Exhibit 10.92     
                                                                           

                       READING & BATES (A) PTY. LTD.

                                   - to -

                      CHRISTIANIA BANK OG KREDITKASSE,
                              NEW YORK BRANCH

                         __________________________

                          FIRST PRIORITY MORTGAGE

                            Dated April 30, 1996

                         _________________________


                               RON TAPPMEYER

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

THIS FIRST PRIORITY MORTGAGE is made the 30th day of April, 1996 by READING
& BATES (A) PTY. LTD.,  ACN 064 532 252,  a company organized and  existing
under the  laws of the State  of Western Australia and  the Commonwealth of
Australia and having its registered  office 66 Kings Park Road, West Perth,
West Australia,  (the "Owner") to  CHRISTIANIA BANK  OG KREDITKASSE  acting
through its New York Branch  having its office at 11 West 42nd  Street, 7th
Floor, New York, NY  10036 (the "Mortgagee", which expression shall include
its successors and assigns),

WHEREAS:

(1)   The Owner is the sole,  absolute and unencumbered owner of sixty-four
      sixty-fourth shares of the Rig described in the Schedule 1 hereto.

(2)   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  Banks party
      thereto Credit  Lyonnais,  New  York Branch,  as  co-agent,  and  the
      Mortgagee, as  agent for  the Banks  (in this capacity,  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 Borrower  upon the  terms  and conditions  therein
      described a reducing revolving credit facility in an aggregate amount
      at  any one  time outstanding  of  One Hundred  Million United States
      Dollars (US$100,000,000)  providing for the  making of  Loans and the
      issuance of and participations in, Letters  of Credit as contemplated
      therein.

(3)   The  obligations of  the Borrower  with respect  to the  Facility are
      evidenced by the Credit Agreement and the other Credit Documents, and
      including the promissory  notes of the Borrower  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).

(4)   The  Owner,  for good  and  valuable  consideration, has  authorized,
      executed  and  delivered  a  Subsidiary   Guaranty  (the  "Subsidiary
      Guaranty"), the form of  which Subsidiary Guaranty is attached hereto
      as Exhibit  2, in favor of the Agent  guaranteeing the performance by
      the Borrower of its obligations under the  Credit Agreement including
      the payment, when due, of all Obligations.

(5)   This Mortgage is made for  the benefit of the Mortgagee to secure the
      guaranty by the Owner of (i) the full and prompt payment when due (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 Mortgagee  in order to preserve
      the Rig  or preserve its security  interest in the Rig;  (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  Mortgagee or re-
      taking, holding,  preparing for sale or  lease, selling or  otherwise
      disposing  of or  realizing on  the Rig,  or of  any exercise  by the
      Mortgagee  of  its   rights  hereunder,   together  with   reasonable
      attorneys' fees of counsel to the Mortgagee and court costs; and (iv)
      all amounts paid  by any Indemnitee  as to which such  Indemnitee has
      the right to reimbursement under Clause 13 of this Mortgage (all such
      obligations, liabilities,  sums and  expenses referred to  in clauses
      (i)  through  (iv)  above  being  collectively  referred  to  as  the
      "Obligations").  It is acknowledged and agreed that the "Obligations"
      shall  include extensions  of credit  of the  types  described above,
      whether outstanding  on the  date of  this Mortgage or  extended from
      time to time after the date of this Mortgage.

(6)   This  First Priority Mortgage, which is entered  into by the Owner in
      consideration of the Banks agreeing to make the Facility available to
      the  Borrower 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 as follows:

1.    (A)   In this Mortgage unless the context otherwise requires:

      "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  1 to the
      Credit Agreement (collectively, the "Banks");

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

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

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

      "Environmental   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  the
      Commonwealth of  Australia, the  individual states or  territories of
      Australia 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(A);

      "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  Borrower referred  to in
      Recital (3) hereto and in Section 1.05(a) of the Credit Agreement;

      "Obligations" shall have the meaning provided in Recital (5) 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  JACK BATES  owned by  the Borrower  documented
      under the laws  and flag of  the United  States with Official  Number
      906283  of 19,928  gross  registered tons  and 14,948  net registered
      tons; (ii)  the offshore drilling rig  W. D. KENT owned  by Reading &
      Bates Exploration  ("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
      D.R. STEWART owned  by R&B Exploration documented  under the laws and
      flag  of United  States with  Official  Number 626904 of  6,494 gross
      registered tons and  5,834 net registered tons;  and (v) the offshore
      drilling rig J.W.  McLEAN owned by the  Borrower 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  priority  preferred  lien  status of  this
      Mortgage; 

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

      "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  referred to in  Recital (1) hereto  and more
      fully  described in  Schedule  1  hereto and  includes  any share  or
      interest therein  and her engines, machinery,  boats, tackle, outfit,
      spare  gear,  fuel,  consumable   or  other  stores,  belongings  and
      appurtenances whether  on board  or ashore  and whether now  owned or
      hereafter  acquired (but  excluding  therefrom any  leased  equipment
      owned by third parties);

      "Secured Creditors" shall mean the Banks, the Letter of Credit Issuer
      and the 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;

      "Subsidiary Guaranty" means the agreement  dated as of April 23, 1996
      made  by the Owner  in favor  of the  Agent as  first referred  to in
      Recital (4) hereto;

      "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;

      (B)   In Clause 5(A) hereof:

            (i)   "Excess risks" means the proportion of claims for general
                  average  and  salvage  charges  and  under  the  ordinary
                  running-down clause not recoverable in consequence of the
                  value at  which a vessel  is assessed for the  purpose of
                  such claim exceeding her insured value;

            (ii)  "Protection and  indemnity risks" means  the usual  risks
                  covered  by  a   protection  and  indemnity   association
                  including  the proportion  not  recoverable  in  case  of
                  collision under the ordinary running-down clause;

            (iii) "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.

      (C)   This Mortgage shall be read together with the Credit Agreement,
            the  Notes,  the  Subsidiary  Guaranty  and  the  other  Credit
            Security Documents.

      (D)   The Owner hereby represents and warrants to the Mortgagee that:

            (i)   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);

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

            (iii) the Owner  is a  corporation duly  organized and  validly
                  existing and in good standing under the laws of the State
                  of Western Australia and the Commonwealth of Australia;

            (iv)  the Owner  has full power  and authority  (i) to register
                  the  Rig  in  its name  under  Australian  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;

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

            (vi)  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 Registrar of Ships at
                  the  Australian  Shipping  Registration  Office  and  the
                  Australian Securities  Commission will  create  a  legal,
                  valid and  enforceable first  preferred mortgage  lien on
                  the Rig;

            (vii) 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 its Memorandum and Articles of Association,  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;

           (viii) 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; 

            (ix)  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;

            (x)   the   Owner  is   in  compliance   with  all   applicable
                  Environmental Laws relating to the Rig, its operation and
                  management;

            (xi)  the Owner has obtained all Environmental Approvals and is
                  in compliance with all requests thereof;

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

           (xiii) 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.    In order to  induce Banks to enter  into the Credit Agreement  and to
      make the Facility available thereunder and in consideration  of other
      valuable consideration (receipt whereof is hereby acknowledged by the
      Owner) the Owner hereby covenants with the Mortgagee as follows:

      (A)   The Owner  shall pay the  full amount of all  moneys comprising
            the Obligations  as  and when  the  same shall  become due  and
            payable in accordance with the terms of the Subsidiary Guaranty
            and the other Credit Documents.

      (B)   The Owner  will  pay to  or  indemnify the  Mortgagee for  such
            additional  amounts  as may  be  necessary  in order  that  all
            payments  under this  Mortgage after  deduction of, for,  or on
            account  of  every  present  or   future  tax,  assessment  and
            governmental charge imposed  by any competent authority  in the
            State of Western Australia or Commonwealth of  Australia (or in
            such other jurisdictions to the revenue laws of which the Owner
            may for the time  being be subject) shall be no  less than such
            payments would have been had there been no such tax, assessment
            or charge.

3.    By way of security  for the performance of the  Obligations THE OWNER
      as BENEFICIAL OWNER HEREBY MORTGAGES AND  CHARGES to and in favor  of
      the Mortgagee all the Owner's interest in the Rig, including, without
      limitation, all 64 shares in the Rig, the Earnings and the Insurances
      (all of which the Owner hereby warrants to be free at the date hereof
      from any other charge or incumbrance whatsoever, other than Permitted
      Liens, if any) and  Requisition Compensation and without prejudice to
      the generality of the  foregoing THE OWNER HEREBY ASSIGNS AND  AGREES
      to assign to the Mortgagee (or  to procure to assign to the Mortgagee
      as the case may be)  the Earnings and the Insurances and  Requisition
      Compensation  as  defined  herein  PROVIDED  HOWEVER  that  any  sums
      receivable in respect of the Insurances shall be payable as follows:

      (A)   There  shall  be  paid to  the  Mortgagee  any  and  every  sum
            receivable in respect of a Total Loss.

      (B)   Unless and until Underwriters have been otherwise instructed by
            notice in  writing from the  Mortgagee, (i) any loss  under any
            insurance on the Rig  with respect to protection and  indemnity
            risks may be paid directly to the Owner to reimburse it for any
            loss, damage  or expense  incurred by  it and  covered by  such
            insurance  or to  the person to  whom any liability  covered by
            such insurance has been incurred, (ii)  in the case of any loss
            (other than a Total Loss or  a loss covered by (i) above) under
            any insurance with respect  to the Rig involving any damage  to
            the  Rig, the  Underwriters may  pay directly  for the  repair,
            salvage, liability or other charges involved or, if  the Owners
            shall have  first fully repaired  the damage and paid  the cost
            thereof, or discharged the liability or paid all of the salvage
            or other charges, then  the Underwriters may pay the Owners  as
            reimbursement therefor, provided, however,  that if such damage
            involves a  loss in excess of U.S. $1,000,000 or its equivalent
            the Underwriters  shall not  make  such payment  without  first
            obtaining the written consent thereto of the Mortgagee.

4.    It is declared and agreed that the security created by  this Mortgage
      shall  be held  by  the Mortgagee  as a  continuing security  for the
      performance of  all Obligations  under the  Credit Documents  and the
      performance  and  observance  of  and  compliance  with  all  of  the
      covenants, terms and conditions therein and herein contained and that
      the security  so created shall  not be satisfied by  any intermediate
      payment or satisfaction of any part of the amount hereby and  thereby
      secured and that the security so created shall be in  addition to and
      shall not in any  way be prejudiced or affected by  any collateral or
      other security  now or hereafter held by the Mortgagee for all or any
      part of the  moneys hereby and thereby  secured and that  every power
      and remedy given to the Mortgagee hereunder shall  be in addition to,
      and not a limitation of, any  and every other power or remedy  vested
      in the Mortgagee under  the Subsidiary Guaranty and the other  Credit
      Documents or any other  document or instrument entered  into pursuant
      to the Credit  Agreement or at law and that  all the powers so vested
      in the Mortgagee may be exercised from  time to time and as often  as
      the Mortgagee may deem expedient.

5.    The Owner further covenants with the Mortgagee and undertakes that:

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

      (ii)        The policy  or policies of  insurance shall  be issued by
                  responsible underwriters  reasonably  acceptable  to  the
                  Mortgagee, shall contain conditions, terms,  stipulations
                  and insuring covenants satisfactory to the Mortgagee, and
                  shall be  kept in full force  and effect by  the Owner so
                  long as the Obligations  shall be outstanding.   All such
                  policies, binders  and other interim  insurance contracts
                  shall be executed and issued in the name of the Owner and
                  shall, to the  extent required herein, provide  that loss
                  be payable  to the  Mortgagee for  distribution by  it to
                  itself, the Banks and  the Owner as  their interests  may
                  appear, and  shall provide for at  least ten days'  prior
                  notice to be given  to the Mortgagee by the  underwriters
                  or  association  in  the  event  of  cancellation or  the
                  failure  of the  Owner to pay  any premium or  call which
                  would suspend coverage under the policy or the payment of
                  a  claim  thereunder.    Certified  copies  of  all  such
                  policies, binders and  other interim insurance  contracts
                  shall be deposited  with the Mortgagee.   Originals shall
                  also be  provided upon the request of the Mortgagee.  The
                  Owner shall furnish to the  Mortgagee annually a detailed
                  report  signed  by  a firm  of  marine  insurance brokers
                  satisfactory  to  the   Mortgagee  as  to  the  insurance
                  maintained in  respect of the Rig, as to their opinion as
                  to the  adequacy thereof and  as to  compliance with  the
                  provisions of this Clause 5(A).

                  Unless otherwise required  by the Mortgagee by  notice to
                  the  underwriters, although  the  following  insurance is
                  payable  to  the  Mortgagee,  (i)   any  loss  under  any
                  insurance  on  the  Rig with  respect  to  protection and
                  indemnity  risks may  be paid  directly to  the  Owner to
                  reimburse it for any loss,  damage or expense incurred by
                  it and covered by such insurance or to the person to whom
                  any liability covered by such insurance has been incurred
                  and (ii)  in  the case  of any  loss (other  than a  loss
                  covered by (i)  above or by the next  following paragraph
                  of this Clause 5(A)(ii) 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  Mortgagee
                  (which consent shall not be  unreasonably withheld).  Any
                  loss  covered by  this paragraph  which  is paid  to  the
                  Mortgagee but which  might have been paid,  in accordance
                  with the provisions  of this  paragraph, directly to  the
                  Owner or others, shall be paid by the Mortgagee to, or as
                  directed by,  the Owner  and all  other payments  to  the
                  Mortgagee of losses  covered by  this paragraph shall  be
                  applied by the Mortgagee in accordance with Clause 10.01.

                  In the event of 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 Mortgagee.  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 Mortgagee.

      (iii)       In the event of an actual  or constructive Total  Loss of
                  the Rig, the Mortgagee shall retain out of  the insurance
                  payments received on account of such loss any sum or sums
                  that  shall be or become owing  to the  Secured Creditors 
                  under the Credit 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 9.

      (iv)        The  Owner  shall  comply  with  and  satisfy  all of the
                  provisions  of   any  applicable  law,  regulation,  pro-
                  clamation  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.

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

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

      (vii)       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.

      (viii)      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.

      (B)   maintain its existence as  a corporation in good  standing duly
            organized under  the laws of the State of Western Australia and
            Commonwealth of Australia;

      (C)   Not to change the name of the Rig without the Mortgagee's prior
            approval and  to keep the  Rig registered as an  Australian Rig
            and not  do or  suffer  to be  done  anything, or  omit  to  do
            anything the doing or  omission of which could or might  result
            in such  registration being  forfeited or  imperilled or  which
            could  or  might  result  in  the  Rig  being  required  to  be
            registered  otherwise  than as  an Australian  Rig  and not  to
            register the  Rig or  permit its registration  under any  other
            flag  or at any other port without the prior written consent of
            the Mortgagee.

      (D)   not without  the previous consent in  writing of the  Mortgagee
            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;

      (E)   To  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  Rig Class  +A1  Self-Elevating Drilling
            Rig) and  so as to comply  with the provisions  of the Shipping
            Registration Act 1981 (Commonwealth of Australia) and all other
            laws, regulations  and requirements  (statutory  or  otherwise)
            from time to time applicable to vessels registered in Australia
            and  to  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 not to diminish the value of the Rig;

      (F)   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 Mortgagee and  becomes on installation on
            the Rig the property of the  Owner and subject to the  security
            constituted by this Mortgage;

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

      (H)   permit  the representatives  of  the  Mortgagee or  independent
            surveyors representing  the Mortgagee 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;

      (I)   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; 

      (J)   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 Mortgagee may require;

      (K)   Promptly to furnish to the Mortgagee all such information as it
            may   from  time  to  time   require  regarding  the  Rig,  her
            employment,  position  and  engagements,  particulars  of   all
            towages  and salvages  and copies  of  all charters  and  other
            contracts for her  employment or otherwise howsoever concerning
            her.

      (L)   To notify the Mortgagee  forthwith by cable or  telex confirmed
            by letter of:

            (i)   Any  accident  to  the  Rig  involving  repairs the  cost
                  whereof will or is likely to be a Major Casualty;

            (ii)  Any occurrence in consequence whereof  the Rig has become
                  or is likely to become a Total Loss;

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

            (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;

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

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

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

      (N)   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; 

      (O)   not without  the previous  consent in writing of  the Mortgagee
            (such consent  not to  be unreasonably  withheld), put  the Rig
            into the possession of any person for the purpose of work being
            done  upon her in  an amount exceeding or  likely to exceed Two
            Million   Five   Hundred   Thousand   United   States   Dollars
            (US$2,500,000) (or the equivalent in any other currency) unless
            such person  shall first  have given  to the  Mortgagee 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;

      (P)   Reimburse the  Mortgagee promptly, with interest at the Default
            Rate,  for any  and  all expenditures  which  the Mortgagee may
            from time  to time make, lay out or  expend in  providing  such
            protection  in respect of insurance, discharge of liens, taxes,
            dues, assessments, governmental charges, fines  and   penalties
            lawfully imposed, repairs, attorneys' fees and other matters as
            the Shipowner is  obligated herein to  provide,  but  fails  to
            provide.  Such   obligation  of  the  Owner  to  reimburse  the
            Mortgagee shall  be an  additional indebtedness  due  from  the
            Owner, secured by this Mortgage, and  shall be payable  by  the
            Owner on demand.  The Mortgagee, though privileged  so  to  do,
            shall be under  no obligation to  the Owner to  make  any  such
            expenditures, nor  shall the making thereof   relieve the Owner
            of any default in that respect.

      (Q)   To  pay on  demand to the Mortgagee  (or as it  may direct) the
            amount of  all  investigation and  legal expenses  of any  kind
            whatsoever, stamp duties  (if any),  registration fees and  any
            other  charges incurred  reasonably and  in good  faith  by the
            Mortgagee  in  connection  with  the  preparation,  completion,
            enforcement  and  registration of  the  Security  Documents  or
            otherwise in connection  with the Obligations and  the security
            therefor.

      (R)   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;

      (S)   notify the Mortgagee forthwith upon:

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

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

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

      (U)   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
            Australia and  will at all  times keep the Rig  duly documented
            thereunder.

6.    (A)   The Mortgagee shall without prejudice  to its other rights  and
            powers hereunder be entitled (but not bound) at any time and as
            often as may be necessary to take any  such action as it may in
            its  discretion think  fit for  the purpose  of  protecting the
            security  created  by  the  Credit  Agreement,  the  Subsidiary
            Guaranty and other Credit Documents and each  and every expense
            or liability so incurred  by the Secured Creditors in or  about
            the protection of the security shall be repayable  to it by the
            Owner on demand  together with interest thereon  at the Default
            Rate from  the  date  whereon such  expense  or  liability  was
            incurred by  the Mortgagee until the date of actual receipt (as
            well after as before any judgment).

      (B)   Without prejudice to the generality of the foregoing:

            (i)   In every case  that the provisions of Clause  5(A) hereof
                  or any  of them shall not be complied with, the Mortgagee
                  shall be at liberty  to effect and thereafter to maintain
                  all such  insurances upon the Rig as in its discretion it
                  may think fit;

            (ii)  In the event that  the provisions of Clause 5(C) or  5(D)
                  hereof  or any  of them shall  not be complied  with, the
                  Mortgagee shall be at liberty to arrange for the carrying
                  out of  such repairs and surveys as it may deem expedient
                  or necessary;

            (iii) In the event that the provisions of Clause 5(F) hereof or
                  any of  them shall  not be  complied with, the  Mortgagee
                  shall be  at liberty to pay and discharge all such debts,
                  damages and liabilities  as are therein mentioned  and to
                  take  any  such measures  as  it  may deem  expedient  or
                  necessary  for the purpose of securing the release of the
                  Rig.

            Each  and  every  expense  or  liability  so  incurred  by  the
            Mortgagee shall be  recoverable, together with interest  at the
            Default Rate, from the Owner as provided herein.

7.    Upon  the happening of  any of the  following events (the  "Events of
      Default")  the  security  created  by   this  Mortgage  shall  become
      immediately enforceable:

      (A)   The owner does  not pay to the  Mortgagee forthwith any sum  of
            money payable under the Subsidiary Guaranty or the other Credit
            Documents.

      (B)   If the Owner is in breach of the covenants contained in Clauses
            5A, 5B, 5C, 5F, 5G, 5H, 5I, 5K, 5L, 5M, 5N or 5O.

      (C)   If the  Owner is in breach of any of the other covenants, terms
            and conditions hereof and  such breach is not remediable or  if
            it is  capable  of being  remedied,  the same  is not  remedied
            within  10  days  of  receipt  of  notice  from  the  Mortgagee
            requesting remedial action.

      (D)   It becomes  impossible or unlawful for the Owner to fulfill any
            of the covenants  and obligations  contained in the  Subsidiary
            Guaranty or  the other Credit Documents or for the Mortgagee to
            exercise  the rights  or any  of them  vested in  it under  the
            Credit Documents or otherwise.

      (E)   Anything is done or suffered or omitted to be done by the Owner
            which  in the  reasonable opinion of the  Mortgagee may imperil
            the security created  by the  Subsidiary Guaranty or the  other
            Security Documents.

      (F)   An  Event  of  Default under  the Credit  Agreement  shall have
            occurred and be continuing.

8.    Upon  the  security  created by  this  Mortgage  becoming immediately
      enforceable  pursuant to Clause 7 hereof the  Mortgagee may by notice
      of default given to the Owner declare the Obligations to be forthwith
      due and  payable and the Mortgagee shall become forthwith entitled as
      and when it may see fit to put into force and exercise all the powers
      possessed by it as mortgagee of the  Rig and chargee of the Rig,  the
      insurances and the Earnings and in particular:

      (A)   To exercise  all of the rights and remedies given to mortgagees
            by the laws of the Commonwealth of Australia and the States and
            Territories  of Australia or  other applicable  laws, including
            the right to cause the Rig to be arrested and  sold by judicial
            authority.

      (B)   To take possession of the Rig.

      (C)   To  require  that  all policies,  contracts  and  other records
            relating to the Insurances or any of them (including details of
            and correspondence concerning outstanding  claims) be forthwith
            delivered  to  such   adjusters  and/or  brokers  and/or  other
            insurers as the Mortgagee may nominate.

      (D)   To  collect, recover, compromise and give  a good discharge for
            all claims  then outstanding  or thereafter  arising under  the
            Insurances and to  take over  or institute (if necessary  using
            the  name of  the  Owner) all  such  proceedings  in connection
            therewith as the  Mortgagee in  its absolute discretion  thinks
            fit  and  to permit  any  brokers  through whom  collection  or
            recovery  is  effected  to  charge  the  usual  brokerage  fees
            therefor.

      (E)   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 by  public auction or private  contract at
            home or  abroad and  upon such  terms as  the Mortgagee  in its
            absolute discretion may  determine with  power to postpone  any
            such sale and without being answerable for  any loss occasioned
            by such sale or resulting from postponement thereof and  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)   Pending sale  of the Rig to manage, insure, maintain and repair
            the  Rig and to employ or lay up the Rig in such manner and for
            such period as  the Mortgagee in its  absolute discretion deems
            expedient and for the purposes aforesaid the Mortgagee shall be
            entitled  to  do all  acts and  things incidental  or conducive
            thereto  and  in  particular to  enter  into  such arrangements
            respecting the  Rig, her  insurance,  management,  maintenance,
            repair, classification and employment in all respects as if the
            Mortgagee  were  the  owner  of  the   Rig  and  without  being
            responsible for any loss thereby incurred.

      (H)   To recover  from the Owner on demand any  such losses as may be
            incurred by the Mortgagee in or about the exercise of the power
            vested  in  the  Mortgagee   under  sub-clause (G)  above  with
            interest thereon  at the Default  Rate from the date  when such
            losses were  incurred by the Mortgagee until the date of actual
            receipt (as well after as before any judgment).

      (I)   To recover  from the Owner on demand all expenses, payments and
            disbursements  incurred  by  the  Mortgagee   in  or  about  or
            incidental to the exercise by it of any of the powers aforesaid
            together with interest  thereon at  the Default  Rate from  the
            date  when  such  expenses,  payments   or  disbursements  were
            incurred by  the Mortgagee until the date of actual receipt (as
            well after as before any judgment).

PROVIDED ALWAYS that  upon any sale of the Rig or any  share therein by the
Mortgagee pursuant to sub-clause (F) above the purchaser shall not be bound
to see or inquire  whether the Mortgagee's power of sale has  arisen in the
manner herein provided and the sale of the Rig shall be deemed to be within
the power  of the  Mortgagee  and the  receipt  of the  Mortgagee  for  the
purchase  money shall effectively discharge the purchaser thereof who shall
not be concerned with the manner of application  of the proceeds of sale or
be in any way answerable therefor.

9.    Upon  the  security  created by  this  Mortgage  becoming immediately
      enforceable  pursuant  to clause  7  hereof,  the Mortgagee  shall be
      entitled  to appoint  a receiver or  manager or receiver  and manager
      (the  "Receiver") of  the Rig  and  the freights,  hire,  insurances,
      revenues, income  and profits due or  to become due  and arising from
      the operation  of the Rig.   Any  Receiver so appointed shall  be the
      agent of  the Owner unless  at any  time otherwise  specified by  the
      Mortgagee.    The   Owner  shall  be   solely  responsible   for  the
      remuneration, costs  and expenses of the Receiver.  The Mortgagee may
      at  any time terminate the appointment  of the Receiver.  In addition
      to all the rights and powers conferred on  the Receiver at law and in
      equity, a Receiver shall  be entitled to exercise  all of the  powers
      and rights  conferred upon the  Mortgagee under this Mortgage  or any
      other Credit Document.

10.   (a)   All moneys received by the  Mortgagee in respect of any sale by
            it of the Rig or any share therein or otherwise pursuant to the
            provisions of this Mortgage shall be place to pay or retain all
            such  payments, disbursements,  expenses and  losses whatsoever
            (together with interest thereon as provided herein) as may have
            been incurred by the Mortgagee in or about or incidental to the
            exercise  by  the  Mortgagee  of  the  powers  applied  in  the
            following manner:

            (i)   first, to the payment  of all amounts owing the Mortgagee
            of the type described in clauses (ii) and (iii) of Recital 5;

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

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

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

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

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

11.   No delay  or omission of the Mortgagee to exercise any right or power
      vested  in  it under  the  Subsidiary Guaranty  or  the other  Credit
      Documents  shall impair  such right  or power  or be  construed  as a
      waiver of or an acquiescence in any default by the Owner and in event
      of the  Mortgagee at  any time agreeing  to waive  any such  right or
      power such waiver shall be revocable by the Mortgagee at any time and
      the right or power  shall thenceforth be again exercisable as  though
      there had been no such waiver.

12.   The Mortgagee shall be  entitled at any time and  as often as may  be
      expedient to delegate all or any of the powers and discretions vested
      in  it  by the  Subsidiary  Guaranty or  the  other Credit  Documents
      (including the power vested in it  by virtue of Clause 14 hereof)  in
      such manner  upon such terms and to such  persons as the Mortgagee in
      its absolute discretion may think fit.

13.   (A)   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 rights  under
                  this Mortgage of the Mortgagee; 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.

      (B)   Without limiting  the foregoing  Clause 13A,  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 governmental authorities relating to Hazardous Materials at,
            or discharged from the Rig.

      (C)   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 Mortgagee, when  converted into the contractual
            currency at the rate of exchange, falls short of the amount due
            under or  in connection  with this  Mortgage, the  Owner, as  a
            separate  and independent obligation, shall  indemnify and hold
            harmless the Mortgagee  against the  amount of such  shortfall.
            For the purposes of this Clause C, "rate of exchange" means the
            rate at which the Mortgagee is able on the date of such payment
            (or, if  it is not  practicable for the Mortgagee)  to purchase
            the contractual  currency with the payment currency on the date
            of such payment, at the rate  of exchange as soon afterwards as
            is practicable  for the  Mortgagee to  do so)  to purchase  the
            contractual currency with  the payment currency and  shall take
            into  account any  premium  and  other costs  of exchange  with
            respect thereto.

14.   (A)   The Owner  hereby irrevocably  appoints  the Mortgagee  as  its
            attorney-in-fact for the duration of the Credit Facility Period
            for the purpose of  doing in its name all acts  which the Owner
            itself  could do  in  relation  to  the  Rig,  the  Requisition
            Compensation  and the  Insurances  and  the  Earnings  PROVIDED
            HOWEVER that  such  power shall  not  be exercisable  by or  on
            behalf of the Mortgagee  unless an Event of Default shall  have
            occurred.

      (B)   The exercise of  such power by  or on behalf  of the  Mortgagee
            shall not  put any person  dealing with the Mortgagee  upon any
            inquiry as  to whether  an Event  of Default  has occurred  nor
            shall  such person be  in any  way affected  by notice  that an
            Event of  Default  has not  occurred  and the  exercise by  the
            Mortgagee of  such power  shall be  conclusive evidence  of its
            right to exercise the same.

15.   The Owner  hereby further undertakes  at its own expense  to execute,
      sign,  perfect, do  and  (if required)  register  every  such further
      assurance, document, act or thing as in the opinion of  the Mortgagee
      may  be necessary  or desirable for  the purpose of  more effectually
      mortgaging  and  charging   the  Rig   or  perfecting  the   security
      constituted  by  the  Subsidiary  Guaranty  and  the  other  Security
      Documents.

16.   The  Owner covenants  with the Mortgagee  that it will  indemnify the
      Mortgagee and hold it harmless against any loss or damage or expenses
      which  consequent  upon a  judgment  being  obtained  or enforced  in
      respect of the non-payment  by the Owner of any amount  due under the
      Subsidiary Guaranty and the other Credit Documents  arises or results
      from any variation in rates of exchange between U.S. Dollars  and the
      currency  in which such judgment was obtained between the date of the
      said amounts  becoming due (or  the date of  the said judgment  being
      obtained as  the case may be) and the  date of actual payment thereof
      and this indemnity shall  not be affected by  any time or  indulgence
      granted to  the Owner from  time to  time and shall continue  in full
      force  and  effect  notwithstanding  any  judgment in  favor  of  the
      Mortgagee.

17.   (A)   This Mortgage shall  be construed and enforceable  according to
            the laws of the Australian Capital Territory, Australia.

      (B)   The  Owner agrees  that the  Mortgagee shall  have liberty  but
            shall  not be obliged to take  any proceedings in the Courts of
            any  country  to   protect  or  enforce  the   security  hereby
            constituted or  to enforce  any  provisions of  the  Subsidiary
            Guaranty and the other  Credit Documents or to  recover payment
            of the Obligations and  for the purpose of any proceedings  for
            the enforcement of the Subsidiary Guaranty or the other  Credit
            Documents  the Owner hereby submits  to the jurisdiction of the
            Courts of any country of the choice of the Mortgagee.

18.   All communications  provided for or permitted  hereunder shall be  in
      writing or  by telex  or telefax  confirmed in writing  and shall  be
      delivered, air mailed, telexed or telefaxed to the addresses given in
      Section 12.03 of the Credit Agreement:

19.   In accordance with section 282 of the Corporation Law (as  set out in
      section  82 of  the Corporation  Act  1989 (Western  Australia)), the
      maximum prospective liability secured by this Mortgage will be  (U.S.
      $150,000,000) One Hundred  Fifty Million  United States Dollars,  but
      this clause  shall not  limit the  amount secured  by or  recoverable
      under this Mortgage or any other Credit Document.
 
      IN WITNESS  WHEREOF Reading  & Bates (A)  Pty. Ltd.  has caused  this
Mortgage to be executed by on the day and year first above written.


THE COMMON SEAL OF            )
READING & BATES (A)           )
PTY LTD (ACN                  )
064 532 252) was              )
affixed by the authority of   )
the Board of Directors in the )
presence of:                  )


                                                                           
_______________________             _______________________         
Signature of Secretary/Director     Signature of Director


                                                                           
_______________________             _______________________
Name of Secretary/Director          Name of Director


Accepted and Agreed:

CHRISTIANIA BANK OG KREDITKASSE,
   NEW YORK BRANCH


By: ____________________________________
    Title:




                    SCHEDULE I hereinbefore referred to
                    -----------------------------------


      The offshore drilling rig "RON TAPPMEYER" of the following dimensions
and tonnages:

                  Tons Gross approx.             11,455
                  Tons Net approx.                3,436

having  Official  Number  855213  at  the Registry  of  Ships  in Canberra,
Australia.



                                SCHEDULE II

                 AUSTRALIAN SHIPPING REGISTRATION ACT 1981

Particulars under section 38(2)


1.    Name and Official Number:

      "RON TAPPMEYER", Australian Official No. 855213.

2.    The number of shares affected - 64

3.    Name and address of the mortgagor

            Reading & Bates (A) Pty. Ltd., a company organized and existing
            under  the  laws of  the  State of  Western  Australia and  the
            Commonwealth of Australia  and having its registered  office at
            66 Kings Park Road, West Perth, Western Australia.

4.    Name and address of the mortgagee:

            Christiania Bank og Kreditkasse,  New York Branch, 11 West 42nd
            Street, 7th Floor, New York, NY  10036


Signed by READING & BATES (A) PTY. LTD. by__________________________________
                                       Its:  Attorney-in-Fact



                               ACKNOWLEDGMENT


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



      On  the   ___  day  of   April,  1996,  before  me   personally  came
________________, to me  known, who being by  me duly sworn did  depose and
say  that  he  resides   at  ___________________________;  that  he  is  an
__________________  for READING  & BATES  (A)  PTY. LTD.,  the  corporation
described in and which executed the above First Priority Mortgage; and that
he  signed his  name thereto pursuant  to authority  granted to him  by the
Board of Directors of said corporation.



                                 _________________________________
                                            Notary Public


                               ACKNOWLEDGMENT

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


      On  the   ___  day  of   April,  1996,  before  me   personally  came
_________________, to  me known, who being by me  duly sworn did depose and
say that she resides at  __________________________________; that she is an
________________  for  CHRISTIANIA  BANK  OG KREDITKASSE,  the  corporation
described in and which executed the above First Priority Mortgage; and that
she signed her  name thereto pursuant  to authority granted  to her  by the
Board of Directors of said corporation.



                                   _________________________________
                                          Notary Public