Exhibit 10.123


                           FIRST PREFERRED MORTGAGE

                            Dated November 13, 1996

                         READING & BATES DRILLING CO.

                                - in favor of -

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

                                 RANDOLPH YOST

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                                     INDEX

CLAUSE                  SUBJECT MATTERPAGE


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

      ACKNOWLEDGEMENT OF MORTGAGE
      EXHIBIT 1 FORM OF CREDIT AGREEMENT

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

BY

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

IN FAVOR OF

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

WHEREAS

(A)    The Owner  is the sole owner  of the whole of  the jack-up drilling rig
       RANDOLPH YOST documented under the laws  and flag of the United  States
       of  America with Official Number 601699 of  4,701 gross registered tons
       and 4,701 net registered tons (the "Rig").

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

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

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

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

NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED

1.     DEFINITIONS AND INTERPRETATION

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

       "Other Rigs"  means,  individually or  collectively,  each of  (i)  the
       jack-up  drilling  rig  D.  R.   STEWART  owned  by  Reading   &  Bates
       Exploration Co. ("R&B  Exploration") documented under the laws and flag
       of  the  United States  with  Official  Number  626904  of 6,494  gross
       registered  tons  and  5,834 net  registered  tons;  (ii) the  offshore
       drilling rig W. D.  KENT owned by R&B Exploration  documented under the
       laws  and flag  of the  United States  with  Official Number  583169 of
       5,383 gross  registered tons and  4,185 net registered  tons; (iii) the
       offshore drilling rig  CHARLEY GRAVES owned by Reading and Bates Borneo
       Drilling  Co., Ltd. documented under the  laws and flag of the Republic
       of Panama  with Patente  Number  6618-76-CH of  5,829 gross  registered
       tons and 1,748 net registered  tons; (iv) the jack-up drilling  rig RON
       TAPPMEYER owned by  Reading & Bates (A)  Pty Ltd. documented  under the
       laws and flag  of Australia with Official Number 855213 of 11,455 gross
       registered  tons   and  3,436  net  registered   tons;  (v)  the  semi-
       submersible drilling rig  J. W. McLEAN  owned by  the Owner  documented
       under the  laws and flag of the Republic  of Panama with Patente Number
       25384-PEXT of  15,453 gross  registered tons  and 4,636 net  registered
       tons; (vi) the semi-submersible drilling  rig RIG 41 owned by the Owner
       documented under  the laws and flag of the  Republic of Panama with the
       Patente Number  to  be assigned  on the  date  hereof of  10,078  gross
       registered  tons  and 3,024  net  registered  tons; (vii)  the  jack-up
       drilling rig HARVEY  H. WARD owned  by HRB  Rig Corporation  documented
       under the laws and  flag of the United States of  America with Official
       Number 642693 of 4,121 gross  registered tons and 3,079  net registered
       tons;  (viii)  the jack-up  drilling  rig  F.  G.  McCLINTOCK owned  by
       Reading &  Bates Offshore, Limited  documented under the  laws and flag
       of the United States  of America with  Official Number 562059 of  5,525
       gross registered tons  and 1,657 net  registered tons;  (ix) the  semi-
       submersible  drilling rig  JACK  BATES owned  by  the Owner  documented
       under the laws and flag of  the United States of America with  Official
       Number  906283  of  19,928   gross  registered  tons  and  14,948   net
       registered tons; (x) the jack-up drilling rig J.  T. ANGEL owned by the
       Owner  documented under  the  laws and  flag  of the  United States  of
       America with Official  Number 651645 of 4,186 gross registered tons and
       3,090  net registered  tons;  (xi) the  jack-up  drilling rig  ROGER W.
       MOWELL owned  by the Owner  documented under the  laws and flag of  the
       United States of  America with Official  Number 645360  of 4,121  gross
       registered  tons  and  3,079 net  registered  tons;  (xii) the  jack-up
       drilling rig  GEORGE H.  GALLOWAY owned  by Reading  & Bates  Offshore,
       Limited documented  under the  laws and  flag of  the United  States of
       America with Official  Number 651646 of 3,729 gross registered tons and
       2,496 net registered  tons; and (xiii) the  jack-up drilling rig  C. E.
       THORNTON to be owned  by HRB Rig Corporation documented under  the laws
       and flag of  the United States of  America with Official Number  673210
       of 6,096 gross registered tons and 6,096 net registered tons;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1.03   In this Mortgage:

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

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

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

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

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

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

2.     REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

3.     MORTGAGE

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

       Provided only and the condition  of these presents is such that  if all
       of  the Obligations secured  by this Mortgage  have terminated  or have
       been  performed in  full as  and  when the  same shall  become due  and
       payable  in accordance with  the terms of  the Subsidiary  Guaranty and
       this Mortgage and  shall observe and  comply with the  covenants, terms
       and  conditions contained in the  Subsidiary Guaranty and this Mortgage
       expressed or  implied to be performed, observed or complied with by and
       on the part of  the Owner and its  successors and assigns, all  without
       delay or  fraud and according to  the true intent and  meaning thereof,
       then  these presents  and the  rights hereunder  shall cease, determine
       and  be void otherwise to  be and remain in full  force and effect and,
       in such event, the  indenture Trustee agrees  to execute and record  at
       the expense  of  the  Owner,  all  such  documents  as  the  Owner  may
       reasonably require to discharge this Mortgage.  
       Notwithstanding anything  to  the contrary  herein it  is not  intended
       that any provision  of this Mortgage  shall waive the  preferred status
       of this  Mortgage and  that  if any  provision or  part thereof  herein
       shall  be construed as  waiving the preferred  status of  this Mortgage
       then such provision shall to such extent be void and of no effect.

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

4.     PAYMENT COVENANTS

4.01   The Owner hereby covenants with the Secured Creditors:

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

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

       (c)   to  pay and perform its obligations which may be or become due or
             owing to any Secured Creditor under  this Mortgage and the  other
             Credit Documents  to which the  Owner is or is  to be a  party at
             the times and in the manner specified herein or therein.

5.     PRESERVATION OF SECURITY

5.01   It is declared and agreed that:

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

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

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

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

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

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

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

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

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

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

       (d)   any amendment or supplement to the  Credit Agreement, any of  the
             other Credit  Documents (other than this  Mortgage) or  any other
             document or security; or

       (e)   the  dissolution,  liquidation,  amalgamation,  reconstruction or
             reorganization of any of  the Credit Parties or any other person;
             or

       (f)   the   unenforceability,   invalidity  or   frustration   of   any
             obligations  of any  of the  Credit Parties  or any  other person
             under  the Credit  Agreement, any of  the other  Credit Documents
             (other than this Mortgage) or any other document or security.

5.04   Until the Obligations have been satisfied  in full to the  satisfaction
       of  the Trustee,  the Owner  shall not  by virtue  of any  payment made
       hereunder  on  account  of  the  Obligations   or  by  virtue  of   any
       enforcement  by  the  Trustee of  its  rights  under,  or  the security
       constituted  by,  this  Mortgage  or  by  virtue  of  any  relationship
       between,  or  transaction involving,  the Owner  and  Holdings (whether
       such relationship or  transaction shall constitute the Owner a creditor
       of  Holdings, a guarantor  of the  obligations of  Holdings or  a party
       subrogated to  the  rights  of others  against  Holdings  or  otherwise
       howsoever and whether or  not such relationship or transaction shall be
       related  to,  or  in  connection  with,  the  subject  matter  of  this
       Mortgage):

       (a)   exercise any  rights of  subrogation in  relation to any  rights,
             security or moneys held  or received or receivable by the Secured
             Creditors or any other person; or

       (b)   be entitled  to  exercise  any right  of  contribution  from  any
             co-surety liable in respect of such  moneys and liabilities under
             any other guaranty, security or agreement; or

       (c)   exercise  any right  of set-off or  counterclaim against Holdings
             or any such co-surety; or

       (d)   receive, claim or have the benefit of any payment,  distribution,
             security or indemnity from Holdings or any such co-surety; or

       (e)   unless  so directed by the Trustee  (when the Owner will prove in
             accordance  with  such  directions),  claim  as   a  creditor  of
             Holdings or any such co-surety in competition with the Trustee.

       The Owner  shall hold in  trust for  the Trustee  and forthwith pay  or
       transfer  (as appropriate)  to the Trustee  any such payment (including
       an amount  equal to any such set-off),  distribution or benefit of such
       security, indemnity or claim in fact received by it.

5.05   The  Owner unconditionally  and  irrevocably agrees  that  if any  sums
       hereby secured are not recoverable on the  basis of a guaranty (whether
       by  reason of legal limitation, illegality, disability or incapacity on
       or  of Holdings or the  Owner or any  other person or  by reason of any
       other  fact  or   circumstance,  and  whether   or  not  known   to  or
       discoverable by the Owner,  Holdings, the Trustee or any other person),
       then the Owner will,  as a separate and independent stipulation  and as
       a primary obligor, pay  to the Trustee on  demand an amount or  amounts
       equal to the amount or  amounts which the Owner would have  been liable
       to pay but for  such irrecoverability and will on  demand indemnify the
       Trustee against  any loss  or  liability suffered  or  incurred by  the
       Secured Creditors or any of them as a result of such irrecoverability.

6.     INSURANCE

6.01   The Owner covenants  with the  Trustee throughout  the Credit  Facility
       Period that:

       (a)   The  Owner shall, at  its own  expense, when and  so long  as any
             Obligations  remain  outstanding, insure  the  Rig  and keep  her
             insured, or cause the Rig  to be insured, in lawful money  of the
             United  States,  in  such  amounts,  for  such  risks  (including
             without   limitation,   hull   and   machinery/increased   value,
             protection  and indemnity  risks,  pollution  liability, and  war
             risks), in such  form (including without limitation, the  form of
             the loss  payable clause  and the designation  of named assureds)
             and  with  such  first class  insurance  companies, underwriters,
             funds,  mutual  insurance  associations  or clubs,  as  shall  be
             reasonably  satisfactory  to  the  Administrative  Agent.    With
             respect   to  hull   and  machinery/increased   value  insurance,
             including war risk, the  Owner shall insure the Rig and  keep her
             insured, or cause  the Rig to be insured, for  an amount which is
             at least  the full  commercial value  of the  Rig, and  when such
             amount is aggregated  with the amount of such  insurance coverage
             on  the Other Rigs, such aggregate amount  shall be at least 110%
             of the Total Commitment.   The Rig shall  in no event be  insured
             for an amount less than  the agreed valuation as set forth in the
             applicable marine  and war risk  policies.  Such insurance  shall
             cover  marine and war  risk perils, on  hull and  machinery, with
             deductibles not in excess of US$500,000 (such deductibles not  to
             apply in  the  case of  Total  Loss of  the  Rig), and  shall  be
             maintained  in  the broadest  forms  available  in the  American,
             British  and  Scandinavian insurance  markets  or  in such  other
             major  international   markets  reasonably   acceptable  to   the
             Administrative Agent.  The Owner shall  maintain, or cause to  be
             maintained,  protection and  indemnity  or equivalent  insurance,
             including  war  risk  protection   and  indemnity  coverage   and
             coverage against pollution liability, in an amount  not less than
             US$100,000,000   (or,  with   respect   to  pollution   liability
             coverage,  such greater amount  as may be  required from  time to
             time by  the  Oil  Pollution Act  1990,  or  other  Environmental
             Laws),  as and  when applicable  to the  Rig and  its operations,
             through   underwriters   or  associations   acceptable   to   the
             Administrative Agent.  In addition, the  Owner shall, at its  own
             expense,  furnish  to  the  Administrative  Agent  a  mortgagee's
             single interest policy providing coverage  which, when aggregated
             with  the   mortgagee's  interest  insurance   furnished  to  the
             Administrative Agent in  respect of the  Other Rigs, shall  be in
             an amount equal  to at least 110% of the  aggregate amount of the
             Total  Commitment  (or  in  lieu  of  such  mortgagee's  interest
             insurance  Owner  shall cause  the  hull  and machinery/increased
             value insurance  to  be endorsed  to  afford breach  of  warranty
             coverage for  the benefit  of  the Administrative  Agent).   Such
             mortgagee's  interest  insurance  and  any  additional  insurance
             policies for  the benefit  of the  Administrative Agent shall  be
             maintained  in  the  broadest  form available  in  the  American,
             British  and  Scandinavian markets  or other  major international
             markets   acceptable   to  the   Administrative   Agent   through
             underwriters  acceptable to  the Administrative  Agent.   The Rig
             shall not operate  in or proceed into  any area then excluded  by
             trading  warranties  under  its  marine  or   war  risk  policies
             (including  protection  and  indemnity)  without   obtaining  any
             necessary   additional  coverage,   satisfactory   in  form   and
             substance, and  evidence  of which  shall  be furnished,  to  the
             Administrative Agent.

       (b)   The   policy  or  policies  of   insurance  shall  be  issued  by
             responsible   underwriters    reasonably   acceptable    to   the
             Administrative    Agent,   shall   contain   conditions,   terms,
             stipulations   and  insuring   covenants   satisfactory  to   the
             Administrative Agent, and shall  be kept in full force and effect
             by the Owner so long as any  Obligations remain outstanding.  All
             such  policies,  binders and  other  interim insurance  contracts
             shall be executed and issued in the name of  the Owner and shall,
             to the extent  required herein, provide  that loss be  payable to
             the Administrative  Agent for  distribution by it  to itself, the
             Banks  and the  Owner as  their interests  may appear,  and shall
             provide for at least  ten days' prior notice  to be given to  the
             Administrative  Agent by  the underwriters or  association in the
             event of cancellation  or the  failure of  the Owner  to pay  any
             premium or call which  would suspend coverage under the policy or
             the payment of a  claim thereunder.  The Administrative Agent and
             the Trustee shall  be named as  co-assureds on all  such policies
             and  insurance   contracts,   but   without  liability   of   the
             Administrative  Agent  or  the  Trustee for  premiums  or  calls.
             Certified  copies of all such policies, binders and other interim
             insurance  contracts shall  be deposited  with the Administrative
             Agent.  Originals shall also be provided  upon the request of the
             Administrative   Agent.     The  Owner   shall  furnish   to  the
             Administrative Agent annually a detailed report signed by a  firm
             of marine insurance  brokers satisfactory  to the  Administrative
             Agent as  to the insurance maintained  in respect of  the Rig, as
             to their opinion as to  the adequacy thereof and as to compliance
             with the provisions of this Clause 6.01.

             Unless otherwise required by  the Administrative Agent by  notice
             to the underwriters, although the following  insurance is payable
             to the Administrative Agent,  (i) any loss under any insurance on
             the  Rig with respect  to protection and  indemnity risks  may be
             paid directly to the Owner  to reimburse it for any loss,  damage
             or expense incurred  by it  and covered by  such insurance or  to
             the person to  whom any liability  covered by such  insurance has
             been incurred  and (ii) in  the case  of any  loss (other than  a
             loss covered  by (i) above or by the  next following paragraph of
             this Clause 6.01(b)) under  any insurance with respect to the Rig
             involving  any  damage  to the  Rig,  the  underwriters  may  pay
             directly  for the  repair, salvage or  other charges involved or,
             if the Owner shall have  first fully repaired the damage  or paid
             all  of  the salvage  or  other charges,  may  pay  the Owner  as
             reimbursement therefor;  provided, however,  that if  such damage
             involves a before deductible loss in  excess of US$1,000,000, the
             underwriters shall not make such payment  without first obtaining
             the  written consent  thereto of the  Administrative Agent (which
             consent shall  not be unreasonably withheld).   Any  loss covered
             by this paragraph which is paid  to the Administrative Agent  but
             which might have been  paid, in accordance with the provisions of
             this paragraph, directly  to the Owner  or others, shall  be paid
             by the Administrative Agent to, or as directed  by, the Owner and
             all  other payments to the Administrative Agent of losses covered
             by this  paragraph shall be applied  by the  Administrative Agent
             in accordance with Clause 10.01.

             In  the event  of  an  actual or  constructive  Total Loss  or  a
             compromised constructive Total Loss or requisition  of title, all
             insurance payments therefor shall  be paid to the  Administrative
             Agent.    The  Owner  shall  not   declare  or  agree  with   the
             underwriters  that  the Rig  is  a  constructive or  compromised,
             agreed  or  arranged constructive  Total Loss  without  the prior
             written consent of the Administrative Agent.

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

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

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

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

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

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

7.     RIG COVENANTS

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

       (a)   maintain its  existence as  a corporation  in good standing  duly
             organized under the laws of the State of Oklahoma;

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

       (c)   not without  the  previous consent  in  writing of  the  Trustee,
             change the name of  the Rig or make  any modification to the  Rig
             which would or  might materially alter  the structure or  type or
             reduce the performance characteristics  of the Rig or  materially
             reduce the value of the Rig;

       (d)   keep the Rig in  a good and efficient state of  repair consistent
             with  the ownership  and operating  practices of  first-class rig
             owners and operators so  as to maintain her present class (namely
             +A1  Self-Elevating   Drilling  Unit)  the   American  Bureau  of
             Shipping free  of recommendations  and qualifications and  change
             of class,  save those notified to and approved  in writing by the
             Trustee  and so  as  to comply  with  all  laws, regulations  and
             requirements  (statutory   or  otherwise)  from   time  to   time
             applicable to vessels documented under the  laws and flag of  the
             United   States  and   applicable  to  vessels   trading  to  any
             jurisdiction to which the Rig may,  subject to the provisions  of
             this Mortgage, trade from time to time;

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

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

       (g)   permit  the  representatives  of  the   Administrative  Agent  or
             independent surveyors representing the  Trustee to board the  Rig
             at  all  reasonable  times and  upon  reasonable  notice for  the
             purpose  of  inspecting  her  condition  or  for the  purpose  of
             satisfying themselves in regard  to proposed or executed  repairs
             and to afford all proper facilities for such inspections;

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

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

       (j)   promptly furnish to  the Trustee all  such information as  it may
             from time  to  time require  regarding the  Rig, her  employment,
             position  and   engagements,  particulars  of  all   towages  and
             salvages and, upon the  request of the Trustee in writing, copies
             of  all  charters  and other  contracts  for  her  employment  or
             otherwise howsoever concerning her;

       (k)   notify  both the  Trustee and the  Administrative Agent forthwith
             by telex or telecopy thereafter confirmed by letter of:

             (i)    any  casualty to  the Rig  which is  or is  likely to  be a
                    Major Casualty, and

             (ii)   any  occurrence in  consequence whereof the  Rig has become
                    or is,  by the  passing of  time  or  otherwise, likely  to
                    become a Total Loss, and

             (iii)  any  requirement or  recommendation made by  any insurer or
                    classification society or by any competent authority  which
                    is not immediately complied with, and

             (iv)   any  arrest  of  the  Rig  or  the  exercise  or  purported
                    exercise of  any lien on the  Rig or any requisition of the
                    Rig for hire, and

             (v)    any intended dry docking of the Rig, as  to which the Owner
                    shall   give  the  Trustee  ten  (10)  days  prior  notice,
                    provided, that in  the event of  any emergency  dry docking
                    of   the  Rig,  the  Owner  shall  immediately  notify  the
                    Trustee; and

             (vi)   any intended deactivation or lay-up  of the Rig (other than
                    for  normal periods of inactivity between contracts for the
                    Rig  during  which  periods the  Rig  remains  manned)  and
                    obtain the prior written consent of the Trustee;

       (l)   keep proper  books of account  in respect of the  Rig and  as and
             when the  Trustee or the  Administrative Agent may so  reasonably
             require  make such  books available  for inspection  on behalf of
             the Trustee and furnish satisfactory evidence that the wages  and
             allotments  and the insurance  of the master  and crew  are being
             regularly  paid  and that  all  deductions from  crew's  wages in
             respect  of  tax  and/or  social  security  liability  are  being
             properly accounted  for and  that  the master  has  no claim  for
             disbursements other than those  incurred by  him in the  ordinary
             course of trading on the voyage then in progress;

       (m)   observe  the obligations  contained in  Sections 7  and 8  of the
             Credit Agreement  which apply to  the Rig and  the Owner, and  in
             pursuance thereof such obligations  shall be incorporated in  and
             deemed to form part of this Mortgage mutatis mutandis; 

       (n)   not without the previous  consent in writing of the Trustee (such
             consent not to  be unreasonably withheld),  put the Rig  into the
             possession of any person for the purpose  of work being done upon
             her  in an amount exceeding or  likely to exceed Two Million Five
             Hundred Thousand  United States  Dollars  (US$2,500,000) (or  the
             equivalent in any other currency) unless such person shall  first
             have  given to the Trustee  and in  terms reasonably satisfactory
             to it a written undertaking  not to exercise any lien on  the Rig
             for the cost of such work or otherwise;

       (o)   comply  with  and satisfy  all the  requirements  and formalities
             established by  the Ship  Mortgage Act  and  any other  pertinent
             legislation of the  United States to  perfect this Mortgage  as a
             legal, valid and  enforceable first and preferred  lien upon  the
             Rig and  promptly to  furnish to  the Trustee from  time to  time
             such proof as the Trustee may  request for its satisfaction  with
             respect  to the Owner's  compliance with  the provisions  of this
             sub-clause;

       (p)   place,  and  use due  diligence to  retain, a  properly certified
             copy of this Mortgage on  board the Rig with her papers and cause
             such  certified copy of this Mortgage  to be exhibited to any and
             all persons having  business with the  Rig which might  give rise
             to any lien thereon other  than a lien for crew's  wages, general
             average and salvage and to any  representative of the Trustee  on
             demand and to place and keep  prominently displayed in the  chart
             room  and  in the  master's cabin  of  the Rig  a  framed printed
             notice in  plain type in English of  such size that the paragraph
             of reading matter  shall cover  a space  not less  than 6  inches
             wide and 9 inches high reading as follows:

                                       "NOTICE OF MORTGAGE

             This Rig is covered  by a First Preferred Mortgage to CHRISTIANIA
             BANK  OG KREDITKASSE, NEW  YORK BRANCH,  as Security  Trustee for
             the  Banks defined in  the said Mortgage  under authority  of the
             United States Ship Mortgage Act, 1920,  as amended, recodified as
             46 U.S.C.  31301  et seq.  Under the terms  of the said Mortgage
             neither the  Owner nor any  charterer nor the master  of this Rig
             nor  any  other  person has  any  right,  power  or  authority to
             create, incur  or permit to  be imposed  upon this  Rig any  lien
             whatsoever  other  than for  crew's  wages,  general average  and
             salvage."

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

       (r)   notify the Trustee forthwith upon:

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

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

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

       (t)   shall not cause or  permit the Rig to  be operated in any  manner
             contrary  to law,  shall not abandon  the Rig in  a foreign port,
             shall  not engage  in any  unlawful trade  or violate  any law or
             carry any cargo that  shall expose the Rig to penalty, forfeiture
             or  capture, and shall not  do, or  suffer or permit  to be done,
             anything  which can or may injuriously affect the registration or
             enrollment of  the Rig under  the laws of  the United States  and
             will at all times keep the Rig duly documented thereunder.

8.     PROTECTION OF SECURITY

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

8.02   Without prejudice to the generality of Clause 8.01:

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

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

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

9.     ENFORCEABILITY AND INDENTURE TRUSTEE'S POWERS

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

       (a)   to  exercise  all  the  rights and  remedies  in  foreclosure and
             otherwise  given to  mortgagees by  applicable law  including the
             provisions of the Ship Mortgage Act;

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

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

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

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

       (f)   to  sell  the Rig  or  any share  therein  with or  without prior
             notice to  the Owner free  from any claim of  or by the  Owner of
             any  nature whatsoever, and  with or without  the benefit  of any
             charterparty  or  other contract  for her  employment,  by public
             auction  or private contract  at such place  and upon  such terms
             (including,  without limitation,  on terms  such that  payment of
             some  or all of the purchase price be deferred) as the Trustee in
             its absolute discretion may  determine with power to postpone any
             such sale,  without being answerable  for any loss occasioned  by
             such sale or resulting  from postponement thereof, and/or  itself
             to  purchase the  Rig at any  such public auction  and to set off
             the purchase price against all or any part of the Obligations;

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

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

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

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

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

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

9.05   Upon  any sale  of  the Rig  or any  share therein  by the  Trustee the
       purchaser shall  not be bound  to see or enquire  whether the  power of
       sale  of the Trustee has arisen in the manner provided in this Mortgage
       and the sale shall be deemed  to be within the power of the Trustee and
       the  receipt of the  Trustee for the  purchase money  shall effectively
       discharge  the purchaser who shall not be  concerned with the manner of
       application  of the  proceeds  of  sale or  be  in any  way  answerable
       therefor.

10.    APPLICATION OF MONEYS

10.01  (a)   All  moneys  received  by  the  Trustee  (or  any  other  Secured
             Creditor, as the  case may be) in  respect of sale of the  Rig or
             any part thereof; in  respect of  recovery under the  Insurances;
             or  in respect  of Requisition Compensation  shall be  applied in
             the following manner:

             (i)    first,  to the payment of all amounts  owing the Trustee of
                    the type described in clauses (ii) and (iii) of Recital D;

             (ii)   second,  to the extent  moneys remain after the application
                    pursuant to  the preceding  clause (i), an amount  equal to
                    the  outstanding Obligations  shall be paid  to the Secured
                    Creditors  as  provided  in  Clause  10.01(c),  with   each
                    Secured  Creditor  receiving  an   amount  equal  to   such
                    Obligations   held   by  it   or,  if   the  proceeds   are
                    insufficient to pay  in full all  such Obligations, its Pro
                    Rata Share  (as defined below)  of the  amount remaining to
                    be distributed; and

             (iii)  third,  to the  extent moneys remain  after the application
                    pursuant  to  the  preceding  clauses  (i)  and  (ii),  and
                    following  the  termination of  this  Mortgage pursuant  to
                    Clause 3.01,  any surplus then remaining  shall be paid  to
                    the  Owner, subject,  however, to the rights  of the holder
                    of  any then existing Lien of which  the Trustee has actual
                    notice (without investigation).

       (b)   For purposes of this Mortgage "Pro  Rata Share" shall mean,  when
             calculating a Secured Creditor's  portion of any distribution  or
             amount in respect of  any Obligations, the amount (expressed as a
             percentage)  equal to a  fraction the numerator  of which  is the
             then unpaid amount of such  Obligations owing to or held  by such
             Secured  Creditor  and  the  denominator of  which  is  the  then
             outstanding  amount of  all  such Obligations.   For  purposes of
             determining  the  amount payable  to each  Secured  Creditor, the
             Trustee shall  be entitled  to request each  Secured Creditor  to
             furnish it with written  notice of the amount of Obligations then
             owed  to  it and  shall  be entitled  to  reply upon  the amounts
             stated therein in making such distribution.

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

       (d)   For  purposes of  applying payments  received in  accordance with
             this Clause 10.01,  the Trustee shall  be entitled to  reply upon
             (i) the Administrative Agent under the Credit Agreement  and (ii)
             the   Secured   Creditors  for   a   determination   (which   the
             Administrative  Agent  and   each  Secured  Creditor,   by  their
             acceptance  of the benefits of  this Mortgage  shall be obligated
             to provide  upon  request  of the  Trustee)  of  the  outstanding
             Obligations owed to the  Secured Creditors.  Unless it has actual
             knowledge (including  by  way of  written notice  from a  Secured
             Creditor)  to the  contrary, the  Administrative Agent  under the
             Credit  Agreement,  in furnishing  information  pursuant  to  the
             preceding sentence, and the  Trustee, in acting hereunder,  shall
             be entitled to assume  that no obligations other than  principal,
             interest and regularly  accruing fees  are owing  to any  Secured
             Creditor.

11.    FURTHER ASSURANCES

11.01  The Owner shall execute and do all such assurances,  acts and things as
       the Trustee in its absolute discretion may require for:

       (a)   perfecting or protecting the security created (or  intended to be
             created) by this Mortgage; or

       (b)   preserving or protecting  any of the  rights of the  Trustee, and
             the other Secured Creditors under this Mortgage; or

       (c)   ensuring that the  security constituted by this  Mortgage and the
             covenants and obligations  of the Owner under this Mortgage shall
             enure to the benefit  of any transferee, successor or assignee of
             the Trustee; or

       (d)   enforcing the security constituted  by this Mortgage on or at any
             time after the same shall have become enforceable; or

       (e)   the exercise of any  power, authority or discretion vested in the
             Trustee under this Mortgage,

       in  any such  case, forthwith  upon demand  by the  Trustee and  at the
       expense of the Owner.

12.    POWER OF ATTORNEY

12.01  The Owner,  by way of  security and in  order more fully to  secure the
       performance  of  the  Obligations,  hereby  irrevocably  appoints   the
       Trustee as its  attorney until the  Total Commitment is  terminated and
       none of the Obligations remain outstanding for the purposes of:

       (a)   doing  in  its  name all  acts  and  executing,  signing  and (if
             required) registering  in its name all  documents which the Owner
             itself  could do, execute,  sign or register  in relation  to the
             Rig (including without limitation, transferring title  to the Rig
             to a third party), provided, however,  that such power shall  not
             be  exercisable by  or  on  behalf  of  the  Trustee  until  this
             Mortgage shall  have become  immediately enforceable pursuant  to
             Clause 9.01; and

       (b)   executing,   signing,  perfecting,   doing   and  (if   required)
             registering every such further  assurance document, act or  thing
             as is referred to in Clause 11.

12.02  The exercise of  such power as is referred to  in Clause 12.01(a) by or
       on  behalf of the  Trustee shall  not put any  person dealing  with the
       Trustee  upon  any  enquiry as  to  whether  this  Mortgage  has become
       enforceable nor  shall such  person be in  any way  affected by  notice
       that this Mortgage has not become enforceable  and, in relation to both
       Clauses 12.01(a)  and 12.01(b),  the exercise  by  the Trustee  of such
       power shall be conclusive evidence of its right to exercise the same.

13.    INDEMNITIES

13.01  The  Owner will  indemnify  and  save  harmless  each  of  the  Secured
       Creditors  and each agent  or attorney appointed  under or  pursuant to
       this Mortgage  (each an  "Indemnitee")  from and  against  any and  all
       expenses, claims, liabilities, losses,  taxes, costs, duties, fees  and
       charges  suffered, incurred or  made by such  Secured Creditor  or such
       agent or attorney in good faith:

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

       (b)   in the preservation or enforcement of  the rights of the  Trustee
             under this Mortgage; or

       (c)   on  the release  of the  Rig  from the  security created  by this
             Mortgage,

       and the  Secured Creditors and each  such agent or attorney  may retain
       and pay all  sums in respect  of the same  out of money  received under
       the powers conferred  by this Mortgage.   All such  amounts recoverable
       by  such  Secured  Creditors   or  such  agent  or  attorney  shall  be
       recoverable on a full indemnity basis.

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

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

14.    EXPENSES

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

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

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

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

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

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

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

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

15.    COMMUNICATIONS

15.01  All notices to  the Trustee hereunder shall be in  writing and shall be
       made to the following address:

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


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

16.    ASSIGNMENTS

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

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

16.03  Pursuant to  Section 12.04 of  the Credit Agreement, each  Bank has the
       right to  assign or  transfer  all or  any part  of  its rights  and/or
       obligations  under the Credit Agreement  on the terms therein provided.
       The  Trustee  shall  notify  the  Owner  promptly  following  any  such
       assignment, transfer or change.

17.    TOTAL AMOUNT, ETC.

17.01  The  total amount of  the direct or  contingent obligations  secured by
       this  Mortgage is  Three Hundred Million  U.S. Dollars (US$300,000,000)
       of  principal  plus  interest,  fees, commissions  and  performance  of
       mortgage covenants.   The interest  of the  Owner in  the Rig is  100%.
       The interest of the Trustee  in the Rig is 100%.   The date of maturity
       is  November 13,  2001, and  the discharge  amount is  the same  as the
       total amount  plus such other sums as shall be  payable by the Owner to
       the Banks under the Credit Agreement.

18.    MISCELLANEOUS

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

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

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

19.    JURISDICTION

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

19.02  Without prejudice to the  generality of Clause 19.01, the Trustee shall
       have the right to  arrest and take action  against the Rig at  whatever
       place  the Rig shall be  found lying and for the  purpose of any action
       which the  Trustee may bring before the courts  of such jurisdiction or
       other judicial  authority and for the  purpose of any action  which the
       Trustee may bring against the Rig, any writ, notice,  judgment or other
       legal process or documents may (without  prejudice to any other  method
       of  service under applicable law) be served  upon the master of the Rig
       (or  upon anyone acting as the master) and such service shall be deemed
       good service on the Owner for all purposes.

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

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

READING & BATES DRILLING CO.

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


                          ACKNOWLEDGEMENT OF MORTGAGE


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


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




                                 ________________________
                                 Notary Public