Exhibit 10.130


                       INDENTURE OF FIRST NAVAL MORTGAGE

                         READING & BATES DRILLING CO.

                                    - and -

                       CHRISTIANIA BANK OG KREDITKASSE,
                               NEW YORK BRANCH,
             administrative agent, arranger and security trustee,

                                 as Mortgagee

                                 J. W. McLEAN

                            Dated November 13, 1996

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                                     INDEX


CLAUSE      SUBJECT MATTER                                                PAGE

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

EXHIBIT 1   FORM OF CREDIT AGREEMENT

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

       THIS INDENTURE OF FIRST NAVAL MORTGAGE made and entered into this  13th
day of  November, 1996,  between READING  &  BATES DRILLING  CO., an  Oklahoma
corporation 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  its office at  11 West 42nd  Street, New
York, NY 10036,  as agent for the Banks  (as hereinafter defined) (hereinafter
called the  "Mortgagee"), on the Panamanian offshore drilling rig J. W. McLEAN
of 15,453 gross  registered tons, 4,636 net registered tons  and with a length
of 111.86m, a breadth of 64.01m  and a depth of 42.67m and  Provisional Patent
of  Navigation No. 25384-PEXT (hereinafter  called the "Rig"), duly registered
under the laws and flag of the Republic of Panama, the detailed description of
which is hereinafter more particularly set forth.

                             W I T N E S S E T H :

WHEREAS

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

(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,  as
       guarantor  ("Holdings"), (ii)  the Owner, as  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 Mortgagee, as administrative  agent, arranger and security
       trustee (in  such capacity,  the "Administrative  Agent") (the form  of
       which Credit Agreement  together with the  form of  promissory note  of
       the  Owner attached  as  Exhibit B  thereto  but without  the remaining
       exhibits  is attached hereto  as Exhibit 1); it  was agreed among other
       things that  the Banks  would make  available to  the Owner  a reducing
       revolving credit  facility (the  "Facility") in  the maximum  aggregate
       principal amount at any one  time outstanding of Three  Hundred Million
       United States Dollars  (U.S.$300,000,000), 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 4.

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

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

(E)    This Indenture  of First Naval Mortgage,  which is entered into  by the
       Owner in consideration  of the Banks entering into the Credit Agreement
       and agreeing  to make  the Facility  available to  the Owner  and as  a
       condition  thereto  and  for  other  good  and  valuable  consideration
       provided by  the  Banks (the  sufficiency  of  which the  Owner  hereby
       acknowledges).

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

1.     REPRESENTATIONS AND COVENANTS

1.01   The Owner represents and covenants to the Mortgagee that:

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

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

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

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

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

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

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

       h.    the  Owner  has  taken  all  necessary  action  to authorize  the
             execution  and  delivery  of  this  Mortgage  and  this  Mortgage
             constitutes,  the legal,  valid  and  binding obligation  of  the
             Owner enforceable against the Owner in accordance  with its terms
             (except   to  the  extent   limited  by   applicable  bankruptcy,
             reorganization, insolvency, moratorium  or other laws of  general
             application  relating   to  or  affecting   the  enforcement   of
             creditors' rights  as from  time to  time in  effect and  general
             equitable principles)  and when  preliminarily recorded with  the
             Public Registry  in Panama  through the  Panamanian Consulate  in
             New York, New  York will create  a legal,  valid and  enforceable
             first  priority 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) and  all  Environmental Approvals  (as
             defined  herein)   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;

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

       n.    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

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

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

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

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

2.     DEFINITIONS AND INTERPRETATION

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

       "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; 

       "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  November
       13,  1996,  among Holdings,  the  Owner, 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  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  business of such  entity and not  in
       response  to  any third  party  action  or  request  of  any  kind)  or
       proceedings relating in any way to any  Environmental Law or any permit
       issued,  or  any  approval  given, under  any  such  Environmental  Law
       (hereafter, "Claims"), including,  without limitation, (a) any  and all
       Claims  by  governmental  or  regulatory  authorities for  enforcement,
       cleanup,  removal,  response,  remedial or  other  actions  or  damages
       pursuant  to any  applicable  Environmental Law,  and  (b) any  and all
       Claims    by   any   third   party   seeking   damages,   contribution,
       indemnification,  cost  recovery,  compensation  or  injunctive  relief
       resulting  from Hazardous  Materials  arising  from alleged  injury  or
       threat of injury to health, safety or the environment;

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

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

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

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

       "Other  Rigs"  means, individually  or  collectively, each  of  (i) the
       semi-submersible drilling rig JACK BATES owned by the Owner  documented
       under the laws and flag of  the United States of America with  Official
       Number 906283  of   19,928  gross  registered   tons  and  14,948   net
       registered tons; (ii) the jack-up drilling  rig D. R. STEWART owned  by
       Reading &  Bates Exploration Co.  ("R&B Exploration") documented  under
       the laws and flag of the United States of America with Official  Number
       626904 of  6,494 gross registered  tons and 5,834  net registered tons;
       (iii) the offshore  drilling rig W.  D. KENT owned  by R&B  Exploration
       documented under  the laws  and flag  of the  United States of  America
       with Official  Number 583169 of  5,383 gross registered  tons and 4,185
       net registered tons;  (iv) the jack-up drilling rig RON TAPPMEYER owned
       by Reading & Bates  (A) Pty Ltd. documented under the laws  and flag of
       Australia with Official  Number 855213 of 11,455 gross  registered tons
       and 3,436  net registered  tons; (v) the  semi-submersible drilling rig
       RIG 41 owned  by the Owner 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;
       (vi) 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;  (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
       Reading &  Bates Offshore, Limited  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 Owner  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  registered tons; (x)
       the jack-up  drilling rig  J. T.  ANGEL owned by  the Owner  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  Owner
       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 GEORGE H. GALLOWAY
       owned by  Reading & Bates  Offshore, Limited documented  under the laws
       and flag of the  United States of  America with Official Number  651646
       of  3,729 gross  registered  tons and  2,496  net registered  tons; 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  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  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;

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

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

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

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

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

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

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

2.03   In this Mortgage:

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

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

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

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

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

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

3.     MORTGAGE

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

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

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

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

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

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

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

4.     PAYMENT COVENANTS

4.01   The Owner hereby covenants with the Secured Creditors:

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

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

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

5.     PRESERVATION OF SECURITY

5.01   It is declared and agreed that:

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

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

       (c)   the  Mortgagee  shall not  have  to wait  for  the Administrative
             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 Administrative  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 Administrative 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 Administrative 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  Administrative  Agent.    With
             respect   to  hull   and  machinery/increased   value  insurance,
             including war risk, the Owner  shall insure the Rig and  keep her
             insured, or cause  the Rig to be insured, for  an amount which is
             at  least the  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  aggregate amount 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  Administrative  Agent  a   mortgagee's  single
             interest  policy providing coverage  which, when  aggregated with
             the   mortgagee's   interest    insurance   furnished   to    the
             Administrative Agent in  respect of the  Other Rigs, shall  be in
             an amount equal  to at least 110% of the  Total Commitment (or in
             lieu  of such  mortgagee's interest  insurance Owner  shall cause
             the hull and machinery/increased  value insurance to be  endorsed
             to  afford breach  of warranty  coverage for  the benefit  of the
             Administrative Agent).   Such mortgagee's interest  insurance and
             any  additional  insurance  policies  for  the   benefit  of  the
             Administrative  Agent shall  be maintained  in the  broadest form
             available  in the  American, British and  Scandinavian markets or
             other   major    international   markets   acceptable    to   the
             Administrative  Agent  through  underwriters  acceptable  to  the
             Administrative Agent.   The Rig shall  not operate in  or proceed
             into  any area  then  excluded by  trading  warranties under  its
             marine or war risk policies (including  protection and indemnity)
             without  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
             Administrative    Agent,   shall   contain   conditions,   terms,
             stipulations   and   insuring  covenants   satisfactory   to  the
             Administrative Agent, and shall  be kept in full force and effect
             by the  Owner so long as  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 directly for the
             repair, salvage or other  charges involved or, if the Owner shall
             have first  fully repaired  the  damage or  paid  the salvage  or
             other  charges,  may pay  the  Owner  as reimbursement  therefor;
             provided,  however,  that  if  such  damage   involves  a  before
             deductible  loss in  excess of US$1,000,000.00  (One Million U.S.
             Dollars),  the underwriters  shall not make  such payment without
             first  obtaining  the written  consent thereto  of  the Mortgagee
             (which consent  shall not  be unreasonably  withheld).   Any loss
             covered  by this  paragraph which  is paid  to the  Mortgagee but
             which might have been  paid, in accordance with the provisions of
             this paragraph, directly  to the Owner  or others, shall  be paid
             by the Mortgagee to, or  as directed by, the Owner and  all other
             payments to the  Mortgagee of  losses covered  by this  paragraph
             shall be  applied  by the  Mortgagee  in accordance  with  Clause
             10.01.

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

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

       (d)   The Owner  shall comply with and satisfy all of the provisions of
             any applicable  law, regulation, proclamation or order concerning
             financial responsibility for liabilities imposed on  the Owner or
             the Rig with respect  to the carriage of passengers or pollution,
             and will maintain, or  cause to  be maintained, all  certificates
             or other evidence  of financial responsibility as may be required
             by any such  law, regulation, proclamation or order  with respect
             to the trade in which the Rig from time to time is engaged.

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

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

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

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

7.     RIG COVENANTS

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

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

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

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

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

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

       (f)   permit the Mortgagee  by independent surveyors to  board the  Rig
             at  all  reasonable times  and  upon  reasonable notice  for  the
             purpose  of  inspecting  her  condition  or for  the  purpose  of
             satisfying themselves in regard  to proposed or executed  repairs
             and  to  afford  all  proper  facilities  for  such  inspections,
             provided that unless an  Event of Default shall have occurred and
             be  continuing, the cost of any such  inspection shall be for the
             account of the Mortgagee;

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

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

       (i)   promptly furnish to the  Mortgagee all such information as it may
             from  time to  time require  regarding the  Rig, her  employment,
             position  and  engagements,   particulars  of  all  towages   and
             salvages  and, upon  the  request of  the  Mortgagee 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 prior written consent of the Mortgagee; 

       (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, NEW YORK
             BRANCH,  as Administrative Agent  for the  Banks defined  in said
             Mortgage, in conformity with the  provisions of Chapter V,  Title
             IV of  Book Second of  the Code  of Commerce,  and the  pertinent
             provisions  of  the  Civil  Code and  other  legislation  of  the
             Republic  of Panama.   Under the terms  of said  Mortgage neither
             the owner,  any charterer,  the Master of  the Rig nor  any other
             person shall have the  right, power or authority to create, incur
             or permit to  be placed upon  the Rig  any other lien  whatsoever
             other than  for current  crew's wages  and salvage  and Permitted
             Liens (as that term is defined in said Mortgage)."

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

       (q)   notify the Mortgagee forthwith upon:

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

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

       (r)   not sell, mortgage or transfer the  Rig (other than as  permitted
             by  the Credit  Agreement)  without the  written  consent of  the
             Mortgagee  having  first  been  obtained, and  any  such  written
             consent to any one  such sale, mortgage or transfer shall  not be
             construed to be  a waiver of this  provision with respect to  any
             subsequent  proposed sale, mortgage or transfer.   Any such sale,
             mortgage or transfer shall be subject  to the provisions of  this
             Mortgage and  the lien it creates.   The Owner  shall not charter
             the Rig to, or permit  the Rig to serve under any  contract with,
             a person included  within the definition  of (i) "national"  of a
             "designated foreign country," or  "specially designated national"
             of a "designated foreign country," in the  Foreign Assets Control
             Regulations  or  the  Cuban  Assets Control  Regulations  of  the
             United States Treasury Department,  31 C.F.R. Parts 500  and 515,
             in each case as amended, (ii)  "Government of Libya", "entity  of
             the  Government  of  Libya" or  "Libyan  entity"  in  the  Libyan
             Sanctions Regulations  of the United  States Treasury Department,
             31 C.F.R. Part  550, as amended,  or (iii) "Government  of Iraq",
             "entity of the Government of  Iraq" or "Iraqi Government  entity"
             in the Iraqi Sanctions Regulations, 56  Fed. Reg. 2112 (1991)  to
             be codified  at 31 C.F.R.  Part 575, as  amended, all  within the
             meaning   of   said   Regulations   or   of    any   regulations,
             interpretations  or rulings  issued thereunder, or  sail in Cuban
             waters or enter any Cuban  port for any purpose or engage  in any
             transaction  that violates  any provision of  said Regulations or
             that  violates  any   provision  of   the  Iranian   Transactions
             Regulations,  31 C.F.R.  Part 560, as  amended, the Foreign Funds
             Control  Regulations,  31  C.F.R.  Part  520,   as  amended,  the
             Transaction Control Regulations, 31 C.F.R. Part  505, as amended,
             the  Haitian  Transaction Regulations,  31  C.F.R.  Part 580,  as
             amended, the Foreign Assets  Control Regulations, 31 C.F.R.  Part
             500,  as amended, or  Executive Orders 12810  and 12831;  if such
             transaction or violation would  (i) expose  the Mortgagee to  any
             penalty,  sanction or  investigation or (ii)  jeopardize the lien
             created by this Mortgage  or (iii) have a material adverse effect
             on the Owner or the operation of the Rig;

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

8.     PROTECTION OF SECURITY

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

8.02   Without prejudice to the generality of Clause 8.01:

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

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

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

9.     ENFORCEABILITY AND MORTGAGEE'S POWERS

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

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

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

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

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

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

       (f)   to  sell the  Rig  or any  share  therein with  or without  prior
             notice to  the Owner free  from any claim  of or by  the Owner of
             any  nature whatsoever, and  with or without  the benefit  of any
             charterparty  or  other contract  for her  employment,  by public
             auction  or private contract  at such place  and upon  such terms
             (including,  without limitation,  on terms  such that  payment of
             some or all of the purchase  price be deferred) as the  Mortgagee
             in its absolute  discretion may determine with power  to postpone
             any  such sale, without being  answerable for any loss occasioned
             by  such  sale or  resulting  from  postponement thereof,  and/or
             itself to purchase the Rig  at any such public auction and to set
             off  the  purchase  price  against  all   or  any  part  of   the
             Obligations,  subject  to  notice  of sale  being  given  by  the
             Mortgagee to the  Owner and other  mortgagees of record,  if any,
             by  airmail,  postage  pre-paid  and  by  publication  once  in a
             newspaper of general circulation  in the City of Panama, Republic
             of  Panama, not less than twenty (20) calendar days in advance of
             the sale, to satisfy  the requirement of notice of sale contained
             in Article  1527 of  the Panama Code  of Commerce.   Such  notice
             shall be necessary only in respect of the initial date of sale;

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

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

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

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

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

9.04   The Mortgagee shall  not by reason of the taking  possession of the Rig
       be liable to account  as mortgagee-in-possession or for anything except
       actual  receipts or be liable for any  loss upon realization or for any
       default  or  omission  for  which a  mortgagee-in-possession  might  be
       liable.

9.05   Upon  any sale of  the Rig or  any share  therein by the  Mortgagee the
       purchaser  shall not  be bound to  see or enquire  whether the power of
       sale  of the  Mortgagee  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  other  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
                   (D);

             (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  Administrative  Agent  under the  Credit
             Agreement for the account of the Secured Creditors.

       (d)   For  purposes of  applying payments  received in  accordance with
             this Clause 10.01, the  Mortgagee shall be entitled to reply upon
             (i) the Administrative  Agent under the Credit Agreement and (ii)
             the   Secured   Creditors  for   a   determination   (which   the
             Administrative  Agent  and   each  Secured  Creditor,   by  their
             acceptance of the  benefits of  this Mortgage shall  be obligated
             to  provide upon  request of  the  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  Administrative 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  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 other Secured Creditors under this Mortgage; or

       (c)   ensuring that the  security constituted by this Mortgage  and the
             covenants and obligations of the Owner under  this Mortgage shall
             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  each  of  the  Secured
       Creditors  and each agent  or attorney appointed  under or  pursuant to
       this Mortgage  (each an  "Indemnitee")  from and  against  any and  all
       expenses, claims, liabilities, losses,  taxes, costs, duties, fees  and
       charges  suffered, incurred or  made by such  Secured Creditor  or such
       agent or attorney in good faith:

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

       (b)   in  the  preservation  or   enforcement  of  the  rights  of  the
             Mortgagee 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 Creditors or such  agent or attorney shall be  recoverable
       on a full indemnity basis.

13.02  Without limiting the  foregoing Clause 13.01, the  Owner hereby further
       indemnifies and holds harmless  each of the Secured Creditors and their
       respective officers,  directors, employees,  attorneys and agents  from
       and  against  any and  all  liabilities,  losses, obligations,  claims,
       damages,  penalties, causes  of action, costs  and expenses (including,
       without   limitation,   reasonable  attorneys'   fees   and   expenses,
       consultant  fees, investigation  and laboratory  fees) imposed  upon or
       incurred by  or asserted against them, or any of them, by reason of (a)
       an  actual,  alleged  or  threatened Environmental  Incident;  (b)  any
       personal  injury (including wrongful death) or property damage (real or
       personal)  or economic  damage  arising  out  of  or  related  to  such
       Environmental  Incident;   (c)  any  Environmental  Claim   brought  or
       threatened,  or  settlement  reached; or  (d)  any  violation of  laws,
       orders, regulations, requirements or demands of  government authorities
       relating to Hazardous Materials at, or discharged from the Rig.

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

14.    EXPENSES

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

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

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

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

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

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

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

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

15.    COMMUNICATIONS

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

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

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

16.    ASSIGNMENTS

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

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

16.03  Pursuant  to Section 12.04 of  the Credit Agreement,  each Bank has the
       right  to  assign or  transfer all  or any  part  of its  rights and/or
       obligations under  the Credit Agreement on  the terms therein provided.
       The  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 Three Hundred Million  US Dollars
       (US$300,000,000)  of principal  plus  interest, fees,  commissions  and
       performance of mortgage  covenants.  The  discharge amount is  the same
       as the total amount.

18.    WAIVER; AMENDMENT

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

19.    MISCELLANEOUS

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

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

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

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

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

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

20.    JURISDICTION

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

20.02  Without  prejudice to  the generality  of  Clause 20.01,  the Mortgagee
       shall  have the  right to  arrest and  take action  against the  Rig at
       whatever place the Rig  shall be found lying and for the purpose of any
       action  which the  Mortgagee  may  bring  before  the  courts  of  such
       jurisdiction  or other judicial  authority and for  the purpose  of any
       action  which  the  Mortgagee may  bring  against  the  Rig,  any writ,
       notice,  judgment or  other  legal process  or  documents may  (without
       prejudice to  any other  method  of service  under  applicable law)  be
       served  upon the  master  of the  Rig  (or upon  anyone  acting as  the
       master)  and such service shall be deemed good service on the Owner for
       all purposes.

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

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


READING & BATES DRILLING CO.


By:  _____________________________________
       Name:  T.W. Nagle
       Title: Vice President and Treasurer



CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH


By:  _____________________________________
       Name:
       Title:


By:  _____________________________________
       Name:
       Title:




                          ACKNOWLEDGMENT OF MORTGAGE


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


                   On this  13th day of November,  1996, before  me personally
appeared Timothy  W. Nagle, to me  known and who resides at  13307 Tosca Lane,
Houston, Texas; and who  submitted evidence to me that he  is a Vice President
and Treasurer of  READING & BATES DRILLING  CO., the company described  in and
which executed the  foregoing mortgage;  and that he  signed his name  thereto
pursuant  to  authority granted  to  him by  the  Board of  Directors  of said
corporation.






____________________________________
Notary Public




                          ACKNOWLEDGMENT OF MORTGAGE


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


                   On this  13th day of November,  1996, before  me personally
appeared Hans  Chr. Kjelsrud  to me  known and  who resides  at 115  East 87th
Street,  New York, NY;  and who submitted  evidence to me  that he/she is Vice
President of CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH, the corporation
described in and which executed the foregoing mortgage; and that he/she signed
his/her name thereto pursuant to authority granted  to him/her by the Board of
Directors of said corporation.



____________________________________
Notary Public




                          ACKNOWLEDGMENT OF MORTGAGE


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


                   On  this 13th  day of November,  1996, before me personally
appeared  Justin F. McCarty,  III to me  known and who  resides at 35 Pleasant
Street, Katonah,  NY; and  who submitted evidence  to me  that he/she  is Vice
President 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