EXHIBIT 10.163

                           JOINT VENTURE AGREEMENT

      THIS  AGREEMENT is made effective as of  the   22    of February, 1996,
between  INTEC Engineering,  Inc., a Texas  corporation having  its principal
office  at   15600  JFK   Boulevard,  Ninth   Floor,  Houston,  Texas   77032
(hereinafter referred to as 'INTEC"), and Reading  & Bates Development Co., a
Delaware corporation  having its principal office  at 901 Threadneedle, Suite
200, Houston, Texas 77079 (hereinafter referred to as "RBDC")

      WHEREAS INTEC and RBDC  wish to enter into a joint venture relationship
(herein  called  "joint  venture")  for  the purpose  of  developing  certain
business activities; and

      WHEREAS  the  parties  wish  to  set  out  the  terms,  conditions  and
provisions  pursuant  to  which  they  will  develop   the  various  business
activities of the joint venture;

      THEREFORE  in consideration of the various  covenants and agreements of
the parties to  and with each other set  forth herein, INTEC and  RBDC hereby
agree as follows:

                                  ARTICLE 1
                                    SCOPE

1.01  The joint venture hereby  formed is limited  to the particular  purpose
      of  pursuing  business  opportunities  with  respect to  obtaining  and
      performing studies,  engineering  and project  management services  and
      contracts for  the development  of offshore  reserves of  oil, gas  and
      other hydrocarbons,  which reserves  are conducive to  development on a
      turnkey   basis.    Such  business   opportunities  shall  not,  unless
      otherwise mutually  agreed in  writing, include business  activities or
      projects related  to offshore  daywork contract drilling  or integrated
      services,  marine  support  vessels,  aircraft,  shorebase  facilities,
      dredging, construction,  pipelines,  transportation or  any other  non-
      turnkey  related  activities  or  projects,  nor  shall  such  business
      opportunities  include  the  participation  of  RBDC,  or  any  of  its
      affiliated  companies, in the Green Canyon 254  Allegheny project or in
      the area  of  mutual interest  related  thereto. As  regards  shorebase
      facilities, pipelines and other facilities, however, the  parties agree
      to discuss  any potential activities  or projects, from  time to  time,
      for the  purpose of  determining whether  there is  mutual interest  in
      including the same within the scope of this joint venture.

1.02  Unless otherwise  agreed in writing,  the joint  venture shall  operate
      under the name of  "Total Offshore Production  Systems" and shall  have
      its principal  office at  901 Threadneedle,  Suite 200, Houston,  Texas
      77079.

                                  ARTICLE 2
                                    TERM

2.01  The  joint venture shall  exist for a  term of five (5)  years from the
      date hereof, unless extended  or sooner terminated by  mutual agreement
      of the parties or in accordance  with the provisions of this Article or
      Article 9 hereof.

2.02  The term of the joint venture shall be automatically terminated  in the
      event of the bankruptcy or insolvency of either party.

2.03  The term of the joint  venture shall be automatically extended for such
      period of time as  may be required to perform or  complete any projects
      or contracts  entered  into or  undertaken  by any  business  structure
      created  pursuant  to Section  3.02,  prior to  the  expiration  of the
      initial term.

                                  ARTICLE 3
                         RELATIONSHIP OF THE PARTIES

3.01  The duties, obligations and liabilities  of the parties are intended to
      be  separate,  and not  joint  or  collective.   Each  party  shall  be
      individually  responsible  for  its  share  of  the   costs,  expenses,
      obligations and liabilities  of the joint venture or  of any project as
      herein provided.

3.02  The  parties shall  cause to  be  created an  appropriate  and mutually
      agreed form of business structure or structures  ("business structure")
      for the purpose of conducting  the business activities developed by the
      joint venture  and, if required  and deemed necessary  by the  parties,
      shall create a separate  business structure for each project  developed
      by  the  joint  venture,  having  regard  to   business  considerations
      including  tax, liability, regulatory  requirements and  other relevant
      considerations.

                                  ARTICLE 4
                                  INTERESTS

4.01  Each party shall  have an ownership interest  in the joint venture  and
      all  equipment,   property,  contracts,  technology  or  other  assets,
      tangible or  intangible, of  the joint  venture in  the percentage  set
      opposite such party's name below:

                  INTEC       25%
                  RBDC        75%

4.02  It is  the  understanding  and intention  of  the  parties  that  their
      participation in  individual business  structures may, on  occasion, be
      on  a basis  other than  as set  forth  in Section  4.01 above.    On a
      project by project basis, prior  to submission of any bid or  proposal,
      each party shall notify the other of  the extent to which it desires to
      participate therein, and the  parties shall then  mutually agree as  to
      the extent  to which each of them shall participate, and the basis upon
      which the  parties  shall incur  and  recover their  respective  costs,
      expenses, obligations and liabilities in connection therewith.

4.03  Each party shall first offer any  and all projects within the scope  of
      this joint venture to the other  party for participation.  In the event
      that  a party elects not  to participate in a  project, it shall notify
      the other  party accordingly, and the  other party shall be  at liberty
      to proceed with the  project with or  without participation therein  by
      third parties, at the sole discretion of such other party.

4.04  A  party who elects not  to participate in a  project shall not compete
      with  the  other  party with  respect  to such  project  or  any aspect
      thereof.

4.05  The parties  agree  that, notwithstanding  anything contained  in  this
      Article 4,  or elsewhere herein, no provision of this Agreement nor any
      act or  omission of either  party shall operate  to preclude  the other
      party from  employing or operating its equipment, or that of any of its
      affiliates, owned on the  date of this  Agreement (or hereafter)  where
      it would otherwise have the opportunity to do so.

4.06  INTEC acknowledges the desire  of RBDC to  maximize the utilization  of
      its drilling  units and  the drilling units  owned or  operated by  its
      affiliated companies, and  where a  project involves the  potential for
      utilization  of an  RBDC or  affiliated  company's drilling  unit, such 
      drilling  unit  owner/operator  will be  given  preference,  subject to
      being competitive in price and terms.   RBDC acknowledges the desire of
      INTEC to maximize the use  of INTEC's engineering resources in projects
      under consideration  and, where  a project  involves the  potential for
      utilization of  INTEC's engineering  resources, such resources  will be
      given preference, subject to being competitive in price and terms.

4.07  It is agreed  by the parties that, on  a project by project  basis, the
      share of  the  total  financial  return (including  profit,  return  on
      investment  in  previously  owned  equipment,  financial  support,  and
      compensation  for  expertise), if  any,  that each  party  will  or may
      derive from such project shall  be directly related to the contribution
      of such party to that particular project.

                                   ARTICLE 5 
                     FINANCING OF BUSINESS STRUCTURES
 
5.01 The  parties  agree that  the  acquisition of  assets  by  any business
      structure will be financed by:

      (i)         income from business activities and projects;
      (ii)        third party  or project  financing to  the extent  possible
                  secured  by the  value ofcontracts,  joint venture  assets,
                  and/or  loans,   guarantees  or  other   credit  facilities
                  provided  by  INTEC  and  RBDC,  as required  and  mutually
                  agreed by the parties; and
      (iii)       capital contributions  as  required and  mutually agreed by
                  the  parties, subject to Section 5.02 below.

5.02  It is  agreed by the parties  that their contributions to  any business
      structure for  the purposes  of creating  equity and/or  securing third
      party or project financing, and  for the purpose of completing projects
      undertaken by that business  structure, may include,  but shall not  be
      limited to the following:

-     drilling or other equipment which  may be sold, chartered, or otherwise
      transferred or made available to the business structure;
-     marine technology;
-     subsea production and transportation technology;
-     operating expertise;
-     cash, debt  guarantees or other  credit facilities as  may be  required
      and mutually agreed.

5.03  The parties shall provide  operational and technical support and  shall
      provide  bidding and contracting expertise to the  joint venture.  Each
      such  party shall  bear  its  own costs  with  respect to  bidding  and
      contracting activities of the joint venture.

5.04  The  parties  agree  that  they  shall  provide   offshore  development
      expertise,  floating  production technology,  materials,  equipment and
      experienced personnel for the purpose  of the joint venture's  business
      activities.

5.05  The assets  of any business  structure shall be  available for  project
      funding requirements,  and security  for financing  undertaken by  such
      business structure.

5.06  Funds required by the joint  venture or any business structure for  its
      business activities shall be supplied  or made available by the parties
      as may be mutually agreed from time to time.

                                  ARTICLE 6
                                 MANAGEMENT 

6.01  The business activities of  the joint venture  shall be determined  and
      controlled by a Management  Committee which shall  consist of four  (4)
      members selected as herein provided.

6.02  INTEC  shall be entitled to  appoint one (1) member,  and RBDC shall be
      entitled  to appoint  three (3) members,  to the  Management Committee,
      from time  to  time.   In addition,  each party  shall  be entitled  to
      appoint  one (1) or more alternate members  to its representative(s) on
      the Management  Committee, and  shall notify  the other  party of  such
      alternate or alternates so appointed.

6.03  Except as may be  provided elsewhere in this Agreement, a majority vote
      of the  members of the  Management Committee shall  be required on  all
      matters, including but not necessarily limited to the following:

-     all matters pertaining  to third party or project  financing, including
      debt guarantees; 
-     valuation of non-dollar contributions to any business structure by  the
      parties.  bid preparation and submission  with respect  to any project;
      and
-     basis  of charges to  and by  any business structure  for equipment and
      manpower.

      The appointment  or removal  of the  general manager  or the  financial
      manager of the joint venture and the appointment  or removal of project
      manager(s) shall be by unanimous vote of the Management Committee.

6.04  The  general manager of the joint venture,  appointed by the Management
      Committee, shall initially be Curtis  Burton, a RBDC nominee, and shall
      have responsibility  for management  of the joint  venture's day-to-day
      activities and business development.  The general manager  shall report
      and be accountable  to, but shall  not be a member  of, the  Management
      Committee.

6.05  The  financial  manager  of   the  joint  venture,  appointed  by   the
      Management Committee, shall  initially be  an RBDC  nominee, and  shall
      have responsibility  for management  of project  finance, treasury  and
      accounting  activities of  the joint  venture.   The  financial manager
      shall report and be accountable to,  but shall not be a member  of, the
      Management Committee.

6.06  If the parties elect to incorporate the joint venture  into a corporate
      entity (including  a  corporation or  limited liability  company),  the
      essential  economic  interests  of  the  parties  hereunder   shall  be
      preserved,  to  the extent  reasonably  possible.   In  the  event such
      corporate entity is formed, it is intended  that the general manager of
      the joint venture shall become the  president of the new entity and the
      financial manager of the  joint venture shall  become the treasurer  of
      the new entity.

6.07  The joint venture shall  reimburse RBDC for  all wages, salary,  bonus,
      benefits, travel  and transportation  costs and other  employment costs
      incurred by RBDC with respect to the general manager,  and the services
      of the general manager  shall be dedicated  to conducting the  business
      of  the  joint venture  as  its  general  manager.    Unless  otherwise
      determined by  the Management  Committee, the  financial manager  shall
      contribute his or her time to the joint venture at no cost.

6.08  The  Management Committee shall  select and  appoint a  project manager
      for  each project  undertaken by  the  joint venture,  based  solely on
      experience and  qualifications.  The  project manager shall report  and
      be responsible to the general manager.

6.09  The Management  Committee shall,  from time  to time  as determined  by 
      them,  cause budgets and/or forecasts  of expenditures  to be prepared,
      revised as required, and  approved for each  project bid or  undertaken
      by  any  business structure.   All  expenditures  shall be  made  on an
      approved budget and/or A.F.E. basis.

                                  ARTICLE 7
                         BASIS OF CHARGES/VALUATION

7.01  The basis  upon which  equipment, manpower, proprietary  information or
      other  services,   technology  or   assets  shall   be  evaluated   and
      contributed   and/or  charged  to  any   business  structure  shall  be
      determined by the Management Committee.

7.02  Equipment owned by either party  may be made available to any  business
      structure at  rates  such  that the  business  structure  will  make  a
      reasonable profit thereon.

7.03  Other considerations being equal, equipment, services and  resources of
      the parties  or their affiliates  shall have priority  in the  business
      activities of the joint venture.

7.04  Equipment or  other assets  committed to  any business  structure by  a
      party may  not be  withdrawn for  any reason  for the  duration of  the
      relevant project contract, unless otherwise mutually agreed.

7.05  The basis  upon which assets  of any business  structure or  equipment,
      manpower,  proprietary  information, or  other services,  technology or
      assets shall  be charged to third  parties for whom  projects are being
      conducted  by any  business  structure,  shall  be  determined  by  the
      Management Committee.

                                  ARTICLE 8
                          DISPOSITION OF INTERESTS

8.01  Neither  party (for purposes of this Article  8, the "disposing party')
      shall dispose  of,  sell,  assign or  otherwise  transfer  all  or  any
      portion of its  interest in  this Agreement or  any assets acquired  by
      any  business structure to any third party (other than to affiliates as
      provided  herein) unless  and until  the disposing  party first  offers
      such interest to the other party  (for purposes of this Article 8,  the
      'receiving party")  in writing on  the same terms  and conditions  (and
      encloses with  such offer a copy of the offer received from such party)
      in  all material respects, and the receiving  party either accepts such
      offer or  waives same  in writing.   If  the receiving  party does  not
      accept such  offer or waive  same in writing  within 30  days following
      receipt  of the  offer, the  receiving  party will  be  deemed to  have
      waived same  in writing, and the offering party  shall be free to sell,
      assign or  otherwise transfer such  interest to the third  party on the
      terms contained in such offer (as provided to the receiving party).

8.02  A party hereto  may dispose of  an interest hereunder  as described  in
      Section  8.01 above to an affiliate, PROVIDED  that the written consent
      of the other  party hereto is  first obtained, such consent  not to  be
      unreasonably  withheld,  and  PROVIDED  FURTHER  that  the transferring
      party  shall  guarantee  performance  hereunder  by  the   assignee  or
      transferee  and  such  assignee  or  transferee  executes  an  addendum
      agreement  hereto whereby  such  assignee or  transferee  agrees to  be
      bound by all the terms and provisions hereof.

8.03  For  the  purposes  of  this  Agreement,  "affiliate"  shall  mean  any
      corporation which  controls or  is controlled  by, whether directly  or
      indirectly, either party hereto.

                                  ARTICLE 9 
                              EARLY TERMINATION

9.01  In the event the  Management Committee has been unable for  a period of
      thirty consecutive months or more during the term of this  Agreement to
      agree  to  pursue   any  business  opportunities   (including,  without
      limitation, the failure  to agree to submit a proposal to a prospective
      client)  that otherwise would have been available  to the joint venture
      or any  business structure  due to apparent  irreconcilable differences
      between  the  parties, either  party  may give  written  notice  of its
      intention to terminate this Agreement to the other.

9.02  In the  event either party  gives notice as  provided in  Section 9.01,
      the parties agree to meet within thirty  (30) days thereafter and exert
      all reasonable efforts to resolve the differences.

9.03  If the parties are not able  to resolve the differences within six  (6)
      months following the giving of  notice under Section 9.01, either party
      may terminate this Agreement  by written notice  to the other,  subject
      to  the performance or completion of any  projects or contracts entered
      into  or   undertaken  by   any  business  structure   prior  to   such
      termination.
                                 ARTICLE 10
                                   DEFAULT

10.01 In  the  event that  either  party fails,  for  any  reason within  its
      reasonable  control,  to  meet  any  of  its  obligations  under   this
      Agreement or in connection with any business  structure or project, the
      other  party may give  written notice to  the defaulting  party of such
      default.

l0.02 If the  defaulting party does  not cure any such  default within thirty
      (30) days following  the giving of notice as provided in Section 10.01,
      then, until  such default  is cured,  the  other party  shall have  the
      following rights:

      (a)  to  name all members of  the Management Committee for the purpose
           of  voting  concerning  the  performance  or  completion  of  any
           projects or  contracts entered into or undertaken by any business
           structure  with  respect to  which  the  defaulting  party  is in
           default.
      (b)  to cure any  such default insofar  as clients or persons  dealing
           with the joint  venture or any business structure  are concerned,
           without prejudice to its  rights against the defaulting party for
           full  indemnification  therefrom (including  interest  at  a rate
           equal  to one (1%)  percent above  the prime rate in  effect from
           time to time during the duration of such default as quoted by The
           Texas Commerce Bank, N.A., Houston).
      (c)  to recover  any and  all monies  (including interest  as provided
           above) out of  the defaulting party's  share of profits from  any
           project or business structure, whether related to the  default or
           otherwise.

10.03 In the event any such default is not cured within ninety (90)  days (or
      such  other time as may be  allowed by the  non-defaulting party in its
      sole discretion) following the giving of notice  as provided in Section
      10.01, the non-defaulting party shall have the  right to terminate this
      Agreement,  without  prejudice  to its  rights  against the  defaulting
      party under this Agreement or otherwise at law.

                                 ARTICLE 11
                               CONFIDENTIALITY

11.01 Neither party  shall be  entitled to  use, publish or  disclose to  any
      third party, other than affiliates,  any information obtained  from the 
      other  party, from  the joint  venture or  any  business  structure, or
      generated by or within the joint venture, or any business  structure or
      any project, without the prior written consent of the other party.

11.02 The  parties  respectively  undertake that  their executives  and other
      personnel,  and   those  of   their  affiliates,   shall  observe   the
      confidentiality provision  set forth herein.   The parties shall,  when
      appropriate, cause  their respective executives  and other personnel to
      execute and deliver  secrecy agreements  to ensure compliance with  the
      confidentiality obligation contained herein.

11.03 This obligation and  restriction shall survive the termination of  this
      Agreement.

                                 ARTICLE 12
               TRANSFER OF TECHNOLOGY/PROPRIETARY INFORMATION

12.01 Technology  and/or  proprietary  information  owned by  a  party  shall
      remain the  sole and exclusive  property of such  party unless sold  or
      otherwise transferred for consideration to any business structure.

12.02 Technology   and/or  proprietary  information  owned  by  any  business
      structure shall not, unless mutually agreed by  the parties, be sold or
      transferred to any third party.

12.03 Technology and/or  proprietary information owned  by the parties shall,
      to the extent possible, be  utilized in the best interests of the joint
      venture.

12.04 Upon request  by  either  party, the  other  party  shall  execute  and
      deliver  a  secrecy  agreement restricting  the  release of  technology
      and/or proprietary information between themselves and/or  third parties
      in connection with the business activities of the joint venture.

12.05 This obligation shall survive the termination of this Agreement.

                                 ARTICLE 13
                           BOOKS AND RECORDS/AUDIT

13.01 The Management Committee  shall cause  proper books and  records to  be
      kept pertaining to all aspects of the business activities of  the joint
      venture.  The same shall  be kept and maintained at  a place or  places
      to be designated  by the Management Committee and shall be available to
      either party  hereto  at  all reasonable  times  for  the  purposes  of
      examination, review and audit.

13.02 The Management  Committee shall  supervise the  preparation of  Federal
      income tax information returns which the joint  venture may be required
      to file, and shall  timely provide sufficient tax  information to  each
      party.

                                 ARTICLE 14
                                 ARBITRATION

14.01 ALL DISPUTES ARISING HEREUNDER  SHALL BE FINALLY SETTLED BY ARBITRATION
      UNDER THE RULES OF  THE SOCIETY OF  MARINE ARBITRATORS BY  ONE OR  MORE
      ARBITRATORS APPOINTED IN  ACCORDANCE WITH SAID RULES.  THE  ARBITRATION
      WELL TAKE  PLACE IN HOUSTON, TEXAS, UNLESS THE  PARTIES OTHERWISE AGREE
      IN  WRITING.  THE AWARD  OF SUCH ARBITRATION SHALL BE  BINDING UPON THE
      PARTIES, WITHOUT APPEAL, WITH RESPECT TO THE  DISPUTES SO SUBMITTED AND
      THE  COSTS OF  SUCH ARBITRATION  INCLUDING  REASONABLE LEGAL  FEES  AND
      EXPENSES.

                                 ARTICLE 15  
                                  INSURANCE
15.01 The Management Committee  shall, from time to  time, take out or  cause
      to  be  taken out  on  behalf  of  the joint  venture  or  any business
      structure,  insurance  with  limits  and  coverage  acceptable  to  the
      Management  Committee,  covering  the  business  activities,  projects,
      contracts, equipment, personnel, or other  assets or liabilities of the
      joint   venture   or  any   business   structure,   including,  without
      limitation, protection against third party liability relating thereto.

                                 ARTICLE 16
                              ENTIRE AGREEMENT

16.01 This  Agreement  supersedes  all prior  correspondence, communications,
      agreements  and  understandings  between  the  parties  respecting  the
      subject matter hereof.

16.02 No amendments, supplements or modifications to this Agreement shall  be
      effective unless in writing and duly executed by both parties hereto.

16.03 INTEC and  RBDC agree that  each of them  shall ensure  that the  joint
      venture and all business structures perform and  comply with the terms,
      conditions and intent of this Agreement.

16.04 This  Agreement shall  be binding  upon the  parties  hereto  and their
      respective successors and permitted assigns.

16.05 This Agreement shall be  governed by and construed  in accordance  with
      the substantive laws of the state of Texas.

                                 ARTICLE 17
                                   NOTICES

17.01 All  correspondence, notices,  demands  or  other communications  which
      under  the  terms  of this  Agreement  are  required  to  be  served or
      delivered  shall  be  in  writing  and  may   be  served  or  delivered
      personally or by facsimile addressed to the parties as follows:

           INTEC Engineering, Inc.
           1600 JFK Boulevard, Ninth Floor
           Houston, Texas 77032

           Attention: Mr. J. Gillespie, Senior Vice President
           Facsimile No. (713)987-3838

           Reading & Bates Development Co.
           901 Threadneedle, Suite 200
           Houston, Texas, 77079

           Attention: D. C. Toalson, President
           Facsimile No. (713) 496-0285

17.02 Either  party may  change its  address  above by  notice to  the  other
      party.

IN  WITNESS WHEREOF each party has executed this  Agreement as of the day and
year first above written.

                  INTEC ENGINEERING, INC.


                  By:                                            

                  Its:                                            

                  READING & BATES DEVELOPMENT Co.

                  By:                                            

                  Its:                                           
June 1, 1996






Reference is  made to  the Joint  Venture Agreement dated  February 22,  1996
between INTEC Engineering, Inc.,  and Reading &  Bates Development Co.  which
established a  joint venture  under the  name of  "Total Offshore  Production
Systems".

The subject  agreement is amended  to include the  attached "EXHIBIT A",  TAX
PARTNERSHIP  PROVISIONS,  retroactive  to  the  original  Agreement  date  of
February 22, 1996.

IN WITNESS WHEREOF,  the parties hereto  have caused this "EXHIBIT  A" to  be
approved and  accepted as  part of the  original Joint  Venture Agreement  by
their duly  authorized representatives in  Houston.  Texas  effective on  the
date first set out above.


                              INTEC ENGINEERING, INC.

                              By:                                    

                              Its:                                   


                              READING & BATES DEVELOPMENT CO.

                              By:                                    

                              Its:                                   


                                 EXHIBIT "A"

Attached to and made  a part of that certain Joint Venture Agreement dated as
of the  22nd day  of February 1996,  between Reading &  Bates Development Co.
and INTEC Engineering, Inc.

                         TAX PARTNERSHIP PROVISIONS

1.    Name.   The  following name shall  be applied  to this  arrangement for
      purposes of  filing of income  tax information  returns: Total Offshore
      Production Services.

2.    Definition.  The following definitions shall apply to this Exhibit:

      a)   Agreement.   The Joint Venture Agreement to which this Exhibit is
           attached.
      b)   Code. The Internal Revenue Code of 1986,  as amended from time to
           time.
      c)   Joint  Operations.   All activities  of  the Venturers  conducted
           pursuant to the Agreement.

3.    Contract  Provisions.  This Exhibit shall supersede contrary provisions
      of the Agreement.

4.    Relationship  of the  Parties.   The rights,  duties, obligations,  and
      liabilities of the parties hereunder shall be several  and not joint or
      collective.    Each party  hereto  shall be  responsible  only  for its
      obligations as  set out in  the Agreement and shall  be liable only for 
      its  share  of  the cost  and  expense of  the Joint  Operations.   The
      parties  recognize   the  Joint   Operations  will   be  considered   a
      partnership for income tax purposes.

5.    Subchapter  K to Apply .  Each party now  having or hereafter acquiring
      an  interest under  the Agreement  agrees not  to  elect for  the Joint
      Operations  of  the parties  to  be excluded  from  the  application of
      Subchapter  K  of Chapter  1  of  Subtitle  A  of  the  Code,  and  all
      amendments thereto or similar provisions of any applicable state laws.

6.    Partnership Returns.   Reading &  Bates Development  Co. shall  prepare
      and file the partnership  tax returns and make  the partnership  income
      tax  elections in such returns.  The parties agree to furnish Reading &
      Bates   Development  Co.  the  information  necessary  for  the  proper
      preparation of these  returns.   In preparing such  returns, Reading  &
      Bates  Development Co. shall use  its best efforts,  but shall incur no
      liability to the parties with regard to such returns.

7.    Tax Matters Return, Reading  & Bates Development Co.  shall be  treated
      as the Tax  Matters Partner for purposes of Section 6231 (a) (7) of the
      Code.   Reading &  Bates Development  Co. shall  promptly inform  other
      parties of  all matters coming to  its attention in its capacity as Tax
      Matters Partner and  shall not  take any action  permitted by  Sections
      6222 through 6232  of the Code without  first giving notice thereof  to
      all other parties.

8.    Allocation of  Income, Deductions and Credits - The  parties agree that
      for income tax purposes all terms  of income, gain, deduction, loss and
      credits shall be allocated among the parties as follows:

      a)   Gross income from the Joint Operations of the Joint venture shall
           be  allocated among the parties in the  ratio in which they share
           in the proceeds as provided in the Agreement.

      b)   Deductions for intangible drilling and development costs, if any,
           shall be allocated among  the parties in the ratio  in which they
           have contributed to such costs.
      c)   Deductions for costs of  the Joint Operations shall be  allocated
           among  the parties in the ratio in which they have contributed to
           such costs.
      d)   Depreciation  on  equipment   (and  investment  tax   credit,  if
           applicable, on equipment) shall be allocated among the parties in
           the ratio in which they have contributed to the adjusted basis of
           such equipment.
      e)   Deductions  related   to  any   item  of   cost  in   excess   of
           thecontributions made  by the parties toward the  payment of such
           cost shall be  allocated in the  ratio of the obligations  of the
           parties to pay the remaining cost of such item.
      f)   Gains from each  sale or other  disposition of property shall  be
           allocated to  each party  whose share of  the proceeds from  such
           sale  or  other  disposition  exceeds  its  contribution  to  the
           adjusted basis of the property (as adjusted for the party's share
           of depreciation, depletion,  amortization or other adjustments to
           basis) in the proportion that such excess bears to the sum of the
           excesses of all parties having such an excess.
      g)   Losses from  each  sale,  abandonment  or  other  disposition  of
           property shall  be allocated to each  party whose contribution to
           the  adjusted basis of the  property (as adjusted for the party's
           share   of   depreciation,   depletion,  amortization   or  other
           adjustments to basis) exceeds its share of the proceeds from such
           sale,  abandonment or  other disposition  in the  proportion that
           such  excess bears  to the  sum  of the  excesses of  all parties
           having such an excess.
      h)   Within  the limits of the  overall allocation of gain or proceeds 
           hereunder, gain treated as ordinary income by reason of  Sections
           1245,  1250, or  1254  of the  Code,  shall be  allocated  to the
           parties in the  ratio in which  the deductions resulting in  such
           ordinary income were previously allocated to them.
      i)   Each other  item of income, gain, loss, deduction or credit shall
           be allocated to each party on the basis of and in accordance with
           its interest in or its contribution to such item.

9.    Allocation  in Event of  Transfer.   Should there  be a  transfer of an
      interest  covered by  the Agreement,  income,  and deductions  shall be
      allocated  between the transferor and transferee based  upon the actual
      income and deductions before and after the  date of transfer unless the
      transferor,  transferee, and  the non-transferring joint  venture party
      agree to an allocation in a pro rata manner for the taxable year.

10.    Maintenance

      a)   A Capital  Account shall  be established  for each  party  hereto
           which shall  be credited  with the  amount of  cash and  the fair
           market value of property  contributed to the Joint Operations  by
           such  party  (net  of  liabilities  assumed  by the  parties  and
           liabilities to which such contributed  property is subject), such
           party's  distributive share  of income  (including  income exempt
           from tax) and gain (or  item thereof), and which shall be charged
           with  the cash and the  fair market value of property distributed
           to  such  party  (net of  liabilities  assume  by such  party and
           liabilities to which such distributed  property is subject), such
           party's  distributive  share  of  loss  and  deduction  (or  item
           thereof),  and such  party's distributive  share of  expenditures
           which are  neither deducible  nor chargeable  to capital,  all as
           determined for  Federal  income  tax  purposes  pursuant  to  the
           allocation provisions of this  Exhibit and consistently with  the
           requirements of regulations under Section 704(b) of the Code.
      b)   Contributed  Properties.    Depreciation,  depletion and  gain or
           loss with respect  to assets contributed to  the Joint operations
           shall be  based  upon the  fair  market  values at  the  time  of
           contribution  and shall  be allocated to the  Capital Accounts in
           accordance with each party's share of such values and interest in
           the proceeds  thereof even  though such  items as  determined for
           income tax purposes are allocated differently so as to eliminate,
           to the extent possible, the disparity between the  adjusted basis
           and the fair market value.
      c)   Distribution in  Kind.  Immediately prior  to any distribution of
           assets in  kind the  Capital Accounts shall  be adjusted for  the
           gain  or loss  which  would be  allocable  to each  party upon  a
           disposition of such assets for fair market value.
      d)   Fair Market Value.  Fair market value for purposes of adjustments
           to Capital  Accounts shall be reasonably  determined by Reading &
           Bates Development Co. Reading  & Bates Development  Co. shall  be
           entitled  to   base  such   value  on  the   price  paid  for   a
           contemporaneous transfer of an interest in the property.  Reading
           &  Bates Development Co. shall  be entitled to value equipment in
           accordance  with the  accounting procedures  as  provided in  the
           Agreement.  Reading &  Bates Development  Co.'s determination  of
           fair  market  value shall  be conclusively  binding as  among the
           parties.
      e)   Deemed Termination.  Upon a deemed termination and reformation of
           the  Joint Operations  as a  partnership for  Federal  income tax
           purposes under Section 708 (b) (1) (13) of  the Code, the Capital
           Accounts for  each party shall be adjusted for each party's share
           of the gain that  would result if all  assets were sold  for fair
           market  value.  Any party  having a deficit balance shall satisfy
           such deficit  by contribution of  cash on or before  the later of
           the end of the taxable year of  the Joint Operations in which the 
           deemed   termination  occurs   or  90   days  after   the  deemed
           termination, such payment  to be credited  to the account of  the
           party under the  Agreement as an  advance payment of costs.   All
           assets, subject  to liabilities  ' shall be  deemed to have  been
           distributed to  the  parties in  the ratio  of  positive  Capital
           Accounts and  recontributed to  the continuing  Joint  operations
           under all  terms of the Agreement, which shall continue in effect
           without  modification.    New  Capital  Accounts  shall  then  be
           established for the parties and  their successors based upon  the
           fair  market value  of  the assets  deemed recontributed  to  the
           continuing Joint operations.

      11.  Sharing of Proceeds.  Proceeds from disposition of properties and
           equipment   (including   simulated   proceeds   from   a   deemed
           disposition)  shall be shared in  the ratio in  which the cost of
           such properties and equipment was charged up to the amount deemed
           undepreciated and undepleted cost  as determined for purposes  of
           the  Capital  Accounts and  any excess  (along  with  the related
           proceeds from any disposition of  properties and equipment) shall
           be  shared  in  the ratio  in  which  joint venture  revenues are
           shared.

      12.  Adjustments upon Termination.  Upon an actual termination  of the
           Agreement or  upon the effectiveness of an election for the Joint
           Operations to be excluded  from Subchapter K of Chapter  I of the
           Code (permitted only with the consent of all parries) :

           a)     The  Capital Accounts  shall be  adjusted  for the  gain or
                  loss which would be allocable  to each party from a sale of
                  all assets  at fair  market value,  determined in the  same
                  manner as  provided in  the provisions  hereof relating  to
                  Capital Accounts;
           b)     Any party  having a  deficit balance Capital  Account shall
                  satisfy   such   deficit  by   contribution  of   cash  for
                  distribution  to the  other parties on  or before the later
                  of the end of the  taxable year of the Joint operations  or
                  90 days after termination;
           c)     If  the credit balances of all Capital  Accounts are in the
                  same  ratio  as the  ratio  in which  assets  of  the Joint
                  Operations  are  then  owned,  no  adjustment  in ownership
                  shall be required:
           d)     otherwise, if (c)  does not apply, each party whose Capital
                  Account balance is less than  the fair market value of this
                  ownership  interest  in assets  of  the  Joint  Operations,
                  after  giving  effect  to  (a)  if  applicable,  shall  (i)
                  contribute cash  to the  Joint Operations for  distribution
                  to other parties in  an amount sufficient to eliminate such
                  deficiency, (ii) assign to other parties  particular assets
                  of  the  Joint  Operations otherwise  owned  by  such party
                  having a  fair market  value sufficient  to eliminate  such
                  deficiency,  of (iii) assign to  other parties an undivided
                  portion of  all assets  of the  Joint Operations  otherwise
                  owned by such party  having a fair market value  sufficient
                  to eliminate such deficiency;
           e)     If (d) applies and a  party with a deficiency has  not made
                  payment or  assignments under  (i) or (ii)  within 60  days
                  after  notice  of  such  deficiency  by  Reading   &  Bates
                  Development Co., option (iii) shall apply; and
           f)     All  assignments  made  or  required  under this  paragraph
                  shall be  in recordable form by  special warranty,  free of
                  all  liability,  claims  and  encumbrances  created  by the
                  assigning party.