Exhibit 10.88     


                           FIRST PREFERRED MORTGAGE

                             Dated April 30, 1996

                        READING & BATES EXPLORATION CO.

                                - in favor of -

                     WILMINGTON TRUST COMPANY, not in its
                   individual capacity but solely as Trustee

                                 D.R. STEWART

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

CLAUSE                  SUBJECT MATTER                                    PAGE

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

      ACKNOWLEDGEMENT OF MORTGAGE

      EXHIBIT 1 FORM OF CREDIT AGREEMENT

 EXHIBIT 2 FORM OF SUBSIDIARY GUARANTY

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

THIS FIRST PREFERRED  MORTGAGE (this "Mortgage")  is made on  the 30th day  of
April, 1996

BY

(1)    READING &  BATES EXPLORATION CO.,  an Oklahoma  corporation having  its
       principal offices at 901  Threadneedle, Suite 200, Houston, Texas 77079
       (the "Owner"),

IN FAVOR OF

(2)    WILMINGTON   TRUST  COMPANY,  a  Delaware  banking  corporation  having
       offices at Rodney Square  North, 1100 North Market Street,  Wilmington,
       Delaware  19890-0001, not  in  its individual  capacity  but solely  as
       indenture  trustee  for  the  Banks  (as  hereinafter  defined)  and as
       mortgagee (the "Trustee")

WHEREAS

(A)    The Owner is the sole owner of the whole of  the offshore drilling unit
       D.R. STEWART  documented under the laws  and flag of the  United States
       of America with Official  Number 626904 of 6,494 gross registered  tons
       and 5,834 net registered tons (the "Rig").

(B)    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"),  Reading  &  Bates
       Drilling  Co., an  Oklahoma  corporation  (the "Borrower"),  the  Banks
       party  thereto, Credit  Lyonnais,  New York  Branch,  as co-agent,  and
       Christiania  Bank  og  Kreditkasse, New  York  Branch,  as  agent  (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  Borrower  upon  the  terms  and  conditions  therein
       described a reducing  revolving credit facility (the "Facility")  in an
       aggregate  amount  at  any  time  outstanding of  One  Hundred  Million
       United States  Dollars (US$100,000,000),  providing for  the  making of
       Loans and the issuance of,  and participation in, Letters of Credit  as
       contemplated therein.

(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  (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 Trustee  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 Trustee 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 Trustee 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  Trustee of its rights hereunder,
       together with reasonable attorneys' fees of counsel  to the Trustee 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  First  Preferred  Mortgage  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 THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED

1.     DEFINITIONS AND INTERPRETATION

1.01   In  this Mortgage 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  on Annex 1  to the
       Credit Agreement (collectively, the "Banks");

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

       "Credit Agreement"  means the Credit Agreement,  dated as of  April 30,
       1996,  among Holdings,  the  Borrower, the  Banks, Credit  Lyonnais New
       York Branch, as co-agent,  and the Agent  first referred to in  Recital
       (B) 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 same 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  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 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;

       "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
       offshore  drilling rig  JACK  BATES owned  by  the Borrower  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; (ii) the  offshore drilling  rig W. D.  KENT owned  by the  Owner
       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 3436  net registered
       tons;  and (v)  the  offshore drilling  rig J.W.  McLEAN  owned by  the
       Borrower  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;

       "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 preferred  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 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 Trustee,  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;

       "Subsidiary Guaranty"  means the agreement dated  as of April  23, 1996
       made  by the  Owner  in favor  of the  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.

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

1.03   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.

2.     REPRESENTATIONS AND WARRANTIES

2.01   The Owner hereby represents and warrants to the Trustee that:-

       (a)   the Owner is the sole legal and beneficial owner  of the whole of
             the  Rig and  neither  the whole  nor  any share  in  the Rig  is
             subject to  any Security Interest (except for Permitted Liens and
             the lien of this Mortgage);

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

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

       (d)   the Owner has full  power and authority (i)  to register the  Rig
             in  its  name  under United  States  flag,  (ii)  to  execute and
             deliver this Mortgage, (iii)  to mortgage the Rig as security for
             the Obligations and  (iv) to comply  with the provisions  of, and
             perform all its obligations under, this Mortgage;

       (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  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  filed  with  the United  States
             Coast  Guard's  National Vessel  Documentation Center  in Falling
             Waters, West Virginia will create a  legal, valid and enforceable
             first preferred mortgage lien on the Rig;

       (g)   the  entry into  and performance  by the  Owner of  this Mortgage
             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   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;

       (i)   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;

       (j)   the  Owner  is in  compliance with  all  applicable Environmental
             Laws relating to the Rig, its operation and management;

       (k)   the  Owner has  obtained all  Environmental  Approvals and  is in
             compliance with all requests thereof;

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

       (m)   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.

2.02   The representations and warranties  of the Owner set out in Clause 2.01
       shall  survive the execution of this Mortgage and shall be deemed to be
       repeated at  the time of the making of each Loan 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.

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 Trustee, its successors and  assigns, the whole of the Rig  TO HAVE
       AND  TO HOLD  the same  unto the  Trustee, 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 all
       of  the Obligations secured  by this Mortgage  have terminated  or have
       been performed  in full  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, all  without
       delay or  fraud and according to  the true intent and  meaning thereof,
       then these  presents and  the rights  hereunder shall  cease, determine
       and be void otherwise  to be and remain  in full force and  effect and,
       in such event, the  Indenture Trustee agrees  to execute and record  at
       the expense  of  the  Owner,  all  such  documents  as  the  Owner  may
       reasonably require to discharge this Mortgage.

       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.

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 demand is made  by any
             Secured  Creditor  for  payment  by  the  Owner  of  the relevant
             expense,  claim,  liability, loss,  cost,  duty,  fee, charge  or
             other money incurred  by a Secured  Creditor for which  the Owner
             is  responsible (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  a  Secured  Creditor  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
             Trustee  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 Trustee shall not have  to wait for the Agent to  enforce any
             of  the other  Security Documents  before enforcing  the security
             created by this Mortgage;

       (d)   no  delay or  omission on the  part of the  Trustee in exercising
             any right, power or  remedy under this Mortgage 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  Mortgage  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  Trustee
             may deem expedient; and

       (e)   any waiver by the  Trustee of any terms  of this Mortgage or  any
             consent given by  the Trustee 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 Trustee
       and the Owner shall be  conditional upon no security or payment  to the
       Secured Creditors  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  Trustee 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 Secured Creditors or any other person:-

       (a)   any time or  waiver granted  to 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  (other than this Mortgage)  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 any  of the  Credit Parties  or any  other person
             under  the Credit Agreement, any of  the other Security Documents
             (other than this Mortgage) or any other document or security.

6.     INSURANCE

6.01   The Owner  covenants with  the Trustee  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 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 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  Agent.  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 Agent.  In addition, the Owner shall,  at its own expense,
             furnish  to  the  Agent  a  mortgagee's  single  interest  policy
             providing coverage  which, when  aggregated with the  mortgagee's
             interest  insurance  furnished to  the  Agent in  respect  of the
             Other  Rigs, shall be in an amount  equal to at least 110% of the
             aggregate  amount 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 Agent).  Such
             mortgagee's  interest  insurance  and  any  additional  insurance
             policies for the benefit of the Agent shall be  maintained in the
             broadest   form   available  in   the   American,   British   and
             Scandinavian  markets  or   other  major  international   markets
             acceptable  to the  Agent through underwriters  acceptable to the
             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 obtaining
             any  necessary  additional  coverage,  satisfactory  in form  and
             substance,  and  evidence of  which  shall be  furnished,  to the
             Agent.

       (b)   The  policy  or   policies  of  insurance  shall   be  issued  by
             responsible  underwriters  reasonably  acceptable  to  the Agent,
             shall  contain  conditions,  terms,   stipulations  and  insuring
             covenants satisfactory to  the Agent, 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 Agent  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
             Agent  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  Agent and the Trustee shall
             be named  as  co-assureds  on all  such  policies  and  insurance
             contracts, but without liability  of the Agent or the Trustee for
             premiums  or  calls.    Certified copies  of  all  such policies,
             binders and other interim insurance contracts  shall be deposited
             with  the Agent.    Originals shall  also  be  provided upon  the
             request of  the Agent.   The  Owner  shall furnish  to the  Agent
             annually a detailed report signed by  a firm of marine  insurance
             brokers satisfactory to the Agent 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  Agent  by   notice  to  the
             underwriters, although the following insurance is  payable to the
             Agent,  (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  Agent (which  consent shall  not be  unreasonably withheld).
             Any  loss covered  by this paragraph  which is paid  to the Agent
             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 Agent  to, or as directed by, the  Owner and
             all  other  payments  to the  Agent  of  losses  covered  by this
             paragraph  shall  be  applied  by the  Agent  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 Agent.   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
             Agent.

       (c)   In the event of an  actual or constructive Total Loss of the Rig,
             the Agent 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  Agent advised
             of the progress of such renewals,  and procure that the  insurers
             shall promptly confirm  in writing to the Agent  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 Agent.

       (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

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

       (a)   maintain its existence  as a  corporation in  good standing  duly
             organized under the laws of the State of Oklahoma;

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

       (c)   not  without the  previous  consent in  writing  of the  Trustee,
             change the name of  the Rig or make  any modification to the  Rig
             which would or  might materially alter  the structure or  type or
             reduce the performance characteristics  of the Rig or  materially
             reduce the value of the Rig;

       (d)   keep the  Rig in a good and  efficient state of repair consistent
             with  the ownership  and operating  practices of  first-class rig
             owners and operators so  as to maintain her present class (namely
             +A1  Self-Elevating  Drilling Unit)  at  the  American Bureau  of
             Shipping  free of recommendations  and qualifications  and change
             of class, save those  notified to and approved in writing  by the
             Trustee  and so  as  to comply  with  all  laws, regulations  and
             requirements  (statutory   or  otherwise)   from  time   to  time
             applicable to vessels documented under the  laws and flag of  the
             United   States  and   applicable  to  vessels   trading  to  any
             jurisdiction to which the Rig may,  subject to the provisions  of
             this Mortgage, trade from time to time;

       (e)   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 to  not 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
             Trustee and becomes  on installation on  the Rig the  property of
             the  Owner  and  subject to  the  security  constituted  by  this
             Mortgage;

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

       (g)   permit the representatives of the Agent  or independent surveyors
             representing  the Trustee  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;

       (h)   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;

       (i)   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 Agent may require;

       (j)   promptly furnish to  the Trustee 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 Trustee in writing, copies
             of all  charters  and  other  contracts  for  her  employment  or
             otherwise howsoever concerning her;

       (k)   notify both  the Trustee  and  the Agent  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 Trustee ten (10) days prior notice, provided,
                  that  in the event of any  emergency dry docking of the Rig,
                  the Owner shall immediately notify the Trustee; 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 Trustee;

       (l)   keep  proper books of account  in respect  of the Rig  and as and
             when  the Trustee  or the  Agent may  so reasonably  require make
             such books available for  inspection on behalf of the Trustee 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;

       (m)   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;

       (n)   not without the previous  consent in writing of the Trustee (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 Trustee 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;

       (o)   comply  with  and satisfy  all the  requirements  and formalities
             established by  the  Ship Mortgage  Act and  any other  pertinent
             legislation of the  United States to  perfect this Mortgage  as a
             legal, valid  and enforceable first and  preferred lien  upon the
             Rig and  promptly to  furnish to  the Trustee from  time to  time
             such proof as the Trustee may  request for its satisfaction  with
             respect to the  Owner's compliance  with the  provisions of  this
             sub-clause;

       (p)   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, general
             average and salvage and to any  representative of the Trustee  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 covered by a  First Preferred Mortgage to  WILMINGTON
             TRUST  COMPANY  not  in  its individual  capacity  but  solely as
             Trustee  for  the  Banks  defined  in  the  said  Mortgage  under
             authority  of  the  United States  Ship  Mortgage  Act,  1920, as
             amended, recodified  as 46  U.S.C.  31301 et.  seq.   Under  the
             terms of the  said Mortgage neither  the Owner nor  any charterer
             nor the master of  this Rig nor any  other person has any  right,
             power or authority to create, incur or permit to  be imposed upon
             this  Rig any  lien  whatsoever  other  than  for  crew's  wages,
             general average and salvage."

       (q)   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;

       (r)   notify the Trustee 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
                     Trustee advised, in writing on such  regular basis and in
                     such detail as the Trustee shall require, of  the Owner's
                     response  to such  Environmental  Claim or  Environmental
                     Incident;

       (s)   not sell, mortgage or transfer the  Rig (other than as  permitted
             by  the  Credit Agreement)  without  the written  consent  of the
             Trustee 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  Trustee 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;

       (t)   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

8.01   The  Trustee 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 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,  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  with the provisions of Clause 6 or
             any  of  them the  Agent  shall be  entitled (but  not  bound) to
             effect  or to replace  and renew and  thereafter to  maintain the
             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   any
             correspondence  concerning   outstanding  claims)   be  forthwith
             delivered  to such  brokers  as the  Agent  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 Agent 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
             7.01(d)  and/or 7.01(f)  or  any of  them  the  Trustee 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 Trustee 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 TRUSTEE'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  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 Trustee 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  applicable law  including the
             provisions of the Ship Mortgage Act;

       (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 Trustee
             without  legal process  and without liability  of the Trustee 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 Agent;

       (d)   to collect, recover, compromise  and give a good discharge for or
             procure  that  the Agent  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)  or, to  the extent  lawful, procure  that the  Agent take
             over or  institute all  such proceedings in  connection with  the
             Rig,  the  Insurances, or  any  Requisition  Compensation as  the
             Trustee  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 Trustee 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;

       (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 Trustee  in its  absolute discretion
             deems expedient and for the purposes aforesaid  the Trustee 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 Trustee 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 Trustee  in  or  about  the
             exercise   of   the   power   vested   in   the   Trustee   under
             Clause 9.01(g);

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

9.02   The Trustee  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 Trustee  by this Mortgage or  to which the Trustee  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 Trustee 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 Trustee  the
       purchaser shall  not be bound  to see or enquire  whether the  power of
       sale  of the Trustee has arisen in the manner provided in this Mortgage
       and the sale shall be deemed  to be within the power of the Trustee and
       the  receipt of the  Trustee 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  All moneys received by  the Trustee (or any other Secured  Creditor, as
       the case  may be) 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 Trustee 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 Trustee 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
             Trustee 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 Trustee 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  Mortgage
             shall  be obligated to  provide upon request  of the  Trustee) 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  Trustee, 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

11.01  The Owner shall execute and do all such assurances,  acts and things as
       the Trustee 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  Trustee 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
             enure to the benefit  of any transferee, successor or assignee of
             the Trustee; 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
             Trustee under this Mortgage,

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

12.    POWER OF ATTORNEY

12.01  The Owner, by  way of security and  in order more  fully to secure  the
       performance  of  the  Obligations,  hereby   irrevocably  appoints  the
       Trustee as its  attorney until the  Total Commitment is  terminated and
       none of the Obligations remain outstanding 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  Trustee  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 Trustee  shall not  put any  person dealing with  the
       Trustee  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 Trustee  of such
       power shall be conclusive evidence 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  Trustee
             under this Mortgage; or

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

       and each of  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 such 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 Trustee,  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  Trustee against the amount  of such shortfall.   For
       the purposes of  this Clause 13.03, "rate  of exchange" means  the rate
       at which the Trustee is able on  the date of such payment (or, if it is
       not practicable  for the  Trustee 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 Trustee 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 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 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 Credit Documents (or any of them).

14.02  The Owner shall pay to  the Trustee and the Agent 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
             Credit  Documents  (or  any  of  them)  requested  by  the Owner,
             necessary or advisable  under applicable law or  relating to  the
             syndication of the Facility,  or initiated during the  occurrence
             and continuation of an Event of Default; and/or

       (b)   any consent or  waiver required from  the Trustee in  relation to
             the  Credit  Agreement, the  Subsidiary Guaranty  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.

14.03  The  Owner shall  pay promptly  all stamp,  documentary and  other like
       duties  and  Taxes  to  which  the  Credit  Agreement,  the  Subsidiary
       Guaranty and the Credit  Documents (or any of  them) may be subject  or
       give rise and  shall indemnify the  Trustee 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 to  the Trustee hereunder shall be in  writing and shall be
       made to the following address:

                   Wilmington Trust Company
                   Rodney Square North
                   1100 North Market Street
                   Wilmington, DE  19890-0001
                   Telefax:  (302) 651-8882
                   Attention: Corporate Trust Division

                   With a copy to:

                   Jennifer L. Janss, Esq.
                   Richards, Layton & Finger
                   P.O. Box 551
                   Wilmington, DE  19899


       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 enure to the  benefit of
       the  Owner,  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  12.16 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  Trustee  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 One  Hundred Million U.S. Dollars
       (US$100,000,000)  of  principal plus  interest,  fees, commissions  and
       performance of mortgage  covenants.  The  discharge amount is  the same
       as the total amount.

18.    MISCELLANEOUS

18.01  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.

18.02  The Trustee, 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  Trustee under this  Mortgage in  relation to
       the Rig.  Any such  delegation may be made upon such  terms and subject
       to such regulations as  the Trustee may think  fit.  The Trustee  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.

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

19.    JURISDICTION

19.01  The  Owner agrees that the Trustee 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 Trustee.

19.02  Without prejudice to the  generality of Clause 19.01, the Trustee 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 Trustee may bring before  the courts of such jurisdiction  or
       other judicial authority and  for the purpose of  any action which  the
       Trustee 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.

19.03  The  Owner  agrees that  should the  Trustee  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 has caused this Mortgage to be executed the  day
and year first before written.


READING & BATES EXPLORATION CO.


By_____________________________________
  Its:




                         ACKNOWLEDGEMENT OF MORTGAGE


STATE OF NEW YORK           )
                            )  S.S.
COUNTY OF NEW YORK          )



On this 30th day of April, 1996  before me personally appeared ____________ to
me known who  being by me duly  sworn did dispose and  say that he  resides at
_________________________________, that he is ____________________________ for
READING  &  BATES EXPLORATION  CO.,  the corporation  described  in and  which
executed the foregoing  instrument; and  that he  signed his  name thereto  by
order of the Board of Directors of READING & BATES EXPLORATION CO.




                                                 --------------------
                                                 Notary Public