Exhibit 10.115


                INDENTURE OF FIRST NAVAL MORTGAGE


                        RB DEVELOPMENT CO.

                             - and -

              CHRISTIANIA BANK OG KREDITKASSE, agent

                           as Mortgagee


                         o.p.v. SEILLEAN

                      Dated August __, 1996

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

                              INDEX

CLAUSE    SUBJECT MATTER                                     PAGE

  1       REPRESENTATIONS AND COVENANTS . . . . . . . . . . . . . . . . . .  2 
  2       DEFINITIONS AND INTERPRETATION  . . . . . . . . . . . . . . . . .  4 
  3       MORTGAGE  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9 
  4       PAYMENT COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 10 
  5       PRESERVATION OF SECURITY  . . . . . . . . . . . . . . . . . . . . 10 
  6       INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 
  7       Vessel COVENANTS  . . . . . . . . . . . . . . . . . . . . . . . . 14 
  8       PROTECTION OF SECURITY  . . . . . . . . . . . . . . . . . . . . . 18 
  9       ENFORCEABILITY AND MORTGAGEE'S POWERS . . . . . . . . . . . . . . 19 
  10      APPLICATION OF MONEYS . . . . . . . . . . . . . . . . . . . . . . 21 
  11      FURTHER ASSURANCES  . . . . . . . . . . . . . . . . . . . . . . . 22 
  12      POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . . . 22 
  13      INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 
  14      EXPENSES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 
  15      COMMUNICATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . 25 
  16      ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 
  17      TOTAL AMOUNT, ETC.  . . . . . . . . . . . . . . . . . . . . . . . 25 
  18      WAIVER; AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . 25 
  19      MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 25 
  20      JURISDICTION  . . . . . . . . . . . . . . . . . . . . . . . . . . 26 

EXHIBIT 1 FORM OF CREDIT AGREEMENT
EXHIBIT 2 FORM OF AMENDMENT 
EXHIBIT 3 FORM OF SECOND AMENDMENT
EXHIBIT 4 FORM OF SUBSIDIARY ASSUMPTION AGREEMENT
EXHIBIT 5 FORM OF SUBSIDIARY GUARANTY

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

       THIS INDENTURE  OF FIRST NAVAL MORTGAGE  made and entered into  this __
day of August 1996, between READING & BATES  DEVELOPMENT CO., corporation duly
constituted and existing in conformity with the laws of the  State of Delaware
with its  principal  office at  901 Threadneedle,  Suite  200, Houston,  Texas
77079  (hereinafter called the  "Owner") and CHRISTIANIA  BANK OG KREDITKASSE,
NEW YORK BRANCH  having offices at 11 West 42nd Street, New York, NY 10036, as
agent  for   the  Banks  (as  hereinafter  defined)  (hereinafter  called  the
"Mortgagee"), on the Panamanian oil production vessel SEILLEAN of 50,098 gross
registered tons,  15,278 net  registered tons  and with a  length of  236.47 a
breadth of 37.00 and a depth of 19.80 and Provisional Patent of Navigation No.
_________ (hereinafter called  the "Vessel"), duly  registered under the  laws
and  flag of  the Republic  of Panama,  the detailed  description of  which is
hereinafter more particularly set forth.

                             W I T N E S S E T H :

WHEREAS

(A)    The  Owner is the sole owner of the  whole of the oil production vessel
       SEILLEAN documented under the laws and flag of the Republic of Panama.

(B)    By a Credit Agreement  dated as of April 30, 1996 (as amended, restated
       or  supplemented from  time  to  time,  the "Credit  Agreement")  among
       Reading  & Bates  Corporation,  a  Delaware corporation,  as  guarantor
       ("Holdings"), Reading & Bates Drilling Co,  an Oklahoma corporation, as
       borrower  (the "Borrower"),  the  banks  party thereto  (the  "Banks"),
       Credit Lyonnais New York Branch,  as co-agent (the "Co-Agent")  and the
       Mortgagee, as agent,  (the form of which Credit Agreement together with
       the form  of promissory  note  of the  Borrower attached  as Exhibit  B
       thereto  but  without the  remaining  exhibits  is attached  hereto  as
       Exhibit 1), it was  agreed among other things that the Banks would make
       available  to the Borrower  a reducing  revolving credit  facility (the
       "Facility") in the maximum aggregate  principal amount at any  one time
       outstanding   of    One   Hundred   Million   United   States   Dollars
       (U.S.$100,000,000), providing for the making of Loans  and the issuance
       of and participations in Letters of Credit as contemplated therein. 

(C)    By an Amendment to the  Credit Agreement dated as of July 9,  1996 (the
       "Amendment",  the  form  of  which  Amendment  without  attachments  is
       attached  hereto  as  Exhibit  2), among  Holdings,  the  Borrower, the
       Banks,  the Co-Agent and the  Mortgagee, as agent,  it was agreed among
       other things that the  Banks would increase the amount available to the
       Borrower under  the  Facility  to  an  aggregate  amount  at  any  time
       outstanding  of  One  Hundred  Forty   Million  United  States  Dollars
       (US$140,000,000).    As required  by  Article  1515  Section  3 of  the
       Commercial  Code of Panama, the dates on which payments of principal in
       respect of  the Loans are due may be  determined from the provisions of
       the Credit Agreement including Section 3.03.

(D)    By an Amendment to the Credit Agreement dated as of August ____,  1996,
       entered into by  Holdings, the Borrower,  the Banks,  the Co-Agent  and
       the  Mortgagee, as  agent  (the "Second  Amendment,  the form  of which
       Second Amendment without attachments is attached hereto  as Exhibit 3),
       it  was  agreed to  amend  Section  7.13  of the  Credit  Agreement  by
       deleting  all references  to "RB  Drilling  Co." contained  therein and
       inserting in lieu  thereof references to "Reading  & Bates  Development
       Co.".

(E)    The obligations  of  the Borrower  with  respect  to the  Facility  are
       evidenced  by the  Credit  Agreement and  the  other Credit  Documents,
       including the  promissory notes of the Borrower payable to the order of
       the respective Banks  (each a  "Note" and,  collectively, the  "Notes")
       (the form of which is attached as Exhibit B to the Credit Agreement).

(F)    The  Owner,  for  good  and   valuable  consideration  has  authorized,
       executed and delivered  a Subsidiary Assumption Agreement  (as amended,
       restated  or supplemented from time to time, the "Subsidiary Assumption
       Agreement",  the  form of  which  is  attached  hereto  as Exhibit  4),
       pursuant to which  the Owner agreed to  become a party to  a Subsidiary
       Guaranty  (the "Subsidiary  Guaranty",  the  form of  which  Subsidiary
       Guaranty without attachments  is attached hereto as Exhibit 5) in favor
       of the  Agent  guaranteeing the  performance  by  the Borrower  of  its
       obligations under the Credit  Agreement and the other Credit Documents.

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

(H)    This Indenture of First  Naval Mortgage, which  is entered into by  the
       Owner in consideration  of the Banks  entering into  the Amendment  and
       the Second Amendment  and agreeing to  make the  Facility available  to
       the  Borrower  and as  a  condition  thereto  and for  other  good  and
       valuable consideration provided by the Banks (the  sufficiency of which
       the Owner hereby acknowledges).

NOW, THEREFORE, the appearing parties, each  in the name and on behalf of  his
respective principal, state that  they hereby execute this Indenture  of First
Naval Mortgage pursuant to the following representations:

1.     REPRESENTATIONS AND COVENANTS

1.01   The Owner represents and covenants to the Mortgagee that:

       a.    The Owner is the  sole and absolute owner of the Vessel under the
             laws and flag of the Republic of Panama;

       b.    The Owner, as sole legal and beneficial owner  of the Vessel, has
             received   and  presently  possesses   a  Provisional  Patent  of
             Navigation for the  Vessel, duly issued by the Republic of Panama
             under No. ________;

       c.    Neither the whole nor  any share in the Vessel is  subject to any
             Security  Interest  (as  defined herein)  (except  for  Permitted
             Liens (as defined herein) and the lien of this Mortgage);

       d.    the Owner  has not  sold or  transferred, or  agreed  to sell  or
             transfer, title to the Vessel or any share therein;

       e.    the Owner  is a corporation  duly organized and validly  existing
             and in good standing under the laws of the State of Delaware;

       f.    the  Owner  has full  power  and  authority  (i)  to execute  and
             deliver this Mortgage,  (ii) to mortgage the  Vessel as  security
             for the Obligations and (iii)  to comply with the  provisions of,
             and perform all its obligations under, this Mortgage;

       g.    the Owner  has complied  with all  statutory  and other  material
             requirements  relative   to  the   ownership,  registration   and
             operation of the Vessel;

       h.    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  preliminarily recorded with  the
             Public Registry  in Panama  through the  Panamanian Consulate  in
             London, England will create  a legal, valid and enforceable first
             preferred  mortgage  lien  on the  Vessel  subject  only  to  the
             permanent filing  of  this Mortgage  in  the Public  Registry  in
             Panama within six  months of the date of the preliminary recorded
             filing;

       i.    the entry  into and  performance by  the Owner  of this  Mortgage
             does  not and  will  not during  the  Credit Facility  Period (as
             defined herein) 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;

       j.    all  consents, licenses, approvals and authorizations required in
             connection  with  the  entry  into,   performance,  validity  and
             enforceability   of    this   Mortgage   and   the   transactions
             contemplated hereby  and thereby  have been  obtained and are  in
             full force  and  effect and  will  be  so maintained  during  the
             Credit Facility Period;

       k.    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;

       l.    the  Owner is  in compliance  with  all applicable  Environmental
             Laws (as  defined herein) relating  to the Vessel, its  operation
             and management;

       m.    the Owner  has obtained all  Environmental Approvals (as  defined
             herein) and is in compliance with all requests thereof;

       n.    no Environmental  Claim  (as defined  herein)  has been  made  or
             threatened  against the Owner or otherwise in connection with the
             Vessel;

       o.    no  Environmental   Incident  (as   defined  herein)   which  has
             resulted, or which  could reasonably be expected to result, in an
             Environmental Claim in excess of US$200,000 has occurred; and

       p.    The  Owner  hereby affirms  as  its  representations all  of  the
             statements contained in the "WHEREAS" clauses of this Mortgage.

1.02   The representations and  warranties of the Owner set out in Clause 1.01
       shall survive the execution  of this Mortgage and shall be deemed to be
       repeated at the time  of the  making of each  Loan (as defined  herein)
       and at the time of the issuance of each Letter of Credit,  with respect
       to the facts and circumstances existing  at each such time, as if  made
       at each such time.

1.03   The  Mortgagee  represents  that  the  Banks  have  made  the  Facility
       available  to  the Owner,  as  evidenced  by,  inter  alia, the  Credit
       Agreement, the  Notes and the Security  Documents (as  defined herein),
       and  accepts  the  Mortgage constituted  by  this  instrument upon  the
       Vessel as security  for the due and  prompt payment and  performance of
       the obligations of the  Owner under the Credit Agreement and  the other
       Credit Documents.

1.04   Each  of the contracting parties declares that it is satisfied with the
       representations and covenants  made by the  other and  accepts them  as
       true;  and the  parties  mutually  acknowledge their  respective  legal
       status as  well  as the  authority  of  the persons  representing  them
       respectively in  this instrument  to sign the  same on behalf  of their
       respective principals.

2.     DEFINITIONS AND INTERPRETATION

2.01   In  this Mortgage unless the  context otherwise requires, the following
       expressions shall have the following meanings:

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

       "Amendment" means  the  Amendment  dated  as  of  July  9,  1996  among
       Holdings, the Borrower, the Banks,  the Co-Agent and the  Mortgagee, as
       agent first referred to in Recital (C) hereto; 

       "Bank" means  any lender  listed from time  to time on  Annex 1  to the
       Credit Agreement (collectively, the "Banks");

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

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

       "Credit Agreement"  means the Credit  Agreement, dated as  of April 30,
       1996, among  Holdings, the Borrower,  the Banks, the  Co-Agent, and the
       Mortgagee, as  agent  as  amended  by  the  Amendment  and  the  Second
       Amendment  first referred  to  in Recital  (B)  hereto, and  as further
       amended, restated or supplemented from time to time; 

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

       "Credit Facility Period" shall mean  the period commencing on  the date
       hereof and  ending on the  date the Total  Commitments have terminated,
       no  Letters  of  Credit  remain outstanding  and  the  Unpaid  Drawings
       together with  interest, fees  and all  other obligations  are paid  in
       full;

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

       "Default  Rate"  shall  mean   the  rate  of  interest  calculated   in
       accordance with Section 1.07(b) of the Credit Agreement;

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

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

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

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

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

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

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

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

       "Interest  Period" shall  have the  same meaning  for such  term as set
       forth in Section 1.08 of the Credit Agreement;

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

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

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

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

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

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

       "Other  Rigs" means,  individually  or collectively,  each  of (i)  the
       semi-submersible  drilling  rig  JACK  BATES   owned  by  the  Borrower
       documented under  the laws  and flag of  the United  States of  America
       with Official Number 906283  of 19,928 gross registered tons and 14,948
       net registered  tons; (ii) the jack-up drilling rig D. R. STEWART owned
       by  Reading &  Bates  Exploration  Co. ("R&B  Exploration")  documented
       under the laws and flag of  the United States of America with  Official
       Number 626904 of 6,494 gross  registered tons and 5,834  net registered
       tons;  (iii) the  drilling tender  W.D. KENT owned  by R&B  Exploration
       documented under  the laws  and flag  of the  United States of  America
       with Official  Number 583169 of  5,383 gross registered  tons and 4,185
       net registered tons;  (iv) the jack-up drilling rig RON TAPPMEYER owned
       by Reading & Bates (A) Pty  Ltd. documented under the laws and  flag of
       Australia with Official  Number 855213 of 11,455 gross  registered tons
       and 3,436 net  registered tons;  (v) the semi-submersible  drilling rig
       J.W.  McLEAN owned by the  Borrower documented under  the laws and flag
       of the  Republic of  Panama with  Patente Number  25384-PEXT of  15,453
       gross registered tons  and 4,636 net registered tons; (vi) the drilling
       tender CHARLEY GRAVES owned by  Reading and Bates Borneo  Drilling Co.,
       Ltd. documented under the laws and flag of the Republic of Panama  with
       Patente  Number 6618-76 CH of 5,829 gross registered tons and 1,748 net
       registered tons;  and (vii)  the jack-up  drilling rig  HARVEY H.  WARD
       owned by HRB Rig Corporation documented under the laws and flag of  the
       United States of  America with Official  Number 642693  of 4,121  gross
       registered  tons  and  3,079  net  registered  tons  and  (viii)  semi-
       submersible drilling Rig 41 owned  by RB Drilling Co.  documented under
       the laws and flag of the Republic of  Panama with Patente Number 22365-
       95 of 10,078 gross tons and 3,024 net registered tons.

       "Permitted Liens"  means: (1)  liens incident  to  expenses of  current
       operations, other than for master's  and crew's wages, incurred  in the
       ordinary course of  business of the Owner  and due and payable  for not
       more than thirty  (30) days (or being contested in good faith, provided
       such liens are  not in excess  of U.S.$5,000,000.00, and  if in  excess
       thereof, then the Owner  shall, upon the written request of  the Agent,
       provide a bond or other security satisfactory to the  Agent); (2) liens
       for master's and  crew's wages not yet  due and payable; (3)  liens for
       taxes, assessments,  governmental charges, fines  and penalties not  at
       the  time delinquent  (unless being contested  in good  faith, provided
       such liens  are not in  excess of U.S.$5,000,000.00,  and if in  excess
       thereof, then the Owner shall,  upon the written request of the  Agent,
       provide a bond or other security satisfactory to the Agent);  (4) liens
       for  general average  and  salvage  (including contract  salvage);  (5)
       liens for claims  covered by valid  policies of  insurance meeting  the
       requirements of Clause 6  hereof (except that no  lien shall be  deemed
       not covered by insurance  to the extent insurance in force  would cover
       the amount  secured  by the  lien  but  for any  applicable  deductible
       amount approved  by  the Agent);  (6)  liens  arising pursuant  to  any
       judgment  or to  an  order of  attachment,  distraint or  similar legal
       process arising in connection with  legal proceedings, but only  if and
       so long as the  execution or other enforcement thereof is  not unstayed
       for more than  30 consecutive  days; (7) any  lien for  the payment  or
       discharge of which  provisions satisfactory to the Agent have been made
       as evidenced by the Agent's written consent to  such lien; (8) any lien
       in favor  of the Banks;  and provided  that Permitted  Liens shall  not
       include any liens  described in subclauses (1) through (7) above unless
       they:  (i)  are subordinate  to  the  lien  of this  Mortgage  or  (ii)
       constitute  a maritime lien  which would  in any  event be  entitled as
       such to priority  over the Mortgage  under the  United States  shipping
       laws  or  other  applicable  laws  relating  to  the  Vessel'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);

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

       "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 Vessel otherwise  than by
       requisition for hire;

       "Second Amendment" means the Second  Amendment dated as of  August ___,
       1996 among  Holdings, the  Borrower, the  Banks, the  Co-Agent and  the
       Mortgagee, as agent first referred to in Recital (D) hereto:

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

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

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

       "Subsidiary Assumption  Agreement"  means  the  agreement  pursuant  to
       which the  Owner has  agreed  to become  a party  to, inter  alia,  the
       Subsidiary Guaranty.

       "Subsidiary Guaranty" means  the Guaranty in favor of the Agent and the
       Banks dated  as of April 30, 1996 as  amended, restated or supplemented
       from time to  time to which the  Owner has become a  signatory pursuant
       to the Subsidiary  Assumption Agreement as first referred to in Recital
       (F) hereto; 

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

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

       "Total Loss" means  (a) the actual, constructive,  arranged, agreed, or
       compromised total loss of the Vessel; (b)  the requisition for title or
       other  compulsory  acquisition or  forfeiture of  the  Vessel otherwise
       than  by requisition  for  hire;  (c)  the  capture,  seizure,  arrest,
       detention  or  confiscation  of the  Vessel  by  any  government  or by
       persons acting or purporting to act on behalf  of any government unless
       the Vessel be released  from such capture, seizure, arrest or detention
       within ninety (90) days after the occurrence thereof;

       "United  States Dollars"  and "US$"  means the  lawful currency  of the
       United States of America;

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

       "Vessel" means the vessel 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);

       "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.

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

2.03   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.

3.     MORTGAGE

3.01   In order to secure the Obligations the  Owner has granted, conveyed and
       mortgaged and does  by these presents  grant, convey and  mortgage unto
       the  Mortgagee,  its successors  and  assigns, in  accordance  with the
       provisions  of Chapter  V,  Title IV  of  Book Second  of  the Code  of
       Commerce  and  pertinent  provisions  of  the   Civil  Code  and  other
       legislation of the  Republic of Panama,  the whole of  the Vessel,  the
       detailed description of which is as follows:

             oil  production  vessel  SEILLEAN;  gross  tonnage  approximately
             50,928;  net tonnage approximately  15,278; length overall 236.47
             meters,  breadth 37.00 meters; depth  19.80 meters; built in 1986
             by Harland & Wolff PLC in  Belfast, Northern Ireland; radio  call
             letters _______; 

       TO  HAVE AND  TO HOLD the  same unto the  Mortgagee, its successors and
       assigns forever, upon  the terms herein  set forth for  the enforcement
       of the Obligations.

       PROVIDED  ONLY and the condition of these  presents is such that if the
       Owner or its successors and assigns shall pay or  cause to be repaid to
       the Secured Creditors and  their respective  successors or assigns  the
       Obligations as  and  when the  same  shall become  due  and payable  in
       accordance  with the  terms  of the  Credit  Agreement, the  Subsidiary
       Guaranty  and  this  Mortgage and  the  Owner  and  its  successors and
       assigns  shall  observe  and  comply  with  the  covenants,  terms  and
       conditions  contained  in the  Subsidiary Guaranty  and  this Mortgage,
       expressed or implied  to be performed, observed or complied with by and
       on the  part of the  Owner and its successors  and assigns,  then these
       presents and the  rights hereunder shall  cease, determine and  be void
       and,  in such  event,  the Mortgagee  agrees  to  furnish, execute  and
       record, at the expense  of the Owner, all  such documents as the  Owner
       may   reasonably require  to discharge this  Mortgage, otherwise  to be
       and remain in full force and effect.

       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 Vessel  and none  of the  Secured Creditors
       shall  be  under  any obligation  of  any  kind  whatsoever  in respect
       thereof or be  under any liability whatsoever  in event of  any failure
       by the Owner to perform its obligations in respect thereof.

3.03   This  Mortgage, when  it shall  have been  duly executed  and signed on
       behalf of  the parties,  shall  be provisionally  recorded through  the
       Panamanian  Consulate at  London, England  and thereafter  within three
       months permanently recorded in the Public Registry in Panama.

4.     PAYMENT COVENANTS

4.01   The Owner hereby covenants with the Secured Creditors:

       (a)   to  pay  and  indemnify  the  Secured  Creditors   for  all  such
             expenses,  claims,  liabilities,  losses,  costs,  duties,  fees,
             charges or  other moneys  as are  stated in  this Mortgage to  be
             payable by  the Owner  to or  recoverable from  the Owner  by the
             Secured  Creditors (or in  respect of which  the Owner  agrees in
             this Mortgage to indemnify any of  the Secured Creditors) at  the
             times and in the manner specified in this Mortgage;

       (b)   to  pay  interest  on  any such  expenses,  claims,  liabilities,
             losses, costs, duties, fees, charges or other  moneys referred to
             in Clause 4.01(a) from  the date  on which the  relevant expense,
             claim,  liability, loss, cost, duty,  fee, charge  or other money
             is  paid by  any  Secured Creditor  (both  before  and after  any
             relevant judgment) at the Default Rate; and

       (c)   to pay and perform its obligations which may be  or become due or
             owing to  any Secured Creditor,  as the case  may be,  under this
             Mortgage  and the  Subsidiary Guaranty  at the  times and  in the
             manner specified herein or therein.

5.     PRESERVATION OF SECURITY

5.01   It is declared and agreed that:

       (a)   the  security created  by  this Mortgage  shall  be  held by  the
             Mortgagee  as a  continuing security for  the performance  of the
             Obligations  and  that  the security  so  created  shall  not  be
             satisfied  by  any intermediate  payment or  satisfaction  of any
             part of the Obligations;

       (b)   the security so created shall be in addition to  and shall not in
             any way be prejudiced  or affected by  any of the other  Security
             Documents;

       (c)   the  Mortgagee shall  not  have  to  enforce  any  of  the  other
             Security Documents before enforcing the security  created by this
             Mortgage;

       (d)   no failure or  delay on the part  of the Mortgagee  in exercising
             any right, power, privilege  or remedy hereunder and no course of
             dealing  between  Owner  and   Mortgagee  (in  its  capacity   as
             mortgagee or in its capacity as agent) shall operate as  a waiver
             thereof; nor shall any single or  partial exercise of any  right,
             power,  privilege  or  remedy  hereunder preclude  any  other  or
             further  exercise thereof  or the  exercise  of any  other right,
             power or  privilege hereunder.   The rights  and remedies  herein
             expressly  provided  are  cumulative  and not  exclusive  of  any
             rights  or  remedies  which  the Mortgagee  (in  its  capacity as
             mortgagee or in its capacity as agent) would otherwise have.   No
             notice to or demand  on the Owner in  any case shall entitle  the
             Owner to  any other or  further notice  or demand  in similar  or
             other circumstances or constitute a waiver  of the rights of  the
             Mortgagee  (in its capacity  as mortgagee or  in its  capacity as
             agent)  to  any other  or  further  action  in any  circumstances
             without notice or demand; and

       (e)   any  waiver by the Mortgagee of any terms of this Mortgage or any
             consent given by the  Mortgagee 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 Mortgagee
       and the Owner  shall be conditional upon no security  or payment to the
       Secured  Parties or  any of  them by  the Credit  Parties or  any other
       person being avoided or set-aside or ordered to be  refunded or reduced
       by  virtue  of  any  provision  or enactment  relating  to  bankruptcy,
       insolvency, administration or  liquidation for the time  being in force
       and,  if  such  condition is  not  satisfied,  the  Mortgagee  shall be
       entitled  to  recover from  the  Owner  on  demand the  value  of  such
       security  or the  amount of any  such payment as  if such settlement or
       discharge had not occurred.

5.03   The  rights  of  the Secured  Creditors  under  this  Mortgage  and the
       security  hereby  constituted  shall  not  be   affected  by  any  act,
       omission, matter or thing  which, but for this provision, might operate
       to  impair, affect or  discharge such rights and  security, in whole or
       in part, including  without limitation, and whether or  not known to or
       discoverable by the Credit  Parties, the Secured Creditors or any other
       person:

       (a)   any waiver granted to or composition  with the Credit Parties  or
             any other person; or

       (b)   the  taking,  variation, compromise,  renewal  or  release of  or
             refusal or neglect to  perfect or enforce any rights, remedies or
             securities against  any  of  the  Credit  Parties  or  any  other
             persons; or

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

       (d)   any  amendment  or  supplement  to  the   Credit  Agreement,  the
             Subsidiary  Guaranty, any of  the other  Credit Documents  or any
             other document or security; or

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

       (f)   the   unenforceability,   invalidity   or  frustration   of   any
             obligations  of the Credit  Party or any  other person  under the
             Credit  Agreement,  the Subsidiary  Guaranty,  any  of the  other
             Credit Documents or any other document or security.

6.     INSURANCE

6.01   The Owner covenants  with the Mortgagee throughout the  Credit Facility
       Period that:

       (a)   The  Owner shall, at  its own  expense, when and  so long  as any
             Obligation  remains outstanding,  insure the Vessel  and keep her
             insured, or cause the  Vessel to be  insured, in lawful money  of
             the United States,  in such  amounts, for  such risks  (including
             without   limitation,   hull   and   machinery/increased   value,
             Protection  and Indemnity  Risks,  pollution liability,  and  War
             Risks), in such  form (including without limitation, the  form of
             the loss  payable clause  and the designation  of named assureds)
             and  with such  first  class  insurance companies,  underwriters,
             funds,  mutual  insurance  associations  or clubs,  as  shall  be
             reasonably satisfactory to  the Mortgagee.  With respect  to hull
             and machinery/increased value insurance, including war risk,  the
             Owner shall insure the Vessel and keep her insured, or  cause the
             Vessel  to be insured, for an amount which is at least the agreed
             value of the  Vessel, and when such amount is aggregated with the
             total amount of such insurance coverage  on the Other Rigs,  such
             aggregate amount shall be  at least 110% of the Total Commitment.
             Such insurance shall  cover marine and  war risk perils,  on hull
             and machinery, with per occurrence  deductibles not in excess  of
             US$500,000 (such deductibles  not to apply  in the case  of Total
             Loss  of the  Vessel), and  shall be  maintained in  the broadest
             forms  available  in  the  American,   British  and  Scandinavian
             insurance  markets or  in such other  major international markets
             acceptable   to  the   Mortgagee.    The   Owner  shall  maintain
             protection   and   indemnity   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  at least equal  from time  to time  to the limitation  of
             liability  amount  applicable  to   the  Vessel  under  the   Oil
             Pollution  Act  1990   or  other  Environmental  Laws),   through
             underwriters  or associations  acceptable to  the Mortgagee.   In
             addition,  the Owner shall,  at its own  expense, furnish  to the
             Mortgagee   a  mortgagee's   single  interest   policy  providing
             coverage  which, when  aggregated  with the  mortgagee's interest
             insurance furnished  to the  Mortgagee  in respect  of the  Other
             Rigs, shall be in an  amount equal to at least 110% of  the Total
             Commitment  (or in  lieu of  such mortgagee's  interest insurance
             Owner  shall  cause   the  hull  and   machinery/increased  value
             insurance to  be endorsed to  afford breach of warranty  coverage
             for the  benefit of  the Mortgagee).   Such  mortgagee's interest
             insurance and any additional  insurance policies for the  benefit
             of the  Mortgagee  shall  be  maintained  in  the  broadest  form
             available  in the  American, British and  Scandinavian markets or
             other  major international  markets acceptable  to the  Mortgagee
             through  underwriters acceptable  to the  Mortgagee.   The Vessel
             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  satisfying  the
             conditions of  the relevant  policies evidence of  which shall be
             furnished to the Mortgagee.

       (b)   The  policy  or   policies  of  insurance  shall  be   issued  by
             responsible underwriters reasonably acceptable to  the Mortgagee,
             shall   contain  conditions,  terms,  stipulations  and  insuring
             covenants satisfactory  to the Mortgagee,  and shall  be kept  in
             full  force and  effect by  the  Owner so  long  as the  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 the Mortgagee  shall
             be the  loss payee for  distribution by it  to itself, the  Banks
             and the Owner  as their interests  may appear, and  shall provide
             for at least ten days'  prior notice to be given to the Mortgagee
             by the underwriters or  association in the event  of cancellation
             or  the failure  of the  Owner to pay  any premium  or call which
             would suspend  coverage under  the  policy or  the  payment of  a
             claim thereunder.  The Mortgagee and the  Banks shall be named as
             co-assureds  on all  such policies  and insurance  contracts, but
             without liability of the  Mortgagee, or the Banks for premiums or
             calls.  Complete  certified copies of all such  policies, binders
             and other interim insurance  contracts shall be delivered to  the
             Mortgagee.  Originals shall  also be provided upon the request of
             the  Mortgagee.    The  Owner  shall  furnish  to  the  Mortgagee
             annually a detailed report signed by  a firm of marine  insurance
             brokers  satisfactory  to  the  Mortgagee  as  to  the  insurance
             maintained in  respect of the Vessel,  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 Mortgagee,  by notice  to the
             underwriters, although the following insurance is  payable to the
             Mortgagee, (i) any  loss under any  insurance on the  Vessel 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   Vessel
             involving  any damage  to the  Vessel, 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 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$1,000,000.00 (One Million
             U.S.  Dollars),  the underwriters  shall  not  make such  payment
             without  first  obtaining  the  written consent  thereto  of  the
             Mortgagee  (which consent  shall not  be  unreasonably withheld).
             Any  loss  covered  by  this  paragraph  which  is  paid  to  the
             Mortgagee but which might  have been paid, in accordance with the
             provisions of this paragraph,  directly to  the Owner or  others,
             shall  be paid by the Mortgagee to,  or as directed by, the Owner
             and  all other  payments to  the Mortgagee  of losses  covered by
             this  paragraph shall  be applied by  the Mortgagee in accordance
             with Clause 10.01.

             In  the event of  a Total Loss,  all insurance  payments therefor
             shall  be paid to the Mortgagee.   The Owner shall not declare or
             agree with  the underwriters  that  the Vessel  is  a Total  Loss
             without the prior written consent of the Mortgagee.

       (c)   In the event  of a Total Loss of the  Vessel, the Mortgagee shall
             retain out of the  insurance payments received on account of such
             loss  any sum  or  sums that  shall  be or  become  owing to  the
             Secured  Creditors under  the Security Documents,  whether or not
             the  same shall be  then due and  payable, together  with accrued
             interest and the cost, if any,  of collecting the insurance,  and
             pay the balance as provided in Clause 10.

       (d)   The Owner shall comply with and satisfy all of the provisions  of
             any applicable law, regulation, proclamation  or order concerning
             financial responsibility for liabilities imposed on  the Owner or
             the  Vessel  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 in which the Vessel from time to
             time is engaged.

       (e)   The  Owner shall renew all such  insurances as they expire and so
             as  to  insure  that  there  is  no  gap  in coverage,  keep  the
             Mortgagee advised of  the progress  of such  renewals, and  shall
             provide evidence of such renewal in  writing to the Mortgagee  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 Mortgagee.

       (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 Vessel or suffer  the Vessel to be
             employed  otherwise than  in  conformity with  the  terms of  the
             instruments  of  insurance  aforesaid  relative  to   the  Vessel
             (including any warranties, express  or implied, therein)  without
             first obtaining  the consent to  such employment of the  insurers
             and complying  with  such requirements  as  to extra  premium  or
             otherwise as the insurers may prescribe.

7.     Vessel COVENANTS

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

       (a)   keep the  Vessel documented  in  its name  as  a Panamanian  flag
             vessel  and  do  or   allow  to  be  done  nothing  whereby  such
             documentation may be forfeited or imperilled;

       (b)   not  without the  previous consent  in writing  of the  Mortgagee
             except as otherwise contemplated by the  Credit Agreement, change
             the name of  the Vessel  or make any  modification to the  Vessel
             which would materially alter  the structure, type or  performance
             characteristics of the Vessel  and which would materially  reduce
             the value of the Vessel;

       (c)   keep  the  Vessel  in  a  good  and  efficient  state  of  repair
             consistent  with   first-class   ship-ownership  and   management
             practice employed by owners  of drilling rigs of similar size and
             type and so as to  maintain her present class (namely 100  A1 Oil
             (Processing) Tanker DP  (AA) LMC,  UMS, 1GS) at  Lloyd's Register
             free of recommendations and  qualifications and change of  class,
             save  those approved  in writing  by the  Mortgagee and  so as to
             comply with all applicable laws, treaties  and conventions of the
             Republic of Panama and other applicable  jurisdictions, and rules
             and regulations issued thereunder,  and have on board as and when
             required    thereby   valid   certificates   showing   compliance
             therewith;

       (d)   procure that all repairs to or  replacement of any damaged,  worn
             or  lost parts  or  equipment in  such  manner  (both as  regards
             workmanship  and  quality  of  materials) as  to  not  materially
             diminish the value of the  Vessel and not to remove any  material
             part of,  or item of  equipment owned by the  Owner installed on,
             the Vessel unless (i)  the part or  item so removed is  forthwith
             replaced  by  a  suitable part  or  item  which  is  in the  same
             condition as or better condition than  the part or item  removed,
             is  free from any Security Interest  (other than Permitted Liens)
             in favor  of any person other  than the Mortgagee and  becomes on
             installation on the Vessel  the property of the Owner and subject
             to the security constituted  by this Mortgage or (ii) the removal
             will not materially diminish the value of the Vessel;

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

       (f)   permit  the  Mortgagee  by  independent surveyors  to  board  the
             Vessel  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,
             provided that unless an  Event of Default shall have occurred and
             be continuing,  the cost of any such inspection  shall be for the
             account of the Mortgagee;

       (g)   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  Vessel  and all  tolls,  dues,  taxes,
             assessments, governmental charges,  fines and penalties  lawfully
             charged on or  in respect  of the Vessel  and all other  expenses
             whatsoever in respect of  the Vessel and  in the event of  arrest
             of the Vessel 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 Vessel from  such
             arrest  or detention  forthwith upon receiving  notice thereof by
             providing bail or otherwise as the circumstances may require;

       (h)   not employ  the Vessel 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  can reasonably be expected to 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  Vessel 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 Vessel unless  there shall  have been
             effected by  the Owner (at its  expense) such special, additional
             or  modified  insurance cover  as  the  Mortgagee may  reasonably
             require;

       (i)   promptly furnish to the  Mortgagee all such information as it may
             from time to  time require regarding the  Vessel, her employment,
             position  and  engagements,   particulars  of  all   towages  and
             salvages and,  upon the Mortgagee's request in writing, copies of
             all charters and other  contracts for her employment or otherwise
             howsoever concerning her;

       (j)   notify  the Mortgagee forthwith  by telecopy thereafter confirmed
             by letter of:

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

             (ii)    any  occurrence  in  consequence whereof  the  Vessel 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 complied with; and

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

             (v)     any intended dry docking of  the Vessel, as to which  the
                     Owner  shall  give the  Mortgagee  30 days  prior notice,
                     provided, that in the event  of any emergency dry docking
                     of the  Vessel, the  Owner shall  immediately notify  the
                     Mortgagee; and

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

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

       (l)   observe  the obligations  contained in  Sections 7  and 8  of the
             Credit Agreement which apply  to the Vessel and the Owner, and in
             pursuance thereof such obligations  shall be incorporated in  and
             deemed to form part of this Mortgage mutatis mutandis;

       (m)   not without  the previous  consent  in writing  of the  Mortgagee
             (such consent  not to be unreasonably  withheld), put  the Vessel
             into the possession of any  person for the purpose of  work being
             done  upon her  in an amount  exceeding or  likely to  exceed Two
             Million Five Hundred United States Dollars  (US$2,500,000.00) (or
             the equivalent  in  any other  currency) unless  (i) such  person
             shall   first  have  given   to  the   Mortgagee  and   in  terms
             satisfactory to  it a  written undertaking  not  to exercise  any
             lien on  the Vessel for  the cost  of such  work or otherwise  or
             (ii) the  cost of such work shall be  fully covered by applicable
             insurance;

       (n)   comply with  and satisfy  all the provisions  of applicable  laws
             and  regulations  of  the Republic  of  Panama,  as  at  any time
             amended, in order  to establish and  maintain this Mortgage  as a
             first  priority  naval mortgage  thereunder upon  the  Vessel and
             upon all  renewals, improvements and replacements  made in  or to
             the same,  and promptly to furnish to  the Mortgagee from time to
             time   such  proofs   as  the  Mortgagee   may  request  for  its
             satisfaction with respect  to the  compliance by  the Owner  with
             the  provisions   of  this  sub-clause,   including,  appropriate
             certificates  of the  Public Registry showing  that this Mortgage
             has  been duly registered  and filed and is  a first and absolute
             lien on the Vessel;

       (o)   place, and  use due  diligence to  retain,  a properly  certified
             copy of  this Mortgage on  board the Vessel  with her papers  and
             cause  such certified copy  of this Mortgage  to be  exhibited to
             any and all persons having business  with the Vessel which  might
             give  rise to any lien thereon other than a lien for crew's wages
             and salvage and to  any representative of the Mortgagee on demand
             and  to place and  keep prominently displayed  in the  chart room
             and in the master's  cabin of the Vessel 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 Vessel  is subject  to an  Indenture of First  Naval
             Mortgage in  favor of CHRISTIANIA  BANK OG KREDITKASSE, as  Agent
             for the Banks  defined in said  Mortgage, in conformity  with the
             provisions of Chapter V, Title  IV of Book Second of the  Code of
             Commerce, and  the pertinent  provisions of  the  Civil Code  and
             other legislation of the Republic of Panama.  Under  the terms of
             said  Mortgage neither  the owner,  any charterer,  the Master of
             the  Vessel nor any other  person shall have  the right, power or
             authority  to create,  incur  or permit  to  be  placed upon  the
             Vessel any other  lien whatsoever other than  for current  crew's
             wages and salvage  and Permitted Liens  (as that term  is defined
             in said Mortgage)."

       (p)   comply,  or procure  compliance with, all  Environmental Laws and
             Environmental Approvals relating to the Vessel,  its operation or
             management and the business of the Owner from time to time;

       (q)   notify the Mortgagee forthwith upon:

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

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

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

       (s)   shall  not cause  or  permit the  Vessel to  be  operated in  any
             manner contrary to  law (except where  the failure to  operate in
             compliance with any law  would not have a material adverse effect
             on the Owner,  the Vessel or  the lien of  this Mortgage),  shall
             not abandon the Vessel in  a foreign port and shall not engage in
             any unlawful  trade or  violate any law  or carry any  cargo that
             shall expose the Vessel to forfeiture or capture.

8.     PROTECTION OF SECURITY

8.01   The Mortgagee shall  without prejudice to  its other rights  and powers
       under  this Mortgage and  the other Credit  Documents be  entitled (but
       not bound) at any time and as often as may  be necessary (but unless an
       Event of  Default shall  have  occurred and  be  continuing with  prior
       written notice to the Owner) to take  any such action as it may  in the
       reasonable  exercise of  its discretion  think fit  for the  purpose of
       protecting or  maintaining the  security created  by this Mortgage  and
       the other Credit Documents (including, without  limitation, such action
       as  is  referred  to  in  Clause 8.02)  and  each  and  every  expense,
       liability,  or  loss (including,  without limitation,  reasonable legal
       fees) so incurred by  the Secured Creditors in or about  the protection
       or  maintenance  of the  said security  together with  interest payable
       thereon  under Clause 4.01(b) shall be repayable  to it by the Owner on
       demand.

8.02   Without prejudice to the generality of Clause 8.01:

       (a)   if the  Owner does  not comply in  any material respect  with the
             provisions  of Clause 6  or any  of them  the Mortgagee  shall be
             entitled  (but not bound) to  effect or to  replace and renew and
             thereafter to maintain the Insurances in  such manner it, in  its
             discretion,  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 Mortgagee
             may  nominate  and,  upon  the  direction  of  the  Mortgagee  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   Mortgagee   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;

       (b)   if  the Owner  does  not comply  with  the  provisions of  Clause
             7.01(d)  or 7.01(f)  the  Mortgagee shall  be  entitled (but  not
             bound) to  arrange for the carrying out of such repairs to and/or
             surveys of the Vessel as it deems expedient or necessary; and

       (c)   if  the Owner  does  not comply  with  the  provisions of  Clause
             7.01(h) the Mortgagee  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 Vessel.

9.     ENFORCEABILITY AND MORTGAGEE'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  Mortgagee or the Banks
       having  served on  the  Owner any  such  notice as  is  referred to  in
       Section  9 of the  Credit Agreement) the  security constituted  by this
       Mortgage shall become immediately  enforceable and the Mortgagee  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
       Vessel or otherwise and in particular:

       (a)   to  exercise  all the  rights  and  remedies in  foreclosure  and
             otherwise  given to  mortgagees by  the laws  of the  Republic of
             Panama or other applicable laws;

       (b)   to   take   possession  of   the  Vessel   whether   actually  or
             constructively  and/or otherwise  to take  control of  the Vessel
             wherever  the Vessel  may be  and cause  the Owner  or any  other
             person  in  possession of  the  Vessel forthwith  upon  demand to
             surrender  the same  to the Mortgagee  without legal  process and
             without  liability of  the Mortgagee  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 Mortgagee;

       (d)   to collect, recover, compromise  and give a good discharge for or
             procure that the Mortgagee 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) all such  proceedings in connection with  the Vessel,  the
             Insurances, or any Requisition  Compensation as the Mortgagee  in
             its  absolute discretion  thinks fit and  to discharge, compound,
             release or compromise claims  against the Owner in respect of the
             Vessel which have given  or may give rise  to any charge or  lien
             on the Vessel or which are  or may be enforceable by  proceedings
             against the Vessel;

       (f)   to sell  the Vessel  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 Mortgagee
             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  Vessel at any such public auction  and to
             set  off  the  purchase price  against  all  or any  part  of the
             Obligations,  subject  to  notice  of  sale being  given  by  the
             Mortgagee to the  Owner and other  mortgagees of record,  if any,
             by airmail,  postage  pre-paid  and  by  publication  once  in  a
             newspaper of general circulation in the  City of Panama, Republic
             of Panama, not less than twenty (20) calendar  days in advance of
             the sale, to satisfy  the requirement of notice of sale contained
             in Article 1527  of the  Panama Code  of Commerce.   Such  notice
             shall be necessary only in respect of the initial date of sale;

       (g)   to  manage,  insure,  maintain  and  repair  the  Vessel  and  to
             charter,  employ, sail or lay up  the Vessel in such manner, upon
             such terms and  for such period as the  Mortgagee in its absolute
             discretion  deems expedient  and for  the purposes  aforesaid the
             Mortgagee shall be entitled  to do all acts and things incidental
             or  conducive  thereto  and  in  particular  to enter  into  such
             arrangements   respecting   the  Vessel,   and   the   insurance,
             management, maintenance,  repair, classification,  chartering and
             employment  of the Vessel,  in all respects  as if  the Mortgagee
             were the owner  of the Vessel  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  Mortgagee in  or  about the
             exercise   of   the  power   vested   in   the  Mortgagee   under
             Clause 9.01(g);

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

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

9.03   Neither  the Secured  Creditors nor  their agents,  managers, officers,
       employees,  delegates  and advisers  shall be  liable for  any expense,
       claim, liability, loss, cost,  damage or expense incurred or arising in
       connection with  the  exercise or  purported  exercise of  any  rights,
       powers  and discretions  under this  Mortgage in  the absence  of gross
       negligence or wilful misconduct.

9.04   The  Mortgagee shall  not by  reason of  the taking  possession of  the
       Vessel 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 Vessel  or any share therein by the Mortgagee  the
       purchaser shall not be bound to see or enquire  whether the Mortgagee'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 Mortgagee and
       the receipt of the Mortgagee for  the purchase money shall  effectively
       discharge the purchaser who  shall not be concerned with the  manner of
       application  of  the proceeds  of  sale  or be  in  any way  answerable
       therefor.

10.    APPLICATION OF MONEYS

10.01  (a)   All moneys  received by  the Mortgagee  or any  Secured Creditor,
             including, without limitation,  in respect of sale  of the Vessel
             or  any   part  thereof,  in  respect   of  recovery   under  the
             Insurances, or in respect  of Requisition Compensation, shall  be
             applied in the following manner:

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

             (ii)    second, to the extent moneys remain after the application
                     pursuant to  the preceding clause (i), an amount equal to
                     the outstanding Obligations shall be  paid to the Secured
                     Creditors as  provided  in  Clause  10.01(c),  with  each
                     Secured  Creditor  receiving  an  amount  equal  to  such
                     Obligations  held  by   it  or,   if  the  proceeds   are
                     insufficient to pay in full all such Obligations, its Pro
                     Rata Share (as defined below)  of the amount remaining to
                     be distributed; and

             (iii)   third, to the extent moneys  remain after the application
                     pursuant  to  the  preceding clauses  (i)  and  (ii), and
                     following the termination  of this  Mortgage pursuant  to
                     Clause 3.01, any surplus then remaining shall  be paid to
                     the Owner, subject, however, to the rights of the  holder
                     of any  then existing  Lien of  which  the Mortgagee  has
                     actual notice (without investigation).

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

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

       (d)   For  purposes of  applying payments  received in  accordance with
             this Clause 10.01, the  Mortgagee shall be entitled to reply upon
             (i)  the Agent under  the Credit Agreement  and (ii)  the Secured
             Creditors  for a determination (which the  Agent and each Secured
             Creditor, by  their acceptance of  the benefits of this  Mortgage
             shall be obligated to provide upon  request of the Mortgagee)  of
             the  outstanding  Obligations  owed  to  the  Secured  Creditors.
             Unless  it has  actual  knowledge (including  by  way of  written
             notice from a Secured  Creditor) to the contrary, the Agent under
             the Credit Agreement, in  furnishing information pursuant to  the
             preceding  sentence,  and the  Mortgagee,  in  acting  hereunder,
             shall be entitled  to assume that  (x) no obligations  other than
             principal, interest and regularly  accruing fees are owing to any
             Secured Creditor.

11.    FURTHER ASSURANCES

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

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

12.    POWER OF ATTORNEY

12.01  The Owner,  by way of security  and in order  to more fully  secure the
       performance of the Obligations under this  Mortgage, hereby irrevocably
       appoints the  Mortgagee 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
             Vessel (including without limitation,  transferring title to  the
             Vessel  to  a third  party), provided,  however, that  such power
             shall not  be exercisable by or on  behalf of the Mortgagee 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  Mortgagee shall not put  any person dealing with  the
       Mortgagee 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  Mortgagee of such
       power  shall be  conclusive evidence  as against  third parties  of its
       right to exercise the same.

13.    INDEMNITIES

13.01  The Owner will  indemnify and save  harmless the Secured  Creditors and
       each  agent or attorney  appointed under or  pursuant to  this Mortgage
       (each an "Indemnitee") from and against  any and all expenses,  claims,
       liabilities, losses, taxes, costs,  duties, fees and charges  suffered,
       incurred or made by  such Secured Creditors  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  Mortgagee's rights
             under this Mortgage; or

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

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

13.02  Without limiting the  foregoing Clause 13.01, the Owner  hereby further
       indemnifies and holds harmless  each of the Secured Creditors and their
       respective officers,  directors, employees, attorneys  and agents  from
       and  against  any and  all  liabilities,  losses, obligations,  claims,
       damages,  penalties, causes  of action, costs  and expenses (including,
       without   limitation,   reasonable   attorneys'   fees   and  expenses,
       consultant  fees, investigation  and laboratory  fees) imposed  upon or
       incurred by or asserted against them, or any of them, by reason of  (a)
       an  actual,  alleged  or  threatened Environmental  Incident;  (b)  any
       personal injury (including wrongful death) or  property damage (real or
       personal)  or economic  damage  arising  out  of  or  related  to  such
       Environmental  Incident;   (c)  any  Environmental  Claim   brought  or
       threatened,  or  settlement reached;  or  (d)  any  violation of  laws,
       orders, regulations, requirements or demands  of government authorities
       relating to Hazardous Materials at, or discharged from the Vessel.

13.03  If,  under any applicable law or  regulation, and whether pursuant to a
       judgment being made or  registered against the Owner or the liquidation
       of  the Owner  or  for  any  other  reason, any  payment  under  or  in
       connection  with the Subsidiary  Guaranty or this  Mortgage is  made or
       fails  to be  satisfied in  a currency  (the "payment  currency") other
       than the currency  in which such payment is due  under or in connection
       with this  Mortgage (the  "contractual currency"), then  to the  extent
       that  the amount of  such payment actually  received by  the Mortgagee,
       when converted into the contractual currency  at the rate of  exchange,
       falls short  of  the  amount  due under  or  in  connection  with  this
       Mortgage, the  Owner, as a separate  and independent  obligation, shall
       indemnify and hold  harmless the Mortgagee  against the amount  of such
       shortfall.  For the purposes of  this Clause 13.03, "rate of  exchange"
       means  the rate  at which  the Mortgagee is  able on  the date  of such
       payment (or,  if it is  not practicable for  the Mortgagee  to purchase
       the contractual currency with the payment currency  on the date of such
       payment, at the rate of  exchange as soon afterwards as is  practicable
       for the  Mortgagee to do so) to  purchase the contractual currency with
       the  payment currency and shall take into account any premium and other
       costs of exchange with respect thereto.

14.    EXPENSES

14.01  The  Owner shall pay  to the  Mortgagee on demand  all costs,  fees and
       expenses, including, but  not limited to,  legal fees and  expenses and
       valuation fees and  Taxes thereon incurred  by any Secured  Creditor or
       for which any Secured Creditor may become liable in connection with:

       (a)   the  negotiation,   preparation  and  execution  of   the  Credit
             Agreement,   the  Subsidiary  Guaranty   and  the   other  Credit
             Documents (or any of them); and/or

       (b)   the  preserving or  enforcing of,  or attempting  to preserve  or
             enforce,  any  of  its  rights under  the  Credit  Agreement, the
             Subsidiary Guaranty  or the  other  Credit Documents  (or any  of
             them).

14.02  The  Owner shall  pay to  the Mortgagee on  demand all  costs, fees and
       expenses (including, but not limited to,  legal fees and expenses)  and
       Taxes thereon incurred by any Secured Creditor in connection with:

       (a)   any variation  of, or  amendment  or supplement  to,  any of  the
             terms of  the Credit  Agreement, the  Subsidiary Guaranty  or the
             other Credit 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 Mortgagee in relation to
             the  Credit  Agreement, the  Subsidiary  Guaranty  and the  other
             Credit Documents (or any of them),

       and  in  each  case,   regardless  of  whether  the  same  is  actually
       implemented, completed or granted, as the case may be.

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

                             Christiania Bank og Kreditkasse, New York Branch
                             11 West 42nd Street
                             7th Floor
                             New York, New York  10036
                             Attention:  Loan Administration
                             Telephone:  (212) 827-4800
                             Telefax:    (212) 827-4888

       All  other notices  shall  be made  to the  addresses  provided for  in
       Section 12.03 of the Credit Agreement and Annex II thereto.

16.    ASSIGNMENTS

16.01  This Mortgage shall  be binding upon and shall inure  to the benefit of
       the Secured Creditors and their respective  transferees, successors and
       permitted assigns,  and references  in  this Mortgage  to  any of  them
       shall be construed accordingly.

16.02  The Owner may  not assign  or transfer all  or any  part of its  rights
       and/or obligations under this Mortgage.

16.03  Pursuant to  Section 12.16 of the  Credit Agreement, each  Bank has the
       right  to assign  or transfer  all  or any  part of  its rights  and/or
       obligations  under the Credit Agreement on  the terms therein provided.
       The  Mortgagee  shall notify  the  Owner  promptly following  any  such
       assignment, transfer or change.

17.    TOTAL AMOUNT, ETC.

17.01  The  total  amount of  this Mortgage  is One  Hundred Forty  Million US
       Dollars (US$140,000,000) of principal plus  interest, fees, commissions
       and  performance of mortgage  covenants.  The  discharge amount  is the
       same as the total amount.

18.    WAIVER; AMENDMENT

18.01  None of  the terms  and  conditions of  this Mortgage  may be  changed,
       waived, modified or varied in any  manner whatsoever unless in  writing
       duly signed by the Owner and the Mortgagee (with  the consent of either
       the  Required Banks or, to the extent  required by Section 12.12 of the
       Credit Agreement, all  of the Banks).   No amendment to the  Subsidiary
       Guaranty  which affects  the rights  and obligations  of  the Mortgagee
       hereunder  shall be  effective  without the  consent  of the  Mortgagee
       thereto.

19.    MISCELLANEOUS

19.01  This Mortgage shall be governed by the laws of the Republic of Panama.

19.02  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.

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

19.04  The  appearing parties  hereby confer  a special  power of  attorney on
       Benedetti &  Benedetti, lawyers  of Panama,  Republic of Panama  and/or
       any partners in  the firm authorizing such firm or  any such partner to
       take  all necessary  steps  to record  this  Indenture  of First  Naval
       Mortgage in the  appropriate registries of the  City of Panama, and  to
       substitute this Power of Attorney herein granted.

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

19.06  The  Mortgagee  declares  that  it accepts  the  naval  mortgage hereby
       created under the terms above set forth.

20.    JURISDICTION

20.01  The Owner  agrees that the  Mortgagee shall have the  liberty but shall
       not be obliged to take any proceedings in the courts of any  country to
       protect  or enforce  the security  constituted by  this Mortgage  or to
       enforce any provisions of this Mortgage  or to enforce the  Obligations
       and for the purpose  of any proceedings for such enforcement  the Owner
       hereby submits to the jurisdiction of the courts of  any country of the
       choice of the Mortgagee.

20.02  Without  prejudice  to the  generality of  Clause 20.01,  the Mortgagee
       shall have the right  to arrest and take  action against the Vessel  at
       whatever place the  Vessel shall be found lying and  for the purpose of
       any  action which  the Mortgagee  may bring  before the  courts of such
       jurisdiction  or other judicial  authority and for  the purpose  of any
       action  which the  Mortgagee may  bring against  the Vessel,  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 Vessel  (or upon  anyone acting as  the
       master) and such service shall be deemed good service  on the Owner for
       all purposes.

20.03  The Owner  agrees that  should the  Mortgagee 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  and the  Mortgagee have  duly executed  these
presents the day and year first before written.

READING & BATES DEVELOPMENT CO.
 

By:  _____________________________________


CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH


By:  _____________________________________



By:  _____________________________________




                          ACKNOWLEDGMENT OF MORTGAGE


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


                   On  this  __  day of  August,  1996,  before  me personally
appeared ____________________ to me known and who resides at                  
                      ;  and  who submitted  evidence  to  me  that  he  is  a
___________  of  READING  &  BATES  DEVELOPMENT CO.,  the  ___________________
company described in  and which executed the  foregoing mortgage; and  that he
signed his name thereto  pursuant to authority granted to him by  the Board of
Directors of said corporation.



____________________________________
Notary Public




                          ACKNOWLEDGMENT OF MORTGAGE


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


                   On  this  __  day of  August,  1996,  before me  personally
appeared    ______________    to    me    known    and    who    resides    at
__________________________;  and who submitted  evidence to me  that he/she is
__________   of  CHRISTIANIA  BANK  OG   KREDITKASSE,  NEW  YORK  BRANCH,  the
corporation described in and which  executed the foregoing mortgage; and  that
he/she signed his/her name thereto pursuant to authority granted to him/her by
the Board of Directors of said corporation.



____________________________________
Notary Public