Exhibit 10.132



                       READING & BATES (A) PTY. LTD.

                                   - to -

                      CHRISTIANIA BANK OG KREDITKASSE,
                              NEW YORK BRANCH

                         __________________________

                          FIRST PRIORITY MORTGAGE

                          Dated November 13, 1996

                         _________________________

                               RON TAPPMEYER

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

THIS  FIRST PRIORITY  MORTGAGE is made  the 13th  day of  November, 1996 by
READING & BATES (A)  PTY. LTD., ACN  064 532 252,  a company organized  and
existing  under  the  laws  of  the State  of  Western  Australia  and  the
Commonwealth  of Australia and  having its registered office  66 Kings Park
Road,  West Perth,  West Australia,  (the "Owner")  to CHRISTIANIA  BANK OG
KREDITKASSE,  NEW YORK BRANCH having its office at 11 West 42nd Street, 7th
Floor, New York, NY  10036 (the "Mortgagee", which expression shall include
its successors and assigns),

WHEREAS:

(1)   The  Owner is the sole, absolute and unencumbered owner of sixty-four
      sixty-fourth shares of the Rig described in the Schedule 1 hereto.

(2)   By a  Credit Agreement  dated as of  November 13, 1996  (as modified,
      amended or supplemented  from time  to time, the "Credit  Agreement")
      among  (i)  Reading  &  Bates  Corporation, a  Delaware  corporation,
      ("Holdings"),  (ii) Reading  & Bates  Drilling Co.  (the "Borrower"),
      (iii) the banks party thereto (the "Banks"), (iv) Credit Lyonnais New
      York  Branch  and  Banque  Indosuez,  as  documentation  agents  (the
      "Documentation Agents")  and  (v) the  Mortgagee,  as  administrative
      agent, arranger and security trustee for the Banks (in such capacity,
      the  "Administrative  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
      in  an aggregate amount at any one  time outstanding of Three Hundred
      Million  United States  Dollars  (US$300,000,000) providing  for  the
      making of Loans and the issuance of and participations in, Letters of
      Credit as contemplated therein.

(3)   The  obligations of  the Borrower  with respect  to the  Facility are
      evidenced by the Credit Agreement and the other Credit Documents, and
      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).

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

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

(6)   This First Priority  Mortgage, which is entered into  by the Owner in
      consideration  of the Banks  entering into  the Credit  Agreement and
      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 as follows:

1.    (A)   In this Mortgage unless the context otherwise requires:

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

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

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

      "Credit Agreement"  means the Credit Agreement, dated  as of November
      13,  1996, among Holdings, the Borrower, the Banks, the Documentation
      Agents  and the Administrative Agent first referred to in Recital (2)
      hereto, as modified, amended or supplemented from time to time;

      "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;

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

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

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

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

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

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

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

      "Indemnitee" shall have the meaning set forth in Section 13(A);

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

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

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

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

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

      "Note"  means each  promissory note  of the  Borrower referred  to in
      Recital (3) hereto and in Section 1.05(a) of the Credit Agreement;

      "Obligations" shall have the meaning provided in Recital (5) hereto;

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

      "Other  Rigs" means,  individually or  collectively, each of  (i) the
      semi-submersible  drilling  rig  JACK  BATES  owned by  the  Borrower
      documented under the laws and flag of the United States 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
      Reading & Bates Exploration  Co. ("R&B Exploration") documented under
      the laws and flag of the United States with Official Number 583169 of
      5,383  gross registered tons and 4,185 net registered tons; (iii) the
      offshore  drilling  rig  CHARLEY GRAVES  owned by  Reading  and Bates
      Borneo Drilling  Co., Ltd. documented under the laws  and flag of the
      Republic of  Panama  with Patente  Number 6618-76-CH  of 5,829  gross
      registered  tons and 1,748 net registered tons; (iv) the drilling rig
      D. R. STEWART  owned by R&B Exploration documented under the laws and
      flag of  United States  with Official  Number 626904 of  6,494  gross
      registered  tons  and  5,834  net  registered  tons;  (v)  the  semi-
      submersible  drilling  rig  J.  W.  McLEAN  owned  by  the   Borrower
      documented under  the laws and  flag of the  Republic of  Panama with
      Official Number 25384-PEXT of  15,453 gross registered tons and 4,636
      net registered tons; (vi)  the semi-submersible drilling  rig RIG  41
      owned by  the Borrower  documented under  the laws  and  flag of  the
      Republic of Panama with the Patente Number to be assigned on the date
      hereof of 10,078 gross registered tons and 3,024 net registered tons;
      (vii) the  jack-up  drilling rig  HARVEY  H. WARD  owned by  HRB  Rig
      Corporation documented under  the laws and flag of the  United States
      of America with Official Number 642693 of 4,121 gross registered tons
      and 3,079 net registered tons;  (vii) the jack-up drilling rig  F. G.
      McCLINTOCK  owned by  Reading  & Bates  Offshore,  Limited documented
      under the laws and flag of the United States of America with Official
      Number 562059 of 5,525 gross registered tons and 1,657 net registered
      tons;  (viii) the  jack-up drilling  rig RANDOLPH  YOST owned  by the
      Borrower documented under the  laws and flag of the  United States of
      America with Official  Number 601699 of  4,701 gross  registered tons
      and 4,701 net  registered tons; (ix) the  jack-up drilling rig J.  T.
      ANGEL owned by the Borrower documented under the laws and flag of the
      United States of  America with Official Number 651645 of  4,186 gross
      registered  tons  and 3,090  net  registered  tons;  (x) the  jack-up
      drilling rig ROGER  W. MOWELL owned by the Borrower  documented under
      the  laws and  flag of  the United  States of  America with  Official
      Number 645360 of 4,121 gross registered tons and 3,079 net registered
      tons;  (xi)  the jack-up  drilling  rig GEORGE  H. GALLOWAY  owned by
      Reading  & Bates Offshore, Limited documented under the laws and flag
      of the United States of America  with Official Number 651646 of 3,729
      gross  registered tons and  2,496 net registered tons;  and (xii) the
      jack-up drilling rig C.E. THORNTON to be owned by HRB Rig Corporation
      documented under the laws and flag of  the United States  of  America
      with Official Number 673210 of 6,096 gross  registered tons and 6,096
      net registered tons;

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

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

      "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  referred to in  Recital (1) hereto  and more
      fully  described in  Schedule  1 hereto  and  includes any  share  or
      interest therein  and her engines, machinery,  boats, tackle, outfit,
      spare  gear,  fuel,  consumable   or  other  stores,  belongings  and
      appurtenances whether  on board or  ashore and whether  now owned  or
      hereafter  acquired (but  excluding  therefrom  any leased  equipment
      owned by third parties);

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

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

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

      "Subsidiary Guaranty"  means the agreement  dated as  of November 13,
      1996 made by the Owner in  favor of the Administrative Agent as first
      referred   to  in  Recital  (4)  hereto,   as  modified,  amended  or
      supplemented from time to time;

      "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;

      (B)   In Clause 5(A) hereof:

            (i)   "Excess risks" means the proportion of claims for general
                  average  and  salvage  charges  and  under  the  ordinary
                  running-down clause not recoverable in consequence of the
                  value at  which a vessel  is assessed for the  purpose of
                  such claim exceeding her insured value;

            (ii)  "Protection and  indemnity risks"  means the  usual risks
                  covered  by   a  protection  and   indemnity  association
                  including  the  proportion  not  recoverable  in case  of
                  collision under the ordinary running-down clause;

            (iii) "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.

      (C)   This Mortgage shall be read together with the Credit Agreement,
            the  Notes,  the  Subsidiary  Guaranty  and  the  other  Credit
            Security Documents.

      (D)   The Owner hereby represents and warrants to the Mortgagee that:

            (i)   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);

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

            (iii) the Owner  is a  corporation duly  organized and  validly
                  existing and in good standing under the laws of the State
                  of Western Australia and the Commonwealth of Australia;

            (iv)  the Owner  has full power and  authority (i) to  register
                  the  Rig  in  its  name under  Australian  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;

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

            (vi)  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 Registrar of Ships at
                  the  Australian  Shipping  Registration  Office  and  the
                  Australian  Securities  Commission will  create a  legal,
                  valid and  enforceable first  preferred mortgage lien  on
                  the Rig;

            (vii) 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 its Memorandum and Articles  of Association, 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;

           (viii) 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; 

            (ix)  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;

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

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

            (xii) 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.    In order to  induce Banks to enter  into the Credit Agreement  and to
      make the  Facility available thereunder and in consideration of other
      valuable consideration (receipt whereof is hereby acknowledged by the
      Owner) the Owner hereby covenants with the Mortgagee as follows:

      (A)   The Owner  shall pay the  full amount of all  moneys comprising
            the Obligations  as  and when  the  same shall  become due  and
            payable in accordance with the terms of the Subsidiary Guaranty
            and the other Credit Documents.

      (B)   The Owner  will  pay to  or  indemnify the  Mortgagee for  such
            additional  amounts  as may  be  necessary  in  order that  all
            payments  under this Mortgage  after deduction  of, for,  or on
            account  of  every  present  or   future  tax,  assessment  and
            governmental charge imposed  by any competent authority  in the
            State of Western Australia  or Commonwealth of Australia (or in
            such other jurisdictions to the revenue laws of which the Owner
            may for the time being be  subject) shall be no less than  such
            payments would have been had there been no such tax, assessment
            or charge.

3.    By way of  security for the performance of the  Obligations THE OWNER
      as BENEFICIAL OWNER HEREBY MORTGAGES  AND CHARGES to and in favor  of
      the Mortgagee all the Owner's interest in the Rig, including, without
      limitation, all 64 shares in the Rig, the Earnings and the Insurances
      (all of which the Owner hereby warrants to be free at the date hereof
      from any other charge or incumbrance whatsoever, other than Permitted
      Liens, if any) and  Requisition Compensation and without prejudice to
      the generality of the  foregoing THE OWNER HEREBY ASSIGNS AND  AGREES
      to assign  to the Mortgagee (or to procure to assign to the Mortgagee
      as the case may be)  the Earnings and the Insurances  and Requisition
      Compensation  as  defined  herein  PROVIDED  HOWEVER  that  any  sums
      receivable in respect of the Insurances shall be payable as follows:

      (A)   There  shall  be  paid to  the  Mortgagee  any  and  every  sum
            receivable in respect of a Total Loss.

      (B)   Unless and until Underwriters have been otherwise instructed by
            notice in  writing from the  Mortgagee, (i) any loss  under any
            insurance on the  Rig with respect to protection  and indemnity
            risks may be paid directly to the Owner to reimburse it for any
            loss, damage  or expense  incurred by  it and  covered by  such
            insurance  or to  the person to  whom any liability  covered by
            such insurance has been incurred, (ii) in the case of any  loss
            (other than  a Total Loss or a loss covered by (i) above) under
            any insurance with respect  to the Rig involving any damage  to
            the Rig,  the Underwriters  may pay  directly for  the  repair,
            salvage, liability or other charges involved or,  if the Owners
            shall have  first fully repaired  the damage and paid  the cost
            thereof, or discharged the liability or paid all of the salvage
            or other charges, then  the Underwriters may pay the Owners  as
            reimbursement therefor, provided, however,  that if such damage
            involves a  loss in excess of U.S. $1,000,000 or its equivalent
            the Underwriters  shall not  make  such payment  without  first
            obtaining the written consent thereto of the Mortgagee.

4.    It is declared and agreed  that the security created by this Mortgage
      shall be  held by  the Mortgagee  as a  continuing  security for  the
      performance of  all Obligations  under the  Credit Documents and  the
      performance  and  observance  of  and  compliance  with  all  of  the
      covenants, terms and conditions therein and herein contained and that
      the security  so created shall  not be satisfied by  any intermediate
      payment or satisfaction of any  part of the amount hereby and thereby
      secured and that the security so created shall be in  addition to and
      shall not in any  way be prejudiced or affected by  any collateral or
      other security  now or hereafter held by the Mortgagee for all or any
      part of the  moneys hereby and  thereby secured and that  every power
      and remedy given to the  Mortgagee hereunder shall be in addition to,
      and not a limitation of, any  and every other power or remedy  vested
      in the Mortgagee under  the Subsidiary Guaranty and the other  Credit
      Documents or  any other document or instrument  entered into pursuant
      to the Credit Agreement  or at law and that all  the powers so vested
      in the  Mortgagee may be exercised from time to  time and as often as
      the Mortgagee may deem expedient.

5.    The Owner further covenants with the Mortgagee and undertakes that:

      (A)(i)      The Owner shall, at its own expense, when and so long  as
                  the  Obligations remain  outstanding, insure the  Rig and
                  keep her  insured, or  cause the  Rig to  be insured,  in
                  lawful money of the United  States, in such amounts,  for
                  such  risks  (including  without   limitation,  hull  and
                  machinery/increased  value,   protection  and   indemnity
                  risks, pollution liability, and war  risks), in such form
                  (including  without  limitation,  the  form of  the  loss
                  payable clause and the designation of named assureds) and
                  with such first  class insurance companies, underwriters,
                  funds, mutual insurance  associations or clubs, as  shall
                  be  reasonably  satisfactory  to  the  Mortgagee.    With
                  respect to hull  and machinery/increased value insurance,
                  including war  risk, the Owner shall  insure the Rig  and
                  keep her insured, or cause the  Rig to be insured, for an
                  amount which is at least the full commercial value of the
                  Rig, and when such  amount is aggregated with  the amount
                  of  such  insurance  coverage  on  the  Other Rigs,  such
                  aggregate amount shall be at least 110% of the  aggregate
                  amount of  the Total  Commitment.   The Rig  shall in  no
                  event  be insured  for  an amount  less  than  the agreed
                  valuation as set forth in  the applicable marine and  war
                  risk policies.  Such insurance shall cover marine and war
                  risk perils, on hull and  machinery, with deductibles not
                  in excess of US$500,000 (such deductibles not to apply in
                  the  case  of  Total Loss  of  the  Rig),  and  shall  be
                  maintained  in  the   broadest  forms  available  in  the
                  American, British  and Scandinavian insurance  markets or
                  in  such  other  major  international markets  reasonably
                  acceptable to the  Mortgagee.  The Owner  shall maintain,
                  or cause to  be maintained,  protection and indemnity  or
                  equivalent insurance, including  war risk protection  and
                  indemnity   coverage  and   coverage  against   pollution
                  liability, in an amount not less than US$100,000,000 (or,
                  with  respect  to  pollution   liability  coverage,  such
                  greater amount  as may be  required from time to  time by
                  the Oil Pollution Act 1990, or other Environmental Laws),
                  as and  when applicable  to the  Rig and its  operations,
                  through underwriters  or associations  acceptable to  the
                  Mortgagee.   In  addition, the  Owner shall,  at its  own
                  expense, furnish  to the  Mortgagee a  mortgagee's single
                  interest policy providing coverage which, when aggregated
                  with the mortgagee's  interest insurance furnished to the
                  Mortgagee in  respect of the  Other Rigs, shall be  in an
                  amount equal  to at least 110% of the 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
                  Mortgagee).  Such  mortgagee's interest insurance and any
                  additional  insurance  policies for  the  benefit of  the
                  Mortgagee  shall  be  maintained  in  the  broadest  form
                  available  in  the  American,  British  and  Scandinavian
                  markets or  other major international  markets acceptable
                  to the  Mortgagee through underwriters  acceptable to the
                  Mortgagee.   The Rig shall not operate in or proceed into
                  any area then  excluded by  trading warranties under  its
                  marine or  war  risk policies  (including protection  and
                  indemnity) without  obtaining  any  necessary  additional
                  coverage,  satisfactory   in  form  and   substance,  and
                  evidence of which shall be furnished, to the Mortgagee.

      (ii)        The policy  or policies of  insurance shall  be issued by
                  responsible underwriters  reasonably  acceptable  to  the
                  Mortgagee, shall contain conditions, terms,  stipulations
                  and insuring covenants satisfactory to the Mortgagee, and
                  shall be  kept in full force  and effect by the  Owner so
                  long as the  Obligations shall be outstanding.   All such
                  policies, binders  and other interim  insurance contracts
                  shall be executed and issued in the name of the Owner and
                  shall, to the  extent required herein, provide  that loss
                  be payable  to the  Mortgagee for  distribution by  it to
                  itself, the Banks  and the Owner  as their  interests may
                  appear,  and shall provide for  at least ten  days' prior
                  notice to be  given to the Mortgagee by  the underwriters
                  or  association  in  the  event  of  cancellation or  the
                  failure  of the  Owner to pay  any premium or  call which
                  would suspend coverage under the policy or the payment of
                  a  claim  thereunder.    Certified  copies  of  all  such
                  policies, binders  and other interim  insurance contracts
                  shall be deposited  with the Mortgagee.   Originals shall
                  also be  provided upon the request of the Mortgagee.  The
                  Owner shall furnish to the  Mortgagee annually a detailed
                  report  signed  by  a firm  of  marine  insurance brokers
                  satisfactory  to  the   Mortgagee  as  to  the  insurance
                  maintained in  respect of the Rig, as to their opinion as
                  to  the adequacy thereof  and as  to compliance  with the
                  provisions of this Clause 5(A).

                  Unless otherwise required  by the Mortgagee by  notice to
                  the underwriters,  although the  following  insurance  is
                  payable  to  the  Mortgagee,  (i)   any  loss  under  any
                  insurance  on  the  Rig with  respect  to  protection and
                  indemnity  risks may  be paid  directly  to the  Owner to
                  reimburse it for any  loss, damage or expense incurred by
                  it and covered by such insurance or to the person to whom
                  any liability covered by such insurance has been incurred
                  and  (ii) in  the case  of any  loss  (other than  a loss
                  covered by (i)  above or by the  next following paragraph
                  of this Clause 5(A)(ii) under  any insurance with respect
                  to  the  Rig  involving  any  damage  to   the  Rig,  the
                  underwriters may pay directly for  the repair, salvage or
                  other charges  involved or, if the Owner shall have first
                  fully repaired the damage  or paid all of the salvage  or
                  other  charges,  may  pay  the  Owner   as  reimbursement
                  therefor; provided, however, that if such damage involves
                  a before deductible  loss in excess of  US$1,000,000, the
                  underwriters shall not  make such  payment without  first
                  obtaining the  written consent  thereto of the  Mortgagee
                  (which consent shall not be  unreasonably withheld).  Any
                  loss covered  by  this  paragraph which  is paid  to  the
                  Mortgagee but which  might have been paid,  in accordance
                  with the provisions  of this  paragraph, directly to  the
                  Owner or others, shall be paid by the Mortgagee to, or as
                  directed  by, the  Owner and  all other  payments  to the
                  Mortgagee of losses  covered by  this paragraph shall  be
                  applied by the Mortgagee in accordance with Clause 10.

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

      (iii) In the event  of an  actual or constructive  Total Loss of  the
            Rig, the Mortgagee  shall retain out of  the insurance payments
            received on account of such loss  any sum or sums that shall be
            or  become  owing to  the Secured  Creditors  under the  Credit
            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.

      (iv)  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.

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

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

      (vii) 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.

      (viii)      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.

      (B)   maintain its existence as a  corporation in good standing  duly
            organized under  the laws of the State of Western Australia and
            Commonwealth of Australia;

      (C)   Not to change the name of the Rig without the Mortgagee's prior
            approval and  to keep the  Rig registered as an  Australian Rig
            and not  do  or  suffer to  be done  anything,  or omit  to  do
            anything the doing or  omission of which could or might  result
            in such  registration being  forfeited or  imperilled or  which
            could  or  might  result  in  the  Rig  being  required  to  be
            registered  otherwise  than  as an  Australian Rig  and  not to
            register  the Rig  or permit  its registration under  any other
            flag or at any other port without the  prior written consent of
            the Mortgagee.

      (D)   not  without the  previous consent in writing  of the Mortgagee
            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;

      (E)   To  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 Rig  Class +A1  Self-Elevating Drilling
            Rig) and  so as to  comply with the provisions  of the Shipping
            Registration Act 1981 (Commonwealth of Australia) and all other
            laws,  regulations and  requirements  (statutory  or otherwise)
            from time to time applicable to vessels registered in Australia
            and  to  procure that  all  repairs to  or  replacement of  any
            damaged, worn  or lost parts  or equipment be effected  in such
            manner (both as  regards workmanship and quality  of materials)
            as not to diminish the value of the Rig;

      (F)   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 Mortgagee and becomes on installation on
            the Rig the property  of the Owner and subject  to the security
            constituted by this Mortgage;

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

      (H)   permit  the representatives  of  the  Mortgagee or  independent
            surveyors representing the  Mortgagee 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;

      (I)   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; 

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

      (K)   Promptly to furnish to the Mortgagee all such information as it
            may  from  time  to   time  require  regarding  the   Rig,  her
            employment,  position  and  engagements,  particulars  of   all
            towages and  salvages  and  copies of  all charters  and  other
            contracts for her employment  or otherwise howsoever concerning
            her.

      (L)   To notify  the Mortgagee forthwith by cable  or telex confirmed
            by letter of:

            (i)   Any  accident  to  the  Rig  involving  repairs the  cost
                  whereof will or is likely to be a Major Casualty;

            (ii)  Any occurrence in consequence whereof  the Rig has become
                  or is likely to become a Total Loss;

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

            (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;

            (v)   any intended  dry docking  of the  Rig, as  to which  the
                  Owner  shall  give  the  Mortgagee  ten  (10) days  prior
                  notice, provided, that in  the event of any emergency dry
                  docking of the  Rig, the  Owner shall immediately  notify
                  the Mortgagee; and

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

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

      (N)   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; 

      (O)   not  without the  previous consent in writing  of the Mortgagee
            (such consent  not to  be unreasonably  withheld), put the  Rig
            into the possession of any person for the purpose of work being
            done upon  her in an amount  exceeding or likely  to exceed Two
            Million   Five   Hundred   Thousand   United   States   Dollars
            (US$2,500,000) (or the equivalent in any other currency) unless
            such person  shall first  have given  to the  Mortgagee and  in
            terms reasonably satisfactory  to it a written  undertaking not
            to exercise  any lien on the Rig  for the cost of  such work or
            otherwise;

        (P) Reimburse the Mortgagee promptly, with  interest at the Default
            Rate, for any and all expenditures which the Mortgagee may from
            time  to  time  make, lay  out  or  expend  in  providing  such
            protection in respect of insurance,  discharge of liens, taxes,
            dues,  assessments, governmental  charges, fines  and penalties
            lawfully imposed, repairs, attorneys' fees and other matters as
            the  Shipowner  is obligated  herein to  provide, but  fails to
            provide.  Such  obligation  of  the   Owner  to  reimburse  the
            Mortgagee shall  be an  additional  indebtedness due  from  the
            Owner, secured  by this Mortgage,  and shall be payable  by the
            Owner  on demand. The  Mortgagee, though  privileged so  to do,
            shall be  under no  obligation to the  Owner to  make any  such
            expenditures, nor shall the making thereof relieve the Owner of
            any default in that respect.

      (Q)   To pay  on demand to  the Mortgagee  (or as it may  direct) the
            amount  of all  investigation  and legal  expenses of  any kind
            whatsoever, stamp duties  (if any),  registration fees and  any
            other  charges incurred  reasonably  and in  good faith  by the
            Mortgagee  in  connection  with  the  preparation,  completion,
            enforcement  and  registration  of  the  Security Documents  or
            otherwise in connection  with the Obligations and  the security
            therefor.

      (R)   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;

      (S)   notify the Mortgagee forthwith upon:

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

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

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

      (U)   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
            Australia and  will at all  times keep the Rig  duly documented
            thereunder.

6.    (A)   The Mortgagee shall  without prejudice to its  other rights and
            powers hereunder be entitled (but not bound) at any time and as
            often as may be necessary to take any such action as  it may in
            its  discretion think  fit  for the  purpose of  protecting the
            security  created  by  the  Credit  Agreement,  the  Subsidiary
            Guaranty and other Credit  Documents and each and every expense
            or liability so incurred  by the Secured Creditors in or  about
            the protection of the security shall be repayable to it by  the
            Owner on demand together  with interest thereon at the  Default
            Rate  from  the date  whereon  such  expense  or liability  was
            incurred by  the Mortgagee until the date of actual receipt (as
            well after as before any judgment).

      (B)   Without prejudice to the generality of the foregoing:

            (i)   In every case that the  provisions of Clause 5(A)  hereof
                  or any  of them shall not be complied with, the Mortgagee
                  shall  be at liberty to effect and thereafter to maintain
                  all such  insurances upon the Rig as in its discretion it
                  may think fit;

            (ii)  In the event that  the provisions of Clause 5(C) or  5(D)
                  hereof  or any  of them shall  not be complied  with, the
                  Mortgagee shall be at liberty to arrange for the carrying
                  out of  such repairs and surveys as it may deem expedient
                  or necessary;

            (iii) In the event that the provisions of Clause 5(F) hereof or
                  any of them  shall not  be complied  with, the  Mortgagee
                  shall be  at liberty to pay and discharge all such debts,
                  damages and liabilities  as are therein mentioned  and to
                  take any  such  measures  as  it may  deem  expedient  or
                  necessary for the purpose  of securing the release of the
                  Rig.

            Each  and  every  expense  or  liability  so  incurred  by  the
            Mortgagee shall be  recoverable, together with interest  at the
            Default Rate, from the Owner as provided herein.

7.    Upon the  happening of any  of the following  events (the  "Events of
      Default")  the  security  created  by   this  Mortgage  shall  become
      immediately enforceable:

      (A)   The  owner does not pay  to the Mortgagee forthwith  any sum of
            money payable under the Subsidiary Guaranty or the other Credit
            Documents.

      (B)   If the Owner is in breach of the covenants contained in Clauses
            5A, 5B, 5C, 5F, 5G, 5H, 5I, 5K, 5L, 5M, 5N or 5O.

      (C)   If the  Owner is in breach of any of the other covenants, terms
            and conditions hereof and  such breach is not remediable or  if
            it is  capable  of being  remedied,  the same  is not  remedied
            within  10  days  of  receipt  of  notice  from  the  Mortgagee
            requesting remedial action.

      (D)   It becomes  impossible or unlawful for the Owner to fulfill any
            of the covenants  and obligations  contained in the  Subsidiary
            Guaranty or  the other Credit Documents or for the Mortgagee to
            exercise  the rights  or any  of them  vested in  it  under the
            Credit Documents or otherwise.

      (E)   Anything is done or suffered or omitted to be done by the Owner
            which in  the reasonable opinion  of the  Mortgagee may imperil
            the security created  by the Subsidiary  Guaranty or  the other
            Security Documents.

      (F)   An  Event  of Default  under  the  Credit Agreement  shall have
            occurred and be continuing.

8.    Upon  the  security  created by  this  Mortgage  becoming immediately
      enforceable pursuant to Clause 7  hereof the Mortgagee may by  notice
      of default given to the Owner declare the Obligations to be forthwith
      due and  payable and the Mortgagee shall become forthwith entitled as
      and when it may see fit to put into force and exercise all the powers
      possessed by it as mortgagee  of the Rig and chargee of the  Rig, the
      insurances and the Earnings and in particular:

      (A)   To exercise  all of the rights and remedies given to mortgagees
            by the laws of the Commonwealth of Australia and the States and
            Territories of  Australia or other  applicable laws,  including
            the right to cause the Rig to be arrested and  sold by judicial
            authority.

      (B)   To take possession of the Rig.

      (C)   To  require  that  all policies,  contracts  and  other records
            relating to the Insurances or any of them (including details of
            and correspondence concerning outstanding  claims) be forthwith
            delivered  to  such  adjusters  and/or  brokers  and/or   other
            insurers as the Mortgagee may nominate.

      (D)   To  collect, recover, compromise and give  a good discharge for
            all claims  then outstanding  or thereafter  arising under  the
            Insurances and to  take over  or institute (if necessary  using
            the name  of  the  Owner) all  such proceedings  in  connection
            therewith as the  Mortgagee in  its absolute discretion  thinks
            fit  and  to permit  any  brokers  through  whom collection  or
            recovery  is  effected  to  charge  the  usual  brokerage  fees
            therefor.

      (E)   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 by  public auction or private  contract at
            home or  abroad and  upon such  terms as  the Mortgagee  in its
            absolute discretion may  determine with  power to postpone  any
            such sale and without  being answerable for any loss occasioned
            by such sale or resulting  from postponement thereof and 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)   Pending sale  of the Rig to manage, insure, maintain and repair
            the Rig and to employ or lay up the Rig in such manner  and for
            such period  as the Mortgagee in its  absolute discretion deems
            expedient and for the purposes aforesaid the Mortgagee shall be
            entitled  to do  all acts  and things  incidental  or conducive
            thereto  and  in  particular to  enter  into  such arrangements
            respecting  the  Rig, her  insurance, management,  maintenance,
            repair, classification and employment in all respects as if the
            Mortgagee  were   the  owner  of  the  Rig  and  without  being
            responsible for any loss thereby incurred.

      (H)   To recover from the  Owner on demand any such losses  as may be
            incurred by the Mortgagee in or about the exercise of the power
            vested  in  the   Mortgagee  under  sub-clause (G)  above  with
            interest thereon  at the Default  Rate from the date  when such
            losses were  incurred by the Mortgagee until the date of actual
            receipt (as well after as before any judgment).

      (I)   To recover  from the Owner on demand all expenses, payments and
            disbursements  incurred  by  the  Mortgagee   in  or  about  or
            incidental to the exercise by it of any of the powers aforesaid
            together  with interest  thereon at  the Default Rate  from the
            date  when  such   expenses,  payments  or  disbursements  were
            incurred by  the Mortgagee until the date of actual receipt (as
            well after as before any judgment).

PROVIDED ALWAYS that upon any  sale of the Rig or any share therein  by the
Mortgagee pursuant to sub-clause (F) above the purchaser shall not be bound
to see or inquire whether the Mortgagee's  power of sale has arisen in  the
manner herein provided and the sale of the Rig shall be deemed to be within
the  power of  the  Mortgagee and  the  receipt  of the  Mortgagee for  the
purchase money shall effectively  discharge the purchaser thereof who shall
not be concerned with  the manner of application of the proceeds of sale or
be in any way answerable therefor.

9.    Upon  the  security  created by  this  Mortgage  becoming immediately
      enforceable  pursuant  to clause  7  hereof,  the Mortgagee  shall be
      entitled  to appoint  a receiver or  manager or receiver  and manager
      (the  "Receiver") of  the Rig  and  the freights,  hire,  insurances,
      revenues,  income and profits due  or to become due  and arising from
      the operation  of the Rig.   Any  Receiver so appointed shall  be the
      agent of  the Owner  unless at  any time otherwise  specified by  the
      Mortgagee.    The   Owner  shall  be   solely  responsible   for  the
      remuneration, costs  and expenses of the Receiver.  The Mortgagee may
      at any time terminate the  appointment of the Receiver.   In addition
      to all  the rights and powers conferred on the Receiver at law and in
      equity,  a Receiver shall  be entitled to exercise  all of the powers
      and rights  conferred upon the  Mortgagee under this Mortgage  or any
      other Credit Document.

10.   (a)   All moneys received by the Mortgagee in respect  of any sale by
            it of the Rig or any share therein or otherwise pursuant to the
            provisions of this Mortgage shall be place to pay or retain all
            such  payments, disbursements,  expenses and  losses whatsoever
            (together with interest thereon as provided herein) as may have
            been incurred by the Mortgagee in or about or incidental to the
            exercise  by  the  Mortgagee  of  the  powers  applied  in  the
            following manner:

            (i)   first, to the payment  of all amounts owing the Mortgagee
            of the type described in clauses (ii) and (iii) of Recital 5;

            (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(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, any
            surplus  then remaining shall  be paid  to the  Owner, subject,
            however, to the  rights of the holder of any then existing Lien
            of   which   the   Mortgagee   has   actual   notice   (without
            investigation).

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

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

      (d)   For purposes of  applying payments received in  accordance with
            this Clause 10, the  Mortgagee shall be entitled to reply  upon
            (i) the  Administrative Agent  under the  Credit Agreement  and
            (ii)  the  Secured  Creditors for  a  determination  (which the
            Administrative  Agent  and  each  Secured  Creditor,  by  their
            acceptance of the benefits of this Mortgage shall be  obligated
            to provide upon  request of  the Mortgagee) of the  outstanding
            Obligations  owed to  the  Secured Creditors.    Unless  it has
            actual  knowledge (including by  way of  written notice  from a
            Secured  Creditor)  to the  contrary, the  Administrative Agent
            under the Credit  Agreement, in furnishing information pursuant
            to  the  preceding  sentence,  and  the  Mortgagee,  in  acting
            hereunder, shall  be entitled  to  assume that  no  obligations
            other than principal, interest and  regularly accruing fees are
            owing to any Secured Creditor.

11.   No delay  or omission of the Mortgagee to exercise any right or power
      vested  in  it under  the  Subsidiary Guaranty  or  the other  Credit
      Documents shall  impair  such right  or power  or be  construed as  a
      waiver of or an acquiescence in any default by the Owner and in event
      of the  Mortgagee at  any time agreeing  to waive  any such  right or
      power such waiver shall be revocable by the Mortgagee at any time and
      the right or power  shall thenceforth be again exercisable as  though
      there had been no such waiver.

12.   The Mortgagee shall  be entitled at any  time and as often  as may be
      expedient to delegate all or any of the powers and discretions vested
      in  it  by the  Subsidiary  Guaranty or  the  other Credit  Documents
      (including the power vested in it  by virtue of Clause 14 hereof)  in
      such manner  upon such terms and to such  persons as the Mortgagee in
      its absolute discretion may think fit.

13.   (A)   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  under
                  this Mortgage of the Mortgagee; or

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

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

      (B)   Without limiting the  foregoing Clause 13(A), 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 governmental authorities relating to Hazardous Materials at,
            or discharged from the Rig.

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

14.   (A)   The Owner  hereby irrevocably  appoints  the Mortgagee  as  its
            attorney-in-fact for the duration of the Credit Facility Period
            for the purpose of doing in  its name all acts which the  Owner
            itself  could  do  in  relation  to  the  Rig, the  Requisition
            Compensation  and  the  Insurances  and the  Earnings  PROVIDED
            HOWEVER that  such  power shall  not  be exercisable  by or  on
            behalf of the Mortgagee  unless an Event of Default shall  have
            occurred.

      (B)   The exercise of  such power by  or on  behalf of the  Mortgagee
            shall not  put any person  dealing with the Mortgagee  upon any
            inquiry as  to whether  an Event  of Default  has occurred  nor
            shall  such person  be in  any way  affected by notice  that an
            Event of  Default  has not  occurred  and the  exercise by  the
            Mortgagee  of such power  shall be  conclusive evidence  of its
            right to exercise the same.

15.   The Owner  hereby further undertakes  at its own expense  to execute,
      sign, perfect,  do and  (if  required) register  every  such  further
      assurance, document, act or thing  as in the opinion of the Mortgagee
      may  be necessary  or desirable for  the purpose of  more effectually
      mortgaging  and  charging   the  Rig   or  perfecting  the   security
      constituted  by  the  Subsidiary  Guaranty  and  the  other  Security
      Documents.

16.   The  Owner covenants  with the Mortgagee  that it will  indemnify the
      Mortgagee and hold it harmless against any loss or damage or expenses
      which  consequent  upon  a judgment  being  obtained  or  enforced in
      respect of the non-payment by the  Owner of any amount due under  the
      Subsidiary Guaranty and the other Credit Documents arises or  results
      from any variation in rates  of exchange between U.S. Dollars and the
      currency in which such judgment was obtained  between the date of the
      said amounts becoming  due (or the  date of  the said judgment  being
      obtained as the case  may be) and the date of  actual payment thereof
      and this indemnity  shall not be  affected by any time  or indulgence
      granted  to the  Owner from time to  time and shall  continue in full
      force  and  effect  notwithstanding  any  judgment  in favor  of  the
      Mortgagee.

17.   (A)   This Mortgage shall  be construed and enforceable  according to
            the laws of the Australian Capital Territory, Australia.

      (B)   The Owner  agrees  that the  Mortgagee shall  have liberty  but
            shall  not be obliged to take any  proceedings in the Courts of
            any  country  to   protect  or  enforce  the   security  hereby
            constituted or  to enforce  any  provisions of  the  Subsidiary
            Guaranty  and the other Credit Documents  or to recover payment
            of the Obligations and  for the purpose of any proceedings  for
            the enforcement  of the Subsidiary Guaranty or the other Credit
            Documents the Owner  hereby submits to the  jurisdiction of the
            Courts of any country of the choice of the Mortgagee.

18.   All communications  provided for  or permitted hereunder shall  be in
      writing  or by telex  or telefax  confirmed in  writing and  shall be
      delivered, air mailed, telexed or telefaxed to the addresses provided
      for in Section 12.03 of the Credit Agreement:

19.   In accordance with section 282 of  the Corporation Law (as set out in
      section  82 of  the Corporation  Act 1989  (Western  Australia)), the
      maximum prospective liability secured by this  Mortgage will be (U.S.
      $350,000,000) Three Hundred Fifty Million  United States Dollars, but
      this clause  shall not  limit the  amount secured  by or  recoverable
      under this Mortgage or any other Credit Document.

      IN  WITNESS WHEREOF  Reading &  Bates (A)  Pty. Ltd. has  caused this
Mortgage to be executed by on the day and year first above written.


THE COMMON SEAL OF            )
READING & BATES (A)           )
PTY LTD (ACN                  ) 
064 532 252) was              )
affixed by the authority of   )
the Board of Directors in the )
presence of:                  ) 


                                                                           
         
Signature of Secretary        Signature of Director


                                                                           
         
Name of Secretary         Name of Director


Accepted and Agreed:

CHRISTIANIA BANK OG KREDITKASSE,
   NEW YORK BRANCH


By: ____________________________________
     Title:


Accepted and Agreed:

CHRISTIANIA BANK OG KREDITKASSE,
   NEW YORK BRANCH


By: ____________________________________
     Title:


                    SCHEDULE I hereinbefore referred to



      The offshore drilling rig "RON TAPPMEYER" of the following dimensions
and tonnages:

                  Tons Gross approx.           11,455
                  Tons Net approx.              3,436

having  Official  Number  855213  at  the Registry  of  Ships  in Canberra,
Australia.

                                SCHEDULE II


                 AUSTRALIAN SHIPPING REGISTRATION ACT 1981


Particulars under section 38(2)


1.    Name and Official Number:

      "RON TAPPMEYER", Australian Official No. 855213.

2.    The number of shares affected - 64

3.    Name and address of the mortgagor

            Reading & Bates (A) Pty. Ltd., a company organized and existing
            under  the  laws of  the  State of  Western  Australia and  the
            Commonwealth of Australia  and having its registered  office at
            66 Kings Park Road, West Perth, Western Australia.

4.    Name and address of the mortgagee:

            Christiania Bank og Kreditkasse,  New York Branch, 11 West 42nd
            Street, 7th Floor, New York, NY  10036


Signed by READING & BATES (A) PTY. LTD. by ________________________________
                                           Its:  Attorney-in-Fact


                               ACKNOWLEDGMENT


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



      On  the 13th day  of November,  1996, before me  personally came T.W.
Nagle, to me  known, who being by me duly sworn did  depose and say that he
resides at 13307 Tosca Lane, Houston, TX; that he is a Director for READING
& BATES (A) PTY. LTD., the corporation described in and  which executed the
above First Priority Mortgage; and that he signed his name thereto pursuant
to authority granted to him by the Board of Directors of said corporation.



                              _________________________________
                                        Notary Public


                               ACKNOWLEDGMENT



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


      On  the 13th day  of November,  1996, before me  personally came Hans
Chr. Kjelsrud, to me known,  who being by me duly sworn did depose  and say
that he resides at 115  East 87th Street, New  York, NY; that he is  a Vice
President for CHRISTIANIA BANK OG KREDITKASSE, the corporation described in
and which  executed the above First  Priority Mortgage; and  that he signed
his name  thereto pursuant  to authority  granted to  him by  the Board  of
Directors of said corporation.


                              _________________________________
                                               Notary Public



                               ACKNOWLEDGMENT

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

      On the 13th  day of November, 1996, before me  personally came Justin
McCarty, III, to me  known, who being by  me duly sworn did depose and  say
that  he resides  at 35  Pleasant Street,  Katonah, NY; that  he is  a Vice
President for CHRISTIANIA BANK OG KREDITKASSE, the corporation described in
and  which executed the above  First Priority Mortgage; and  that he signed
his name  thereto pursuant  to authority  granted to  him by  the Board  of
Directors of said corporation.



                              _________________________________
                                          Notary Public