Exhibit 10.124


                           FIRST PREFERRED MORTGAGE

                            Dated November 13, 1996

                       READING & BATES OFFSHORE, LIMITED

                                - in favor of -

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


                              GEORGE H. GALLOWAY
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                                     INDEX

CLAUSE                  SUBJECT MATTERPAGE

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

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

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


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

BY

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

IN FAVOR OF

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

WHEREAS

(A)    The Owner is  the sole owner of the  whole of the jack-up  drilling rig
       GEORGE H.  GALLOWAY documented under  the laws and  flag of the  United
       States  of   America  with  Official   Number 673210  of  3,729   gross
       registered tons and 2,496 net registered tons (the "Rig").

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

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

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

(E)    This  Mortgage is made  for the  benefit of  the Trustee to  secure the
       guaranty by the  Owner of (i) the  full and prompt payment  when due of
       (x) the principal of  and interest on the Notes issued, and Loans made,
       under  the Credit  Agreement,  and  all reimbursement  obligations  and
       Unpaid Drawings with respect  to the Letters of Credit issued under the
       Credit  Agreement  and  (y)  all  other  obligations  and  indebtedness
       (including,  without   limitation,  indemnities,   Fees  and   interest
       thereon)  of the  Borrower  to the  Secured  Creditors (as  hereinafter
       defined), whether  now existing  or hereafter  incurred under,  arising
       out of or in connection with the Credit Agreement and the other  Credit
       Documents  including, without  limitation, this  Mortgage  and the  due
       performance  and compliance  by  the Borrower  with  all of  the terms,
       conditions and  agreements contained  in the Credit  Agreement and  the
       other Credit  Documents including,  without limitation, this  Mortgage;
       (ii) any and all sums advanced by the Trustee in order to preserve  the
       Collateral (as hereinafter  defined) or preserve its  security interest
       in  the Collateral;  (iii)  in  the event  of  any proceeding  for  the
       collection   or  enforcement  of   any  indebtedness,  obligations,  or
       liabilities of  the Borrower referred to in  clause (i) above, after an
       Event of Default  shall have occurred and be continuing, the reasonable
       expenses of  the Trustee of  re-taking, holding, preparing  for sale or
       lease,   selling  or  otherwise  disposing  of   or  realizing  on  the
       Collateral, or of any exercise by the  Trustee of its rights hereunder,
       together with reasonable  attorneys' fees of counsel to the Trustee and
       court costs; and  (iv) all amounts paid  by any Indemnitee as  to which
       such Indemnitee  has the right to reimbursement under Clause 13 of this
       Mortgage  (all   such  obligations,  liabilities,   sums  and  expenses
       referred  to  in  clauses (i)  through  (iv)  above being  collectively
       referred to as the "Obligations").  It is  acknowledged and agreed that
       the "Obligations"  shall  include extensions  of  credit of  the  types
       described above,  whether outstanding on  the date of  this Mortgage or
       extended from time to time after the date of this Mortgage. 

(F)    This  First  Preferred  Mortgage  is  entered  into  by  the  Owner  in
       consideration of the Banks agreeing  to make the Facility  available to
       the Borrower  and  as  a  condition  thereto and  for  other  good  and
       valuable consideration provided by the Banks (the  sufficiency of which
       the Owner hereby acknowledges).

NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED

1.     DEFINITIONS AND INTERPRETATION

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

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

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

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

       "Credit Agreement"  means the  Credit Agreement, dated  as of  November
       13, 1996,  among Holdings, the  Borrower, the Banks, the  Documentation
       Agents, and the Administrative Agent  first referred to in  Recital (B)
       hereto, as modified, amended or supplemented from time to time;

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

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

       "Default  Rate"  shall   mean  the  rate  of  interest   calculated  in
       accordance with Section 1.08(c) of the Credit Agreement;

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

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

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

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

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

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

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

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

       "Interest Period"  shall have  the same  meaning for  such term as  set
       forth in Section 1.09 of the Credit Agreement;

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

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

       "Major Casualty" means any casualty  to the Rig in respect  whereof the
       claim  or the  aggregate  of the  claims  against all  insurers, before
       adjustment  for any  relevant  franchise  or deductible,  exceeds  Five
       Hundred Thousand United  States Dollars (US$500,000) or  the equivalent
       in any other currency;

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

       "Obligations" shall have the meaning provided in Recital (E) hereto;

       "Oil Pollution Act 1990"  means the Oil Pollution Act 1990 (33 U.S.C. 
       2701 et seq.), as amended;

       "Other  Rigs" means,  individually  or collectively,  each  of (i)  the
       semi-submersible  drilling  rig  JACK  BATES   owned  by  the  Borrower
       documented under the laws  and flag of the United  States with Official
       Number  906283  of  19,928  gross  registered  tons  and    14,948  net
       registered tons; (ii)  the offshore drilling  rig W. D.  KENT owned  by
       Reading & Bates Exploration  Co. documented under the laws and  flag of
       the   United  States  with  Official   Number  583169  of  5,383  gross
       registered  tons  and 4,185  net  registered tons;  (iii)  the offshore
       drilling rig CHARLEY  GRAVES owned by Reading and Bates Borneo Drilling
       Co., Ltd. documented under  the laws and flag of the Republic of Panama
       with  Patente  Number 6618-76-CH  of  5,829 gross  registered  tons and
       1,748 net registered  tons; (iv) the jack-up drilling rig RON TAPPMEYER
       owned  by Reading &  Bates (A) Pty Ltd.  documented under  the laws and
       flag  of  Australia   with  Official  Number 855213  of   11,455  gross
       registered  tons  and   3,436  net  registered  tons;  (v)   the  semi-
       submersible drilling rig  J. W. McLEAN owned by the Borrower documented
       under the  laws and flag of the Republic  of Panama with Patente Number
       25384-PEXT  of 15,453  gross registered tons  and 4,636  net registered
       tons; (vi)  the  semi-submersible drilling  rig  RIG  41 owned  by  the
       Borrower documented under the laws  and flag of the Republic  of Panama
       with the  Patente Number to  be assigned on  the date hereof of  10,078
       gross registered tons  and 3,024 net registered tons; (vii) the jack-up
       drilling rig HARVEY  H. WARD owned  by HRB  Rig Corporation  documented
       under the laws and  flag of the United States of  America with Official
       Number 642693 of 4,121 gross  registered tons and 3,079  net registered
       tons;  (viii) the jack-up  drilling rig F.  G. McCLINTOCK  owned by the
       Owner  documented under  the  laws and  flag  of the  United  States of
       America with Official  Number 562059 of 5,525 gross registered tons and
       1,657 net registered  tons; (ix) the jack-up drilling rig RANDOLPH YOST
       owned by the Borrower documented under the laws  and flag of the United
       States  of  America  with   Official  Number  601699  of   4,701  gross
       registered  tons  and  4,701  net  registered  tons;  (x)  the  jack-up
       drilling rig  J. T. ANGEL  owned by  the Borrower documented  under the
       laws and  flag of the  United States  of America  with Official  Number
       651645 of  4,186 gross registered  tons and 3,090  net registered tons;
       (xi) the  jack-up drilling rig  ROGER W. MOWELL  owned by the  Borrower
       documented under  the laws  and flag  of the  United States of  America
       with Official  Number 645360 of  4,121 gross registered  tons and 3,079
       net  registered tons;  (xii)  the jack-up  drilling  rig D.  R. STEWART
       owned by Reading &  Bates Exploration Co. documented under the laws and
       flag of  the United States  of America with  Official Number 626904  of
       6,494 gross registered tons and  5,834 net registered tons;  and (xiii)
       the  jack-up drilling  rig  C.  E. THORNTON  to  be  owned by  HRB  Rig
       Corporation  documented under the laws and flag of the United States of
       America with Official  Number 673210 of 6,096 gross registered tons and
       6,096 net registered tons;

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

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

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

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

       "Secured Creditors" shall  mean the Trustee,  the Banks, the  Letter of
       Credit Issuer and  the Administrative Agent under and as defined in the
       Credit Agreement;

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

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

       "Subsidiary  Guaranty" means  the agreement  dated as  of  November 13,
       1996 made by the  Owner in favor of  the Administrative Agent as  first
       referred  to   in  Recital   (D)  hereto,   as  modified,   amended  or
       supplemented from time to time;

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

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

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

       "Total Loss" means  (a) the actual, constructive, arranged,  agreed, or
       compromised  Total Loss of  the Rig;  (b) the requisition  for title or
       other compulsory acquisition  or forfeiture  of the Rig  otherwise than
       by  requisition for hire; (c)  the capture,  seizure, arrest, detention
       or confiscation of the  Rig by any government  or by persons acting  or
       purporting  to  act on  behalf  of  any government  unless  the Rig  be
       released from such capture, seizure, arrest or detention  within ninety
       (90) days after the occurrence thereof;

       "United  States Dollars"  and "US$"  means the  lawful currency  of the
       United States of America;

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

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

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

1.03   In this Mortgage:

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

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

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

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

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

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

2.     REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

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

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

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

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

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

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

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

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

2.02   The representations and warranties  of the Owner set out in Clause 2.01
       shall  survive the execution of this Mortgage and shall be deemed to be
       repeated at  the time of the making of each Loan and at the time of the
       issuance  of  each Letter  of Credit,  with  respect to  the  facts and
       circumstances  existing at  each  such time,  as if  made at  each such
       time.

3.     MORTGAGE

3.01   In  order to secure  the Obligations, the  Owner has  granted, conveyed
       and  mortgaged and does  by these presents  grant, convey  and mortgage
       unto the Trustee, its successors  and assigns, the whole of the  Rig TO
       HAVE AND TO HOLD the  same unto the Trustee, its successors and assigns
       forever upon  the terms  herein set  forth for the  enforcement of  the
       Obligations.

       Provided only and  the condition of these presents is  such that if all
       of  the Obligations secured  by this Mortgage  have terminated  or have
       been performed  in full  as  and when  the same  shall  become due  and
       payable  in accordance with  the terms of  the Subsidiary  Guaranty and
       this Mortgage and  shall observe and  comply with the  covenants, terms
       and conditions contained in the  Subsidiary Guaranty and this  Mortgage
       expressed or  implied to be performed, observed or complied with by and
       on the part of  the Owner and its  successors and assigns, all  without
       delay or  fraud and according to  the true intent and  meaning thereof,
       then these  presents and the  rights hereunder  shall cease,  determine
       and be void otherwise  to be and remain  in full force and effect  and,
       in such event, the Trustee  agrees to execute and record at the expense
       of the  Owner, all such documents  as the Owner  may reasonably require
       to discharge this Mortgage.

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

3.02   The Owner shall  remain liable to  perform all the  obligations assumed
       by it in  relation to the Rig and  none of the Secured  Creditors shall
       be under  any obligation of any  kind whatsoever in  respect thereof or
       be  under any liability whatsoever in event of any failure by the Owner
       to perform its obligations in respect thereof.

4.     PAYMENT COVENANTS

4.01   The Owner hereby covenants with the Secured Creditors:

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

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

       (c)   to  pay and perform its obligations which may be or become due or
             owing  to  a  Secured  Creditor  under  this   Mortgage  and  the
             Subsidiary  Guaranty at  the  times and  in the  manner specified
             herein or therein.

5.     PRESERVATION OF SECURITY

5.01   It is declared and agreed that:

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

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

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

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

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

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

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

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

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

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

       (d)   any amendment or supplement to the  Credit Agreement, any of  the
             other  Credit Documents  (other than this  Mortgage) or any other
             document or uch  jurisdiction or
       other judicial authority  and for the purpose  of any action which  the
       Trustee may bring against the Rig, any writ, notice, judgment  or other
       legal process or documents may (without  prejudice to any other  method
       of  service under applicable law) be served  upon the master of the Rig
       (or  upon anyone acting as the master) and such service shall be deemed
       good service on the Owner for all purposes.

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


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

READING & BATES OFFSHORE, LIMITED


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



                          ACKNOWLEDGEMENT OF MORTGAGE


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



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



                                 _____________________
                                 Notary Public