Exhibit 10.86

                              SECURITY AGREEMENT


            SECURITY AGREEMENT (as amended, modified or supplemented from time
to  time, this  "Agreement"), dated as  of April  30, 1996,  between Reading &
Bates Drilling Co. (the "Borrower"),  Reading & Bates Exploration Co., Reading
&  Bates  (A)  Pty.  Ltd.  and Reading  and  Bates  Borneo  Drilling  Co. Ltd.
(collectively the  Subsidiary Guarantors and, together with  the Borrower, the
"Assignors"),  and Christiania  Bank  og  Kreditkasse,  New  York  Branch,  as
Collateral Agent (the  "Collateral Agent"), for the benefit  of the Banks, the
Letter of Credit Issuer,  the Agent and the Trustee under,  and as defined in,
the Credit  Agreement hereinafter  referred to (such  Banks, Letter  of Credit
Issuer, Agent  and Trustee  are hereinafter called  the "Secured  Creditors").
Except as otherwise defined herein,  capitalized terms used herein and defined
in the Credit Agreement shall be used herein as so defined.


                             W I T N E S S E T H :


            WHEREAS,  Reading &  Bates Corporation,  the Borrower,  the Banks,
Credit  Lyonnais  New  York  Branch,  as  Co-Agent  and  Christiania  Bank  og
Kreditkasse, New  York Branch,  as Agent  (the "Agent"),  have entered into  a
Credit Agreement,  dated as of  April 30,  1996 (as modified,  supplemented or
amended from time to time,  the "Credit Agreement"), providing for the  making
of  Loans and  the issuance  of, and  participation in,  Letters of  Credit as
contemplated therein;

            WHEREAS, the  Subsidiary Guarantors have  executed the  Subsidiary
Guaranty  and thereby  guaranteed the  obligations of  the Borrower  under the
Credit Agreement and the other Credit Documents;

            WHEREAS, the Borrower  desires to incur Loans and  to have Letters
of Credit issued for its account under the Credit Agreement;

            WHEREAS,  it is a  condition precedent to the  making of Loans and
the  issuance  of Letters  of Credit  under the  Credit  Agreement and  to the
occurrence  of the Effective Date  that the Assignors  shall have executed and
delivered to the Collateral Agent this Agreement;

            WHEREAS, the Assignors desire to execute this Agreement to satisfy
the conditions described in the preceding paragraph;


            NOW, THEREFORE, in consideration  of the benefits accruing to  the
Assignors, the receipt  and sufficiency of which are  hereby acknowledged, the
Assignors  hereby  make the  following representations  and warranties  to the
Collateral Agent and  hereby covenant and  agree with the Collateral  Agent as
follows:

            SECTION 1.  PLEDGE AND GRANT OF SECURITY INTEREST.

            1.01 Obligations Secured.  The  Agreement is made for the  benefit
of the Secured Creditors 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  Borrower to  the  Secured
Creditors, whether now existing or hereafter incurred under, arising out of or
in connection with the Credit Agreement and the other Credit Documents and the
due performance  and  compliance  by  the  Borrower with  all  of  the  terms,
conditions  and agreements  contained in  the Credit  Agreement and  the other
Credit Documents;  (ii) any and all  sums advanced by the  Collateral Agent in
order  to preserve  the Collateral  (as hereinafter  defined) or  preserve its
security interest  in the Collateral; (iii) in the event of any proceeding for
the collection or enforcement of any indebtedness, obligations, or liabilities
of the Borrower referred  to in clause  (i) above, after  an Event of  Default
shall  have  occurred  and  be  continuing, the  reasonable  expenses  of  the
Collateral Agent 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 Collateral  Agent of  its rights  hereunder, together  with reasonable
attorneys'  fees of counsel to the Collateral  Agent and court costs; and (iv)
all amounts paid by  any Indemnitee as to which such  Indemnitee has the right
to reimbursement  under Section  11 of this  Agreement (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 Agreement or extended
from time to time after the date of this Agreement.

            1.02 Pledge  and  Grant  of  Security  Interest.    As  collateral
security for  the Obligations, the Assignors  hereby pledge and  assign to the
Collateral  Agent, for  the benefit  of  the Secured  Creditors, a  continuing
possessory lien  and security interest in  all of the Assignors'  right, title
and  interest in  and to  the Concentration  Account (as  hereinafter defined)
together with  all deposits made from time to time therein and all investments
from time to time therein and/or made with the funds therein  and all cash and
non-cash proceeds of any of the  foregoing, from the date this Agreement until
the termination thereof pursuant to the terms hereof (the "Collateral").

            SECTION 2.  ESTABLISHMENT OF COLLATERAL ACCOUNT; ETC.

            2.01 Establishment.     The  Assignors  currently   maintain  with
Christiania Bank  og Kreditkasse,  Grand Cayman  Branch  ("CBKGC", with  CBKGC
acting as agent  for the Agent with respect  to such account) an  account (No.
4062660601) for  purposes of  this  Agreement (the  "Concentration  Account").
Only  Collateral will  be  deposited  and shall  remain  in the  Concentration
Account until  such Collateral is  released from the Concentration  Account in
accordance with this Agreement.  Subject  to the provisions of this  Agreement
(including  the  automatic   release  provision  of   Section  2.02(b)),   the
Concentration Account shall  be under  the sole  dominion and  control of  the
Collateral  Agent,  with  the  Collateral  Agent  having  the  right  to  make
withdrawals from the balance  of the Concentration  Account from time to  time
therein  in accordance  with  the terms  of  this Agreement.    All Collateral
delivered to or held  by or on behalf of the  Collateral Agent pursuant hereto
shall be held  in the Concentration Account in accordance  with the provisions
hereof.

            2.02 Deposits  to  Concentration Account; etc.   (a) The Assignors
shall deposit  or direct  their Subsidiaries to  deposit in  the Concentration
Account on  a daily basis  all collected (i)  earnings of the  Collateral Rigs
from  any source;  (ii) all  moneys or  other compensation  paid by  reason of
requisition of  title  or for  hire  or other  compulsory acquisition  of  any
Collateral  Rig; and  (iii) proceeds  of  the foregoing  maintained with  such
institutions  to the Concentration Account.  As used herein, "earnings" in (i)
means:

            (x)   all rent, charterhire and other moneys and rights and claims
      to  moneys, other  than the  local currency  portion necessary  to cover
      expenses  relating  to  the  relevant  contract  (the  "Local   Currency
      Portion");

            (y)   all the Assignors'  right, title and interest to  and in any
      moneys  other than the  Local Currency Portion payable to the  Assignors
      under any bareboat or time charter, drilling contract, or other contract
      for the use  or employment of the Collateral Rigs,  and all other rights
      and benefits whatsoever accruing to the Assignors thereunder,  including
      (but without  prejudice to the  generality of the foregoing)  all claims
      for damages  for any breach by  any charterer or other  party thereto of
      any such bareboat or time  charter, drilling contract, or other contract
      for the use or employment of the Collateral Rigs; and 

            (z)   all freights (if any), passage  moneys (if any), hire moneys
      (if any), compensation (if any) payable to the Assignors in the event of
      the  requisition of  the  Collateral  Rigs  for hire,  remuneration  for
      salvage and towage services (if any), demurrage and detention moneys (if
      any), and  any other earnings  whatsoever due  or to become  due to  the
      Assignors.

            (b)  Subject  to  the  provisions  of  Section  2.02(c)  of   this
Agreement, the Collateral Agent's security interest in the funds maintained in
the  Concentration Account  shall  automatically be  and  be deemed  released,
without the need for any action on the part of the Collateral Agent, from time
to time as requested or directed by the Borrower.

            (c)  Upon  the  occurrence of  an  Event  of Default  pursuant  to
Section 9.05 of the Credit Agreement (a "Bankruptcy  Default") and without any
further act or notice, or upon the giving by the Collateral Agent of a written
notice (a "Release Termination Notice")  to the Assignors after the occurrence
and  during the  continuance of an  Event of  Default other  than a Bankruptcy
Default, the automatic release set forth  in Section 2.02(b) of this Agreement
shall terminate.

            (d)  Upon the  occurrence of  an Event  of Default, the  Assignors
shall continue to deposit, or cause  to be deposited, all payments of earnings
of the Collateral Rigs directly into the Concentration Account.

            It is hereby expressly  agreed that, anything contained herein  to
the  contrary notwithstanding,  the Assignors  shall remain  liable under  all
charters  and contracts  pertaining  to  the Collateral  Rigs  to perform  the
obligations assumed by them thereunder, and the Collateral Agent shall have no
obligation or  liability of any  nature whatsoever  under any such  charter or
contract by  reason of,  or  arising out  of, this  Agreement,  nor shall  the
Collateral  Agent be  required to  assume  or be  obligated in  any manner  to
perform or  fulfill any obligation of  the Assignors under or  pursuant to any
such charter or  contract or to make any payment or make any inquiry as to the
nature or  sufficiency of any  payment received  by the Collateral  Agent, or,
unless and until indemnified to its satisfaction, to present or file any claim
or to take any other action  to collect or enforce the payment of  any amounts
which may have been assigned to it or to which it may be entitled hereunder or
pursuant hereto at any time or times.

            2.03  Investment  of Funds Deposited in the Concentration Account.
Until  the date on  which the Total  Commitment under the  Credit Agreement is
terminated and  no Letter  of Credit remains  outstanding and  all Obligations
have been paid  in full, and so long  as no Event of Default  is in existence,
the Collateral Agent will from time to time, at the request of the  Assignors,
invest funds on deposit in the Concentration Account in Cash Equivalents which
are  substantially  similar  to  those  investments  being  requested  by  the
Assignors on  or about the  date hereof  or such other  investments as  may be
requested by the Assignors and acceptable to the Collateral Agent  in its sole
discretion (investments  permitted under this  Section 2.03 are  herein called
"Permitted Investments").  All investments  made pursuant to this Section 2.03
(and any instruments evidencing same), and all proceeds thereof, shall be held
in the Concentration Account as part  of the Collateral.  All such investments
shall be  made in  the name of  the Collateral  Agent.   All risk  of loss  in
respect  of investments  made pursuant to  this Section  2.03 shall  be on the
Assignors.

            SECTION 3.  FURTHER ASSURANCES.

            The Assignors will, at any time and from time to  time, at its own
expense, promptly execute and deliver all further agreements, instruments  and
other documents and take all further action  that may be necessary or that the
Collateral Agent  may reasonably request in  order to perfect and  protect the
security  interest purported to  be created hereby or  otherwise to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder.

            SECTION 4.  TRANSFERS AND OTHER LIENS.

            The  Assignors  will  not,  without  the  written consent  of  the
Collateral  Agent, (i)  sell,  assign (by  operation of  law or  otherwise) or
otherwise dispose of  any interest in the Collateral or  (ii) create or suffer
to exist  any Lien, security interest  or other charge or  encumbrance upon or
with respect to any Collateral except  for the security interest purported  to
be created hereby.

            SECTION 5.  ATTORNEY-IN-FACT.

            The Assignors  hereby appoint the Collateral  Agent the Assignors'
attorney-in-fact, with full authority only  after the occurrence of and during
the continuance  of  an  Event of  Default,  in the  place  and stead  of  the
Assignors and in the name of the Assignors or otherwise, from time to  time in
the Collateral Agent's  discretion to execute  any instrument and to  take any
other  action which  the Collateral  Agent may in  good faith  reasonably deem
necessary  or advisable  to accomplish  the purposes  of this Agreement  or to
facilitate the assignment or other transfer  by the Collateral Agent of any or
all of  its rights hereunder,  including, without limitation, (i)  to receive,
endorse  and  collect  all  instruments  made payable  to  the  Assignors  and
representing  any interest  payment or  other distribution  in respect  of the
Collateral  and to give  full discharge for  the same and (ii)  to execute and
deliver any and all  instruments and other documents that the Collateral Agent
may request in connection with the exercise  by the Collateral Agent of any or
all of  its rights hereunder.   Such  appointment of the  Collateral Agent  as
attorney-in-fact is irrevocable and coupled with an interest.

            SECTION 6.  PERFORMANCE BY THE COLLATERAL AGENT.

            If  the Assignors  fail  to perform  any  agreement or  obligation
contained herein, the Collateral Agent itself may perform or cause performance
of such agreement or obligation, and the reasonable expenses of the Collateral
Agent  incurred in  connection therewith  shall be  payable to  the Collateral
Agent by the Assignors.

            SECTION 7.  RESPONSIBILITY OF THE COLLATERAL AGENT.

            Other  than the  exercise of  reasonable care  to assure  the safe
custody of  the Collateral  while held hereunder,  the Collateral  Agent shall
have no duty or liability  to preserve rights pertaining thereto and  shall be
relieved  of all  responsibility for  the Collateral  upon surrendering  it or
tendering surrender  of it to  the Assignors.   The Collateral Agent  shall be
deemed to have exercised  reasonable care in  the custody and preservation  of
the  Collateral in  its possession  if  the Collateral  is accorded  treatment
substantially  equal  to that  which  the  Collateral  Agent accords  its  own
property.   Without  limiting the  generality  of the  foregoing, neither  the
Collateral Agent nor any of its directors, officers, agents or employees shall
be  liable  (i)  for  any  failure to  invest  or  reinvest  any  cash in  the
Concentration  Account in accordance herewith  in the absence  of its or their
own gross  negligence or  willful misconduct  or for  any  losses incurred  by
reason of investments made by the Collateral Agent pursuant to Section 2.03 or
(ii)  for any action taken or omitted to  be taken by the Collateral Agent (x)
in good faith  in accordance with  the advice of counsel  with respect to  any
question as to the  construction of any provision hereof  or any action to  be
taken  by  the  Collateral Agent  hereunder  or  (y)  in accordance  with  any
instructions or other notice which the Collateral Agent believes in good faith
to be properly given by the Assignors hereunder.  This Section 7 shall have no
application to CBK except in its capacity as Collateral Agent.

            SECTION 8.  REMEDIES UPON DEFAULT.

            If any Event of Default shall occur and be continuing:

            (a)  The  Collateral  Agent may  (i)  exercise in  respect  of the
Collateral, in addition  to other rights  and remedies provided for  herein or
otherwise available  to it, all of the rights  and remedies of a secured party
on  default under the Uniform Commercial  Code then in effect  in the State of
New York, (ii) withdraw any funds, if any, from the Concentration Account, and
(iii) without  notice  except as  specified  below, sell  any  or all  of  the
Collateral  in one  or more  parcels  at any  public or  private sale,  at any
exchange, broker's  board  or at  any  of the  Collateral  Agent's offices  or
elsewhere, for cash, on credit  or for future delivery,  and at such price  or
prices and upon such other terms as the Collateral Agent may deem commercially
reasonable.  The Assignors  agree that, to the extent notice  of sale shall be
required by law,  at least 10  Business Days' notice  to the Assignors of  the
time and place  of any public sale or the time after which any private sale or
other disposition is to be made shall constitute reasonable notification.  The
Collateral  Agent  shall not  be  obligated  to make  any  sale of  Collateral
regardless  of notice  of sale having  been given.   The  Collateral Agent may
adjourn any public or private sale from time to time  (by announcement, in the
case of any public sale, at the time and place fixed  therefor), and such sale
may, without further  notice, be made at the time and place to which it was so
adjourned.

            (b)  All cash proceeds received by the Collateral Agent in respect
of any sale  of, collection from, or other realization upon all or any part of
the Collateral shall  be applied in  accordance with the Credit  Agreement and
the  Mortgages (as defined in the Credit Agreement) relating to the Collateral
Rigs.

            (c)  Notwithstanding  the foregoing provisions  of this Section 8,
the Collateral Agent may elect,  by notice to the Assignors, to retain any and
all of  the Collateral, to  collect or  cause the collection  of the  proceeds
thereof and  to hold any and  all of such Collateral  as continuing collateral
for, and to apply at such times and in such manner as the Collateral Agent may
elect any  and all of such  Collateral to pay, the  Obligations; provided that
the Collateral is valued at fair market value for purposes  of determining the
amount by  which the  Obligations  shall be  reduced in  consideration of  the
retention  of such  Collateral.   The Assignors hereby  waive, to  the fullest
extent permitted  by law,  any and  all rights  they may  have to  require the
Collateral Agent to sell or otherwise dispose of any or all of the Collateral.

            SECTION 9.  APPLICATION OF PROCEEDS.

            (a)  All moneys collected by the Collateral Agent upon any sale or
other disposition of  any Collateral, together with all  other moneys received
by  the  Collateral  Agent  hereunder  or under  any  of  the  other  Security
Documents, shall be applied as follows:

        (i) first, to the payment of all amounts owing the Collateral Agent of
      the type described in clauses (ii) and (iii) of Section 1.01;

       (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
      Section 9(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 Agreement pursuant to Section  12, any surplus then remaining shall
      be paid to the Assignors, subject,  however, to the rights of the holder
      of any  then  existing Lien  of which  the Collateral  Agent has  actual
      notice (without investigation).

            (b)   For purposes of this Agreement  "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  Collateral Agent 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 rely  upon
the amounts stated therein in making such distribution.

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

            (d)   For  purposes of  applying  payments received  in accordance
with this Section 9, the  Collateral Agent shall be entitled to rely  upon (i)
the Agent  under the  Credit Agreement  and (ii) the  Secured Creditors  for a
determination (which the Agent and  each Secured Creditor, by their acceptance
of  the benefits of this Agreement shall  be obligated to provide upon request
of the Collateral  Agent) of the  outstanding Obligations owed to  the Secured
Creditors.  Unless it has actual knowledge (including by way of written notice
from  a  Secured Creditor)  to  the  contrary,  the  Agent  under  the  Credit
Agreement, in furnishing  information pursuant to the  preceding sentence, and
the Collateral Agent,  in acting hereunder, shall  be entitled to assume  that
(x) no obligations other than  principal, interest and regularly accruing fees
are owing to any Secured Creditor.

            SECTION  10.  REPRESENTATIONS, WARRANTIES  AND  COVENANTS  OF  THE
ASSIGNORS.

            The  Assignors represent  and  warrant  that on  the  date of  the
deposit by  the Assignors of  any Collateral in the  Concentration Account, it
will  be the legal,  record and  beneficial owner of,  and will  have good and
marketable title  to, the  Collateral, subject to  no pledge,  lien, mortgage,
hypothecation, security interest, charge, option or other interests other than
the  lien created by  this Agreement.   The Assignors covenant  and agree that
they will defend the Collateral Agent's right, title  and security interest in
and to the Collateral and the  proceeds thereof against the claims and demands
of all Persons whomsoever; and the Assignors covenant and agree that they will
have  like title  to  and right  to  pledge any  other  property  at any  time
hereafter pledged  to the  Collateral Agent as  Collateral hereunder  and will
likewise  defend  the right  thereto  and  security  interest therein  of  the
Collateral Agent.

            SECTION 11.  INDEMNITY.

            11.1   Indemnity.    (a)    The  Assignors  agree  to   indemnify,
reimburse  and hold  the Collateral  Agent,  each Secured  Creditor and  their
respective successors, assigns, employees, agents and servants (hereinafter in
this Section 11.1 referred  to individually as "Indemnitee," and  collectively
as "Indemnitees") harmless from any and all liabilities, obligations, damages,
injuries, penalties, claims,  demands, actions, suits,  judgments and any  and
all costs  and expenses (including  reasonable attorneys'  fees and  expenses)
(for  the purposes of this Section  11.1 the foregoing are collectively called
"expenses")  of whatsoever  kind and  nature imposed  on, asserted  against or
incurred  by any of the  Indemnitees in any way relating  to or arising out of
this  Agreement,  the Credit  Agreement,  any  other  Credit Document  or  the
documents executed  in connection herewith and  therewith or in any  other way
connected with  the administration of the transactions contemplated hereby and
thereby or the enforcement of any of  the terms of, or the preservation of any
rights  under  any such  Credit  Document or  other  document, or  in  any way
relating to or arising out  of the manufacture, ownership, ordering, purchase,
delivery,  control,  acceptance,  lease,  financing,   possession,  operation,
condition,  sale,  return or  other  disposition,  or  use of  the  Collateral
(including,  without  limitation, latent  or  other  defects, whether  or  not
discoverable), the  violation  of the  laws  of any  country,  state or  other
governmental  body or  unit, any tort  (including, without  limitation, claims
arising  or imposed  under the  doctrine  of strict  liability, or  for or  on
account of injury to or the death of any Person (including any Indemnitee), or
property  damage), or  contract claim;  provided that  no Indemnitee  shall be
indemnified   pursuant  to  this  Section  11.1(a)   for  losses,  damages  or
liabilities  to the extent caused by the gross negligence or wilful misconduct
of  such Indemnitee.   The  Assignors agree  that upon  written notice  by any
Indemnitee of the  assertion of such a liability,  obligation, damage, injury,
penalty, claim, demand,  action, judgment or suit, the  Assignors shall assume
full responsibility  for the defense  thereof.  Each Indemnitee  agrees to use
its best efforts  to promptly notify  the Assignors of  any such assertion  of
which such Indemnitee has knowledge.

            (b)   Without  limiting the  application  of Section  11.1(a), the
Assignors agree  to pay,  or reimburse  the Collateral Agent  for any  and all
fees,  costs and expenses  of whatever kind  or nature incurred  in connection
with the creation, preservation or  protection of the Collateral Agent's Liens
on,  and security interest in, the  Collateral, including, without limitation,
all fees and taxes in  connection with the recording or filing  of instruments
and documents  in public offices, payment  or discharge of any  taxes or Liens
upon or in  respect of the Collateral, premiums for  insurance with respect to
the Collateral  and all  other fees,  costs  and expenses  in connection  with
protecting, maintaining  or  preserving  the  Collateral  and  the  Collateral
Agent's interest  therein, whether through judicial  proceedings or otherwise,
or in defending or  prosecuting any actions, suits or proceedings  arising out
of or relating to the Collateral.

            (c)   Without limiting the application of Section 11.1(a) or  (b),
the  Assignors agree to pay, indemnify and  hold each Indemnitee harmless from
and against  any loss, costs, damages  and expenses which such  Indemnitee may
suffer,   expend  or  incur   in  consequence  of   or  growing   out  of  any
misrepresentation by the Assignors in  this Agreement, the Credit Agreement or
any other  Credit Document or in  any statement or writing  contemplated by or
made or delivered pursuant to or in connection with this Agreement, the Credit
Agreement or any other Credit Document.

            (d)   If and to  the extent that the obligations  of the Assignors
under this Section 11.1 are unenforceable for any reason, the Assignors hereby
agree to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.

            11.2   Indemnity Obligations Secured by Collateral; Survival.  Any
amounts paid by  any Indemnitee as to  which such Indemnitee has  the right to
reimbursement shall constitute  Obligations secured  by the  Collateral.   The
indemnity  obligations of  the Assignors  contained in  this Section  11 shall
continue in  full force and effect notwithstanding the full payment of all the
Notes  issued under the Credit Agreement and  all of the other Obligations and
notwithstanding the discharge thereof.

            SECTION 12.  TERMINATION; RELEASE; PARTIAL RELEASE.

            (a)   On the date on which the Credit Agreement and all Letters of
Credit  shall have been  terminated, when no Note  remains outstanding and all
Obligations shall  have been  irrevocably paid in  full, this  Agreement shall
terminate, and  the  Collateral  Agent, at  the  request and  expense  of  the
Assignors, will execute  and deliver to the  Assignors a proper  instrument or
instruments acknowledging the satisfaction and termination of this  Agreement,
and will duly assign, transfer and deliver  to the Assignors (without recourse
and without  any representation or  warranty) such  of the  Collateral as  may
remain  in the possession of the Collateral  Agent together with any moneys at
the time held by the Collateral Agent hereunder.

            (b)   Subject to Section  2.02 hereof and so  long as no Event  of
Default shall be in existence,  upon instructions of the Assignors, Collateral
shall be  released  from the  Concentration  Account to  the  Assignors or  as
directed by the Assignors.

            SECTION 13.  NOTICES, ETC.

            Except  as otherwise  expressly provided  herein, all  notices and
other communications  provided  for hereunder  shall be  delivered and  become
effective in accordance with Section 12.03 of the Credit Agreement.

            SECTION 14.  MISCELLANEOUS.

            This  Agreement shall  be  binding upon  the  Assignors and  their
successors and  assigns (although the Assignors may not assign their rights or
obligations under this  Agreement) and shall  inure to the  benefit of and  be
enforceable  by the  Collateral Agent  and its  successors and  assigns.   The
headings in  this Agreement are for  purposes of reference only  and shall not
limit  or  define the  meaning  hereof.   This  Agreement and  the  rights and
obligations of the parties hereunder shall be construed in accordance with and
be governed  by the  law of the  State of  New York.   This  Agreement may  be
executed in  any number of counterparts,  each of which shall  be an original,
but all of which shall constitute one instrument.  This Agreement shall become
effective on the date  on which each  of the parties  shall have executed  and
delivered a copy  hereof.  In the  event that any provision  of this Agreement
shall prove to be invalid or  unenforceable, such provision shall be deemed to
be severable from the  other provisions of this  Agreement which shall  remain
binding on all parties hereto.

            SECTION 15.  WAIVER; AMENDMENT.

            None of the terms and conditions of this Agreement may be changed,
waived, modified  or varied in  any manner  whatsoever unless in  writing duly
signed by the Assignors and the Collateral Agent.

            SECTION 16.  SECURED CREDITOR ACKNOWLEDGMENT.

            By accepting the benefits of this Agreement, each Secured Creditor
acknowledges  and agrees  that the  rights and  obligations of  the Collateral
Agent shall be as set forth in Section 12 of the Credit Agreement.

            IN WITNESS WHEREOF,  the Assignors and  the Collateral Agent  have
caused this  Agreement to  be executed  by their  duly  elected officers  duly
authorized as of the date first above written.

ADDRESS:

901 Threadneedle                    READING & BATES DRILLING CO.
Suite 200
Houston, Texas  77079               By________________________________
Attention:  General Counsel            Title:  
Tel: (713) 496-5000
Fax: (713) 496-0285                 READING & BATES EXPLORATION CO.

                                    By_______________________________
                                      Title:

                                    READING & BATES (A) PTY. LTD.

                                    By_______________________________
                                      Title:

                                    READING AND BATES BORNEO DRILLING
                                      CO. LTD.

                                    By_______________________________
                                      Title:


11 West 42nd Street                 CHRISTIANIA BANK og KREDITKASSE,
New York, New York  10036            NEW YORK BRANCH
Attention: Hans Chr. Kjelsrud
Tel: (212) 827-4814                 By________________________________
Fax: (212) 827-4888                   Title:
                                    By________________________________
                                      Title: