EXHIBIT 10.101
                                                                 


                         CREDIT FACILITY AGREEMENT FOR

                                       A

                       U.S.$45,000,000 REDUCING REVOLVING
                                CREDIT FACILITY

                                     AND A

               U.S.$10,000,000 STANDBY LETTER OF CREDIT FACILITY

                                  BY AND AMONG

                          READING & BATES DRILLING CO.

                                      AND

                        READING & BATES EXPLORATION CO.,
                         AS JOINT AND SEVERAL BORROWERS

                                      AND 

                          READING & BATES CORPORATION,
                                  AS GUARANTOR

                                      AND

                            THE LENDERS NAMED HEREIN

                                      WITH

                        CHRISTIANIA BANK OG KREDITKASSE
                      acting through its New York branch,
                                    AS AGENT

                                                                            

                         Dated as of November 16, 1995 
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                                     INDEX


1     DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .    
      1.1   Defined Terms.  . . . . . . . . . . . . . . . . . . . . . .    
      1.2   Construction. . . . . . . . . . . . . . . . . . . . . . . .    
      1.3   Accounting Terms. . . . . . . . . . . . . . . . . . . . . .   

2     REPRESENTATIONS AND WARRANTIES  . . . . . . . . . . . . . . . . .   

3     ADVANCES UNDER THE REVOLVING CREDIT FACILITY  . . . . . . . . . .    
      3.1   (a)   Purpose.  . . . . . . . . . . . . . . . . . . . . . .    
      3.2   Drawdown Notice.  . . . . . . . . . . . . . . . . . . . . .    
      3.3   Effect of Drawdown Notices  . . . . . . . . . . . . . . . .    
      3.4   Notation of Advances. . . . . . . . . . . . . . . . . . . .   
      3.5   Allocation of Funds to the
               Standby Letter of Credit Facility. . . . . . . . . . . .   

4     STANDBY LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . .    
      4.1.  (a)   Purpose . . . . . . . . . . . . . . . . . . . . . . .    
      4.2   Request for Issuance of Letter of Credit  . . . . . . . . .    
      4.3   Effect of Letter of Credit Request  . . . . . . . . . . . .   

5     CONDITIONS PRECEDENT  . . . . . . . . . . . . . . . . . . . . . .    
      5.1   General Conditions Precedent. . . . . . . . . . . . . . . .   

6     INTEREST RATE HEDGE TRANSACTIONS/FOREIGN EXCHANGE TRANSACTIONS  .   

7     REPAYMENT, REDUCTION AND PREPAYMENT . . . . . . . . . . . . . . .    
      7.1   Repayment.  . . . . . . . . . . . . . . . . . . . . . . . .    
      7.2   Scheduled Reductions of the Credit Facility.  . . . . . . .    
      7.3   Prepayment, Reborrowing.  . . . . . . . . . . . . . . . . .    
      7.4   Pro-rata Reduction of Commitments.  . . . . . . . . . . . .    
      7.5   Optional  Permanent Reduction  or  Termination of  the Credit
            Facility  . . . . . . . . . . . . . . . . . . . . . . . . .   

8     INTEREST AND RATE . . . . . . . . . . . . . . . . . . . . . . . .    
      8.1   Interest Rate; Default Rate.  . . . . . . . . . . . . . . .    
      8.2   Interest Periods. . . . . . . . . . . . . . . . . . . . . .    
      8.3   Interest Payments.  . . . . . . . . . . . . . . . . . . . .    
      8.4   Calculation of Interest.  . . . . . . . . . . . . . . . . .   

9     PAYMENTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
      9.1   Place of Payments, No Set Off.  . . . . . . . . . . . . . .   

10    REIMBURSEMENT OBLIGATIONS . . . . . . . . . . . . . . . . . . . .    
      10.01 Agreement to Repay Letter of Credit Payments. . . . . . . .    
      10.02 Standby Letter of Credit Participants.  . . . . . . . . . .    
      10.03 Indemnities.  . . . . . . . . . . . . . . . . . . . . . . .   

11    EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . .    
      11.1    . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
      11.2  Indemnification.  . . . . . . . . . . . . . . . . . . . . .   
      11.3  Application of Moneys.  . . . . . . . . . . . . . . . . . .   

12    COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
      12.1    . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
      12.2  Valuation of the Rigs . . . . . . . . . . . . . . . . . . .   
      12.3  Collateral Maintenance  . . . . . . . . . . . . . . . . . .   
      12.4  Reduction of Collateral . . . . . . . . . . . . . . . . . .   
      12.5  Inspection and Survey Reports . . . . . . . . . . . . . . .  

13    EARNINGS ACCOUNT  . . . . . . . . . . . . . . . . . . . . . . . .   

14    ASSIGNMENT  . . . . . . . . . . . . . . . . . . . . . . . . . . .   

15    ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.  . . . . . . .    
      15.1. Illegality  . . . . . . . . . . . . . . . . . . . . . . . .    
      15.2  Increased Cost  . . . . . . . . . . . . . . . . . . . . . .    
      15.3  Determination of Losses . . . . . . . . . . . . . . . . . .    
      15.4  Compensation for Losses . . . . . . . . . . . . . . . . . .   

16    CURRENCY INDEMNITY  . . . . . . . . . . . . . . . . . . . . . . .    
      16.1  Currency Conversion . . . . . . . . . . . . . . . . . . . .    
      16.2  Change in Exchange Rate . . . . . . . . . . . . . . . . . .    
      16.3  Additional Debt Due . . . . . . . . . . . . . . . . . . . .    
      16.4. Rate of Exchange  . . . . . . . . . . . . . . . . . . . . .   

17    FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . .    
      17.1  Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . .    
      17.2  Expenses. . . . . . . . . . . . . . . . . . . . . . . . . .   

18    APPLICABLE LAW, JURISDICTION AND WAIVER . . . . . . . . . . . . .    
      18.1  Applicable Law  . . . . . . . . . . . . . . . . . . . . . .    
      18.2  Jurisdiction  . . . . . . . . . . . . . . . . . . . . . . .    
      18.3  WAIVER OF JURY TRIAL  . . . . . . . . . . . . . . . . . . .   

19    THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
      19.1  Appointment of Agent  . . . . . . . . . . . . . . . . . . .    
      19.2  Distribution of Payments  . . . . . . . . . . . . . . . . .    
      19.3  Holder of Interest in Note  . . . . . . . . . . . . . . . .    
      19.4  No Duty to Examine, Etc.  . . . . . . . . . . . . . . . . .    
      19.5  Agent as Lender . . . . . . . . . . . . . . . . . . . . . .    
      19.6  (a)   Obligations of Agent. . . . . . . . . . . . . . . . .    
            (b)   No Duty to Investigate  . . . . . . . . . . . . . . .    
      19.7  Discretion of Agent . . . . . . . . . . . . . . . . . . . .    
      19.8  Assumption Regarding Event of Default . . . . . . . . . . .    
      19.9  No Liability of Agent or Lenders  . . . . . . . . . . . . .    
      19.10 Indemnification of Agent  . . . . . . . . . . . . . . . . .    
      19.11 Consultation with Counsel . . . . . . . . . . . . . . . . .    
      19.12 Resignation . . . . . . . . . . . . . . . . . . . . . . . .    
      19.13 Representations of Lenders  . . . . . . . . . . . . . . . .    
      19.14 Notification of Event of Default  . . . . . . . . . . . . .   

20    NOTICES AND DEMANDS . . . . . . . . . . . . . . . . . . . . . . .    
      20.1  Notices . . . . . . . . . . . . . . . . . . . . . . . . . .   

21    MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . .    
      21.1  Time of Essence . . . . . . . . . . . . . . . . . . . . . .    
      21.2  Unenforceable, etc., Provisions - Effect  . . . . . . . . .    
      21.3  References  . . . . . . . . . . . . . . . . . . . . . . . .    
      21.4  Further Assurances  . . . . . . . . . . . . . . . . . . . .    
      21.5  Prior Agreements, Merger  . . . . . . . . . . . . . . . . .    
      21.7  Limitation of Liability . . . . . . . . . . . . . . . . . .    
      21.8  Entire Agreement; Amendments  . . . . . . . . . . . . . . .    
      21.9  Headings  . . . . . . . . . . . . . . . . . . . . . . . . .   

  SCHEDULE

      1     The Lenders and the Commitments

  EXHIBITS

      A     Promissory Note
      B     Form of Drawdown Notice
      C     Form of Letter of Credit Request
      D     Form of Compliance Certificate
      E     Form of Assignment and Assumption Agreement 

-----------------------------------------------------------------------------

                           CREDIT FACILITY AGREEMENT

      THIS CREDIT FACILITY AGREEMENT  is made as of the 16th day of November,
  1995, and is by and among:

      (1)   Reading &  Bates Drilling Co.,  a corporation incorporated  under
            the laws  of  the State  of  Oklahoma  ("R &  B  Drilling"),  and
            Reading  &  Bates Exploration  Co.,  a  corporation  incorporated
            under the laws of  the State of Oklahoma ("R & B Exploration" and
            together with R & B Drilling, the "Borrowers");

      (2)   Reading  &  Bates Corporation,  a corporation  incorporated under
            the laws of the State of Delaware (the "Guarantor");

      (3)   The banks  and financial institutions  whose names and  addresses
            are  set  out  in  Schedule   1  hereto  (each  a   "Lender"  and
            collectively, the "Lenders"); and

      (4)   Christiania  Bank og  Kreditkasse, acting  through  its New  York
            branch, as agent (the "Agent") for the Lenders.

                                WITNESSETH THAT:

  1   DEFINITIONS

  1.1       Defined  Terms.   In  this Agreement  the  words and  expressions
  specified below shall, except  where the context otherwise  requires, have
  the meanings attributed to them below:

  "Acceptable Accounting Firm"            Arthur  Anderson, L.L.P.,  or  such
                                          other   recognized    international
                                          accounting   firm   as   shall   be
                                          approved   by   the   Agent,   such
                                          approval  not  to  be  unreasonably
                                          withheld;

  "Adjusted Percentage"                   shall  have  the  meaning  ascribed
                                          thereto in Clause 10.02;

  "Advance(s)"                            means  any  amount advanced  to the
                                          Borrowers  with   respect  to   the
                                          Revolving  Credit Facility  or  (as
                                          the   context  may   require)   the
                                          aggregate   amount  of   all   such
                                          Advances   for   the   time   being
                                          outstanding;

  "Affiliate"                             means  with respect  to any Person,
                                          any   other  Person   directly   or
                                          indirectly controlled  by or  under
                                          common  control with  such  Person.
                                          For    the   purposes    of    this
                                          definition,  "control"  (including,
                                          with   correlative  meanings,   the <PAGE>
 
                                          terms  "controlled by"  and  "under
                                          common  control with")  as  applied
                                          to any Person means the  possession
                                          directly  or   indirectly  of   the
                                          power   to  direct   or  cause  the
                                          direction  of  the   management and
                                          policies  of  that  Person  whether
                                          through    ownership   of    voting
                                          securities   or  by   contract   or
                                          otherwise;

  "Agreement"                             this  Agreement  as the  same shall
                                          be     amended,     modified     or
                                          supplemented from time to time;

  "Applicable Rate"                       any   rate   of  interest   on  the
                                          Revolving   Credit  Facility   from
                                          time  to time  applicable  pursuant
                                          to Clause 8.1 hereof;

  "Approved Shipbroker"                   means      a      first      class,
                                          internationally          reputable,
                                          independent,   sale  and   purchase
                                          shipbroker  for  offshore  drilling
                                          rigs   as   shall   be   reasonably
                                          satisfactory  to  the   Agent  from
                                          time to time;

  "Arcade"                                means   Arcade   Drilling   AS,   a
                                          Norwegian    corporation   and    a
                                          Subsidiary of the Guarantor;

  "Assignment and 
            Assumption Agreement(s)"      the   Assignment   and   Assumption
                                          Agreement(s)  executed pursuant  to
                                          Clause 14  hereof substantially  in
                                          the form of Exhibit E hereto;

  "Banking Day(s)"                        day(s) on which banks are open  for
                                          the    transaction  of business  of
                                          the   nature   required   by   this
                                          Agreement in Oslo,  Norway, London,
                                          England and New York, New York;

  "Base Rate"                             at any  time  means the  higher  of
                                          (i) the rate which is  1/2 of 1% in
                                          excess   of   the   Federal   Funds
                                          Effective  Rate and  (ii) the Prime
                                          Lending Rate;

  "Beneficiary"                           of  a  Standby  Letter  of  Credit,
                                          means any  Person to whom a Standby
                                          Letter of Credit  is issued by  the
                                          Letter of Credit Issuer;
  
  "Cash Flow Coverage Ratio"              means  for  the  prior four  fiscal
                                          quarters,    the   sum    of    the
                                          Guarantor's    consolidated     net
                                          income,  before  interest  expense,
                                          income     taxes,     depreciation,
                                          amortization  and   Lease  Expense,
                                          divided  by  the  sum  of  interest
                                          expense and Lease Expense;

  "Closing Date"                          means   the   date  on   which  the
                                          conditions precedent  set forth  in
                                          Clause  5  of this  Agreement shall
                                          have  been  satisfied or  waived by
                                          the Lenders;

  "Code"                                  the Internal Revenue Code of  1986,
                                          as amended, any  successor statute,
                                          and     regulations     promulgated
                                          thereunder;

  "Commitment Reduction"                  the   portion  of   the   Revolving
                                          Credit  Facility  which  is  to  be
                                          reduced  on  the   Reduction  Dates
                                          pursuant to Clause 7.2;

  "Commitment(s)"                         means    the    Revolving    Credit
                                          Facility   Commitment(s)  and   the
                                          Standby Letter  of Credit  Facility
                                          Commitment(s),  or   the  aggregate
                                          thereof, as the context requires;

  "Compliance Certificate"                has  the meaning  ascribed  thereto
                                          in Clause 12.1(A)(iv)(a) hereof;

  "Credit Facility"                       the  aggregate  of   the  Revolving
                                          Credit  Facility  and  the  Standby
                                          Letter of Credit Facility;

  "Credit Facility Period"                the  period commencing  on the date
                                          of this  Agreement to the date upon
                                          which  all amounts  owing under the
                                          Credit  Facility   and  all   other
                                          amounts due  to the  Agent and  the
                                          Lenders     pursuant    to     this
                                          Agreement,   the   Note   and   the
                                          Security      Documents      become
                                          repayable  and are  repaid in full,
                                          or are prepaid in full;

  "Default Rate"                          the  rate  per annum  equal  to the
                                          sum  of  the  Applicable Rate  plus
                                          two percent (2%);

  "Dollars" and the sign "$"              the   legal   currency,    at   any
                                          relevant  time  hereunder,  of  the
                                          United  States  of America  and, in
                                          relation     to    all     payments
                                          hereunder,   in  same   day   funds
                                          settled   through  the   New   York
                                          Clearing  House Interbank  Payments
                                          System (or such other Dollar  funds
                                          as   may   be  determined   by  the
                                          Lenders  to  be  customary for  the
                                          settlement  in  New  York  City  of
                                          banking  transactions of  the  type
                                          herein involved);

  "Drawdown Date(s)"                      the  dates,  each  being a  Banking
                                          Day  falling  not  later  than  one
                                          month  prior to  the Maturity Date,
                                          upon  which   the  Borrowers   have
                                          requested  that an  Advance be made
                                          available  as provided  by Clause 3
                                          hereof;

  "Drawdown Notice"                       shall  have  the  meaning  ascribed
                                          thereto in Clause 3.2 hereof;

  "Earnings Account"                      means  the  account   specified  in
                                          Clause 13  opened or  to be  opened
                                          with the Agent  in the name of  the
                                          Borrowers  in accordance  with  the
                                          General Assignments for the Rigs;

  "Environmental Approvals"               shall  have  the  meaning  ascribed
                                          thereto in Clause 2.1(n) hereof;

  "Environmental Claim"                   shall  have  the  meaning  ascribed
                                          thereto in Clause 2.1(n) hereof;

  "Environmental Laws"                    shall  have  the  meaning  ascribed
                                          thereto in Clause 2.1(n) hereof;

  "ERISA"                                 means   the   Employee   Retirement
                                          Income  Security  Act  of 1974,  as
                                          amended,   and    all   regulations
                                          thereunder.
  "ERISA Affiliate"                       means   each  trade   or   business
                                          whether    or     not    separately
                                          incorporated  which,  together with
                                          the  Guarantor,  would be  deemed a
                                          "single   employer"    within   the
                                          meaning of Section 4001 of ERISA;

  "Event(s) of Default"                   any  of  the  events   set  out  in
                                          Clause 11 hereof;

  "FMV"                                   has   the  meaning   set  forth  in
                                          Clause 12.1A(xvii);

  "Federal Funds Effective Rate"          means,    for   any    period,    a
                                          fluctuating  interest   rate  equal
                                          for each  day during such period to
                                          the  weighted average  of the rates
                                          on    overnight    Federal    Funds
                                          transactions  with members  of  the
                                          Federal Reserve System  arranged by
                                          Federal    Funds     brokers,    as
                                          published  for  such  day  (or,  if
                                          such day is  not a Banking Day, for
                                          the next preceding Banking Day)  by
                                          the  Federal  Reserve  Bank of  New
                                          York, or, if  such rate  is not  so
                                          published for  any day  which is  a
                                          Banking   Day,   the   average   of
                                          quotations  for  such  day on  such
                                          transactions received by  the Agent
                                          from  three Federal  Funds  Brokers
                                          of recognized standing  selected by
                                          the Agent;

  "GAAP"                                  shall  have  the  meaning  ascribed
                                          thereto in Clause 1.3 hereof;

  "General Assignments"                   assignments  in   respect  of   the
                                          earnings  of each Rig  from any and
                                          all sources,  to be executed by the
                                          respective  Borrowers in  favor  of
                                          the Agent;

  "Guarantor"                             Reading  &  Bates   Corporation,  a
                                          corporation organized  and existing
                                          under the  laws  of  the  State  of
                                          Delaware;

  "Guarantee"                             the   unconditional   guarantee  in
                                          respect  of the  obligations of the
                                          Borrowers under  this Agreement  to
                                          be  executed  by  the Guarantor  in
                                          favor of the Agent;

  "Indebtedness"                          means  with  respect to  any Person
                                          at   any  date   of   determination
                                          (without   duplication),  (i)   all
                                          indebtedness  of  such  Person  for
                                          borrowed     money,    (ii)     all
                                          obligations    of    such    Person
                                          evidenced  by  bonds,   debentures,
                                          notes     or      other     similar
                                          instruments, (iii)  all obligations
                                          of   such  Person   in  respect  of
                                          letters of credit or other  similar
                                          instruments              (including
                                          reimbursement   obligations    with
                                          respect    thereto),    (iv)    all
                                          obligations  of such  Person to pay
                                          the  deferred and  unpaid  purchase
                                          price  of  property   or  services,
                                          other than trade payables, (v)  all
                                          obligations    on    account     of
                                          principal of such Person as  lessee
                                          under capitalized leases,  (vi) all
                                          indebtedness   of   other   Persons
                                          secured by  a lien on  any asset of
                                          such  Person,  whether or  not such
                                          indebtedness  is  assumed  by  such
                                          Person;  provided that  the  amount
                                          of  such indebtedness  shall be the
                                          lesser  of  (a)  the  fair   market
                                          value of  such asset  at such  date
                                          of   determination  and   (b)   the
                                          amount of such  indebtedness, (vii)
                                          all indebtedness  of other  Persons
                                          guaranteed  by  such Person  to the
                                          extent    such    indebtedness   is
                                          guaranteed  by  such   Person,  and
                                          (viii) to the extent not  otherwise
                                          included  in this  definition,  the
                                          net   obligations  under   currency
                                          agreements   and    interest   rate
                                          agreements.      The    amount   of
                                          Indebtedness  of any  Person at any
                                          date  shall   be  the   outstanding
                                          balance   at   such  date   of  all
                                          unconditional    obligations     as
                                          described above  and, with  respect
                                          to   contingent   obligations,  the
                                          maximum    liability    upon    the
                                          occurrence   of   the   contingency
                                          giving  rise  to   the  obligation,
                                          provided     that    the     amount
                                          outstanding  at  any  time  of  any
                                          indebtedness  issued  with original
                                          issue  discount is  the face amount
                                          of  such   indebtedness  less   the
                                          remaining  unamortized  portion  of
                                          the  original  issue   discount  of
                                          such  indebtedness at  such time as
                                          determined   in   conformity   with
                                          GAAP;  and  provided  further  that
                                          Indebtedness shall not  include any
                                          liability   for   federal,   state,
                                          local or other taxes;

  "Indenture of Trust"                    the   indenture  of   trust  to  be
                                          executed by  the Indenture  Trustee
                                          and the Borrowers;

  "Indenture Trustee"                     Wilmington Trust Company;

  "Insurances Assignments"                assignments  in   respect  of   the
                                          insurances  of  each  Rig,  to   be
                                          executed    by    the    respective
                                          Borrowers in favor of the Agent;

  "Interest Payment Date"                 the  last  day  of  each   Interest
                                          Period  and, for  Interest  Periods
                                          longer than three months, that  day
                                          falling  every three  months  after
                                          the commencement thereof  until the
                                          end   of  such   Interest   Period;
                                          should  any  such  day   not  be  a
                                          Banking Day  the relevant  Interest
                                          Payment  Date  shall  be  the  next
                                          following Banking Day,  unless such
                                          next  following Banking  Day  falls
                                          in  the following  calendar  month,
                                          in   which   case    the   relevant
                                          Interest Payment Date shall be  the
                                          immediately preceding Banking Day;

  "Interest Period(s)"                    with  respect to  each Advance, any
                                          period  by  reference  to which  an
                                          interest    rate   is    determined
                                          pursuant to Clause 8.2 hereof;

  "Lease Expense"                         means  the  sum of  the Guarantor's
                                          consolidated   expense   associated
                                          with leases,  which leases  qualify
                                          as operating  leases in  accordance
                                          with GAAP;

  "Letter of Credit Issuer"               means    Christiania     Bank    og
                                          Kreditkasse,  acting   through  its
                                          New York branch;

  "Letter of Credit Request"              shall  have  the  meaning  ascribed
                                          thereto in Clause 4.2;

  "LIBOR"                                 in relation to Interest Periods  of
                                          one  (1),  three  (3)  or  six  (6)
                                          months, the  offered rate  (rounded
                                          upward  to  the  nearest 1/16th  of
                                          one   percent)  for   deposits   of
                                          Dollars for a period equivalent  to
                                          such period  at or about 11:00 a.m.
                                          (London time) on the second  London
                                          Banking  Day  before the  first day
                                          of such period  as is displayed  on
                                          Telerate    page   3750    (British
                                          Bankers'    Association    Interest
                                          Settlement  Rates) (or  such  other
                                          page as may replace  such page 3750
                                          on  such  system  or  on any  other
                                          system  of the  information  vendor
                                          for  the  time being  designated by
                                          the  British  Bankers'  Association
                                          to  calculate   the  BBA   Interest
                                          Settlement Rate (as defined in  the
                                          British   Bankers'    Association's
                                          Recommended  Terms  and  Conditions
                                          ("BBAIRS"   terms)   dated   August
                                          1985)),  provided  that if  on such
                                          date no  such rate is so displayed,
                                          LIBOR for such period  shall be the
                                          rate quoted  to  the Agent  as  the
                                          offered   rate  for   deposits   of
                                          Dollars in an  amount approximately
                                          equal to the amount in relation  to
                                          which  LIBOR  is  to be  determined
                                          for  a  period  equivalent to  such
                                          period   by  prime   banks  in  the
                                          London  Interbank   Market  at   or
                                          about  11:00 a.m.  (London time) on
                                          the  second Banking  Day before the
                                          first day of such period;

  "Long Term Debt"                        means all long term obligations  of
                                          the Guarantor and  its consolidated
                                          subsidiaries  (including  the  long
                                          term  debt  of  Arcade),  excluding
                                          the  current  portion of  long term
                                          debt  and  the  obligations of  any
                                          direct  or indirect  subsidiary  of
                                          the  Guarantor (other  than  either
                                          of  the  Borrowers or  Arcade) that
                                          is  non-recourse to  the  Guarantor
                                          or  either  of  the Borrowers,  all
                                          according to GAAP;

  "Majority Lenders"                      Lenders  whose  Commitments  exceed
                                          fifty   percent  (50%)   of   total
                                          Commitments;

  "Margin"                                means    one   and    three-fourths
                                          percent (1.75%);

  "Materials of Environmental Concern"    shall have the meaning ascribed  in
                                          Clause 2.1(n) hereof;

  "Maturity Date"                         means  the  date  five  (5)   years
                                          after  the  date  of  the   Closing
                                          Date; except  that if  such day  is
                                          not  a  Banking  Day, the  Maturity
                                          Date  will  be  the next  following
                                          Banking  Day,   unless  such   next
                                          following Banking Day falls in  the
                                          following calendar month,  in which
                                          case  the  Maturity  Date shall  be
                                          the  immediately preceding  Banking
                                          Day;

  "Mortgages"                             the first preferred  mortgages with
                                          respect  to  each   Rig  registered
                                          under  United  States  flag  to  be
                                          executed    by    the    respective
                                          Borrowers  in  favor  of  Indenture
                                          Trustee;

  "New Debentures"                        means  the 8%  Senior  Subordinated
                                          Convertible   Debentures   of   the
                                          Guarantor due December 1998;

  "Note"                                  the  joint and  several  promissory
                                          note   to   be   executed  by   the
                                          Borrowers  to  the  order  of   the
                                          Agent  to  evidence  the  Revolving
                                          Credit  Facility  substantially  in
                                          the form of Exhibit A hereto;
  "Participant"                           shall  have  the  meaning  ascribed
                                          thereto in Clause 10.02;

  "Person"                                means    any    individual,    sole
                                          proprietorship,        corporation,
                                          partnership  (general or  limited),
                                          business    trust,    bank,   trust
                                          company,       joint       venture,
                                          association,  joint stock  company,
                                          trust   or   other   unincorporated
                                          organization,  whether  or   not  a
                                          legal entity, or any government  or
                                          agency  or  political   subdivision
                                          thereof;

  "Plan"                                  means  any multi-employer  plan  or
                                          single  employer plan,  as  defined
                                          in  Section  4001  and  subject  to
                                          Title   IV   of   ERISA  which   is
                                          maintained  or  at any  time during
                                          the five  calendar years  preceding
                                          the   effective   date    of   this
                                          Agreement   was    maintained   for
                                          employees  of  the Guarantor  or an
                                          ERISA Affiliate;

  "Prime Lending Rate"                    means  the  rate  which  the  Agent
                                          announces from  time to time as its
                                          prime  lending   rate,  the   Prime
                                          Lending Rate to change when and  as
                                          such  prime lending  rate  changes.
                                          (The   Prime  Lending   Rate  is  a
                                          reference   rate   and   does   not
                                          necessarily  represent  the  lowest
                                          or  best  rate actually  charged to
                                          any  customer.  The  Agent may make
                                          commercial loans or other loans  at
                                          rates  of  interest  at,  above  or
                                          below the Prime Lending Rate);

  "Reduction Date"                        means each of the  dates falling at
                                          intervals  of six  months after the
                                          Closing Date; if such day  is not a
                                          Banking  Day,  the  next  following
                                          Banking  Day,   unless  such   next
                                          following Banking Day falls in  the
                                          following calendar month,  in which
                                          case  the relevant  Reduction  Date
                                          shall be the  immediately preceding
                                          Banking Day;

  "Reimbursement Obligations"             means       the       reimbursement
                                          obligations  of the  Borrowers  set
                                          forth in Clause 10.01 hereof;

  "Revolving Credit Facility"             means    the    revolving    credit
                                          facility in the  original principal
                                          amount    of    $45,000,000    made
                                          available  to  the  Borrowers on  a
                                          joint  and several  basis  pursuant
                                          to  Clause  3,   as  the  same   is
                                          reduced  pursuant  to the  terms of
                                          this Agreement;

  "Revolving Credit
       Facility Commitments"              means,  in  relation  to a  Lender,
                                          the   portion  of   the   Revolving
                                          Credit  Facility set  out  opposite
                                          its name in  Schedule 1 or, as  the
                                          case   may  be,   in  any  relevant
                                          Assignment      and      Assumption
                                          Agreement, as reduced from time  to
                                          time pursuant to this Agreement;

  "Rigs"                                  means,   collectively,  the   semi-
                                          submersible  drilling   unit  "JACK
                                          BATES", owned  by R  & B  Drilling,
                                          and  the   jack-up  drilling   unit
                                          "D.R.  STEWART",  owned  by  R &  B
                                          Exploration,  each  duly documented
                                          under  the  laws and  flag  of  the
                                          United States;

  "Security Documents"                    the Guarantee,  the Mortgages,  the
                                          Indenture  of  Trust,  the  General
                                          Assignments,     the     Insurances
                                          Assignments,    and    any    other
                                          documents  that may  be executed as
                                          security  for the  Credit  Facility
                                          and the  Borrowers' obligations  in
                                          connection therewith;

  "Standby Letters of Credit"             means   the  Standby   Letters   of
                                          Credit  to be issued  by the Letter
                                          of    Credit    Issuer    to    the
                                          Beneficiaries    named    by    the
                                          Borrowers;

  "Standby Letter of Credit Facility"     means  that  portion of  the Credit
                                          Facility  in  an  aggregate  amount
                                          not  to  exceed  $10,000,000 to  be
                                          made  available  by  the Letter  of
                                          Credit Issuer to the Borrowers  and
                                          the  Guarantor   for  issuance   of
                                          Standby  Letters  of Credit  to the
                                          Beneficiaries  designated   by  the
                                          Borrowers pursuant to Clause 4;

  "Standby Letter of
       Credit Facility Commitment"        means in relation to a Lender,  the
                                          portion  of  the Standby  Letter of
                                          Credit  Facility set  out  opposite
                                          its name in Schedule  1 or, as  the
                                          case   may  be,   in  any  relevant
                                          Assignment      and      Assumption
                                          Agreement;

  "Subsidiary"                            is  defined  to mean,  with respect
                                          to any Person, (i) any  corporation
                                          more than  50%  of whose  stock  of
                                          any class  or classes having by the
                                          terms   thereof   ordinary   voting
                                          power to  elect a  majority of  the
                                          directors   of   such   corporation
                                          (irrespective  of  whether  at  the
                                          time stock of any class or  classes
                                          of  such corporation  shall have or
                                          might  have voting  power by reason
                                          of    the    happening    of    any
                                          contingency)  is at  the time owned
                                          by   such   Person    directly   or
                                          indirectly     and     (ii)     any
                                          partnership,   association,   joint
                                          venture  or  other entity  in which
                                          such     Person,    directly     or
                                          indirectly,  has  more  than a  50%
                                          equity interest at the time;

  "Taxes"                                 any  present  or future  income tax
                                          or  other  taxes,  levies,  duties,
                                          charges,   fees,    deductions   or
                                          withholdings  of any  nature now or
                                          hereafter     imposed,      levied,
                                          collected, withheld or  assessed by
                                          any taxing authority whatsoever;

  "Total Assets"                          means  the  value  of  all  of  the
                                          assets   of  the   Guarantor  on  a
                                          consolidated   basis   using   book
                                          value  except  that the  Rigs shall
                                          be  included  in such  valuation at
                                          their FMVs  as determined  pursuant
                                          to  Clause   12.1A(xvii)  of   this
                                          Agreement;

  "Total Loss"                            means:

                                          (a)   the   actual,   constructive,
                                                arranged,     agreed,      or
                                                compromised total  loss of  a
                                                Rig;

                                          (b)   the requisition for  title or
                                                other compulsory  acquisition
                                                or   forfeiture  of   a   Rig
                                                otherwise       than       by
                                                requisition for hire;

                                          (c)   the     capture,     seizure,
                                                arrest,     detention      or
                                                confiscation of a Rig by  any
                                                government   or  by   persons
                                                acting or  purporting to  act
                                                on behalf  of any  government
                                                unless such  Rig be  released
                                                from  such capture,  seizure,
                                                arrest  or  detention  within
                                                ninety  (90) days  after  the
                                                occurrence thereof;

  "Transaction Documents"                 this  Agreement,  the Note  and the
                                          Security Documents;

  "Unpaid Drawing"                        shall  have  the  meaning  ascribed
                                          thereto in Clause 10.01;

  "Wholly-Owned"                          means,   with   respect    to   any
                                          Subsidiary  of  any   Person,  such
                                          Subsidiary  of  such Person  if all
                                          of the outstanding common stock  or
                                          other   similar  equity   ownership
                                          interests   in   such    Subsidiary
                                          (other    than    any    director's
                                          qualifying share or  investments by
                                          foreign   nationals   mandated   by
                                          applicable law)  is owned  directly
                                          or indirectly by such Person.

  1.2      Construction.   Words importing  the singular  number only  shall
  include the plural and vice versa.  Words importing persons  shall include
  companies, firms, corporations, partnerships, unincorporated  associations
  and their respective successors and assigns.

  1.3      Accounting Terms. All  accounting terms not specifically  defined
  herein shall be construed in accordance with generally accepted accounting
  principles as in  effect from time to time in the United States of America
  consistently  applied  ("GAAP")  and  all  financial statements  submitted
  pursuant to this  Agreement shall be prepared  in accordance with, and all
  financial data submitted  pursuant hereto shall be derived  from financial
  statements  prepared in  accordance with,  GAAP  with such  adjustments as
  shall be necessary, and with which an Acceptable Accounting Firm  concurs,
  to  reflect  any  differences  between  the  stated  assumptions  made  in
  preparing such financial statements and actual events.

  2   REPRESENTATIONS AND WARRANTIES

  2.1      In order  to induce the Lenders and the  Agent to enter into this
  Agreement and  to make the Revolving Credit Facility and Standby Letter of
  Credit Facility available, the  Borrowers and the Guarantor hereby jointly
  and severally represent and warrant that:

     (a)   Due Organization  and  Power.   Each  of  the Borrowers  and  the
  Guarantor  is duly organized  and validly existing in  good standing under
  the  laws  of its  respective  jurisdiction  of  incorporation,  has  duly
  qualified and is  authorized to  do business as a  foreign corporation  in
  each jurisdiction  wherein the  nature of the  business transacted thereby
  makes  such  qualification  necessary,  has  full power  to  carry  on its
  business  as now  being  conducted  and to  enter  into  and  perform  its
  respective obligations under  the Transaction Documents to which it  is or
  is to  be a party, and  has complied  with all  statutory, regulatory  and
  other  requirements relative  to  such  business and  such  agreements the
  noncompliance with which  could reasonably be expected to have  a material
  adverse  effect  on its  business,  assets  or  operations,  financial  or
  otherwise;

     (b)   Authorization and Consents.   All necessary corporate  action has
  been  taken  to authorize,  and all  necessary  consents  and authorities,
  including any  governmental approvals,  have been obtained  and remain  in
  full force and effect to permit the  Borrowers and the Guarantor to  enter
  into  and  perform  their  respective  obligations  under the  Transaction
  Documents  and, in the case of the Borrowers, to borrow, service and repay
  the Advances  and to  reimburse  amounts owed  in respect  of the  Standby
  Letters  of Credit  and, as  of  the date  of  this Agreement,  no further
  consents or authorities are necessary for the service and repayment of the
  Advances or any part of any thereof  or the reimbursement of amounts  owed
  in respect of the Standby Letters of Credit, or any part thereof;

     (c)   Binding  Obligations.  The  Transaction Documents  constitute or,
  when executed  and delivered,  will constitute,  legal, valid  and binding
  obligations  of such  of the  Borrowers and  the Guarantor  as is  a party
  thereto  enforceable  against  each  thereof as  is  a  party  thereto  in
  accordance  with their terms,  except to the extent  that such enforcement
  may  be limited  by  applicable  bankruptcy,  insolvency,  reorganization,
  moratorium or other  similar laws  affecting generally the  enforcement of
  creditors' rights and general equitable principles;

     (d)   No  Violation.     The  execution  and  delivery   of,  and   the
  performance of the provisions of, the Transaction Documents by each of the
  Borrowers and the Guarantor as  is a party thereto,  do not, and will  not
  during  the term  of  this  Agreement, contravene  any applicable  law  or
  regulation existing  at  the date  hereof or  any contractual  restriction
  binding on  any thereof or the  articles of  incorporation or by-laws  (or
  equivalent document) of any thereof;

     (e)   Litigation.   Except  as otherwise  disclosed  in writing  to the
  Agent  on or  before the  date hereof,  no action,  suit or  proceeding is
  pending or  threatened against  either of the Borrowers  or the  Guarantor
  before  or by  any court,  board of  arbitration or  administrative agency
  which if adversely determined would result in a material adverse change in
  the  business or  condition  (financial  or otherwise)  of the  either  of
  Borrowers  or the  Guarantor or  prevent either  of  the Borrowers  or the
  Guarantor from performing  any of  its obligations  under the  Transaction
  Documents;

     (f)   No Default.   Neither the  Guarantor nor either  of the Borrowers
  is in default under  any material agreement by  which it is bound,  nor is
  any thereof  in default in respect of any material financial commitment or
  obligation;

     (g)   Rig Ownership, Classification, Seaworthiness and Insurance.

            (i)   "JACK  BATES" is in the sole and  absolute ownership of R &
            B Drilling,  unencumbered, save  and except  for, the  respective
            Mortgage,  and  duly registered  in the  name of  R &  B Drilling
            under the laws and flag of the United States;

            (ii)  "D.R. STEWART" is in the  sole and absolute ownership  of R
            &  B  Exploration,   unencumbered,  save  and  except   for,  the
            respective Mortgage,  and duly registered  in the name  of R &  B
            Exploration under the laws and flag of the United States;

            (iii) each  Rig is  classed  in  the highest  classification  and
            rating for vessels of  the same age and type with American Bureau
            of Shipping  or such other  classification society acceptable  to
            the  Lenders  without  any  outstanding  recommendations   deemed
            material by the Lenders;

            (iv)  each  Rig  is  operationally  and  in  every  way  fit  for
            service;

            (v)   each Rig  is insured  in accordance with  the provisions of
            its respective Mortgage  and the requirements thereof  in respect
            of such insurances will have been complied with; and

            (vi)  each Rig is  under the technical and  commercial management
            of the Guarantor or one of its Affiliates;

     (h)   Financial Statements.   The Guarantor has made  available to  the
  Agent copies of the consolidated annual report on Form 10-K for the fiscal
  year ended  December 31, 1994  and quarterly reports on Form  10-Q for the
  first and second quarters  of 1995.  The financial statements contained in
  the annual report on Form 10-K, including the schedules and notes thereto,
  and the condensed financial statements contained in the quarterly reports,
  fairly present  (in the case of quarterly reports on  an unaudited basis),
  in accordance with generally accepted accounting principles, the financial
  condition and  results of the Guarantor and  its consolidated subsidiaries
  as of  the respective dates thereof  and for the  periods covered  by such
  financial statements.  All such financial statements have been prepared in
  accordance  with generally  accepted  accounting  principles  consistently
  applied throughout the periods involved, except as otherwise stated in the
  preceding sentence or in the notes thereto.  Since June 30, 1995 there has
  been  no  material  adverse  change in  the  financial  condition  of  the
  Guarantor and its consolidated subsidiaries;

     (i)   Tax Returns  and  Payments.    Each  of  the  Borrowers  and  the
  Guarantor has filed all tax returns required  to be filed thereby and  has
  paid all taxes payable thereby which have become due, other than those not
  yet delinquent  or  the nonpayment  of  which would  not have  a  material
  adverse effect on any such party, as the case may be, and except for those
  taxes  being contested  in good  faith and  by appropriate  proceedings or
  other acts  and for  which adequate  reserves have  been set  aside on its
  books.   The tax  returns of the  Guarantor have been audited  by the U.S.
  Internal Revenue  Service through December  31, 1984, and all  outstanding
  issues (other than issues which, if adversely determined, would singly  or
  in the  aggregate not have  a materially adverse effect  on the Guarantor)
  have been settled;

     (j)   Insurance.  Each of the  Borrowers and the Guarantor  has insured
  its  properties and assets against such  risks and in such  amounts as are
  customary for companies engaged in similar businesses;

     (k)   Offices.   Each of the chief  executive office and chief place of
  business of  each of  the Borrowers  and the  Guarantor and  the office in
  which  the records relating to the earnings and insurances of the Rigs are
  kept, is, and will  continue to be, located at 901 Threadneedle,  Houston,
  Texas;

     (l)   Foreign  Trade Control  Regulations.   None  of the  transactions
  contemplated  herein will  violate any  of the  provisions of  the Foreign
  Assets Control Regulations  of the  United States of   America (Title  31,
  Code of Federal Regulations, Chapter V, Part 500, as  amended), any of the
  provisions of the Cuban Assets Control Regulations of the United States of
  America (Title 31, Code  of Federal Regulations,  Chapter V, Part 515,  as
  amended), any of  the provisions of the Libyan Assets  Control Regulations
  of the United States  of America (Title 31,  Code of Federal  Regulations,
  Chapter  V, Part  550, as  amended), any  of the  provisions of  the Iraqi
  Sanctions Regulations (Title  31, Code of Federal  Regulations, Chapter V,
  Part 575, as amended),  any of the provisions  of the Haitian Transactions
  Regulations  of the United States  of America  (Title 31, Code  of Federal
  Regulations, Chapter V,  Part 580, as amended),  any of the  provisions of
  the Federal Republic of  Yugoslavia (Serbia and Montenegro) Assets Control
  Regulations (Title 31, Code of Federal Regulations, Chapter V, Part 585 as
  amended) or any of the provisions of the Regulations  of the United States
  of  America  Governing Transactions  in  Foreign  Shipping  of Merchandise
  (Title 31, Code of Federal Regulations, Chapter V, Part 505, as amended);

     (m)   Equity Ownership; Citizenship.   R & B Drilling is a Wholly-Owned
  Subsidiary  of  the  Guarantor.   R  &  B  Exploration  is  a Wholly-Owned
  Subsidiary of R & B Drilling.  During the  Credit Facility Period, neither
  Borrower will own any shares of capital stock, partnership interest or any
  other direct or indirect  equity interest in any  corporation, partnership
  or  other  entity  (other  than  the  Wholly-Owned  Subsidiaries   of  the
  Guarantor), except as heretofore disclosed to the Lenders.  The  Guarantor
  and each of  the Borrowers is  a citizen of  the United States within  the
  meaning  of Section 2 of the  Shipping Act 1916, as  amended, qualified to
  own and operate the Rigs as mobile offshore drilling units in U.S. waters;

     (n)   Environmental  Matters.    Except  as   heretofore  disclosed  in
  writing to the Lenders (i)  each of the Borrowers and the  Guarantor is in
  full  compliance with  all  applicable  United States  federal  and state,
  local,  foreign  and  international  laws,  regulations,  conventions  and
  agreements relating to pollution prevention or protection  of human health
  or the  environment (including,  without limitation,  ambient air, surface
  water,  ground water,  navigable  waters, waters  of the  contiguous zone,
  ocean  waters and  international  waters), including,  without limitation,
  laws, regulations,  conventions and agreements  relating to (1) emissions,
  discharges,  releases  or threatened  releases  of  chemicals, pollutants,
  contaminants,   wastes,  toxic   substances,  hazardous   materials,  oil,
  hazardous substances,  petroleum and  petroleum  products and  by-products
  ("Materials of Environmental Concern") or (2) the manufacture, processing,
  distribution, use, treatment,  storage, disposal, transport or handling of
  Materials of  Environmental Concern  ("Environmental Laws");  (ii) each of
  the  Borrowers and  the  Guarantor has  all permits,  licenses, approvals,
  rulings,   variances,   exemptions,    clearances,   consents   or   other
  authorizations    required    under    applicable    Environmental    Laws
  ("Environmental   Approvals")  and   is  in   full  compliance   with  all
  Environmental Approvals required  to operate their business as  then being
  conducted; (iii) neither  of the Borrowers nor the Guarantor  has received
  any notice of any claim, action, cause  of action, investigation or demand
  by  any  person,  entity,  enterprise  or  government,  or  any  political
  subdivision,   intergovernmental   body   or    agency,   department    or
  instrumentality   thereof,  alleging   potential  liability   for,  or   a
  requirement to incur,  investigatory costs, cleanup costs, response and/or
  remedial costs (whether incurred  by a governmental entity  or otherwise),
  natural resources damages, property damages, personal injuries, attorneys'
  fees and  expenses, or fines  or penalties,  in each case  arising out of,
  based  on or  resulting from  (1) the  presence, or  release or  threat of
  release into the environment, of any Materials of Environmental Concern at
  any location, whether  or not owned  by such person, or  (2) circumstances
  forming  the  basis  of  any  violation,  or  alleged  violation,  of  any
  Environmental Law or Environmental Approval ("Environmental Claim") (other
  than Environmental Claims that have been fully and finally adjudicated  or
  otherwise determined  and all  fines, penalties and other  costs, if  any,
  payable by  such Borrowers or  the Guarantor in respect  thereof have been
  paid in full or which are  fully covered by insurance (including permitted
  deductibles)); and  (iv) there  are no circumstances that  may prevent  or
  interfere with such full compliance in the future;

     (o)   Pending  or   Threatened   Environmental  Claims.     Except   as
  heretofore disclosed in  writing to the Lenders there is  no Environmental
  Claim  pending  or  threatened  against  either of  the  Borrowers  or the
  Guarantor;

     (p)   Potential Environmental Claims.   Except as heretofore  disclosed
  in  writing  to  the  Lenders  there  are  no  past  or  present  actions,
  activities, circumstances,  conditions,  events  or  incidents,  known  to
  either of the Borrowers or  the Guarantor, including, without  limitation,
  the  release,  emission,  discharge  or  disposal  of  any  Materials   of
  Environmental  Concern, that  could form  the basis  of any  Environmental
  Claim against either of the Borrowers or the Guarantor;

     (q)   Regulations G, U and  X; Use of Proceeds.  Neither  the Guarantor
  or any  Subsidiary of the Guarantor  owns or has  any present intention of
  acquiring any  "margin stock" as defined  in Regulations G, U or  X of the
  Board of Governors of the Federal Reserve System (herein called  a "margin
  stock").   Neither the Guarantor  nor any  agent acting on  its behalf has
  taken  or  will  take  any  action  which  might  cause  the  transactions
  contemplated herein  to  violate  Regulations G,  U  or  X  or  any  other
  regulation of the  Board of Governors of the  Federal Reserve System or to
  violate the Securities Exchange Act of 1934, in each case as now in effect
  or as the same may hereafter be in effect;

     (r)   ERISA  Compliance.  Each Plan  is in  substantial compliance with
  ERISA, no Plan has an accumulated  or waived funding deficiency within the
  meaning  of  Section  412 or  413(b)  of  the Code  except  as  heretofore
  disclosed in writing  to the Lenders, no proceedings have  been instituted
  to terminate any Plan,  neither the Guarantor nor any ERISA Affiliate  has
  incurred any  material liability to or  on account of  a Plan under ERISA,
  and no condition exists which presents a material risk to the Guarantor of
  incurring such a liability;

     (s)   Investment  Company.   Neither the  Guarantor  nor either  of the
  Borrowers is  an "investment  company"  or a  company "controlled"  by  an
  "investment  company"  (as each  such  terms  is defined  or  used  in the
  Investment Company Act of 1940, as amended);

     (t)   Survival.   All  representations, covenants  and warranties  made
  herein and in any certificate or other document delivered pursuant  hereto
  or in connection herewith shall be accurate when made or delivered, as the
  case may be, and shall survive the making of the Advances and the issuance
  of the Standby Letters of Credit by the Letter of Credit Issuer.

  3         ADVANCES UNDER THE REVOLVING CREDIT FACILITY

  3.1      (a)   Purpose.   The Lenders  shall make  the Advances  under the
  Revolving Credit Facility available to the Borrowers for general corporate
  purposes of the Borrowers, the Guarantor and its and their Subsidiaries.

     (b)   Making of the  Advances.  The Lenders,  relying upon each  of the
  representations and warranties set  out in Clause 2, hereby agree with the
  Borrowers that, subject to and upon the terms of this Agreement, they will
  on the Drawdown Dates make the Advances available through the Agent to the
  Borrowers. The  maximum aggregate  amount  of all  Advances which  may  be
  outstanding at any time under the Agreement is the aggregate amount of the
  Revolving  Credit Facility,  as  reduced  pursuant to  the terms  of  this
  Agreement.

     (c)   Maximum  Number of  Advances.   The  maximum  number of  Advances
  outstanding at any time  under this Agreement shall be eight (8),  and the
  minimum amount of each Advance shall be U.S.$1,000,000.00   

  3.2      Drawdown Notice.   The  Guarantor,  on behalf  of the  Borrowers,
  shall, at  least three (3)  Banking Days  before a Drawdown  Date, serve a
  notice, such notice to  be substantially in the form of Exhibit  B hereto,
  (a  "Drawdown Notice") on the Agent  which notice shall (a)  be in writing
  addressed to  the Agent,  (b) be  effective on  receipt by  the Agent, (c)
  specify the amount of the Advance to be drawn, (d) specify the Banking Day
  on  which  the  Advance  is  to be  drawn,  (e)  specify the  disbursement
  instructions, (f) specify  the initial Interest Period in respect  of such
  Advance and (g) be irrevocable.

  3.3      Effect  of  Drawdown  Notices.   Each  Drawdown  Notice  shall be
  deemed   to  constitute  a   warranty  by  the  Borrowers   (a)  that  the
  representations  and  warranties  stated  in  Clause  2  (updated  mutatis
  mutandis)  are true and  correct on  and as  of the date of  such Drawdown
  Notice and will be  true and correct  on and as  of the relevant  Drawdown
  Date as if made  on and as of such date,  and (b) that no Event of Default
  and no  event which  with the giving  of notice or  lapse of  time or both
  would constitute an Event of Default has occurred and is continuing.

  3.4      Notation of  Advances.  Each Advance  made by the Lenders  to the
  Borrowers may be evidenced by a notation  of the same made by the Agent on
  the  grid attached  to the  Note, which  notation, absent  manifest error,
  shall be prima facie evidence of the amount of the relevant Advance.

  3.5      Allocation of  Funds to  the Standby Letter  of Credit  Facility.
  Any  amounts  available  to  the  Borrowers  under  the  Revolving  Credit
  Facility, but which are not drawn down, may at any time be utilized by the
  Borrowers  for the  issuance of  Standby Letters  of Credit  on the  terms
  described in Clauses 4 and 17 (subject to reductions in  available amounts
  pursuant to the terms herein). 

  4   STANDBY LETTERS OF CREDIT

  4.1.     (a)   Purpose.   The Letter  of Credit  Issuer on  behalf of  the
  Lenders shall make the Standby Letter of Credit Facility available to  the
  Borrowers for issuance of Standby Letters of Credit in the ordinary course
  of business of the Borrowers, the Guarantor and their Subsidiaries  (other
  than  to support  Indebtedness payable  to third  parties) and  to support
  standby  letters of  credit issued by  ING Bank in the  ordinary course of
  business of the respective Borrowers outstanding on the Closing Date until
  thirty (30) days beyond their maturity.

     (b)   Availability.  (i) Subject to  and upon the terms  and conditions
  herein  set forth, the Guarantor  on behalf  of the Borrowers  may request
  that the Letter of Credit Issuer  at any time and from time to time on  or
  after the  Closing  Date and  prior  to the  Maturity Date  issue  Standby
  Letters  of Credit in  favor of Beneficiaries specified  by the Guarantor,
  for the joint  and several account of the Borrowers and in support of bid,
  performance and  other bonds  needed by the Borrowers,  the Guarantor  and
  their  Subsidiaries in their  ordinary course of business  (other than for
  the  purpose of  supporting Indebtedness  payable to  a third  party), and
  subject to and upon the terms and  conditions herein set forth the  Letter
  of Credit  Issuer agrees to issue  from time to  time, Standby  Letters of
  Credit denominated in Dollars and  in such form as may be  approved by the
  Letter of Credit Issuer.

     (ii)  Notwithstanding the foregoing, no Standby  Letter of Credit shall
  be issued, the amount of which, when added to the aggregate amounts of all
  other Standby  Letters of  Credit  then outstanding  at such  time,  would
  exceed  $10,000,000  (excluding,  however,  amounts  available  under  the
  Revolving  Credit Facility utilized  by the Borrowers for  the issuance of
  Standby Letters  of  Credit in  accordance  with  Clause 3.5).    For  the
  purposes  of this Agreement, the  amount of  any Standby Letter  of Credit
  calculated  by reference  to a currency other  than U.S.  Dollars shall be
  mutually agreed in  writing between  the Letter of Credit  Issuer and  the
  Borrowers from time to time  (in any event, not to be  less than an amount
  calculated at a rate of exchange from time to time quoted by the Letter of
  Credit  Issuer to be the current  exchange rate).  Each  Standby Letter of
  Credit shall  have an expiry date  occurring not  later than the  Maturity
  Date.

  4.2      Request  for Issuance  of  Letter of  Credit.   The  Guarantor on
  behalf of the  Borrowers shall  give the Letter  of Credit  Issuer written
  notice in the form of Exhibit C hereto, prior to 1:00 P.M. (New York time)
  at least three business days  (or such shorter period as may be acceptable
  to  the Letter  of Credit Issuer)  prior to the proposed  date of issuance
  (which shall be a business day) (each a "Letter of Credit Request"), which
  Letter of  Credit Request  shall include an application  for such  Standby
  Letter  of Credit and any other documents that the Letter of Credit Issuer
  customarily requires  in connection therewith.   The Agent  shall promptly
  notify each Lender of each Letter of Credit Request.  The Letter of Credit
  Issuer shall, on  the date of each issuance of  a Standby Letter of Credit
  by it, give the Agent, each Lender and the Borrowers written notice of the
  issuance of  such Standby Letter of  Credit, accompanied by  a copy to the
  Agent  of the Standby Letter of Credit or Standby Letters of Credit issued
  by it.

  4.3      Effect of  Letter  of Credit  Request.    Each Letter  of  Credit
  Request shall be deemed to constitute a warranty by the Borrowers (a) that
  the  representations and  warranties stated  in Clause 2  (updated mutatis
  mutandis) are  true and correct on  and as of  the date of  such Letter of
  Credit  Request and will  be true  and correct on and  as of  the date the
  relevant  Standby Letter of Credit is issued  as if made on and as of such
  date and (b) that no  Event of Default and no event  which with the giving
  of notice  or lapse of time  or both would constitute  an Event of Default
  has occurred and is continuing.

  5         CONDITIONS PRECEDENT

  5.1      General Conditions  Precedent.   The several  obligations of  the
  Lenders under this  Agreement shall be expressly subject to  the following
  conditions precedent:

     (a)   the  Agent shall have  received the  following documents  in form
      and substance satisfactory to the Lenders and their legal advisers:

            (i)   copies,  certified as  true and  complete by  an officer of
            each of the  Borrowers and the  Guarantor of  the resolutions  of
            the board of directors  (and, if any necessary  under appropriate
            law,  shareholders) of  such Person  evidencing  approval of  the
            Transaction  Documents to which such Person is  to be a party and
            authorizing   an    appropriate    officer   or    officers    or
            attorney-in-fact or attorneys-in-fact to execute  the same on its
            behalf;

            (ii)  copies,  certified as  true and  complete by  an officer of
            each  of the  Borrowers  and the  Guarantor  or other  applicable
            party, of  all documents  evidencing any  other necessary  action
            (including  actions  by  such  parties  thereto  other  than  the
            Borrowers or  the Guarantor  as may  be required  by the  Agent),
            approvals  or consents with respect  to this Agreement, the Note,
            the Security Documents  and the transactions contemplated  hereby
            and thereby;

            (iii) copies,  certified as  true and  complete by  an officer of
            each  of the  Borrowers  and the  Guarantor,  of the  articles or
            certificate  of  incorporation and  by-laws  (or  the  equivalent
            thereof) of each thereof;

            (iv)  good standing certificates or  the equivalent thereof  with
            respect to each of the Borrowers and the Guarantor issued by  the
            appropriate  authorities   of  the  respective   jurisdiction  of
            incorporation of such parties;

            (v)   copies, certified as  true and  complete by  an officer  of
            each relevant  Borrower, of  all drilling  contracts relating  to
            the Rigs;

            (vi)  valuations  of  each  Rig  from  an  independent  appraiser
            satisfactory to the Agent; and

            (vii) a  certificate  signed  by  an  officer   of  each  of  the
            Borrowers  and  the Guarantor  as  to  (a)  the  accuracy of  the
            representations  and   warranties  of  the   Borrowers  and   the
            Guarantor  and (b)  to the  effect that  no Event  of Default  or
            event which with notice or  passage of time or both shall  become
            an Event of Default has occurred and is continuing.

      (b)   the  Agent  shall  have received  evidence  satisfactory  to  the
      Lenders and their legal advisers that:

            (i)   "JACK  BATES" is registered  in the name of  R & B Drilling
            under  the U.S.  flag and  is free  and  clear of  all liens  and
            encumbrances of record except  for the Mortgage thereon  in favor
            of the Indenture Trustee;

            (ii)  "D.R.  STEWART"  is  registered  in  the  name  of  R  &  B
            Exploration under  the U.S. flag  and is  free and  clear of  all
            liens and encumbrances of record except  for the Mortgage thereon
            in favor of the Indenture Trustee;

            (iii) each  Rig is  classed  in  the highest  classification  and
            rating for  vessels of the same age and type with American Bureau
            of Shipping  or such other  classification society acceptable  to
            the Agent without any material outstanding recommendations;

            (iv)  each Rig  is insured in accordance  with the  provisions of
            its  respective  Mortgage  (evidence  of  which   shall  include,
            without  limitation,  cover  notes,  certificates  of  entry  and
            brokers' letters of undertaking and an opinion of an  independent
            insurance  consultant  retained  by the  Lenders  or  such  other
            evidence as shall be  reasonably satisfactory to the Lenders) and
            all requirements thereof in respect of  such insurances have been
            fulfilled;

      (c)   the Borrowers shall have duly executed and delivered:

            (i)   the Note,
            (ii)  the Mortgages,
            (iii) the Insurances Assignments,
            (iv)  the General Assignments, and
            the security  interests created by  the Mortgages, the  Insurance
            Assignments  and the  General Assignments  shall  have been  duly
            perfected in all relevant jurisdictions;

      (d)   the  Guarantor  shall  have  duly   executed  and  delivered  the
  Guarantee;

      (e)   the Borrowers  and the Indenture Trustee shall have duly executed
      and delivered the Indenture of Trust, for the benefit of the Lenders;

      (f)   the Agent shall  have received payment  in full of  all fees  and
      expenses  due  to  the  Agent and  the  Lenders  on  the  date  thereof
      including,  without  limitation,  all  expenses  due  under  Clause  17
      hereof;

      (g)   the Lenders  shall have received evidence  satisfactory to it and
      its legal advisers that,  save for the liens created by  the Mortgages,
      General Assignments  and Insurances  Assignments, there  are no  liens,
      charges or  encumbrances of any kind whatsoever  on either Rig or their
      respective earnings or  insurances except as permitted hereby or by any
      of the Security Documents;

      (h)   the Lenders shall  be satisfied that neither of the Borrowers nor
      the Guarantor is subject to any Environmental Claim which  could have a
      material  adverse  effect  on  the  business,  assets  or  results   of
      operations of any thereof;

      (i)   the  Lenders  shall   have  received  a  complete   copy  of  the
      consolidated  audited financial  report of the  Guarantor for  the year
      ending December  31, 1994,  which shall  include at  least the  balance
      sheet of such  corporation as of the  end of such year and  the related
      statements of income,  cash flow and  retained earnings  for such  year
      all in reasonable detail,  certified by an Acceptable  Accounting Firm,
      together with  their opinion  (containing no  qualifications which  the
      Lenders deem material);

      (j)   the Borrowers shall have  provided such  evidence as the  Lenders
      may require documenting the current  legal and beneficial ownership  of
      the shares of the Borrowers; and

      (k)   the Lenders shall have received opinions from (i) Watson,  Farley
      & Williams, special counsel  to the Lenders and the Agent on matters of
      New  York law and the Federal  law of the United  States and (ii) Wayne
      K. Hillin,  counsel  to  the  Borrowers  and  General  Counsel  of  the
      Guarantor, in each case in such form as the Lenders may require.

  6   INTEREST RATE HEDGE TRANSACTIONS/FOREIGN EXCHANGE TRANSACTIONS

     The Lenders agree that the Guarantor, one or more of the Borrowers  and
  the  Agent  may  from  time  to  time  enter  into   interest  rate  hedge
  transactions and foreign exchange transactions and that in connection with
  any such transaction, the Lenders will consent to the execution,  delivery
  and recording by the Borrowers of second priority mortgages on the Rigs to
  secure the obligations of the Guarantor  and such Borrower or Borrowers in
  respect of such transactions.

  7   REPAYMENT, REDUCTION AND PREPAYMENT

  7.1      Repayment.  The Borrowers, jointly and severally, agree to  repay
  all outstanding  Advances (subject  to such reduction  and prepayments  as
  hereinafter set forth) on the Maturity Date and, to the extent required to
  comply  with  the limitations  set  forth  in Clause  7.2  below, on  each
  Reduction Date.

  7.2      Scheduled Reductions  of the  Credit Facility.    Subject to  the
  following provisions of this Clause 7, the Revolving Credit Facility shall
  be reduced  on each of the first nine (9) Reduction Dates by Three Million
  Four Hundred Thousand Dollars ($3,400,000).  The Revolving Credit Facility
  shall be reduced on the tenth and final Reduction Date by Fourteen Million
  Four  Hundred   Thousand  Dollars  ($14,400,000).     Notwithstanding  the
  foregoing, in the event an initial Advance of U.S.$1,000,000.00 under  the
  Revolving Credit  Facility is not  made on or prior to  November 30, 1995,
  the  Revolving Credit  Facility  and the  Lenders'  Commitments thereunder
  shall be reduced to zero.

  7.3      Prepayment, Reborrowing.   The  Borrowers may  prepay, upon  five
  (5) business day's written notice, any outstanding Advance or any  portion
  thereof, without  penalty, provided  that such prepayment is  made on  the
  last day  of the Interest Period of  such Advance.  Subject  to the limits
  and  upon the conditions  herein provided (including the  reduction of the
  Revolving Credit Facility provided in Clause 7.2), the Borrowers may  from
  time to time prepay the Advances and thereafter re-borrow such Advances or
  a portion thereof.

  7.4      Pro-rata Reduction  of Commitments.   If the  Commitments of  the
  Lenders are reduced pursuant to Clause 12.4 hereof or any  other provision
  of this Agreement, the Commitments shall be reduced on the Reduction Dates
  falling  on or after the date of  such reduction by the same proportion as
  that  by which  the amount  of the  aggregate of  the  Commitments of  the
  Lenders is so reduced and the remaining  reductions pursuant to Clause 7.2
  shall be adjusted proportionately to reflect such reduction.

  7.5      Optional  Permanent  Reduction  or  Termination  of  the   Credit
  Facility.  The Borrowers shall  have the right, at any time  and from time
  to  time, to request  on thirty  (30) days  prior written  notice, without
  penalty, a  permanent partial  reduction in or termination  of the  Credit
  Facility.   If the  Revolving Credit Facility is  reduced, all outstanding
  Advances in  excess of the reduced  Revolving Credit  Facility Commitments
  shall be  repaid in full.   Any reduction or  termination of the Revolving
  Credit Facility shall  occur on  the last day  of the  applicable Interest
  Period(s)  with respect  to the  outstanding Advances.   If  the Borrowers
  request that  the Standby  Letter of Credit Facility  is terminated,  they
  shall  furnish to  the Agent  an irrevocable  and unconditional  letter of
  credit from  a first class international bank acceptable to the Agent (and
  execute all  all required  documentation in connection  therewith) for all
  amounts  payable under  all Standby  Letters of  Credit  then outstanding,
  which shall be returned to the Borrowers  only after such Standby  Letters
  of Credit have been  terminated or have expired.   Each partial  permanent
  reduction  shall be equal  to or  shall exceed Five Million  United States
  Dollars (U.S.$5,000,000.00)  and shall  be  an  integral multiple  of  One
  Million United States Dollars (U.S.$1,000,000.00).

  8   INTEREST AND RATE

  8.1      Interest Rate;  Default Rate.   Each Advance  shall bear interest
  at the Applicable  Rate, which shall  be the rate per  annum equal to  the
  aggregate  of (a) LIBOR  for the  applicable Interest  Period and  (b) the
  Margin.  Any amounts due  under this Agreement, including  but not limited
  to, amounts payable at the time of  a Commitment Reduction, not paid  when
  due, whether on a Reduction Date, by acceleration or otherwise, shall bear
  interest thereafter at the Default Rate.

  8.2      Interest  Periods.   With respect  to each  Advance, an  Interest
  Period shall  be a period of one (1), three (3) or six (6) months, or such
  other period as selected by the Guarantor on behalf of the Borrowers which
  is available  to, and  accepted by,  the Lenders  upon at  least three (3)
  Banking Days written notice to the Agent prior to the drawdown thereof and
  the expiration of any applicable  Interest Period; provided, however, that
  the Guarantor may select an Interest Period of one (1) month no more  than
  three  (3) times per annum and, provided, further, that if the Agent fails
  to  receive  the  required  notice  as  aforesaid,  the  duration  of  the
  applicable Interest Period shall be three (3) months.

  8.3      Interest Payments.  The Borrowers agree jointly  and severally to
  pay interest accrued on the Advances,  in arrears, on the Interest Payment
  Dates.

  8.4      Calculation of Interest.  All  interest shall accrue from  day to
  day and  be calculated on  the actual  number of  days elapsed and on  the
  basis of a three hundred sixty (360) day year.

  9   PAYMENTS

  9.1      Place of  Payments, No  Set Off.   (a)  All payments  to be  made
  hereunder by the Borrowers shall be made on the due dates of such payments
  to the Agent by wire transfer to  The Bank of New York, New York, New York
  (ABA No.  021000018) for credit to  the account  of Christiania Bank,  New
  York, New  York (Account  No. 8026120277)  or to such other  place as  the
  Agent may  direct, for  the  account of  the Lenders,  without set-off  or
  counterclaim and free from,  clear of and without deduction for any Taxes,
  provided,  however, that if the Borrowers shall at any time be required by
  law  to withhold  or deduct  any Taxes  from any  amounts  payable to  the
  Lenders hereunder, then the Borrowers shall jointly and severally (1)  pay
  directly to the  relevant taxing authority the full amount required  to be
  deducted or withheld, (2) pay  to the Agent for the account of the Lenders
  such additional amounts in Dollars  as may be necessary to ensure that the
  net  amounts received by  each Lender  shall equal  the full  amounts such
  Lender would  have received  if  such withholding  or deduction  were  not
  required, and (3) promptly send  to the Agent an official receipt or other
  documentary evidence satisfactory to  the Agent evidencing such payment to
  such  authority.   Notwithstanding the  preceding sentence,  the Borrowers
  shall not be required to pay additional amounts or otherwise indemnify the
  Lenders for or on account of:

     (i)   Taxes based  on or measured  by the net  income of any Lender  or
  Taxes in the nature of franchise taxes or taxes for the privilege of doing
  business imposed  by  any jurisdiction  or any  political  subdivision  or
  taxing  authority therein  unless such  are  imposed as  a  result of  the
  activities of  the Borrowers  within the  relevant taxing  jurisdiction or
  which activities result in the enforcement of remedies hereunder;

     (ii)  Taxes imposed  by any jurisdiction  or any political  subdivision
  or taxing authority therein on any Lender that would not have been imposed
  but  for  such Lender  being organized  in  or conducting  business  in or
  maintaining  a place of  business in the relevant  taxing jurisdiction, or
  engaging in activities or transactions in the relevant taxing jurisdiction
  that  are unrelated  to the  transactions contemplated by  the Transaction
  Documents,  but only to the extent such  Taxes are not imposed as a result
  of the activities of the Borrowers within the relevant taxing jurisdiction
  or the enforcement of remedies hereunder;

     (iii) Taxes  imposed on any Lender that would not have been imposed but
  for  any  failure  of  such  Lender  to  comply  with  any  return  filing
  requirement or any certification, information, documentation, reporting or
  other similar requirement  known to such Lender  or should have been known
  in the exercise of due diligence, if such compliance is required to obtain
  or establish relief or exemption from or reduction in such Taxes; or

     (iv)  any withholding  of United States  federal income tax that  would
  not  have been required but for a failure by any Lender to comply with the
  requirements of Clause 9.1(b).

     (b)   Prior to the first day of  the first Interest Period (or, in  the
  case of  a Lender  that acquired  its interest  in an  Advance or  a  Note
  pursuant to  an assignment described in Clause 14, on or prior to the date
  of the Assignment  and Assumption Agreement pursuant  to which it became a
  Lender), each Lender that is not incorporated under the laws of the United
  States or  a State thereof will  deliver to the Borrowers  and the Agent a
  duly completed and executed IRS Form 1001 or 4224 or  successor applicable
  form, as the  case may  be, certifying  in each case that  such Lender  is
  entitled  to receive payments  under this Agreement, the  Advances and the
  Notes payable to it, without deduction or withholding of any United States
  federal  income  taxes.   Each Lender  who  undertakes to  deliver  to the
  Borrowers and  the Agent  a Form  1001 or  4224 pursuant  to the preceding
  sentence further undertakes  to deliver to the Agent and the  Borrowers an
  additional Form  1001 or 4224 (or successor applicable forms) on or before
  the  date that  any such  form expires  or becomes  obsolete or  after the
  occurrence  of any  event  requiring a  change  in  the most  recent  form
  previously delivered  by  it to  the Borrowers  and  the Agent,  and  such
  extensions or  renewals thereof  as  may reasonably  be requested  by  the
  Borrower, certifying, in the case of a Form 1001 or 4224, that such Lender
  is entitled to receive payments under this Agreement, the Advances and the
  Notes without deduction or withholding of any United States federal income
  taxes, unless in  any such case, an event (including,  without limitation,
  any change in treaty, law or regulation) has occurred prior to the date on
  which any such delivery would otherwise be required which renders all such
  forms inapplicable or which would prevent such Lender from duly completing
  and delivering any such form with respect to it, in which case the  Lender
  shall either  (1) furnish  to the  Borrowers and  the Agent  such forms or
  other certification as  the Lender (in its reasonable opinion)  is legally
  entitled to furnish  evidencing the  Lender's eligibility  for a  complete
  exemption from or a  reduced rate of withholding of United States  federal
  income taxes, or (2) notify the Borrowers and the Agent that the Lender is
  not capable of receiving payments without any deduction or withholding  of
  United States federal income tax.

     (c)   Without prejudice to  the preceding provisions of  Clause 9.1, if
  any Lender or  the Agent on its behalf is required to  make any payment on
  account of  any Tax  for which the  Borrowers are  responsible pursuant to
  Clause  9.1(a), or any liability in  respect of any such  Tax is asserted,
  imposed, levied  or  assessed against  such Lender  or  the Agent  on  its
  behalf, the Borrowers shall, upon demand of the Agent, promptly  indemnify
  such Lender against such payment or liability, together with any interest,
  penalties or expenses payable or incurred in connection therewith.

     (d)   In the  event that the  Borrowers have actual  knowledge that the
  Borrowers  are required to,  or there arises in  the Borrowers' reasonable
  opinion  a substantial likelihood  that the Borrowers will  be required to
  pay an  additional  amount or  otherwise indemnify  any Lender  for or  on
  account of any withholding of United States federal income tax pursuant to
  Clause 9, the  Borrowers will promptly notify  the Agent and each relevant
  Lender  of the nature of such  Tax, and shall furnish  such information to
  the Agent and such Lender with respect  to such Tax, as the Agent  or such
  Lender may reasonably request. In the event of any knowledge or opinion of
  the Borrowers  described in  the preceding  sentence,  the Borrowers,  the
  Agent and each  relevant Lender shall consult  in good faith to  determine
  what  may be required  to avoid  or reduce  such Tax,  and shall  each use
  reasonable efforts to avoid or reduce such Tax (so long as such efforts do
  not, in  the reasonable opinion of  the Lender, result in  any cost to the
  Lenders  or any  modification of  the terms  of repayment  of any  Note or
  Advance).

     (e)   In addition, Borrowers agree to  pay any present or  future stamp
  or  documentary taxes, excise or  property taxes, or  any other charges or
  similar  levies which  arise from any payment  made hereunder  or from the
  execution, delivery or registration of, or otherwise with respect to,  the
  Transaction Documents.

  10  REIMBURSEMENT OBLIGATIONS

  10.01    Agreement  to  Repay  Letter  of  Credit  Payments.    (a)    The
  Borrowers  hereby jointly and  severally agree to reimburse  the Letter of
  Credit Issuer by making payment to the Agent by  wire transfer to The Bank
  of New York,  New York,  New York  (ABA No. 021000018) for  credit to  the
  account of Christiania  Bank, New York, New York (Account  No. 8026120277)
  or to such  other place as  the Agent may direct,  for the account of  the
  Lenders, for  any payment  or disbursement  made by the  Letter of  Credit
  Issuer  pursuant to a  demand received in substantial  compliance with any
  Standby Letter  of Credit  (each such  amount so  paid or  disbursed until
  reimbursed,  an "Unpaid Drawing"  and the joint and  several obligation of
  the Borrowers to pay the Unpaid Drawings, the "Reimbursement Obligations")
  immediately after, and in any event on the date on which the Borrowers are
  notified by the Letter  of Credit Issuer of such payment or  disbursement,
  with interest on  the amount so paid or disbursed by  the Letter of Credit
  Issuer, to the extent not reimbursed prior to 1:00 P.M. (New York time) on
  the date of such payment or disbursement, from and including the date paid
  or  disbursed to but not including the date the Letter of Credit Issuer is
  reimbursed therefor, at  a rate per annum  which shall be one  half of one
  percent  (1/2 of 1%) in excess of the Base Rate  as in effect from time to
  time  (plus an  additional 2%  per annum  if not  reimbursed by  the third
  business day after the  date of such  notice of payment or  disbursement),
  such interest also to be payable on demand.  The Reimbursement Obligations
  of the Borrowers (and their obligations to pay interest thereon)  shall be
  absolute   and  unconditional   under  any   and  all   circumstances  and
  irrespective of any  setoff, counterclaim or defense to payment  which the
  Borrowers may  have or have had  against the Letter  of Credit Issuer, the
  Agent or any Lender, including, without limitation, any defense based upon
  the failure of any drawing  under a Standby Letter of Credit to conform to
  the terms  of the Standby Letter  of Credit (except  as provided in Clause
  10.02(b)) or  any non-application or misapplication by  the Beneficiary of
  the proceeds of such drawing.  Upon the occurrence of an Event of Default,
  the Borrowers agree, jointly  and severally, to deliver to the Agent  cash
  collateral  in an  amount equal  to the  aggregate  amount of  the Standby
  Letters of Credit then outstanding, which cash collateral shall be held in
  a deposit in the name of the Agent for application to the reimbursement of
  any Unpaid Drawing.

  10.02    Standby Letter of Credit Participants.  (a) Immediately upon  the
  issuance by the Letter  of Credit Issuer of any Standby Letter  of Credit,
  the Letter of Credit Issuer shall be  deemed to have sold and  transferred
  to each other Lender, and each such Lender (each a "Participant") shall be
  deemed irrevocably and unconditionally to have purchased and received from
  the  Letter of Credit  Issuer, without recourse or  warranty, an undivided
  interest and participation  proportionate to the Standby Letter  of Credit
  Commitment of such Lender  (hereinafter the "Adjusted Percentage") in such
  Standby Letter of  Credit, each substitute letter of credit,  each drawing
  made thereunder and the obligations of the Borrowers under this  Agreement
  with respect thereto.

     (b)   In  determining  whether  to pay  under  any  Standby  Letter  of
  Credit, the Letter of Credit Issuer shall not have any obligation relative
  to the Participants other than to determine that any documents required to
  be delivered  under such Standby Letter of Credit have  been delivered and
  that they substantially comply on their face with the requirements of such
  Standby Letter of Credit.   Any action taken or omitted to be taken by the
  Letter of Credit Issuer under  or in connection with any Standby Letter of
  Credit,  if taken or omitted in the absence of gross negligence or willful
  misconduct, shall not create for the Letter of Credit Issuer any resulting
  liability.

     (c)   In the event that  the Letter of Credit Issuer makes  any payment
  under  any Standby  Letter of  Credit  and the  Borrowers  shall not  have
  reimbursed  such amount in full to the Letter of Credit Issuer pursuant to
  Clause 10.01, the Letter of Credit Issuer shall promptly notify  the Agent
  and  the Agent shall promptly notify each Participant of such failure, and
  each Participant shall  promptly and unconditionally pay to the  Agent for
  the  account of the Letter of  Credit Issuer, the amount  of such Lender's
  Adjusted Percentage of  such payment in Dollars and  in same day funds. If
  the  Agent so notifies any Participant required to  fund an Unpaid Drawing
  under a Standby  Letter of Credit prior  to 11:00 A.M. (New  York time) on
  any  business day, such Participant  shall make available to the Agent for
  the account  of the  Letter of Credit Issuer  such Participant's  Adjusted
  Percentage of the amount of such payment on  such business day in same day
  funds.  If and to the  extent such Participant shall not  have so made its
  Adjusted Percentage of the amount of such Unpaid Drawing available  to the
  Agent  for the account  of the  Letter of Credit Issuer,  such Participant
  agrees to pay to the Agent for the account of the Letter of Credit Issuer,
  forthwith on demand such amount, together with interest thereon, for  each
  day from such date until the date such amount is paid to the Agent for the
  account of  the Letter  of Credit  Issuer at  the overnight  Federal Funds
  Effective Rate.   The failure of any Participant  to make available to the
  Agent  for  the  account of  the  Letter  of Credit  Issuer  its  Adjusted
  Percentage of any Unpaid Drawing under any Standby Letter of  Credit shall
  not  relieve any  other Participant  of its  obligation hereunder  to make
  available to the  Agent for the account of the Letter of Credit Issuer its
  Adjusted Percentage of any  payment under any Standby  Letter of Credit on
  the  date  required,  as  specified  above, but  no  Participant  shall be
  responsible for the failure of any other Participant to  make available to
  the  Agent for  the account  of such  Letter of  Credit Issuer  such other
  Participant's Adjusted Percentage of any such payment.

     (d)   Whenever the Letter  of Credit Issuer  receives a  payment of  an
  Unpaid Drawing as  to which the Agent has received  for the account of the
  Letter of  Credit Issuer  any payments from the  Participants pursuant  to
  clause  (c) above, the Letter of Credit Issuer shall pay to the Agent, and
  the  Agent shall  promptly  pay to  each  Participant which  has  paid its
  Adjusted Percentage thereof, in  Dollars and in same  day funds, an amount
  equal to such  Participant's Adjusted  Percentage of the  principal amount
  thereof and accrued interest thereon.

     (e)   The  obligations  of the  Participants  to make  payments  to the
  Agent  for the  account of  the Letter  of Credit  Issuer with  respect to
  Standby  Letters  of  Credit  shall be  irrevocable  and  not  subject  to
  counterclaim, set-off  or  other defense  or any  other  qualification  or
  exception  whatsoever (provided that  no Participant shall be  required to
  make payments resulting from the gross negligence or willful misconduct of
  the Letter  of Credit Issuer) and  shall be  made in  accordance with  the
  terms and conditions of this Agreement under all circumstances, including,
  without limitation, any of the following circumstances:

            (i)   any lack  of validity or  enforceability of this  Agreement
            or any of the other Transaction Documents;

            (ii)  the  existence of  any  claim,  set-off, defense  or  other
            right which  the  Borrowers  may  have  at  any  time  against  a
            Beneficiary, any transferee of  any Standby Letter of Credit  (or
            any  Person for  whom  any such  transferee  may be  acting), the
            Agent, the Letter of Credit  Issuer, any Lender or  other Person,
            whether in connection with  this Agreement, any Standby Letter of
            Credit,  the transactions  contemplated  herein or  any unrelated
            transactions (including  any underlying  transaction between  the
            Borrowers and the Beneficiary);

            (iii)  any draft, certificate or  other document presented  under
            the  Standby Letter  of Credit proving  to be forged, fraudulent,
            invalid or  insufficient in any respect  or any statement therein
            being untrue or inaccurate in any respect;

            (iv)  the  surrender  or  impairment  of  any  security  for  the
            performance  or observance  of any  of the  terms  of any  of the
            Transaction Documents.

     10.03 Indemnities.  The Borrowers hereby  agree, jointly and severally,
  to reimburse and indemnify the Letter of Credit Issuer for and against any
  and  all liabilities,  obligations,  losses, damages,  penalties,  claims,
  actions, judgments, suits,  costs, expenses or disbursements of whatsoever
  kind or  nature which may  be imposed on, asserted against  or incurred by
  the Letter of Credit Issuer in performing  its duties in any way  relating
  to or arising  out of its issuance of  Standby Letters of Credit; provided
  that  the  Borrowers  shall  not  be  liable  for  any   portion  of  such
  liabilities,  obligations, losses, damages, penalties, actions, judgments,
  suits,  costs,   expenses  or  disbursements   resulting  from  the  gross
  negligence or willful misconduct  of the Letter of Credit Issuer.   To the
  extent the Letter of  Credit Issuer is  not indemnified by the  Borrowers,
  the Participants,  severally, will  reimburse and indemnify  the Letter of
  Credit Issuer, in proportion to their respective Standby Letter of  Credit
  Commitments, for and against any and all liabilities, obligations, losses,
  damages, penalties, claims,  actions, judgments, suits, costs, expenses or
  disbursements  of whatsoever  kind  or  nature which  may be  imposed  on,
  asserted against or incurred by the Letter  of Credit Issuer in performing
  its duties  in any  way relating  to or  arising out  of  its issuance  of
  Standby Letters of  Credit; provided that no Participants shall  be liable
  for  any  portion  of  such  liabilities,  obligations,  losses,  damages,
  penalties, actions,  judgments, suits,  costs,  expenses or  disbursements
  resulting from the gross negligence or willful misconduct of the Letter of
  Credit Issuer.

  11  EVENTS OF DEFAULT

  11.1      In the event that any of the following  events shall occur and be
  continuing:

      (a)   Commitment Reduction and Interest.   Any payment due at  the time
      of a Commitment  Reduction or any  Interest Payment  Date or  otherwise
      due hereunder,  under the Note or  under any of the  Security Documents
      is not paid  when due, and the continuance  of any of the same  for two
      (2) Banking Days; or

      (b)   Reimbursement Obligations.   The Borrowers shall  fail to pay the
      Reimbursement  Obligations  in  accordance  with  Clause  10,  and  the
      continuance of any of the same for two (2) Banking Days; or

      (c)   Other Payments.   Any fees  or other amounts  becoming payable to
      the Agent  or the Lenders under  this Agreement, under  the Note, under
      the Security Documents  or under any  of them  is not paid  on the  due
      date or within three (3) Banking Days  after the date of demand (as the
      case  may be),  and  the continuance  of any  of the  same for  two (2)
      Banking Days; or

      (d)   Representations,  etc.   Any  representation, warranty  or  other
      statement made by the Borrowers or  the Guarantor in this Agreement  or
      in any  of the  Security Documents to  which it  is a  party or in  any
      other instrument, document  or other agreement delivered  in connection
      herewith  or therewith proves to have  been untrue or misleading in any
      material respect as at the date as of which made; or

      (e)   Impossibility,  Illegality.   It becomes  impossible or  unlawful
      for the Borrowers or the Guarantor or  either of them to fulfill any of
      the covenants and obligations contained  herein, in the Note or in  any
      of the Security  Documents to which it  is a party or for  the Agent or
      the Lenders  to exercise any  of the  rights vested in  them hereunder,
      under  the  Note  or under  any  of  the  Security  Documents and  such
      impossibility or illegality,  in the reasonable opinion of the Agent or
      the Majority  Lenders, will  have a  material adverse  effect on  their
      rights  hereunder,  under  the  Note  or  under  any  of  the  Security
      Documents or on their right to enforce any thereof; or

      (f)   Covenants.   The Borrowers  or the  Guarantor or  either of  them
      defaults  in  the  performance  of  any  term,  covenant  or  agreement
      contained in this  Agreement, in  the Note or  in any  of the  Security
      Documents to which they are a party or in any of  them, or in any other
      instrument,   document  or  other  agreement  delivered  in  connection
      herewith  or  therewith,  or   there  occurs  any  other   event  which
      constitutes a  default under  this Agreement, the  Note or  any of  the
      Security  Documents,  in each  case  other  than  an  Event of  Default
      referred to  elsewhere in  this Clause 11.1,  and such default,  in the
      reasonable  opinion  of the  Majority  Lenders, could  have  a material
      adverse effect on their rights  hereunder, under the Note or  under any
      of the Security Documents  or on their right to enforce any thereof and
      continues unremedied for a period of thirty (30) days; or

      (g)   Indebtedness.   The Guarantor shall  default in  the payment when
      due  (subject to any applicable grace  period), whether by acceleration
      or  otherwise, of  any  Indebtedness  having an  outstanding  principal
      amount of  $1,000,000  or  more  or an  event  of  default  shall  have
      occurred  and be continuing under any loan agreement, credit agreement,
      security agreement, capital  lease, operating lease, guaranty  or other
      similar agreement between  the Guarantor or any of its subsidiaries and
      any bank or other  financial institution which results in  acceleration
      of  any Indebtedness  or  the re-negotiation  of the  material payments
      terms of such Indebtedness; or

      (h)   Stock  Ownership;  Citizenship.   There  is,  without  the  prior
      written consent  of the Majority  Lenders, any  change in the  legal or
      beneficial stock ownership or the  voting control of the  Borrowers, or
      the Guarantor or  either of the Borrowers  shall cease to be  a citizen
      of the United  States within the meaning  of Section 2 of  the Shipping
      Act 1916, as amended,  qualified to  own and operate  the Rigs in  U.S.
      waters; or

      (i)   Default  under the  Security  Documents.   There  is an  event of
      default under any of the  Security Documents which shall  have occurred
      and be continuing beyond any applicable grace period; or

      (j)   Bankruptcy.   Either  of  the Borrowers  or  the Guarantor  is or
      becomes   insolvent,   commences  any   proceeding   relating   to  any
      substantial  portion   of  its   property  under   any  reorganization,
      arrangement  or   readjustment  of   debt,  dissolution,  winding   up,
      adjustment, composition,  bankruptcy or liquidation  law or statute  of
      any jurisdiction,  whether now or  hereafter in effect  ("Proceeding"),
      or there is commenced against either of the Borrowers or  the Guarantor
      any Proceeding and such Proceeding remains  undismissed or unstayed for
      a period of  thirty (30) days; or any receiver, trustee, liquidator or,
      sequestrator of,  or  for,  the  Borrowers  or  the  Guarantor  or  any
      substantial portion of the property of any  thereof is appointed and is
      not  discharged within a  period of thirty (30)  days; or the Borrowers
      or the  Guarantor by  any act indicates  consent to  or approval of  or
      acquiescence in any Proceeding or  to the appointment of  any receiver,
      trustee,   liquidator  or  sequestrator  of,  or  for,  itself  or  any
      substantial portion of its property; or

      (k)   Sale  of  Assets.   Either  of  the  Borrowers  or the  Guarantor
      ceases, or threatens  to cease, its  operations or  sells or  otherwise
      disposes  of, or  threatens to  sell or  otherwise  dispose of,  all or
      substantially all  of its  assets or all  or substantially  all of  its
      assets are seized or otherwise appropriated; or

      (l)   Judgments.   Any judgment  or order  is entered  for the  payment
      (not covered by insurance or  indemnification) in excess of  $1,000,000
      against either of the  Borrowers or in excess of $5,000,000 against the
      Guarantor or  any judgment is  entered the effect  whereof would be  to
      render ineffective or  invalid this  Agreement, the Note,  the Security
      Documents or any of them; or

      (m)   Inability  to  Pay  Debts.    Either  of  the  Borrowers  or  the
      Guarantor is unable to pay or admits its inability to pay its  debts as
      they fall  due or if a moratorium  shall be declared in  respect of any
      Indebtedness thereof; or

      (n)   Material Adverse Change.  There  is a material adverse  change in
      the business  or condition financial  or otherwise of  the Borrowers or
      the Guarantor,

  then the obligation of the Lenders  to make the Credit  Facility available
  shall cease  and the  Majority Lenders may,  by notice  to the  Borrowers,
  declare the then outstanding Advances, accrued interest and any other sums
  payable by the Borrowers hereunder, under the Note, and under the Security
  Documents  and  all  outstanding Reimbursement  Obligations,  and  accrued
  interest thereon  immediately due  and payable  whereupon  the same  shall
  forthwith  be  due and  payable without  presentment,  demand,  protest or
  notice of  any kind,  all of which are  hereby expressly  waived; provided
  that upon  the happening of an  event specified in  subclause (i)  of this
  Clause  11.1,  the  Note  and  all  Reimbursement  Obligations   shall  be
  immediately due  and payable  without declaration or other  notice to  the
  Borrowers.   In such event, the Lenders may proceed to protect and enforce
  their rights  by action at  law, suit in  equity or in  admiralty or other
  appropriate proceeding,  whether for specific  performance of any covenant
  contained  in this  Agreement,  in the  Note  or in  any of  the  Security
  Documents,  or in  aid of  the exercise  of any  power  granted herein  or
  therein, or  the Lenders may  proceed to  enforce the payment  of the Note
  when due or  to enforce any other legal or equitable right of the Lenders,
  or proceed to take any action authorized  or permitted under the terms  of
  this  Agreement, any of the  Security Documents or  by applicable laws for
  the collection of all  sums due, or so declared due, under  this Agreement
  or  on  the Note, including, without limitation, the right  to appropriate
  and  hold or  apply (directly,  by  way of  set-off  or otherwise)  to the
  payment  of the  obligations of  the Borrowers  to the  Lenders hereunder,
  under the Note and/or under any of the Security  Documents (whether or not
  then  due)  all moneys  and  other  amounts  of  the  Borrowers,  then  or
  thereafter in possession of any of the Lenders, the balance of any deposit
  account (demand or time, matured or unmatured) of either of the Borrowers,
  then or thereafter with any of  Lenders and every other claim of either of
  the Borrowers, then or thereafter against any of the Lenders.

  11.2     Indemnification.  The  Borrowers jointly and severally  agree to,
  and shall, indemnify  and hold the Agent and the Lenders  harmless against
  any loss or  costs or expenses (including  legal fees and expenses)  which
  the Agent or any of the Lenders sustains or incurs as a consequence of any
  default  in repayment  of the principal  amount of any of  the Advances or
  interest accrued thereon,  the repayment of the Reimbursement Obligations,
  or  any other  amount  payable  hereunder, under  the  Note or  under  the
  Security  Documents  including, but  not  limited  to,  all  actual losses
  incurred in  liquidating or  re-employing  fixed  deposits made  by  third
  parties or funds acquired to effect or maintain the Credit Facility or any
  part thereof. The certification  by the Agent or any Lender of  such costs
  and expenses shall,  absent any manifest error, be conclusive  and binding
  on the Borrowers.

  11.3     Application  of  Moneys.   Except  as otherwise  provided  in any
  Security Document, all moneys received  by the Agent or any of the Lenders
  under  or pursuant  to this  Agreement, the  Note or  any of  the Security
  Documents after the happening of any Event of Default (unless cured) shall
  be applied by the Agent in the following manner:

      (i)   first,  in  or  towards  the  payment  or  reimbursement  of  any
      expenses  or  liabilities incurred  by  the  Agent  or  the Lenders  in
      connection with the  ascertainment, protection or enforcement  of their
      rights and  remedies hereunder, under  the Note  and under  any of  the
      Security Documents;
      (ii)  secondly, in or  towards payment of any interest owing in respect
      of the Advances or Unpaid Drawings;
      (iii) thirdly, in or  towards repayment  of principal owing  in respect
      of the Advances or Unpaid Drawings; 
      (iv)  fourthly, in or towards  payment of  fees, commissions and  other
      amounts payable under this Agreement; and
      (v)   fifthly, the  surplus (if any) shall be paid  to the Borrowers or
      to whomsoever else may be entitled thereto.

  12  COVENANTS

  12.1     The Borrowers  and the  Guarantor hereby  covenant and  undertake
  with the Lenders  that, from the date hereof and so long as any principal,
  interest or other monies are owing in respect of this Agreement, the Note,
  the Standby Letters of Credit, the Security Documents or any of them:

      A.    The Borrowers and the Guarantor will each:

            (i)   Performance of Agreements.   Duly perform and  observe, and
            procure  the observance  and  performance  by all  other  parties
            thereto (other than  the Agent and the Lenders)  of, the terms of
            this Agreement, the Note, and the Security Documents;

            (ii)  Notice  of  Default;  Change in  Classification  of  Rig.  
            Promptly inform the Agent of  the occurrence of (a) any Event  of
            Default or of any event which with the giving of notice or  lapse
            of time, or both,  would constitute an Event of  Default, (b) the
            withdrawal of any Rig's  rating by its classification  society or
            the issuance by the classification  society of any recommendation
            or notation affecting  class, (c) any litigation  or governmental
            proceeding  or  environmental  proceeding  pending or  threatened
            against either  of the  Borrowers  or the  Guarantor which  could
            reasonably be expected to have  a material adverse effect  on the
            business,  assets, operations, property or financial condition of
            any such  party and (d) any other event  or condition of which it
            becomes  aware which  is  reasonably likely  to  have a  material
            adverse effect on its ability, or the ability of any  other party
            thereto, to  perform its  obligations under  this Agreement,  the
            Note and the Security Documents or any of them;

            (iii) Obtain  Consents.  Without prejudice to Clause 2.1 and this
            Clause  12.1, obtain  every  consent and  do  all other  acts and
            things which may from time to time be necessary or advisable  for
            the continued due performance  of all its obligations under  this
            Agreement, the Note and the Security Documents;

            (iv)  Financial Statements.  Deliver  or cause to be delivered to
            the Agent:

                  (a)   as soon as  available but not later  than ninety (90)
                  days after the  end of each  fiscal year  of the  Guarantor
                  complete  copies  of  the   financial  statements  of   the
                  Guarantor   (together   with   a   Compliance   Certificate
                  substantially in the  form of  Exhibit D hereto,  signed by
                  the  Chief  Financial  Officer  of  the  Guarantor),  on  a
                  consolidated  basis,  which  shall  include  at  least  the
                  consolidated balance sheet  of the Guarantor as  of the end
                  of such  year and  the related  consolidated statements  of
                  income, cash flow and retained earnings  for such year, all
                  in  reasonable   detail,   certified   by   an   Acceptable
                  Accounting  Firm,  together  with  their  opinion  (without
                  material qualifications) thereon;

                  (b)   as soon  as available but  not later than  forty-five
                  (45) days  after  the  end  of  each  of  the  first  three
                  quarters  of each  fiscal year  of  the Guarantor,  balance
                  sheets  of the  Guarantor, on a  consolidated basis,  as at
                  the  end  of  such quarter  and  the  related  consolidated
                  statements of income,  cash flow and retained  earnings for
                  such  quarter,  all  in reasonable  detail,  unaudited, but
                  certified by the chief financial  officer of the Guarantor,
                  together, in  each instance, with  a Compliance Certificate
                  (substantially in the  form of Exhibit D hereto)  signed by
                  such chief financial officer of the Guarantor;

                  (c)   as soon  as available but not  later than  sixty (60)
                  days after  the  end of  each  of  the first  three  fiscal
                  quarters  of the  Guarantor and not  later than ninety (90)
                  days after the end of  the fourth fiscal quarter,  a report
                  (in  form  and substance  reasonably  satisfactory  to  the
                  Agent) on each  drilling rig directly or  indirectly owned,
                  controlled or managed by the  Guarantor or its subsidiaries
                  stating the  then current  employment; operator  contracted
                  with; the then current day  rate; contract expiration date;
                  average  utilization  during  the  past   quarter  and  the
                  average net  day  rate earned  by  such  rig for  the  past
                  quarter for the days it was under contract;

                  (d)   as  soon  as   available,  copies  of  all   reports,
                  statements,  proxy  statements or  other  instruments filed
                  with  the United States  Securities and Exchange Commission
                  or distributed to the shareholders of the Guarantor;

                  (e)   such  other   statement  or   statements,  lists   of
                  property  and  accounts,  budgets,  forecasts, reports  and
                  financial  information  with respect  to the  operation and
                  management  of  the  Rigs  and  any  other  rigs  owned  or
                  operated directly or indirectly by  either of the Borrowers
                  or the  Guarantor,  as the  Agent  may  from time  to  time
                  reasonably request;

            (v)   Corporate Existence.   Do or cause  to be  done all  things
            necessary  to preserve  and  keep in  full  force and  effect its
            corporate existence,  and all licenses,  franchises, permits  and
            assets  necessary  to  the  conduct  of  the   business  of  such
            corporation;

            (vi)  Books,  Records,  etc.   Keep  proper books  of  record and
            account into  which full  and correct  entries shall  be made  in
            accordance with GAAP throughout the Credit Facility Period;

            (vii) Inspection.   Allow any  representative or  representatives
            designated  by  the  Lenders,  subject  to  applicable  laws  and
            regulations, to visit and inspect  any of the properties  of such
            party,  and,  on  request,  to  examine  the  books  of  account,
            records, reports  and other  papers (and  to make  copies thereof
            and  to take  extracts  therefrom)  of  such corporation  and  to
            discuss the affairs,  finances and accounts of  such corporation,
            with the  officers and  executive employees  of such  corporation
            all  at  such reasonable  times  and  as  often  as such  Lenders
            reasonably request;

            (viii)      Taxes.  Pay and discharge  all Taxes, assessments and
            governmental   charges  or   levies   imposed  upon   each   said
            corporation or upon  said corporation's income or  property prior
            to  the  date  upon which  penalties  attach  thereto;  provided,
            however, that said corporation shall  not be required to  pay and
            discharge, or  cause to  be paid  and discharged,  any such  tax,
            assessment, charge  or levy  so long  as the  legality or  amount
            thereof  shall be  contested  in good  faith  and by  appropriate
            proceedings  or other acts  and it shall  set aside  on its books
            adequate  reserves  with respect  thereto,  and so  long  as such
            deferment in  payment shall  not subject  either Rig to  material
            risk of forfeiture or loss;

            (ix)  Compliance with  Statutes, etc.  Do or cause to be done all
            things necessary to  comply with all material laws, and the rules
            and regulations thereunder,  applicable to the Borrowers  and the
            Guarantor  and including, without  limitation, those  laws, rules
            and   regulations   relating  to   employee  benefit   plans  and
            environmental matters;

            (x)   Environmental  Matters.   Promptly upon  the occurrence  of
            any   of  the  following  conditions,  provide  to  the  Agent  a
            certificate of  the chief  executive officer thereof,  specifying
            in detail the  nature of such condition and the proposed response
            of the Borrower concerned or  the Guarantor, as the case  may be,
            or the proposed response of any Environmental Affiliate (as  such
            term is hereinafter defined) of any thereof,  as the case may be:
            (a) the receipt by a Borrower or the Guarantor or the receipt  by
            any Environmental Affiliate  of any thereof of  any communication
            whatsoever that  alleges that  such person  is not  in compliance
            with any  applicable environmental law or environmental approval,
            if such  noncompliance could  reasonably be  expected  to have  a
            material  adverse  effect on  the  business,  assets, operations,
            property  or financial  condition of  either of  the Borrowers or
            the Guarantor,  (b) knowledge by  either of the  Borrowers or the
            Guarantor  or any  Environmental Affiliate  of  any thereof  that
            there  exists  any  Environmental  Claim  pending  or  threatened
            against  any such person  which could  reasonably be  expected to
            have  a  material   adverse  effect  on  the   business,  assets,
            operations, property or  financial condition of the  Guarantor or
            (c) any release, emission, discharge or disposal  of any material
            known to  either of  the Borrowers  or the  Guarantor that  could
            form the basis of any  Environmental Claim against either  of the
            Borrowers, the  Guarantor or any  Environmental Affiliate of  any
            thereof if such Environmental Claim  could reasonably be expected
            to  have  a  material  adverse effect  on  the  business, assets,
            operations,  property or  financial condition  of  either of  the
            Borrowers or  the Guarantor.   Upon  the written  request by  the
            Agent, the Borrowers will submit, and  procure that the Guarantor
            shall  submit,  to the  Agent at  reasonable intervals,  a report
            providing  an  update  of  the  status  of  any  issue  or  claim
            identified  in any  notice or  certificate  required pursuant  to
            this   subclause.     For  the   purposes   of  this   subclause,
            "Environmental Claim" shall  mean any claim under  federal, state
            and  local environmental,  health and  safety  laws, statutes  or
            regulations. "Environmental Affiliate"  shall mean any person  or
            entity the liability  of which for Environmental Claims either of
            the Borrowers  or the Guarantor  may have assumed  by contract or
            operation of law;

            (xi)  Accountants.  Retain throughout the  Credit Facility Period
            an  Acceptable  Accounting  Firm  as  its  independent  certified
            accountants;

            (xii) Class Certificate.   Furnish, or cause to  be furnished, to
            the Agent,  upon any change of the classification status of a Rig
            or  the  issuance of  a  recommendation  affecting class  by  the
            classification  society of  a Rig or  upon the reasonable request
            of the  Agent (to  be made  no more  than twice  in any  calendar
            year), a  confirmation of class certificate covering each Rig and
            evidencing compliance with the Mortgage;

            (xiii)      Maintenance of Properties.  Maintain,  or cause to be
            maintained, and keep, or  cause to be kept, and procure  that the
            Guarantor shall  maintain, or cause to  be maintained,  and keep,
            or  cause to  be  kept,  all properties  used  or  useful in  the
            conduct  of its  business in  good condition,  repair and working
            order and supplied  with all  necessary equipment and  will cause
            to be made  necessary repairs, renewals and  replacements thereof
            so that the business carried  on and in connection  therewith and
            every  portion   thereof  may  be   properly  and  advantageously
            conducted at  all times.  In addition, each  Borrower shall cause
            its Rig to be drydocked (or  to undergo any underwater survey  in
            lieu of  drydocking) as often as  required by  the classification
            society of such Rig  and as a prudent rig owner or operator would
            require;

            (xiv) Long Term Debt  to Total Assets Ratio.  The Guarantor shall
            not allow its ratio  of Long Term Debt to Total  Assets to exceed
            0.28 to 1.0 at the end of any fiscal quarter;

            (xv)  Restrictions on Working  Capital.  The Guarantor  shall not
            allow  its  working  capital  (defined  as  current  assets  less
            current  liabilities, exclusive  of  the  New Debentures)  to  be
            negative for more than one (1) consecutive fiscal quarter;

            (xvi) Cash Flow Coverage  Ratio.  The Guarantor  shall maintain a
            Cash  Flow Coverage Ratio  of at least  2.0 to 1.0  at the end of
            each fiscal year;

            (xvii)      Valuation  Certificates.    At any  time  as  may  be
            requested by the Agent  (but in no event less than  annually) and
            at the  expense  of the  Borrowers not  more  than twice  in  any
            fiscal year, such expense not to  exceed more than U.S.$10,000.00
            per year, without  taking into account the right of the Borrowers
            to  retain a second  Approved Shipbroker  in accordance  with the
            immediately succeeding sentence, the  Borrowers shall retain  the
            Approved Shipbroker  requested by the  Agent to supply a  written
            report setting forth  the fair market  value ("FMV")  of each  of
            the  Rigs (the "First Valuation").  If the Borrowers do not agree
            with the  valuation of FMV for each  of the Rigs set  out in such
            report, the Borrowers may  retain a second Approved Shipbroker at
            such time  and at their  own expense to  supply a second  written
            report setting  forth the  FMV of each  of the Rigs  (the "Second
            Valuation").  Promptly  upon receipt thereof the  Borrowers shall
            deliver copies  of each  such report  to  the Lenders.   In  such
            event, the  FMV of each  Rig shall be  the arithmetic  average of
            the First Valuation and the Second Valuation.   If the Lenders do
            not agree with  this valuation, the  Lenders may  obtain a  third
            and final written  valuation from an Approved  Shipbroker setting
            forth the FMV  of each of the  Rigs (the "Third Valuation").   In
            such event,  the arithmetic average  of the First Valuation,  the
            Second  Valuation  and  the  Third  Valuation shall  be  used  to
            determine the FMV of each Rig.     

      B.    The Borrowers shall  not without the prior written  consent (such
            consent  not  to  be  unreasonably   withheld)  of  the  Majority
            Lenders:

            (i)   Liens.   Create, assume  or permit to  exist any  mortgage,
            pledge,  lien,  charge,  encumbrance  or  any  security  interest
            whatsoever upon  any of  such party's  property or  other assets,
            real or personal, tangible  or intangible,  whether now owned  or
            hereafter acquired except:

                  (a)   liens for taxes  not yet payable, or  being contested
                  in  good  faith,  for which  adequate  reserves  have  been
                  maintained;

                  (b)   the   Mortgages,   the   General   Assignments,   the
                  Insurances  Assignments and  other liens  in  favor of  the
                  Agent or  the Indenture  Trustee or mortgages,  assignments
                  or  other security  interests on or  in respect of property
                  other than  the Rigs in  favor of other  banks or financial
                  institutions    or   institutional    investors    securing
                  indebtedness  or  other  obligations  otherwise   permitted
                  under this Agreement;

                  (c)   liens, charges  and  encumbrances  against  the  Rigs
                  permitted to exist under the terms of the Mortgages; and

                  (d)   other liens, charges  and encumbrances incidental  to
                  the  conduct of  the  business of  each  such party  or the
                  ownership  of any  such  party's  property and  assets  and
                  which  do not in the aggregate  materially detract from the
                  value  of  each   such  party's  property,  or   assets  or
                  materially  impair the use thereof  in the operation of its
                  business;

            (ii)  Loans and Advances.  Make any loans or  advances to, or any
            investments in  any person, firm,  corporation, joint venture  or
            other entity other  than loans or  advances to  the Guarantor  or
            any of its Subsidiaries;

            (iii) Guarantees,  etc.    Except  in   the  ordinary  course  of
            business, assume,  guarantee or  endorse or  otherwise become  or
            remain liable, in  connection with any obligation  of any person,
            firm, company  or  other entity  other  than  in respect  of  the
            obligations  arising  under   this  Agreement   and  other   than
            indebtedness to  banks or other financial  institutions otherwise
            permitted by this Agreement;

            (iv)  Changes in Business.   Change the nature of its business or
            commence any other business;

            (v)   Use of Corporate Funds.   Pay out any funds to  any company
            or person  except  (a) in  the  ordinary  course of  business  in
            connection with the  management of the business of  the Borrowers
            and the Guarantor,  including, without limitation, the  operation
            and/or  repair  of   the  Rigs  and  (b)  the  servicing  of  the
            indebtedness  to the Lenders  or indebtedness otherwise permitted
            by this Agreement;

            (vi)  Dissolution, Consolidation or  Merger.  Other than  as part
            of  a transaction  permitted by  Clause  12.1.C(i), liquidate  or
            dissolve or  consolidate or  amalgamate with  or  merge into  any
            other entity;

            (vii) Changes in  Offices or Names.   Change the  location of the
            chief executive office  of either of the Borrowers, the office of
            the chief place  of business of either  such party or  the office
            of the  Borrowers in which  the records relating  to the earnings
            or insurances of  the Rigs are kept unless the Lenders shall have
            received thirty (30) days prior written notice of such change;

            (viii)      Change  of Flag,  Management or  Class.   Change  the
            flag, the management or the class of any Rig;

            (ix)  Sale of  Rig.   Sell, transfer  or otherwise  dispose of  a
            Rig;

            (x)   Sale of  Assets.   Sell  or  otherwise  dispose of  all  or
            substantially all of its assets; or

      C.    The Guarantor shall  not without the prior written consent of the
      Majority Lenders:

            (i)   Dissolution,  Consolidation   or  Merger.     Liquidate  or
            dissolve or  consolidate  or amalgamate  with or  merge into  any
            other  entity  unless  (a)  the  Guarantor  is  the successor  or
            survivor  in  respect  of such  merger  and  after  giving effect
            thereto the Guarantor will be  in full compliance with  the terms
            of this Agreement and (b)  Standard & Poor's shall  have affirmed
            in  writing that  such  transaction will  not impair  the implied
            senior debt rating of the Guarantor.

            (ii)  Sale  of  Business.     Sell,  transfer,  lend,   lease  or
            otherwise dispose  of  the  whole  or,  in  the  opinion  of  the
            Majority Lenders, any substantial part  of its business, property
            or  assets, whether by  a single  transaction or  by a  series of
            transactions,  related or  not or  change the  management of  the
            Guarantor, unless Standard & Poor's affirms in  writing that such
            sale, transfer or other disposition or such change in  management
            will not result in a downgrade of the implied senior  debt rating
            of the Guarantor or  result in such  debt being placed on  credit
            watch for negative implications.

  12.2     Valuation of  the Rigs.  The  Borrowers shall not permit  the FMV
  of the Rigs at any  time during the Credit Facility Period to be less than
  160% of the amount of the Credit Facility.

  12.3     Collateral Maintenance.  If  the FMV of the Rigs falls below 160%
  of the amount of the Credit Facility, within a period of ten  (10) Banking
  Days following receipt by  the Borrowers of written  notice from the Agent
  notifying  the  Borrowers of  such  shortfall  and  specifying  the amount
  thereof  (which amount shall, in the absence of  manifest error, be deemed
  to be conclusive  and binding  on the Borrowers) (a)  the Borrowers  shall
  deliver to  the Agent, upon its request, such additional collateral as may
  be  satisfactory  to  the  Majority  Lenders,  in  their  sole  discretion
  (including the  deposit of  cash in a cash  collateral account  maintained
  with  the Agent),  such that  the sum  of (i)  the value  of the  Rigs, as
  determined in  accordance with the latest valuation  delivered pursuant to
  Clause 12.1 A (xvii), and (ii) such additional collateral shall be greater
  than or equal to  160% of the amount  of the Credit  Facility, or (b)  the
  Lenders  shall reduce their Commitments hereunder and the Borrowers shall,
  if necessary, prepay such Advances or part thereof (together with interest
  thereon) so that the  FMV of the Rigs  shall not be less than  160% of the
  amount of the Credit Facility.

  12.4     Reduction of Collateral.   In the event  of a Total Loss  of JACK
  BATES, upon such Total  Loss the Credit Facility shall be terminated,  all
  amounts outstanding shall be immediately repaid and cash shall be provided
  as collateral for the Standby Letter of Credit  Facility.  In the event of
  a Total  Loss of D.R.  STEWART, upon  such Total Loss  the Credit Facility
  shall be reduced by 160% of the FMV of the rig (unless the Borrowers shall
  provide substitute cash  or other  collateral satisfactory to  the Agent),
  and to  the extent the  aggregate amount  of the Advances  and the Standby
  Letters of Credit  exceeds the reduced amount  of the Credit Facility, the
  Borrowers  shall  prepay  Advances  in  respect of  the  Revolving  Credit
  Facility and  furnish  to the  Agent cash  collateral  in respect  of  the
  Standby Letter of Credit Facility.

  12.5     Inspection and Survey  Reports.  If the Lenders shall so request,
  the  Borrowers shall  provide the  Lenders with  copies of  all internally
  generated inspection or survey reports on the Rigs.

  13  EARNINGS ACCOUNT

     The Borrowers  shall, throughout  the Credit  Facility Period,  procure
  and ensure that all  charterhire and  other revenue relating  to the  Rigs
  (other than those amounts paid in the currency (other than Dollars) of the
  country where  the Rig  is operating  and used  by the  Borrowers to cover
  local operating  expenses) is paid  into an account in the  joint names of
  the Borrowers with  Christiania Bank og Kreditkasse,  Grand Cayman Branch,
  Account  No.   4062660601  (the   "Earnings  Account"),   and  shall  have
  unrestricted  access to  the funds  in such  Earnings Account  for general
  corporate purposes, unless and until such time as the Agent, following the
  occurrence of  an Event of Default,  requires that said  monies be paid to
  the Agent, for the benefit of itself and the Lenders, or as it may direct,
  whereafter the  Borrowers shall  procure and ensure that  such monies  are
  paid in accordance with the directions of the Agent.

  14  ASSIGNMENT

     This Agreement shall be  binding upon, and inure to the benefit of, the
  Borrowers, the Agent  and the Lenders and their respective  successors and
  assigns, except that  the Borrowers may not assign  any of their rights or
  obligations  hereunder  except  as  specifically  provided  herein.   Upon
  fifteen (15) days notice to the Borrowers,  a Lender may assign a  portion
  of its  rights and  obligations under  this Agreement  to any  one or more
  commercial lenders  (the expenses  of such Lender in  connection with  any
  such assignment shall be for  its own account), provided,  however, in the
  event of any such assignment, such assignment is to be made pursuant to an
  Assignment and Assumption Agreement substantially in the form of Exhibit E
  hereto.  The Borrowers will  take all reasonable actions  requested by the
  Lenders  to effect  such  assignment, including,  without  limitation, the
  execution   of  a  written  consent  to  such  Assignment  and  Assumption
  Agreement.

  15  ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.

  15.1.    Illegality.  In the  event that  by reason of  any change in  any
  applicable   law,  regulation   or  regulatory   requirement  or   in  the
  interpretation thereof any of the Lenders reasonably concludes that it has
  become unlawful  for  such  Lender to  maintain  or  give  effect  to  its
  obligations  as contemplated by  this Agreement, such Lender  shall inform
  the Agent and  the Borrowers to that  effect, whereafter the  liability of
  such Lender to make its Commitment available shall forthwith cease and the
  Borrowers shall be required to prepay the then outstanding portion of such
  Lender's  Commitment,  together  with  accrued  interest,  immediately  in
  accordance with and subject to the provisions of Clause  15.4. In any such
  event, but without prejudice to the aforesaid obligations of the Borrowers
  to prepay such amount,  the Borrowers and such  Lender shall negotiate  in
  good faith  with a view to  agreeing on  terms for  making its  Commitment
  available from another  jurisdiction or otherwise restructuring the Credit
  Facility on a basis which is not unlawful with respect to  such Lender and
  the Agent  shall use  reasonable efforts  to replace  such Lender  with  a
  lender for which the making  and performance of the Agreement would not be
  illegal.

  15.2     Increased Cost.  If any  change in applicable law,  regulation or
  regulatory requirement or in the interpretation  or application thereof by
  any governmental or other authority, shall:

      (i)   change the  basis of taxation  (excluding any change  in the rate
      of any Tax) to any of the Lenders of payments of principal or  interest
      or any other  payment due or to  become due pursuant to  this Agreement
      (other than a change in taxation of the net income of such Lender), or

      (ii)  impose, modify  or deem  applicable any  reserve requirements  or
      require the making  of any special  deposits against or  in respect  of
      any assets  or liabilities of, deposits with or  for the account of, or
      loans by, any of the Lenders or the issuance  of the Standby Letters of
      Credit by the Letter of Credit Issuer, or

      (iii) impose on any of  the Lenders or the Letter of  Credit Issuer any
      other condition affecting  the Credit Facility or any part thereof, and
      the  result of the  foregoing is  either to  increase the cost  to such
      Lender  or  the   Letter  of  Credit  Issuer  of  making  available  or
      maintaining the Credit Facility  or any part  thereof or to reduce  the
      amount of any  payment received by such  Lenders, then and in  any such
      case if  such  increase  or  reduction in  the  opinion  of  the  Agent
      materially affects  the interests of any  of the Lenders or  the Letter
      of Credit Issuer under or in connection with this Agreement, then:

            (a)   the  Agent shall notify the  Borrowers of  the happening of
            such event,

            (b)   the  Borrowers agree forthwith  upon demand  to pay  to the
            Agent  or the Lenders  such amount as  the Agent  certifies to be
            necessary  to  compensate  the Agent  or  the  Lenders  for  such
            additional cost or such reduction, and

            (c)   any such  demand as  is referred  to in  sub-clause (b)  of
            this Clause 15.2 may be  made by the Agent at any time  before or
            after any  repayment of the  Advances under the Revolving  Credit
            Facility and  payment of  the Unpaid  Drawings under  the Standby
            Letter of Credit Facility.

  15.3     Determination of Losses.   A certificate or  determination notice
  of the  Agent, as  to any  of the  matters referred to  in this Clause  15
  shall, absent manifest error, be conclusive and binding on the Borrowers.

  15.4     Compensation for Losses.   The Borrowers, jointly  and severally,
  shall  compensate each  Lender, upon  its  written request  (which request
  shall set  forth the  basis  for requesting  such compensation),  for  all
  reasonable   losses,   expenses   and  liabilities   (including,   without
  limitation, any  loss, expense  or  liability incurred  by reason  of  the
  liquidation  or reemployment of  deposits or other funds  required by such
  Lender to fund its Advance which such Lender may sustain:   (i) if for any
  reason (other than a default by such Lender  or the Agent) an Advance does
  not occur on a  date specified therefor in a Drawdown Notice;  (ii) if any
  prepayment or repayment  of any Advance occurs on a  date which is not the
  last day of an Interest Period applicable thereto; (iii) if any prepayment
  of any Advance is not made on any date specified in a notice of prepayment
  given by the Borrowers; or  (iv) as a consequence of any  other default by
  the Borrowers  to repay  its Advance  when required  by the  terms of this
  Agreement. 

  16  CURRENCY INDEMNITY

  16.1     Currency  Conversion.    If  for  the  purpose  of  obtaining  or
  enforcing a judgment  in any court in any  country it becomes necessary to
  convert into any other currency (the "judgment currency") an amount due in
  Dollars under  this Agreement, the  Note or any of  the Security Documents
  then the  conversion shall be made,  in the discretion  of the Lenders, at
  the rate  of exchange prevailing either on  the date of default  or on the
  day  before the  day  on which  the judgment  is  given or  the order  for
  enforcement  is made, as the case may be (the "conversion date"), provided
  that the  Lenders shall not  be entitled to recover under  this clause any
  amount in the judgment  currency which exceeds at  the conversion date the
  amount in  Dollars due under  this Agreement,  the Note and/or  any of the
  Security Documents.

  16.2     Change in  Exchange Rate.   If there is  a change in the  rate of
  exchange prevailing  between the  conversion date and the  date of  actual
  payment of the amount due, the Borrowers shall, jointly and severally, pay
  such additional amounts (if any, but in any event not a lesser amount)  as
  may be necessary to  ensure that the amount paid in the  judgment currency
  when converted at the rate of exchange  prevailing on the date of  payment
  will produce the amount when due under this Agreement, the Note and/or any
  of  the Security  Documents  in Dollars;  any excess  over the  amount due
  received or collected by the Lenders shall be remitted to the Borrowers.

  16.3     Additional Debt Due.   Any amount  due from  the Borrowers  under
  Clause  16.2 shall be due as a  separate debt and shall not be affected by
  judgment being obtained for any other sums due under or in respect of this
  Agreement, the Note and/or any of the Security Documents.

  16.4.    Rate of Exchange.  The term "rate of exchange" in this Clause  16
  means  the  rate at  which the  Lenders  in accordance  with  their normal
  practices  are  able on  the relevant  date to  purchase Dollars  with the
  judgment currency and  includes any premium and costs of  exchange payable
  in connection with such purchase.

  17  FEES AND EXPENSES

  17.1     Fees.   (a)  The  Borrowers agree, jointly  and severally, to pay
  to the Agent a  commitment commission ("Commitment Fee") pro rata for  the
  account of each Lender for  the period from and including the Closing Date
  to, but not  including, the  date the Revolving  Credit Facility  has been
  terminated,  which Commitment  Fee  shall  be equal  to 0.75%  per  annum,
  computed at such rate for each day, on the daily unutilized portion of the
  Commitments  of the Lenders.  Such Commitment Fee shall be due and payable
  in arrears  on the last Banking  Day of  each March,  June, September  and
  December  and on  the date  upon which  the  Revolving Credit  Facility is
  terminated.

     (b)   The Borrowers agree, jointly and  severally, to pay to  the Agent
  for the account  of each Lender pro rata on  the basis of their respective
  Standby Letter  of Credit  Facility Commitment, a  fee in  respect of each
  Standby Letter of Credit (the "Letter of Credit Fee") computed at the rate
  of 1% per annum of the aggregate outstanding amount of the Standby Letters
  of Credit computed on a daily basis.  Accrued Letter of  Credit Fees shall
  be due and payable in arrears on the last Banking Day of each March, June,
  September and  December and on  the date upon which the  Standby Letter of
  Credit Facility is terminated.

     (c)    The Borrowers agree, jointly and severally,  to pay to the Agent
  for  the account of the  Letter of Credit Issuer a fee  in respect of each
  Standby Letter of  Credit issued by it (the  "Facing Fee") computed at the
  rate of .25 of 1% per annum on the daily outstanding amount of such Standby
  Letter of Credit, provided that in no event shall the annual Facing Fee to
  the Letter of Credit Issuer be less than $500.   Accrued Facing Fees shall
  be due and payable in arrears on the last Banking Day of each March, June,
  September  and December and on the  date upon which the  Standby Letter of
  Credit Facility is terminated.

     (d)   The  Borrowers shall pay  to the  Agent for its  own account such
  fees as agreed in  separate letters from the Borrowers to the  Agent dated
  the date hereof.

     (e)   All computations  of fees shall  be made  on the basis  of actual
  days elapsed over a year of 360 days.

  17.2     Expenses.   The  Borrowers agree whether  or not the transactions
  hereby  contemplated are consummated,  on demand to pay,  or reimburse the
  Agent and the Lenders for their payment of, the reasonable expenses of the
  Agent and  the Lenders  incident to said transactions  (and in  connection
  with any supplements, amendments,  waivers or consents relating thereto or
  incurred  in connection  with the  enforcement or  defense  of any  of the
  rights or remedies of the Agent and the Lenders with respect thereto or in
  the preservation of the priorities  of the Agent and the Lenders under the
  documentation executed and  delivered in connection  therewith) including,
  without  limitation, all  reasonable  costs and  expenses  of preparation,
  negotiation,  execution  and  administration  of  this  Agreement and  the
  documents referred to herein, the reasonable fees and disbursements of the
  counsel for the  Agent and the Lenders in connection  therewith, including
  Watson, Farley & Williams, as  well as the reasonable fees and expenses of
  any  independent appraisers,  surveyors, engineers  and other  consultants
  retained by the Agent and the Lenders in connection with this transaction,
  all  reasonable  costs  and  expenses, if  any,  in  connection  with  the
  enforcement of  this Agreement,  the Note and the  Security Documents  and
  stamp and  other similar  taxes, if  any, incident  to the  execution  and
  delivery of the documents (including, without limitation, the Note) herein
  contemplated and to hold the Lenders free and harmless in connection  with
  any  liability arising  from the  nonpayment  of any  such stamp  or other
  similar  taxes. Such  taxes and,  if any,  interest and  penalties related
  thereto  as may  become  payable  after the  date  hereof  shall  be  paid
  immediately by the Borrowers to the Agent  or the Lenders, as the case may
  be,  when  liability therefor  is  no longer  contested by  such  party or
  parties  or reimbursed  immediately  by  the Borrowers  to such  party  or
  parties after payment thereof (if the Agent or the  Lenders, at their sole
  discretion, chooses to make such payment).

  18  APPLICABLE LAW, JURISDICTION AND WAIVER

  18.1     Applicable  Law.    This  Agreement  shall be  governed  by,  and
  construed in accordance with, the laws of the State of New York.

  18.2     Jurisdiction.  Each  of the Borrowers hereby  irrevocably submits
  to  the jurisdiction of  the courts  of the State of  New York  and of the
  United States District Court for  the Southern District of New York in any
  action  or  proceeding  brought  against it  by  the  Lenders  under  this
  Agreement or under any document delivered hereunder and hereby irrevocably
  agrees that service of summons or other legal process  on it may be served
  by registered mail addressed  thereto, c/o Prentice Hall  Corporation, 500
  Central  Avenue,  Albany,  New York  12206-2290.  The service,  as  herein
  provided, of  such summons or  other legal  process in any  such action or
  proceeding shall be deemed personal service and accepted by the  Borrowers
  as  such, and shall be  legal and binding  upon the Borrowers  for all the
  purposes of any such action or proceeding.  Final judgment (a certified or
  exemplified  copy of which shall be conclusive evidence of the fact and of
  the amount  of any indebtedness of  the Borrowers to the  Lenders) against
  the  Borrowers in any such legal action or  proceeding shall be conclusive
  and may  be enforced in other  jurisdictions by suit  on the judgment. The
  Borrowers will advise  the Lenders promptly of  any change of address  for
  the purpose of service of process. Notwithstanding anything herein to  the
  contrary,  the Lenders may  bring any  legal action  or proceeding  in any
  other appropriate jurisdiction.

  18.3     WAIVER OF  JURY TRIAL.   IT IS MUTUALLY  AGREED BY AND AMONG  THE
  BORROWERS, THE  GUARANTOR, THE  AGENT AND  THE LENDERS  THAT EACH  OF THEM
  HEREBY  WAIVES TRIAL  BY JURY  IN ANY  ACTION, PROCEEDING  OR COUNTERCLAIM
  BROUGHT BY ANY  PARTY HERETO AGAINST ANY OTHER  PARTY HERETO ON ANY MATTER
  WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE
  NOTE, OR THE SECURITY DOCUMENTS.

  19  THE AGENT

  19.1     Appointment of  Agent.   Each of  the Lenders hereby  irrevocably
  appoints and  authorizes the  Agent to  take such action as  agent on  its
  behalf  and to exercise  such powers  under this Agreement, the  Note, the
  Standby Letters of  Credit and the Security  Documents as are delegated to
  the Agent by  the terms hereof and thereof.  Neither the Agent nor  any of
  its directors,  officers, employees  or  agents shall  be liable  for  any
  action taken or omitted to  be taken by it  or them under this  Agreement,
  the  Notes, the Standby Letters of Credit, or the Security Documents or in
  connection  therewith, except  for its  or their  own gross  negligence or
  wilful misconduct.

  19.2     Distribution of Payments.   Whenever any  payment is received  by
  the Agent  from the Borrowers  for the account of  the Lenders, or  any of
  them,  whether of principal or interest on the Notes, commissions, fees or
  otherwise, it will thereafter cause to be  distributed on the same day  if
  received before 11  a.m. New  York time,  or on the next  day if  received
  thereafter, like  funds relating  to such payment ratably  to the  Lenders
  according  to their  respective Commitments,  in each  case to  be applied
  according to the terms of this Agreement.

  19.3     Holder of  Interest in Note.  The Agent  may treat each Lender as
  the holder of all of the interest of such Lender in the  Note, as the case
  may  be,  until  written  notice  of  transfer,  in  form  and   substance
  satisfactory to  the Agent,  signed by such Lender  shall have  been filed
  with the Agent.

  19.4     No  Duty to Examine, Etc.  The Agent shall not be under a duty to
  examine or pass upon the validity, effectiveness  or genuineness of any of
  the  Security  Documents  or  any  instrument,  document or  communication
  furnished  pursuant to  this Agreement  or in  connection therewith  or in
  connection with  any Security Document, and the Agent shall be entitled to
  assume that the same are valid, effective and genuine, have been signed or
  sent by the proper parties and are what they purport to be.

  19.5     Agent  as Lender.   With respect  to that  portion of  the Credit
  Facility  made available by it, the  Agent shall have the  same rights and
  powers hereunder as any other Lenders and may exercise  the same as though
  it were  not the Agent, and  the term "Lender"  or "Lenders" shall include
  the Agent in  its capacity as a Lender.   The Agent and its affiliates may
  accept  deposits from, lend money to  and generally engage in  any kind of
  business  with, the  Borrowers and  the Guarantor  as if  it were  not the
  Agent.

  19.6      (a)   Obligations of Agent.   The obligations of the  Agent under
            this  Agreement,  under   the  Notes,  and  under   the  Security
            Documents are only those expressly set forth herein and therein.

      (b)   No Duty  to Investigate.   The  Agent shall  not at  any time  be
      under any duty to investigate whether an Event of Default, or an  event
      which  with the  giving of  notice or  lapse  of time,  or both,  would
      constitute an  Event of  Default, has  occurred or  to investigate  the
      performance  of this Agreement or any  of the Security Documents by the
      Borrowers or the Guarantor.

  19.7     Discretion of Agent.   (a)   The Agent shall  be entitled to  use
  its  discretion with respect  to exercising or refraining  from exercising
  any rights which may  be vested in  it by, and  with respect to taking  or
  refraining from taking  any action or actions which it may be able to take
  under or  in  respect  of, this  Agreement,  the Note,  and  the  Security
  Documents, unless  the Agent  shall have been instructed  by the  Majority
  Lenders to  exercise such rights or  to take or  refrain from  taking such
  action; provided,  however, that the  Agent shall not be  required to take
  any  action which  exposes the  Agent to  personal liability  or  which is
  contrary to this Agreement or applicable law.

     (b)   Instructions of Majority Lenders.   The Agent shall in  all cases
  be  fully  protected  in  acting or  refraining  from  acting  under  this
  Agreement, under  the Note,  under  the Guarantee  or under  any  Security
  Document in accordance with the instructions of the Majority Lenders,  and
  any action taken or failure to act pursuant to  such instructions shall be
  binding on all of the Lenders.

  19.8     Assumption  Regarding Event  of  Default.   Except  as  otherwise
  provided in Clause 19.14  hereof, the  Agent shall be  entitled to  assume
  that  no Event  of Default, or event  which with  the giving of  notice or
  lapse of time, or both, would constitute an Event of Default, has occurred
  and is continuing, unless the  Agent has been notified by the Borrowers or
  the Guarantor  of such fact,  or has been notified  by a Lender  that such
  Lender considers that an Event of Default or such  an event (specifying in
  detail  the nature thereof) has  occurred and is  continuing. In the event
  that  the Agent shall have been notified by the Borrowers or any Lender in
  the manner set forth in the  preceding sentence of any Event of Default or
  of an  event which with the  giving of notice or  lapse of time,  or both,
  would constitute an  Event of Default, the  Agent shall notify the Lenders
  and (to the extent they have not  yet received notice) the Borrowers,  and
  shall take action and assert such rights  under this Agreement, under  the
  Notes and under  Security Documents as the Majority Lenders  shall request
  in writing.

  19.9      No Liability  of Agent or Lenders.  Neither  the Agent nor any of
  the Lenders shall be under any liability or responsibility whatsoever:

      (A)   To the Borrowers or  the Guarantor or any other person  or entity
      as a  consequence of  any failure or  delay in  performance by, or  any
      breach by,  any other  Lenders or any  other person  of any  of its  or
      their obligations under this Agreement or under any Security Document;

      (B)   To any  Lender or  Lenders, as  a consequence of  any failure  or
      delay  in  performance by,  or  any  breach by,  the  Borrowers or  the
      Guarantor of any  of their respective obligations under this Agreement,
      under the Notes, or under the Security Documents; or

      (C)   To any Lender or Lenders, for any statements, representations  or
      warranties contained  in this Agreement,  in any  Security Document  or
      any  document   or  instrument   delivered  in   connection  with   the
      transaction hereby  contemplated, or  for the validity,  effectiveness,
      enforceability or  sufficiency  of this  Agreement,  the Note,  or  any
      Security  Document   or  any  document   or  instrument  delivered   in
      connection with the transactions hereby contemplated.

  19.10    Indemnification  of Agent.   The  Lenders agree  to indemnify the
  Agent (to the  extent not reimbursed by  the Borrowers or  the Guarantor),
  pro  rata according to  the respective amounts of  their Commitments, from
  and  against  any  and  all  liabilities,  obligations,  losses,  damages,
  penalties, actions, judgments,  suits, costs, expenses or disbursements of
  any kind or nature whatsoever (including legal fees and expenses  incurred
  in  investigating claims  and defending  itself against  such liabilities)
  which may be imposed on, incurred by or asserted against, the Agent in any
  way  relating to  or  arising out  of  this Agreement,  the Note,  or  any
  Security Document, any action  taken or omitted by the Agent thereunder or
  the preparation, administration, amendment or enforcement of, or waiver of
  any  provision of,  this Agreement,  the Note,  or any  Security Document,
  except  that  no  Lenders  shall  be  liable  for  any   portion  of  such
  liabilities, obligations, losses,  damages, penalties, actions, judgments,
  suits, costs, expenses or  disbursements resulting from the  Agent's gross
  negligence or wilful misconduct.

  19.11    Consultation  with Counsel.   The  Agent may  consult with  legal
  counsel  selected by  it and  shall not  be liable  for any  action taken,
  permitted or omitted by it in good  faith in accordance with the advice or
  opinion of such counsel.

  19.12    Resignation.   The  Agent  may resign  at any  time by  giving 60
  days' written notice  thereof to the Lenders  and the Borrowers.  Upon any
  such resignation, the Lenders shall have the right to appoint a  successor
  Agent. If no  successor Agent shall have been  so appointed by the Lenders
  and shall have accepted such appointment within 60 days after the retiring
  Agent's  giving notice  of resignation,  then the  retiring Agent  may, on
  behalf of the Lenders, appoint a successor Agent which shall be a bank  or
  trust company  of recognized  standing. The appointment  of any  successor
  Agent shall be subject to the prior written consent of the Borrowers, such
  consent  not   be  unreasonably  withheld.   After  any  retiring  Agent's
  resignation as  Agent hereunder,  the provisions of this  Clause 19  shall
  continue in  effect for its  benefit with respect to any  actions taken or
  omitted by it while acting as Agent.

  19.13    Representations of Lenders.  Each  Lender represents and warrants
  to each other Lender and the Agent that:

      (i)   In making its decision  to enter into this Agreement and  to make
      its  portion  of  the  Credit  Facility  available  hereunder,  it  has
      independently taken whatever  steps it considers necessary  to evaluate
      the  financial  condition   and  affairs  of  the  Borrowers   and  the
      Guarantor, that it  has made an independent credit judgment and that it
      has not  relied upon any  statement, representation or  warranty by any
      other Lender or the Agent; and

      (ii)  So long as  any portion of its Commitment remains outstanding, it
      will continue to make its  own independent evaluation of  the financial
      condition and affairs of the Borrowers and the Guarantor.

  19.14    Notification of  Event of Default.   The Agent hereby  undertakes
  to promptly notify the Lenders, and the Lenders hereby promptly  undertake
  to notify the Agent and the  other Lenders, of the existence of  any Event
  of  Default which shall have occurred and be continuing of which the Agent
  or any Lender has actual knowledge.

  20  NOTICES AND DEMANDS

  20.1     Notices.      All   notices,   requests,    demands   and   other
  communications  to any  party  hereunder  shall be  in  writing (including
  prepaid overnight courier,  facsimile transmission or similar writing) and
  shall be  given to  the Borrowers  at the  address or  telecopy number set
  forth below and to the Lenders and the Agent at their address and telecopy
  number set forth in Schedule 1 or at such other address or telecopy number
  as such  party may  hereafter specify  for the  purpose by  notice to each
  other party hereto. Each such notice, request or other communication shall
  be effective (1)  if given by telecopy,  when such telecopy is transmitted
  to   the  telecopy  number   specified  in  this  Clause   and  telephonic
  confirmation  of receipt  thereof is obtained  or (ii)  if given  by mail,
  prepaid overnight courier or any other means, when received at the address
  specified in this Clause or when delivery at such address is refused.

            If to the Borrowers or the Guarantor:
            901 Threadneedle, Suite 200
            Houston, Texas 77079
            Attn:  Chief Financial Officer
            Telecopier:  713 496 0285

  21  MISCELLANEOUS

  21.1     Time of Essence.   Time is of  the essence of this  Agreement but
  no failure or  delay on the part  of the Lenders to  exercise any power or
  right under this  Agreement shall operate as  a waiver thereof,  nor shall
  any  single or  partial exercise  by  the Lenders  of  any power  or right
  hereunder preclude any  other or further exercise thereof or  the exercise
  of any other power or right.  The remedies  provided herein are cumulative
  and are not exclusive of any remedies provided by law.

  21.2     Unenforceable, etc., Provisions  - Effect.   In case  any one  or
  more of the provisions contained in this Agreement, in the Note  or in any
  of the Security  Documents would, if given  effect, be invalid, illegal or
  unenforceable  in any  respect under  any law  applicable in  any relevant
  jurisdiction,  said  provision   shall  not  be  enforceable  against  the
  Borrowers, but the validity,  legality and enforceability of the remaining
  provisions herein or therein contained shall not in any way be affected or
  impaired thereby.

  21.3     References.  References  herein to Clauses and  Schedules are  to
  be  construed  as  references  to  clauses  of,  and  schedules  to,  this
  Agreement.

  21.4     Further Assurances.   Each of  the Borrowers agrees  that if this
  Agreement, the  Note  or any  of  the  Security Documents  shall,  in  the
  reasonable  opinion of the Lenders, at  any time be deemed  by the Lenders
  for any reason insufficient in whole or in  part to carry out the purposes
  hereof or thereof, it will execute or cause to be executed such other  and
  further assurances  and documents  as  in the  reasonable opinion  of  the
  Lenders  may be  required  in  order more  effectively to  accomplish  the
  purposes of this Agreement, the Note or any of the Security Documents.

  21.5     Prior Agreements, Merger.  Any  and all prior understandings  and
  agreements heretofore entered into between the Borrowers and the Guarantor
  on the one part, and  the Agent or the Lenders, on the other part, whether
  written or oral, are superseded  by and merged into this Agreement and the
  other  agreements to be  executed and delivered in  connection herewith to
  which the  Borrowers, the  Guarantor and/or Agent and/or  the Lenders  are
  parties, which  alone fully and completely  express the agreements between
  the Borrowers, the Guarantor, the Agent and the Lenders.

  21.7     Limitation  of  Liability.    Notwithstanding   anything  to  the
  contrary  contained  in  this  Agreement or  any  of  the  other  Security
  Documents, in the event that any court or other judicial body of competent
  jurisdiction determines that  legal principles of fraudulent  conveyances,
  fraudulent transfers or similar concepts are applicable in evaluating  the
  enforceability against  any  particular  Borrower  or  its asset  of  this
  Agreement  or any Security  Document granted by such  Borrower as security
  for its  obligations  hereunder  and  that  under  such  principles,  this
  Agreement or such Security Documents would not be enforceable against such
  Borrower or  its asset unless the following provisions of this Clause 21.7
  had  effect, then, the  maximum liability of each  Borrower hereunder (the
  "Maximum Liability Amount") shall  be limited  so that in  no event  shall
  such amount exceed  the lesser of (i) the  Indebtedness and (ii) an amount
  equal  to  the  aggregate,  without double  counting,  of (a)  ninety-five
  percent (95%)  of  such  Borrower's  Adjusted  Net Worth  (as  hereinafter
  defined) on the date hereof, or on the date  enforcement of this Agreement
  is  sought  (the  "Determination  Date"),  whichever is  greater,  (b) the
  aggregate fair value of the Borrower's Subrogation and Contribution Rights
  (as hereinafter defined)  and (c) the amount  of any Valuable Transfer (as
  hereinafter  defined)  to such  Borrower,  provided  that  such Borrower's
  liability under this Agreement shall be further limited  to the extent, if
  any,  required  so  that  the obligations  of  such  Borrower  under  this
  Agreement shall  not be subject to  being set aside  or annulled under any
  applicable law relating to fraudulent transfers or fraudulent conveyances.
  In  determining the  limitations, if  any, on  the amount  of any  of such
  Borrower's obligations  hereunder pursuant to  the preceding sentence, any
  rights of  subrogation or contribution  (collectively the "Subrogation and
  Contribution Rights") which  such Borrower  may have on  the Determination
  Date  with  respect  to  any  other guarantor  of  the  Indebtedness under
  applicable law shall be taken  into account.  As used in  this Clause 21.7
  only, "Indebtedness"  of the  Borrower shall mean, all  of the  Borrower's
  present  or future  indebtedness  whether for  principal,  interest, fees,
  expenses  or  otherwise,  to  the  Lenders under  this  Agreement  and the
  Security Documents.   As  used  in this  Clause 21.7  only, "Adjusted  Net
  Worth"  of  the  respective  Borrower  shall  mean,  as  of  any  date  of
  determination thereof, an  amount equal  to the  lesser of  (a) an  amount
  equal  to the excess of (i) the  amount of the present fair saleable value
  of the assets of such Borrower over (ii)  the amount that will be required
  to  pay such  Borrower's probable  liability on  its then  existing debts,
  including contingent liabilities, as they become absolute and matured, and
  (b) an  amount equal  to (i)  the excess  of the  sum of  such  Borrower's
  property at  a fair valuation  over (ii) the amount of  all liabilities of
  such Borrower,  contingent or  otherwise, as such terms  are construed  in
  accordance with applicable laws governing determinations of the insolvency
  of debtors.   In determining  the Adjusted Net Worth of  such Borrower for
  purposes of calculating  the Maximum  Liability Amount for  such Borrower,
  the liabilities of such Borrower to be used in such determination pursuant
  to each clause (ii)  of the preceding sentence shall in any  event exclude
  (a)  the liability of such Borrower under this  Agreement and the Security
  Documents to  which it  is a  party, (b)  the liabilities  of the Borrower
  subordinated in right of payment to this Agreement and (c) any liabilities
  of such  Borrower for  Subrogation and Contribution  Rights to  any of the
  other guarantors.  As  used in this  Clause 21.7 only "Valuable  Transfer"
  shall mean,  in  respect of  such Borrower,  (a)  all loans,  advances  or
  capital  options  made  to  such Borrower  with  proceeds  of  the  Credit
  Facility,  (b) all debt  securities or other obligations  of such Borrower
  acquired from such  Borrower or retired by  such Borrower with proceeds of
  the Credit Facility,  (c) the fair  market value of all  property acquired
  with proceeds of  the Credit Facility and transferred, absolutely  and not
  as  collateral,  to  such  Borrower,  (d) all  equity  securities  of such
  Borrower acquired from such Borrower with proceeds of the Credit Facility,
  and  (e)  the value  of  any other  economic  benefits in  accordance with
  applicable laws governing determinations  of the insolvency of debtors, in
  each such  case  accruing to  such Borrower  as  a  result of  the  Credit
  Facility and this Agreement.

  21.8     Entire  Agreement; Amendments.   This  Agreement constitutes  the
  entire agreement of the parties hereto including all parties added  hereto
  pursuant to an  Assignment and Assumption Agreement and cannot  be amended
  other than by written agreement signed by the Borrowers, the Guarantor and
  the Majority Lenders  except that the prior written  consent of all of the
  Lenders and  the Letter of  Credit Issuer shall be required  in respect of
  (a)  any  waiver  or  amendment  of the  Commitments,  (b)  any waiver  or
  amendment of  the Maturity  Date, (c)  any waiver  of an  event of default
  under  Clause 11.1  (a) and  Clause 11.1  (b) of  this Agreement,  (d) any
  amendment of the Margin, the Letter of  Credit Fee or the Commitment  Fee,
  or (e)  the release  of any  security interest  in favor  of the Indenture
  Trustee, the Lenders or the Agent.

  21.9     Headings.  In  this Agreement,  Clause headings are  inserted for
  convenience of reference only  and shall not be taken into account  in the
  interpretation of this Agreement.
 
     IN  WITNESS whereof the parties hereto have caused this Agreement to he
  duly executed by  their duly authorized representatives as of the  day and
  year first above written.

  READING & BATES DRILLING CO.



  By _________________________
     Name:
     Title:


  READING & BATES EXPLORATION CO.


  By __________________________
     Name:
     Title:


  READING & BATES CORPORATION


  By ___________________________
     Name:
     Title:


  CHRISTIANIA BANK OG KREDITKASSE,
    acting through its New York branch,
        as Lender


  By ______________________________
     Name:
     Title:

  By _____________________________
     Name:
     Title:
 

  CHRISTIANIA BANK OG KREDITKASSE,
    acting through its New York branch, as Agent



  By ____________________________
     Name:
     Title:


  By ____________________________
     Name:
     Title:

 

                                   SCHEDULE 1


  Lenders                           Revolving Credit Facility Commitment

  Christiania Bank og Kreditkasse,
  acting through its                                  $45,000,000.00
  New York branch
  11 West 42nd Street, 7th Floor
  New York, NY  10036
  Telefax no.: 212 827 4888 


  Lenders                         Standby Letter of Credit Facility Commitment

  Christiania Bank og Kreditkasse,
  acting through its                            $10,000,000.00
  New York branch
  11 West 42nd Street, 7th Floor
  New York, NY  10036
  Telefax no.: 212 827 4888

-----------------------------------------------------------------------------
                                                                    EXHIBIT A

                            SECURED PROMISSORY NOTE

                                                           New York, New York
  U.S.$45,000,000.00                                     November      , 1995

        FOR  VALUE RECEIVED, the  undersigned, READING & BATES  DRILLING CO.
  and  READING  &  BATES  EXPLORATION  CO.,  each  an  Oklahoma  corporation
  (hereinafter collectively  called  the  "Borrowers",  hereby  jointly  and
  severally promise to pay to the order of CHRISTIANIA BANK  OG KREDITKASSE,
  acting  through  its  New York  branch,  as  agent (the  "Agent")  for the
  Lenders, the  principal sum  of Forty-Five  Million United States  Dollars
  (U.S. $45,000,000.00), or, if  less, the aggregate unpaid principal amount
  of the Advances  (as defined in the Credit Agreement  hereinafter defined)
  from time  to  time  outstanding made  by  the Lenders  to  the  Borrowers
  pursuant to the  Credit Facility.  The Borrowers shall repay  the Advances
  as provided  in Clause  7.2 of  the Credit  Agreement.   This Note may  be
  prepaid on such terms as provided in the Credit Agreement.

  Words  and expressions  used herein  and defined  in the  Credit Agreement
  shall have the same meanings herein as therein defined.

  The Advances shall bear interest at the  rate per annum which is equal to,
  in respect to  each applicable  Interest Period,  (a) LIBOR  plus (b)  the
  Margin, as provided in Clause 8.1 of the Credit Agreement (the "Applicable
  Rate").  Any payments made pursuant to a Commitment Reduction or any other
  payments  in respect of the  Revolving Credit Facility not  paid when due,
  whether by acceleration  or otherwise, shall bear interest hereafter  at a
  rate  per annum  equal to two  percent (2%) over the  Applicable Rate from
  time  to time.  All interest shall  accrue and be calculated on the actual
  number of days elapsed on the basis of a 360 day year.

  All payments  of principal  and interest hereunder are  payable in  lawful
  money of the United  States of America to Christiania Bank og Kreditkasse,
  as Agent,  by wire transfer to  The Bank of New  York, New York,  New York
  (A.B.A. No. 021000018) for credit to the  account of Christiania Bank, New
  York, New York (Account No. 8026120277).

  The  Agent may  endorse the  amount and  the date  of the  making  of each
  Advance and any  payment or prepayment thereof  on the grid annexed hereto
  and made  a part  hereof, which endorsement shall  constitute prima  facie
  evidence  of  the accuracy  of  the  information  so  endorsed;  provided,
  however, that  any failure to endorse such information on  such grid shall
  not in any manner affect  the obligation of any  of the Borrowers to  make
  payment of  principal and  interest in accordance  with the  terms of this
  Note.

  If this Note or any payment required hereunder becomes  due and payable on
  the day which is not a Banking Day the due date thereof shall  be extended
  until  the next following  Banking Day unless such  next following Banking
  Day falls in the following  calendar month, in which case this Note or any
  payment  required  hereunder shall  be  due on  the immediately  preceding
  Banking Day.  Any  interest shall be payable during any such  extension at
  the rate applicable immediately prior thereto.

  This  Promissory  Note is  the  Note referred  to in,  is entitled  to the
  security  and benefits  of, and  is subject  to the  terms of,  the Credit
  Facility Agreement dated as of November 16, 1995 (the "Credit  Agreement")
  and made  by and  among (i)  the Borrowers, as borrowers,  (ii) Reading  &
  Bates  Corporation, as  guarantor,  (iii)  the Lenders  (as such  term  is
  defined in the  Credit Agreement) and (iv)  the Agent, acting through  its
  New York branch, as  agent for the Lenders pursuant to which,  inter alia,
  the Lenders  have agreed  to  make a  reducing revolving  credit  facility
  available to the Borrowers upon the terms and condition therein  described
  in  the  maximum  principal  amount of  Forty-Five  Million United  States
  Dollars ($45,000,000).  Upon the occurrence of  any Event of Default under
  the Credit Agreement, the principal hereof and accrued interest hereon may
  be declared to be and shall thereupon become, forthwith, due and payable.

  Presentment, demand,  protest and notice  of dishonor of this  Note or any
  other notice of any kind are hereby expressly waived.

  EACH  OF THE  UNDERSIGNED  HEREBY  WAIVES TRIAL  BY  JURY IN  ANY  ACTION,
  PROCEEDING  OR  COUNTERCLAIM BROUGHT  BY ANY  PARTY HERETO  OR BENEFICIARY
  HEREOF ON  ANY MATTER WHATSOEVER ARISING  OUT OF OR  IN ANY  WAY CONNECTED
  WITH THIS NOTE. 

  This Promissory  Note shall  be governed by, and  construed in  accordance
  with, the laws of the State of New York.

  IN  WITNESS  WHEREOF,  the  Borrowers  have  executed  and  delivered this
  Promissory Note on the date and year first above written.

  READING & BATES DRILLING CO.                READING & BATES EXPLORATION CO.


  By:                                         By:
     Name:                                       Name:
     Title:                                      Title:

-----------------------------------------------------------------------------
           ADVANCES AND [PAYMENTS OF PRINCIPAL] [REDUCTION PAYMENTS]


  Date     Amount of    Amount of Principal     Outstanding    Notation Made
           Advance                              Balance        By

-----------------------------------------------------------------------------
                                                                    EXHIBIT B

  Christiania Bank og Kreditkasse, as Agent                            [Date]
  11 West 42nd Street
  7th Floor
  New York, NY  10036

  Attention:  Loan Administration

                                Drawdown Notice

  Pursuant  to Clause  3.2  of the  Credit  Facility Agreement  dated as  of
  November 16, 1995 (the "Credit Agreement") made among (1) the undersigned,
  as Borrowers,  (2) Reading  &  Bates Corporation,  as Guarantor,  (3)  the
  Lenders  and (4)  yourselves, as  Agent, the  undersigned hereby  give you
  notice of drawdown of an Advance.  All terms used herein, unless otherwise
  defined  herein, shall  have  the  meanings given  thereto in  the  Credit
  Agreement.

        Amount:

        Drawdown Date:

        Disbursement instructions:

        Initial Interest Period:

  The undersigned hereby represent and  warrant that (a) the representations
  and warranties stated in Clause 2 of the Credit Agreement (updated mutatis
  mutandis)  are true and  correct on the date  hereof and will  be true and
  correct on the  Drawdown Date specified above as if made on such date, and
  (b) that no Event of Default nor any event which with the giving of notice
  or lapse of time or both would constitute an Event of Default has occurred
  and is continuing.

  This Drawdown  Notice  is effective  upon  receipt  by you  and  shall  be
  irrevocable.

                                      READING & BATES DRILLING CO.


                                      By:                                    
                    
                                      Name:
                                      Title:

                                      READING & BATES EXPLORATION CO.


                                      By:                                    
                    
                                      Name:
                                      Title:

-----------------------------------------------------------------------------

                                                                    EXHIBIT C

  Christiania Bank og Kreditkasse
  11 West 42nd Street
  7th Floor
  New York, NY  10036
  Attention:  Loan Administration

                            Letter of Credit Request

  Pursuant  to Clause  4.2  of the  Credit Facility  Agreement  dated as  of
  November 16, 1995 (the "Credit Agreement") made among (1) the undersigned,
  as Borrowers,  (2) Reading  &  Bates Corporation,  as guarantor,  (3)  the
  Lenders  and (4)  yourselves, as  agent for  the Lenders,  the undersigned
  hereby request the issuance of a Standby Letter of Credit.  All terms used
  herein, unless otherwise  defined herein,  shall have  the meanings  given
  thereto in the Credit Agreement.

        Amount:

        Issue Date:

        Maturity Date:

        Beneficiary:

        Drawing Instructions:

  The undersigned hereby represent  and warrant that (a) the representations
  and warranties stated in Clause 2 of the Credit Agreement (updated mutatis
  mutandis) are  true and correct  on the date hereof  and will be  true and
  correct on the Issue Date specified above as if made on such date, and (b)
  that no Event of Default  nor any event which with the giving of notice or
  lapse  of time or both would  constitute an Event of  Default has occurred
  and is continuing.

  This Notice is effective upon receipt by you and shall be irrevocable.

                                      READING & BATES DRILLING CO.


                                      By:                                   
                   
                                      Name:
                                      Title:

                                      READING & BATES EXPLORATION CO.


                                      By:                                   
                    
                                      Name:
                                      Title:

-----------------------------------------------------------------------------
                                                                    EXHIBIT D

                             Compliance Certificate

  I, [                  ],  the Chief Financial  Officer of READING &  BATES
  CORPORATION (the "Corporation") having  reviewed the provisions of (i) the
  Credit Facility  Agreement dated  as  of November  16, 1995  (the  "Credit
  Agreement"),  made among (1)  Reading &  Bates Drilling Co. and  Reading &
  Bates  Exploration Co., as borrowers (collectively,  the "Borrowers"), (2)
  Reading & Bates Corporation,  as guarantor, (3) the  Lenders (as such term
  is defined in the Credit Agreement),  as lenders and (4)  Christiania Bank
  og Kreditkasse, acting through its New York branch, as  agent, pursuant to
  which  the Lenders  agreed  to make  available to  the Borrowers  a credit
  facility  in the  maximum principal  amount of  Fifty Five  Million United
  States Dollars  ($55,000,000) (the  "Facility"), (ii)  the promissory note
  (the  "Note") executed  in  connection  therewith and  (iii) each  of  the
  Security Documents,  as  defined in  the  Credit  Agreement,  (the  Credit
  Agreement, the Note and the Security Documents hereinafter referred to  as
  the "Financing Documents"), hereby certify:

  (1)   The  Corporation  and  the  Borrowers  (as  defined  in  the  Credit
  Agreement) are performing and observing all of their obligations under and
  in connection with the Financing Documents to which they are a party;

  (2)   To  my knowledge,  [no event  has occurred  and no  condition exists
  which constitutes or with the giving of notice or lapse  of time, or both,
  would constitute an Event of default under the Credit Agreement]/[an event
  has occurred and  a condition exists which  constitutes or with the giving
  of notice or lapse of time, or both, would constitute an Event  of Default
  under the Credit Agreement [specify the nature and  period of existence of
  such event or condition, what action the Borrower is taking or proposes to
  take with respect thereto]].

  Dated:

                                      By                                    
                                         Name:
                                         Title: Chief Financial Officer

-----------------------------------------------------------------------------
                                                                    EXHIBIT E

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

                      ASSIGNMENT AND ASSUMPTION AGREEMENT

                                    between

                               [NAME OF ASSIGNOR]


                                      and

                               [NAME OF ASSIGNEE]

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

                                 _____________ , 199_ 


-----------------------------------------------------------------------------

                      ASSIGNMENT AND ASSUMPTION AGREEMENT

  ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated as of       
        , 199     among [NAME OF ASSIGNOR], a [bank]/[corporation] organized
  under the laws  of [JURISDICTION OF ASSIGNOR] (the "Assignor"),  and [NAME
  OF  ASSIGNEE],   a  [bank]/[corporation]  organized   under  the  laws  of
  [JURISDICTION OF ASSIGNEE], supplemental to:

        (i) that certain credit facility agreement, dated as of November 16,
  1995 (the "Credit Agreement"), made among (a) Reading & Bates Drilling Co.
  and  Reading  & Bates  Exploration  Co., as  borrowers (collectively,  the
  "Borrowers"),  (b) Reading  &  Bates  Corporation, as  guarantor,  (c) the
  Lenders (as such  term is defined in the Credit Agreement),  including the
  Assignor,  as  lenders and  (d) Christiania  Bank  og  Kreditkasse, acting
  through its New York Branch, as agent (the "Agent"), pursuant to which the
  Lenders  agreed, severally  and  not  jointly, to  make available  to  the
  Borrowers a  reducing revolving  credit facility in  the maximum principal
  amount   of  Forty-Five   Million  United  States   Dollars  ($45,000,000)
  outstanding  at any time  (the "Revolving Credit Facility")  and a Standby
  Letter of  Credit Facility in  the principal amount of  Ten Million United
  States Dollars ($10,000,000) (the "Standby Letter of Credit Facility");

        (ii)  the promissory note from the Borrowers dated                  
              , 1995 (the "Note") evidencing the Revolving Credit Facility;

        (iii) the Guarantee dated              , 1995 (the "Guarantee") made
              by Reading & Bates Corporation in favor of the Agent;

        (iv)  the other Security  Documents (as such term is defined  in the
  Credit Agreement).

  Except as otherwise defined herein, terms defined in the Credit  Agreement
  shall have the same meaning when used herein.

  In  consideration  of  the  premises  and  of  other  good  and   valuable
  consideration,   the  receipt   and  sufficiency   of  which   are  hereby
  acknowledged, the parties hereto hereby agree as follows:

        1.    The  Assignor holds    % of the  Commitments under  the Credit
              Agreement.   The Assignor hereby  sells, transfers and assigns
                % of its right,  title  and interest  in, to  and under  the
              Credit   Agreement,  under   the  Note   (including,   without
              limitation, its interest  in the indebtedness evidenced by the
              Note),  under  the  Guarantee  and  under  the other  Security
              Documents  to  the  Assignee.    Simultaneously herewith,  the
              Assignee  shall pay  to the  Assignor an  amount equal  to the
              product derived by multiplying (a) US$   being the sum  of the
              present outstanding principal  balance of all Advances and all
              Unpaid Drawings  by (b) the  Assignor's percentage of interest
              in the Credit Facility transferred pursuant hereto.
        

        2.    The  Assignee hereby  assumes all  of  the obligations  of the
              Assignor being  transferred pursuant hereto  in respect of (i)
              the Revolving Credit  Facility (including, but not limited to,
              the  obligation to  advance its  respective percentage  of any
              Advance as and when required), and (ii) the Standby Letter  of
              Credit Facility (including, but not limited to, the obligation
              to   pay  to  the  Letter  of  Credit  Issuer  its  respective
              percentage  of any  Unpaid  Drawings) and  the  Assignee shall
              hereinafter be  deemed a  "Lender"  for  all purposes  of  the
              Transaction Documents,  the Assignee's  Commitment  thereunder
              being    % of the Credit Facility.

        3.    (a)   The  Assignor makes  no  representation or  warranty and
                    assumes no responsibility with respect to:

                    (i)   the due execution, legality, validity, sufficiency
                          or enforceability of  the Credit Agreement  or any
                          of the Security Documents; or

                    (ii)  the financial  condition of any  of the parties to
                          the  Credit  Agreement  or  any  of  the  Security
                          Documents; or

                    (iii) any failure or  delay in performance of, or breach
                          by any party to the Credit Agreement or any of the
                          Security Documents of, its  obligations under  the
                          Credit Agreement or any of the Security Documents;
                          or

              in particular, but without limitation, if any such party shall
              fail  to  perform any  of  its  obligations  under  the Credit
              Agreement or any of the Security Documents, the Assignee shall
              have no recourse to the Assignor in respect of such failure.

              (b)   Notwithstanding   Clause   3(a)   above   the   Assignor
                    represents and warrants that the assignment contained in
                    Clauses 1 and 2 above is made free of any rights of set-
                    off  or counterclaim  capable of  being asserted  by any
                    party to  the Credit  Agreement or  any of the  Security
                    Documents.

              (c)   The  Assignor shall have no  responsibility or liability
                    in  respect of any  failure or delay by  the Assignee to
                    perform its obligations under the Credit Agreement.

              (d)   The Assignee confirms that:

                    (i)   it  has received  a  copy of  the  executed Credit
                          Agreement and  Security Documents  and accepts all
                          the terms of the Credit Agreement  and each of the
                          Security Documents;

                    (ii)  it  has  itself been,  and  will  continue  to be,
                          solely  responsible for making its own independent
                          appraisal  of,   and  investigations   into,   the
                          financial condition and affairs of the  parties to
                          the Credit Agreement and the Security Documents in
                          connection  with the  entry by  the Assignee  into
                          this Assignment;

                    (iii) it has  not relied on  any information provided to
                          it  by  the   Assignor  in  connection  with  this
                          Assignment; and

                    (iv)  it  will  continue  to  make  its own  independent
                          appraisal of and investigations into the financial
                          condition and affairs of the parties to the Credit
                          Agreement  and the Security Documents and will not
                          rely  on any  information  provided to  it  by the
                          Assignor.

        4.    Nothing in this Assignment shall constitute or be construed as
              a novation  of the  obligations owed by the  Borrowers to  the
              Assignor under  the Credit  Agreement of  any of  the Security
              Documents to which any of the Borrowers is a party.

        5.    All references  in the Note,  in the Guarantee and  in each of
              the other  Security Documents to the Credit Agreement shall be
              deemed to  be references  to the Credit  Agreement as assigned
              and assumed pursuant to the terms hereof.

        6.    The assignee irrevocably  designates and appoints the Agent as
              its agent  and irrevocably  authorizes the Agent  to take such
              action on its behalf and to exercise such powers on its behalf
              under  the  Credit   Agreement,  under  the  Note,  under  the
              Guarantee  and under  the  other Security  Documents,  each as
              supplemented  hereby, as  are  delegated to  the Agent  by the
              terms  of  each thereof,  together  with  such  powers  as are
              reasonably incidental thereto all as provided  in Clause 19 of
              the Credit Agreement.

        7.    Every  notice  or demand  under  this  Agreement  shall  be in
              writing  and may  be given  by telefax  and  shall be  sent as
              follows:

              If to the Assignor:

                    [NAME OF ASSIGNOR]
                    [ADDRESS]
                    Telefax No.:
                    Attention:

              If to the Assignee:

                    [NAME OF ASSIGNEE]
                    [ADDRESS]
                    Telefax No.:
                    Attention:

  Every  notice or demand hereunder shall be deemed to have been received at
  the time of receipt thereof.

        8.    Each party will bear its own costs and expenses in  connection
              with this Assignment.

        9.    This  Agreement  shall   be  governed  by,  and  construed  in
              accordance with, the laws of the State of New York.

        10.   This Agreement  may be  executed in  several counterparts with
              the same effect as, if the parties executing such counterparts
              shall have all  executed one agreement as of the  date hereof,
              each of  which counterparts when  executed and delivered shall
              be deemed  to be  an  original and  all of  such  counterparts
              together shall constitute this Agreement.

------------------------------------------------------------------------------

        IN  WITNESS WHEREOF, the parties hereto  have caused this instrument
  to be duly executed as of the day and year first above written.

                                            [NAME OF ASSIGNOR]


                                            By   
                                               Name:
                                               Title:


                                            [NAME OF ASSIGNEE]


                                            By                              
                                               Name:
                                               Title:


  Consented and Agreed this
  _____ day of_______________, 199__:

       [BORROWERS]

       [GUARANTOR]