Exhibit 10.125


                           FIRST PREFERRED MORTGAGE

                            Dated November 13, 1996

                       READING & BATES OFFSHORE, LIMITED

                                - in favor of -

                       CHRISTIANIA BANK OG KREDITKASSE,
                               NEW YORK BRANCH,
                              as Security Trustee


                               F. G. McCLINTOCK

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

                                     INDEX

CLAUSE                  SUBJECT MATTERPAGE

      1     DEFINITIONS AND INTERPRETATION  . . . . . . . . . . . . . . . . 2 
      2     REPRESENTATIONS AND WARRANTIES  . . . . . . . . . . . . . . . . 7 
      3     MORTGAGE  . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 
      4     PAYMENT COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 9 
      5     PRESERVATION OF SECURITY  . . . . . . . . . . . . . . . . . .  10 
      6     INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . .  11 
      7     RIG COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .  14 
      8     PROTECTION OF SECURITY  . . . . . . . . . . . . . . . . . . .  18 
      9     ENFORCEABILITY AND TRUSTEE'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  . . . . . . . . . . . . . . . . . . . . . . .  24 
      16    ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . .  25 
      17    TOTAL AMOUNT, ETC.  . . . . . . . . . . . . . . . . . . . . .  25 
      18    MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . .  25 
      19    JURISDICTION  . . . . . . . . . . . . . . . . . . . . . . . .  26 

      ACKNOWLEDGEMENT OF MORTGAGE
      EXHIBIT 1 FORM OF CREDIT AGREEMENT
      EXHIBIT 2 FORM OF SUBSIDIARY GUARANTY

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

THIS FIRST PREFERRED  MORTGAGE (this "Mortgage")  is made on  the 13th day  of
November, 1996

BY

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

IN FAVOR OF

(2)    CHRISTIANIA BANK OG  KREDITKASSE, NEW YORK BRANCH, a  Norwegian banking
       corporation  having its office  at 11 West  42nd Street,  New York, New
       York, as  security trustee for  the Banks (as  hereinafter defined) and
       as mortgagee (the "Trustee")

WHEREAS

(A)    The Owner is  the sole owner of the  whole of the jack-up  drilling rig
       F.  G. McCLINTOCK  documented under  the laws  and flag  of the  United
       States  of   America  with  Official   Number 562059  of  5,525   gross
       registered tons and 1,657 net registered tons (the "Rig").

(B)    By  a Credit  Agreement dated  as of  November  13, 1996  (as modified,
       amended  or supplemented  from time  to time,  the  "Credit Agreement")
       among  (i)  Reading   &  Bates  Corporation,  a   Delaware  corporation
       ("Holdings"),  (ii)   Reading  &  Bates   Drilling  Co.,  an   Oklahoma
       corporation  (the  "Borrower"),  (iii) the  banks  party  thereto  (the
       "Banks"), (iv) Credit  Lyonnais New York Branch and Banque Indosuez, as
       documentation agents (the "Documentation Agents")  and (v) the Trustee,
       as  administrative  agent,  arranger  and  security  trustee  (in  such
       capacity,  the  "Administrative  Agent")  (the  form  of  which  Credit
       Agreement together  with Exhibit B  thereto but  without the  remaining
       attachments  is attached  hereto  as Exhibit  1),  it was  agreed among
       other things that the Banks would  make available to the Borrower  upon
       the terms and conditions therein described a reducing  revolving credit
       facility  (the  "Facility")   in  an  aggregate  amount   at  any  time
       outstanding   of   Three   Hundred    Million   United States   Dollars
       (US$300,000,000), providing  for the making  of Loans and the  issuance
       of, and participation in, Letters of Credit as contemplated therein.

(C)    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).

(D)    The  Owner,  for  good  and   valuable  consideration  has  authorized,
       executed and delivered a  Subsidiary Guaranty (as modified, amended  or
       supplemented from time  to time,  the "Subsidiary Guaranty"),  the form
       of which  Subsidiary Guaranty is attached hereto as Exhibit 2, in favor
       of  the  Administrative  Agent  guaranteeing  the  performance  by  the
       Borrower of  its obligations under  the Credit Agreement  and the other
       Credit Documents.

(E)    This  Mortgage is made  for the  benefit of  the Trustee to  secure the
       guaranty by the  Owner of (i) the  full and prompt payment  when due of
       (x) the principal of  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 Trustee 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 Trustee 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  Trustee of its rights hereunder,
       together with reasonable  attorneys' fees of counsel to the Trustee and
       court costs; and  (iv) all amounts paid  by any Indemnitee 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. 

(F)    This  First  Preferred  Mortgage  is  entered  into  by  the  Owner  in
       consideration of the Banks 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 THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED

1.     DEFINITIONS AND INTERPRETATION

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

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

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

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

       "Credit Agreement"  means the  Credit Agreement, dated  as of  November
       13, 1996,  among Holdings, the  Borrower, the Banks, the  Documentation
       Agents, and the Administrative Agent  first referred to in  Recital (B)
       hereto, as modified, amended 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 Loans and  the Unpaid
       Drawings together  with interest,  fees and  all other  obligations are
       paid in full;

       "Default  Rate"  shall   mean  the  rate  of  interest   calculated  in
       accordance with Section 1.08(c) 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 such  Person's business 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   Rig,  (ii)   any  incident  in   which
       Environmentally  Sensitive Material  is released  from  a vessel  other
       than the  Rig and  which involves  collision between the  Rig and  such
       other vessel  or some  other incident  of navigation  or operation,  in
       either case, where  the Rig or the  Owner are actually or  allegedly at
       fault or otherwise liable (in whole  or in part) or (iii) any  incident
       in  which Environmentally Sensitive Material is  released from a vessel
       other than the Rig and where the Rig is actually or potentially  liable
       to  be arrested  as a  result and/or  where  the Owner  is actually  or
       allegedly  at  fault or  otherwise  liable  (and,  in  each such  case,
       "release"  shall  mean  disposing,  discharging,  injecting,  spilling,
       leaking,  leaching,  dumping, emitting,  escaping,  emptying,  seeping,
       placing  and  the like,  into or  upon  any land  or  water or  air, or
       otherwise entering into the environment);

       "Environmental Law"  means any  applicable Federal,  state, foreign  or
       local statute,  law, rule, regulation,  ordinance, code, guide,  policy
       and rule  of common law now or hereafter  in effect and in each case as
       amended,  and  any judicial  or administrative  interpretation thereof,
       including  any judicial  or  administrative  order, consent  decree  or
       judgment,  relating to  the environment,  health,  safety or  Hazardous
       Materials,  including, without  limitation, CERCLA;  RCRA; the  Federal
       Water Pollution Control Act, as amended, 33 U.S.C.  1251 et seq.;  the
       Toxic Substances Control Act,  15 U.S.C.  7401 et seq.;  the Clean Air
       Act, 42  U.S.C.  7401 et seq.; the  Safe Drinking Water Act, 42 U.S.C.
       3808  et seq.; the  Oil Pollution Act  of 1990,  33 U.S.C.   2701 et
       seq. and  any applicable  state and  local or  foreign counterparts  or
       equivalents;

       "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  Rig  in  a  protection  and
       indemnity  association)  which are  from  time  to  time  taken out  or
       entered into in respect  of the Rig or otherwise by  the Owner (whether
       in the sole name of  the Owner or in the  joint names of the  Owner and
       the Administrative  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 1.09 of the Credit Agreement;

       "Letter of Credit" shall  have the  same meaning for  such term as  set
       forth in Section 2.01(a) 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 Rig in respect  whereof the
       claim  or the  aggregate  of the  claims  against all  insurers, before
       adjustment  for any  relevant  franchise  or deductible,  exceeds  Five
       Hundred Thousand United  States Dollars (US$500,000) or  the equivalent
       in any other currency;

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

       "Obligations" shall have the meaning provided in Recital (E) 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 with Official
       Number  906283  of  19,928  gross  registered  tons  and    14,948  net
       registered tons; (ii)  the offshore drilling  rig W. D.  KENT owned  by
       Reading & Bates Exploration  Co. documented under the laws and  flag of
       the   United  States  with  Official   Number  583169  of  5,383  gross
       registered  tons  and 4,185  net  registered tons;  (iii)  the offshore
       drilling rig 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; (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  semi-submersible drilling  rig  RIG  41 owned  by  the
       Borrower documented under the laws  and flag of the Republic  of Panama
       with the  Patente Number to  be assigned on  the date hereof of  10,078
       gross registered tons  and 3,024 net registered tons; (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; (viii) the jack-up drilling rig  GEORGE H. GALLOWAY owned by  the
       Owner  documented under  the  laws and  flag  of the  United  States of
       America with Official  Number 651646 of 3,729 gross registered tons and
       2,496 net registered  tons; (ix) the jack-up drilling rig RANDOLPH YOST
       owned by the Borrower documented under the laws  and flag of the United
       States  of  America  with   Official  Number  601699  of   4,701  gross
       registered  tons  and  4,701  net  registered  tons;  (x)  the  jack-up
       drilling rig  J. T. ANGEL  owned by  the Borrower documented  under the
       laws and  flag of the  United States  of America  with Official  Number
       651645 of  4,186 gross registered  tons and 3,090  net registered tons;
       (xi) the  jack-up drilling rig  ROGER W. MOWELL  owned by the  Borrower
       documented under  the laws  and flag  of the  United States of  America
       with Official  Number 645360 of  4,121 gross registered  tons and 3,079
       net  registered tons;  (xii)  the jack-up  drilling  rig D.  R. STEWART
       owned by Reading &  Bates Exploration Co. 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;  and (xiii)
       the  jack-up drilling  rig  C.  E. THORNTON  to  be  owned by  HRB  Rig
       Corporation  documented under the laws and flag of the United States of
       America with Official  Number 673210 of 6,096 gross registered tons and
       6,096 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
       Administrative Agent, provide a bond or other  security satisfactory to
       the Administrative 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 Administrative Agent,  provide a bond
       or other security  satisfactory to the Administrative 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  Administrative  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
       Administrative Agent have been made as evidenced by the  Administrative
       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 Rig's trading  pattern.  Nothing herein  shall be
       deemed a waiver of the preferred status of this Mortgage; 

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

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

       "Rig"  means the vessel  described in Recital  (A) hereto  and includes
       any share  or  interest  therein and  her  engines,  machinery,  boats,
       tackle,  outfit,  spare  gear,   fuel,  consumable  or  other   stores,
       belongings and  appurtenances whether  on board  or ashore  and whether
       now  owned or hereafter  acquired (but  excluding therefrom  any leased
       equipment owned by third parties);

       "Secured Creditors" shall  mean the Trustee,  the Banks, the  Letter of
       Credit Issuer and  the Administrative 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  Guaranty" means  the agreement  dated as  of  November 13,
       1996 made by the  Owner in favor of  the Administrative Agent as  first
       referred  to   in  Recital   (D)  hereto,   as  modified,   amended  or
       supplemented from time to time;

       "Ship Mortgage Act"  means the United  States Ship Mortgage  Act, 1920,
       as amended, recodified at 46 U.S.C.  31301, et seq.;

       "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 Rig;  (b) the requisition  for title or
       other compulsory acquisition  or forfeiture  of the Rig  otherwise than
       by  requisition for hire; (c)  the capture,  seizure, arrest, detention
       or confiscation of the  Rig by any government  or by persons acting  or
       purporting  to  act on  behalf  of  any government  unless  the Rig  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;

       "War  Risks" includes the risk of mines and all risks excluded from the
       standard  form of  English marine  policy by  the free  of  capture and
       seizure clause.

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

1.03   In this Mortgage:

       (a)   Clause headings are inserted  for convenience only and shall  not
             affect  the construction  of this Mortgage  and, unless otherwise
             specified, all  references  to Clauses  are  to clauses  of  this
             Mortgage;

       (b)   unless  the  context  otherwise  requires,   words  denoting  the
             singular number shall include the plural and vice versa;

       (c)   references   to    persons   include    bodies   corporate    and
             unincorporated;

       (d)   references  to  assets include  property,  rights  and assets  of
             every description;

       (e)   references to any document are to  be construed as references  to
             such document as amended or supplemented from time to time; and

       (f)   references  to any  enactment  include re-enactments,  amendments
             and extensions thereof.

2.     REPRESENTATIONS AND WARRANTIES

2.01   The Owner hereby represents and warrants to the Trustee that:

       (a)   the Owner is the sole legal and beneficial owner  of the whole of
             the  Rig and  neither  the whole  nor  any share  in  the Rig  is
             subject to any Security Interest (except  for Permitted Liens and
             the lien of this Mortgage);

       (b)   the Owner  has not  sold or  transferred, or  agreed  to sell  or
             transfer, title to the Rig or any share therein;

       (c)   the Owner  is a  corporation duly organized  and validly existing
             and in good standing under the laws of the State of Oklahoma;

       (d)   the  Owner has full power  and authority (i)  to register the Rig
             in  its  name  under United  States  flag,  (ii)  to  execute and
             deliver this Mortgage, (iii)  to mortgage the Rig as security for
             the Obligations and  (iv) to comply  with the provisions  of, and
             perform all its obligations under, this Mortgage;

       (e)   the  Owner has  complied with  all statutory  and other  material
             requirements   relating  to   the  ownership,   registration  and
             operation of the Rig;

       (f)   the  Owner has  taken  all  necessary  action  to  authorize  the
             execution  and  delivery  of  this  Mortgage  and  this  Mortgage
             constitutes,  the  legal, valid  and  binding  obligation of  the
             Owner  enforceable against the Owner in accordance with its terms
             (except  to   the  extent   limited  by  applicable   bankruptcy,
             reorganization, insolvency, moratorium  or other laws  of general
             application   relating  to   or  affecting   the  enforcement  of
             creditors'  rights as  from time  to time  in effect  and general
             equitable  principles)  and when  filed  with  the United  States
             Coast  Guard's National  Vessel Documentation  Center in  Falling
             Waters, West Virginia will create a  legal, valid and enforceable
             first preferred mortgage lien on the Rig;

       (g)   the  entry into  and performance  by the  Owner of  this Mortgage
             does not and will not during  the Credit Facility Period  violate
             in any respect (i) any  law or regulation of any governmental  or
             official  authority or  body,  or (ii)  any  of the  constitutive
             documents   of   the   Owner   including   the   Certificate   of
             Incorporation or By-laws, as  amended from time to time, or (iii)
             any  material agreement,  contract or other  undertaking to which
             the Owner is a  party or which is  binding upon the Owner  or any
             of its assets;

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

       (i)   save  for such registrations  and filings as  are referred  to in
             this Mortgage,  it is not necessary  for the  legality, validity,
             enforceability  or admissibility  in  evidence of  this  Mortgage
             that  it or  any document relating  thereto be registered, filed,
             recorded or enrolled with  any court or authority in any relevant
             jurisdiction or  that any stamp, registration or similar taxes be
             paid on or in relation to this Mortgage;

       (j)   the  Owner  is in  compliance with  all  applicable Environmental
             Laws  and all Environmental  Approvals relating  to the  Rig, its
             operation and management  and the business  of the Owner  (as now
             conducted  and as reasonably anticipated  to be  conducted in the
             future) have been obtained or complied with;

       (k)   no Environmental  Claim has  been made or  threatened against the
             Owner, the Approved  Manager or otherwise in  connection with the
             Rig; and

       (l)   no  Environmental  Incident which  has resulted,  or  which could
             reasonably be expected  to result,  in an Environmental  Claim in
             excess of US$200,000 has occurred.

2.02   The representations and warranties  of the Owner set out in Clause 2.01
       shall  survive the execution of this Mortgage and shall be deemed to be
       repeated at  the time of the making of each Loan 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.

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 Trustee, its successors  and assigns, the whole of the  Rig TO
       HAVE AND TO HOLD the  same unto the Trustee, 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 all
       of  the Obligations secured  by this Mortgage  have terminated  or have
       been performed  in full  as  and when  the same  shall  become due  and
       payable  in accordance with  the terms of  the Subsidiary  Guaranty and
       this Mortgage and  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, all  without
       delay or  fraud and according to  the true intent and  meaning thereof,
       then these  presents and the  rights hereunder  shall cease,  determine
       and be void otherwise  to be and remain  in full force and effect  and,
       in such event, the Trustee  agrees to execute and record at the expense
       of the  Owner, all such documents  as the Owner  may reasonably require
       to discharge this Mortgage.

       Notwithstanding  anything to  the contrary  herein it  is not  intended
       that any provision  of this Mortgage  shall waive the  preferred status
       of this  Mortgage and  that if  any  provision or  part thereof  herein
       shall  be construed as  waiving the preferred  status of  this Mortgage
       then such provision shall to such extent be void and of no effect.

3.02   The Owner shall  remain liable to  perform all the  obligations assumed
       by it in  relation to the Rig and  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.

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 demand is  made by any
             Secured  Creditor  for  payment  by  the  Owner  of  the relevant
             expense,  claim,  liability, loss,  cost,  duty,  fee, charge  or
             other money incurred  by a Secured  Creditor for which  the Owner
             is  responsible (both before and  after any relevant judgment) at
             the Default Rate; and

       (c)   to  pay and perform its obligations which may be or become due or
             owing  to  a  Secured  Creditor  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
             Trustee  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 Trustee shall not have to  wait for the Administrative  Agent
             to enforce  any of the other  Security Documents before enforcing
             the security created by this Mortgage;

       (d)   no  delay or  omission on the  part of the  Trustee in exercising
             any right, power or  remedy under this Mortgage shall impair such
             right, power or remedy  or be construed  as a waiver thereof  nor
             shall any single  or partial exercise of any such right, power or
             remedy preclude any further  exercise thereof or the  exercise of
             any  other  right,  power or  remedy.    The  rights,  powers and
             remedies  provided  in  this  Mortgage  are  cumulative  and  not
             exclusive of any rights,  powers and remedies provided by law and
             may be exercised from  time to time and  as often as the  Trustee
             may deem expedient; and

       (e)   any waiver by the  Trustee of any terms  of this Mortgage or  any
             consent given by  the Trustee under  this Mortgage shall  only be
             effective  if given in writing and  then only for the purpose and
             upon the terms for which it is given.

5.02   Any settlement  or discharge  under this  Mortgage between  the Trustee
       and the Owner shall be  conditional upon no security or payment  to the
       Secured Creditors  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 Trustee shall be entitled
       to recover from the Owner on  demand the value of such security or  the
       amount  of any such payment as if  such settlement or discharge had not
       occurred.

5.03   The  rights  of  the 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 Secured Creditors or any other person:

       (a)   any time  or waiver granted  to 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, any of  the
             other  Credit Documents  (other than this  Mortgage) 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 any  of the  Credit Parties  or any  other person
             under the Credit  Agreement, any of the other  Security Documents
             (other than this Mortgage) or any other document or security.

6.     INSURANCE

6.01   The  Owner covenants  with the  Trustee 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  Rig  and keep  her
             insured, or cause  the Rig to be insured, in  lawful money of the
             United  States,  in  such  amounts,  for  such  risks  (including
             without   limitation,   hull   and   machinery/increased   value,
             protection  and indemnity  risks,  pollution  liability, and  war
             risks), in such form  (including without limitation, the form  of
             the loss payable  clause and  the designation of  named assureds)
             and  with  such  first class  insurance  companies, underwriters,
             funds,  mutual  insurance  associations  or clubs,  as  shall  be
             reasonably  satisfactory  to  the  Administrative  Agent.    With
             respect  to   hull  and   machinery/increased  value   insurance,
             including war risk, the Owner  shall insure the Rig and  keep her
             insured,  or cause the Rig to be  insured, for an amount which is
             at least  the full  commercial value  of the Rig,  and when  such
             amount is aggregated with  the amount of such insurance  coverage
             on the  Other Rigs, such aggregate amount  shall be at least 110%
             of the Total Commitment.   The Rig shall  in no event be  insured
             for an amount less than the agreed valuation as  set forth in the
             applicable marine  and war risk  policies.  Such insurance  shall
             cover  marine and war  risk perils, on  hull and  machinery, with
             deductibles  not in excess of US$500,000 (such deductibles not to
             apply  in the  case  of Total  Loss  of the  Rig),  and shall  be
             maintained  in  the broadest  forms  available  in the  American,
             British  and  Scandinavian insurance  markets  or  in such  other
             major   international  markets   reasonably  acceptable   to  the
             Administrative Agent.  The Owner shall  maintain, or cause to  be
             maintained,  protection  and indemnity  or  equivalent insurance,
             including  war  risk  protection   and  indemnity  coverage   and
             coverage against pollution liability, in an amount not  less than
             US$100,000,000   (or,   with  respect   to   pollution  liability
             coverage,  such greater amount  as may be  required from  time to
             time  by  the Oil  Pollution  Act  1990, or  other  Environmental
             Laws),  as and  when applicable  to the  Rig and  its operations,
             through   underwriters   or   associations   acceptable   to  the
             Administrative Agent.  In addition, the  Owner shall, at its  own
             expense,  furnish  to  the  Administrative  Agent  a  mortgagee's
             single interest policy providing coverage  which, when aggregated
             with  the   mortgagee's  interest  insurance   furnished  to  the
             Administrative Agent in  respect of the  Other Rigs, shall  be in
             an  amount equal to at least 110%  of the aggregate amount 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 Administrative  Agent).   Such
             mortgagee's  interest  insurance  and  any  additional  insurance
             policies  for the  benefit of the  Administrative Agent  shall be
             maintained  in  the  broadest  form available  in  the  American,
             British  and Scandinavian  markets or  other major  international
             markets   acceptable   to   the   Administrative   Agent  through
             underwriters  acceptable to  the Administrative  Agent.   The Rig
             shall not operate  in or proceed  into any area then  excluded by
             trading  warranties  under  its  marine  or   war  risk  policies
             (including  protection  and  indemnity)   without  obtaining  any
             necessary   additional   coverage,  satisfactory   in   form  and
             substance,  and evidence  of  which shall  be  furnished, to  the
             Administrative Agent.

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

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

             In the  event  of an  actual  or  constructive Total  Loss  or  a
             compromised constructive Total Loss or requisition  of title, all
             insurance payments therefor shall  be paid to the  Administrative
             Agent.    The  Owner  shall  not   declare  or  agree  with   the
             underwriters  that  the Rig  is  a  constructive or  compromised,
             agreed  or  arranged constructive  Total Loss  without  the prior
             written consent of the Administrative Agent.

       (c)   In  the event of an actual or constructive Total Loss of the Rig,
             the  Administrative  Agent  shall  retain out  of  the  insurance
             payments received on  account of such  loss any sum or  sums that
             shall be  or become  owing  to the  Secured  Creditors under  the
             Security Documents,  whether or  not  the same  be  then due  and
             payable, together with accrued  interest and the cost, if any, of
             collecting  the insurance,  and pay  the  balance as  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 Rig with respect  to the carriage of passengers or pollution,
             and  will maintain,  or cause to  be maintained, all certificates
             or other evidence of financial responsibility as may be  required
             by any such law,  regulation, proclamation or order  with respect
             to the trade which the Rig from time to time is engaged in.

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

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

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

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

7.     RIG COVENANTS

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

       (a)   maintain  its existence  as a  corporation in  good standing duly
             organized under the laws of the State of Oklahoma;

       (b)   keep  the Rig documented  in its name  as a  United States vessel
             and to do or allow  to be done nothing whereby such documentation
             may be forfeited or imperilled;

       (c)   not  without the  previous  consent in  writing  of the  Trustee,
             change the name of  the Rig or make  any modification to the  Rig
             which would or  might materially alter  the structure or  type or
             reduce the performance characteristics  of the Rig or  materially
             reduce the value of the Rig;

       (d)   keep the Rig in  a good and efficient state  of repair consistent
             with  the ownership  and operating  practices of  first-class rig
             owners and operators so  as to maintain her present class (namely
             +A1  Self-Elevating  Drilling Unit)  at  the  American Bureau  of
             Shipping free  of recommendations  and qualifications and  change
             of class, save  those notified to and approved  in writing by the
             Trustee  and so  as  to comply  with  all  laws, regulations  and
             requirements  (statutory   or  otherwise)  from   time  to   time
             applicable to vessels documented under the  laws and flag of  the
             United   States  and   applicable  to  vessels   trading  to  any
             jurisdiction to which the Rig may,  subject to the provisions  of
             this Mortgage, trade from time to time;

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

       (f)   submit the  Rig to  such periodical  or other surveys  as may  be
             required  for  classification  purposes  and if  so  required  to
             supply to the Trustee  and the Administrative Agent copies of all
             survey reports issued in respect thereof;

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

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

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

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

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

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

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

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

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

             (v)     any  intended  dry  docking  of the Rig, as to which  the
                     Owner  shall give the Trustee ten (10) days prior notice,
                     provided, that in the event of any emergency dry  docking
                     of  the  Rig,  the  Owner  shall  immediately  notify the
                     Trustee; and

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

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

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

       (n)   not without the previous  consent in writing of the Trustee (such
             consent not to  be unreasonably withheld),  put the Rig  into the
             possession of any person for the purpose  of work being done upon
             her in an amount exceeding  or likely to exceed Two Million  Five
             Hundred Thousand  United  States Dollars  (US$2,500,000) (or  the
             equivalent in any  other currency) unless such person shall first
             have given  to the Trustee  and in terms reasonably  satisfactory
             to it a written undertaking  not to exercise any lien on  the Rig
             for the cost of such work or otherwise;

       (o)   comply  with  and satisfy  all the  requirements  and formalities
             established  by the  Ship Mortgage  Act and  any other  pertinent
             legislation of the  United States to  perfect this Mortgage  as a
             legal, valid and enforceable  first and  preferred lien upon  the
             Rig  and promptly  to furnish  to the  Trustee from time  to time
             such proof as the Trustee may  request for its satisfaction  with
             respect  to the  Owner's compliance  with the  provisions of this
             sub-clause;

       (p)   place,  and use  due diligence  to retain,  a  properly certified
             copy of this Mortgage on  board the Rig with her papers and cause
             such certified copy  of this Mortgage to be  exhibited to any and
             all persons having  business with the  Rig which might  give rise
             to  any lien thereon other than a  lien for crew's wages, general
             average and salvage and to any  representative of the Trustee  on
             demand and to place and keep  prominently displayed in the  chart
             room  and in  the  master's cabin  of the  Rig  a framed  printed
             notice in plain type  in English of such size  that the paragraph
             of reading  matter shall cover  a space  not less  than 6  inches
             wide and 9 inches high reading as follows:


                                       "NOTICE OF MORTGAGE

             This Rig is covered  by a First Preferred Mortgage to CHRISTIANIA
             BANK OG KREDITKASSE,  NEW YORK  BRANCH, as  Security Trustee  for
             the  Banks defined in  the said Mortgage  under authority  of the
             United States Ship Mortgage  Act, 1920, as amended, recodified as
             46 U.S.C.  31301  et seq.  Under the terms  of the said Mortgage
             neither the  Owner nor any charterer  nor the master  of this Rig
             nor  any  other  person has  any  right,  power  or  authority to
             create, incur  or permit  to be  imposed upon this  Rig any  lien
             whatsoever  other  than for  crew's  wages,  general average  and
             salvage."

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

       (r)   notify the Trustee forthwith upon:

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

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

       (s)   not sell, mortgage or transfer the  Rig (other than as  permitted
             by the  Credit  Agreement) without  the  written consent  of  the
             Trustee  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 Rig to, or permit  the Rig to serve under any  contract with,
             a person included  within the definition  of (i) "national"  of a
             "designated foreign country," or  "specially designated national"
             of  a "designated foreign country," in the Foreign Assets Control
             Regulations  or  the  Cuban  Assets Control  Regulations  of  the
             United States Treasury  Department, 31 C.F.R. Parts 500  and 515,
             in each case as amended, (ii)  "Government of Libya", "entity  of
             the  Government  of  Libya"  or  "Libyan  entity" in  the  Libyan
             Sanctions Regulations  of the United  States Treasury Department,
             31 C.F.R. Part  550, as amended,  or (iii) "Government  of Iraq",
             "entity of the  Government of Iraq" or "Iraqi  Government entity"
             in the Iraqi Sanctions Regulations, 56  Fed. Reg. 2112 (1991)  to
             be codified  at 31  C.F.R. Part 575,  as amended, all  within the
             meaning   of   said   Regulations   or   of   any    regulations,
             interpretations  or rulings  issued thereunder, or  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 Trustee  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 Rig;

       (t)   shall not cause or  permit the Rig to  be operated in any  manner
             contrary to  law, shall not  abandon the  Rig in a  foreign port,
             shall not  engage in any  unlawful trade  or violate  any law  or
             carry any cargo that  shall expose the Rig to penalty, forfeiture
             or  capture, and  shall not do,  or suffer or  permit to be done,
             anything which can or may injuriously  affect the registration or
             enrollment  of the  Rig under the  laws of the  United States and
             will at all times keep the Rig duly documented thereunder.

8.     PROTECTION OF SECURITY

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

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

       (c)   if  the Owner  does  not comply  with  the  provisions of  Clause
             7.01(h)  or any  of them the  Trustee shall be  entitled (but not
             bound)  to  pay  and  discharge  all  such  debts,   damages  and
             liabilities  and  all  such  tolls,   dues,  taxes,  assessments,
             charges,  fines,  penalties and  other outgoings  as  are therein
             mentioned and/or to take  any such measures as it deems expedient
             or necessary for the purpose of securing the release of the Rig.

9.     ENFORCEABILITY AND TRUSTEE'S POWERS

9.01   Upon the  happening of any  of the Events of  Default specified  in the
       Credit Agreement  but without  the  necessity for  any  court order  or
       declaration in any jurisdiction to  the effect that an Event of Default
       has occurred (and whether  prior to or after the Required  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  Trustee shall be entitled,  as
       and when it may see fit, to  put into force and exercise all or any  of
       the powers possessed by it as mortgagee  of the Rig or otherwise and in
       particular:

       (a)   to  exercise  all  the rights  and  remedies  in foreclosure  and
             otherwise  given to  mortgagees by  applicable law  including the
             provisions of the Ship Mortgage Act;

       (b)   to take possession of the Rig  whether actually or constructively
             and/or otherwise to take control of the Rig wherever the Rig  may
             be and cause the Owner  or any other person in possession  of the
             Rig forthwith upon  demand to surrender  the same to  the Trustee
             without legal  process and without  liability of the Trustee  for
             any  losses  or damages  incurred thereby  and without  having to
             render accounts to the Owner in connection therewith;

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

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

       (e)   to take  over or  institute (if necessary  using the name  of the
             Owner) or, to the extent lawful, procure  that the Administrative
             Agent take  over or institute all  such proceedings in connection
             with the  Rig, the Insurances, or any Requisition Compensation as
             the  Trustee  in  its  absolute  discretion  thinks  fit  and  to
             discharge,  compound, release  or compromise  claims against  the
             Owner in respect of the Rig which have given or may give rise  to
             any charge or lien on  the Rig or which are or may be enforceable
             by proceedings against the Rig;

       (f)   to  sell the  Rig  or any  share  therein with  or without  prior
             notice to  the Owner free  from any claim of  or by the  Owner of
             any  nature whatsoever, and  with or without  the benefit  of any
             charterparty  or  other contract  for her  employment,  by public
             auction  or private contract  at such place  and upon  such terms
             (including,  without limitation,  on terms  such that  payment of
             some  or all of the purchase price be deferred) as the Trustee in
             its absolute discretion may determine with power  to postpone any
             such sale, without  being answerable  for any loss  occasioned by
             such sale or resulting  from postponement thereof, and/or  itself
             to  purchase the  Rig at any  such public auction  and to set off
             the purchase price against all or any part of the Obligations;

       (g)   to manage, insure,  maintain and repair  the Rig and  to charter,
             employ, sail or lay  up the Rig in  such manner, upon such  terms
             and  for such period  as the Trustee  in its  absolute discretion
             deems expedient and for the purposes aforesaid  the Trustee shall
             be  entitled to do  all acts and  things incidental  or conducive
             thereto  and  in  particular  to  enter  into  such  arrangements
             respecting the  Rig, and the insurance,  management, maintenance,
             repair,  classification, chartering  and  employment  of the Rig,
             in all respects as  if the Trustee were the owner of  the Rig and
             without being responsible for any loss thereby incurred;

       (h)   to recover from the  Owner on demand any expenses, liabilities or
             losses  as  may  be incurred  by  the  Trustee  in or  about  the
             exercise   of   the   power   vested   in   the   Trustee   under
             Clause 9.01(g);

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

9.02   The Trustee shall not  be obliged to make any enquiry as  to the nature
       or sufficiency of any payment  received by it under this Mortgage or to
       make  any claim,  take any  action or  enforce any rights  and benefits
       assigned to the Trustee  by this Mortgage or  to which the Trustee  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 Trustee shall not by reason of the taking  possession of the Rig be
       liable  to account  as mortgagee-in-possession  or for  anything except
       actual receipts or be liable  for any loss upon realization or  for any
       default  or  omission  for  which a  mortgagee-in-possession  might  be
       liable.

9.05   Upon  any sale  of the  Rig or  any share  therein by  the Trustee  the
       purchaser  shall not  be bound to  see or enquire  whether the power of
       sale of the Trustee has  arisen in the manner provided in this Mortgage
       and the sale shall be deemed to be within the power of  the Trustee and
       the  receipt of the  Trustee for the  purchase money  shall effectively
       discharge the purchaser who  shall not be concerned with the  manner of
       application  of  the  proceeds of  sale  or  be in  any  way answerable
       therefor.

10.    APPLICATION OF MONEYS

10.01  All moneys received by the  Trustee (or any other Secured Creditor,  as
       the case may be) in respect of sale of the Rig 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 Trustee of  the
             type described in clauses (ii) and (iii) of Recital E;

       (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 Trustee 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
             Trustee 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 Administrative  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 Trustee shall  be entitled to  reply upon
             (i) the Administrative Agent under the  Credit Agreement and (ii)
             the   Secured   Creditors  for   a   determination   (which   the
             Administrative  Agent  and   each  Secured  Creditor,   by  their
             acceptance  of the benefits of  this Mortgage  shall be obligated
             to provide  upon  request  of the  Trustee)  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  Administrative Agent  under the
             Credit  Agreement,  in furnishing  information  pursuant  to  the
             preceding sentence, and the  Trustee, in acting hereunder,  shall
             be entitled to assume  that 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 Trustee in its absolute discretion may require for:

       (a)   perfecting or protecting the security created (or  intended to be
             created) by this Mortgage; or

       (b)   preserving  or protecting any  of the rights  of the  Trustee and
             the other Secured Creditors under this Mortgage; or

       (c)   ensuring that the  security constituted by this  Mortgage and the
             covenants and obligations  of the Owner under this Mortgage shall
             enure to the benefit  of any transferee, successor or assignee of
             the Trustee; or

       (d)   enforcing the security constituted  by this Mortgage on or at any
             time after the same shall have become enforceable; or

       (e)   the exercise of any  power, authority or discretion vested in the
             Trustee under this Mortgage,

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

12.    POWER OF ATTORNEY

12.01  The Owner,  by way of security  and in order  more fully to  secure the
       performance   of  the  Obligations,  hereby  irrevocably  appoints  the
       Trustee as its  attorney until the  Total Commitment is  terminated and
       none of the Obligations remain outstanding for the purposes of:

       (a)   doing  in  its  name all  acts  and  executing,  signing  and (if
             required)  registering in its name all  documents which the Owner
             itself  could do, execute,  sign or register  in relation  to the
             Rig (including without limitation, transferring title  to the Rig
             to a third party), provided, however,  that such power shall  not
             be  exercisable by  or  on  behalf  of  the  Trustee  until  this
             Mortgage shall have  become immediately  enforceable pursuant  to
             Clause 9.01; and

       (b)   executing,   signing,  perfecting,   doing   and  (if   required)
             registering every such further  assurance document, act or  thing
             as is referred to in Clause 11.

12.02  The exercise  of such power as is referred to  in Clause 12.01(a) by or
       on  behalf of the  Trustee shall  not put any  person dealing  with the
       Trustee  upon  any  enquiry as  to  whether  this  Mortgage  has become
       enforceable nor shall  such person  be in  any way  affected by  notice
       that this Mortgage  has not become enforceable and, in relation to both
       Clauses 12.01(a)  and 12.01(b),  the exercise  by  the Trustee  of such
       power shall be conclusive evidence of its right to exercise the same.

13.    INDEMNITIES

13.01  The  Owner will  indemnify  and  save  harmless  each  of  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 Creditor  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 rights of the  Trustee
             under this Mortgage; or

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

       and each of  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 such Secured Creditors 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 Rig.

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

14.    EXPENSES

14.01  The Owner shall  pay to any Secured Creditor 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 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 Credit Documents (or any of them).

14.02  The  Owner shall  pay to  the Trustee  and the Administrative  Agent 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
             Credit  Documents  (or  any of  them)  requested  by  the  Owner,
             necessary or  advisable under  applicable law or  relating to the
             syndication of the Facility,  or initiated during the  occurrence
             and continuation of an Event of Default; and/or

       (b)   any consent or  waiver required from  the Trustee in  relation to
             the  Credit  Agreement, the  Subsidiary Guaranty  and  the 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 Credit  Documents (or any of  them) may be subject  or
       give  rise and shall  indemnify the Trustee  on demand  against any and
       all  liabilities with  respect  to  or  resulting  from  any  delay  or
       omission on the part of the Owner to pay any such duties or Taxes.

15.    COMMUNICATIONS

15.01  All  notices to the Trustee hereunder shall  be in writing and 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
                   Telefax:  (212) 827-4888
                   Attention:  Loan Administration

       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 enure to the benefit of
       the  Owner,  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 12.04 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  Trustee  shall  notify  the  Owner  promptly  following  any  such
       assignment, transfer or change.

17.    TOTAL AMOUNT, ETC.

17.01  The  total amount of  the direct or  contingent obligations  secured by
       this  Mortgage is  Three Hundred Million  U.S. Dollars (US$300,000,000)
       of  principal  plus  interest,  fees, commissions  and  performance  of
       mortgage  covenants.  The  interest of  the Owner in  the Rig  is 100%.
       The  interest of the Trustee in the  Rig is 100%.  The date of maturity
       is  November 13,  2001, and  the discharge  amount is  the same  as the
       total amount plus such  other sums as shall be payable by  the Owner to
       the Banks under the Credit Agreement or the Subsidiary Guaranty.

18.    MISCELLANEOUS

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

18.02  The Trustee, at any time and  from time to time, may delegate by  power
       of attorney or in any other manner to any person or persons  all or any
       of the  powers, authorities  and  discretions which  are  for the  time
       being  exercisable by the  Trustee under this  Mortgage in  relation to
       the Rig.  Any such delegation may  be made upon such terms and  subject
       to such regulations as  the Trustee may think  fit.  The Trustee  shall
       not be in  any way liable or responsible  to the Owner for  any loss or
       damage  arising from any  act, default, omission  or misconduct  on the
       part of any such delegate.

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

19.    JURISDICTION

19.01  The Owner agrees that the  Trustee shall have the liberty but shall not
       be obliged  to take any  proceedings in  the courts  of any country  to
       protect  or enforce  the security  constituted by  this Mortgage  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 Trustee.

19.02  Without prejudice to the  generality of Clause 19.01, the Trustee shall
       have the right to  arrest and take action  against the Rig at  whatever
       place  the Rig shall be  found lying and for  the purpose of any action
       which the Trustee may  bring before the courts of such  jurisdiction or
       other judicial authority  and for the purpose  of any action which  the
       Trustee may bring against the Rig, any writ, notice, judgment  or other
       legal process or documents may (without  prejudice to any other  method
       of  service under applicable law) be served  upon the master of the Rig
       (or  upon anyone acting as the master) and such service shall be deemed
       good service on the Owner for all purposes.

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


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

READING & BATES OFFSHORE, LIMITED


By_____________________________________
    Name:  T.W. Nagle
    Title:  Vice President and Treasurer




                          ACKNOWLEDGEMENT OF MORTGAGE


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



On this 13th  day of November, 1996  before me personally appeared  Timothy W.
Nagle to  me known  who being  by me duly  sworn did  depose and  say that  he
resides at  13307  Tosca Lane,  Houston, TX;  that he  is  Vice President  and
Treasurer for  READING & BATES OFFSHORE, LIMITED, the corporation described in
and  which executed  the foregoing  instrument; and  that he  signed his  name
thereto by  order  of the  Board of  Directors of  READING  & BATES  OFFSHORE,
LIMITED.


                                 ___________________
                                 Notary Public