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                            UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549


                              FORM 10-Q

(Mark One)
 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
     OF THE SECURITIES EXCHANGE ACT OF 1934
     For the quarterly period ended September 30, 1998
                                  or
 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
     OF THE SECURITIES EXCHANGE ACT OF 1934


                    Commission file number 1-13729

                        R&B FALCON CORPORATION

        (Exact name of registrant as specified in its charter)

              Delaware                             76-0544217
     (State or other jurisdiction             (I.R.S. Employer
   of incorporation or organization)         Identification No.)

               901 Threadneedle, Houston, Texas  77079
          (Address of principal executive offices)(Zip Code)


                            (281) 496-5000
        (Registrant's telephone number, including area code)

                                 NONE
(Former name, former address and former fiscal year, if changed  since
last report.)



Indicate  by  check  mark whether the registrant  (1)  has  filed  all
reports  required to be filed by Section 13 or 15(d) of the Securities
Exchange  Act  of  1934 during the preceding 12 months  (or  for  such
shorter period that the registrant was required to file such reports),
and  (2) has been subject to such filing requirements for the past  90
days.  Yes X            No___


      NUMBER OF SHARES OUTSTANDING OF REGISTRANT'S COMMON STOCK
                  AT NOVEMBER 1, 1998 :  165,348,558


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                Forward-Looking Statements and Assumptions

     This  Quarterly  Report  on Form 10-Q may contain  or  incorporate  by
reference   certain  forward-looking  statements,  including  by   way   of
illustration  and  not  of limitation, statements  relating  to  liquidity,
revenues,  expenses,  margins and contract rates and  terms.   The  Company
strongly  encourages readers to note that some or all of  the  assumptions,
upon  which  such  forward-looking statements are  based,  are  beyond  the
Company's  ability to control or estimate precisely, and may in some  cases
be  subject  to rapid and material changes.  Such assumptions  include  the
contract  status of the Company's offshore units, general market conditions
prevailing  in  the  marine drilling industry (including  daily  rates  and
utilization)  and  various  other  trends  affecting  the  marine  drilling
industry,  including  world  oil  and  gas  prices,  the  exploration   and
development  programs  of  the  Company's customers,  the  actions  of  the
Company's competitors and economic conditions generally.


                    PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Company or Group of Companies for Which Report is Filed:

                 R&B Falcon Corporation and Subsidiaries

      The  financial statements for the three and nine month periods  ended
September  30, 1998 and 1997, include, in the opinion of the  Company,  all
adjustments (which only consist of normal recurring adjustments)  necessary
to present fairly the financial position and results of operations for such
periods.   The  financial data for the three and nine month  periods  ended
September  30,  1998 included herein have been reviewed in accordance  with
standards  established  by  the  American  Institute  of  Certified  Public
Accountants  by  Arthur Andersen LLP, the registrant's  independent  public
accountants,  whose report is included herein.  Results of  operations  for
the  three  and  nine  month  periods ended  September  30,  1998  are  not
necessarily indicative of results of operations which will be realized  for
the year ending December 31, 1998.  The financial statements should be read
in conjunction with the Company's Form 10-K for the year ended December 31,
1997.
                                     
                                     
                                     
                               R&B FALCON CORPORATION
                                  AND SUBSIDIARIES

                             CONSOLIDATED BALANCE SHEET
                                    (in millions)
                                     
                                                 SEPTEMBER 30, DECEMBER 31,
                                                     1998         1997
                                                 ------------  -----------
                                                  (unaudited)
ASSETS
------
CURRENT ASSETS:
  Cash and cash equivalents                        $    67.7    $    55.5
  Short-term investments                                82.0         45.4
  Accounts receivable:
    Trade, net                                         189.6        168.0
    Other                                               41.2         22.4
    Materials and supplies inventory                    28.4         15.2
    Other current assets                                19.0         14.3
                                                   ---------    ---------
      Total current assets                             427.9        320.8
                                                   ---------    ---------
PROPERTY AND EQUIPMENT:
  Drilling                                           2,612.8      1,926.5
  Other                                                177.9         82.8
                                                   ---------    ---------
      Total property and equipment                   2,790.7      2,009.3
  Accumulated depreciation                            (490.3)      (426.3)
                                                   ---------    ---------
      Net property and equipment                     2,300.4      1,583.0
                                                   ---------    ---------
DEFERRED CHARGES AND OTHER ASSETS                       37.9         29.2
                                                   ---------    ---------
TOTAL ASSETS                                       $ 2,766.2    $ 1,933.0
                                                   =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
  Short-term obligations                           $   113.6    $      -
  Long-term obligations due within one year             24.0        135.2
  Accounts payable - trade                              47.4         53.6
  Accrued liabilities                                  161.3        147.2
                                                   ---------    ---------
      Total current liabilities                        346.3        336.0
     
LONG-TERM OBLIGATIONS                                1,374.6        692.2
 
OTHER NONCURRENT LIABILITIES                            37.6         38.6
 
DEFERRED INCOME TAXES                                  103.7         76.8
 
NET LIABILITIES OF DISCONTINUED OPERATIONS               1.3          5.8
                                                   ---------    --------- 
      Total liabilities                              1,863.5      1,149.4
                                                   ---------    ---------
COMMITMENTS AND CONTINGENCIES
 
MINORITY INTEREST                                       59.7         55.6
                                                   ---------    --------- 
STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value                           1.7          1.6
  Capital in excess of par value                       658.1        631.4
  Retained earnings                                    184.0         96.3
  Other                                                  (.8)        (1.3)
                                                   ---------    ---------
      Total stockholders' equity                       843.0        728.0
                                                   ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $ 2,766.2    $ 1,933.0
                                                   =========    =========


The accompanying notes are an integral part of the consolidated financial
statements.



                         R&B FALCON CORPORATION
                            AND SUBSIDIARIES

                  CONSOLIDATED STATEMENT OF OPERATIONS
                 (in millions except per share amounts)
                              (unaudited)

                                     THREE MONTHS ENDED   NINE MONTHS ENDED
                                        SEPTEMBER 30,       SEPTEMBER 30,
                                     ------------------   -----------------
                                       1998      1997       1998      1997
                                     -------   -------    -------   -------
OPERATING REVENUES:
  Deepwater                          $ 101.0   $  92.7    $ 298.1   $ 253.3
  Shallow water                         88.8      86.8      306.0     234.4
  Inland water                          53.7      65.2      199.8     178.7
                                     -------   -------    -------   -------
    Total operating revenues           243.5     244.7      803.9     666.4
                                     -------   -------    -------   -------
COSTS AND EXPENSES:
  Deepwater                             52.1      32.5      139.2      93.2
  Shallow water                         39.5      40.2      119.2     115.7
  Inland water                          42.1      34.9      126.2      98.2
  Cancellation of conversion projects   85.8        -        85.8        -
  Depreciation                          24.1      21.6       68.1      60.2
  General and administrative            15.2      11.9       44.6      36.0
  Merger expenses                         -         -        (1.0)       -
                                     -------   -------    -------   -------
    Total costs and expenses           258.8     141.1      582.1     403.3
                                     -------   -------    -------   -------

OPERATING INCOME (LOSS)                (15.3)    103.6      221.8     263.1
                                     -------   -------    -------   -------
OTHER INCOME (EXPENSE):
  Interest expense, net of
    capitalized interest               (13.9)    (11.9)     (43.0)    (32.4)
  Interest income                        2.4       1.3        7.0       4.4
  Other, net                             (.3)       .2        (.1)      (.1)
                                     -------   -------    -------   -------
    Total other income (expense)       (11.8)    (10.4)     (36.1)    (28.1)
                                     -------   -------    -------   -------
INCOME (LOSS) FROM CONTINUING
  OPERATIONS BEFORE INCOME TAX
  EXPENSE, MINORITY INTEREST AND
  EXTRAORDINARY LOSS                   (27.1)     93.2      185.7     235.0
                                     -------   -------    -------   -------
INCOME TAX EXPENSE (BENEFIT):
  Current                               16.5      14.4       28.9      33.8
  Deferred                             (26.2)      (.9)      38.9      11.7
                                     -------   -------    -------   -------
    Total income tax
      expense (benefit)                 (9.7)     13.5       67.8      45.5
                                     -------   -------    -------   -------
MINORITY INTEREST                       (3.1)     (2.5)      (8.2)     (6.9)
                                     -------   -------    -------   -------
INCOME (LOSS) FROM CONTINUING
  OPERATION BEFORE
  EXTRAORDINARY LOSS                   (20.5)     77.2      109.7     182.6
LOSS FROM DISCONTINUED OPERATIONS         -      (42.2)        -      (64.7)
EXTRAORDINARY LOSS, NET OF
  TAX BENEFIT                             -         -       (22.0)       -
                                     -------   -------    -------   -------
NET INCOME (LOSS)                    $ (20.5)  $  35.0    $  87.7   $ 117.9
                                     =======   =======    =======   =======
NET INCOME (LOSS) PER COMMON SHARE:
  Basic:
    Continuing operations            $  (.12)  $   .47    $   .66   $  1.11
    Discontinued operations              -        (.26)       -        (.39)
    Extraordinary loss                   -         -         (.13)      -
                                     -------   -------    -------   -------
      Net income (loss)              $  (.12)  $   .21    $   .53   $   .72
                                     =======   =======    =======   =======
  Diluted:   
    Continuing operations            $  (.12)  $   .47    $   .66   $  1.10
    Discontinued operations              -        (.25)       -        (.39)
    Extraordinary loss                   -         -         (.13)      -
                                     -------   -------    -------   -------
      Net income (loss)              $  (.12)  $   .22    $   .53   $   .71
                                     =======   =======    =======   =======
WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING:
    Basic                              165.3     164.3      165.2     164.0
                                     =======   =======    =======   =======
    Diluted                            166.8     167.8      166.4     166.3
                                     =======   =======    =======   =======

The accompanying notes are an integral part of the consolidated financial
statements.



                        R&B FALCON CORPORATION
                           AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF CASH FLOWS
                       (in millions)(unaudited)

                                                         NINE MONTHS ENDED
                                                            SEPTEMBER 30,
                                                        -------------------
                                                          1998       1997
                                                        --------   --------
CASH FLOWS FROM OPERATING ACTIVITIES:     
 Net  income                                            $   87.7   $  117.9
 Adjustments to reconcile net income to net cash
 provided by operating activities:
   Depreciation                                             68.1      60.2
   Deferred income taxes                                    38.9      26.8
   Gain on dispositions of property and equipment           (3.0)     (3.4)
   Cancellation of conversion projects                      85.8        -
   Recognition of deferred expenses                          9.2       4.0
   Deferred compensation                                      -        5.8
   Minority interest in income of
     consolidated subsidiaries                               8.2       6.9
   Loss from discontinued operations                          -       64.7
   Extraordinary loss, net of tax benefit                   22.0        -
   Changes in assets and liabilities:
     Accounts receivable, net                              (40.4)    (41.6)
     Materials and supplies inventory                      (13.9)     (2.4)
     Deferred   charges and other assets                   (21.7)    (16.8)
     Accounts payable - trade                              (16.5)     (7.1)
     Accrued liabilities                                    (1.7)     (5.0)
     Accrued interest                                       23.8        .9
     Income taxes                                           (5.4)      5.7
     Other, net                                             (.6)       2.8
                                                       --------   --------
       Net cash provided by operating activities          240.5      219.4
                                                       --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Dispositions of property and equipment                    3.7        8.4
  Purchases of property and equipment                    (845.9)    (361.0)
  Purchase of short-term investments                      (36.6)     (19.1)
  Increase in investments in and advances to
    unconsolidated investees                                 -       (48.4)
                                                       --------   --------
       Net cash used in investing activities             (878.8)    (420.1)
                                                       --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (payments on) proceeds from revolving
    credit facilities                                    (222.0)     157.0
  Increase in short-term borrowings                       113.6         -
  Proceeds from long-term obligations                   1,094.0       83.0
  Principal payments on long-term obligations            (303.2)     (46.7)
  Premium paid on debt extinguishment                     (25.1)        -
  Distribution to minority shareholders
    of consolidated subsidiaries                           (4.0)        -
  Other                                                     1.7        4.4
                                                       --------   --------
       Net cash provided by financing activities          655.0      197.7
                                                       --------   --------
CASH USED IN DISCONTINUED OPERATIONS                       (4.5)     (70.7)
                                                       --------   --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS       12.2      (73.7)
                  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD           55.5      127.8
                                                       --------   -------- 
CASH AND CASH EQUIVALENTS AT END OF PERIOD             $   67.7   $   54.1
                                                       ========   ========
Supplemental Cash Flow Disclosures:
  Interest paid                                        $   44.4   $   37.3
  Income taxes paid                                    $   29.5   $    9.9
  Purchase of property and equipment in
    exchange for debt or equity                        $   35.5   $    8.0


The accompanying notes are an integral part of the consolidated financial
statements.


                            R&B FALCON CORPORATION
                               AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)


A)   SIGNIFICANT ACCOUNTING POLICIES

          PROPERTY AND EQUIPMENT - In the first quarter of 1998, the Company
     had  an independent appraiser evaluate the expected useful lives of its
     marine  units  and, based on such appraisal, the Company  extended  the
     useful  lives  of  its marine units effective January  1,  1998.   Such
     change  in  estimate resulted in an approximate $15.6 million reduction
     in depreciation expense for the nine months ended September 30, 1998.
          
           NEWLY  ISSUED ACCOUNTING STANDARDS - In June 1997,  Statement  of
     Financial Accounting Standards No. 130, Reporting Comprehensive  Income
     ("SFAS  130") was issued.  SFAS 130 establishes standards for reporting
     and display of comprehensive income and its components in a full set of
     general  purpose  financial statements.  Comprehensive  income  is  the
     total  of  net  income and all other non-owner changes in  equity.  The
     Company  had no non-owner changes in equity during the three  and  nine
     month  periods  ended  September 30, 1998 and 1997  and  therefore,  no
     reporting and display of comprehensive income was required.
     
          In June 1998, Statement of Financial Accounting Standards No. 133,
     Accounting  for  Derivative Instruments and Hedging  Activities  ("SFAS
     133")  was  issued.  SFAS  133  establishes  accounting  and  reporting
     standards requiring that every derivative instrument be measured at its
     fair  value,  recorded  in the balance sheet  as  either  an  asset  or
     liability and that changes in the derivative's fair value be recognized
     currently in earnings. SFAS 133 is effective for fiscal years beginning
     after June 15, 1999. The Company has not yet quantified the impacts  of
     adopting SFAS 133 on its financial statements nor has it determined the
     timing of its adoption.
     
          CAPITALIZED INTEREST - The Company capitalizes interest applicable
     to the construction and significant upgrades of its marine equipment as
     a cost of such assets.  Interest capitalized for the three months ended
     September  30,  1998  and  1997 was $12.2  million  and  $2.3  million,
     respectively and for the nine months ended September 30, 1998 and  1997
     was  $27.5 million and $6.8 million, respectively. Interest capitalized
     is  shown  net  of  interest expense in the Consolidated  Statement  of
     Operations.
          
          EXTRAORDINARY  LOSS - In the second quarter of 1998,  the  Company
     incurred an extraordinary loss of $22.0 million, after a tax benefit of
     $11.9  million,  due  to the premium payments required  for  the  early
     extinguishment of debt obligations and the expense of related  deferred
     debt issuance costs (see Note C).
          
          RECLASSIFICATION   -   Certain  prior  period   amounts   in   the
     consolidated   financial   statements  have   been   reclassified   for
     comparative purposes.  Such reclassifications had no effect on the  net
     income (loss) or the overall financial condition of the Company.

B)   SHORT-TERM OBLIGATIONS

          In  February  1998,  a subsidiary of the Company  entered  into  a
     $150.0  million short-term credit facility for the construction of  the
     "DEEPWATER MILLENIUM" and repayment of that facility was guaranteed  by
     a  number  of other subsidiaries.  The facility bears interest  at  the
     London Interbank Offered Rate ("LIBOR") plus .6% and is due in December
     1998.   In  April  1998,  the facility was amended  to  substitute  the
     Company as the sole guarantor and to increase the interest rate  margin
     to .75%.
          
C)   LONG-TERM OBLIGATIONS
                                                              (in millions)
                                                              -------------
          Debt obligations at December 31, 1997                 $   827.4
           Proceeds from debt offering (1)                        1,094.0
           Proceeds from new credit facility (2)                    260.0
           Net payments on retired credit facilities (2)           (482.0)
           Payments on debt obligations other
             than credit facilities (3)                            (303.1)
           Other                                                      2.3
                                                                ---------
          Debt obligations at September 30, 1998                  1,398.6
           Less long-term obligations due within one year           (24.0)
                                                                ---------
          Long-term obligations at September 30, 1998           $ 1,374.6
                                                                =========
     
     (1)  In April 1998, the Company issued four series of senior notes with
          an  aggregate  principal amount of $1.1 billion (the  "New  Senior
          Notes").  As  a  result,  the Company  received  net  proceeds  of
          approximately $1,082.0 million after deducting estimated  offering
          related  expenses. The New Senior Notes bear interest  at  varying
          rates  from 6.5% to 7.375%, are payable semiannually on  April  15
          and October 15, and mature at varying times from 2003 to 2018. The
          New Senior Notes are unsecured obligations of the Company, ranking
          pari  passu in right of payment with all other existing and future
          senior unsecured indebtedness of the Company. The Company used the
          proceeds to repay existing indebtedness of $874.4 million and  the
          remainder  will be used for planned capital expenditures,  working
          capital and other general corporate purposes. As a result  of  the
          repayment  of  existing  indebtedness,  the  Company  incurred  an
          extraordinary  loss of $22.0 million, net of tax,  in  the  second
          quarter of 1998.
     
     (2)  In  April 1998, the Company retired two existing bank group credit
          facilities aggregating $615.0 million (of which $600.0 million had
          been  drawn),  and  entered  into  a new  $500.0 million unsecured
          revolving credit facility agreement with a syndicate of banks. The
          new facility matures April 24, 2002,  bears interest at LIBOR plus
          .75%, and ranks pari passu in right of payment with the New Senior
          Notes.
     
     (3)  On March 23, 1998, the Company offered to redeem its 9 3/4 % Senior
          Notes due 2001, its 8 7/8 % Senior Notes due 2003 and its  12 1/2 %
          Subordinated Notes due 2005  (collectively  the  "Old  Notes"). The
          aggregate principal amount of the  outstanding Old Notes was $280.0
          million and on April 20, 1998,  $274.4  million in principal amount
          of  Old  Notes  was  repaid  from proceeds from the sale of the New
          Senior Notes.

D)   COMMITMENTS AND CONTINGENCIES

          CAPITAL  EXPENDITURES - During the fourth quarter of 1998  through
     2000, the Company expects to spend approximately $1.4 billion to expand
     and  upgrade  its operating rig fleet.  Approximately $1.2  billion  of
     this  total  will be expended in connection with the expansion  of  the
     Company's  deepwater  rig  fleet.  These amounts  exclude  construction
     commitments  on the "DEEPWATER FRONTIER".  The "DEEPWATER FRONTIER"  is
     being  constructed for a joint venture in which the Company owns a  60%
     interest  and  the Company's portion of the project is expected  to  be
     funded  through working capital and project financing which is expected
     to be provided by a third party on a limited recourse basis.
     
          Based on projected cash flows, the Company estimates that in order
     to  fulfill  its obligations on its construction projects, it  will  be
     required  to obtain in the fourth quarter of 1998 or first  quarter  of
     1999   significant  incremental  financing  in  addition  to  currently
     committed vendor and shipyard financing.
          
          The Company is currently contemplating three project financings to
     meet a portion of its cash requirements.  The first is an approximately
     $260.0 million financing in the form of a synthetic lease that would be
     collateralized  by  the  drillship "DEEPWATER  FRONTIER"  and  drilling
     contract revenues from such drillship.  Proceeds of such financing,  if
     obtained, would be used in part to repay an interim financing facility,
     under  which  $160.0 million had been borrowed at September  30,  1998.
     The foregoing interim loan has been made to a limited liability company
     which  will operate the "DEEPWATER FRONTIER" and which is owned 60%  by
     the Company and 40% by Conoco.  The Company has guaranteed repayment of
     60% of this interim loan. The second financing being contemplated is an
     approximately   $250.0  million  project  financing   that   would   be
     collateralized by the semisubmersible "RBS8M" (formerly the "RBS6"), as
     well  as  the  drilling contract revenues from  such  rig.   The  third
     financing  involves the "DEEPWATER MILLENIUM" where as the  Company  is
     contemplating  a  $200.0 million project financing.  Proceeds  of  such
     financing, if obtained, would be used in part to repay a $150.0 million
     interim  financing facility of which $113.6 million had been  drawn  at
     September 30, 1998.
          
          In  addition  to the above-described debt financings, the  Company
     intends to make a public offering of trust preferred securities in  the
     fourth  quarter  of  1998 in an amount up to $300.0 million.   However,
     there is no assurance that this offering can be completed.
          
          The  Company currently believes it will be able to consummate such
     financings.  However, there is no assurance that such financings can be
     obtained,  or  if  obtained,  that they will  be  on  favorable  terms.
     Financial  markets  have been unsettled in recent  months,  and  credit
     availability  has been materially limited.  Further, the implementation
     of  the  contemplated debt financings will require the approval of  the
     Company's  bank lenders, and there is no assurance these  lenders  will
     approve  any additional debt financings.  The inability of the  Company
     to  obtain  the financing required for the construction projects  would
     have  a  material  adverse effect on the Company.  In such  event,  the
     Company may have to sell assets or terminate or suspend one or more  of
     the  construction projects.  Termination or suspension of a project may
     subject  the  Company  to claims for penalties  or  damages  under  the
     construction  contracts or drilling contracts for  the  rigs  that  are
     being constructed.
          
          The Company's construction and upgrade projects are subject to the
     risks  of  delay  and cost overruns inherent in any large  construction
     project,  including  shortages  of  equipment,  unforeseen  engineering
     problems,  work  stoppages,  weather interference,  unanticipated  cost
     increases  and  shortages of materials or skilled  labor.   Significant
     cost overruns or delays would adversely affect the Company's liquidity,
     financial  condition,  and results of operations.   Delays  could  also
     result  in  penalties  under,  or  the termination  of,  the  long-term
     contracts  under  which the Company plans to operate these  rigs.   The
     currently  scheduled delivery dates for the "PEREGRINE IV",  "PEREGRINE
     VII",  and "FALCON 100" are later than the commencement date under  the
     initial drilling contracts for such drillships.
          
          Based  upon  the  currently  estimated  delivery  dates  for   the
     "PEREGRINE IV", and "FALCON 100", the Company will be subject  to  late
     delivery    penalties   under   the   applicable   drilling   contracts
     (approximately $41,500 per day, up to a maximum of approximately  $34.8
     million,   for the  "PEREGRINE IV", and approximately $26,500 per  day,
     up to a maximum of approximately $13.3 million,  for the "FALCON 100").

E)   DISCONTINUED OPERATIONS

          In  March  1998,  the Company decided to divest its  oil  and  gas
     segment,  and  expects such divestiture to occur by  March  1999.   The
     Company's  oil and gas segment has been accounted for as a discontinued
     operation.
          
          As  of  November  1,  1998, the Company had not  entered  into  an
     arrangement  or  contract to divest its oil and gas  segment.   If  the
     Company  does not enter into an arrangement or contract to  divest  its
     oil  and  gas  segment  by March 1999 the Company will  reclassify,  in
     accordance with generally accepted accounting principles, its  oil  and
     gas  segment  as  a  continuing operation.  It is still  the  Company's
     intention to divest its oil and gas segment.
          
          Oil  and gas assets held for sale at September 30, 1998 were $52.5
     million  and  related  liabilities totaled $53.8 million,  including  a
     $48.8  million  reserve for losses on ultimate disposal and  operations
     until disposal. There were no revenues from the discontinued operations
     during  the three and nine month periods ended September 30,  1998  and
     1997.  Expenses  incurred from the discontinued operations  during  the
     three  months ended September 30, 1998 and 1997 were $21.2 million  and
     $42.2 million, respectively and for the nine months ended September 30,
     1998 and 1997 were $30.0 million and $64.7 million, respectively.  Such
     expenses  for  1998  were  applied against the reserve  established  in
     connection with the discontinuance of the oil and gas segment.
          
          In  1998, the Company entered into a letters of intent to  perform
     development  operations  to earn interests in oil  and  gas  properties
     owned  by  third  parties. The cost of such development  operations  is
     estimated at $69.0 million.

F)   CANCELLATION OF CONVERSION PROJECTS

          In the third quarter of 1998, the Company cancelled the "PEREGRINE
     VI" and the "PEREGRINE VIII" conversion projects. The drilling contract
     on  the "PEREGRINE VIII" was terminated on September 24, 1998, and  the
     drilling contract on the "PEREGRINE VI" will by its terms terminate  on
     January 1, 1999. Both terminations are without prejudice to any  rights
     of  the parties existing as of the date of the termination. The Company
     believes  that  based  on  the obligations of  the  parties  under  the
     contracts,  provisions  of  the contracts  that  preclude  recovery  of
     indirect  or  consequential damages, and projected rig availability  in
     the  offshore drilling industry, the Company will not have any material
     liability under these drilling contracts as a result of the termination
     thereof.  The  contracts  with  the  shipyard  for  conversion  of  the
     "PEREGRINE  VI"  and  the "PEREGRINE VIII" have been  cancelled.  As  a
     result  of  the  termination of the "PEREGRINE VI" and  the  "PEREGRINE
     VIII" projects, the Company expensed  $85.8 million in related costs in
     the third quarter of 1998.
          
            In  connection  with  the "PEREGRINE VI"  and  "PEREGRINE  VIII"
     projects  and  a  third  drillship project, the  Company  purchased  or
     committed  to  purchase drilling equipment with an  aggregate  cost  of
     approximately  $285.0 million. This equipment constitutes  all  of  the
     material   drilling  equipment  necessary  to  outfit   two   deepwater
     drillships  (although a substantial portion of such  equipment  can  be
     used  on  semisubmersible  rigs).  The  Company  expects  to  use  this
     equipment to outfit other deepwater projects and as inventory.

G)   EARNINGS PER SHARE

          The following table reconciles the numerators and denominators  of
     the  basic  and diluted per share computations for income  (loss)  from
     continuing operations before extraordinary loss for the three and  nine
     month periods ended September 30, 1998 and 1997 as follows (in millions
     except per share amounts):
                                   
                                          Three Months        Nine Months
                                      Ended September 30, Ended September 30,
                                      ------------------- -------------------
                                         1998      1997      1998     1997
                                       -------   -------   -------   -------
   Numerator:
   Income (loss) from continuing
     operations before extraordinary
     loss - basic                      $ (20.5)  $  77.2   $ 109.7   $ 182.6
   Interest expense on convertible
     debentures                            1.1       1.0        -         -
                                       -------   -------   -------   -------
   Income (loss) from continuing
     operations before extraordinary
     loss - diluted                    $ (19.4)  $  78.2   $ 109.7   $ 182.6
                                       =======   =======   =======   =======
   Denominator:
   Weighted  average  common shares
    outstanding  -  basic                165.3     164.3     165.2     164.0
   Outstanding stock options                .5       2.5       1.2       2.3
   Convertible debentures                  1.0       1.0        -         -
                                       -------   -------   -------   -------
   Weighted average common shares
     outstanding - diluted               166.8     167.8     166.4     166.3
                                       =======   =======   =======   =======
          
   Earnings per share:
   Income (loss) from continuing
     operations before extraordinary
     loss:
          Basic                        $  (.12)  $   .47   $   .66   $  1.11
          Diluted                      $  (.12)  $   .47   $   .66   $  1.10


H)   BUSINESS COMBINATION

          The  Company  has  entered  into a merger  agreement  with  Cliffs
     Drilling  Company  pursuant to which a wholly-owned subsidiary  of  the
     Company  will  merge  with Cliffs Drilling, and  Cliffs  Drilling  will
     become  a wholly-owned subsidiary of the Company.  In the merger,  each
     share  of  common stock, par value $0.01 per share, of Cliffs  Drilling
     Company  will  be exchanged for 1.7 shares of common stock,  par  value
     $0.01 per share, of the Company. The merger is contemplated to be a tax-
     free  reorganization  and will be accounted for  as  a  purchase.   The
     transaction is subject to, among other things, certain third party  and
     Cliffs Drilling shareholder approvals. The Cliffs Drilling shareholders
     are  currently  scheduled  to meet on November  20,  1998  to  vote  on
     approval  of  the  merger.  Assuming certain  third  party  and  Cliffs
     Drilling  shareholder approvals are obtained, the Company  expects  the
     merger to be effective on November 30, 1998.



                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                                     



To the Board of Directors and Stockholders
R&B Falcon Corporation


     We  have reviewed the accompanying consolidated balance sheet  of  R&B
Falcon  Corporation  (a  Delaware  corporation)  and  Subsidiaries  as   of
September  30, 1998, and the related consolidated statements of  operations
and cash flow for the three and nine month periods ended September 30, 1998
and  1997.   These  financial  statements are  the  responsibility  of  the
Company's management.

     We  conducted  our review in accordance with standards established  by
the  American  Institute  of Certified Public  Accountants.   A  review  of
interim  financial information consists principally of applying  analytical
procedures  to  financial data and making inquiries of persons  responsible
for  financial and accounting matters.  It is substantially less  in  scope
than  an  audit  conducted in accordance with generally  accepted  auditing
standards, the objective of which is the expression of an opinion regarding
the  financial statements taken as a whole.  Accordingly, we do not express
such an opinion.

     Based  upon our review, we are not aware of any material modifications
that  should be made to the financial statements referred to above for them
to be in conformity with generally accepted accounting principles.


/s/Arthur Andersen LLP

Houston, Texas
November 4, 1998



  
Item  2.   Management's Discussion and Analysis of Financial Condition  and
Results of Operations


Changes In Financial Condition

     The  Company  incurred capital expenditures of $845.9 million  in  the
first  nine  months  of  1998. The most significant  expenditures  were  as
follows:

1)   The Company incurred $566.0 million of capital expenditures related to
     its  significant  construction projects,  equipment  acquisitions  and
     capital  upgrades to the fleet to fulfill obligations  under  existing
     contracts  or to improve the marketability of certain of the Company's
     marine units.

2)   The  Company  issued  204,900 shares of its common  stock  in  partial
     consideration for the acquisition of all of the outstanding shares  of
     stock of a corporation owning six workover rigs.

3)   The Company paid $1.5 million in cash and issued 517,184 shares of its
     common stock in partial consideration for the acquisition of all of the
     outstanding shares of stock of three corporations owning eight tugs and
     five ocean going barges.

4)   The  Company  paid  $10.7 million in cash for the acquisition  of  the
     previously leased jackup "FALRIG 82".

5)   The  Company paid $5.8 million in cash for the acquisition  of  a  two
     story,  86,000  square  foot  office  building  in Houston, Texas that
     serves as its corporate headquarters.

6)   The Company paid $31.9 million in cash for the acquisition of 17 tugs.

     See "Liquidity And Capital Resources" for discussions on the repayment
and issuance of debt obligations.
   
     The  Company  has  from  time to time in  the  past  engaged  in,  and
currently  continues  to  engage  in, preliminary  discussions  with  other
industry  participants  with respect to business  combinations  that  would
potentially  strengthen its competitive position in the  offshore  drilling
industry.    The   Company  also  continues  to  consider   the   selective
construction, acquisition and/or upgrade of marine units.


Results of Operations

               NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED
               TO NINE MONTHS ENDED SEPTEMBER 30, 1997

     The  Company's net income for the nine months ended September 30, 1998
was  $87.7  million ($.53 per diluted share) compared with  net  income  of
$117.9  million  ($.71  per diluted share) for the  same  period  of  1997.
Included in the results for the nine months ended September 30, 1998 was an
$85.8  million  expense due to the cancellation of two conversion  projects
and  an  extraordinary loss of $22.0 million due to the  extinguishment  of
debt  obligations.   Included in the results  for  the  nine  months  ended
September 30, 1997 were losses related to discontinued operations of  $64.7
million.
     
     Operating   revenues  are  primarily  a  function  of   dayrates   and
utilization.  The increase in operating revenues for the nine months  ended
September  30, 1998 over the same period in 1997 is primarily  due  to  (i)
increased  dayrates fleetwide, with the shallow water fleet accounting  for
the  largest  part of the increase, and (ii) an increase in the  number  of
offshore  and  inland marine vessels available for service  which  resulted
from acquisitions, reactivations or conversions.
     
     Operating  expenses  do  not necessarily fluctuate  in  proportion  to
changes in operating revenues due to the continuation of personnel on board
and equipment maintenance when the Company's units are stacked.  It is only
during  prolonged stacked periods that the Company is able to significantly
reduce labor costs and equipment maintenance expense.  Additionally,  labor
costs  fluctuate  due to the geographic diversification  of  the  Company's
units  and the mix of labor between expatriates and nationals as stipulated
in the contracts.  In general, labor costs increase primarily due to higher
salary  levels  and  inflation.  Equipment maintenance  expenses  fluctuate
depending upon the type of activity the unit is performing and the age  and
condition  of  the  equipment.   Scheduled  maintenance  and  overhauls  of
equipment  are  performed  on  the basis of number  of  hours  operated  in
accordance  with  the Company's preventive maintenance program.   Operating
expenses  for  a unit are typically deferred or capitalized as  appropriate
during  periods  of mobilization, contract preparation, major  upgrades  or
conversions unless corresponding revenue is recognized, in which case  such
operating expenses are expensed as incurred.

     The increase in operating expenses for the nine months ended September
30,  1998  as  compared  to the same period in 1997  is  primarily  due  to
increased  wage rates and an increase in the number of offshore and  inland
marine  vessels  available  for service which resulted  from  acquisitions,
reactivations or conversions.
     
      Cancellation of conversion projects expense of $85.8 million was  the
result  of  the  termination of the "PEREGRINE  VI"  and  "PEREGRINE  VIII"
conversion  projects.  Such expense includes shipyard costs  (for  services
performed  and  in settlement of contract cancellation), Company  personnel
and  contractor costs, engineering costs, capitalized interest,  and  write
down of the vessels that were purchased for conversion.  Both projects were
cancelled  due to continuing uncertainty as to the final cost and  expected
delivery dates.  See "Liquidity and Capital Resources".

     Depreciation expense increased for the nine months ended September 30,
1998  as  compared  to  the same period in 1997 despite  the  reduction  in
depreciation  expense  for  the nine months ended  September  30,  1998  of
approximately  $15.6  million due to the extension of the  expected  useful
lives  of  the  Company's marine units effective  January  1,  1998.   Such
increase  is  primarily due to the purchase and/or significant upgrades  of
offshore and inland marine vessels during 1997 and 1998.

     General  & administrative expense increased for the nine months  ended
September 30, 1998 as compared to the same period in 1997 primarily due  to
increases  in  payroll  and  related  expenses  associated  with  increased
staffing  through  new  hires, and acquisitions  within  the  inland  water
segment.
     
     Interest  expense  increased for the nine months ended  September  30,
1998  as  compared to the same period in 1997 primarily due to an increased
average debt balance outstanding, partially offset by increased capitalized
interest related to significant upgrade and new build projects.

     Income  tax expense increased for the nine months ended September  30,
1998  as  compared to the same period in 1997 despite the decrease  in  the
Company's pretax income.  Such increase is due to the Company providing for
taxes in 1998 at the full statutory rate.
     
      Loss from discontinued operations decreased for the nine months ended
September 30, 1998 as compared to the same period in 1997 as the losses for
1998 were reserved for in connection with the discontinuance of the oil and
gas segment (see Note E of Notes to Consolidated Financial Statements).

      Extraordinary  loss, net of tax, for the nine months ended  September
30,  1998  is  due to the extinguishment of debt obligations in  connection
with  the  issuance  of  new debt obligations  (see  Note  C  of  Notes  to
Consolidated Financial Statements).
                                     
                                     
              THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED
               TO THREE MONTHS ENDED SEPTEMBER 30, 1997

     The  Company's net loss for the three months ended September 30,  1998
was  $20.5  million ($.12 per diluted share) compared with  net  income  of
$35.0  million  ($.22  per  diluted share) for the  same  period  of  1997.
Included  in the results for the three months ended September 30, 1998  was
an  $85.8  million  expense  due  to the  cancellation  of  two  conversion
projects.  Included in the results for the three months ended September 30,
1997 were losses related to discontinued operations of $42.2 million.
     
     Operating   revenues  are  primarily  a  function  of   dayrates   and
utilization. The decrease in operating revenues for the three months  ended
September  30,  1998  over  the same period in 1997  is  primarily  due  to
decreased utilization fleetwide, with the inland water fleet accounting for
the  largest  part  of  the  decrease, offset by an  increase  in  dayrates
fleetwide  and  an  increase in the number of offshore  and  inland  marine
vessels   available   for   service  which  resulted   from   acquisitions,
reactivations or conversions.
     
     Operating  expenses  do  not necessarily fluctuate  in  proportion  to
changes in operating revenues due to the continuation of personnel on board
and equipment maintenance when the Company's units are stacked.  It is only
during  prolonged stacked periods that the Company is able to significantly
reduce labor costs and equipment maintenance expense.  Additionally,  labor
costs  fluctuate  due to the geographic diversification  of  the  Company's
units  and the mix of labor between expatriates and nationals as stipulated
in the contracts.  In general, labor costs increase primarily due to higher
salary  levels  and  inflation.  Equipment maintenance  expenses  fluctuate
depending upon the type of activity the unit is performing and the age  and
condition  of  the  equipment.   Scheduled  maintenance  and  overhauls  of
equipment  are  performed  on  the basis of number  of  hours  operated  in
accordance  with  the Company's preventive maintenance program.   Operating
expenses  for  a unit are typically deferred or capitalized as  appropriate
during  periods  of mobilization, contract preparation, major  upgrades  or
conversions unless corresponding revenue is recognized, in which case  such
operating expenses are expensed as incurred.

     The  increase  in  operating  expenses  for  the  three  months  ended
September 30, 1998 as compared to the same period in 1997 is primarily  due
to  increased  wage  rates and an increase in the number  of  offshore  and
inland   marine   vessels  available  for  service  which   resulted   from
acquisitions, reactivations or conversions.
     
      Cancellation of conversion projects expense of $85.8 million was  the
result  of  the  termination of the "PEREGRINE  VI"  and  "PEREGRINE  VIII"
conversion  projects.  Such expense includes shipyard costs  (for  services
performed  and  in settlement of contract cancellation), Company  personnel
and  contractor costs, engineering costs, capitalized interest,  and  write
down of the vessels that were purchased for conversion.  Both projects were
cancelled  due to continuing uncertainty as to the final cost and  expected
delivery dates.  See "Liquidity and Capital Resources".

     Depreciation  expense increased for the three months  ended  September
30,  1998  as compared to the same period in 1997 despite the reduction  in
depreciation  expense  in the third quarter of 1998 of  approximately  $5.2
million  due to the extension of the expected useful lives of the Company's
marine units effective January 1, 1998.  Such increase is primarily due  to
the  purchase  and/or significant upgrades of offshore  and  inland  marine
vessels during 1997 and 1998.

     General & administrative expense increased for the three months  ended
September 30, 1998 as compared to the same period in 1997 primarily due  to
increases  in  payroll  and  related  expenses  associated  with  increased
staffing  through  new  hires, and acquisitions  within  the  inland  water
segment.
     
     Interest  expense increased for the three months ended  September  30,
1998  as  compared to the same period in 1997 primarily due to an increased
average debt balance outstanding, partially offset by increased capitalized
interest related to significant upgrade and new build projects.

     Income tax expense decreased for the three months ended September  30,
1998  as  compared to the same period in 1997 due to the  decrease  in  the
Company's pretax income offset by the Company providing for taxes  in  1998
at the full statutory rate.
     
     Loss from discontinued operations decreased for the three months ended
September 30, 1998 as compared to the same period in 1997 as the losses for
1998 were reserved for in connection with the discontinuance of the oil and
gas segment (see Note E of Notes to Consolidated Financial Statements).


Liquidity And Capital Resources

     General.  Net cash provided by operating activities was $240.5 million
for  the  nine months ended September 30, 1998, compared to $219.4  million
for  the  same  period  in  1997.  The increase is  primarily  due  to  the
cancellation of conversion projects and extraordinary loss, net of  changes
in the components of working capital.
     
     Net cash used in investing activities was $ 878.8 million for the nine
months  ended  September 30, 1998 compared to $420.1 million for  the  same
period  in  1997.   The  increase is due to increasing  levels  of  capital
expenditures,  primarily  related  to  the  significant  capital   projects
involving  the construction or upgrade of drilling units (see  "Changes  In
Financial Condition").
     
     Net  cash provided by financing activities was $655.0 million for  the
nine  months  ended September 30, 1998 compared to $197.7 million  for  the
same  period  in  1997.   The increase in net cash  provided  by  financing
activities is due to proceeds received from the $1.1 billion debt  offering
(see  below) and short-term borrowings related to the construction  of  the
"DEEPWATER MILLENIUM", offset by the repayment of existing debt obligations
(see below).
     
     The Company has numerous projects under way involving the construction
or upgrade of drilling units.  The following is a list of such projects:
  
                                                                   Expenditures
                                    Estimated   Contract            Made thru
                                     Delivery     Term  Estimated September 30,
   Vessel             Type             Date      (years)   Cost       1998
----------------- -------------- ---------------- -----  -------- ------------
                                                             (in millions)
DEEPWATER        
 FRONTIER (1)     Drillship      1st quarter 1999  2.5   $ 265.0     $ 158.7
DEEPWATER        
 MILLENIUM        Drillship      2nd quarter 1999   4    $ 265.0     $ 118.4
DEEPWATER IV
 (unnamed)        Drillship      3rd quarter 2000   -    $ 290.0     $  48.8
PEREGRINE IV      Drillship      2nd quarter 1999   6    $ 200.0     $ 136.8
PEREGRINE VII     Drillship      2nd quarter 1999   3    $ 215.0     $ 137.2
FALCON 100       Semisubmersible 1st quarter 1999   4    $ 110.0     $  74.6
RBS8M
 (formerly RBS6) Semisubmersible 1st quarter 2000   5    $ 300.0     $ 111.3
RBS8D            Semisubmersible 4th quarter 2000   3    $ 310.0          -
---------------
  (1) Owned 60% by the Company and 40% by Conoco.
     
     In the third quarter of 1998, the Company cancelled the "PEREGRINE VI"
and  the "PEREGRINE VIII" conversion projects. The drilling contract on the
"PEREGRINE  VIII"  was terminated on September 24, 1998, and  the  drilling
contract  on the "PEREGRINE VI" will by its terms terminate on  January  1,
1999.  Both terminations are without prejudice to any rights of the parties
existing as of the date of the termination. The Company believes that based
on  the  obligations of the parties under the contracts, provisions of  the
contracts that preclude recovery of indirect or consequential damages,  and
projected  rig availability in the offshore drilling industry, the  Company
will  not have any material liability under these drilling contracts  as  a
result  of  the  termination thereof. The contracts with the  shipyard  for
conversion  of  the  "PEREGRINE  VI" and the  "PEREGRINE  VIII"  have  been
cancelled.  As a result of the termination of the "PEREGRINE  VI"  and  the
"PEREGRINE  VIII" projects, the Company expensed  $85.8 million in  related
costs in the third quarter of 1998 (see "Results of Operations").
     
     In  October  1998,  the Company entered into a contract  with  Samsung
Heavy  Industries  Co.  Ltd.  ("Samsung") to  construct  a  drillship  (the
"DEEPWATER IV"), which will be similar to the "DEEPWATER PATHFINDER" (which
was  delivered by Samsung to the Company in September 1998) the  "DEEPWATER
FRONTIER"  and  the  "DEEPWATER  MILLENIUM",  which  are  currently   under
construction by Samsung for the Company.  The Company does not yet  have  a
contract for the use of the "DEEPWATER IV" following its delivery.

     In  September 1998, the Company and Vastar Resources, Inc.  ("Vastar")
executed  a letter of intent for a drilling contract pursuant to which  the
Company  will  construct and provide a semisubmersible  drilling  rig  (the
"RBS8D") for a term of three years (with five one-year options in favor  of
Vastar),  at an operating dayrate of approximately $200,000. The letter  of
intent  is  subject  to  the  execution of a  mutually  agreeable  drilling
contract.
     
     In  September 1998, the Company and Navis ASA ("Navis"),  a  Norwegian
public  company  which  is constructing a dynamically positioned  drillship
(the  "NAVIS EXPLORER I"), entered into an agreement pursuant to which  the
Company  will  make  a capital contribution to Navis of  $50.0  million  in
exchange  for  stock in Navis at the rate of 11 NOK per share.  The  "NAVIS
EXPLORER  I"  is  designed to drill in 10,000 feet of water  and  is  being
constructed  at  Samsung  at an estimated cost of $280.0  million,  with  a
scheduled  delivery in the second quarter of 2000. The Company expects  its
capital contribution will be in the form of approximately $33.0 million  of
equipment  and equipment purchase orders and $17.0 million in cash.  It  is
expected  that  the Company will own approximately 38% of  the  outstanding
stock of Navis following such contributions and the completion of an equity
offering  currently underway by Navis. Most of the equipment and  equipment
purchase orders that will be contributed by the Company was acquired by the
Company in connection with the "PEREGRINE VI" and "PEREGRINE VIII" projects
and is no longer required for such projects in light of their cancellation.
Navis and the Company have also agreed to enter into a management agreement
pursuant  to which the Company will manage the "NAVIS EXPLORER I" following
its delivery.
     
     In  connection  with the "PEREGRINE VI" and "PEREGRINE VIII"  projects
and  a  third  drillship  project, the Company purchased  or  committed  to
purchase drilling equipment with an aggregate cost of approximately  $285.0
million.  This equipment constitutes all of the material drilling equipment
necessary  to  outfit  two  deepwater drillships  (although  a  substantial
portion of such equipment can be used on semisubmersible rigs). The Company
expects  to  use  approximately  half  of  this  equipment  to  outfit  the
"DEEPWATER  IV",  and  approximately $30.0 million  as  a  portion  of  its
contribution  to  Navis. The balance of the equipment  is  expected  to  be
maintained by the Company as inventory.
     
     Based on projected cash flows, the Company estimates that in order  to
fulfill  its obligations on its construction projects, it will be  required
to  obtain  in  the  fourth  quarter of  1998  or  first  quarter  of  1999
significant incremental financing in addition to currently committed vendor
and shipyard financing.
     
     The  Company  is currently contemplating three project  financings  to
meet  a  portion  of its cash requirements.  The first is an  approximately
$260.0  million financing in the form of a synthetic lease  that  would  be
collateralized by the drillship "DEEPWATER FRONTIER" and drilling  contract
revenues  from  such drillship.  Proceeds of such financing,  if  obtained,
would  be used in part to repay an interim financing facility, under  which
$160.0  million  had  been borrowed at September 30, 1998.   The  foregoing
interim  loan  has  been  made to a limited liability  company  which  will
operate the "DEEPWATER FRONTIER" and which is owned 60% by the Company  and
40% by Conoco.  The Company has guaranteed repayment of 60% of this interim
loan.  The  second financing being contemplated is an approximately  $250.0
million   project   financing  that  would   be   collateralized   by   the
semisubmersible  "RBS8M" (formerly the "RBS6"), as  well  as  the  drilling
contract  revenues  from  such  rig.   The  third  financing  involves  the
"DEEPWATER  MILLENIUM" where the Company is contemplating a $200.0  million
project financing.  Proceeds of such financing, if obtained, would be  used
in  part  to  repay  a $150.0 million interim financing facility  of  which
$113.6 million had been drawn at September 30, 1998.
     
     In  addition  to  the  above-described debt  financings,  the  Company
intends  to  make  a public offering of trust preferred securities  in  the
fourth  quarter of 1998 in an amount up to $300.0 million.  However,  there
is no assurance that this offering can be completed.
     
     The  Company  currently believes it will be able  to  consummate  such
financings.   However, there is no assurance that such  financings  can  be
obtained,  or if obtained, that they will be on favorable terms.  Financial
markets  have been unsettled in recent months, and credit availability  has
been  materially limited.  Further, the implementation of the  contemplated
debt  financings will require the approval of the Company's  bank  lenders,
and  there  is no assurance these lenders will approve any additional  debt
financings.  The inability of the Company to obtain the financing  required
for  the construction projects would have a material adverse effect on  the
Company.   In such event, the Company may have to sell assets or  terminate
or  suspend  one  or  more  of the construction projects.   Termination  or
suspension of a project may subject the Company to claims for penalties  or
damages under the construction contracts or drilling contracts for the rigs
that are being constructed.
     
     The  Company's  construction and upgrade projects are subject  to  the
risks  of  delay  and  cost  overruns inherent in  any  large  construction
project, including shortages of equipment, unforeseen engineering problems,
work  stoppages,  weather interference, unanticipated  cost  increases  and
shortages  of  materials or skilled labor.  Significant  cost  overruns  or
delays would adversely affect the Company's liquidity, financial condition,
and results of operations.  Delays could also result in penalties under, or
the  termination of, the long-term contracts under which the Company  plans
to  operate  these rigs.  The currently scheduled delivery  dates  for  the
"PEREGRINE  IV",  "PEREGRINE VII", and "FALCON  100"  are  later  than  the
commencement date under the initial drilling contracts for such drillships.
     
     Based  upon  the currently estimated delivery dates for the "PEREGRINE
IV",  and  "FALCON  100",  the Company will be  subject  to  late  delivery
penalties  under  the applicable drilling contracts (approximately  $41,500
per  day,  up  to  a  maximum  of  approximately  $34.8  million,  for  the
"PEREGRINE  IV",  and approximately $26,500 per day, up  to  a  maximum  of
approximately $13.3 million, for the "FALCON 100").
     
     Liquidity  of  the Company should also be considered in light  of  the
significant  fluctuations  in demand that may be  experienced  by  drilling
contractors  as changes in oil and gas producers' expectations and  budgets
occur, primarily in response to declines in prices for oil and gas.   These
fluctuations  can  rapidly impact the Company's  liquidity  as  supply  and
demand  factors  directly affect utilization and dayrates,  which  are  the
primary  determinants  of  cash  flow from the  Company's  operations.  The
decline in oil and gas prices that started in late 1997 began to negatively
impact   the  Company's  performance  in  the  second  quarter   of   1998,
particularly in the shallow water U.S. Gulf market.  The Company believes a
continued  depression in oil and gas prices will have  a  material  adverse
effect on the Company.
     
     Due to the Company's construction program, the Company's current level
of  cash flow from operations, cash on hand, and funds available under  its
existing credit facilities is not sufficient to satisfy the Company's short-
term  and  long-term  working capital needs, planned  investments,  capital
expenditures,  debt,  lease  and  other payment  obligations.   Unless  the
Company  is  able to obtain additional capital through debt  and/or  equity
financings,  it will be necessary for the Company to suspend  or  terminate
one  or more of such projects and/or to sell assets.  The inability of  the
Company  to  implement  the  contemplated financings  discussed  above,  or
alternate financings in lieu thereof, would have a material adverse  effect
on the Company.
     
     Tender Offer.  On March 23, 1998, the Company offered to redeem its  9
3/4  % Senior Notes due 2001, its 8 7/8 % Senior Notes due 2003 and its  12
1/2  %  Subordinated  Notes due 2005 (collectively the  "Old  Notes").  The
aggregate principal amount of the outstanding Old Notes was $280.0  million
and  on April 20, 1998, $274.4 million in principal amount of Old Notes was
repaid from proceeds from the sale of the New Senior Notes (see below).
     
     Debt  Offering.   In  April 1998, the Company issued  four  series  of
senior  notes with an aggregate principal amount of $1.1 billion (the  "New
Senior  Notes"). As a result, the Company received net proceeds of $1,082.0
million after deducting estimated offering related expenses. The New Senior
Notes  bear  interest  at varying rates from 6.5% to  7.375%,  are  payable
semiannually on April 15 and October 15, and mature at varying  times  from
2003  to  2018.  The  New  Senior Notes are unsecured  obligations  of  the
Company, ranking pari passu in right of payment with all other existing and
future  senior unsecured indebtedness of the Company. The Company used  the
proceeds to repay existing indebtedness of $874.4 million and the remainder
will  be  used for planned capital expenditures, working capital and  other
general  corporate  purposes.  As a result of  the  repayment  of  existing
indebtedness, the Company incurred an extraordinary loss of $22.0  million,
net of tax, in the second quarter of 1998.
     
     Credit Facility.  In April 1998, the Company retired two existing bank
group credit facilities aggregating $615.0 million (of which $600.0 million
had  been drawn), and entered into a new $500.0 million unsecured revolving
credit  facility  agreement with a syndicate of  banks.  The  new  facility
matures  April 24, 2002, bears interest at LIBOR plus .75%, and ranks  pari
passu in right of payment with the New Senior Notes.
     
Market Trends

      Since  May  1998,  there has been a downturn  in  demand  for  marine
drilling rigs, resulting in a decline in rig utilization and dayrates.  The
decline has been particularly dramatic in the domestic barge and jackup rig
markets, where the Company is one of the largest contractors.  The  Company
believes  this downturn is attributable to declines in oil and  gas  prices
that began in 1997 and have persisted into 1998.

      In  the  Company's domestic jackup fleet, utilization  declined  from
approximately 100% in January 1998 to approximately 76% in September  1998,
and  dayrates on new contract fixtures declined from a range of $35,000  to
$40,000 in January of 1998 to a range of $22,000 to $25,000 in September of
1998.  At the present time, the Company is bidding domestic jackups in  the
Gulf  of   Mexico  in  the  range  from $15,000 to $18,000.   Dayrates  for
the   Company's  domestic  barge  drilling  rig  fleet  have  not  declined
materially, but utilization of the fleet declined from approximately 96% in
January  1998  to  approximately 48% in September  1998  and  has  declined
further  since  that time.  The Company's international  jackup  fleet  has
experienced  declines in utilization and dayrates between January  1,  1998
and  September  30, 1998, but such declines have not been  as  dramatic  as
those  experienced  in the domestic jackup fleet.  The Company's  deepwater
fleet  was largely committed under term contracts at the beginning of 1998,
and  has  in  general  not suffered declines in utilization  and  dayrates.
However,  due  to  political unrest that occurred  in  Indonesia,  and  the
general  economic downturn that has occurred in the Far East,  two  of  the
Company's moored drillships, which were operating under term contracts, had
operations  suspended by the operators in June 1998 and  remained  idle  at
October 31, 1998.

      The  decline  in  utilization and dayrates for  the  Company's  rigs,
particularly  its domestic rigs, has had a material adverse impact  on  the
Company's  revenues  and profitability.  The Company can  not  predict  the
future  trend  of utilization rates and dayrates, but does not  expect  any
material improvement in market conditions during the remainder of 1998.
                                     
Year 2000
  
     The  Company has determined that various components of its  operations
are  at risk to Year 2000 ("Y2K") compliance.  The Company's drilling  rigs
and  equipment  have  a  variety of hardware and  software  that  could  be
affected, and this equipment has been identified.  The process is  underway
to  correct  the  identified problems, determine the risks of  unidentified
equipment,  and  provide contingency plans for those  items  not  remedied.
Completion  of  the  project, including verification  of  all  systems  and
components, is expected by the 2nd quarter of 1999.
     
     Some  of  the Company's hardware and software such as control  systems
and   rig  management  systems  will  need  premature  replacement   and/or
corrective action. The cost impact of remedial action for Y2K compliance is
not  expected to be material to the Company's financial position or results
of  operations. In the event the Company's major suppliers or customers  do
not   successfully  and  timely  achieve  Y2K  compliance,  the   Company's
operations could be adversely affected.
     
     The  Company has accepted the position that there will be some  finite
levels of risk that some systems will not fully function after Y2K.  A risk-
based approach has identified those items where absolute compliance is  not
guaranteed  by  the  vendor or supplier, and contingency  plans  are  being
developed to deal with any safety related possibilities.
     
     In  addition to the safety related contingency plans directly  related
to  uncertainties  with  equipment, the Company  maintains  plans  for  all
critical safety equipment as part of its normal business.  Failure of  this
type  of  equipment,  whether related to normal  operational  risk  or  Y2K
problems,  must  be managed with contingency planning.   For  this  reason,
additional risk due to the Y2K issue does not measurably affect the risk to
personnel or equipment beyond the normal failure due to other causes.


                        PART II - OTHER INFORMATION
     
Item 1.  Legal Proceedings
     
     The Company is involved in various legal actions arising in the normal
course of business.  After taking into consideration the evaluation of such
actions  by  counsel  for the Company, management is of  the  opinion  that
outcome  of all known and potential claims and litigation will not  have  a
material adverse effect on the Company's business or consolidated financial
position or results of operations.
     
Item 2.  Change in Securities
     
         During the third quarter of 1998, the Company issued shares of its
common stock that were not registered under the Securities Act of 1933,  as
amended  (the  "Act").  In July 1998, the Company issued 41,596  shares  of
common  stock to four persons as consideration for the acquisition  by  the
Company  of  all  the issued and outstanding stock of  Knots  Marine.   The
agreed  price  for the shares issued was $22.5375 per share.   The  Company
relied  upon Section 4(2) of the Act for exemption from registration.   The
shares were issued pursuant to a negotiated transaction between the Company
and the holders of the outstanding shares of Knots Marine.
     
Item 6.  Exhibits and Reports on Form 8-K
     
 (a)  Exhibits
 
     Exhibit 2    -  Agreement  and Plan of Merger dated  August  21,  1998
                     by  and  among  Cliffs  Drilling Company,  R&B  Falcon
                     Corporation   and   RBF   Cliffs   Acquisition   Corp.
                     (incorporated  by  reference  to  Exhibit  2  to   the
                     Company's  Registration Statement on Form  S-4,  filed
                     on September 15, 1998, Registration No. 333-63471).
     
     Exhibit 4     - Registration Rights Agreement dated July 1,  1998   by
                     and between R&B Falcon Corporation, Kenneth Stage,  T.
                     George  Delsa,  Vial  J. LeBlanc and  Dr.  William  T.
                     Barfield.
     
     Exhibit 10.1  - Guaranty,  dated  as  of  July  30,  1998,   made   by
                     Registrant in favor of the Deepwater Investment  Trust
                     1998-A,  Wilmington Trust FSB, not in  its  individual
                     capacity,   but   solely   as   Investment    Trustee,
                     Wilmington   Trust  Company,  not  in  its  individual
                     capacity,  except as specified herein, but  solely  as
                     Charter Trustee, BA Leasing & Capital Corporation,  as
                     Documentation   Agent,  ABN   Amro   Bank   N.V.,   as
                     Administrative  Agent, The Bank  of  Nova  Scotia,  as
                     Syndication  Agent, BA Leasing & Capital  Corporation,
                     ABN  Amro  Bank  N.V., Bank Austria Aktiengesellschaft
                     New  York  Branch, The Bank of Nova Scotia, Bayerische
                     Vereinsbank    AG   New   York   Branch,   Commerzbank
                     Aktiengesellschaft,  Atlanta Agency,  Credit  Lyonnais
                     New   York   Branch,  Great-West  Life   and   Annuity
                     Insurance  Company, Mees Pierson Capital  Corporation,
                     Westdeutsche   Landesbank   Girozentrale,   New   York
                     Branch,   as  Certificate  Purchasers,  and  ABN  Amro
                     Bank,  N.V.,  Bank  of  America  National  Trust   and
                     Savings  Association and The Bank of Nova Scotia,  New
                     York  Branch,  as Swap Counterparties, and  the  other
                     parties named therein.
     
     Exhibit 10.2  - Letter   agreement   dated   as  of   August  7,  1998
                     between  RBF  Deepwater Exploration Inc., an  indirect
                     subsidiary  of the Registrant, and Conoco  Development
                     Company  and  Acknowledgment by Conoco  Inc.  and  the
                     Registrant.
     
     Exhibit 10.3  - Letter  agreement   dated   as   of   August  7,  1998
                     between  RBF  Deepwater Exploration Inc., an  indirect
                     subsidiary  of the Registrant, and Conoco  Development
                     Company  and  Acknowledgment by Conoco  Inc.  and  the
                     Registrant.
     
     Exhibit 15    - Letter    regarding    unaudited    interim  financial
                     information.
     
     Exhibit 27    -  Financial  Data  Schedule.   (Exhibit  27  is   being
                     submitted as an exhibit only in the electronic  format
                     of  this Quarterly Report on Form 10-Q being submitted
                     to the Securities and Exchange Commission.)
 
 
 (b)   Reports on Form 8-K
 
        There  was  one Current Report on Form 8-K filed during  the  three
     months  ended September 30, 1998.  A Current Report on Form 8-K  dated
     August  10,  1998  was  filed on August 11, 1998 announcing  that  the
     Company  had  entered  into a letter of intent to  merge  with  Cliffs
     Drilling Company.
   
     

  
                           SIGNATURE




Pursuant  to the requirements of the Securities Exchange Act of  1934,  the
registrant  has duly caused this report to be signed on its behalf  by  the
undersigned thereunto duly authorized.



                                      R&B FALCON CORPORATION



Date:  November 4, 1998               By /s/T. W. Nagle
                                         --------------------------
                                         T. W. Nagle
                                         Executive Vice President
                                         (Chief Accounting Officer)