EXHIBIT 10.104


                            FIRST PREFERRED MORTGAGE


                             Dated November 28, 1995

 
                         READING & BATES EXPLORATION CO.

                                 - in favor of -


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


                                  D.R. STEWART 

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                                     INDEX

  CLAUSE                SUBJECT MATTERPAGE

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

             ACKNOWLEDGEMENT OF MORTGAGE

             EXHIBIT 1 FORM OF CREDIT AGREEMENT (FILED AS EXHIBIT 10.101 TO
                THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1995

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  THIS FIRST PREFERRED MORTGAGE (this "Mortgage") is  made on the 28th day of
  November, 1995

  BY

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

  IN FAVOR OF

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

  WHEREAS

  (A)     The Owner  is the sole owner  of the whole  of the semi-submersible
          drilling  unit D.R. STEWART  documented under the laws  and flag of
          the  United States of America with Official Number D626904 of 6,494
          gross registered tons and 5,834 net registered tons.

  (B)     By  a Credit Facility Agreement dated  as of November 16, 1995 (the
          "Credit Agreement") and made by and among (i) the Owner and Reading
          & Bates Drilling Co., an Oklahoma  corporation ("R&B Drilling"), as
          joint and several borrowers  (collectively, the "Borrowers"),  (ii)
          Reading &  Bates Corporation, a Delaware  corporation, as guarantor
          (hereinafter called the "Guarantor" and together with the Borrowers
          collectively  called the  "Companies",  and  individually called  a
          "Company"), (iii)  the Lenders (as hereinafter  defined), acting as
          lenders and  (iv) Christiania  Bank og Kreditkasse,  acting through
          its New York  branch, as agent for  the Lenders (the "Agent")  (the
          form  of which Credit Agreement together with Exhibit A thereto but
          without the remaining attachments is attached hereto as Exhibit 1),
          it  was agreed  among  other things  that  the Lenders  would  make
          available to  the Borrowers upon  the terms and  conditions therein
          described (i) a reducing  revolving credit facility in the original
          principal  amount  of  Forty-Five  Million  United  States  Dollars
          (US$45,000,000)  (the  "Revolving  Credit  Facility")  and  (ii)  a
          standby letter  of credit facility  in an aggregate  amount not  to
          exceed   Ten  Million  United  States  Dollars  (US$10,000,000)(the
          "Standby Letter of Credit Facility").

  (C)     Pursuant to  the said Credit  Agreement the Lenders  have made  the
          Revolving Credit Facility available to the Borrowers upon the terms
          and conditions  described in the  Credit Agreement in  the original
          principal amount  of US$45,000,000.  The  Revolving Credit Facility
          and  interest, fees  and  commissions thereon  is  to be  paid  and
          repaid,  as the case  may be, as provided  in the Credit Agreement.
          The Revolving  Credit Facility is evidenced by a secured promissory
          note (the  "Note") (the form of  which is attached as  Exhibit A to
          the Credit Agreement).  

  (D)     Pursuant to  the said Credit  Agreement the Lenders  have made  the
          Standby  Letter of Credit Facility available to the Borrowers in an
          aggregate amount  not to exceed  US$10,000,000.  The  Borrowers are
          obligated, jointly  and severally,  to reimburse all  amounts drawn
          under  the  Standby Letters  of  Credit (as  defined in  the Credit
          Agreement)  issued by the Lenders pursuant to the Standby Letter of
          Credit  Facility, and  to  pay all  interest  and fees  thereon  as
          provided in the Credit Agreement.

  (E)     The Owner, in  order to  secure the repayment  of the Advances  (as
          defined in the Credit  Agreement), the Unpaid Drawings (as  defined
          in the Credit Agreement), interest thereon and fees and commissions
          payable under  the Credit  Agreement,  the Note  and  the  Security
          Documents  (as  hereinafter  defined)   and  the  performance   and
          observance of and  compliance with all of the covenants,  terms and
          conditions  contained in  this  Mortgage, has  duly  authorized the
          execution and delivery  of this First Preferred  Mortgage under and
          pursuant  to the United States Ship Mortgage Act, 1920, as amended,
          recodified at 46 U.S.C.  31301, et. seq. (the "Ship Mortgage Act"),
          which is entered into by  the Owner in consideration of the Lenders
          agreeing, at the request of the Owner, to make the Revolving Credit
          Facility and the Standby Letter of Credit Facility available to the
          Borrowers  under  the terms  of  the  Credit  Agreement  and  as  a
          condition  thereto and  for other  good and  valuable consideration
          provided  by the Lenders (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:-

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

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

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

          "Credit  Agreement" means the  agreement dated  as of  November 16,
          1995 and made  among the Borrowers, the Guarantor, the  Lenders and
          the Agent first referred to in Recital (B) hereto;

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

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

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

          "Environmental Claim"  means (i) any  claim by, or  directive from,
          any applicable governmental, judicial or other regulatory authority
          alleging breach of, or  non-compliance with, any Environmental Laws
          or Environmental  Approvals or  otherwise howsoever relating  to or
          arising out of  an Environmental Incident or (ii)  any claim by any
          other  third party  howsoever  relating to  or  arising out  of  an
          Environmental  Incident (and, in each such case, "claim" shall mean
          for  damages,  cleanup   costs,  compliance,  remedial   action  or
          otherwise);

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

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

          "Environmentally Sensitive  Material" shall include, but  shall not
          be  limited to, any petroleum or petroleum products, natural gases,
          explosives, radioactive materials,  hazardous materials,  hazardous
          wastes,  hazardous  or  toxic  substances   or  related  materials,
          asbestos  or any  material  containing asbestos  or  any substances
          which are  hazardous by virtue of  the manner of their  use, or any
          activity involving any  of the foregoing or any other  substance or
          material  or activity defined as hazardous in words or substance by
          any  present or future  Federal, state or  local environmental law, 
          ordinance,  rule,  regulation  or  rule  of common  law  including,
          without limitation, the Environmental Laws;

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

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

          "Lender"  means any  Lender  listed in  Schedule  1 to  the  Credit
          Agreement as the same may be amended from time to time and each  of
          their successors and assigns (collectively, the "Lenders");

          "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 the  promissory  note of  the  Owner referred  to  in
          Recital (C) hereto;

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

          "Other Rig" means the jack-up drilling unit JACK BATES owned by R&B
          Drilling  documented under the  laws and flag of  the United States
          with  Official Number D906283  of 19,928 gross  registered tons and
          14,948 net registered tons;

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

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

          "Requisition  Compensation" means all moneys  or other compensation
          payable during the Credit Facility Period by reason of  requisition
          for title or other compulsory acquisition of the Rig otherwise than
          by requisition for hire;

          "Rig" means the vessel 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 Indebtedness" means the aggregate of (a) the Advances, the
          Unpaid  Drawings and  interest, fees  and commissions  thereon (and
          interest on  any unpaid interest thereon  and on any  other sums of
          money  on which interest  is stated  in the Credit  Agreement to be
          payable),  (b) 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 Indenture Trustee (or  in respect of  which the Owner
          agrees in this Mortgage to indemnify the Indenture Trustee) whether
          actually or contingently, presently  or in the future together with
          interest thereon  as provided in  this Mortgage and  (c) all  other
          sums of money from time to time  owing to the Agent and the Lenders
          under the Credit  Agreement, the Security Documents or any  of them
          whether actually or contingently, presently or in the future;

          "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;

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

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

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

          "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 Indenture 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 save as constituted by 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 Secured  Indebtedness 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 relative  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 throughout
                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)   all applicable Environmental Laws and Environmental Approvals
                relating to  the Rig,  its operation  and management and  the
                business of  the Owner  (as now  conducted and  as reasonably
                anticipated to be conducted in the future) have been 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 Advance
          and at the time of the  issuance of each Standby 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 payment of  the Secured Indebtedness and to
          secure the  performance and observance  of and compliance  with the
          covenants, terms  and conditions  contained in  this Mortgage,  the
          Credit Agreement,  the Note and  the Security Documents,  the Owner
          has  granted, conveyed  and  mortgaged and  does by  these presents
          grant,  convey  and  mortgage  unto   the  Indenture  Trustee,  its
          successors and assigns,  the whole of the  Rig TO HAVE AND  TO HOLD
          the  same unto the  Indenture Trustee,  its successors  and assigns
          forever upon the  terms herein set forth for the enforcement of the
          payment of the Secured  Indebtedness and to secure the  performance
          and observance  of, and compliance  with, the covenants,  terms and
          conditions contained in  this Mortgage,  the Credit Agreement,  the
          Note and the Security Documents.

          Provided only and  the condition of these presents  is such that if
          the Owner or  its successors and assigns  shall pay or cause  to be
          repaid in  full to  the Indenture  Trustee, the  Lenders and  their
          respective successors or  assigns the  Secured Indebtedness as  and
          when the same shall  become due and payable in accordance  with the
          terms of the Credit Agreement, the Note, the Security Documents and
          this Mortgage  and shall  observe and  comply with  the  covenants,
          terms and conditions  contained in the Credit Agreement,  the Note,
          the Security Documents 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 by accepting this Mortgage
          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 neither  the Indenture
          Trustee, nor  the Agent, nor any of the  Lenders 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  Indenture Trustee, the  Agent
          and the Lenders:-

          (a)   to pay and indemnify the Indenture Trustee, the Agent and the
                Lenders 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 Indenture  Trustee, the Agent  or the
                Lenders (or  in respect  of which  the Owner  agrees in  this
                Mortgage to indemnify the Indenture Trustee, the Agent or the
                Lenders)  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
                the Indenture  Trustee, the Agent or the Lenders, 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 the  Indenture Trustee,  the Agent  or the
                Lenders 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 the  Indenture Trustee, the Agent or the  Lenders
                as  the  case  may  be,  under this  Mortgage  and  the other
                Security 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
                Indenture Trustee as a continuing security for the payment of
                the Secured  Indebtedness and  that the  security so  created
                shall  not  be  satisfied  by  any  intermediate  payment  or
                satisfaction of any part of the Secured Indebtedness;

          (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 Indenture Trustee shall not have to wait for the Agent or
                the Lenders 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 Indenture 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  Indenture  Trustee   may  deem
                expedient; and

          (e)   any waiver  by the  Indenture Trustee  of any  terms of  this
                Mortgage or any consent given by the  Indenture 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
          Indenture  Trustee  and  the  Owner shall  be  conditional  upon no
          security  or payment  to the Indenture  Trustee, the Agent,  or the
          Lenders or any of  them by the Companies 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  Indenture 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  Indenture Trustee  and the  Lenders 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 Companies, the
          Indenture Trustee, the Lenders or any other person:-

          (a)   any time  or waiver  granted to  the Companies  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 Companies  or  any other
                persons; or

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

          (d)   any amendment or  supplement to the Credit  Agreement, any of
                the other Security  Documents (other  than this Mortgage)  or
                any other document or security; or

          (e)   the dissolution, liquidation, amalgamation, reconstruction or
                reorganization of any of  the Companies or any  other person;
                or

          (f)   the  unenforceability,  invalidity  or   frustration  of  any
                obligations of any of the Companies or any other person under
                the Credit  Agreement, any  of the  other Security  Documents
                (other than this Mortgage) or any other document or security.

  5.04    Until  the  Secured   Indebtedness  has  been  unconditionally  and
          irrevocably paid  and discharged in full to the satisfaction of the
          Indenture  Trustee, the  Owner shall not  by virtue of  any payment
          made hereunder  on account of the Secured Indebtedness or by virtue
          of any enforcement by the Indenture 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 the
          Guarantor  (whether   such  relationship   or   transaction   shall
          constitute the  Owner a creditor  of the Guarantor, a  guarantor of
          the obligations  of  the Guarantor  or  a party  subrogated to  the
          rights of others against  the Guarantor 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
                Indenture Trustee or the Lenders 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 guarantee, security or agreement; or

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

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

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

          The  Owner  shall  hold  in  trust for  the  Indenture  Trustee and
          forthwith pay or transfer (as appropriate) to the Indenture 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  guarantee
          (whether by reason  of legal limitation, illegality,  disability or
          incapacity on or of the Guarantor  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, the Guarantor, the Indenture
          Trustee or  any other person),  then the Owner will,  as a separate
          and independent  stipulation and as  a primary obligor, pay  to the
          Indenture 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
          Indenture  Trustee  against  any  loss  or  liability  suffered  or
          incurred by the Indenture Trustee and the Lenders or any of them as
          a result of such irrecoverability.

  6.      INSURANCE

  6.01    The  Owner  covenants  with the  Indenture  Trustee  throughout the
          Credit Facility Period that:-

          (a)   The Owner shall, at its own expense, when and so  long as the
                Secured Indebtedness shall be outstanding, insure the Rig and
                keep her insured,  or cause the Rig to be  insured, in lawful
                money of the United  States, in such amounts, for such  risks
                (including  without limitation, hull  and machinery/increased
                value, protection  and indemnity risks,  pollution liability,
                and war risks),  in such form (including  without limitation,
                the form  of the loss  payable clause and the  designation of
                named   assureds)  and   with  such  first   class  insurance
                companies, underwriters, funds, mutual insurance associations
                or clubs, as shall  be reasonably satisfactory to  the Agent. 
                With respect to hull and machinery/increased value insurance,
                including war risk, the  Owner shall insure the Rig and  keep
                her insured,  or cause the Rig  to be insured,  for an amount
                which is at  least the full commercial  value of the  Rig and
                when  such  amount is  aggregated  with  the amount  of  such
                insurance coverage  on the  Other Rig  such aggregate  amount
                shall  be at least 110% of the aggregate amount of the Credit
                Facility.  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 Norwegian,
                American and British insurance markets or in such other major
                international  markets reasonably  acceptable  to  the Agent.
                The  Owner  shall  maintain,  or   cause  to  be  maintained,
                protection and  indemnity or equivalent  insurance, including
                war  risk  protection  and  indemnity  coverage  and coverage
                against  pollution  liability,  in an  amount  not  less than
                US$100,000,000  (or,  with  respect  to  pollution  liability
                coverage, such greater amount as may be required from time to
                time by the  Oil Pollution Act  1990, or other  Environmental
                Laws, as and when  applicable to the Rig and its  operations,
                through underwriters or associations acceptable to the Agent.
                In addition,  the Owner shall, at its own expense, furnish to
                the  Agent a  mortgagee's  single  interest policy  providing
                coverage which, when aggregated with the mortgagee's interest
                insurance furnished to the  Agent by the Owner in respect  of
                the Other Rig, shall be in  an amount equal to at least  110%
                of the aggregate amount of the Credit Facility (or in lieu of
                such  mortgagee's interest  insurance  Owner shall  cause the
                hull and machinery/increased value  insurance to be  endorsed
                to afford  breach of warranty coverage for the benefit of the
                Agent).     Such  mortgagee's  interest   insurance  and  any
                additional insurance policies  for the  benefit of the  Agent
                shall be  maintained in  the broadest form  available in  the
                American, British  and Scandinavian  markets or  other  major
                international  markets   acceptable  to  the   Agent  through
                underwriters  acceptable to  the Agent.   The  Rig shall  not
                operate in  or proceed into any area then excluded by trading
                warranties under its  marine or war risk  policies (including
                protection  and indemnity)  without  obtaining  any necessary
                additional coverage, satisfactory in form and substance,  and
                evidence of which shall be furnished, to the Agent.

          (b)   The policy  or  policies  of  insurance shall  be  issued  by
                responsible underwriters reasonably acceptable to the  Agent,
                shall  contain conditions,  terms, stipulations  and insuring
                covenants  satisfactory to  the Agent, and  shall be  kept in
                full force  and effect by  the Owner so long  as the Security
                Documents and the Secured  Indebtedness shall be outstanding.
                All  such  policies,  binders  and  other  interim  insurance 
                contracts  shall be  executed and issued  in the name  of the
                Owner and  shall, to the extent required herein, provide that
                loss  be  payable to  the  Agent for  distribution  by it  to
                itself,  the Lenders  and the  Owner as  their interests  may
                appear, and shall provide for at least ten days' prior notice
                to be given to  the Agent by the underwriters or  association
                in the event of  cancellation or the failure of the  Owner to
                pay any premium  or call which  would suspend coverage  under
                the policy or  the payment of a claim  thereunder.  The Agent
                and  the Indenture Trustee  shall be named  as co-assureds on
                all  such  policies  and  insurance  contracts,  but  without
                liability of the Agent  or the Indenture Trustee for premiums
                or calls.  Certified copies of all such policies, binders and
                other interim insurance contracts shall be deposited with the
                Agent.   Originals shall also be provided upon the request of
                the Agent.  The Owner shall  furnish to the Agent annually  a
                detailed report signed by a  firm of marine insurance brokers
                satisfactory  to the Agent as to  the insurance maintained in
                respect of the Rig,  as to their  opinion as to the  adequacy
                thereof  and as  to compliance  with  the provisions  of this
                Clause 6.01.

                Unless  otherwise  required  by the  Agent by  notice  to the
                underwriters, although the following  insurance is payable to
                the Agent, (i)  any loss under any insurance  on the Rig with
                respect  to  protection  and  indemnity  risks  may  be  paid
                directly to the Owner to reimburse it for any loss, damage or
                expense incurred  by it and  covered by such insurance  or to
                the person to  whom any liability  covered by such  insurance
                has been  incurred and (ii)  in the case  of any loss  (other
                than a  loss covered  by (i) above  or by the  next following
                paragraph of this  Clause 6.01(b))  under any insurance  with
                respect to  the  Rig involving  any  damage to  the Rig,  the
                underwriters may pay direct  for the repair, salvage or other
                charges involved  or, if  the Owner  shall have  first  fully
                repaired the  damage  or paid  all  of the  salvage or  other
                charges,  may  pay  the  Owner  as  reimbursement   therefor;
                provided, however,  that if  such  damage involves  a  before
                deductible loss in  excess of US$1,000,000, the  underwriters
                shall  not  make  such payment  without  first  obtaining the
                written consent thereto of the Agent (which consent shall not
                be  unreasonably  withheld).    Any   loss  covered  by  this
                paragraph  which is  paid to the  Agent but which  might have
                been  paid,  in  accordance  with   the  provisions  of  this
                paragraph, directly  to the Owner or others, shall be paid by
                the  Agent to,  or as  directed by,  the Owner and  all other
                payments to  the Agent  of losses  covered by this  paragraph
                shall  be applied  by  the Agent  in  accordance  with Clause
                10.01.

                In the event  of an actual  or constructive total  loss or  a
                compromised constructive total loss  or requisition of title,
                all insurance payments therefor  shall be paid to  the Agent.

                The  Owner shall not  declare or agree  with the underwriters
                that  the Rig  is a  constructive  or compromised,  agreed or
                arranged constructive total  loss without  the prior  written
                consent of the Agent.

          (c)   In the  event of an actual or constructive  total loss of the
                Rig, the  Agent shall  retain out  of the  insurance payments
                received  on account of such loss  any sum or sums that shall
                be or  become owing to  the Indenture Trustee, the  Agent and
                the Lenders 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 in Clause 10 provided.

          (d)   The Owner shall comply with and satisfy all of the provisions
                of  any  applicable law,  regulation,  proclamation or  order
                concerning  financial responsibility for  liabilities imposed
                on  the Owner  or  the Rig  with respect  to the  carriage of
                passengers  or pollution, and  will maintain, or  cause to be
                maintained, all  certificates or other  evidence of financial
                responsibility  as  may   be  required   by  any  such   law,
                regulation, proclamation or  order with respect to  the trade
                which the Rig from time to time is engaged in.

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

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

          (g)   The Owner shall arrange for the execution  of such guarantees
                as may from  time to time be  required by any  protection and
                indemnity or war risks association.

          (h)   The Owner shall  not employ the Rig  or suffer the Rig  to be
                employed otherwise  than in conformity with the  terms of the
                instruments  of  insurance  aforesaid  relative  to  the  Rig
                (including  any  warranties,  express  or  implied,  therein)
                without first obtaining the  consent of the insurers  to such
                employment and complying  with such requirements as  to extra
                premium or otherwise as the insurers may prescribe.

  7.      RIG COVENANTS

  7.01    The Owner covenants with the Indenture 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 Indenture
                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) 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
                Indenture  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 Indenture 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 Indenture Trustee copies of all survey reports
                issued in respect thereof;

          (g)   permit  the  representatives  of  the  Agent  or  independent
                surveyors representing the Indenture Trustee to board the Rig
                at all reasonable  times and upon  reasonable notice for  the
                purpose of  inspecting her  condition or  for the  purpose of
                satisfying themselves  in  regard  to  proposed  or  executed
                repairs  and  to  afford  all   proper  facilities  for  such
                inspections; 

          (h)   promptly pay and discharge all debts, damages and liabilities
                whatsoever which have given  or may give rise to maritime  or
                possessory liens (other  than Permitted  Liens) on or  claims
                enforceable  against  the  Rig and  all  tolls,  dues, taxes,
                assessments,   governmental  charges,  fines   and  penalties
                lawfully charged on  or in respect of  the Rig and all  other
                outgoings whatsoever in respect  of the Rig and in the  event
                of arrest  of the Rig  pursuant to legal  process, or in  the
                event  of her detention in exercise  or purported exercise of
                any such lien or  claim as aforesaid, procure the release  of
                the  Rig  from  such  arrest   or  detention  forthwith  upon
                receiving notice thereof  by providing  bail or otherwise  as
                the circumstances may require; 

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

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

          (k)   notify both the Indenture Trustee and the Agent forthwith  by
                telex or telecopy thereafter confirmed by letter of:-

                (i) any casualty  to the Rig which is  or is likely to  be a
                    Major Casualty, and

                (ii)   any  occurrence in  consequence  whereof the  Rig has
                       become or is,  by the  passing of time  or otherwise,
                       likely to become a Total Loss, and

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

                (iv)   any  arrest of the  Rig or the exercise  or purported
                       exercise of any lien on the Rig or any requisition of
                       the Rig for hire, and 

                (v) any  intended dry  docking of  the Rig, as to  which the
                    Owner shall  give the  Indenture 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 Indenture Trustee;

          (l)   keep proper books of account in respect of the Rig and as and
                when the Indenture  Trustee or  the Agent  may so  reasonably
                require make such books available for inspection on behalf of
                the Indenture 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)   (i) observe the obligations  contained in  Clause 12  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; and

                (ii)   not  without  the  previous written  consent  of  the
                       Indenture Trustee  de-activate  or  lay  up  the  Rig
                       (other than for  normal periods of inactivity between
                       contracts for the  Rig during  which periods  the Rig
                       remains manned);

          (n)   not without the previous consent in  writing of the Indenture
                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  One  Million  Five  Hundred  Thousand  United  States
                Dollars  (US$1,500,000)  (or  the  equivalent  in  any  other
                currency)  unless such person  shall first have  given to the
                Indenture 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 Indenture Trustee from
                time to  time such proof as the Indenture 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  Indenture Trustee  on demand  and to  place and  keep
                prominently displayed  in the chart room and  in the master's
                cabin  of the Rig  a framed printed  notice in  plain type in
                English of  such size  that the  paragraph of  reading matter
                shall cover a space not less  than 6 inches wide and 9 inches
                high reading as follows:-

                                           NOTICE OF MORTGAGE

                This  Rig  is  covered  by  a  First  Preferred  Mortgage  to
                WILMINGTON TRUST COMPANY  not in its individual  capacity but
                solely as  Indenture Trustee for  the Lenders 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 Indenture 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
                       Indenture Trustee advised, in writing on such regular
                       basis and  in such  detail as  the Indenture  Trustee
                       shall  require,  of  the  Owner's  response  to  such
                       Environmental Claim or Environmental Incident;

          (s)   not sell, mortgage,  transfer or change the  port of registry
                of the  Rig without  the  written consent  of  the  Indenture
                Trustee having  first been  obtained,  and any  such  written
                consent to any  one such sale, mortgage, transfer,  or change
                shall not be construed to  be a waiver of this provision with
                respect to  any subsequent proposed  sale, mortgage, transfer
                or  change.   Any such  sale, mortgage,  transfer, or  change
                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 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, or call at  a Cuban port to  load or
                discharge cargo or to effect repairs on 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  Indenture Trustee shall without  prejudice to its other rights
          and powers  under this Mortgage and the other Security 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
          Security 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  Indenture Trustee, the Agent or  the Lenders in or
          about the protection  or maintenance of the  said security together
          with  interest  payable  thereon  under  Clause  4.01(b)  shall  be
          repayable to it by the Owner on demand. 

  8.02    Without prejudice to the generality of Clause 8.01:-

          (a)   if the  Owner does not comply with the provisions of Clause 6
                or any of them the Agent shall be entitled (but not bound) to
                effect or to replace and renew and thereafter to maintain the
                Insurances in such manner  as in its discretion it may  think
                fit and  to require  that all  policies, contracts  and other
                records relating to the Insurances  (including details of any
                correspondence  concerning outstanding  claims) be  forthwith
                delivered to  such brokers as  the Agent may nominate  and to
                collect, recover, compromise  and give  a good discharge  for
                all claims then  outstanding or thereafter arising  under the
                Insurances or any of them  and to take over or institute  (if
                necessary using  the name of the Owner)  all such proceedings
                in  connection  therewith  as  the   Agent  in  its  absolute
                discretion may  think fit and  to permit the  brokers through
                whom the collection  or recovery  is effected  to charge  the
                usual brokerage therefor; and

          (b)   if the  Owner does not  comply with the provisions  of Clause
                7.01(d) and/or 7.01(f)  or any of them  the Indenture 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  Indenture  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 Majority
          Lenders  having served on the Owner  any such notice as is referred
          to in Clause 11  of the Credit Agreement) the security  constituted
          by  this  Mortgage  shall become  immediately  enforceable  and the
          Indenture 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 Indenture  Trustee without  legal
                process and without  liability of  the Indenture Trustee  for
                any losses or damages incurred thereby and without  having to
                render accounts to the Owner in connection therewith;

          (c)   to  require that  all  policies,  contracts, certificates  of
                entry and other records relating to the Insurances (including
                details of and  correspondence concerning outstanding claims)
                be forthwith delivered to or to the order of the Agent;

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

          (e)   to take over or institute (if necessary using the name of the
                Owner) or,  to the extent lawful, procure that the Agent take
                over or institute all such proceedings in connection with the
                Rig, the Insurances,  or any Requisition Compensation  as the
                Indenture 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
                Indenture 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 Secured Indebtedness;

          (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 Indenture  Trustee in
                its absolute discretion deems expedient  and for the purposes
                aforesaid the Indenture 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 Indenture  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  Indenture Trustee in or
                about  the exercise  of  the power  vested  in  the Indenture
                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 Indenture Trustee
                in or about or incidental to the exercise by it of any of the
                powers aforesaid.

  9.02    The Indenture 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  Indenture  Trustee by  this
          Mortgage  or to  which the  Indenture  Trustee may  at any  time be
          entitled hereunder.

  9.03    Neither  the Indenture Trustee,  the Agent,  the Lenders  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 Indenture  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  Indenture
          Trustee the purchaser shall not  be bound to see or enquire whether
          the Indenture  Trustee's power  of sale  has arisen  in the  manner
          provided in this Mortgage and the sale shall be deemed to be within
          the power of the Indenture Trustee and the receipt of the Indenture
          Trustee for  the purchase  money  shall effectively  discharge  the
          purchaser who shall not be concerned with the manner of application
          of the proceeds of sale or be in any way answerable therefor.

  10.     APPLICATION OF MONEYS

  10.01   All moneys  received by the Indenture Trustee (or the Agent, as the
          case may be):-

          (a)   in respect of sale of the Rig or any part thereof;

          (b)   in respect of recovery under the Insurances;

          (c)   in respect of Requisition Compensation, 

          shall  be held and applied  in the first place  to pay or make good
          all  such  expenses,  liabilities,  losses,  costs,  duties,  fees,
          charges or other moneys whatsoever  (together with interest payable
          thereon under  Clause 4.01(b)) as may have been paid or incurred by
          the Indenture Trustee or the Agent in or about or incidental to the
          exercise  by  the Indenture  Trustee  or the  Agent  of the  powers
          specified or otherwise referred to in Clauses 8 and 9.01 (or any of
          them) and  in connection  with the  Indenture Trustee's  duties  as
          Indenture Trustee and the balance shall be applied in the following
          manner:-

          FIRST:  in or towards satisfaction of any amounts in respect of the
          balance of  the Secured Indebtedness  as are then accrued,  due and
          payable or are  then due and payable by  virtue of payment demanded
          under the Credit Agreement and the other Security Documents (or any
          of  them), in  such order of  application as the  Indenture Trustee
          shall think fit;

          SECONDLY:   at the option of  the Indenture Trustee in retention of
          an amount equal to any part or parts of the Secured Indebtedness as
          is or  are not  then due  and payable but  which (in  the sole  and
          absolute opinion of the  Indenture Trustee) will or may become  due
          and payable  in  the future  and, upon  the same  becoming due  and
          payable,  in or towards satisfaction thereof in accordance with the
          foregoing provisions of this Clause 10.01;

          THIRDLY:  the  surplus (if any)  shall be paid  to the Owner or  to
          whomsoever else may be entitled thereto.

  11.     FURTHER ASSURANCES

  11.01   The Owner shall execute and do all such assurances, acts and things
          as  the Indenture  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 Indenture
                Trustee, the Agent, and the Lenders 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 Indenture 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 Indenture Trustee under this Mortgage, 

          in any  such case, forthwith  upon demand by the  Indenture 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 Owner's obligations  under this Mortgage, hereby
          irrevocably appoints the Indenture Trustee  as its attorney for the
          duration of the Credit Facility Period for the purposes of:-

          (a)   doing  in its  name all acts  and executing, signing  and (if
                required) registering  in its  name all  documents which  the
                Owner itself could do, execute, sign  or register in relation
                to the 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
                Indenture  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 Indenture  Trustee shall  not put  any person
          dealing with the Indenture  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  Indenture  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 the  Indenture Trustee,
          the Agent, the Lenders  and each agent or attorney appointed  under
          or pursuant to this Mortgage from and against any and all expenses,
          claims, liabilities, losses, taxes, costs, duties, fees and charges
          suffered, incurred or made by the Indenture Trustee, the Agent, the
          Lenders 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 Indenture Trustee's
                rights under this Mortgage; or

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

          and  the Indenture  Trustee, the Agent,  the Lenders 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 the  Indenture Trustee,
          the  Agent,  the  Lenders  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  Indenture
          Trustee, the  Agent, the  Lenders  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 Environmentally Sensitive  Material 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 Indenture
          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 Indenture Trustee
          against  the amount of  such shortfall.   For the purposes  of this
          Clause 13.03,  "rate of  exchange"  means  the rate  at  which  the
          Indenture Trustee is able on the date of such payment (or, if it is
          not  practicable  for   the  Indenture  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  Indenture 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 the  Indenture Trustee  and  the Agent  on
          demand all costs, fees and expenses, including, but not limited to,
          legal  fees  and expenses  and  valuation  fees and  Taxes  thereon
          incurred by the Indenture Trustee, the Agent and the Lenders or for
          which the Indenture Trustee,  the Agent and the Lenders may  become
          liable in connection with:- 

          (a)   the  negotiation, preparation  and  execution  of the  Credit
                Agreement and the Security 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
                Security Documents (or any of them).

  14.02   The  Owner shall  pay to  the  Indenture Trustee  and the  Agent on
          demand all costs, fees and expenses (including, but not limited to,
          legal  fees  and  expenses)  and  Taxes  thereon  incurred  by  the
          Indenture Trustee and the Lenders in connection with:-

          (a)   any variation of, or  amendment or supplement to, any of  the
                terms of the Credit Agreement and the Security  Documents (or
                any of them) requested  by the Owner, necessary or  advisable
                under applicable  law or relating  to the syndication  of the
                Credit  Facility,  or  initiated  during  the occurrence  and
                continuation of an Event of Default; and/or

          (b)   any consent  or waiver required from the Indenture Trustee in
                relation to the  Credit Agreement and the  Security 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 Security
          Documents (or any  of them) may be  subject or give rise  and shall
          indemnify  the Indenture  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 Indenture Trustee hereunder shall be in writing
          and shall be made to the following address:
                       Wilmington Trust Company
                       Rodney Square North
                       1100 North Market Street
                       Wilmington, DE 19890-0001
                       Telefax: (302) 651-8882
                       Attention: Corporate Trust Division

                       With a copy to:

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

          All other notices shall be made to the addresses given in Clause 20
          of the Credit Agreement and Schedule 1 thereto. 

  16.     ASSIGNMENTS

  16.01   This Mortgage shall be binding upon and shall enure to  the benefit
          of the Owner, the  Indenture Trustee and the Lenders and  the Agent
          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 Clause 14 of the  Credit Agreement, each Lender 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 Indenture Trustee  shall notify the  Owner promptly
          following any such assignment, transfer or change.

  17.     TOTAL AMOUNT, ETC.

  17.01   The  total amount  of this Mortgage  is US$55,000,000  of principal
          plus  interest,  fees,  commissions  and  performance  of  mortgage
          covenants.  The discharge amount is the same as the total amount.

  18.     MISCELLANEOUS

  18.01   If at any time  any one or more of the provisions  in this Mortgage
          is  or becomes  invalid, illegal  or unenforceable  in  any respect
          under  any   law  or   regulation,  the   validity,  legality   and
          enforceability of the  remaining provisions of this  Mortgage shall
          not be in any way affected or impaired thereby.

  18.02   The Indenture  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 Indenture  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
          Indenture Trustee may think  fit.  The Indenture 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 Indenture 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 Indenture 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 recover payment of  the
          Secured Indebtedness and for the purpose of any proceedings for the
          enforcement  and  execution  of  this  Mortgage  and/or the  Credit
          Agreement and  the Security Documents  the Owner hereby  submits to
          the jurisdiction of the courts of  any country of the choice of the
          Indenture Trustee.

  19.02   Without prejudice  to the generality of Clause 19.01, the Indenture
          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 Indenture Trustee may bring before
          the courts of such jurisdiction or other judicial authority and for
          the  purpose of  any action which  the Indenture 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 Indenture Trustee bring  a legal
          action or proceedings against it  or its assets in relation to  any
          matters arising  out of  or in  connection with  this Mortgage,  no
          immunity from  such legal  action or  proceedings (which  shall  be
          deemed to include,  without limitation,  suit, attachment prior  to
          judgment, other attachment, the obtaining of judgment, execution or
          other enforcement) shall be claimed by or on behalf of the Owner or
          with respect of its assets, and the Owner hereby irrevocably waives
          any such right  of immunity which it or  its assets now has  or may
          hereafter  acquire  and  the  Owner  hereby  consents generally  in
          respect of any  legal action or  proceedings arising  out of or  in
          connection  with this Mortgage  to the giving out  of any relief or
          the  issue  of  any process  in  connection  with  such  action  or
          proceedings including, without limitation, the making,  enforcement
          or execution or  attachment against any property whatsoever  of any
          order or judgment  which may  be made  or given in  such action  or
          proceedings. 

  IN WITNESS  whereof the Owner has caused  this Mortgage to be executed the
  day and year first before written.

  READING & BATES EXPLORATION CO.


  By_____________________________________
      Its: 

 
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                          ACKNOWLEDGEMENT OF MORTGAGE


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



On this _____ day of November, 1995 before me personally appeared  Tim W. Nagle
to me known who being  by me duly sworn did dispose and say  that he resides at
13307 Tosca, Houston,  Texas 77079, that he is Vice President and Treasurer for
READING  &  BATES  EXPLORATION  CO., the  corporation  described  in  and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of READING & BATES EXPLORATION CO.

                                                               
                                                Notary Public