Exhibit 10.119

                              SUBSIDIARY GUARANTY


            SUBSIDIARY GUARANTY,  dated as  of November 13,  1996 made  by the
undersigned  (each a "Guarantor" and  collectively, the "Guarantors").  Except
as otherwise  defined herein,  terms used  herein and  defined  in the  Credit
Agreement (as hereinafter defined) shall be used herein as therein defined.


                             W I T N E S S E T H :


            WHEREAS, Reading & Bates Corporation, Reading & Bates Drilling Co.
(the  "Borrower"),  various financial  institutions  from time  to  time party
thereto (the "Banks"), Banque Indosuez and Credit Lyonnais New York Branch, as
Documentation Agents,   and Christiania Bank og Kreditkasse,  New York Branch,
as  Administrative  Agent (the  "Administrative  Agent") have  entered  into a
Credit  Agreement, dated  as of  November 13,  1996 (as  amended, modified  or
supplemented from  time to  time, the "Credit  Agreement"), providing  for the
making  of Loans and the issuance of,  and participation in, Letters of Credit
as  contemplated   therein  (the   Banks,   the  Documentation   Agents,   the
Administrative Agent,  the Letter of  Credit Issuer, and the  Collateral Agent
are herein collectively called the "Creditors");

            WHEREAS,  the Borrower owns,  directly or indirectly,  100% of the
capital stock of each Guarantor;

            WHEREAS, it is a condition to the making of Loans and the issuance
of, and  participation in, Letters of  Credit under the Credit  Agreement that
each Guarantor shall have executed and delivered this Guaranty; and

            WHEREAS, each  Guarantor will obtain benefits  from the incurrence
of Loans  by the  Borrower and the  issuance of  Letters of  Credit under  the
Credit Agreement and,  accordingly, desires to execute this  Guaranty in order
to satisfy the  conditions described in the preceding paragraph  and to induce
the Banks  to make Loans  to the Borrower and  the Letter of  Credit Issuer to
issue Letters of Credit;


            NOW, THEREFORE,  in  consideration  of  the  foregoing  and  other
benefits accruing to each Guarantor, the receipt  and sufficiency of which are
hereby acknowledged, each Guarantor hereby makes the following representations
and warranties  to the  Creditors and hereby  covenants and  agrees with  each
Creditor as follows:

            1.  Each   Guarantor,  jointly  and   severally,  irrevocably  and
unconditionally, guarantees, as  primary obligor and not merely  as surety, to
the Creditors  the full  and prompt  payment when due  (whether at  the stated
maturity, by acceleration or  otherwise) of (x) the principal  of and interest
on the Notes issued by, and  the Loans made to, the Borrower 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 (including obligations  which, but  for the  automatic stay  under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities owing
by the Borrower to the Creditors under the Credit Agreement  (including, with-
out limitation,  indemnities,  Fees  and interest  thereon)  now  existing  or
hereafter  incurred under,  arising out  of or  in connection with  the Credit
Agreement or any other Credit Document  and the due performance and compliance
with the  terms of the Credit  Documents by the Borrower  (all such principal,
interest,  liabilities and  obligations being  herein collectively  called the
"Guaranteed Obligations").   Each Guarantor understands,  agrees and  confirms
that the  Creditors may  enforce this Guaranty  up to the  full amount  of the
Guaranteed Obligations  against each Guarantor without  proceeding against any
other  Guarantor or  the Borrower,  against  any security  for the  Guaranteed
Obligations,  or under  any other guaranty  covering all  or a  portion of the
Guaranteed Obligations.   All payments  by each Guarantor under  this Guaranty
shall be made  on the same basis  as payments by  the Borrower under  Sections
4.03 and 4.04 of the Credit Agreement.

            2.  Additionally,   each   Guarantor,   jointly   and   severally,
unconditionally  and  irrevocably,  guarantees  the  payment of  any  and  all
Guaranteed Obligations of the Borrower to  the Creditors whether or not due or
payable by the Borrower upon the occurrence in respect  of the Borrower of any
of  the  events  specified in  Section  9.05  of  the  Credit  Agreement,  and
unconditionally and irrevocably,  jointly and severally, promises  to pay such
Guaranteed Obligations to the Creditors, or order, on  demand, in lawful money
of  the United States.  This Guaranty  shall constitute a guaranty of payment,
and not of collection.

            3.  The  liability of  each Guarantor  hereunder is  exclusive and
independent of any  security for or other guaranty of  the indebtedness of the
Borrower whether  executed by such  Guarantor, any other Guarantor,  any other
guarantor or by any other party, and the liability of each Guarantor hereunder
shall not be  affected or impaired by (a)  any direction as to  application of
payment by  the Borrower or by  any other party,  (b) any other  continuing or
other guaranty,  undertaking or  maximum liability  of a  guarantor or  of any
other party as to the indebtedness of  the Borrower, (c) any payment on or  in
reduction  of any  such other  guaranty or  undertaking, (d)  any dissolution,
termination  or increase, decrease or change in personnel by the Borrower, (e)
any payment made to any Creditor on the indebtedness which any Creditor repays
the  Borrower  pursuant to  court  order  in  any bankruptcy,  reorganization,
arrangement, moratorium or  other debtor relief proceeding, and each Guarantor
waives any right to the deferral or modification of  its obligations hereunder
by reason of any such proceeding, (f) any action or  inaction by the Creditors
as contemplated  in Section 6 hereof,  or (g) any  invalidity, irregularity or
unenforceability  of  all or  part of  the  Guaranteed Obligations  or  of any
security therefor.

            4.  The obligations of each Guarantor hereunder are independent of
the obligations of any  other Guarantor, any other guarantor  or the Borrower,
and a  separate action or actions  may be brought and  prosecuted against each
Guarantor whether  or not action is  brought against any  other Guarantor, any
other guarantor  or the Borrower and  whether or not any  other Guarantor, any
other guarantor or the Borrower be joined  in any such action or actions.  Any
payment by  the  Borrower or  other circumstance  which operates  to toll  any
statute of limitations as to the Borrower shall operate to toll the statute of
limitations as to each Guarantor.

            5.  Each Guarantor  hereby waives  notice  of acceptance  of  this
Guaranty  and  notice of  any  liability to  which  it may  apply,  and waives
promptness, diligence,  presentment, demand  of  payment, protest,  notice  of
dishonor or nonpayment of any such liabilities, suit or taking of other action
by  the Administrative  Agent or  any other  Creditor  against, and  any other
notice  to, any  party liable  thereon  (including such  Guarantor, any  other
guarantor or the Borrower).

            6.  Any Creditor may at any time and from time to time without the
consent of, or  notice to, any Guarantor, without  incurring responsibility to
such  Guarantor,  without  impairing  or  releasing  the  obligations  of such
Guarantor hereunder, upon  or without any terms or conditions  and in whole or
in part:

            (a)   change  the manner,  place  or terms  of payment  of, and/or
      change  or extend the  time of  payment of, renew  or alter, any  of the
      Guaranteed Obligations, any security therefor, or any liability incurred
      directly or indirectly in respect  thereof, and the guaranty herein made
      shall apply  to  the Guaranteed  Obligations  as so  changed,  extended,
      renewed or altered;

            (b)   take and  hold security  for the  payment of  the Guaranteed
      Obligations and  sell, exchange,  release,  surrender, realize  upon  or
      otherwise  deal with  in any  manner and  in any  order any  property by
      whomsoever  at any  time pledged  or mortgaged  to secure,  or howsoever
      securing, the  Guaranteed Obligations or any  liabilities (including any
      of those hereunder)  incurred directly or indirectly  in respect thereof
      or hereof, and/or any offset thereagainst;

            (c)   exercise or  refrain from exercising any  rights against the
      Borrower or others or otherwise act or refrain from acting;

            (d)   settle or compromise any of the Guaranteed Obligations,  any
      security  therefor or any  liability (including any  of those hereunder)
      incurred directly  or indirectly in  respect thereof or hereof,  and may
      subordinate the payment of all or any part thereof to the payment of any
      liability  (whether due  or not)  of  the Borrower  to creditors  of the
      Borrower;

            (e)   apply any sums  by whomsoever paid or  howsoever realized to
      any liability or liabilities of the Borrower to the Creditors regardless
      of what liabilities of the Borrower remain unpaid;

            (f)   release or substitute any one or more endorsers, guarantors,
      any Credit Party or other obligors;

            (g)   consent to or  waive any breach of, or any  act, omission or
      default under, any of the Credit  Documents or any of the instruments or
      agreements referred to therein, or otherwise amend, modify or supplement
      any  of the Credit Documents or any  of such other instruments or agree-
      ments; and/or

            (h)   act  or  fail to  act  in  any manner  referred  to  in this
      Guaranty which  may deprive such  Guarantor of its right  to subrogation
      against the  Borrower to  recover full indemnity  for any  payments made
      pursuant to this Guaranty.

            7.  No invalidity, irregularity or unenforceability of all or  any
part of the Guaranteed Obligations  or of any security therefor shall  affect,
impair or be  a defense to this Guaranty, and this  Guaranty shall be primary,
absolute and unconditional notwithstanding the  occurrence of any event or the
existence  of  any other  circumstances  which  might  constitute a  legal  or
equitable discharge  of a surety  or guarantor except  payment in full  of the
Guaranteed Obligations.

            8.  This Guaranty is a continuing one and all liabilities to which
it applies  or may apply under the terms hereof shall be conclusively presumed
to have been created in reliance hereon.   No failure or delay on the  part of
any  Creditor in  exercising any  right,  power or  privilege hereunder  shall
operate  as a waiver thereof; nor shall any  single or partial exercise of any
right, power  or privilege  hereunder preclude any  other or  further exercise
thereof or the exercise  of any other right,  power or privilege.   The rights
and remedies  herein expressly specified  are cumulative and not  exclusive of
any rights or remedies which  any Creditor would otherwise have.  No notice to
or demand  on any Guarantor  in any case  shall entitle such Guarantor  to any
other further notice or demand in similar or other circumstances or constitute
a waiver of the rights of any  Creditor to any other or further action  in any
circumstances without notice or demand.   It is not necessary for any Creditor
to  inquire  into  the capacity  or  powers  of the  Borrower  or  any  of its
Subsidiaries  or  the  officers,  directors,  partners  or  agents  acting  or
purporting  to act  on its  behalf, and  any indebtedness  made or  created in
reliance  upon the  professed  exercise  of such  powers  shall be  guaranteed
hereunder.

            9.  Any indebtedness of the Borrower  now or hereafter held by any
Guarantor is hereby  subordinated to the indebtedness  of the Borrower to  the
Creditors; and  such indebtedness of  the Borrower  to any  Guarantor, if  the
Administrative Agent,  after an  Event of Default  has occurred,  so requests,
shall be collected, enforced and received by such Guarantor as trustee for the
Creditors and be paid over to the  Creditors on account of the indebtedness of
the  Borrower to  the Creditors,  but without  affecting or  impairing in  any
manner  the liability of  such Guarantor  under the  other provisions  of this
Guaranty.  Prior to the  transfer by any Guarantor  of any note or  negotiable
instrument evidencing any indebtedness of the Borrower to such Guarantor, such
Guarantor shall mark such note or negotiable instrument with a legend that the
same is subject to this subordination.  Without limiting the generality of the
foregoing, each Guarantor hereby  agrees with the Creditors  that it will  not
exercise any right of subrogation which it may at any time otherwise have as a
result  of  this Guaranty  (whether  contractual,  under  Section 509  of  the
Bankruptcy Code  or  otherwise) until  all  Guaranteed Obligations  have  been
irrevocably paid in full in cash.

            10.  (a)  Each Guarantor  waives any  right  (except as  shall  be
required  by applicable law and cannot be  waived) to require the Creditors to
(A) proceed against the Borrower, any other Guarantor, any  other guarantor or
any  other party, (B)  proceed against or  exhaust any security  held from the
Borrower,  any other Guarantor, any other guarantor  or any other party or (C)
pursue any other remedy  in the Creditors' power  whatsoever.  Each  Guarantor
waives any defense based on or arising out of any defense of the Borrower, any
other Guarantor, any other guarantor or any other party other  than payment in
full of the  Guaranteed Obligations, including without  limitation any defense
based  on  or  arising  out  of the  disability  of  the  Borrower,  any other
Guarantor, any other  guarantor or any other party, or the unenforceability of
the  Guaranteed  Obligations or  any  part  thereof  from  any cause,  or  the
cessation from any cause of  the liability of the Borrower other  than payment
in full of the Guaranteed Obligations.  The Creditors may,  at their election,
foreclose on any security held by the Administrative Agent or the other Credi-
tors by one or more judicial or nonjudicial sales, whether or not every aspect
of any  such sale  is  commercially reasonable  (to the  extent  such sale  is
permitted  by applicable  law),  or exercise  any other  right  or remedy  the
Creditors may have against the  Borrower or any other party, or  any security,
without affecting  or impairing  in  any way  the liability  of any  Guarantor
hereunder  except to the extent  the Guaranteed Obligations  have been paid in
full.  Each  Guarantor waives any defense arising out of  any such election by
the Creditors, even though such election  operates to impair or extinguish any
right  of  reimbursement or  subrogation  or  other right  or  remedy  of such
Guarantor against the Borrower or any other party or any security.

            (b)  Each   Guarantor  waives   all   presentments,  demands   for
performance,  protests and  notices, including  without limitation  notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty,  and notices of the existence, creation  or incurring of new
or additional  indebtedness.   Each Guarantor  assumes all  responsibility for
being and  keeping itself informed  of the Borrower's financial  condition and
assets, and of all other circumstances  bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks which
such Guarantor  assumes and  incurs hereunder, and  agrees that  the Creditors
shall  have no  duty to  advise  any Guarantor  of information  known to  them
regarding such circumstances or risks.

            11.  The Creditors agree that  this Guaranty may be enforced  only
by  the action of  the Administrative Agent  or the Collateral  Agent, in each
case  acting upon the instructions of the  Required Banks and that no Creditor
shall  have any  right individually  to  seek to  enforce or  to enforce  this
Guaranty, it  being understood and agreed that such rights and remedies may be
exercised by the Administrative Agent or the Collateral Agent for the  benefit
of the Creditors upon the terms of this Guaranty.  The Creditors further agree
that this Guaranty may not be enforced against any director, officer, employee
or stockholder of any Guarantor (except to the extent such stockholder is also
a Guarantor hereunder).

            12.  Each Guarantor  covenants and  agrees that  on and after  the
date hereof  and until  the termination  of the Total  Commitment and  when no
Letter of  Credit or Note  remains outstanding and all  Guaranteed Obligations
have been  paid in  full,  such Guarantor  shall take,  or  will refrain  from
taking, as the case may be, all actions  that are necessary to be taken or not
taken so that  no violation of any provision,  covenant or agreement contained
in Section 7 or 8 of the Credit Agreement, and so that no Event of Default, is
caused by the actions of such Guarantor or any of its Subsidiaries.

            13.  The Guarantors hereby  jointly and severally agree to pay all
reasonable out-of-pocket  costs and  expenses (x), after  an Event  of Default
shall have occurred and be continuing, of each Creditor in connection with the
enforcement  of this  Guaranty and  the protection  of such  Creditor's rights
hereunder   (including,   without   limitation,   the  reasonable   fees   and
disbursements of counsel  (including in-house counsel) employed by  any of the
Creditors)  and  (y)  of  the  Administrative Agent  in  connection  with  any
amendment, waiver  or consent relating hereto  (including, without limitation,
the  reasonable fees and disbursements of counsel (including in-house counsel)
employed by the Administrative Agent.

            14.  This  Guaranty shall be  binding upon each  Guarantor and its
successors and assigns  and shall inure  to the benefit  of the Creditors  and
their successors and assigns.

            15.  Neither  this  Guaranty  nor  any  provision  hereof  may  be
changed, waived, discharged  or terminated except with the  written consent of
the Required Banks (or to  the extent required by Section 12.12 of  the Credit
Agreement, with the written consent of each Bank) and each Guarantor  affected
thereby  (it being  understood that the  addition or release  of any Guarantor
hereunder shall  not  constitute a  change, waiver,  discharge or  termination
affecting any Guarantor other than the Guarantor so added or released).

            16.  Each Guarantor  acknowledges that an executed  (or conformed)
copy of each of the Credit Documents has been made available  to its principal
executive officers and such officers are familiar with the contents thereof.

            17.  In  addition to  any rights  now or  hereafter  granted under
applicable law  (including, without  limitation, Section 151  of the  New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and  include any "Event  of Default" as  defined in the  Credit Agreement
continuing  after  any  applicable  grace period),  each  Creditor  is  hereby
authorized  at any time or from time  to time, without notice to any Guarantor
or to any other Person, any such notice being expressly waived, to set off and
to  appropriate and apply  any and all  deposits (general or  special) and any
other indebtedness at any time  held or owing by  such Creditor to or for  the
credit  or the  account  of such  Guarantor,  against and  on  account of  the
obligations  and liabilities  of such  Guarantor to  such Creditor  under this
Guaranty, irrespective  of whether or  not such  Creditor shall have  made any
demand  hereunder  and although  said  obligations,  liabilities, deposits  or
claims, or any of them, shall be contingent or unmatured.

            18.  All  notices,  requests,   demands  or  other  communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or  other communication is
required or  permitted to be given  or made under this  Guaranty, addressed to
such  party at  (i) in the  case of  any Creditor,  as provided in  the Credit
Agreement and  (ii) in  the case of  any Guarantor, at  its address  set forth
opposite its  signature below; or in any case at  such other address as any of
the Persons listed above may hereafter notify the others in writing.

            19.  If  claim is  ever made  upon any  Creditor for  repayment or
recovery of any amount or amounts received  in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays  all or part
of said amount by reason of (a) any  judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (b)  any settlement or compromise of any such  claim effected by such payee
with any such  claimant (including the Borrower), then and  in such event each
Guarantor  agrees  that  any  such  judgment,  decree,  order,  settlement  or
compromise  shall be binding upon  such Guarantor, notwithstanding any revoca-
tion  hereof or  of  any  other instrument  evidencing  any  liability of  the
Borrower, and  such  Guarantor shall  be and  remain liable  to the  aforesaid
payees hereunder for the amount so  repaid or recovered to the same extent  as
if such amount had never originally been received by any such payee.

            20.  (a)  THIS GUARANTY  AND THE  RIGHTS  AND OBLIGATIONS  OF  THE
CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL  BE GOVERNED BY AND CONSTRUED
IN  ACCORDANCE WITH THE  LAW OF THE  STATE OF NEW  YORK.  Any  legal action or
proceeding  with respect to this Guaranty or  any other Credit Document may be
brought in  the courts of  the State of  New York or  of the United  States of
America for  the Southern District of New York, and, by execution and delivery
of  this Guaranty, each Guarantor hereby accepts  for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts and hereby  irrevocably waives any right  it may have to  object to the
laying  of venue of any such action or  proceeding in the aforesaid courts and
hereby further  irrevocably waives and agrees  not to plead or  claim that any
such  action or proceeding  has been brought  in an inconvenient  forum.  Each
Guarantor hereby  irrevocably designates, appoints and  empowers the Borrower,
with offices on the date hereof at 901 Threadneedle, Suite 200, Houston, Texas
77079 as its designee, appointee and agent to receive, accept and  acknowledge
for any on  its behalf, and in respect of its property, service or any and all
legal process, summons, notices and documents  which may be served in any such
action or  proceeding.  If for  any reason such designee,  appointee and agent
shall cease to be available to act as such, each Guarantor agrees to designate
a new designee, appointee and agent in New  York City on the terms and for the
purposes of  this provision satisfactory  to the Administrative Agent  for the
Banks under this Guaranty.  Each Guarantor further irrevocably consents to the
service of process  out of any of the aforementioned courts in any such action
or proceeding  by the  mailing of  copies thereof  by registered or  certified
mail, postage prepaid, to each Guarantor at its address set forth opposite its
signature  below.   Nothing  herein  shall  affect the  right  of  any of  the
Creditors to serve process in any other manner permitted by law or to commence
legal proceedings  or otherwise  proceed against each  Guarantor in  any other
jurisdiction.

            (b)  Each Guarantor hereby irrevocably waives any objection  which
it may now  or hereafter have to the  laying of venue of any  of the aforesaid
actions or proceedings arising out  of or in connection with this  Guaranty or
any  other credit  document brought in  the courts  referred to  in clause (a)
above and hereby  further irrevocably waives and agrees not  to plead or claim
in any such court that such action or proceeding brought in any such court has
been brought in an inconvenient forum.

            21.  In  the event that  all of the  capital stock of  one or more
Guarantors is sold or otherwise disposed  of or liquidated in compliance  with
the requirements  of Section  8.02 of  the Credit Agreement  (or such  sale or
other disposition has been approved  in writing by the Required Banks  (or all
Banks if required by Section 12.12 of the Credit Agreement))  and the proceeds
of such sale, disposition  or liquidation are  applied in accordance with  the
provisions of the  Credit Agreement, to the extent  applicable, such Guarantor
shall  be released from this Guaranty and this Guaranty shall, as to each such
Guarantor or  Guarantors, terminate, and have  no further force or  effect (it
being understood and agreed that the sale of any Person that owns, directly or
indirectly, the capital stock of any Guarantor shall be deemed to be a sale of
such Guarantor for the purposes of this Section 21).

            22.  At  any time  a payment  in respect  of the  Guaranteed Obli-
gations is  made under this  Guaranty, the right  of contribution, if  any, of
each Guarantor  against any other  Guarantor required to  make any  payment to
such  Guarantor  pursuant  to  this  Section  22  (a "Contributor")  shall  be
determined as provided  in the immediately following sentence,  with the right
of  contribution of each Guarantor to be  revised and restated as of each date
on  which  a  payment  (a  "Relevant  Payment")  is  made  on  the  Guaranteed
Obligations  under this Guaranty.  At any time that a Relevant Payment is made
by a Guarantor that results  in the aggregate payments made by  such Guarantor
in  respect of  the Guaranteed Obligations  to and  including the  date of the
Relevant  Payment  exceeding  such  Guarantor's  Contribution  Percentage  (as
hereinafter  defined) of  the aggregate  payments  made by  all Guarantors  in
respect  of  the Guaranteed  Obligations  to  and including  the  date  of the
Relevant  Payment (such  excess,  the "Aggregate  Excess  Amount"), each  such
Guarantor shall have a right of contribution against each Contributor who  has
made payments  in respect of the  Guaranteed Obligations to  and including the
date  of  the  Relevant   Payment  in  an  aggregate  amount  less  than  such
Contributor's Contribution  Percentage of the  aggregate payments made  to and
including the date of the Relevant Payment by all Guarantors in respect of the
Guaranteed  Obligations (the aggregate amount of  such deficit, the "Aggregate
Deficit Amount") in an  amount equal to (x) a fraction the  numerator of which
is the Aggregate Excess Amount of such Guarantor and the  denominator of which
is  the Aggregate  Excess  Amount  of all  Guarantors  multiplied by  (y)  the
Aggregate  Deficit  Amount  of  such  Contributor.   A  Guarantor's  right  of
contribution, if any,  pursuant to the preceding sentences shall  arise at the
time of each computation, subject to  adjustment to the time of any subsequent
computation; provided,  that no Guarantor may take  any action to enforce such
right until the Guaranteed Obligations have been paid in full,  all Letters of
Credit have terminated  and the Total Commitment has been terminated, it being
expressly recognized  and agreed  by all parties  hereto that  any Guarantor's
right  of  contribution  arising  pursuant  to this  Section  22  against  any
Contributor shall  be expressly junior  and subordinate to  such Contributor's
obligations and liabilities  in respect of the Guaranteed  Obligations and any
other  obligations owing under this Guaranty.   As used in this Agreement, (i)
each  Contributor's   "Contribution  Percentage"  shall  mean  the  percentage
obtained by dividing (x) the Adjusted Net Worth of such Contributor by (y) the
aggregate Adjusted Net Worth of all Guarantors; (ii)  the "Adjusted Net Worth"
of  each Guarantor  shall  mean the  greater  of (x)  the  Net Worth  of  such
Guarantor or (y) zero; and  (iii) the "Net Worth" of each Guarantor shall mean
the amount by which the fair salable  value of such Guarantor's assets on  the
Initial  Borrowing  Date  exceeds its  existing  debts  and  other liabilities
(including contingent liabilities, but without giving effect to any Guaranteed
Obligations arising under this Guaranty), in each case after  giving effect to
all transactions occurring on the Initial Borrowing Date.

            23.  Each  Guarantor recognizes  and agrees  that, except  for any
right of  contribution arising  pursuant to Section  22, until  the Guaranteed
Obligations have  been paid in full,  each Guarantor who makes  any payment in
respect of  the Guaranteed Obligations shall have  no right of contribution or
subrogation against any other  Guarantor in respect of such  payment, any such
right  of contribution  or subrogation  arising under  law or  otherwise being
expressly waived by all Guarantors  until the Guaranteed Obligations have been
paid in full.

            24.  Each Guarantor recognizes and acknowledges that the rights to
contribution arising hereunder shall constitute an asset in favor of the party
entitled to such  contribution.   In this connection,  each Guarantor has  the
right  to waive  its contribution  right against  any other  Guarantor to  the
extent  that after giving  effect to such  waiver such  Guarantor would remain
solvent, in the determination of the Required Banks.

            25.  This  Guaranty may be executed in  any number of counterparts
and by  the different parties hereto  on separate counterparts, each  of which
when so executed and  delivered shall be an original,  but all of which  shall
together  constitute one  and  the same  instrument.   A  set of  counterparts
executed by all the parties hereto shall be lodged with the Guarantors and the
Administrative Agent.

            26.  EACH GUARANTOR  HEREBY IRREVOCABLY  WAIVES  ALL RIGHTS  TO  A
TRIAL BY  JURY IN  ANY ACTION,  PROCEEDING OR COUNTERCLAIM  ARISING OUT  OF OR
RELATING  TO THIS  GUARANTY, THE  OTHER CREDIT  DOCUMENTS OR  THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

            27.  It  is  understood and  agreed  that  any  Subsidiary of  the
Borrower that is required  to execute a counterpart of  this Guaranty pursuant
to the  Credit Agreement shall  automatically become a Guarantor  hereunder by
executing a counterpart  hereof and delivering the same  to the Administrative
Agent.

            28.  All payments  made by  any Guarantor  hereunder will  be made
without setoff, counterclaim or other defense.

                              *     *     *     *

            IN WITNESS WHEREOF, each Guarantor  has caused this Guaranty to be
executed and delivered as of the date first above written.


Address for each Guarantor
 
c/o Reading & Bates Drilling Co.          READING & BATES
901 Threadneedle                          EXPLORATION CO.
Suite 200
Houston, Texas  77079                     By________________________
Attention:  General Counsel                       Title:
Tel: (713) 496-5000
Fax: (713) 496-0285
                                          READING & BATES (A)
                                          PTY. LTD.


                                          By________________________
                                                   Title:


                                          READING AND BATES BORNEO
                                          DRILLING CO., LTD.


                                          By________________________
                                                   Title:


                                          READING & BATES
                                          OFFSHORE, LIMITED


                                          By________________________
                                                  Title:


                                          HRB RIG CORPORATION


                                          By________________________
                                                    Title:


Accepted and Agreed to:

CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH, 
as Administrative Agent



By____________________________
          Title:


By____________________________
          Title: