Exhibit 10.89     
                                                                            


                           FIRST PREFERRED MORTGAGE

                             Dated April 30, 1996

                         READING & BATES DRILLING CO.

                                - in favor of -

                     WILMINGTON TRUST COMPANY, not in its 
                   individual capacity but solely as Trustee

                                  JACK BATES


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

                                     INDEX

CLAUSE                  SUBJECT MATTER                                   PAGE

      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  . . . . . . . . . . . . . . . . . . .  17 
      9     ENFORCEABILITY AND INDENTURE TRUSTEE'S POWERS . . . . . . . .  18 
      10    APPLICATION OF MONEYS . . . . . . . . . . . . . . . . . . . .  20 
      11    FURTHER ASSURANCES  . . . . . . . . . . . . . . . . . . . . .  21 
      12    POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . .  21 
      13    INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . .  22 
      14    EXPENSES  . . . . . . . . . . . . . . . . . . . . . . . . . .  23 
      15    COMMUNICATIONS  . . . . . . . . . . . . . . . . . . . . . . .  23 
      16    ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . .  24 
      17    TOTAL AMOUNT, ETC.  . . . . . . . . . . . . . . . . . . . . .  24 
      18    MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . .  24 
      19    JURISDICTION  . . . . . . . . . . . . . . . . . . . . . . . .  25 

      ACKNOWLEDGEMENT OF MORTGAGE

      EXHIBIT 1 FORM OF CREDIT AGREEMENT

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

THIS FIRST PREFERRED  MORTGAGE (this "Mortgage")  is made on  the 30th day  of

April, 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)    WILMINGTON  TRUST  COMPANY,  a  Delaware  banking  corporation   having
       offices  at Rodney Square North,  1100 North Market Street, Wilmington,
       Delaware  19890-0001,  not in  its  individual capacity  but  solely as
       indenture 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  semi-submersible
       drilling unit  JACK BATES  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 (the "Rig").

(B)    By a  Credit Agreement dated as  of April 30,  1996 (as in  effect from
       time   to  time,   the  "Credit  Agreement")   among  Reading  &  Bates
       Corporation,  a  Delaware corporation,  ("Holdings"),  the  Owner,  the
       Banks party  thereto, Credit Lyonnais,  New York  Branch, as  co-agent,
       and Christiania  Bank og  Kreditkasse, New York  Branch, as agent  (the
       "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 One  Hundred Million United States
       Dollars (US$100,000,000), 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 and this  Deed of Covenants is  made for  the benefit of
       the Mortgagee to  secure the guaranty by the Owner  of (i) the full and
       prompt payment  when due of  (x) the principal  of and interest on  the
       Notes  issued, and  Loans made,  under the  Credit  Agreement, and  all
       reimbursement  obligations and  Unpaid  Drawings  with respect  to  the
       Letters of Credit  issued under the Credit Agreement  and (y) all other
       obligations   and    indebtedness   (including   without    limitation,
       indemnities, Fees and interest thereon) of the  Borrower to the Secured
       Creditors (as hereinafter  defined), whether now existing  or hereafter
       incurred  under,  arising out  of  or  in connection  with  the  Credit
       Agreement  and   the   other   Credit  Documents   including,   without
       limitation,  this Mortgage and  the due  performance and  compliance by
       the  Borrower  with   all  of  the  terms,  conditions  and  agreements
       contained  in  the Credit  Agreement  and  the other  Credit  Documents
       including,  without limitation,  this Mortgage;  (ii) any  and all sums
       advanced  by  the Trustee  in  order  to preserve  the  Collateral  (as
       hereinafter  defined)  or   preserve  its  security  interest   in  the
       Collateral;  (iii) in the event of any proceeding for the collection or
       enforcement of  any indebtedness,  obligations, or  liabilities of  the
       Borrower referred to  in clause (i)  above, after an  Event of  Default
       shall have occurred  and be continuing, the reasonable expenses  of the
       Trustee of re-taking, holding, preparing for sale  or lease, selling or
       otherwise  disposing of  or  realizing on  the  Collateral, or  of  any
       exercise  by  the  Trustee  of  its  rights  hereunder,  together  with
       reasonable attorneys' fees  of counsel to the Trustee and  court costs;
       and  (iv)  all  amounts  paid  by  any  Indemnitee  as  to  which  such
       Indemnitee  has the  right to  reimbursement under  Clause  13 of  this
       Mortgage   (all  such  obligations,   liabilities,  sums  and  expenses
       referred  to  in  clauses  (i) through  (iv)  above  being collectively
       referred to as  the "Obligations").  It is acknowledged and agreed that
       the  "Obligations" shall  include  extensions of  credit  of the  types
       described above,  whether outstanding on the  date of this  Mortgage or
       extended from time to time after the date of this Mortgage.  

(E)    This  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:-

       "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 Assignment  of Insurance" means  the Collateral  Assignment
       of Insurance in  respect of the Rig executed  or to be executed  by the
       Owner in favor of the Agent;

       "Credit Agreement"  means the  Agreement, dated as  of April 30,  1996,
       among  Holdings,  the  Owner,  the Banks,  Credit  Lyonnais,  New  York
       Branch, as co-agent,  and the  Agent first referred  to in Recital  (B)
       hereto;

       "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;

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

       "Default  Rate"  shall  mean   the  rate  of  interest  calculated   in
       accordance with Section 1.07(b) of the Credit Agreement;

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

       "Environmental Claim" 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   Laws"   means  all   applicable   laws,   regulations,
       conventions   and  agreements  whatsoever   relating  to  pollution  or
       protection of the  environment (including, without limitation,  the Oil
       Pollution Act  of 1990 (33  U.S.C.  2701  et seq.),  the Comprehensive
       Environmental Response,  Compensation, and  Liability Act  of 1980  (42
       U.S.C.  9601 et seq.), the Hazardous  Materials Transportation Act (49
       U.S.C.   1801 et seq.), the Resource  Conservation and Recovery Act of
       1976  (42 U.S.C.  6901 et  seq.), the Clean Air Act  (42 U.S.C.  7401
       et seq.), the Federal Water Pollution Control Act (33 U.S.C.  1251  et
       seq.) and the Toxic  Substances Control Act (15 U.S.C.   2601 et seq.)
       (all  of the  foregoing as  amended), and  any comparable  laws of  the
       individual  States of the  United States of America  or any other state
       or nation); 

       "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 provided 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 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 1.08 of the Credit Agreement;

       "Letter  of Credit" shall  have the same meaning  for such  term as set
       forth in Section 2.01 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
       offshore  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  6494  gross
       registered  tons  and  5834  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 offshore 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 3436  net registered  tons; and  (v) the  offshore
       drilling rig J.W.  McLEAN owned by the Owner  documented under the laws
       and  flag of the Bahamas  with Official Number  715954 of 9199.01 gross
       registered tons and 7267.22 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 Agent,
       provide a bond or other security satisfactory to the  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  Agent,
       provide a bond or other security satisfactory to the 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  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  Agent have been made
       as evidenced by the 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  Agent under  and  as  defined  in  the Credit
       Agreement;

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

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

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

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

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

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

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

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

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)   all  applicable Environmental  Laws  and 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 Creditors 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 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 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  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 Agent.  In addition, the Owner shall,  at its own expense,
             furnish  to  the  Agent  a  mortgagee's  single  interest  policy
             providing coverage  which, when  aggregated with the  mortgagee's
             interest  insurance  furnished to  the  Agent in  respect  of the
             Other  Rigs, shall be in an amount  equal to at least 110% of the
             Total  Commitment  (or  in  lieu  of  such  mortgagee's  interest
             insurance  Owner  shall cause  the  hull and  machinery/increased
             value  insurance to  be  endorsed to  afford  breach of  warranty
             coverage  for  the  benefit  of  the  Agent).    Such mortgagee's
             interest insurance and any additional insurance  policies for the
             benefit  of the Agent  shall be maintained  in the  broadest form
             available  in the  American, British and  Scandinavian markets or
             other  major   international  markets  acceptable  to  the  Agent
             through underwriters acceptable to  the 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 Agent.

       (b)   The   policy  or  policies  of   insurance  shall  be  issued  by
             responsible  underwriters  reasonably  acceptable to  the  Agent,
             shall   contain  conditions,  terms,  stipulations  and  insuring
             covenants satisfactory to  the 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 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
             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 Agent and the  Trustee shall
             be  named  as co-assureds  on  all  such  policies and  insurance
             contracts, but without liability  of the 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 Agent.    Originals shall  also  be  provided upon  the
             request  of the  Agent.   The Owner  shall  furnish to  the Agent
             annually a detailed report signed by  a firm of marine  insurance
             brokers satisfactory to the  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  Agent   by  notice  to  the
             underwriters, although the following insurance is  payable to the
             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 direct 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  Agent (which  consent shall  not be  unreasonably withheld).
             Any loss  covered by this  paragraph which is  paid to the  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 Agent to,  or as directed by, the Owner and
             all  other  payments  to the  Agent  of  losses  covered  by this
             paragraph  shall  be applied  by  the  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 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
             Agent.

       (c)   In the event of an actual or constructive Total  Loss of the Rig,
             the 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 Agent advised
             of the progress of such renewals,  and procure that the  insurers
             shall  promptly confirm in writing to  the 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 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 Column Stabilized Drilling Unit with  Ice Strengthening Class
             1C)  at 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 Agent  copies of all survey reports
             issued in respect thereof;

       (g)   permit the representatives of the 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 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  Trustee's request in  writing, copies of
             all  charters and other contracts for her employment or otherwise
             howsoever concerning her;

       (k)   notify both  the Trustee  and  the 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 Trustee's prior written consent;

       (l)   keep proper  books of account  in respect of the  Rig and  as and
             when  the Trustee  or the  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  WILMINGTON
             TRUST  COMPANY  not  in its  individual  capacity  but solely  as
             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  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  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 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 Agent;

       (d)   to collect, recover, compromise  and give a good discharge for or
             procure  that  the 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  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  Trustee's
       power of sale 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 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 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 Agent under  the Credit Agreement  and (ii)  the Secured
             Creditors for a determination (which  the Agent and each  Secured
             Creditor, by  their acceptance of  the benefits of this  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 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  (x)  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, the
             Agent,  the Banks,  and the  Letter of  Credit Issuer  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 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  Creditors 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 Trustee's rights 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  Creditor  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 the Trustee and  the Agent 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 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 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:

                   Wilmington Trust Company
                   Rodney Square North
                   1100 North Market Street
                   Wilmington, DE  19890-0001
                   Telefax:  (302) 651-8882
                   Attention: Corporate Trust Division 
 
                   With a copy to:

                   Jennifer L. Janss, Esq.
                   Richards, Layton & Finger
                   P.O. Box 551
                   Wilmington, DE  19899


       All  other notices  shall  be made  to the  addresses given  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 12.16 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 this  Mortgage is One Hundred Million U.S.  Dollars
       (US$100,000,000)  of principal  plus  interest, fees,  commissions  and
       performance of mortgage  covenants.  The  discharge amount is  the same
       as the total amount.

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_____________________________________
  Its:


                          ACKNOWLEDGEMENT OF MORTGAGE


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



On   this   30th  day   of   April,  1996   before   me  personally   appeared
________________________ to me  known who being  by me duly sworn  did dispose
and  say that  he  resides at  _________________________________,  that he  is
____________________________ 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