Exhibit 10.91     


                       INDENTURE OF FIRST NAVAL MORTGAGE


                  READING AND BATES BORNEO DRILLING CO., LTD.

                                    - and -

                    CHRISTIANIA BANK OG KREDITKASSE, agent

                                 as Mortgagee


                                CHARLEY GRAVES

                             Dated April 30, 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 . . . . . . . . . . . . . . . . . . . . . . . 9 
  5         PRESERVATION OF SECURITY  . . . . . . . . . . . . . . . . . .  10 
  6         INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . .  11 
  7         RIG COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .  14 
  8         PROTECTION OF SECURITY  . . . . . . . . . . . . . . . . . . .  18 
  9         ENFORCEABILITY AND MORTGAGEE'S POWERS . . . . . . . . . . . .  18 
  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  . . . . . . . . . . . . . . . . . . . . . . . .  25 

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

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       THIS INDENTURE OF FIRST NAVAL MORTGAGE made and entered into this  30th
day of  April, 1996, between READING  AND BATES BORNEO DRILLING  CO., LTD., 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
CHARLEY  GRAVES of  5,829 gross  tons, 1,748  net tons  and with  a  length of
87.78m, a  breadth of 21.34m  and a  depth of  6.55m and  Permanent Patent  of
Navigation  No. 6618-76-CH  (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
       CHARLEY GRAVES documented under  the laws and flag  of the Republic  of
       Panama.

(B)    By a  Credit Agreement dated  as of April 30,  1996 (as in  effect from
       time   to  time,  the  "Credit   Agreement")  among   Reading  &  Bates
       Corporation,  a  Delaware   corporation,  as  guarantor   ("Holdings"),
       Reading   &  Bates   Drilling  Co.,   an   Oklahoma  corporation   (the
       "Borrower"), the Banks party thereto, Credit Lyonnais New  York Branch,
       as  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 amongst 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.   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.

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

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

(E)    This Mortgage is  made for the benefit  of the Mortgagee to  secure the
       guaranty by the  Owner of (i) the  full and prompt payment when  due of
       (x)  the principal of  interest on  the Notes  issued, and  Loans made,
       under  the Credit  Agreement,  and  all reimbursement  obligations  and
       Unpaid Drawings with respect to the Letters  of Credit issued under the
       Credit  Agreement  and  (y)  all  other  obligations  and  indebtedness
       (including,  without   limitation,  indemnities,   Fees  and   interest
       thereon)  of  the Borrower  to  the Secured  Creditors  (as hereinafter
       defined), whether  now existing  or hereafter  incurred under,  arising
       out of or in  connection with the Credit Agreement and the other Credit
       Documents  including, without  limitation, this  Mortgage  and the  due
       performance  and compliance  by the  Borrower with  all  of the  terms,
       conditions and  agreements contained in  the Credit  Agreement and  the
       other  Credit Documents including,  without limitation,  this Mortgage;
       (ii) any and  all sums advanced by  the Mortgagee in order  to preserve
       the  Collateral  (as  hereinafter defined)  or  preserve  its  security
       interest in  the Collateral; (iii) in  the event of any  proceeding for
       the  collection or  enforcement of  any  indebtedness, obligations,  or
       liabilities of the  Borrower referred to in clause  (i) above, after an
       Event of Default shall have occurred and  be continuing, the reasonable
       expenses of the Mortgagee of re-taking, holding,  preparing for sale or
       lease,  selling  or  otherwise   disposing  of  or  realizing   on  the
       Collateral,  or  of  any  exercise  by  the  Mortgagee  of  its  rights
       hereunder, together with  reasonable attorneys' fees of counsel  to the
       Mortgagee  and court costs; and (iv) all amounts paid by any Indemnitee
       as  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 agreeing  to  make the  Facility
       available to  the Borrower and  as a  condition thereto  and for  other
       good and valuable consideration provided by the  Banks (the sufficiency
       of which the Owner hereby acknowledges).

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

1.     REPRESENTATIONS AND COVENANTS

1.01   The Owner represents and covenants to the Mortgagee that:

       a.    The Rig is  permanently registered in  the name of  the Owner  in
             the Public Registry of the City of  Panama, Republic of Panama in
             the  Microfilm Section  (Mercantile),  Microjacket N-12808,  Roll
             34425, Frame 95;

       b.    The Owner,  as sole legal  and beneficial owner  of the  Rig, has
             received   and  presently   possesses  a   Permanent  Patent   of
             Navigation for  the Rig,  duly issued by  the Republic of  Panama
             under No. 6618-76-CH;

       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 Borrower,  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 Subsidiary Guaranty.

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;

       "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 Borrower,  the Banks,  Credit Lyonnais  New
       York Branch, as  co-agent, and the Agent  first referred to in  Recital
       (B) hereto;

       "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  such Person's business  and not  in
       response  to  any  third  party  action or  request  of  any  kind)  or
       proceedings relating in any way to any Environmental Law or  any permit
       issued,  or  any  approval  given,  under any  such  Environmental  Law
       (hereafter, "Claims"), including,  without limitation, (a) any  and all
       Claims  by  governmental or  regulatory  authorities  for  enforcement,
       cleanup,  removal,  response,  remedial or  other  actions  or  damages
       pursuant  to any  applicable Environmental  Law, and  (b)  any and  all
       Claims   by   any    third   party   seeking   damages,   contribution,
       indemnification,  cost  recovery,  compensation  or  injunctive  relief
       resulting  from Hazardous  Materials  arising  from alleged  injury  or
       threat of injury to health, safety or the environment;
       "Environmental  Incident"  means (i)  any  release  of  Environmentally
       Sensitive  Material  from  the   Rig,  (ii)   any  incident  in   which
       Environmentally  Sensitive Material  is released  from  a vessel  other
       than the  Rig and which  involves collision  between the  Rig and  such
       other vessel  or some  other incident  of navigation  or operation,  in
       either case, where  the Rig or the  Owner are actually or  allegedly at
       fault or otherwise liable (in whole  or in part) or (iii) any  incident
       in  which Environmentally Sensitive Material is  released from a vessel
       other than the Rig and where the Rig  is actually or potentially liable
       to  be arrested  as  a result  and/or where  the  Owner is  actually or
       allegedly  at  fault or  otherwise  liable  (and, in  each  such  case,
       "release"  shall  mean  disposing,  discharging,  injecting,  spilling,
       leaking,  leaching,  dumping,  emitting,  escaping, emptying,  seeping,
       placing and  the  like, into  or upon  any  land or  water  or air,  or
       otherwise entering into the environment);

       "Environmental  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  Borrower referred  to  in
       Recital (C) hereto and in Section 1.05(c) of the Credit Agreement;

       "Obligations" shall have the meaning provided in Recital (C) 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
       offshore rig  JACK BATES  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  offshore rig
       D.  R.  STEWART  owned  by  Reading  &   Bates  Exploration  Co.  ("R&B
       Exploration") documented under  the laws and flag of the  United States
       with Official  Number 626904 of 6,494  gross registered tons  and 5,834
       net  registered tons; (iii) the offshore  drilling rig W. D. KENT owned
       by  R&B  Exploration  documented  under  the  laws   and  flag  of  the
       United States with  Official Number  583169 of  5,383 gross  registered
       tons and 4,185 net registered tons; (iv) the offshore  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;  and (v) the  offshore
       drilling J.W.  McLEAN owned by the  Borrower documented under  the laws
       and flag of  the Bahamas with Official  Number 715954 of 9199.01  gross
       registered tons and 7267.22 net registered tons;

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

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

       "Subsidiary Guaranty" means  the agreement dated  as of April  23, 1996
       made by  the  Owner in  favor of  the  Agent as  first referred  to  in
       Recital (D) hereto;

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

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

       "Total Loss" means  (a) the actual, constructive, arranged,  agreed, or
       compromised total  loss of the  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    CHARLEY   GRAVES;   gross    tonnage
             approximately  5,829;  net  tonnage  approximately  1,748; length
             overall  87.78 meters,  breadth 21.34 meters;  depth 6.55 meters;
             built  in 1975 by  Far East  Livingston Shipbuilding  Ltd.; radio
             call letters HP-3275;

       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 Subsidiary Guaranty and this Mortgage
       and shall observe  and comply with  the covenants terms  and conditions
       contained in the  Subsidiary Guaranty  and this Mortgage,  expressed or
       implied to be  performed, observed or complied with by  and on the part
       of the  Owner and its  successors and assigns, 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  Subsidiary Guaranty  at the  times and  in the
             manner specified herein or therein.

5.     PRESERVATION OF SECURITY

5.01   It is declared and agreed that:-

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

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

       (c)   the Mortgagee shall  not have to  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 Barge) at  American Bureau
             of  Shipping  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  outgoings
             whatsoever in respect of  the Rig and in  the event of arrest  of
             the  Rig pursuant  to  legal  process, or  in  the  event of  her
             detention in exercise or purported exercise  of any such lien  or
             claim  as aforesaid,  procure the  release of  the Rig  from such
             arrest  or detention  forthwith upon receiving  notice thereof by
             providing bail or otherwise as the circumstances may require;

       (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 Rig 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)  and/or 7.01(f)  or any  of them  the Mortgagee  shall be
             entitled (but not  bound) to arrange for the carrying out of such
             repairs to and/or  surveys of the  Rig as  it deems expedient  or
             necessary; and

       (c)   if  the Owner  does  not comply  with  the  provisions of  Clause
             7.01(h) or any of them, the 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
       Required  Banks having  served  on the  Owner  any  such notice  as  is
       referred  to in  Section  9  of  the  Credit  Agreement)  the  security
       constituted by this Mortgage  shall become immediately enforceable  and
       the 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 Subsidiary  Guaranty or this  Mortgage is  made or
       fails  to be  satisfied in  a currency  (the "payment  currency") other
       than the currency  in which such payment is due  under or in connection
       with this  Mortgage (the  "contractual currency"), then  to the  extent
       that  the amount of  such payment actually  received by  the Mortgagee,
       when converted into the contractual currency  at the rate of  exchange,
       falls short  of  the  amount  due under  or  in  connection  with  this
       Mortgage, the  Owner, as a separate  and independent  obligation, shall
       indemnify and hold  harmless the Mortgagee  against the amount  of such
       shortfall.  For the purposes of  this Clause 13.03, "rate of  exchange"
       means  the rate  at which  the Mortgagee is  able on  the date  of such
       payment (or,  if it is  not practicable for  the Mortgagee  to purchase
       the contractual currency with the payment currency  on the date of such
       payment, at the rate of  exchange as soon afterwards as is  practicable
       for the  Mortgagee to do so) to  purchase the contractual currency with
       the  payment currency and shall take into account any premium and other
       costs of exchange with respect thereto.

14.    EXPENSES

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

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

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

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

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

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

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

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

15.    COMMUNICATIONS

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

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

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

16.    ASSIGNMENTS

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

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

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

17.    TOTAL AMOUNT, ETC.

17.01  The total amount  of this  Mortgage is One  Hundred Million US  Dollars
       (US$100,000,000) of  principal  plus  interest, fees,  commissions  and
       performance of mortgage  covenants.  The  discharge amount is  the same
       as the total amount.

18.    WAIVER; AMENDMENT

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

19.    MISCELLANEOUS

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

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

19.03  The  Mortgagee, at  any time  and from  time to  time, may  delegate by
       power  of attorney or in any other  manner to any person or persons all
       or any  of the powers,  authorities and discretions  which are for  the
       time  being  exercisable  by  the  Mortgagee  under  this  Mortgage  in
       relation to the  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 AND BATES BORNEO DRILLING CO., LTD.


By:  _____________________________________

CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH


By:  _____________________________________


                          ACKNOWLEDGMENT OF MORTGAGE


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


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


                                                    ___________________
                                                    Notary Public



                          ACKNOWLEDGMENT OF MORTGAGE


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

                   On this  ____  day of  April,  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