Exhibit 10.87




                              SUBSIDIARY GUARANTY


            SUBSIDIARY  GUARANTY, dated  as  of  April 30,  1996  made by  the
undersigned (each  a "Guarantor" and collectively, the  "Guarantors").  Except
as  otherwise defined  herein,  terms used  herein and  defined in  the Credit
Agreement (as hereinafter defined) shall be used herein as therein defined.


                             W I T N E S S E T H :


            WHEREAS, Reading & Bates Corporation, Reading & Bates Drilling Co.
(the  "Borrower"),  various financial  institutions  from time  to  time party
thereto  (the "Banks"),  Credit  Lyonnais  New York  Branch,  as Co-Agent  and
Christiania Bank og Kreditkasse, New York Branch,  as Agent (the "Agent") have
entered  into a  Credit Agreement,  dated as  of April  30, 1996  (as amended,
modified or supplemented from time to time, the "Credit Agreement"), providing
for the making of Loans and the issuance of,  and participation in, Letters of
Credit as contemplated  therein (the  Banks, the Agent,  the Letter of  Credit
Issuer, the  Collateral Agent and  the Trustee are herein  collectively called
the "Creditors");

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


                              *     *     *     *


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


Address for each Guarantor

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


                                        By_______________________________
                                          Title:


                                        READING AND BATES BORNEO DRILLING 
                                         CO., LTD.


                                        By______________________________
                                          Title:




Accepted and Agreed to:

CHRISTIANIA BANK OG KREDITKASSE,
  NEW YORK BRANCH, 
  as Agent


By____________________________
  Title:


By____________________________
  Title: