EXHIBIT 10.16

                      LETTER OF CREDIT WIND-DOWN AGREEMENT


        LETTER OF CREDIT  WIND-DOWN AGREEMENT dated as of November  28, 1995
  between  READING &  BATES CORPORATION,  a corporation  duly organized  and
  validly existing under  the laws of the  State of Delaware (the "Company")
  and INTERNATIONALE NEDERLANDEN BANK, N.V. ("ING").

        ING  has issued  for  account  of the  Company  and certain  of  its
  subsidiaries standby letters  of credit, including the  letters of  credit
  listed  on Schedule  1 hereto  (the "ING  Letters of  Credit").   The  ING
  Letters  of Credit were  issued or otherwise maintained  under the Amended
  and Restated  Credit Facility Agreement  dated as  of April  27, 1995,  as
  amended,  among,   inter  alia,  ING  and   the  Company   (the  "Existing
  Agreement").

        Because it  is not practicable  on the date hereof  to terminate the
  extensions  of credit  from ING  to  the Company  represented  by the  ING
  Letters  of Credit,  the  Company  has arranged  for Christiania  Bank  og
  Kreditkasse, New York Branch, to issue to ING on the  date hereof a letter
  of credit (the "CBK  Letter of Credit") permitting ING to draw  thereunder
  the amounts drawn under the ING Letters of Credit, accrued fees on the ING
  Letters  of Credit and  interest, if any, accrued  on unpaid reimbursement
  obligations owing  by the Company  to ING  in connection  therewith.   The
  Company  has  prepaid  to  ING  all  fees  on the  ING  Letters  of Credit
  calculated as if each ING Letter of  Credit will remain undrawn until  its
  stated expiration date.

        It  is the intention of the Company  and ING that the ING Letters of
  Credit be terminated as promptly as practicable.

        Accordingly, the parties hereto hereby agree as follows:

        Section 1.   ING Letters of Credit.   The Company will use  its best
  efforts to cause the  ING Letters of Credit  to be surrendered to  ING for
  cancellation as promptly as practicable.

        Section  2.  Reduction of CBK  Letter of Credit.   From time to time
  after  the surrender to ING for cancellation of an ING Letter of Credit or
  the passing of the  final expiration date of an ING  Letter of Credit, ING
  will, upon the request of the Company with five Business Days' (as defined
  in Section  6(a) hereof) prior  notice, agree  to an amendment  to the CBK
  Letter of Credit to permit  a reduction in the  face amount thereof in  an
  amount not exceeding 101% of the face amount of such ING Letter of  Credit
  remaining  available  to  be  drawn  at  the  time  of  such  surrender or
  immediately prior to such expiration, as the case may be.

        Section  3.    Termination  of  CBK  Letter of  Credit.    After the
  surrender  to  ING  for  cancellation,  and/or the  passing  of  the final
  expiration dates, of all ING Letters of Credit, ING will, upon the request
  of  the Company  with five  Business  Days' (as  defined  in Section  6(a)
  hereof) prior  notice, surrender the CBK  Letter of Credit  to the Company
  for cancellation.

        Section  4.  Refund of Letter of  Credit Fees.  On the last Business
  Day (as defined in Section 6(a) hereof) in each calendar quarter, ING will
  refund to the Company (to the  extent not theretofore refunded)  an amount
  equal to the fees prepaid by the Company on the date  hereof in respect of
  each ING Letter of Credit to the extent that, as at such Business Day, ING
  determines that (by reason of a drawing under such ING Letter of Credit or
  the early  termination thereof) such  fee exceeds the amount  to which ING
  would have been entitled had the  face amount of such ING Letter of Credit
  that is available and undrawn on the  date hereof remained available until
  the stated expiration date of such ING Letter of Credit.

        Section 5.  Reimbursement Obligations.

        Section 6.  Miscellaneous.

        (a)   As used herein, the term "Business Day" means any day on which
  commercial banks are not authorized or required to close in New York City.

        (b)   Notices  by the Company  to ING hereunder shall  be in writing
  and telecopied, mailed or delivered to ING at:

                    Internationale Nederlanden Bank, N.V.
                    De Amsterdamse Poort
                    P.O. Box 23432 
                    1100 DX Amsterdam-Zuidoost
                    The Netherlands

       All notices shall be effective upon receipt.

       (c)  THIS  AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN  ACCORDANCE 
  WITH THE LAWS OF THE STATE OF NEW YORK. 

       IN WITNESS  WHEREOF, the parties hereto  have caused this Agreement to
  be  duly executed  as of the  day and year  first above written.

                                READING & BATES CORPORATION


                                By:                            
                                     Title:

                                INTERNATIONALE NEDERLANDEN BANK, N.V.


                                By:                             
                                     Title: