EXHIBIT 10.3


             FIRST AMENDMENT TO LETTER OF CREDIT AGREEMENT


          FIRST AMENDMENT TO LETTER OF CREDIT AGREEMENT (this "Amendment"),
dated  as  of  April  24,  1998, among R&B FALCON CORPORATION,  a  Delaware
corporation ("R&B Falcon"), R&B FALCON DRILLING (INTERNATIONAL & DEEPWATER)
INC. (f/k/a Reading & Bates Corporation), a Delaware corporation ("R&BFD"),
READING & BATES DRILLING CO., an Oklahoma corporation ("R&B Drilling")  and
CHRISTIANIA  BANK  OG  KREDITKASSE, NEW  YORK  BRANCH  (the  "Bank").   All
capitalized  terms  used herein and not otherwise defined  shall  have  the
meanings provided such terms in the L/C Agreement referred to below.

                                   
                         W I T N E S S E T H :
                                   
                                   
          WHEREAS, R&BFD, R&B Drilling and the Bank are parties to a Letter
of  Credit  Agreement, dated as of December 30, 1996 (as in effect  on  the
date hereof, the "L/C Agreement"); and

          WHEREAS,  the  parties thereto and hereto wish to amend  the  L/C
Agreement as herein provided;

          NOW, THEREFORE, it is agreed:

I.  Amendments to L/C Agreement.

          1.   The  preamble of the L/C Agreement is hereby amended by  (i)
deleting  the text  "READING & BATES CORPORATION ("Holdings"),  a  Delaware
corporation,  READING  &  BATES DRILLING CO. (the  "Obligor")  "  appearing
therein   and  (ii)  inserting  the  text  "R&B  FALCON  CORPORATION   (the
"Obligor")"  in lieu thereof, with such amendment being made  in  order  to
effect the assignment pursuant to the terms and conditions contained herein
of  all rights and obligations of  R&B Drilling under the L/C Agreement  to
R&B Falcon.

          2.   Section 7 of the L/C Agreement is hereby amended by deleting
Sections  7.01  through  7.09, inclusive, thereof  in  their  entirety  and
inserting the following new Sections 7.01 through 7.12 in lieu thereof:

          7.01.   Indebtedness.  Obligor will not, and will not permit  any
     Subsidiary  to,  create,  incur,  assume  or  permit  to   exist   any
     Indebtedness, except:
     
               (a)  Indebtedness created hereunder;
          
               (b)   Indebtedness existing on the First Amendment Effective
          Date  and  set  forth  in Annex IV and extensions,  renewals  and
          replacements  of any such Indebtedness that do not  increase  the
          outstanding principal amount thereof;
          
               (c)   Indebtedness of the Obligor to any Subsidiary  and  of
          any Subsidiary to the Obligor or any other Subsidiary;
          
               (d)  Permitted Project Debt;
          
               (e)   Indebtedness  created  under  the  R&B  Falcon  Credit
          Agreement  in  an  aggregate  principal  amount  not  to   exceed
          $500,000,000; and
          
               (f)  other Indebtedness in an aggregate principal amount not
          exceeding $30,000,000 at any time outstanding; provided that  the
          aggregate  principal  amount  of Indebtedness  of  the  Obligor's
          Subsidiaries  permitted  by  this clause  (f)  shall  not  exceed
          $5,000,000 at any time outstanding.
          
          7.02.   Liens.   Obligor  will  not,  and  will  not  permit  any
     Subsidiary  to, create, incur, assume or permit to exist any  Lien  on
     any property or asset now owned or hereafter acquired by it, or assign
     or  sell  any  income or revenues (including accounts  receivable)  or
     rights in respect of any thereof, except:
     
               (a)  Permitted Encumbrances;
          
               (b)   any  Lien on any property or asset of Obligor  or  any
          Subsidiary existing on the First Amendment Effective Date  hereof
          and  set forth in Annex V; provided that (i) such Lien shall  not
          apply to any other property or asset of Obligor or any Subsidiary
          and  (ii) such Lien shall secure only those obligations which  it
          secures   on  the  date  hereof  and  extensions,  renewals   and
          replacements  thereof  that  do  not  increase  the   outstanding
          principal amount thereof;
          
               (c)    any   Lien  (including,  without  limitation,   Liens
          hereunder)  on the Deepwater Pathfinder, Deepwater Frontier,  and
          Drillship  III  or  related contracts to  secure  the  respective
          Permitted Project Debt incurred to construct such vessel; and
          
               (d)   Liens  on  fixed or capital assets  acquired,  leased,
          constructed  or  improved by Obligor or any Subsidiary;  provided
          that (i) such security interests secure Indebtedness permitted by
          clause (d) of Section 7.01 but the aggregate principal amount  of
          such  Indebtedness  secured shall not exceed $20,000,000  at  any
          time   outstanding,   (ii)  such  security  interests   and   the
          Indebtedness secured thereby are incurred prior to or  within  90
          days  after such acquisition or lease or the completion  of  such
          construction  or  improvement,  (iii)  the  Indebtedness  secured
          thereby   does  not  exceed  100%  of  the  cost  of   acquiring,
          constructing or improving such fixed or capital assets  and  (iv)
          such security interests shall not apply to any other property  or
          assets of Obligor or any Subsidiary.
          
          7.03.  Fundamental Changes.  (a)  Obligor will not, and will  not
     permit  any  Subsidiary to, merge into or consolidate with  any  other
     Person,  or permit any other Person to merge into or consolidate  with
     it,  or  sell, transfer, lease or otherwise dispose of (in one transac
     tion  or in a series of transactions) all or substantially all of  its
     assets, or any of the stock of or voting rights with respect to any of
     its  Subsidiaries  (in  each  case, whether  now  owned  or  hereafter
     acquired),  or  liquidate or dissolve, except that,  if  at  the  time
     thereof  and immediately after giving effect thereto no Default  shall
     have  occurred  and be continuing (i) any Subsidiary  may  merge  into
     Obligor  in  a  transaction in which Obligor is the surviving  corpora
     tion,  (ii)  any  Subsidiary  may  merge  into  any  Subsidiary  in  a
     transaction in which the surviving entity is a Subsidiary,  (iii)  any
     Subsidiary  may  sell,  transfer, lease or otherwise  dispose  of  its
     assets to Obligor or to another Subsidiary, (iv) any Subsidiary  other
     than  the  Obligor may liquidate or dissolve if Obligor determines  in
     good  faith  that  such  liquidation or dissolution  is  in  the  best
     interests  of  Obligor  and is not materially disadvantageous  to  the
     Bank;  provided that any such merger involving a Person that is not  a
     wholly owned Subsidiary immediately prior to such merger shall not  be
     permitted and (v) Obligor may merge with another Person if (A) Obligor
     is  the  successor  or  survivor of such merger  transaction  and  (B)
     Moody's  and  S&P shall have affirmed in writing that such transaction
     will  not  impair  Obligor' implied senior debt rating  as  such  debt
     rating  is  in  effect immediately prior to the announcement  of  such
     merger transaction.
     
          (b)    Obligor  will  not,  and  will  not  permit  any  of   its
     Subsidiaries  to, engage to any material extent in any business  other
     than  businesses of the type conducted by Obligor and its Subsidiaries
     on  the  date of execution of this Agreement and businesses reasonably
     related thereto.
     
          7.04.  Investments, Loans, Advances, Guarantees and Acquisitions.
     Obligor  will  not,  and will not permit any of its  Subsidiaries  to,
     purchase, hold or acquire any capital stock, evidences of indebtedness
     or  other securities (including any option, warrant or other right  to
     acquire any of the foregoing) of, make or permit to exist any loans or
     advances to, Guarantee any obligations of, or make or permit to  exist
     any investment or any other interest in, any other Person, or purchase
     or  otherwise acquire (in one transaction or a series of transactions)
     any assets of any other Person constituting a business unit, except:
     
               (a)  Permitted Investments;
          
               (b)   investments  by Obligor or by any  Subsidiary  in  the
          capital stock of its Subsidiaries;
          
               (c)  loans or advances made by Obligor to any Subsidiary and
          made by any Subsidiary to Obligor or any other Subsidiary; and
          
               (d)   investments  by Obligor and/or any Subsidiary  in  the
          aggregate not to exceed 10% of Obligor' consolidated Tangible Net
          Worth.
          
          7.05.  Hedging Agreements.  Obligor will not, and will not permit
     any  of  its Subsidiaries to, enter into any Hedging Agreement,  other
     than  Hedging  Agreements  entered into  in  the  ordinary  course  of
     business to hedge or mitigate risks to which Obligor or any Subsidiary
     is  exposed  in the conduct of its business or the management  of  its
     liabilities.
     
          7.06.   Restricted  Payments.  Obligor will  not,  and  will  not
     permit any of its Subsidiaries to, declare or make, or agree to pay or
     make,  directly  or  indirectly, any Restricted  Payment,  except  (a)
     Obligor  may  declare and pay dividends with respect  to  its  capital
     stock  payable  solely in additional shares of its common  stock,  (b)
     Subsidiaries  may declare and pay dividends ratably  with  respect  to
     their  capital  stock  and  (c) Obligor may make  Restricted  Payments
     pursuant  to  and  in  accordance with stock  option  plans  or  other
     benefits  plans  for  management  or  employees  of  Obligor  and  its
     Subsidiaries.
     
          7.07.  Transactions with Affiliates.  Obligor will not, will  not
     permit  any of its Subsidiaries to, sell, lease or otherwise  transfer
     any property or assets to, or purchase, lease or otherwise acquire any
     property or assets from, or otherwise engage in any other transactions
     with,  any  of  its Affiliates, except (a) in the ordinary  course  of
     business  at prices and on terms and conditions not less favorable  to
     Obligor  or  such Subsidiary than could be obtained on an arm's-length
     basis  from unrelated third parties, (b) transactions between or among
     Obligor  and  its  wholly-owned Subsidiaries not involving  any  other
     Affiliate and (c) any Restricted Payment permitted by Section 7.06.
     
          7.08.   Restrictive Agreements.  Obligor will not, and  will  not
     permit any of its Subsidiaries to, directly or indirectly, enter into,
     incur  or  permit  to  exist any agreement or other  arrangement  that
     prohibits, restricts or imposes any condition upon (a) the ability  of
     Obligor or any Subsidiary to create, incur or permit to exist any Lien
     upon  any  of  its  property or assets, or  (b)  the  ability  of  any
     Subsidiary to pay dividends or other distributions with respect to any
     shares  of its capital stock or to make or repay loans or advances  to
     the  Obligor  or any other Subsidiary or to Guarantee Indebtedness  of
     the  Obligor or any other Subsidiary; provided that (i) the  foregoing
     shall  not apply to restrictions and conditions imposed by law  or  by
     this Agreement, (ii) the foregoing shall not apply to restrictions and
     conditions existing on the date hereof and contained in the  Indenture
     or identified on Annex VI (but shall apply to any extension or renewal
     of,  or any amendment or modification expanding the scope of, any such
     restriction  or  condition), (iii) the foregoing shall  not  apply  to
     customary restrictions and conditions contained in agreements relating
     to  the  sale  of  a  Subsidiary  pending  such  sale,  provided  such
     restrictions and conditions apply only to the Subsidiary that is to be
     sold  and  such sale is permitted hereunder, (iv) clause  (a)  of  the
     foregoing shall not apply to restrictions or conditions imposed by any
     agreement relating to secured Indebtedness permitted by this Agreement
     if  such  restrictions or conditions apply only  to  the  property  or
     assets  securing such Indebtedness and (v) clause (a) of the foregoing
     shall  not apply to customary provisions in leases and other contracts
     restricting the assignment thereof.
     
          7.09.   Tangible Net Worth.  Obligor will not permit at any  time
     its  Tangible Net Worth to be less than $600,000,000 plus (i)  50%  of
     its  cumulative Consolidated Net Income, if positive, for  the  period
     from April 1, 1998 through the date of calculation, plus (ii) 100%  of
     any equity issued by Obligor after April 24, 1998.
     
          7.10.  EBITDA Leverage Ratio.  Obligor will not permit its EBITDA
     Leverage  Ratio  as  of  the  end of any  fiscal  quarter  of  Obligor
     (calculated quarterly at the end of each fiscal quarter) to be greater
     than  the amount set forth in the table below on the applicable  date.
     For  the purposes of this Section 7.10, "EBITDA Leverage Ratio"  shall
     mean  the  ratio of (i) difference of Funded Debt minus cash and  cash
     equivalents of Obligor on a consolidated basis to (ii) EBITDA for  the
     four fiscal quarters ending on such date; provided that (A) EBITDA for
     the  period ending on June 30, 1998 shall equal the product of  EBITDA
     for  the  six-month period ending on such date times 2 and (B)  EBITDA
     for the period ending on September 30, 1998 shall equal the product of
     EBITDA for the nine-month period ending on such date times 1.33.
     
                                         EBITDA
               Period                Leverage Ratio

               6/30/98 thru 6/30/99       3.00x
               7/1/99 thru 12/31/99       2.50x
               1/1/00 and thereafter      2.00x
          
          7.11.  Sale of Properties.  Obligor will not, and will not permit
     any  Subsidiary  to,  sell, assign, convey or otherwise  transfer  any
     properties  or  assets except for (i) the sale  of  inventory  in  the
     ordinary course of business; (ii) the sale or transfer of equipment or
     other  property or assets that is no longer necessary for the business
     of  Obligor or such Subsidiary  or is replaced by equipment  or  other
     property  or  assets of at least comparable value and  use  and  (iii)
     sales  of properties and assets which shall not exceed $50,000,000  in
     the aggregate in any fiscal year.
     
          7.12.   Amendments  to  Material Agreements.   Obligor  will  not
     modify or amend the terms of the Indenture as in existence on the date
     of this Agreement or any documents described on Schedule V without the
     consent  of the Bank, if the effect of such modification or  amendment
     would be to the material detriment of the Bank.
     
          3.   Section 9 of the L/C Agreement is hereby further amended  by
deleting the following definitions in their entirety:

          Approved Bank
          Approved Company
          Arcade
          Authorized Officer
          Capital Lease
          Capital Lease Obligations
          Cash Equivalents
          Change of Control
          Consolidated Capital Expenditures
          Consolidated Current Assets
          Consolidated Current Liabilities
          Consolidated EBIT
          Consolidated EBITDAR
          Consolidated Funded Indebtedness
          Consolidated Interest Expense
          Consolidated Net Income
          Consolidated Net Worth
          Consolidated Rent Expense
          Contingent Obligations
          Credit Party
          Dividends
          Guarantor
          Guaranty
          Holdings
          Holdings Convertible Debentures
          Maturity Date
          Obligor
          Parent Guarantors
          
          4.   Section 9 of the L/C Agreement is hereby further amended  by
inserting   in  the  appropriate  alphabetical  order  the  following   new
definitions:

          "Authorized Officer" shall mean any officer of Obligor designated
     as such in writing to the Bank by Obligor.
     
          "Bonds"  shall mean the Senior Unsecured Notes of Obligor  issued
     pursuant to the Indenture.
     
          "Capital  Lease Obligations" of any Person means the  obligations
     of  such  Person to pay rent or other amounts under any lease  of  (or
     other  arrangement  conveying  the right  to  use)  real  or  personal
     property, or a combination thereof, which obligations are required  to
     be  classified and accounted for as capital leases on a balance  sheet
     of such Person under GAAP, and the amount of such obligations shall be
     the capitalized amount thereof determined in accordance with GAAP.
     
          "Change  of  Control"  means  (a) the acquisition  of  ownership,
     directly  or indirectly, beneficially or of record, by any  person  or
     group  (within the meaning of the Securities Exchange Act of 1934  and
     the  rules of the Securities and Exchange Commission thereunder as  in
     effect on the date hereof) of shares representing more than 30% of the
     aggregate  ordinary  voting  power  represented  by  the  issued   and
     outstanding capital stock of Obligor; (b) occupation of a majority  of
     the  seats  (other  than vacant seats) on the board  of  directors  of
     Obligor  by  Persons who were neither (i) nominated by  the  board  of
     directors of Obligor nor (ii) appointed by directors so nominated;  or
     (d)  the acquisition of direct or indirect Control of Obligor  by  any
     Person or group.
     
          "Consolidated Net Income" shall mean with respect to Obligor  and
     its  Consolidated Subsidiaries, for any period, the aggregate  of  the
     net  income  (or  loss)  of Obligor and its Consolidated  Subsidiaries
     after  allowances  for  taxes  for  such  period,  determined   on   a
     consolidated basis in accordance with GAAP; provided that there  shall
     be  excluded  from  such net income (to the extent otherwise  included
     therein)  the  following:  (i) the net income of any Person  in  which
     Obligor or any Consolidated Subsidiary has an interest (which interest
     does  not cause the net income of such other Person to be consolidated
     with  the  net income of Obligor and its Consolidated Subsidiaries  in
     accordance with GAAP), except to the extent of the amount of dividends
     or  distributions actually paid in such period by such other Person to
     Obligor or to a Consolidated Subsidiary, as the case may be; (ii)  the
     net income (but not loss) of any Consolidated Subsidiary to the extent
     that  the declaration or payment of dividends or similar distributions
     or  transfers or loans by that Consolidated Subsidiary is not  at  the
     time  permitted  by  operation of the terms  of  its  charter  or  any
     agreement, instrument or Governmental Requirement applicable  to  such
     Consolidated  Subsidiary, or is otherwise restricted or prohibited  in
     each case determined in accordance with GAAP; (iii) the net income (or
     loss) of any Person acquired in a pooling-of-interests transaction for
     any   period  prior  to  the  date  of  such  transaction;  (iv)   any
     extraordinary  gains, including gains attributable to  property  sales
     not  in the ordinary course of business; and (v) the cumulative effect
     of  a  change  in  accounting  principles  and  any  gains  or  losses
     attributable  to  writeups  or  writedowns  of  assets;  and   further
     provided, that there shall be added to such net income (to the  extent
     otherwise deducted therefrom) any extraordinary losses.
     
          "Consolidated Subsidiaries" shall mean each Subsidiary of Obligor
     (whether  now existing or hereafter created or acquired) the financial
     statements  of which shall be (or should have been) consolidated  with
     the financial statements of Obligor in accordance with GAAP.
     
          "Control"  means the possession, directly or indirectly,  of  the
     power to direct or cause the direction of the management or polices of
     a  Person,  whether through the ability to exercise voting  power,  by
     contract  or otherwise.  "Controlling" and "Controlled" have  meanings
     correlative thereto.
     
          "Credit  Party"  shall  mean (i) prior  to  the  First  Amendment
     Effective Date, R&BFD and Reading & Bates Drilling Co. and (ii)  after
     the First Amendment Effective Date, the Obligor.
     
          "Deepwater Frontier" means the drillship being constructed for  a
     joint  venture  on  the  date  of  this  Agreement  in  which  Obligor
     indirectly owns a 60% interest.
     
          "Deepwater Pathfinder" means the drillship being constructed  for
     a  joint  venture  on  the  date of this Agreement  in  which  Obligor
     indirectly owns a 50% interest.
     
          "EBITDA" shall mean, for any period, the sum of Consolidated  Net
     Income  for such period plus the following expenses or charges to  the
     extent   deducted  from  Consolidated  Net  Income  in  such   period:
     interest, taxes, depreciation, depletion and amortization.
     
          "First  Amendment"  shall  mean  the  First  Amendment  to   this
     Agreement, dated as of April 24, 1998.
     
          "First  Amendment Effective Date" shall have the meaning provided
     in  paragraph II.5. of the First Amendment.

          "Funded Debt" of any Person means,  without  duplication, (a) all
     obligations of such Person  for borrowed money, (b) all obligations of
     such  Person  evidenced  by  bonds,   debentures,   notes  or  similar
     instruments,  (c)  all  Capital  Lease  Obligations  of  such  Person,
     (d) all Hedging  Obligations  of  such  Person,  (e)  all obligations,
     contingent  or  otherwise,  of such  Person as  an  account  party  in
     respect  of  letters  of  credit  and  letters  of  guaranty,  (f) all
     obligations,  contingent  or  otherwise, of such Person  in respect of
     bankers' acceptances and (g) all obligations, contingent or otherwise,
     of  such  Person  guaranteeing,  indemnifying  or  having the economic
     effect  of  guaranteeing  any  of  the above described Funded Debt  of
     another  Person.  The Funded Debt  of  any  Person  shall include  the
     Funded  Debt of any other entity (including any partnership  in  which
     such  Person is a general partner) to the extent such Person is liable
     therefor  as a result of such Person's ownership interest in or  other
     relationship with such entity, except to the extent the terms of  such
     Funded  Debt provide that such Person is not liable therefor.   Funded
     Debt shall expressly exclude Permitted Project Debt.
     
          "Governmental  Requirement" shall mean any  law,  statute,  code,
     ordinance,  order, determination, rule, regulation, judgment,  decree,
     injunction, franchise, permit, certificate, license, authorization  or
     other  directive or requirement (whether or not having  the  force  of
     law),   including,  without  limitation,  Environmental  Laws,  energy
     regulations and occupational, safety and health standards or controls,
     of any Governmental Authority.
     
          "Guarantee"  of  or  by  any Person (the "guarantor")  means  any
     obligation, contingent or otherwise, of the guarantor guaranteeing  or
     having  the economic effect of guaranteeing any Indebtedness or  other
     obligation of any other Person (the "primary obligor") in any  manner,
     whether  directly or indirectly, and including any obligation  of  the
     guarantor,  direct or indirect, (a) to purchase or pay (or advance  or
     supply  funds  for  the purchase or payment of) such  Indebtedness  or
     other obligation or to purchase (or to advance or supply funds for the
     purchase of) any security for the payment thereof, (b) to purchase  or
     lease property, securities or services for the purpose of assuring the
     owner of such Indebtedness or other obligation of the payment thereof,
     (c) to maintain working capital, equity capital or any other financial
     statement  condition  or liquidity of the primary  obligor  so  as  to
     enable  the  primary  obligor  to  pay  such  Indebtedness  or   other
     obligation  or  (d) as an account party in respect of  any  letter  of
     credit  or  letter of guaranty issued to support such Indebtedness  or
     obligation;  provided,  that  the term  Guarantee  shall  not  include
     endorsements  for  collection or deposit in  the  ordinary  course  of
     business.
     
          "Hedging Agreement" means any interest rate protection agreement,
     foreign   currency  exchange  agreement,  commodity  price  protection
     agreement  or  other interest or currency exchange rate  or  commodity
     price hedging arrangement.
     
          "Hedging Obligations" of any person means the net obligation (not
     the notional amount) of such Person pursuant to any Hedging Agreement.
     
          "Indebtedness" of any Person means, without duplication, (a)  all
     obligations  of  such Person for borrowed money  or  with  respect  to
     deposits  or advances of any kind, (b) all obligations of such  Person
     evidenced by bonds, debentures, notes or similar instruments, (c)  all
     obligations of such Person upon which interest charges are customarily
     paid,  (d)  all obligations of such Person under conditional  sale  or
     other title retention agreements relating to property acquired by such
     Person,  (e) all obligations of such Person in respect of the deferred
     purchase  price  of property or services (excluding  current  accounts
     payable  incurred  in  the  ordinary  course  of  business),  (f)  all
     Indebtedness  of others secured by (or for which the  holder  of  such
     Indebtedness  has  an existing right, contingent or otherwise,  to  be
     secured  by)  any Lien on property owned or acquired by  such  Person,
     whether or not the Indebtedness secured thereby has been assumed,  (g)
     all  Guarantees  by  such Person of Indebtedness of  others,  (h)  all
     Capital  Lease  Obligations of such Person, (i)  all  Synthetic  Lease
     Obligations  of  such  Person,  (j) all Hedging  Obligations  of  such
     Persons, (k) all obligations, contingent or otherwise, of such  Person
     as  an  account party in respect of letters of credit and  letters  of
     guaranty  and  (l) all obligations, contingent or otherwise,  of  such
     Person  in respect of bankers' acceptances.  The Indebtedness  of  any
     Person  shall include the Indebtedness of any other entity  (including
     any  partnership  in which such Person is a general  partner)  to  the
     extent  such  Person is liable therefor as a result of  such  Person's
     ownership  interest in or other relationship with such entity,  except
     to  the extent the terms of such Indebtedness provide that such Person
     is not liable therefor.
     
          "Indenture" shall mean the Indenture, dated as of April 14, 1998,
     between  Obligor,  as  Issuer,  and  Chase  Bank  of  Texas,  National
     Association,  as Trustee, providing for the issuance of $1,100,000,000
     of   Senior   Unsecured  Notes  and  all  renewals,   extensions   and
     modifications thereof permitted by the terms of this Agreement.
     
          "Index Debt" means senior, unsecured, long-term indebtedness  for
     borrowed  money of Obligor that is not guaranteed by any other  Person
     or subject to any other credit enhancement.
     
          "Lien"  means, with respect to any asset, (a) any mortgage,  deed
     of trust, lien, pledge, hypothecation, encumbrance, charge or security
     interest  in, on or of such asset, (b) the interest of a vendor  or  a
     lessor  under any conditional sale agreement, capital lease  or  title
     retention  agreement (or any financing lease having substantially  the
     same  economic effect as any of the foregoing) relating to such  asset
     and  (c)  in  the  case of securities, any purchase  option,  call  or
     similar right of a third party with respect to such securities.
     
          "Maturity Date" shall mean June 30, 1999.
     
          "Moody's" means Moody's Investors Service, Inc.
     
          "Obligor"   shall  mean  R&B  Falcon  Corporation,   a   Delaware
     corporation.
     
          "Permitted Encumbrances" means:

               (a)  Liens imposed by law for taxes that are not yet due  or
          are  being contested in good faith and by appropriate proceedings
          for  which  adequate reserves with respect thereto, in accordance
          with GAAP, have been established;
          
               (b)   carriers',  warehousemen's, mechanics', materialmen's,
          repairmen's,  maritime  and  other like  Liens  imposed  by  law,
          arising   in  the  ordinary  course  of  business  and   securing
          obligations  that are not overdue by more than  30  days  or  are
          being contested in good faith and by appropriate proceedings  for
          which adequate reserves with respect thereto, in accordance  with
          GAAP, have been established;
          
               (c)   pledges  and deposits made in the ordinary  course  of
          business  in  compliance with workers' compensation, unemployment
          insurance and other social security laws or regulations;
          
               (d)   deposits  to  secure the performance  of  bids,  trade
          contracts,  leases,  statutory  obligations,  surety  and  appeal
          bonds,  performance bonds and other obligations of a like nature,
          in each case in the ordinary course of business;
          
               (e)   judgment  liens in respect of judgments  that  do  not
          constitute an Event of Default under Section 8.08;
          
               (f)    easements,  zoning  restrictions,  rights-of-way  and
          similar  encumbrances on real property imposed by law or  arising
          in  the  ordinary  course  of business that  do  not  secure  any
          monetary obligations and do not materially detract from the value
          of  the  affected property or interfere with the ordinary conduct
          of business of Obligor or any Subsidiary; and
          
               (g)   any  interest or title of a lessor or charterer  under
          any  lease  or  charter  between Obligor and  any  Subsidiary  or
          between  any  of  its  Subsidiaries  or  as  otherwise  permitted
          hereunder;
          
     provided that the term "Permitted Encumbrances" shall not include  any
     Lien securing Indebtedness.
     
          "Permitted Investments" means:

               (a)  direct obligations of, or obligations the principal  of
          and  interest  on  which are unconditionally guaranteed  by,  the
          United  States of America (or by any agency thereof to the extent
          such  obligations are backed by the full faith and credit of  the
          United States of America), in each case maturing within one  year
          from the date of acquisition thereof;
          
               (b)   investments  in commercial paper maturing  within  270
          days  from  the date of acquisition thereof and having,  at  such
          date  of  acquisition, the highest credit rating obtainable  from
          S&P or from Moody's;
          
               (c)    investments  in  certificates  of  deposit,  banker's
          acceptances and time deposits maturing within 180 days  from  the
          date  of  acquisition thereof issued or guaranteed by  or  placed
          with, and money market deposit accounts issued or offered by, any
          domestic  office of any commercial bank organized under the  laws
          of the United States of America or any State thereof which has  a
          combined  capital and surplus and undivided profits of  not  less
          than $500,000,000; and
          
               (d)   fully collateralized repurchase agreements with a term
          of  not more than 30 days for securities described in clause  (a)
          above  and  entered into with a financial institution  satisfying
          the criteria described in clause (c) above.
          
          "Permitted  Project Debt" means Indebtedness (including,  without
     limitation, or duplication, the Guarantee of any such Indebtedness  by
     Obligor)  incurred  in connection with the construction  of  Deepwater
     Pathfinder,  Deepwater Frontier and Drillship III  by  the  respective
     joint   venture  or  Subsidiary  owning  such  vessel  not  to  exceed
     $375,000,000  in  the  aggregate  and  all  extensions,  renewals  and
     replacements  of any such Indebtedness by the primary obligor  thereof
     that do not increase the outstanding principal amount thereof.
     
          "Prior Indebtedness" means the Funded Debt of Obligor on the date
     of the R&B Falcon Credit Agreement, excluding the Indebtedness created
     under this Agreement and the Indebtedness evidenced by the Bonds.
     
          "R&B  Falcon  Credit Agreement" shall mean the Credit  Agreement,
     dated  as  of April 24, 1998, by and among Obligor, the lenders  party
     thereto and The Chase Manhattan Bank, as Administrative Agent.
     
          "R&BFD"   shall   mean  R&B  Falcon  Drilling  (International   &
     Deepwater)  Inc.  (f/k/a  Reading  & Bates  Corporation),  a  Delaware
     Corporation.
     
          "Restricted  Payment"  means any dividend or  other  distribution
     (whether  in cash, securities or other property) with respect  to  any
     shares of any class of capital stock of Obligor or any Subsidiary,  or
     any payment (whether in cash, securities or other property), including
     any  sinking  fund  or similar deposit, on account  of  the  purchase,
     redemption,  retirement, acquisition, cancellation or  termination  of
     any such shares of capital stock of Obligor or any option, warrant  or
     other right to acquire any such shares of capital stock of Obligor.
     
          "S&P" means Standard & Poor's.
     
          "Synthetic  Lease Obligations" of any Person means the  aggregate
     obligations  of  such Person under each lease or a  guaranty  of  such
     lease  which  requires such Person to make payments of rent  or  other
     amounts   over  the  term  of  such  lease,  including   payments   at
     termination, which are more than seventy percent (70%) but  less  than
     ninety percent (90%) of the purchase price of the Property subject  to
     such lease but excluding interest at an imputed rate of interest.
     
          "Tangible Net Worth" means without duplication in accordance with
     GAAP the sum of (i) the total amount of capital stock of Obligor, (ii)
     preferred  stock,  (iii) paid-in capital, and (iv)  retained  earnings
     minus the sum of (i) patents, patent applications, trademarks, service
     marks,  copyrights, and trade names and (ii) goodwill  and  all  other
     intangibles.
     
          5.   The  L/C Agreement is hereby further amended by (i) deleting
Annex IV thereto in its entirety and inserting Annex IV attached hereto  in
lieu  thereof and (ii) by inserting immediately following Annex IV  thereto
Annexes V and VI attached hereto.

          6.   On  and after the First Amendment Effective Date,  R&BFD  is
hereby  released from all obligations under and in respect of the  Guaranty
contained  in  Section 11 of the L/C Agreement, and Section  11  is  hereby
deleted in its entirety.


II  Miscellaneous Provisions.

          1.   In  order to induce the Banks to enter into this  Amendment,
R&B Falcon hereby represents and warrants that:

          (a)   no  Default  or Event of Default exists  as  of  the  First
     Amendment Effective Date both before and after giving effect  to  this
     Amendment; and
     
          (b)   except as may be expressly modified by this Amendment,  all
     of  the  representations and warranties contained in the L/C Agreement
     and  the  other Credit Documents are true and correct in all  material
     respects  on the First Amendment Effective Date both before and  after
     giving  effect to this Amendment, with the same effect as though  such
     representations and warranties had been made on and as  of  the  First
     Amendment  Effective Date (it being understood that any representation
     or  warranty made as of a specific date shall be true and  correct  in
     all material respects as of such specific date).
     
          2.   This  Amendment  is  limited  as  specified  and  shall  not
constitute  a modification, acceptance or waiver of any other provision  of
the L/C Agreement or any other Credit Document.

          3.   This Amendment may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but  all  of
which  shall together constitute one and the same instrument.   A  complete
set of counterparts shall be lodged with R&B Falcon and the Bank.

          4.   THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.

          5.  This Amendment shall become effective on the date (the "First
Amendment Effective Date") when the following conditions have been  met  to
the satisfaction of the Bank:

          (i)   the  Bank  shall  have received from R&B  Falcon  certified
     copies  of  resolutions  of the Board of Directors  or  statements  of
     unanimous  written consent in lieu thereof of R&B Falcon with  respect
     to  the matters set forth in this Amendment and such resolutions shall
     be satisfactory to the Bank;
     
          (ii) R&B Drilling shall have paid to the Bank all costs, fees and
     expenses  (including,  without limitation, legal  fees  and  expenses)
     payable to the Bank to the extent then due;
     
          (iii)     all corporate and legal proceedings and all instruments
     and  agreements  in connection with the transactions  contemplated  by
     this  Amendment  shall be satisfactory in form and  substance  to  the
     Bank,  and the Bank shall have received all information and copies  of
     all  documents and papers, including records of corporate  proceedings
     or  governmental approvals, if any, which the Bank may have  requested
     in  connection therewith, such documents and papers where  appropriate
     to be certified by proper corporate or governmental authorities;
     
          (iv)  each of R&B Falcon, R&BFD, R&B Drilling and the Bank  shall
     have  signed  a  counterpart hereof (whether  the  same  or  different
     counterparts) and shall have delivered (including by way of  facsimile
     transmission) the same to the Bank at its Notice Office; and
     
          (v)    the Bank shall have received, and shall be satisfied  with
     both the form and substance of, an opinion of Wayne Hillin, counsel to
     R&B  Falcon,  R&BFD  and  R&B Drilling, with respect  to  the  matters
     contemplated by the this Amendment.
     
Upon  the  satisfaction of the condition described in  clause  (v)  of  the
immediately preceding sentence and upon the Bank's determination  that  the
other  conditions  described  above have  been  met,  the  First  Amendment
Effective  Date  shall  be  deemed  to have  occurred,  regardless  of  any
subsequent determination that one or more of the conditions thereto had not
been  met  (although the occurrence of the First Amendment  Effective  Date
shall not release R&B Falcon from any liability for failure to satisfy  one
or  more of the applicable conditions specified above).  The Bank will give
R&B Falcon prompt notice of the occurrence of the First Amendment Effective
Date.

          6.   From  and  after  the First Amendment  Effective  Date,  all
references  in  the  L/C Agreement and each of the other  Credit  Documents
shall be deemed to be references to such documents as amended hereby.

                        *          *          *

          IN  WITNESS  WHEREOF, the parties hereto have caused  their  duly
authorized  officers to execute and deliver this Amendment as of  the  date
first above written.
          
                              R&B FALCON CORPORATION
                              
                              By:___________________
                                    Title:
                              
                              R&B FALCON DRILLING (INTERNATIONAL &
                              DEEPWATER) INC. (f/k/a Reading & Bates
                              Corporation)
                              
                              By:___________________
                                    Title:
                              
                              READING & BATES DRILLING CO.
                              
                              By:___________________
                                    Title:
                              
                              CHRISTIANIA BANK OG KREDITKASSE, NEW YORK
                              BRANCH
                              
                              By:___________________
                                    Title:
                              
                              By:___________________
                                    Title:


                                                               ANNEX IV

                         EXISTING INDEBTEDNESS
                                   
For  purposes of this schedule only "Falcon" means Falcon Drilling Company,
Inc. and "R&B" means Reading & Bates Corporation.

     1.   Indenture  relating  to R&B's 8% Senior Subordinated  Convertible
          Debentures due 1998 dated as of August 29, 1989, as supplemented,
          between  R&B  and IBJ Schroder Bank & Trust Company,  as  Trustee
          (outstanding principal amount - $18,494,500).
          
     2.   Indenture dated as of January 15, 1994, between Falcon and  Texas
          Commerce  Bank  National  Association, as  Trustee,  relating  to
          Falcon's   9-3/4%   senior  notes  and  guaranteed   by   certain
          subsidiaries   of   Falcon  (outstanding   principal   amount   -
          $5,250,000).
          
     3.   Floating  Rate  Senior  Note  Purchase  Agreement,  dated  as  of
          February  23,  1994,  by and between Falcon and  Crescent/Mach  I
          Partners, L.P., and guaranteed by certain subsidiaries of  Falcon
          (outstanding principal amount - $9,000,000).*
          
     4.   Indenture dated as of March 1, 1996, between Falcon and Bank One,
          Texas,  N.A.,  as  trustee, relating another series  of  Falcon's
          senior notes (outstanding principal amount - $345,000).
          
     5.   Indenture  dated  as  of  April  14,  1998  between  R&B   Falcon
          Corporation  and  Chase Bank of Texas, National  Association,  as
          Trustee (outstanding principal amount - $1,100,000,000).
          
     6.   Agreement for the sale and purchase of Semi-Submersible Emergency
          Support  Vessel  Iolair  dated  September  8,  1995  between   BP
          Exploration  Operating  Company  Limited  and  Reading  &   Bates
          (Caledonia)  Limited, a subsidiary of R&B (outstanding  principal
          amount - $7,500,000).
          
     7.   Performance Guarantee dated September 8, 1995 by R&B in favor  of
          BP Exploration Operating Company Limited, in connection with item
          6 above.
          
     8.   Performance Guarantee dated September 8, 1995 by R&B in favor  of
          Britoil plc, in connection with item 6 above.
          
     9.   Initial  Services  Agreement  dated  September  8,  1995  between
          Britoil  Public  Limited Company and Reading & Bates  (Caledonia)
          Limited, a subsidiary of R&B, in connection with item 6 above.
          
     10.  Heads  of  Agreement for the provision of Vessel  Services  dated
          September 8, 1995 between Britoil Public Limited Company, Reading
          &  Bates  (Caledonia) Limited, a subsidiary of R&B, and  R&B,  in
          connection with item 6 above.
          
     11.  Credit  Agreement  dated  February 24,  1998,  among  R&B  Falcon
          Corporation,  RB Deepwater Exploration III Inc., various  lending
          institutions,  Credit Lyonnais, New York Branch,  as  Syndication
          Agent  and  Christiania Bank og Kreditkasse, New York  Branch  as
          Administrative Agent ($150,000,000 Facility).
          
     12.  Loan  Agreement dated as of December 14, 1996 among  TRB  Holding
          Corporation,  Reading  &  Bates (U.K.) Limited  and  Nissho  Iwai
          Europe PLC (outstanding principal amount - $24,774,244).
          
     13.  Two promissory notes dated June 30, 1994 payable by subsidiary of
          Falcon  to  Diamond  Services Corporation (outstanding  principal
          amount - $536,646).
          
     14.  Secured  promissory note dated January 1997 payable by Falcon  to
          Coastal  Capital  Corporation  (outstanding  principal  amount  -
          $6,390,000).*
          
     15.  Four  promissory notes payable by a subsidiary of Falcon to First
          National Bank of Commerce (outstanding aggregate principal amount
          - $6,958,378).*
          
     16.  Undertaking dated September 30, 1997 by Reading & Bates  Drilling
          Co.  to  Arthur Andersen with respect to Reading &  Bates  (U.K.)
          Limited with respect to the continuance of its business.
          
     17.  Indemnification  Agreement by R&B in favor of Conoco  Development
          Company  with respect to equity contributions by a subsidiary  of
          R&B  required under the Liability Company Agreement dated October
          28,  1996  between  Conoco Development Company and  RB  Deepwater
          Exploration Inc.
          
     18.  Indemnification  Agreement by R&B in favor of Conoco  Development
          II  Inc. with respect to equity contributions by a subsidiary  of
          R&B  required under the Liability Company Agreement  dated  April
          30,  1997  between  Conoco Development II Inc. and  RB  Deepwater
          Exploration II Inc.
          
     19.  Guaranty by R&B and certain of its subsidiaries in favor of  Bank
          of  America  National  Trust  and Savings  Association,  National
          Westminster  PLC,  New  York  Branch and  certain  other  lending
          institutions party to the Credit Agreement dated as  of  November
          10,   1997   among  Deepwater  Drilling  II  L.L.C.   and   those
          institutions.

_____________________________
* To be repaid on or before June 30, 1998
          

                                                                    ANNEX V

                                 LIENS
                                   
     1.   Mortgage  of  a  Ship dated September 8, 1995 between  Reading  &
          Bates   (Caledonia)  Limited,  a  subsidiary  of  R&B,   and   BP
          Exploration Operating Company Limited, in connection with item  6
          in Annex IV.
          
     2.   Mortgage  of  a  Ship dated September 8, 1995 between  Reading  &
          Bates (Caledonia) Limited, a subsidiary of R&B, and Britoil plc.,
          in connection with item 6 in Annex IV.
          
     3.   Deed  of Covenant dated September 8, 1995 between Reading & Bates
          (Caledonia)  Limited,  a subsidiary of R&B,  and  BP  Exploration
          Operating Company Limited, in connection with item 6 in Annex IV.
          
     4.   Deed  of Covenant dated September 8, 1995 between Reading & Bates
          (Caledonia)  Limited,  a subsidiary of R&B,  and  Britoil  Public
          Limited Company in connection with item 6 in Annex IV.
          
     5.   First  Naval Mortgage on the "SEILLEAN" dated December  14,  1996
          between  TRB  Holding Corporation in favor of Nissho Iwai  Europe
          PLC, in connection with item 12 in Annex IV.
          
     6.   Collateral  Assignment of Deposit Account,  Pledge  and  Security
          Agreement  dated December 14, 1996 with respect to the "SEILLEAN"
          between  TRB Holding Corporation and Nissho Iwai Europe  PLC,  in
          connection with item 12 in Annex IV.
          
     7.   Assignment of Insurances dated December 14, 1996 with respect  to
          the  "SEILLEAN"  between TRB Holding Corporation  and  Reading  &
          Bates  (U.K.)  Limited and Nissho Iwai Europe PLC, in  connection
          with item 12 in Annex IV.
          
     8.   Vessel mortgage dated July 25, 1994 by Falcon in favor of Diamond
          Services Corporation with respect to one of Falcon's barge  rigs,
          in connection with item 13 in Annex IV.
          
     9.   Texas and Louisiana UCC-1 Financing Statements filed July 2, 1994
          in  favor of Diamond Services Corporation with respect to two  of
          Falcon's barge rigs, in connection with item 13 in Annex IV.
          
     10.  First   Preferred   Mortgage  on  the  vessel  "Coastal   Golden"
          (Peregrine  VI)  in  favor  of Coastal  Capital  Corporation,  in
          connection with item 14 in Annex IV.
          
     11.  Liens - BSI Assets, in connection with item 15 in Annex IV.
          
     12.  Assignment  of  Construction Contract and  Letter  of  Refundment
          Guaranty to Christiania Bank og Kreditkasse, New York Branch,  as
          Collateral Agent in connection with item number 11 on Annex IV.
  


                                                                 ANNEX VI

                        RESTRICTIVE AGREEMENTS
                                   
     1.   R&B Falcon Credit Agreement.
          
     2.   Credit  Agreement  dated  February 24,  1998,  among  R&B  Falcon
          Corporation,  RB Deepwater Exploration III Inc., various  lending
          institutions,  Credit Lyonnais, New York Branch,  as  Syndication
          Agent  and  Christiania Bank og Kreditkasse, New York  Branch  as
          Administrative Agent.
          
     3.   Indenture dated as of January 15, 1994, between Falcon and  Texas
          Commerce  Bank National Association, as Trustee, with respect  to
          Falcon's  9-3/4%  senior notes (outstanding  principal  amount  -
          $5,250,000).
          
     4.   Floating  Rate  Senior  Note  Purchase  Agreement,  dated  as  of
          February  23,  1994,  by and between Falcon and  Crescent/Mach  I
          Partners,  L.P., including a form of Note (outstanding  principal
          amount - $9,000,000).
          
     5.   Indenture dated as of March 1, 1996, between Falcon and Bank One,
          Texas,  N.A.,  as  trustee, with respect  to  another  series  of
          Falcon's senior notes (outstanding principal amount - $345,000).
          
     6.   First   Preferred   Mortgage  on  the  vessel  "Coastal   Golden"
          (Peregrine  VI)  in  favor  of Coastal  Capital  Corporation,  in
          connection with item 14 in Annex 7.01.
          
     7.   Loan  Agreement  dated January 17, 1991 between  Falcon  Drilling
          Company, Inc. and Coastal Capital Corporation, in connection with
          item 14 in Annex 7.01.
          
     8.   Credit  and  Sale  Agreement dated June 30, 1994 between  Diamond
          Services  Corporation  and  Eilert-Olsen  Investments,  Inc.,  in
          connection with item 13 in Annex 7.01.
          
     9.   First  Preferred  Mortgage  dated July  25,1994  by  Eilert-Olsen
          Investments, Inc. to Diamond Services Corporation, in  connection
          with items 13 in Annex 7.01.
          
     10.  BSI, in connection with item 15 in Annex 7.01.