRESENTATIONS AND WARRANTIES

2.1    The Owner hereby represents and warrants to the Mortgagee that:

       (a)  the Owner  is the sole  legal and  beneficial owner of  sixty four
            sixty-fourths shares of and in the Rig and none of the said shares
            is subject  to any Security Interest  (save as constituted  by the
            Permitted Liens, the Mortgage and this Deed); 

       (b)  the  Owner has  not  sold or  transferred, or  agreed  to sell  or
            transfer, the Rig or any share therein; 

       (c)  the Owner  has full  power and  authority to  mortgage sixty  four
            sixty-fourth  shares  of and  in  the  Rig  as  security  for  the
            Obligations; 

       (d)  the Owner is a corporation duly organized and validly existing and
            in good standing under the laws of the State of Oklahoma;

       (e)  the  Owner  has complied  with  all statutory  and  other material
            requirements relating to the ownership, registration and operation
            of the Rig; 

       (f)  the  Owner  has  taken  all  necessary  action  to  authorize  the
            execution  and delivery of  the Mortgage  and this Deed,  and this
            Deed 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).  The  Mortgage when filed with the Bahamian Registrar
            of Ships will create a legal, valid and enforceable first priority
            mortgage lien on the Rig;

       (g)  the entry into and performance by the Owner of this Deed  does not
            and will  not during  the Credit  Facility Period  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;

       (h)  all consents, licenses,  approvals and authorizations required  in
            connection  with  the  entry   into,  performance,  validity   and
            enforceability of  this  Deed 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; 

       (i)  save for such registrations and filings as are referred to in this
            Deed,   it   is  not   necessary   for  the   legality,  validity,
            enforceability or admissibility  in evidence of this Deed  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 Deed; and

       (j)  the Owner is fully familiar with  and agrees to all the provisions
            of all agreements relating to the Obligations.

2.2    The Owner hereby further represents and warrants to the Mortgagee that:

       (a)  all applicable  Environmental  Laws  and  Environmental  Approvals
            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 complied with; and

       (b)  no Environmental Claim  has been  made or  threatened against  the
            Owner or  the Approved Manager or otherwise in connection with the
            Rig; and

       (c)  no  Environmental  Incident  which has  resulted,  or  which could
            reasonably  be expected to  result, in  an Environmental  Claim in
            excess of US$200,000 has occurred.


2.3    The representations  and warranties of the Owner  set out in Clause 2.1
and Clause 2.2 shall survive the execution of this Deed and shall be deemed to
be repeated throughout the Credit Facility Period at the time of the making of
each Loan  and 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.

3      PAYMENT COVENANTS

3.1    The Owner hereby covenants with the Secured Creditors:

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

       (b)  to pay  interest on  any amount  payable  by the  Owner under  the
            Credit Agreement and  on any  such expenses, claims,  liabilities,
            losses, costs,  duties, fees, charges or other  moneys referred to
            in  Clause  3.1(a) from  the  date on  which  the relevant  amount
            becomes payable under the Credit Agreement or such expense, claim,
            liability, loss, cost, duty, fee, charge or other money is paid or
            incurred  by  any  Secured  Creditor  until  the  date of  payment
            reimbursement thereof to  such Secured Creditor (as well  after as
            before judgment) at the Default Rate; and

       (c)  to pay each  and every other sum  of money which may  be or become
            owing  to the any Secured  Creditor under this  Deed and the other
            Credit Documents to which the Owner is or  is to be a party at the
            times and in the manner specified herein or therein.

4      MORTGAGE

4.1    By way  of security  for  the Obligations  the  Owner with  full  title
guarantee hereby mortgages and  charges and agrees to  mortgage and charge  to
and in favor of the Mortgagee all its rights, title and interest,  present and
future, to and in the Rig.

4.2    The  Owner covenants with  the Mortgagee that  it will not  at any time
during the Credit Facility Period without  the previous consent in writing  of
the Mortgagee  (and  then only  subject to  such terms  as  the Mortgagee  may
impose):

       (a)  create or suffer the  creation of any  Security Interest on or  in
            respect  of the Rig  or any share  therein in favor  of any person
            other than the Mortgagee  or unless the same is being contested in
            good  faith  by proceedings  diligently  conducted in  relation to
            which the Owner has established an adequate reserve; or

       (b)  sell, agree to sell or otherwise  dispose of the Rig or any  share
            therein.

4.3    The Owner shall remain liable to perform all the obligations assumed by
it  in relation to the Rig  and the Mortgagee shall  be under no 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.

4.4    On  the date on  which the Credit  Agreement and all  Letters of Credit
shall  have  been  terminated,  when  no  Note  remains  outstanding  and  all
Obligations shall have been  irrevocably paid in  full, the Mortgage and  this
Deed of  Covenants shall  terminate,  and the  Mortgagee  at the  request  and
expense  of  the  Owner,  will execute  and  deliver  to  the  Owner a  proper
instrument or instruments  acknowledging the  satisfaction and termination  of
the Mortgage and  this Deed of Covenants,  and will duly assign,  transfer and
deliver to  the  Owner (without  recourse and  without  any representation  or
warranty) such of  the Rig as  may remain in the  possession of the  Mortgagee
together with any moneys at the time held by the Mortgagee hereunder.

5      PRESERVATION OF SECURITY

5.1    It is declared and agreed that:

       (a)  the  security created by the Mortgage and  this Deed (or either of
            them) 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 be  bound to  enforce  any of  the other
            Security Documents before  enforcing the  security created by  the
            Mortgage and this Deed (or either of them);

       (d)  no delay or  omission on the  part of the Mortgagee  in exercising
            any  right, power or remedy  under the Mortgage  and this Deed (or
            either of  them) shall  impair such right,  power or remedy  or be
            construed as  a waiver  thereof nor  shall any  single or  partial
            exercise of any such right,  power or remedy preclude any  further
            exercise thereof  or the  exercise of  any other  right, power  or
            remedy.  The rights powers and remedies provided in this Deed  are
            cumulative  and not exclusive  of any rights,  powers and remedies
            provided by law  and may  be exercised  from time to  time and  as
            often as the Mortgagee may deem expedient; and

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

5.2    Any settlement or discharge under the Mortgage and this Deed (or either
of them) between  the Mortgagee  and the  Owner shall be  conditional upon  no
security or payment  to the Secured Creditors  by any 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.

5.3    The rights of the  Secured Creditors under the  Mortgage and this  Deed
and the security thereby and 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
any person:

       (a)  any time or waiver granted to or composition with any 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 person; or

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

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

       (e)  the dissolution, amalgamation, reconstruction or reorganisation of
            any person; or

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

5.4    Until  the   Obligations  have   been  satisfied   unconditionally  and
irrevocably paid and  discharged in full to the satisfaction of the Mortgagee,
the Owner shall not by virtue of any payment made hereunder on account of  the
Obligations  or by virtue  of any enforcement  by the Mortgagee  of its rights
under, or the security constituted by, the Mortgage and this Deed or by virtue
of  any relationship between  or transaction involving  any person in  any way
whatsoever and  whether or not such  relation or transaction  shall be related
to, or in  connection with, the  subject matter of  the Credit Agreement,  the
Mortgage and/or this Deed):

       (a)  exercise  any  rights of  subrogation in  relation to  any rights,
            security or moneys held or  received or receivable by the  Secured
            Creditors or any other person; or

       (b)  exercise any  right of contribution  from any co-surety  liable in
            respect of such moneys and  liabilities under any other  guaranty,
            security or agreement; or

       (c)  exercise any right  of set-off or counterclaim against  any person
            or any co-surety; or

       (d)  receive, claim or have the  benefit of any payment,  distribution,
            security or indemnity from any person or any co-surety; or

       (e)  unless so  directed by the Mortgagee (when the Owner will prove in
            accordance  with  such directions),  claim  as a  creditor  of any
            person or any co-surety in competition with the Secured Creditors.


       The Owner shall  hold in trust for  the Mortgagee and forthwith  pay or
transfer (as  appropriate) to  the Mortgagee  any such  payment (including  an
amount equal to  any such set-off), distribution or benefit  of such security,
indemnity or claim in fact received by it.

5.5    Until  the  Obligations  have  been   unconditionally  and  irrevocably
performed in full to the satisfaction  of the Mortgagee, the Mortgagee may  at
any  time keep in  a separate  account for as  long as  it may think  fit, any
moneys received,  recovered or realised under  the Mortgage and this  Deed (or
either of them) or under  any other guarantee, security or agreement  relating
in  whole or  in part  to  the Secured  Indebtedness without  being  under any
intermediate obligation to  apply the same or  any part thereof in  or towards
the discharge of such amount.

5.6    The  Owner  unconditionally and  irrevocably  agrees that  if  any sums
hereby  secured are  not recoverable on  the basis  of a guaranty  (whether by
reason of legal limitation, illegality, disability or incapacity on or of  any
person or  by reason of  any other  fact or circumstance,  and whether  or not
known to or  discoverable by any person),  then the Owner will,  as a separate
and  independent stipulation  and as  a primary  obligor, pay  to the  Secured
Creditors on demand an  amount or amounts equal to the amount or amounts which
the Owner would have been liable to pay but for such irrecoverability and will
on  demand indemnify the Mortgagee  against any loss  or liability suffered or
incurred by the Secured Creditors as a result of such irrecoverability.

6      INSURANCE

6.1    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  the any
            Obligations  remain  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
            Mortgagee.   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 full commercial value  of the Rig, and when
            such  amount is  aggregated  with  the  amount of  such  insurance
            coverage on  the Other  Rigs, such  aggregate amount  shall be  at
            least 110% of the Total Commitment.  The Rig  shall in no event be
            insured for an amount  less than the agreed valuation as set forth
            in the  applicable marine and war  risk policies.   Such insurance
            shall  cover marine and  war risk  perils, on hull  and machinery,
            with 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 reasonably acceptable to the Mortgagee.  The
            Owner shall  maintain, or cause  to be maintained,  protection and
            indemnity or equivalent  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
            required from time to time by the Oil Pollution Act 1990, or other
            Environmental  Laws), as and  when applicable  to the Rig  and its
            operations, through underwriters or associations acceptable to the
            Mortgagee.   In addition,  the Owner  shall, at  its own  expense,
            furnish  to  the Mortgagee  a  mortgagee's single  interest policy
            providing coverage  which,  when aggregated  with the  mortgagee's
            interest insurance  furnished to the  Mortgagee 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 the Owner  shall cause the hull  and machinery/increased
            value  insurance  to  be  endorsed to  afford  breach  of warranty
            coverage for  the benefit  of  the Mortgagee).   Such  mortgagee's
            interest insurance and  any additional insurance policies  for the
            benefit of  the Mortgagee shall be maintained in the broadest form
            available in  the American,  British and  Scandinavian markets  or
            other  major international  markets  acceptable  to the  Mortgagee
            through underwriters acceptable  to the Mortgagee.  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  obtaining   any  necessary
            additional  coverage,  satisfactory  in form  and  substance,  and
            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 Mortgagee, shall contain
            conditions,    terms,   stipulations   and    insuring   covenants
            satisfactory to the Mortgagee, and shall be kept in full force and
            effect by the Owner so long as any Obligations remain 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 loss be payable to the
            Mortgagee 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.   Certified copies of  all such policies,  binders and
            other  interim  insurance contracts  shall  be deposited  with 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 direct  for the repair, salvage or  other
            charges involved  or, if the Owner shall have first fully repaired
            the damage or  paid all of 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, 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  an  actual  or constructive  Total  Loss  or  a
            compromised constructive Total  Loss or requisition of  title, 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   constructive  or  compromised,  agreed   or  arranged
            constructive Total Loss  without the prior written consent  of the
            Mortgagee.

       (c)  In the  event of an actual or constructive  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 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 which the Rig from time to time is engaged in.

       (e)  The Owner shall renew all 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 procure  that the
            insurers shall promptly confirm 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  of  the insurers  to  such employment  and
            complying with such requirements as  to extra premium or otherwise
            as the insurers may prescribe.

7       RIG COVENANTS

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

       (a)  keep the Rig registered in its  name as a Bahamian flag vessel  at
            the Port of Nassau  and to do or allow to  be done nothing whereby
            such registration may be forfeited  or imperilled and, if the  Rig
            shall  be provisionally as opposed to  permanently registered as a
            Bahamas vessel  as at the date of this  Deed, procure that the Rig
            be duly  permanently registered within three months of the date of
            this Deed and promptly furnish to the  Mortgagee from time to time
            such proofs as the Mortgagee may request for its satisfaction with
            respect to the Owner's compliance with this sub-clause;

       (b)  not without  the  previous consent  in  writing of  the  Mortgagee
            change  the  name or  port  of registry  of  the Rig  or  make any
            modification to  the Rig which would or might materially alter the
            structure,  type  or  performance characteristics  of  the  Rig or
            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 and so as
            to  maintain  the   highest  classification  available   from  her
            classification  society,  namely  +A1 Column  Stabilized  Drilling
            Unit,  free  of  recommendations  and  qualifications  save  those
            notified to and approved in writing by the Mortgagee or which have
            been complied  with in  accordance with their  terms and so  as to
            comply with the provisions of the Merchant ping Acts and all other
            regulations and requirements of  any government, government agency
            or other regulatory  authority (statutory or otherwise)  from time
            to  time  applicable  to  vessels  registered   at  ports  in  the
            Commonwealth of  the Bahamas and applicable to vessels of the same
            type as the Rig trading to any jurisdiction to which the  Rig may,
            subject to the provisions of this Deed, trade from time to time;

       (d)  procure that all repairs to or replacement of any damaged  worn or
            lost  parts  or equipment  be  effected in  such  manner (both  as
            regards workmanship and quality  of materials) as not to  diminish
            the value of the  Rig and not to  remove any material part  of, or
            item of equipment installed on, the Rig unless 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 the Mortgage and this Deed;

       (e)  submit the  Rig regularly 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 surveyors or other persons appointed by it
            for that purpose to board the Rig at all reasonable times  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;

       (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 may  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 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  Mortgagee's  request  in  writing, copies  of  all
            charters  and  other  contracts for  her  employment  or otherwise
            howsoever concerning her;

       (j)  notify the  Mortgagee forthwith  by telex  or 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 immediately 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  ten   (10)  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 Mortgagee's prior written consent;

       (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 and this Deed 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  Thousand  United  States Dollars  (US$2,500,000)  (or the
            equivalent in any other  currency) unless such person  shall first
            have  given to the Mortgagee and  in terms reasonably satisfactory
            to it a  written undertaking not to  exercise any lien on  the Rig
            for the cost of such work or otherwise;


       (n)  keep the  Mortgage registered  against the  Rig as  a valid  first
            priority mortgage,  to carry on board the  Rig a certified copy of
            the  Mortgage  and  this Deed  and  to  place  and maintain  in  a
            conspicuous place in the navigation room and the Master's cabin of
            the Rig a framed printed notice  stating that the Rig is mortgaged
            by the Owner to the Mortgagee.

7.2    The  Owner further  covenants with  the Mortgagee  that throughout  the
Security Period the Owner will:

       (a)  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;

       (b)  notify the Mortgagee forthwith upon:

            (i)  any Environmental Claim  being made  against the Owner  which
                 could reasonably be expected to  result in damages in  excess
                 of US$200,000 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.


       (c)  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;

       (d)  shall not cause  or permit the  Rig to be  operated in any  manner
            contrary  to law,  shall not  abandon the Rig  in a  foreign port,
            shall not engage in any unlawful trade or violate any law or carry
            any cargo  that shall  expose the  Rig to  penalty, forfeiture  or
            capture,  and  shall not  do,  or  suffer or  permit  to  be done,
            anything which can or may  injuriously affect the registration  or
            enrollment of the Rig under the laws of the United States and will
            at all times keep the Rig duly documented thereunder.

8      PROTECTION OF SECURITY

8.1    The Mortgagee  shall without prejudice to  its other rights  and powers
under the Mortgage  and this Deed and  the other Credit Documents  be entitled
(but not bound) at any time and as often  as may be necessary to take any such
action as it may in its discretion think fit for  the purpose of protecting or
maintaining  the security created  by the  Mortgage and this  Deed (including,
without limitation, such action as is referred  to in Clause 8.2) and each and
every  expense, liability, or loss (including, without limitation, legal fees)
so incurred by  the Mortgagee in or about the protection or maintenance of the
said security together with interest payable thereon under Clause 3.1(c) shall
be repayable to it by the Owner on demand.

8.2    Without prejudice to the generality of Clause 8.1:

       (a)  if the Owner does not comply with  the provisions of Clause 6.1 or
            any  of them  the Mortgagee shall  be entitled (but  not bound) to
            effect  or  to  replace  and  renew  and  thereafter  to  maintain
            Insurances in  such manner as in  its discretion it may  think fit
            and  to require  that all  policies, contracts  and other  records
            relating   to   the   Insurances   (including   details   of   and
            correspondence  concerning   outstanding   claims)  be   forthwith
            delivered  to such brokers  as the  Mortgagee may nominate  and 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; and

       (b)  if the Owner does not comply with the provisions of  Clause 7.1(c)
            and/or  7.1(e) 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 7.1(g)
            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

9.1    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 having  served on the Owner  any such
notice  is  referred  in Section  9  of  the  Credit Agreement)  the  security
constituted by the Mortgage and this Deed shall become immediately enforceable
and the power of sale  and other powers conferred by law shall  be immediately
exercisable and the Mortgagee  shall be entitled, as and when  it may see fit,
to put  into force and to exercise all the powers possessed by it as mortgagee
and chargee of the Rig and in particular:

       (a)  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;

       (b)  to require that all policies,  contracts, certificate 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;

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

       (d)  to take  over or institute  (if necessary  using the  name of  the
            Owner)  all  such  proceedings in  connection  with  the Mortgaged
            Premises 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;

       (e)  to sell the Rig or any share  therein with or without prior notice
            to the Owner, 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;

       (f)  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;

       (g)  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 9.1(f);

       (h)  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.

9.2    The Mortgagee shall not be obliged to make any enquiry as to the nature
or sufficiency of any payment received by  it under the Mortgage and this Deed
(or either of  them) or to make  any claim under this  Deed or to  enforce any
rights and  benefits assigned to the  Mortgagee by this  Deed or to  which the
Mortgagee may at any time be entitled hereunder.

9.3    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 the Mortgage and this Deed  (or either of them) in the absence  of gross
negligence or wilful misconduct.

9.4    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 realisation  or for any  default or
omission for which a mortgagee-in-possession might be liable.

9.5    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 Mortgagee's power
of sale has  become exercisable in  the manner provided  in this Deed 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

10.1   (a)  All moneys received by the Mortgagee in respect of sale of the Rig
            or any share therein; in respect of recovery under the Insurances;
            or in respect of Requisition Compensation;

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

            (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  Mortgage and  this Deed  of Covenants  pursuant to
            Clause 4.4, 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  Deed of  Covenants "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 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  Agent  under  the  Credit  Agreement  and  (ii)  the  Secured
            Creditors for a  determination (which the  Agent and each  Secured
            Creditor, by their acceptance of  the benefits of this Deed  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 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 (x) no obligations other  than principal,
            interest  and regularly  accruing fees  are owing  to  any Secured
            Creditor.

11     FURTHER ASSURANCES

11.1   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 the Mortgage and this Deed; or

       (b)  preserving or  protecting any of the rights of the Mortgagee under
            the Mortgage and this Deed (or either of them); or

       (c)  ensuring  that the security  constituted by the  Mortgage and this
            Deed  and the covenants  and obligations  of the Owner  under this
            Deed  shall enure  to  the benefit  of  any such  assignee  of the
            Mortgagee as is referred to in Clause 16.3; or

       (d)  enforcing the security constituted  by the Mortgage and this  Deed
            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 the Mortgage and this Deed (or either of them),

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

12     POWER OF ATTORNEY

12.1   The Owner, by way  of security and  in order more  fully to secure  the
performance of the Obligations, 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
            (including without  limitation, transferring  title to  the  to  a
            third  party)   Provided  however  that such  power  shall not  be
            exercisable by  or on behalf of  the Mortgagee until  the Mortgage
            and this Deed  shall have become immediately  enforceable pursuant
            to Clause 9.1; 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.

12.2   The exercise of such power as is referred to in Clause 12.1(a) by or on
behalf of the  Mortgagee shall not put  any person dealing with  the Mortgagee
upon  any  enquiry  as to  whether  the  Mortgage and  this  Deed  have become
enforceable nor shall  such person be in  any way affected by notice  that the
Mortgage and this  Deed have not become  enforceable and, in relation  to both
Clauses 12.1(a) and 12.1(b), the exercise by the Mortgagee of such power shall
be conclusive evidence of its right to exercise the same.

13     INDEMNITIES

13.1   The Owner  will indemnify and save  harmless the Secured  Creditors and
each agent or  attorney appointed  under or  pursuant to this  Deed (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:

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

       (b)  in the preservation or enforcement of the Mortgagee's rights under
            the Mortgage and this Deed (or either of them); or

       (c)  on the release of  the Rig or any share therein  from the security
            created by the Mortgage and this Deed (or either of them),

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 the Mortgage and this Deed (or either of them).  All such amounts
recoverable by  such  Secured Creditor  or  such agent  or  attorney shall  be
recoverable on a full indemnity basis.

13.2   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.

13.3   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
Mortgage and this Deed (or either of them) is made or falls to be satisfied in
a currency  (the "payment  currency") other  than the  currency in  which such
payment is due  under or in  connection with the  Mortgage and this  Deed (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  the Mortgage  and this  Deed, 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 13.3,
"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 it 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

14.1   The Owner shall  pay to  the Mortgagee  on demand all  costs, fees  and
expenses (including,  but not limited  to, legal, surveyor's  and shipbroker's
fees and  expenses) 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
            and the Credit Documents; and/or

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

14.2   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 and the Credit Documents (or any of them);
            and/or

       (b)  any consent or waiver required  from the Mortgagee in relation  to
            the Credit Agreement and the 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.

14.3   The Owner  shall pay  promptly all  stamp, documentary  and other  like
duties and Taxes  to which the Credit  Agreement and the 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

15.1   The provisions of Clause  12.03 of the Credit Agreement  shall apply in
relation to any notice, demand or other communication under this Deed.

16     ASSIGNMENTS

16.1   The Mortgage and this Deed shall be binding upon and shall enure to the
benefit of the Owner and the Secured Creditors and their respective successors
and permitted assigns and references in  the Mortgage and this Deed to  either
of them shall be construed accordingly.

16.2   The  Owner may not  assign or  transfer all or  any part of  its rights
and/or obligations under the Mortgage and this Deed (or either of them).

16.3   The  Mortgagee may assign or transfer all or  any part of its rights or
obligations under the  Mortgage and  this Deed  to any  permitted assignee  or
transferee of all or any such 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     MISCELLANEOUS

17.1   If at  any time any one  or more of  the provisions in this  Deed 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 Deed shall not be in any way affected or impaired thereby.

17.2   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  the Mortgage  and this  Deed (or  either of them)  in
relation to the Mortgaged  Premises or any part thereof.   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.

17.3   This Deed may be  executed in several counterparts, each of which shall
be an  original, but  which together  shall constitute  but one  and the  same
document.

18     LAW AND JURISDICTION

18.1   This  Deed  shall be  governed  by, and  construed  in accordance  with
Bahamian Law.

18.2   The Owner agrees  that the Mortgagee shall have  the liberty, but shall
not be obligated, to take any proceedings in the courts of any jurisdiction to
protect  and  enforce the  security  hereby  constituted  or  to  enforce  any
provision of the Security Documents or  to enforce the Obligations.    For the
purpose  of any  proceedings for the  enforcement of  this Deed and  the other
Security Documents, the Owner hereby submits to the jurisdiction of the courts
of the Bahamas, the state and federal courts located in New York, New York and
the courts  of any  jurisdiction where  the Rig  may be found,  and the  Owner
agrees to accept  service in respect of  any such proceeding by  registered or
certified mail addressed in accordance with the Credit Agreement.
 
18.3   Without prejudice  to the generality of Clause 18.2 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.

IN  WITNESS   whereof the  parties hereto  have caused  this Deed  to  be duly
executed the day and year first before written.


OWNER

SIGNED SEALED and DELIVERED           )
on behalf of READING & BATES          )
DRILLING CO.                          )
by                                    )                                
its duly authorised attorney-in-fact  )
in the presence of:                   )

           Witness:



MORTGAGEE


SIGNED SEALED and DELIVERED           )
on behalf of CHRISTIANIA BANK OG      )
KREDITKASSE, NEW YORK BRANCH          )
by                                    )                                
its duly authorised attorney-in-fact  )
in the presence of:                   )

           Witness: