Exhibit 10.126



                           FIRST PREFERRED MORTGAGE

                            Dated November 13, 1996


                         READING & BATES DRILLING CO.

                                - in favor of -

                       CHRISTIANIA BANK OG KREDITKASSE,
                               NEW YORK BRANCH,
                              as Security Trustee


                                  J. T. ANGEL

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

                                     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 . . . . . . . . . . . . . . . . . . . . . . . . . .  11 
      7     RIG COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .  14 
      8     PROTECTION OF SECURITY  . . . . . . . . . . . . . . . . . . .  18 
      9     ENFORCEABILITY AND INDENTURE TRUSTEE'S POWERS . . . . . . . .  19 
      10    APPLICATION OF MONEYS . . . . . . . . . . . . . . . . . . . .  20 
      11    FURTHER ASSURANCES  . . . . . . . . . . . . . . . . . . . . .  21 
      12    POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . .  22 
      13    INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . .  22 
      14    EXPENSES  . . . . . . . . . . . . . . . . . . . . . . . . . .  23 
      15    COMMUNICATIONS  . . . . . . . . . . . . . . . . . . . . . . .  24 
      16    ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . .  24 
      17    TOTAL AMOUNT, ETC.  . . . . . . . . . . . . . . . . . . . . .  25 
      18    MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . .  25 
      19    JURISDICTION  . . . . . . . . . . . . . . . . . . . . . . . .  25 

      ACKNOWLEDGEMENT OF MORTGAGE
      EXHIBIT 1 FORM OF CREDIT AGREEMENT

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

THIS FIRST PREFERRED  MORTGAGE (this "Mortgage")  is made on  the 13th day  of
November, 1996

BY

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

IN FAVOR OF

(2)    CHRISTIANIA BANK OG  KREDITKASSE, NEW YORK BRANCH, a  Norwegian banking
       corporation  having its office  at 11 West  42nd Street,  New York, New
       York, as  security 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 jack-up  drilling rig
       J. T. ANGEL 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 (the "Rig").

(B)    By  a Credit  Agreement dated  as of  November  13, 1996  (as modified,
       amended  or supplemented  from time  to time,  the  "Credit Agreement")
       among  (i)  Reading  &  Bates   Corporation,  a  Delaware  corporation,
       ("Holdings"),  (ii)  the  Owner,  as 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 Trustee,  as administrative  agent, arranger  and security  trustee
       (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 Owner
       upon the  terms and conditions  therein described a reducing  revolving
       credit facility (the  "Facility") in an  aggregate amount  at any  time
       outstanding   of    Three   Hundred   Million   United States   Dollars
       (US$300,000,000), providing  for the making of  Loans and  the issuance
       of, and participation in, Letters of Credit as contemplated therein.

(C)    The  obligations  of  the  Owner  with  respect  to  the  Facility  are
       evidenced by  the  Credit Agreement  and  the other  Credit  Documents,
       including  the promissory  notes of the  Owner 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)    This Mortgage  is made for the benefit of the Trustee to secure (i) the
       full and prompt payment when due  of (x) the principal of and  interest
       on  the Notes issued,  and Loans made, under  the Credit Agreement, and
       all reimbursement  obligations and Unpaid Drawings  with respect to the
       Letters of Credit issued under  the Credit Agreement and (y)  all other
       obligations    and   indebtedness    (including   without   limitation,
       indemnities, Fees and  interest thereon) of  the Owner  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 Owner  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 Owner 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.  

(E)    This  First  Preferred  Mortgage  is  entered  into  by  the  Owner  in
       consideration  of the Banks agreeing,  at the request  of the Owner, to
       make the Facility available  to the Owner under the terms of the Credit
       Agreement 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:

       "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  Owner, the  Banks,  the Documentation
       Agents and  the Administrative Agent  first referred to  in Recital (B)
       hereto, as modified, amended or supplemented from time to time;

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

       "Credit Facility Period" shall mean  the period commencing on  the date
       hereof and  ending on the  date the Total  Commitments have terminated,
       no Letters  of Credit remain outstanding  and the 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
       judgment,  relating to  the environment,  health,  safety or  Hazardous
       Materials, including,  without  limitation, CERCLA;  RCRA; the  Federal
       Water Pollution Control Act, as amended, 33 U.S.C.   1251 et seq.; the
       Toxic Substances Control Act, 15 U.S.C.   7401 et seq.; the Clean  Air
       Act,  42 U.S.C.  7401 et seq.;  the Safe Drinking Water Act, 42 U.S.C.
       3808 et seq.;  the Oil  Pollution Act of  1990, 33 U.S.C.   2701 et
       seq. and  any applicable  state and  local or  foreign counterparts  or
       equivalents;

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

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

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

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

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

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

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

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

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

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

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

       "Other  Rigs" means,  individually  or collectively,  each  of (i)  the
       jack-up  drilling  rig  D.  R.   STEWART  owned  by  Reading   &  Bates
       Exploration Co. ("R&B Exploration") documented under the laws and  flag
       of  the  United States  with  Official  Number  626904  of 6,494  gross
       registered tons  and  5,834  net registered  tons;  (ii)  the  offshore
       drilling rig W.  D. KENT owned by R&B  Exploration documented under the
       laws and  flag of  the United  States  with Official  Number 583169  of
       5,383 gross  registered tons and  4,185 net registered  tons; (iii) the
       offshore drilling rig  CHARLEY GRAVES owned by Reading and Bates Borneo
       Drilling Co., Ltd. documented under  the laws and flag of the  Republic
       of  Panama  with Patente  Number 6618-76-CH  of 5,829  gross registered
       tons and 1,748 net  registered tons; (iv) the jack-up  drilling rig RON
       TAPPMEYER owned  by Reading & Bates  (A) Pty Ltd.  documented under the
       laws and flag  of Australia with Official Number 855213 of 11,455 gross
       registered  tons  and   3,436  net  registered  tons;  (v)   the  semi-
       submersible drilling rig  J. W. McLEAN  owned by  the Owner  documented
       under the  laws and flag of the Republic  of Panama with Patente Number
       25384-PEXT  of 15,453  gross registered tons  and 4,636  net registered
       tons; (vi) the semi-submersible  drilling rig RIG 41 owned by the Owner
       documented under  the laws and flag of the  Republic of Panama with the
       Patente  Number  to be  assigned on  the  date hereof  of  10,078 gross
       registered  tons  and 3,024  net  registered  tons;  (vii) the  jack-up
       drilling rig HARVEY  H. WARD owned  by HRB  Rig Corporation  documented
       under the laws and  flag of the United States of  America with Official
       Number 642693 of 4,121 gross  registered tons and 3,079  net registered
       tons;  (viii)  the jack-up  drilling  rig  F.  G.  McCLINTOCK owned  by
       Reading &  Bates Offshore, Limited  documented under the  laws and flag
       of the United  States of America  with Official Number 562059  of 5,525
       gross registered tons  and 1,657 net  registered tons;  (ix) the  semi-
       submersible  drilling rig  JACK  BATES owned  by  the Owner  documented
       under the laws and flag of  the United States of America with  Official
       Number   906283  of  19,928  gross  registered   tons  and  14,948  net
       registered tons;  (x) the jack-up  drilling rig RANDOLPH  YOST owned by
       the Owner 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;  (xi) the  jack-up  drilling rig  ROGER W.
       MOWELL  owned by the  Owner documented under the  laws and  flag of the
       United States of  America with Official  Number 645360  of 4,121  gross
       registered tons  and  3,079  net  registered tons;  (xii)  the  jack-up
       drilling rig  GEORGE H.  GALLOWAY owned  by Reading  & Bates  Offshore,
       Limited  documented under  the laws and  flag of  the United  States of
       America with Official  Number 651646 of 3,729 gross registered tons and
       2,496 net  registered tons; and (xiii)  the jack-up drilling  rig C. E.
       THORNTON to  be owned by HRB Rig Corporation  documented under the laws
       and flag  of the United States  of America with Official  Number 673210
       of 6,096 gross registered tons and 6,096 net registered tons;

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

       "Ship Mortgage Act"  means the United  States Ship Mortgage  Act, 1920,
       as amended, recodified at 46 U.S.C.  31301, et seq.;

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

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

       (l)   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 as the case may be, for payment by the Owner of
             the  relevant expense,  claim, liability, loss,  cost, duty, fee,
             charge or other money  incurred by any 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 any Secured Creditor under  this Mortgage and the  other
             Credit Documents to  which the Owner is  or is to  be a party  at
             the times and in the manner specified herein or therein.

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 Administrative Agent,
             the Banks or the  Letter of Credit Issuer  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 Credit  Parties, 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  Credit Documents
             (other than this Mortgage) or any other document or security.

5.04   Until the Obligations have been satisfied  in full to the  satisfaction
       of  the Trustee,  the Owner  shall not  by virtue  of any  payment made
       hereunder  on  account  of  the  Obligations   or  by  virtue  of   any
       enforcement  by  the  Trustee of  its  rights  under,  or  the security
       constituted  by,  this  Mortgage  or  by  virtue  of  any  relationship
       between,  or  transaction involving,  the Owner  and  Holdings (whether
       such relationship or transaction shall constitute the Owner  a creditor
       of Holdings, a  guarantor of  the obligations  of Holdings  or a  party
       subrogated  to  the  rights of  others  against  Holdings  or otherwise
       howsoever and whether or  not such relationship or transaction shall be
       related  to,  or  in  connection  with,  the  subject  matter  of  this
       Mortgage):

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

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

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

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

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

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

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

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
             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  Administrative  Agent.    With
             respect   to  hull   and  machinery/increased   value  insurance,
             including war risk, the Owner shall  insure the Rig and keep  her
             insured, or cause the Rig  to be insured, for an amount  which is
             at least  the 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
             Administrative 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
             Administrative Agent.  In addition, the  Owner shall, at its  own
             expense,  furnish  to  the  Administrative  Agent  a  mortgagee's
             single interest policy  providing coverage which, when aggregated
             with   the  mortgagee's  interest   insurance  furnished  to  the
             Administrative Agent in  respect of the  Other Rigs, shall  be in
             an amount equal to at  least 110% of the 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 Administrative  Agent).   Such
             mortgagee's  interest  insurance  and  any  additional  insurance
             policies  for the benefit  of the  Administrative Agent  shall be
             maintained  in  the  broadest  form available  in  the  American,
             British  and Scandinavian  markets or  other major  international
             markets   acceptable   to   the  Administrative   Agent   through
             underwriters  acceptable to  the Administrative  Agent.   The Rig
             shall not operate  in or proceed into  any area then  excluded by
             trading  warranties  under  its  marine  or   war  risk  policies
             (including   protection  and  indemnity)  without  obtaining  any
             necessary   additional  coverage,   satisfactory   in  form   and
             substance,  and  evidence of  which  shall be  furnished,  to the
             Administrative Agent.

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

       (c)   In the event of an actual or constructive Total  Loss of the Rig,
             the  Administrative  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 Administrative
             Agent advised of the  progress of such renewals, and procure that
             the   insurers  shall   promptly  confirm   in  writing   to  the
             Administrative 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 Administrative 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 Administrative Agent copies of all
             survey reports issued in respect thereof;

       (g)   permit  the  representatives  of  the   Administrative  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 Administrative 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  Administrative 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 Administrative 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 CHRISTIANIA
             BANK OG  KREDITKASSE, NEW YORK  BRANCH, as  Security 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 Administrative 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  Administrative  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 Administrative 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 INDENTURE 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  Administrative
             Agent;

       (d)   to collect, recover, compromise  and give a good discharge for or
             procure   that   the  Administrative   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 Administrative
             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  (a)   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
                     D;

             (ii)    second, to  the extent  moneys  remain after  the applic-
                     ation  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  Administrative  Agent under  the  Credit
             Agreement for the account of the Secured Creditors.

       (d)   For  purposes of  applying payments  received in  accordance with
             this Clause 10.01,  the Trustee 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  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  Administrative 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 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 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 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 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  and the
             Credit Documents (or any of them).

14.02  The  Owner shall  pay to  the Trustee  and the Administrative  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 and  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 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  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:


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


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

17.    TOTAL AMOUNT, ETC.

17.01  The  total amount of  the direct or  contingent obligations  secured by
       this  Mortgage is  Three Hundred Million  U.S. Dollars (US$300,000,000)
       of  principal  plus  interest,  fees, commissions  and  performance  of
       mortgage covenants.   The interest  of the  Owner in  the Rig is  100%.
       The interest of the Trustee  in the Rig is 100%.   The date of maturity
       is  November 13,  2001, and  the discharge  amount is  the same  as the
       total amount  plus such other sums as shall be  payable by the Owner to
       the Banks under the Credit Agreement.

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  and/or
       the Credit  Agreement and  the  Security Documents  or  to enforce  any
       provisions  of  this  Mortgage  and/or  the  Credit  Agreement and  the
       Security Documents 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 DRILLING CO.

By_____________________________________
    Name:  T.W. Nagle
    Title:  Vice President and Treasurer


                          ACKNOWLEDGEMENT OF MORTGAGE


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



On this 13th  day of November, 1996  before me personally appeared  Timothy 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  Vice President  and
Treasurer for READING &  BATES DRILLING 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 DRILLING CO.



                                 _______________________
                                 Notary Public