Exhibit 10.103


                       INDENTURE OF FIRST NAVAL MORTGAGE

                         READING & BATES DRILLING CO.

                                    - and -

                    CHRISTIANIA BANK OG KREDITKASSE, agent

                                 as Mortgagee


                                  J.W. McLEAN


                              Dated July 9, 1996

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                                     INDEX

CLAUSE      SUBJECT MATTER                                                PAGE

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

EXHIBIT 1   FORM OF CREDIT AGREEMENT
EXHIBIT 2   FORM OF AMENDMENT

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       THIS INDENTURE OF FIRST  NAVAL MORTGAGE made and entered  into this 9th
day of July, 1996, between READING & BATES DRILLING  CO.,  an Oklahoma company
duly constituted  and existing in  conformity with  the laws of  the State  of
Oklahoma  with its principal office  at 901 Threadneedle,  Suite 200, Houston,
Texas   77079  (hereinafter  called  the  "Owner")  and  CHRISTIANIA  BANK  OG
KREDITKASSE, NEW  YORK BRANCH having offices at 11 West 42nd Street, New York,
NY  10036, as agent for the Banks (as hereinafter defined) (hereinafter called
the  "Mortgagee"),  on the  Panamanian offshore  drilling  rig J.W.  McLEAN of
15,453 gross registered tons, 4,636  net registered tons and with a  length of
111.86m, a breadth of 64.01m and a  depth of 42.67m and Provisional Patent  of
Navigation  No. 25384-PEXT  (hereinafter  called the  "Rig"), duly  registered
under the laws and flag of the Republic of Panama, the detailed description of
which is hereinafter more particularly set forth.

                             W I T N E S S E T H :

WHEREAS

(A)    The Owner is the sole owner of  the whole of the offshore drilling  rig
       J.W.  McLEAN documented  under the  laws and  flag of  the Republic  of
       Panama.

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

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

(D)    The  obligations  of  the  Owner  with  respect  to  the  Facility  are
       evidenced by  the  Credit Agreement  and  the other  Credit  Documents,
       including the  promissory notes of  the Owner 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).

(E)    This Mortgage is  made for the benefit  of the Mortgagee to  secure (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  Owner 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 Owner  with all of  the terms, conditions  and agreements contained
       in  the  Credit Agreement  and  the other  Credit  Documents including,
       without limitation,  this Mortgage; (ii)  any and all  sums advanced by
       the Mortgagee  in  order to  preserve  the Collateral  (as  hereinafter
       defined) or preserve  its security interest in the Collateral; (iii) in
       the event  of any proceeding for  the collection or enforcement  of any
       indebtedness, obligations, or  liabilities of the Owner referred  to in
       clause (i) above, after an Event of Default shall have occurred and  be
       continuing,  the reasonable  expenses of  the  Mortgagee of  re-taking,
       holding,  preparing for sale or  lease, selling  or otherwise disposing
       of or realizing on the Collateral, or of any exercise by the  Mortgagee
       of its  rights hereunder, together  with reasonable attorneys' fees  of
       counsel to the Mortgagee  and court costs; and (iv) all amounts paid by
       any  Indemnitee  as  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 Indenture  of First Naval Mortgage,  which is entered into  by the
       Owner in consideration  of the Banks  entering into  the Amendment  and
       agreeing  to  make  the  Facility  available  to  the  Owner and  as  a
       condition  thereto  and  for  other  good  and  valuable  consideration
       provided by  the  Banks (the  sufficiency  of  which the  Owner  hereby
       acknowledges).

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

1.     REPRESENTATIONS AND COVENANTS

1.01   The Owner represents and covenants to the Mortgagee that:

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

       b.    The Owner,  as sole legal  and beneficial owner  of the Rig,  has
             received  and  presently   possesses  a  Provisional  Patent   of
             Navigation for the  Rig, duly issued  by the  Republic of  Panama
             under No. 25384-PEXT;

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

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

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

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

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

       h.    the  Owner  has  taken  all  necessary  action  to authorize  the
             execution  and  delivery  of  this  Mortgage  and  this  Mortgage
             constitutes,  the legal,  valid  and  binding obligation  of  the
             Owner enforceable against the Owner in accordance  with its terms
             (except   to  the  extent   limited  by   applicable  bankruptcy,
             reorganization, insolvency, moratorium  or other laws of  general
             application  relating   to  or  affecting   the  enforcement   of
             creditors' rights  as from  time to  time in  effect and  general
             equitable principles)  and when  preliminarily recorded with  the
             Public Registry  in Panama  through the  Panamanian Consulate  in
             New York, New  York will create  a legal,  valid and  enforceable
             first preferred  mortgage lien  on the  Rig subject  only to  the
             permanent  filing  of this  Mortgage  in the  Public  Registry in
             Panama within six  months of the date of the preliminary recorded
             filing;

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

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

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

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

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

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

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

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

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

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

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

2.     DEFINITIONS AND INTERPRETATION

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

       "Major Casualty" means any casualty  to the 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 Owner referred to in  Recital
       (D) 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 Owner documented
       under the laws and flag of  the United States of America with  Official
       Number 906283  of   19,928  gross  registered   tons  and  14,948   net
       registered tons;  (ii) the jack-up drilling rig D.  R. STEWART owned by
       Reading &  Bates Exploration Co.  ("R&B Exploration") documented  under
       the laws and flag of the United States of America with Official  Number
       626904 of  6,494 gross registered  tons and 5,834  net registered tons;
       (iii)  the   drilling  tender  W.D. KENT   owned  by  R&B   Exploration
       documented under  the laws  and flag  of the  United States of  America
       with Official  Number 583169 of  5,383 gross registered  tons and 4,185
       net registered tons;  (iv) the jack-up drilling rig RON TAPPMEYER owned
       by Reading & Bates (A)  Pty Ltd. documented under the laws  and flag of
       Australia with Official  Number 855213 of 11,455 gross  registered tons
       and 3,436 net  registered tons;  (v) the semi-submersible  drilling rig
       RIG 41 owned  by RB Drilling Co.  ("RB") documented under the  laws and
       flag of the Republic of  Panama with Patente Number 22365-95  of 10,078
       gross registered tons  and 3,024 net registered tons; (vi) the drilling
       tender CHARLEY GRAVES owned by  Reading and Bates Borneo  Drilling Co.,
       Ltd. documented under the laws and flag of the Republic of Panama  with
       Patente Number 6618-76 CH of 5,829 gross registered tons and  1,748 net
       registered tons; (vii) the offshore  drilling rig HARVEY H.  WARD owned
       by  HRB  Rig Corporation  documented  under the  laws  and flag  of the
       United States of  America with Official  Number 642693  of 4,121  gross
       registered  tons  and  3,079   net  registered  tons  and   (viii)  the
       Panamanian  flag rig SEILLEAN  to be acquired by  RB as contemplated by
       the Amendment;

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

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

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

       "Requisition  Compensation"  means all  moneys  or  other  compensation
       payable during the  Credit Facility Period by reason of requisition for
       title or  other compulsory  acquisition of  the 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  Banks, the Letter of  Credit Issuer
       and the Agent under and as defined in the Credit Agreement;

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

       "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.

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

2.03   In this Mortgage:

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

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

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

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

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

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

3.     MORTGAGE

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

             offshore drilling  rig J.W.  McLEAN; gross tonnage  approximately
             15,453; net tonnage  approximately 4,636;  length overall  111.86
             meters, breadth 64.01  meters; depth 42.67 meters; built  in 1974
             by  Bethlehem Steel  Corporation in  Beaumont, Texas;  radio call
             letters HP-8713;

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

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

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

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

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

4.     PAYMENT COVENANTS

4.01   The Owner hereby covenants with the Secured Creditors:

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

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

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

5.     PRESERVATION OF SECURITY

5.01   It is declared and agreed that:

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

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

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

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

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

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

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

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

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

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

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

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

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

6.     INSURANCE

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

       (a)   The  Owner shall,  at its  own expense, when  and so  long as any
             Obligation  remains  outstanding, insure  the  Rig  and keep  her
             insured, or cause  the Rig to be insured, in  lawful money of the
             United  States,  in  such  amounts,  for  such  risks  (including
             without   limitation,   hull   and   machinery/increased   value,
             Protection  and  Indemnity Risks,  pollution  liability,  and War
             Risks),  in such form (including without  limitation, the form of
             the loss  payable clause and  the designation of named  assureds)
             and with  such  first  class insurance  companies,  underwriters,
             funds,  mutual  insurance  associations  or clubs,  as  shall  be
             reasonably satisfactory to the Agent.   With respect to hull  and
             machinery/increased  value  insurance, including  war  risk,  the
             Owner shall  insure the Rig  and keep her  insured, or  cause the
             Rig to  be insured, for  an amount which is  at least  the agreed
             value  of the  Rig, and when  such amount is  aggregated with the
             total amount of such insurance coverage  on the Other Rigs,  such
             aggregate amount shall be  at least 110% of the Total Commitment.
             Such insurance shall  cover marine and  war risk perils,  on hull
             and machinery, with per  occurrence deductibles not in excess  of
             US$500,000 (such deductibles  not to apply  in the case  of Total
             Loss  of the 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  acceptable
             to  the  Mortgagee.    The Owner  shall  maintain  protection and
             indemnity  insurance, including war risk protection and indemnity
             coverage and coverage against  pollution liability, in an  amount
             not  less  than US$100,000,000  (or,  with  respect to  pollution
             liability coverage, such greater  amount as may be at least equal
             from  time  to  time  to  the  limitation  of  liability   amount
             applicable to  the Rig under the Oil Pollution  Act 1990 or other
             Environmental  Laws),   through   underwriters  or   associations
             acceptable to the  Mortgagee.  In  addition, the Owner  shall, at
             its  own  expense,  furnish  to the  Agent  a  mortgagee's single
             interest  policy providing coverage  which, when  aggregated with
             the  mortgagee's  interest insurance  furnished to  the  Agent in
             respect of  the Other Rigs,  shall be  in an  amount equal to  at
             least  110%  of  the   Total  Commitment  (or  in  lieu  of  such
             mortgagee's  interest insurance  Owner shall  cause the  hull and
             machinery/increased value  insurance  to  be endorsed  to  afford
             breach of warranty  coverage for the benefit of the Agent).  Such
             mortgagee's  interest  insurance  and  any  additional  insurance
             policies for the benefit of the Agent  shall be maintained in the
             broadest  form   available   in   the   American,   British   and
             Scandinavian  markets   or  other  major   international  markets
             acceptable  to the  Agent through underwriters  acceptable to the
             Agent.   The  Rig shall not  operate in or  proceed into any area
             then excluded by trading  warranties under its marine or war risk
             policies (including protection and  indemnity) without satisfying
             the  conditions of the relevant policies  evidence of which shall
             be furnished to the Mortgagee.

       (b)   The  policy  or   policies  of  insurance  shall   be  issued  by
             responsible  underwriters  reasonably  acceptable  to  the Agent,
             shall  contain  conditions,  terms,   stipulations  and  insuring
             covenants satisfactory to  the Agent, and  shall be kept  in full
             force and effect by the  Owner so long as the  Security Documents
             and  the Secured  Indebtedness shall  be  outstanding.   All such
             policies, binders and other interim insurance  contracts shall be
             executed and issued in  the name of the  Owner and shall, to  the
             extent  required herein, provide that  the Mortgagee shall be the
             loss payee for distribution  by it to  itself, the Banks and  the
             Owner  as their interests  may appear, and  shall provide  for at
             least  ten days' prior notice to be given to the Mortgagee by the
             underwriters  or association in the event  of cancellation or the
             failure  of the  Owner to  pay any  premium or  call which  would
             suspend coverage  under the  policy  or the  payment  of a  claim
             thereunder.   The Mortgagee and  the Banks shall be  named as co-
             assureds  on  all  such  policies and  insurance  contracts,  but
             without liability of the  Mortgagee, or the Banks for premiums or
             calls.  Complete certified  copies of all such policies,  binders
             and other  interim insurance contracts shall  be delivered to the
             Mortgagee.  Originals shall  also be provided upon the request of
             the  Mortgagee.    The  Owner  shall  furnish  to  the  Mortgagee
             annually a detailed report signed by  a firm of marine  insurance
             brokers  satisfactory  to  the  Mortgagee  as  to  the  insurance
             maintained in respect of the  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 Mortgagee,  by notice  to the
             underwriters, although the following insurance is  payable to the
             Mortgagee, (i)  any loss  under  any insurance  on  the Rig  with
             respect to  Protection and Indemnity  Risks may be paid  directly
             to the  Owner to  reimburse it  for any  loss, damage  or expense
             incurred by it and covered by such insurance or  to the person to
             whom any  liability covered by such  insurance has  been incurred
             and (ii) in the  case of any loss  (other than a loss covered  by
             (i) above  or by  the  next following  paragraph  of this  Clause
             6.01(b)) under any  insurance with  respect to the  Rig involving
             any damage to the  Rig, the underwriters  may pay direct for  the
             repair, salvage or other  charges involved or, if the Owner shall
             have first  fully repaired  the  damage or  paid  the salvage  or
             other  charges,  may pay  the  Owner  as reimbursement  therefor;
             provided,  however,  that  if  such  damage   involves  a  before
             deductible  loss in  excess of US$1,000,000.00  (One Million U.S.
             Dollars),  the underwriters  shall not make  such payment without
             first  obtaining  the written  consent thereto  of  the Mortgagee
             (which consent shall  not be  unreasonably withheld).   Any  loss
             covered  by this  paragraph which  is paid  to the  Mortgagee but
             which might have been  paid, in accordance with the provisions of
             this paragraph, directly  to the Owner  or others, shall  be paid
             by the Mortgagee  to, or as directed by, the  Owner and all other
             payments  to the Mortgagee  of losses  covered by  this paragraph
             shall  be applied  by  the Mortgagee  in  accordance with  Clause
             10.01.

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

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

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

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

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

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

       (h)   The  Owner shall  not employ  the  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 to such  employment of the insurers
             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  Mortgagee that  throughout  the Credit
       Facility Period the Owner will:

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

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

       (c)   keep the Rig in a  good and efficient state of repair  consistent
             with first-class ship-ownership and management  practice employed
             by owners of drilling rigs of  similar size and type and so as to
             maintain  her   present  class  (namely   +A1  Column  Stabilized
             Drilling Unit) at Det Norske Veritas free  of recommendations and
             qualifications  and  change  of  class, save  those  approved  in
             writing by the Mortgagee and so as to comply  with all applicable
             laws,  treaties and  conventions of  the Republic  of  Panama and
             other applicable jurisdictions, and rules and regulations  issued
             thereunder, and have on  board as and when required thereby valid
             certificates showing compliance therewith;

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

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

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

       (g)   promptly  pay and  discharge all  debts, damages  and liabilities
             whatsoever which  have given  or  may give  rise  to maritime  or
             possessory  liens  (other  than  Permitted Liens)  on  or  claims
             enforceable  against  the  Rig   and  all  tolls,  dues,   taxes,
             assessments, governmental  charges, fines and  penalties lawfully
             charged  on or  in  respect of  the Rig  and  all other  expenses
             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;

       (h)   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 can reasonably be expected to  render
             her liable  to destruction, seizure  or confiscation  and in  the
             event  of hostilities in  any part  of the world  (whether war be
             declared or not) not employ  the 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  Mortgagee  may   reasonably
             require;

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

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

             (i)  any  casualty  to  the 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 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  Mortgagee  30 days  prior  notice,
                  provided, that in the  event of any emergency dry docking
                  of  the  Rig,  the  Owner  shall  immediately  notify the
                  Mortgagee; 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 Rid remains  manned)
                  and obtain the Mortgagee's prior written consent;

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

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

       (m)   not  without the  previous consent  in writing  of  the Mortgagee
             (such consent not to  be unreasonably withheld), put the 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  United States  Dollars  (US$2,500,000.00) (or  the
             equivalent in  any other currency)  unless (i) such person  shall
             first have given  to the Mortgagee  and in terms  satisfactory to
             it a written undertaking not  to exercise any lien on the Rig for
             the cost of such work or otherwise or (ii) the cost of  such work
             shall be fully covered by applicable insurance;

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

       (o)   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 and
             salvage and to any  representative of the Mortgagee on demand and
             to  place and keep prominently displayed in the chart room and in
             the master's  cabin of the 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 subject to an Indenture of First Naval Mortgage
             in  favor of CHRISTIANIA  BANK OG KREDITKASSE,  as Agent  for the
             Banks   defined  in   said  Mortgage,  in   conformity  with  the
             provisions of Chapter  V, Title IV of Book Second  of the Code of
             Commerce,  and the  pertinent provisions  of the  Civil  Code and
             other legislation  of the Republic of Panama.  Under the terms of
             said Mortgage  neither the  owner, any  charterer, the  Master of
             the  Rig nor  any other  person shall  have the  right, power  or
             authority to create,  incur or permit to  be placed upon the  Rig
             any other  lien whatsoever  other than  for current crew's  wages
             and  salvage and Permitted Liens (as that term is defined in said
             Mortgage)."

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

       (q)   notify the Mortgagee forthwith upon:

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

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

       (r)   not sell, mortgage or transfer the  Rig (other than as  permitted
             by  the  Credit Agreement)  without  the written  consent  of the
             Mortgagee  having  first  been  obtained, and  any  such  written
             consent to any one such sale,  mortgage or transfer shall not  be
             construed to be a  waiver of this provision  with respect to  any
             subsequent proposed sale, mortgage or  transfer.  Any such  sale,
             mortgage or transfer shall be subject  to the provisions of  this
             Mortgage and the  lien it creates.   The Owner shall  not charter
             the  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 Mortgagee  to any
             penalty,  sanction or  investigation or (ii)  jeopardize the lien
             created by this Mortgage  or (iii) have a material adverse effect
             on the Owner or the operation of the Rig;

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

8.     PROTECTION OF SECURITY

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

8.02   Without prejudice to the generality of Clause 8.01:

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

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

9.     ENFORCEABILITY AND MORTGAGEE'S POWERS

9.01   Upon  the happening  of any of  the Events of  Default specified in the
       Credit Agreement  but without  the  necessity for  any  court order  or
       declaration in  any jurisdiction to the effect that an Event of Default
       has occurred (and whether prior to or after the  Mortgagee or the Banks
       having  served on  the  Owner any  such  notice as  is  referred to  in
       Section  9 of the  Credit Agreement) the  security constituted  by this
       Mortgage shall become immediately  enforceable and the Mortgagee  shall
       be entitled,  as  and when  it  may  see fit,  to  put into  force  and
       exercise all  or any of the powers possessed by  it as mortgagee of the
       Rig or otherwise and in particular:

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

       (b)   to take possession of  the 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 Mortgagee
             without legal process  and without liability of the Mortgagee for
             any  losses or  damages incurred  thereby  and without  having to
             render accounts to the Owner in connection therewith;

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

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

       (e)   to take  over or institute  (if necessary  using the name  of the
             Owner)  all such  proceedings  in connection  with  the Rig,  the
             Insurances, or any Requisition  Compensation as the Mortgagee  in
             its  absolute discretion  thinks fit and  to discharge, compound,
             release or compromise claims  against the Owner in respect of the
             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 Mortgagee
             in its absolute discretion may  determine with power to  postpone
             any such sale,  without being answerable for any  loss occasioned
             by  such  sale or  resulting  from  postponement thereof,  and/or
             itself to purchase the Rig  at any such public auction and to set
             off  the  purchase  price  against  all   or  any  part  of   the
             Obligations,  subject to  notice  of  sale  being  given  by  the
             Mortgagee to the  Owner and other  mortgagees of record,  if any,
             by  airmail,  postage  pre-paid  and  by publication  once  in  a
             newspaper  of general circulation in the City of Panama, Republic
             of Panama, not less than twenty (20)  calendar days in advance of
             the sale, to satisfy  the requirement of notice of sale contained
             in Article  1527 of  the Panama  Code of  Commerce.   Such notice
             shall be necessary only in respect of the initial date of sale;

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

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

9.02   The Mortgagee  shall not  be  obliged to  make any  enquiry  as to  the
       nature  or sufficiency  of  any  payment  received  by  it  under  this
       Mortgage or to make  any claim, take any  action or enforce any  rights
       and benefits  assigned to  the Mortgagee by  this Mortgage or  to which
       the Mortgagee may at any time be entitled hereunder.

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

9.04   The Mortgagee shall  not by reason of the taking  possession of the 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 Mortgagee the
       purchaser shall not be bound to see or enquire whether  the Mortgagee's
       power of sale has  arisen in the manner  provided in this Mortgage  and
       the  sale shall be deemed  to be within the power  of the Mortgagee and
       the receipt of the Mortgagee for  the purchase money shall  effectively
       discharge the purchaser who  shall not be concerned with the  manner of
       application  of  the  proceeds of  sale  or  be in  any  way answerable
       therefor.

10.    APPLICATION OF MONEYS

10.01  (a)   All moneys  received by  the Mortgagee  or any Secured  Creditor,
             including, without limitation, in respect of  sale of the 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 Mortgagee 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 Mortgagee  has
                     actual notice (without investigation).

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

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

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

11.    FURTHER ASSURANCES

11.01  The Owner shall execute and do all such assurances,  acts and things as
       the Mortgagee in its absolute discretion may require for:

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

       (b)   preserving or protecting any of the  rights of the Mortgagee  and
             the Agent under this Mortgage; or

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

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

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

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

12.    POWER OF ATTORNEY

12.01  The  Owner, by way  of security and in  order to more  fully secure the
       performance of the Obligations under this  Mortgage, hereby irrevocably
       appoints  the Mortgagee as its attorney for  the duration of the Credit
       Facility Period for the purposes of:

       (a)   doing  in  its  name all  acts  and  executing,  signing  and (if
             required) registering in  its name all documents which  the Owner
             itself  could do, execute,  sign or register  in relation  to the
             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  Mortgagee until  this
             Mortgage  shall have become  immediately enforceable  pursuant to
             Clause 9.01; and

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

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

13.    INDEMNITIES

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

       (a)   in the exercise  or purported exercise  of any rights,  powers or
             discretions vested in them pursuant to this Mortgage; or

       (b)   in  the  preservation or  enforcement of  the  Mortgagee's rights
             under this Mortgage; or

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

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

13.02  Without limiting the  foregoing Clause 13.01, the Owner  hereby further
       indemnifies and holds harmless  each of the Secured Creditors and their
       respective officers,  directors, employees,  attorneys and agents  from
       and  against  any and  all  liabilities,  losses, obligations,  claims,
       damages,  penalties, causes  of action, costs  and expenses (including,
       without   limitation,   reasonable   attorneys'   fees   and  expenses,
       consultant  fees, investigation  and laboratory  fees) imposed  upon or
       incurred by or asserted against them, or any of them, by reason  of (a)
       an  actual,  alleged  or  threatened Environmental  Incident;  (b)  any
       personal injury (including wrongful death) or  property damage (real or
       personal)  or economic  damage  arising  out  of  or  related  to  such
       Environmental  Incident;  (c)   any  Environmental  Claim  brought   or
       threatened,  or  settlement reached;  or  (d)  any  violation of  laws,
       orders, regulations, requirements or demands of government  authorities
       relating to Hazardous Materials at, or discharged from the 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 Credit  Agreement or this Mortgage is made or fails
       to be satisfied in  a currency (the "payment currency") other  than the
       currency  in which such payment is due under or in connection with this
       Mortgage (the  "contractual currency"),  then  to the  extent that  the
       amount of  such  payment  actually  received  by  the  Mortgagee,  when
       converted into the contractual  currency at the rate of exchange, falls
       short of the amount due under or in connection  with this Mortgage, the
       Owner, as a  separate and  independent obligation, shall  indemnify and
       hold harmless the Mortgagee against the amount of such  shortfall.  For
       the purposes of  this Clause 13.03, "rate  of exchange" means  the rate
       at which the Mortgagee is able on  the date of such payment (or,  if it
       is  not  practicable  for  the Mortgagee  to  purchase  the contractual
       currency with the payment currency on the date of  such payment, at the
       rate  of  exchange  as  soon  afterwards  as  is  practicable  for  the
       Mortgagee to  do so)  to  purchase the  contractual  currency with  the
       payment  currency and  shall take  into account  any premium  and other
       costs of exchange with respect thereto.

14.    EXPENSES

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

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

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

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

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

       (b)   any consent or waiver  required from the Mortgagee in relation to
             the Credit Agreement  and the other  Credit Documents (or  any of
             them),

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

14.03  The  Owner shall  pay promptly  all stamp,  documentary and  other like
       duties and  Taxes to which  the Credit Agreement  and the  other Credit
       Documents (or  any of  them)  may be  subject or  give  rise and  shall
       indemnify the Mortgagee on  demand against any and all liabilities with
       respect to or  resulting from any delay or omission  on the part of the
       Owner to pay any such duties or Taxes.

15.    COMMUNICATIONS

15.01  All notices required to be given to the Mortgagee shall be made to  the
       following address:

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

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

16.    ASSIGNMENTS

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

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

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

17.    TOTAL AMOUNT, ETC.

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

18.    WAIVER; AMENDMENT

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

19.    MISCELLANEOUS

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

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

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

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

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

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

20.    JURISDICTION

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

20.02  Without  prejudice to  the generality  of  Clause 20.01,  the Mortgagee
       shall  have the  right to  arrest and  take action  against the  Rig at
       whatever place the Rig  shall be found lying and for the purpose of any
       action  which the  Mortgagee  may  bring  before  the  courts  of  such
       jurisdiction  or other judicial  authority and for  the purpose  of any
       action  which  the  Mortgagee may  bring  against  the  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.

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

IN WITNESS   whereof  the Owner  and the  Mortgagee have  duly executed  these
presents the day and year first before written.

READING & BATES DRILLING CO.


By:  _____________________________________


CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH


By:  _____________________________________




By:  _____________________________________

                          ACKNOWLEDGMENT OF MORTGAGE


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


                   On this  9th  day  of  July,  1996,  before  me  personally
appeared ____________________ to me known and who resides at                  
                      ;  and  who submitted  evidence  to  me  that  he  is  a
___________  of READING & BATES DRILLING  CO., the ___________________ company
described in and which executed the foregoing mortgage; and that he signed his
name thereto pursuant to authority granted to him by the Board of Directors of
said corporation.




____________________________________
Notary Public




                          ACKNOWLEDGMENT OF MORTGAGE


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


                   On this  9th  day  of  July,  1996,  before  me  personally
appeared    ______________    to    me    known    and    who    resides    at
__________________________; and who  submitted evidence to  me that he/she  is
__________   of  CHRISTIANIA  BANK  OG  KREDITKASSE,   NEW  YORK  BRANCH,  the
corporation described in and which  executed the foregoing mortgage; and  that
he/she signed his/her name thereto pursuant to authority granted to him/her by
the Board of Directors of said corporation.




____________________________________
Notary Public




                          ACKNOWLEDGMENT OF MORTGAGE


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


                   On  this  9th  day  of  July,  1996, before  me  personally
appeared    ______________    to    me    known    and    who    resides    at
__________________________; and who  submitted evidence to  me that he/she  is
__________  of  CHRISTIANIA   BANK  OG  KREDITKASSE,  NEW   YORK  BRANCH,  the
corporation described in and which  executed the foregoing mortgage; and  that
he/she signed his/her name thereto pursuant to authority granted to him/her by
the Board of Directors of said corporation.




____________________________________
Notary Public