EXHIBIT 10.159
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                    LIMITED LIABILITY COMPANY AGREEMENT

                                  BETWEEN

                        CONOCO DEVELOPMENT II INC.

                                    AND

                     RB DEEPWATER EXPLORATION II INC.

                           DATED APRIL 30, 1997


                    LIMITED LIABILITY COMPANY AGREEMENT

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                             TABLE OF CONTENTS

I.   DEFINITIONS
     1.1    Definitions

II.  FORMATION OF COMPANY; FILINGS
     2.1    Formation
     2.2    Registered Office and Registered Agent.
     2.3    Filings
     2.4    Relationship of the Parties

III. NAME; PURPOSE; PLACE OF BUSINESS; TERM
     3.1    Name
     3.2    Purposes
     3.3    Place of Business
     3.4    Term

IV.  MEMBERS; RESTRICTION ON DISPOSITION OF INTEREST; PREFERENTIAL RIGHT OF
     PURCHASE
     4.1    Members
     4.2    Restrictions on the Disposition of an Interest
     4.3    Preferential Right of Purchase
     4.4    Disposition Documents
     4.5    Legality
     4.6    Status After Disposition
     4.7    Disposition Costs
     4.8    Limitation on Transfer

V.   CONTRIBUTIONS; DISTRIBUTIONS; FAILURE TO MAKE CONTRIBUTIONS TIMELY;
     SECURITY INTEREST
     5.1    Initial Contributions
     5.2    Cost Overrun Contributions.
     5.3    Additional Contributions
     5.4    Distributable Cash
     5.5    Failure to Make Contributions
     5.6    Grant of Security Interest
     5.7    Secured Party.

VI.  TAX MATTERS
     6.1.1  Tax Matters
            6.1.2  Information Request by TMP
            6.1.3  TMP Agreements with IRS
            6.1.4  Inconsistent Treatment of Company Item
            6.1.5  Communication of Proceedings to Members
            6.1.6  Requests for Administrative Adjustment
            6.1.7  Judicial Proceedings
     6.2    Income Tax Compliance and Capital Accounts
            6.2.1  Tax Returns
            6.2.2  Fair Market Value Capital Accounts
            6.2.3  Information Request
     6.3    Elections
            6.3.1  General Elections
            6.3.2  Other Elections or Consents
     6.4    Capital Contributions and FMV Capital Accounts
            6.4.1  Capital Contributions
            6.4.2  FMV Capital Accounts
     6.5    Company Allocations
            6.5.1  FMV Capital Account Allocations
            6.5.2  Tax Returns and Tax Basis Capital Account Allocation
     6.6    Termination and Liquidating Distributions
            6.6.1  Termination
            6.6.2  Section 708(b)(1)(A) Termination
            6.6.3  Balancing
            6.6.4  Final Distribution
     6.7    Transfers, Indemnification, and Correspondence
            6.7.1  Transfers of Company Interests
            6.7.2  Indemnification
            6.7.3  Correspondence
     6.8    No Interest
     6.9    Return of Capital

VII. ADMINISTRATIVE MATTERS
     7.1    Books and Records
     7.2    Inspection
     7.3    Bank Accounts; Investments
     7.4    Monthly Progress Reports

VIII.MANAGEMENT; MEMBERS COMMITTEE; MANAGER; STANDARD OF CARE;
     INDEMNIFICATION
     8.1    Management
     8.2    Members Committee
     8.3    Manager
     8.4    Standard of Care
     8.5    Indemnification of the Representatives and the Manager

IX.  VOLUNTARY WITHDRAWAL
     9.1    Resignation by Member
     9.2    Wrongful Withdrawal

X.   [DELETED]

XI.  DISSOLUTION; RECONSTITUTION; WINDING UP
     11.1   Events Deemed to Cause Dissolution
     11.2   Distribution of Assets
     11.3   Termination

XII. [DELETED]

XIII.INSURANCE
     13.1   Insurance Coverage
     13.2   Certain Requirements

XIV. MISCELLANEOUS
     14.1   Offset
     14.2   Choice of Law; Submission to Jurisdiction
     14.3   Notices
     14.4   Entire Agreement
     14.5   Effect of Waiver or Consent
     14.6   Amendment or Modification
     14.7   Binding Effect; Joinder of Additional Parties
     14.8   Counterparts
     14.9   Severability
     14.10  Headings
     14.11  Gender; Articles and Sections
     14.12  Indemnity
     14.13  Further Assurances
     14.14  Independent Conduct
     14.15  Deemed Assent
     14.16  Signing Members; Certificate of Authority
     14.17  Withholding or Granting of Consent
     14.18  Waiver of Certain Rights
     14.19  U.S. Currency
     14.20  Dispute Resolution
     14.21  Proprietary Information
     14.22  Publicity

XV.  DISSOLUTION
     15.1   Dissolution
     15.2   Ancillary Agreements

Exhibit "A" - Description of Drillship
Exhibit "B" - Indemnification Agreements
Exhibit "C" - Sharing Ratios
Exhibit "D" - Certificate of Formation
Exhibit "E" - Form of Demand Promissory Note (Equity Contributions)
Exhibit "F" - Form of Promissory Note (Loans)
Exhibit "G" - Marine Services Agreement
Exhibit "H" - Drilling Services Agreement

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                    LIMITED LIABILITY COMPANY AGREEMENT

      This Limited Liability Company Agreement is made and entered into  on
April  30,  1997  by and between Conoco Development II  Inc.,   a  Delaware
corporation  having  its  principal office  at  600  North  Dairy  Ashford,
Houston,  Texas  77079 (sometimes referred to as "Conoco") and RB Deepwater
Exploration  II Inc., a Nevada corporation having its principal  office  at
901  Threadneedle, Suite 200, Houston, Texas  77079 (sometimes referred  to
as "Reading & Bates").

      FOR  AND  IN  CONSIDERATION  of  the mutual  covenants,  rights,  and
obligations  contained  herein, the benefits to be derived  therefrom,  and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Members hereby agree as follows:

                                 ARTICLE I

                                DEFINITIONS

      1.1  Definitions.   As  used in this Agreement, the  following  terms
shall have the respective meanings indicated:


           "Act"  means the Delaware Limited Liability Company Act, 6  Del.
      C. Sections 18-101, et seq., as amended, from time to time.

           "Affiliate"  shall mean, with respect to any Person,  any  other
      Person  directly or indirectly controlling (including but not limited
      to  all  directors  and officers of such Person), controlled  by,  or
      under direct or indirect common control with such Person.

           "Assets"  shall mean the Drillship and all other assets  of  the
      Company  of  every  kind  whatsoever, real or personal,  tangible  or
      intangible.

           "Agreement"   shall   mean   this  Limited   Liability   Company
      Agreement.

           "Bankrupt" or "Bankruptcy" shall mean any of the events set  out
      in Section 18-304 of the Act happening with respect to a Member.

           "Base  Term"  shall  mean the period of time commencing  on  the
      date  of  this  Agreement and ending on the date one  day  after  the
      later of (i) the completion of the Drilling Contracts, including  any
      extensions  or  renewals thereof, or (ii) the complete  discharge  of
      the Purchase Note, including all interest accrued thereon.

           "Builder" shall mean collectively Samsung Heavy Industries  Co.,
      Ltd. and Samsung Corporation.

           "Company" shall mean Deepwater Drilling II L.L.C.

           "Control"  (including  with  correlative  meanings,  the   terms
      "controlling",  "controlled by" and "under direct or indirect  common
      control")   shall  mean,  with  respect  to  a  Person  that   is   a
      corporation, the right to the exercise, directly or indirectly,  more
      than  50%  of  the voting rights attributable to the  shares  of  the
      controlled  Person  normally entitled to vote  for  the  election  of
      directors  and,  with respect to a Person that is not a  corporation,
      the  possession, directly or indirectly, of the power  to  direct  or
      cause  the  direction of the management or policies of the controlled
      Person.

           "Code"  shall  mean  the  Internal  Revenue  Code  of  1986,  as
      amended from time to time, and the regulations issued thereunder.

           "Default  Interest Rate" shall mean a rate equal to  the  lesser
      of  (i)  five (5) percentage points in excess of a varying  rate  per
      annum  that  is equal to the interest rate publicly quoted  by  Texas
      Commerce Bank, N.A., Houston, Texas, from time to time, as its  prime
      commercial rate, with adjustments in such varying rate to be made  on
      the  same date as any change in the aforesaid prime rate, or (ii) the
      maximum non-usurious rate permitted by applicable law.

           "Delinquent Member" shall have the meaning attributed to  it  in
      Section 5.5.

           "Designated  Representative"  shall  mean  (a)  when  used  with
      respect  to  Reading & Bates, or any successor or  permitted  assign,
      the  chief  executive  officer of the ultimate parent  of  Reading  &
      Bates  or  any successor or permitted assign of Reading & Bates;  and
      (b)  when  used with respect to Conoco, or any successor or permitted
      assign, a person who is at least a Vice President of Conoco Inc.,  or
      the President of the successor or permitted assign of Conoco.

           "Dispose"  (or  "Disposition") shall mean to sell  or  otherwise
      transfer  legal or beneficial ownership to any property  or  interest
      in property, real or personal (or the act of such sale or transfer).

           "Distributable Cash" means all cash of the Company in excess  of
      the  amount  which the Members Committee determines  is  required  to
      meet  the  Company's  obligations (including reserves  for  projected
      expenditures, working capital and contingencies).

           "Disposition Notice" shall have the meaning attributed to it  in
      Section 4.3.

           "Drilling  Contracts"  shall  mean, collectively,  the  drilling
      contracts  (with  options  as provided therein)  contemplated  to  be
      awarded  by  Conoco Drilling Inc. and Reading & Bates Corporation  to
      the  Company for the Drillship, for minimum terms, in the  aggregate,
      of  five  (5)  years,  such drilling contracts to  be  on  terms  and
      conditions satisfactory to the Members.

           "Drillship"  shall  mean  the shipshape self-propelled  offshore
      drilling  vessel described in Exhibit "A" hereto, together  with  all
      of  her  machinery  and equipment, including without  limitation  all
      marine,  drilling  and production  equipment, drill  string,  risers,
      blowout  prevention  equipment, spare and  repair  parts,  inventory,
      whether  located on the vessel or on shore, belonging to  the  vessel
      (excluding, however, equipment to be leased from third parties).

           "First  Member"  shall  have the meaning  attributed  to  it  in
      Section 4.3.

           "Indemnification Agreement" shall mean, with respect to  Reading
      &  Bates, the indemnification agreement to be executed  by Reading  &
      Bates  Corporation,  and with respect to Conoco  the  indemnification
      agreement  to  be  executed by Conoco Inc., each such indemnification
      agreement to be in the form attached as Exhibit "C".

           "Independent  Accountants"  shall  mean  Price  Waterhouse  LLP,
      Arthur   Anderson  LLP  or  such  other  firm  of  certified   public
      accountants,  as may from time to time be designated by  the  Members
      Committee.

           "Manager"  shall  mean  such Person  as  may  be  designated  as
      Manager from time to time by the Members Committee.

           "Member  " or "Members" shall mean the Persons named in  Section
      4.1  or  any  Member who is admitted as a substitute Member  pursuant
      hereto.

           "Members  Committee" shall mean the committee described  in  and
      functioning according to Section 8.2.

           "Membership  Interest" shall mean the ownership  interest  of  a
      Member  in  the Company (which shall be considered personal  property
      for  all  purposes) consisting of (i) such Member's Sharing Ratio  of
      the  entire  ownership interests of the Company, (ii)  such  Member's
      right  to  vote or grant or withhold consent with respect to  Company
      matters  as  provided herein or in the Act, and (iii)  such  Member's
      other rights and privileges as herein provided or as provided in  the
      Act or otherwise at law.

           "Non-Delinquent  Member" shall have the meaning   attributed  to
      it in Section 5.5(b).

           "Person"   shall   mean   an  individual,  corporation,   trust,
      unincorporated association, or other entity or association.

           "Permitted Security Interest" means the security interest  given
      under  Section 5.6 of the Agreement, any security interests given  to
      an  interim construction lender or lenders to the Company,   and  any
      other  security  interest in a Membership Interest given  by  one  or
      more Members which is consented to in writing by all other Members.

           "Proprietary   Information"  means   patents,   trade   secrets,
      proprietary  systems,  designs,  and  processes,  and  technical   or
      business know-how, which is not in the public domain.

           "Purchase  Note"  shall  mean  the  promissory  note  or   notes
      constituting  the permanent financing by the Company of the  purchase
      of  the Drillship, such note or notes not to have a term greater than
      five  years from delivery of the Drillship by the Builder, or  to  be
      in  a  principal  amount  to  exceed  eighty  percent  (80%)  of  the
      acquisition  cost  of  the  Drillship,   without  the  prior  written
      approval  of the Members (such financing to be on a basis of recourse
      limited to the Drillship, her earnings and insurances); Conoco or  an
      Affiliate has the option to provide such permanent financing for  the
      Company provided:  (i) the interest rate is no greater than 25  basis
      points  in  excess of that interest rate and on such other  terms  as
      are  comparable  to any other permanent financing  available  to  the
      Company,  and (ii) such option is exercised in writing by  Conoco  to
      the  Company  no later than ninety (90) days prior to  the  scheduled
      delivery of the Drillship by the Builder to the Company .

           "Representatives"  shall have the meaning attributed  to  it  in
      Section 8.2(c).

           "Second  Member"  shall have the meaning  attributed  to  it  in
      Section 4.3.

           "Sharing Ratio" shall mean, with respect to each Member,  as  of
      the  date  of  this Agreement, the percentage set forth  beside  such
      Member's name on Exhibit "C" to this Agreement.

           "Shipbuilding  Contract" means the Contract  dated  February  7,
      1997   for  the  construction  and  sale  of  the  Drillship  between
      Deepwater  Drilling L.L.C. and Builder, to be assigned  by  Deepwater
      Drilling L.L.C. to Company.

           "TMP" shall have the meaning attributed to it in Section 6.1.

                                ARTICLE II

                       FORMATION OF COMPANY; FILINGS

      2.1  Formation.  The Company shall be organized by the  Members  upon
execution  and delivery of this Agreement and the  execution and filing  of
the  Certificate of Formation of the Company to the Delaware  Secretary  of
State in accordance with and pursuant to the Act, substantially in the form
attached as Exhibit "D" to this Agreement.  Conoco or Reading & Bates shall
be  an  "authorized person" within the meaning of the Act for  purposes  of
executing  the  Certificate  of Formation.  The  Manager  may  provide  the
Members with written evidence of their Membership Interest in such form  as
the  Members Committee may from time to time determine, provided  that,  if
issued, such written evidence shall always indicate that a Member shall not
transfer  its  Membership Interest except in accordance with the  terms  of
this Agreement.  Except as provided to the contrary in this Agreement,  the
rights  and  obligations of the Members shall be governed by the provisions
of the Act.

      2.2  Registered  Office and Registered Agent.  The Company's  initial
registered  office shall be at the office of its registered agent  at  1209
Orange  Street,  Wilmington, Delaware 19801, and the name  of  its  initial
registered agent at such address shall be The Corporation Trust Company.

      The  registered office and registered agent may be changed from  time
to  time by filing the address of the new registered office and/or the name
of  the  new registered agent with the Delaware Secretary of State pursuant
to the Act.

      2.3  Filings.  The Members, the Members Committee and/or the Manager,
as  applicable,  shall execute, deliver and file such additional  documents
and  perform  such  additional  acts consistent  with  the  terms  of  this
Agreement  as may be necessary to comply with the requirements of  law  for
the  formation, qualification, and operation of a limited liability company
in each jurisdiction in which the Company shall conduct business.

      2.4  Relationship of the Parties.  The Members understand  and  agree
that the arrangement and undertakings evidenced by the Agreement result  in
a  partnership  for purposes of federal income taxation and  certain  state
income  tax laws which incorporate or follow federal income tax principles.
For  every other purpose of the Agreement, the Members understand and agree
that  their legal relationship to each other and to any third parties under
applicable state law is that of members of a limited liability company  and
not as a partnership.

                                ARTICLE III

                  NAME; PURPOSE; PLACE OF BUSINESS; TERM

      3.1  Name.   The name of the Company shall be "Deepwater Drilling  II
L.L.C.", and the business of the Company shall be conducted under such name
or under any other name or names as the Members  Committee may from time to
time  elect,  or  as  may  be necessary to comply with  the  laws  of  each
jurisdiction  in  which  the  Company conducts,  or  proposes  to  conduct,
business.

      3.2  Purposes.   The purposes of the Company are  (a)  to  cause  the
Drillship  to be built and equipped, as described in Exhibit "A",  to  take
delivery  of  the Drillship from the Builder, to operate the Drillship  and
perform  the  Drilling Contracts and other drilling and  related  contracts
obtained  by  the Company for the Drillship, and to carry out any  and  all
modifications  to  the  Drillship deemed necessary or  appropriate  by  the
Members  Committee  (including modifications to the Drillship  which  might
change  the overall use of same from a mobile offshore drilling unit  to  a
floating  production, storage and offloading vessel),  (b)  to  obtain  the
necessary  permanent  and construction financing [it being  understood  and
agreed  that with respect to the construction financing each of the Members
shall  provide,  or  cause  to  be provided,  the  necessary  cost  overrun
guaranty,  to  the extent of its respective Sharing Ratio, to support  such
financing  for  the Company from third parties  to enable  the  Company  to
acquire the Drillship (including entering into the Purchase Note)], and  to
enter  into from time to time such other financing arrangements as  may  be
necessary,  appropriate, or advisable to enable the Company  to  accomplish
its purposes and to mortgage, pledge, assign, grant a security interest in,
or  otherwise encumber the Drillship, its earnings and insurances, and  any
or  all  of the other Company assets to secure the Purchase Note  and  such
other  financing  arrangements, (c) to sell, assign,  lease,  exchange,  or
otherwise  Dispose  of,  or  refinance  or  additionally  finance,  all  or
substantially all of the Company's interest in one or more or  all  of  its
assets,  (d) to maximize the profits of the Company, and (e) to  engage  in
all  activities  and  to  enter into, exercise the  rights  and  enjoy  the
benefits  under, and discharge the obligations of the Company pursuant  to,
all   contracts,   agreements,  and  documents  that  may   be   necessary,
appropriate, or advisable to enable the Company to accomplish the  purposes
set  forth in clauses (a), (b), (c) and (d) of this sentence, and  (f)  any
other lawful business purpose or activity that may be legally exercised  by
a limited liability company under the Act, as the Members may agree.

      3.3  Place  of  Business.  The principal place  of  business  of  the
Company  shall  be at 901 Threadneedle, Suite 200, Houston,   Texas  77079.
The  Company may establish offices at such other places within  or  outside
the  State  of  Texas  as  the Members  Committee may  from  time  to  time
designate.

      3.4  Term.   The Company  shall be deemed to have commenced effective
as  of  the date the Certificate of Formation of the Company is filed  with
the  Delaware  Secretary of State.  The Company  shall continue  until  the
close of Company business on December 31, 2027, unless sooner terminated as
provided in this Agreement.

                                ARTICLE IV

             MEMBERS; RESTRICTION ON DISPOSITION OF INTEREST;
                      PREFERENTIAL RIGHT OF PURCHASE

      4.1  Members.   Simultaneously with the execution of this  Agreement,
Conoco and Reading & Bates are hereby admitted as Members  of the Company.

      4.2  Restrictions  on  the Disposition of an Interest.   Each  Member
shall  be  entitled  from time to time, without the prior  consent  of  the
Members Committee, but subject to the provisions of Sections 4.4, 4.5, 4.6,
and 4.7, to Dispose of all of its Membership Interest in the Company to  an
Affiliate of such Member.  Except as set forth in the immediately preceding
sentence, no Member shall have the right to effect a Disposition of all  or
any part of its Membership Interest in the Company unless and until (i) the
consent of the Members Committee has been obtained and (ii) there has  been
compliance with the provisions of Section 4.3, 4.4, 4.5, 4.6, and 4.7.   If
the  Members Committee consents to the Disposition of a Membership Interest
in  the Company, the provisions of Section 4.3 shall then become applicable
to the Disposition in question.  Any attempted Disposition by a Person of a
Membership Interest or right, or any part thereof, in or in respect of  the
Company  in  contravention of this Section 4.2  shall  be,  and  is  hereby
declared, null and void ab initio.

      4.3  Preferential  Right  of Purchase.  (a) Subject  to  Section  4.2
should any Member at any time desire to Dispose of all or a portion of  its
Membership  Interest  in the Company pursuant to a  bona  fide  offer  from
another  Person (other than an Affiliate), such Member (the "First Member")
shall  promptly give notice (the "Disposition Notice") thereof to the other
Member  (hereinafter referred to as the "Second Member").  The  Disposition
Notice  shall set forth all relevant information in respect of the proposed
Disposition,  including, without limitation, the name and  address  of  the
prospective   acquirer  and  each  Person  that  Controls  the  prospective
acquirer,  the purchase price (all of which must be payable in  cash),  and
the  terms of any delayed payment of the purchase price.  The Second Member
shall  have the optional preferential right (to be exercised by  notice  to
the  First Member given no later than ninety days after the Second Member's
receipt of the Disposition Notice) to acquire, for the same purchase  price
and  on  the  same terms of any delayed payment that are set forth  in  the
Disposition Notice, the Membership Interest that the First Member  proposes
to  Dispose.  If the Second Member does not elect to exercise the  optional
right  set  forth  in the immediately preceding sentence  within  the  time
period set forth therein, the First Member shall have the right, subject to
compliance with the provisions of Sections 4.2, 4.4, 4.5, 4.6 and  4.7,  to
Dispose  of  the  Membership Interest described in the  Disposition  Notice
strictly  in  accordance  with the terms of the Disposition  Notice  for  a
period  of  sixty-five  days after the expiration of  the  above  described
ninety  day  preferential right period.  If the First Member  fails  so  to
Dispose  of the Membership Interest within such sixty-five day period,  the
proposed  Disposition shall again become subject to the preferential  right
set forth in this Section 4.3.

      (b)  If the Second Member exercises the preferential right set  forth
in  Section 4.3(a), the closing of the acquisition by the Second Member  of
the First Member's Membership Interest shall be held at the principal place
of  business  of  the Company on a date mutually acceptable  to  the  First
Member  and  the Second Member, but in no event more than sixty days  after
receipt  by  the First Member of notice of the Second Member's election  to
acquire  the  First  Member's Membership Interest.   At  such  closing  the
following transactions shall occur:

           (i)The  First Member shall convey and assign by assignment  with
general  warranty  of title to the Second Member, free  and  clear  of  all
liens, claims, and encumbrances (other than any lien, claim, or encumbrance
created  pursuant to Section 5.6, set forth in the Disposition  Notice,  or
otherwise  expressly  permitted  by  the  Second  Member),  the  Membership
Interest  in  the  Company described in the Disposition  Notice  and  shall
execute  and  deliver   to  the Second Member all  documents  that  may  be
required  to  give  effect  to  the Disposition  and  acquisition  of  such
interest; and

           (ii)     The  Second  Member shall pay to the First  Member,  in
accordance  with  the terms of payment set forth in the Disposition  Notice
(that  is,  in  cash, payable either 100% at the closing or in installments
over  time, whichever is set forth in the Disposition Notice), the purchase
price  specified  in  the  Disposition Notice for the  Membership  Interest
described  in the Disposition Notice whereupon such Second Member  (or  its
designee)  shall  be  admitted as a substitute Member  in  respect  of  the
Membership Interest so purchased.

      (c)   If the Second Member exercises the preferential right set forth
in  Section 4.3(a), in the notice to the First Member exercising such right
the Second Member shall be entitled to designate an Affiliate of the Second
Member  to acquire the Membership Interest of the First Member.  Upon  such
designation, the designated Affiliate will be substituted in the place  and
stead of the Second Member for purposes of the Disposition provided for  in
Section  4.3(b)(i),  but  the Second Member will remain  fully  liable  for
making any and all payments due under Section 4.3(b)(ii).

      (d)  It is expressly agreed that the remedy at law for breach of  any
of  the obligations set forth in this Section 4.3 is inadequate in view  of
(i) the complexities and uncertainties in measuring the actual damages that
would  be  sustained by reason of the failure of a Member to  comply  fully
with  each  of  said obligations, and (ii) the uniqueness  of  the  Company
business and the  relationship between the Members.  Accordingly,  each  of
the   aforesaid  obligations  shall  be,  and  is  hereby  expressly  made,
enforceable by specific performance.

      4.4 Disposition Documents.  Except as a result of the foreclosure  of
a  Permitted Security Interest in a Membership Interest, the Company  shall
not  recognize  for any purpose any purported Disposition  of  all  or  any
portion  of a Member's Membership Interest in the Company unless and  until
the  provisions  of this Article have been satisfied and there  shall  have
been delivered to the Manager a dated notification of such Disposition  (i)
executed and acknowledged by both the Member effecting such Disposition and
the Person to whom such Membership Interest is Disposed, (ii) if the Person
to  whom such Membership Interest is Disposed is to become a Member in  the
Company,  containing the acceptance by such Person of  all  the  terms  and
provisions of this Agreement and an agreement by such Person to perform and
discharge timely all of the obligations and liabilities in respect  of  the
Membership Interest Disposed of that are attributable to the period on  and
subsequent  to  the  date  of  the  Disposition,  and  (iii)  containing  a
representation  that  such  Disposition was made  in  accordance  with  all
applicable laws and regulations.  Any Disposition shall be effective as  of
the  first  day of the calendar month immediately succeeding the  month  in
which   the  Manager  actually  receives  the  aforesaid  notification   of
Disposition.

      4.5  Legality.   Notwithstanding any provision of this  Agreement  to
the  contrary,  no  Disposition by a Member shall be effective  unless  (i)
either  (aa)  the  Membership  Interest in the  Company   subject  to  such
Disposition shall have been registered under the Securities Act of 1933, as
amended, and any applicable state securities laws or (bb) the Company shall
have  received  a favorable opinion of the Company's legal  counsel  or  of
other legal counsel acceptable to the Members Committee to the effect  that
such  Disposition  is exempt from registration under such  laws,  and  (ii)
unless waived by all of the other Members the Company shall have received a
favorable opinion of the Company's legal counsel or of other legal  counsel
acceptable  to  the Members Committee, to the effect that such  Disposition
would not (aa) when added to the total of all other sales, assignments,  or
other  Dispositions  within  the preceding twelve  months,  result  in  the
Company  being considered to have terminated within the meaning of  section
708 of the Code, or (bb) cause the Company to jeopardize its classification
as a partnership for federal income tax purposes.

      4.6  Status After Disposition.  Each Member shall have the  right  to
constitute  the  Person to whom its Membership Interest in the  Company  is
Disposed  as  a substituted Member if (i) the Disposition in  question  has
been effected in compliance with the provisions of this Article IV and (ii)
the  preferential right of purchase set forth in Section 4.3 has  not  been
exercised.   Each  Member  that Disposes of a Membership  Interest  in  the
Company  to  a Member or to a Person that is admitted to the Company  as  a
Member contemporaneously with such Disposition shall, as between itself and
the  other  Members,  remain  responsible for the  timely  performance  and
discharge  of all obligations and liabilities in respect of the  Membership
Interest Disposed of that are attributable to the period prior to the  date
of  its Disposition but shall, as between itself and the other Members,  be
released  from all other Company obligations and liabilities.  Each  Member
that  Disposes of a Membership Interest in the Company to a Person that  is
not  a  Member  or  that  is  not admitted  to  the  Company  as  a  Member
contemporaneously  with such Disposition shall remain responsible  for  the
timely  performance  and discharge of all obligations  and  liabilities  in
respect of the Membership Interest Disposed of, whether attributable to the
period prior or subsequent to the date of its Disposition.

      4.7  Disposition  Costs.   All  costs  incurred  by  the  Company  in
connection  with the Disposition of a Membership Interest  in  the  Company
(including, without limitation, the legal fees incurred in connection  with
the  obtaining of the legal opinions referred to in Section 4.5)  shall  be
borne  and  paid  by the Member effecting the Disposition within  ten  days
after  the  receipt by such Member of the Company's invoice for the  amount
due.

      4.8   Limitation  on  Transfer.   Except  as  otherwise  specifically
provided  in  this  Agreement, no Member shall have the right  without  the
prior written consent of the other Member, to:

      (i)  other  than  through a Permitted Security Interest, dispose  of,
           assign,  pledge,  hypothecate, transfer, exchange  or  otherwise
           transfer  for  consideration all or any part of  its  Membership
           Interest in the Company; or

      (ii) Give or otherwise transfer for no consideration (whether or  not
           by  operation of law) all or part of its Membership Interest  in
           the Company.

      In  any  agreement granting a Permitted Security Interest  (including
this Agreement), provided all other Members agree in writing, a Member  may
provide  in  such  agreement that in the event of the foreclosure  of  such
Permitted  Security Interest, the party foreclosing on same  may  become  a
substituted  Member  of the Company.  In addition,  if  and  only  if,  the
foreclosing  party is a Member, such Member may designate an  Affiliate  to
exercise  its  rights  so  as  to avoid a single-Member  limited  liability
company.

      Each Member covenants and agrees that it will not engage directly  or
indirectly in any business other than the business arising out of its being
a  Member  of the Company; however, this provision is not intended  in  any
manner  to prohibit an Affiliate of a Member from engaging in any  business
whatsoever as further set out in Section 14.14.

      If  after  the  expiration of the Base Term  a  Member  resigns  (the
"Resigning  Member"),  the  remaining Member (the  "Non-Resigning  Member")
shall have the option to purchase the Membership of the Resigning Member at
the  then  fair market value of the Resigning Member's Membership Interest.
The Non-Resigning Member shall have the right to designate an Affiliate  to
exercise  the  rights provided in this Section.  If a Non-Resigning  Member
exercises  the rights given in this Section, the Resigning Member  and  the
Non-Resigning  Member  shall  close the  sale  of  the  Resigning  Member's
Membership  Interest to the Non-Resigning Member within  twenty  (20)  days
after  the  365  days written notice provided in Section 11.1(b),  and  the
Members shall follow the procedures set out in Section 4.3(b) in connection
with the sale of the Resigning Member's Membership Interest.

                                 ARTICLE V

                   CONTRIBUTIONS; DISTRIBUTIONS; FAILURE
              TO MAKE CONTRIBUTIONS TIMELY; SECURITY INTEREST

      5.1  Initial Contributions and Loans.  Conoco agrees it will make  an
initial equity contribution to the Company of $20,000,000.--, and Reading &
Bates agrees it will make an initial equity contribution to the Company  of
$30,000,000.--.   The  initial equity contributions represent  the  Sharing
Ratios  of  Conoco and Reading & Bates, and payment shall be  made  to  the
Company  by  such Members on the earlier of (i) on February 28, 1999,  (ii)
with  the  prior written approval of the Member's Committee, on demand,  in
whole or in part, or (iii) as provided in the promissory notes referred  to
in the next succeeding sentence.  In order to secure its obligation to make
such initial equity contribution, each Member agrees upon execution of  the
Drilling Contracts it will deliver to the Company a demand promissory  note
in  favor of the Company for the amount of its initial equity contribution,
as  set  out  in the first sentence of this Section 5.1, each  such  demand
promissory  note to allow the Company to make demands contemporaneously  to
each  of  the  Members for pro-rata payments of such notes on  the  Payment
Date.   Such promissory notes shall be in the form attached as Exhibit  "E"
to  this  Agreement  and  shall be payable  as  provided  therein.   It  is
understood  and  agreed by the Members that any and all  payments  of  such
initial equity contribution by a Member shall contemporaneously reduce  the
principal of that Member's promissory note referred to in this Section  5.1
by  the  same amounts, and likewise any and all payments made by  a  Member
with  respect to any demands made with respect to such Member's  promissory
note  shall  contemporaneously be credited against such Member's obligation
to make its initial equity contribution under this Section 5.1.

      In  addition,  Conoco agrees to loan the Company up  to  the  sum  of
$28,900,350.--, and Reading & Bates agrees to loan the Company  up  to  the
sum  of  $43,350,540.--,  in  order  to enable  the  Company  to  reimburse
Deepwater Drilling L.L.C. for $14,240,180.-- previously paid to the Builder
with  respect  to the first installment payment due under the  Shipbuilding
Contract,  and  to enable to Company to pay the second installment  payment
due under the Shipbuilding Contract amounting to $57,800,720.--, such loans
to  be  secured by promissory notes executed and delivered by  the  Company
substantially  in  the  form attached as Exhibit  "F"  to  this  Agreement.
Further, the Members agree to loan to the Company their respective  Sharing
Ratios  of up to an additional $30,000,000.- to enable the Company to  make
commitments  for  owner-furnished equipment  required  for  the  Drillship,
provided such commitments are approved by the Members Committee and/or  the
Manager  in  accordance  with policies and procedures  established  by  the
Members  Committee pursuant to the terms of this Agreement, each such  loan
to  be secured by a promissory note or notes executed and delivered by  the
Company  substantially  in  the  form  attached  as  Exhibit  "F"  to  this
Agreement.

      5.2   Cost Overrun Contributions.  Each of the Members agrees, to the
extent  required by the construction lender(s) of the Company with  respect
to  the Drillship, it will provide or cause to be provided by its Affiliate
a  cost overrun guaranty (or other similar type guaranty) in favor of  such
interim  construction  lender(s),  in a form  acceptable  to  the  Members,
pursuant  to which the respective guarantor for each Member would guarantee
that  Member's respective Sharing Ratio percentage, so the Company will  be
able to fund that amount of any cost overruns incurred by Company under the
Shipbuilding  Contract, in order for the Company to take  delivery  of  the
Drillship  under the Shipbuilding Contract.  Accordingly, the Members  also
agree,  within  three  business  days after  demand  by  any  such  interim
construction  lenders,  to  contribute  to  the  Company  in  cash,   their
respective  Member's  Sharing Ratio of any and all such  additional  monies
necessary  in  order to enable Company to take delivery  of  the  Drillship
under  the  Shipbuilding Contract (including owner furnished equipment)  in
compliance  with  the terms of any such cost overrun guaranties  (over  and
above the amount of the promissory notes made by the Members referred to in
the first paragraph of Section 5.1 and the amount of the Purchase Note).

      5.3  Additional  Contributions.  Except for initial  working  capital
for  the Company to commence operations, the Members intend for the Company
operations  to  be  self-sustaining, and  after  the  Drillship  goes  into
service,  for  the  Company to pay its costs and  expenses  from  operating
revenues.   However, without creating any rights, remedies,  or  claims  in
favor of or enforceable by any third party, if at any time the Company,  as
determined by the Members Committee, requires funds in excess of  operating
revenues  which  are  necessary  to allow the  Company  to  accomplish  its
objectives  and  purposes,  each  Member  shall,  and  hereby  agrees   to,
contribute  to  the  Company, in cash, within ten days  after  receiving  a
request therefor from the Manager, such Member's Sharing Ratio of all  such
additional  monies that are necessary to enable the Company  to  cause  the
Assets  to be properly operated and maintained and to discharge its  costs,
expenses, obligations, and liabilities.

      5.4  Distributable Cash.  The Distributable Cash of the Company shall
be  determined  on  a  quarterly basis and  the  amount  thereof  shall  be
distributed  to  the  Members pro rata according to  their  Sharing  Ratios
(except  as  otherwise required to effect and carry out the  provisions  of
Section 5.5(b)(iv), 14.1 and 14.12), provided however, that no distribution
will be made to the extent any such distribution will result in the minimum
equity  capital  of  the  Company falling below 3%  of  the  total  assets.
Amounts payable to any Member other than in its capacity as a Member,  such
as  for services rendered, goods purchased or money borrowed, shall not  be
treated as distributions for purposes of this Section 5.4.

      5.5  Failure  to  Make  Contributions.  If  either  Member  fails  to
contribute timely all or any portion of any monetary sum that it has agreed
to contribute to the Company pursuant to the provisions of Section 5.1, 5.2
or  5.3 the Company may exercise, by notice to such Member (the "Delinquent
Member") any one or more of the following rights or remedies:

          (a)    Taking  such  action (including, without  limitation,  the
      filing  of  a lawsuit) as the Members Committee deems appropriate  to
      obtain  payment  by  the Delinquent Member of  that  portion  of  its
      agreed  contribution  that  is  in default,  together  with  interest
      thereon  at  the  Default  Interest Rate  from  the  date  that  such
      contribution was due until the date that such contribution  is  made,
      at the cost and expense of the Delinquent Member;

          (b)  Permitting the other Members that desire to do so (the "Non-
     Delinquent Members") to advance that portion of the contribution  that
     is in default, with the following results:

               (i)    The  sum thus advanced shall be deemed to be  a  loan
          from  the  Non-Delinquent Member to the Delinquent Member  and  a
          contribution of such sum to the Company by the Delinquent  Member
          pursuant to Section 5.1, 5.2 or 5.3, as appropriate;

               (ii)   The  principal balance of such loan and  all  accrued
          unpaid  interest thereon shall be due and payable in whole within
          thirty  days after written demand therefor has been given to  the
          Delinquent Member by the Non-Delinquent Member;

               (iii)  The loan shall bear interest at the Default  Interest
          Rate,  from the date that the loan was made until the  date  that
          such  loan, together with all interest accrued thereon, is repaid
          to the Non-Delinquent Member;

               (iv)    All  distributions  from  the  Company  that   would
          otherwise  be  made to the Delinquent Member (whether  before  or
          after dissolution of the Company) shall, instead, be paid to  the
          Non-Delinquent  Member until the loan and  all  interest  accrued
          thereon  have  been  repaid in full to the Non-Delinquent  Member
          (with  all  such payments being applied first to interest  earned
          and  unpaid and then to principal);  provided however,  that  for
          purposes of Section 6.4, any amounts paid by the Company  to  the
          Non-Delinquent   Member   shall  nevertheless   be   treated   as
          adjustments to the Delinquent Member's Capital Account;

               (v)    The  repayment of the loan and all  interest  accrued
          thereon shall be secured by a security interest in the Delinquent
          Member's  interest  in the Company, as more fully  set  forth  in
          Section 5.6, and

               (vi)   The  Non-Delinquent Member shall have the  right,  in
          addition  to the other rights and remedies granted to it pursuant
          to this Agreement or available to it at law or in equity, to take
          such  action  (including, without limitation,  the  filing  of  a
          lawsuit) as the Non-Delinquent Member deem appropriate to  obtain
          payment by the Delinquent Member of the principal balance of such
          loan and all accrued and unpaid interest thereon, at the cost and
          expense of the Delinquent Member;

          (c)   Exercising the rights of a secured party under the  Uniform
     Commercial Code of the State of Delaware, as more fully set  forth  in
     Section 5.6;

          (d)  Dissolving the Company; or

          (e)  Exercising any other rights and remedies available at law or
     in equity.

     5.6   Grant  of Security Interest.  Each Member hereby grants  to  the
Company  and to the Non-Delinquent Member, in respect of any loans made  by
the  Non-Delinquent  Member to the Delinquent Member  pursuant  to  Section
5.5(b), as security for (i) the payment of all contributions to be made  by
such  Member pursuant to this Agreement and (ii) the repayment of any loans
and  all  interest accrued thereon made by the Non-Delinquent Member  to  a
Delinquent Member pursuant to Section 5.5(b), a security interest in and to
its  Membership Interest in the Company, all pursuant to and in  accordance
with  the  provisions  of  the Uniform Commercial  Code  of  the  State  of
Delaware,  and  agrees that in the event of any default in the  payment  of
such  contributions  or  in the repayment of such loans  and  all  interest
accrued  thereon, the Company or the Non-Delinquent Member, as  applicable,
shall  have and are hereby granted all the rights and remedies of a secured
party  under  the  Uniform Commercial Code of the State  of  Delaware  with
respect  to  the  security interest granted herein.   Each  Member  further
agrees  to  execute  and deliver to the other Members  all  such  financing
statements  and  other  instruments as  may  be  required  by  the  Members
Committee or the Non-Delinquent Members, as applicable, to effect and carry
out  the  provisions of the immediately preceding sentence and agrees  that
this  Agreement may serve as the necessary security agreement and financing
statement.  The Company shall register on its books the security  interests
given  pursuant to this Section 5.6.  The Members agree that  the  security
interests  granted  under  this Section 5.6 shall  be  subordinate  to  any
security interests granted to any interim construction lender or lenders to
the Company.

     5.7   Secured Party.  A secured party of a Permitted Security Interest
with respect to any Member's Membership Interest shall not as the result of
the  exercise of any of its rights as a secured party become liable for any
of the obligations of such Member under this Agreement.

                                ARTICLE VI

                                TAX MATTERS

     6.1.1      Tax  Matters Partner. The Members intend that  the  Company
shall  be  taxed  as  a partnership for federal, state, local  and  foreign
income  tax  purposes,  and  have  agreed to  certain  provisions  of  this
Agreement  with  that intention in mind.  The Members  agree  to  take  all
reasonable  actions,  including the amendment of  this  Agreement  and  the
execution  of such other documents as may be reasonably required  in  order
for  the  Company to qualify and receive partnership treatment for federal,
state,  local and foreign income tax purposes.  At such time, if  ever,  as
final  regulations are promulgated as heretofore proposed (61 F.R.  Section
21989) under Section 7701 of the Code with respect to classification of  an
entity as a partnership for federal income tax purposes, the Members  shall
elect in compliance with such regulations that the Company be treated,  for
federal  income tax purposes, as a partnership and take such other  actions
as  may be reasonably necessary or desirable in connection therewith.   The
Member  from  which  the Manager is selected by the  Members  Committee  is
designated  as the Tax Matters Partner ("TMP"), as such term is defined  in
Section  6231(a)(7)  of  the Internal Revenue Code  of  1986,  as  amended,
("Code").  In the event of any change in the TMP, the Member serving as TMP
at the beginning of a given taxable year shall continue as TMP with respect
to  all matters concerning such year.  The TMP and other Members shall  use
their best efforts to comply with responsibilities outlined in this section
and  in Code Sections 6222 and 6233 and 6050K (and the Treasury Regulations
thereunder)  and in doing so shall incur no liability to any other  Member.
Notwithstanding  the  TMP's  obligation to use  its  best  efforts  in  the
fulfillment of its responsibilities, the TMP shall not be required to incur
any  expenses  for the preparation for, or pursuance of administrative,  or
judicial proceedings, unless the Members agree on a method for sharing such
expenses.

     6.1.2  Information Request by TMP.  The Members shall furnish the  TMP
within  two  weeks  from the receipt of the request with  such  information
(including  information  specified  in  Code  Sections  6230(e)  on  Member
identification and 6050K for transfers of Membership Interests) as the  TMP
may reasonably request to permit it to provide the Internal Revenue Service
with sufficient information for purposes of Code Sections 6223(c) and 650K.

     6.1.3  TMP Agreements with IRS.

     6.1.3.1   The TMP shall not agree to any extension of the  statute  of
     limitations  for  making assessments on behalf of the Company  without
     first obtaining the written consent of all Members.  The TMP shall not
     bind  any other Member to a settlement agreement in tax audits without
     obtaining the written concurrence of any such Member.

     6.1.3.2  Any other Member who enters into a settlement agreement  with
     the  Secretary of the Treasury with respect to any Company  items,  as
     defined in Code Section 6231(a)(3), shall notify the other Members  of
     the terms within ninety (90) days from the date of such settlement.

     6.1.4   Inconsistent Treatment of Company Item.  If any Member intends
to file a notice of inconsistent treatment under Code Section 6222(b), such
Member  shall, prior to the filing of such notice, notify the  TMP  of  the
(actual or potential) inconsistency of the Member's intended treatment of a
Company  item with the treatment of that item by the Company.   Within  one
week  of  receipt the TMP shall remit copies of such notification to  other
Members to the Company.  If an inconsistency notice is filed solely because
a  Member has not received a Schedule K-1 in time for filing of its  income
tax return, the TMP need not be notified.

     6.1.5  Communication of Proceedings to Members.  The TMP shall to  the
extent and in the manner provided by regulations issued pursuant to Section
6223(g)  of  the Code, keep all Members informed of all administrative  and
judicial  proceedings for the adjustment at the Company  level  of  Company
items.

     6.1.6  Requests for Administrative Adjustment.  No Member shall file a
request  pursuant to Code Section 6227 for an administrative adjustment  of
Company  items  without first notifying all other Members.   If  all  other
Members agree with the requested adjustment, the TMP shall file the request
on  behalf  of  the Company.  If unanimous consent is not  obtained  within
thirty  (30) days from such notice, or within the period required to timely
file  the  request for administrative adjustment, if shorter,  any  Member,
including the TMP, may file a request for administrative adjustment on  its
own behalf.

     6.1.7   Judicial Proceedings.  Any Member intending to file a petition
under  Code Sections 6226, 6228, or any other Code Section with respect  to
any  Company item, or other tax matters involving the Company, shall notify
the  other Members, prior to such filing, of the nature of the contemplated
proceeding.  In the case where the TMP is the Member intending to file such
petition, such notice shall be given within a reasonable time to allow  the
other  Members to participate in the choice of the forum for such petition.
If  the Members do not agree on the appropriate forum, then the forum shall
be  decided  by majority vote.  Each Member shall have a vote in accordance
with its percentage interest in the  Company for the year under audit.   If
a  majority  cannot  agree, the TMP shall choose the forum.   If  a  Member
intends to seek review of any court decision rendered as a result of such a
proceeding  such  Member shall notify the other Members, prior  to  seeking
such review.

6.2  Income Tax Compliance and Capital Accounts

     6.2.1   Tax  Returns.   The TMP shall prepare and  file  all  required
federal,  state, and local partnership income tax returns, as well  as  all
sales, use and other excise tax returns.  In preparing such returns the TMP
shall use its best efforts and in doing so shall incur no liability to  any
other  Member with regard to such returns.  Not less than thirty (30)  days
prior to the due  date (including extensions) the TMP shall submit to  each
Member  a  copy of the income tax returns and/or franchise tax  returns  as
proposed for review.

     6.2.2   Fair  Market Value Capital Accounts.  The TMP shall  establish
and  maintain  fair  market value ("FMV") capital accounts  and  tax  basis
capital  accounts for each Member.  Upon request, the TMP shall  submit  to
each Member along with a copy of any proposed partnership income tax return
an  accounting of its respective FMV capital accounts as of the end of  the
tax return period.

     6.2.3  Information Request.  Each Member agrees to furnish to the  TMP
not  later  than  sixty  (60) days before the return  due  date  (including
extensions)  such  information relating to the operations  conducted  under
this  Agreement as may be required for the proper preparation of  all  such
tax returns and capital accounts.

6.3  Elections

     6.3.1   General  Elections.  For both income tax  return  and  capital
account  purposes,  the  Company  shall elect:   (a)  to  use  the  maximum
allowable accelerated tax method and the shortest permissible tax life  for
depreciation purposes, (b) the accrual method of accounting, (c)  to  treat
all  organizational  costs of the Company as deferred expenses  amortizable
over  a sixty (60) month period pursuant to Section 709(b) of the Code  and
comparable  provisions of state law, (d) to amortize start-up  expenditures
over  a sixty (60) month period pursuant to Section 195(d) of the Code  and
comparable provisions of state law, and (e) to report income on a  calendar
year basis.

     6.3.2   Other Elections or Consents.  In connection with any permitted
transfer of a Membership Interest in the Company under Article IV, the  TMP
shall  cause  the  Company, at the written request of a transferee  or  the
transferor,  on  behalf of the Company and at the time and manner  provided
under  Code  Section 754 to adjust the basis of Company property  with  the
adjustments  provided in Code Sections 734 for a distribution  of  property
and 743 for a transfer of a Membership Interest.  In case of a distribution
of  property, the TMP shall adjust all tax basis capital accounts.  In case
of a transfer of an interest in the Company, the transferee shall, no later
than  sixty  (60)  days  prior to the due date of the  Company  tax  return
(including extensions), cooperate with the TMP in the filing of tax returns
by  providing  the TMP with all reconciliations necessary to  reflect  such
basis  adjustments  on  the  tax return.  Any  election  other  than  those
referred to above must be approved by the Members Committee.

6.4  Capital Contributions and FMV Capital Accounts

     6.4.1  Capital Contributions.  The respective capital contributions of
each  Member to the Company shall be (a) any properties contributed to  the
Company  (net  of  liabilities  that  the  Company  assumes  or  takes  the
properties   subject  to),  and  (b)  all  amounts  paid  by  each   Member
characterized as contributions to the Company or Company expenses borne and
paid by such Member on behalf of the Company.

     6.4.2   FMV  Capital  Accounts.  The FMV  capital  accounts  shall  be
increased and decreased as follows:

     (a)   The FMV capital accounts shall be increased by:  (i) the  amount
     of money and the fair market value of any property contributed by each
     Member,  respectively, to the Company (net of liabilities  assumed  by
     the  Company  or  to which the contributed property is subject);  (ii)
     that  Member's [Section 6.5.1] allocated share of Company  income  and
     gains,  or  items  thereof; and, (iii) that  Member's  share  of  Code
     Section 705(a)(1)(B) items.

     (b)   The FMV capital accounts shall be decreased by:  (i) the  amount
     of  money  and the fair market value of property distributed  to  each
     Member  (net  of liabilities assumed by such Member or  to  which  the
     property  is  subject); (ii) that Member's [Section  6.5.1]  allocated
     share  of  Company loss and deductions, or items thereof;  and,  (iii)
     that  Member's  share  of  Code Section 705(a)(2)(B)  items  and  Code
     Section 709 nondeductible and nonamortizable items.

     (c)  "Fair market value" when it applies to property contributed by or
     distributed to a Member or other Company property shall be  determined
     by the Members Committee.

6.5  Company Allocations

     6.5.1   FMV  Capital Account Allocations.  Each item of income,  gain,
     loss or deduction shall be allocated to each Member as follows:

          (a)   Operating and maintenance cost shall be allocated  to  each
          Member  in  accordance  with  its  respective  contribution,   or
          obligation to contribute, to such cost;

          (b)  Depreciation shall be allocated to each Member in accordance
          with  its contribution, or obligation to contribute, to the  cost
          of the underlying asset;

          (c)    Loss   (or  simulated  loss)  upon  the  sale,   exchange,
          distribution,  abandonment  or other disposition  of  depreciable
          property, shall be allocated to the Members in the ratio of their
          respective  FMV capital account adjusted basis in the depreciable
          property;

          (d)   Gain   (or   simulated  gain)  upon  the  sale,   exchange,
          distribution,  or other disposition of depreciable or  depletable
          property  shall  be  allocated to the Members  so  that  the  FMV
          capital account balances of the Members will most closely reflect
          their  respective  percentage or fractional interests  under  the
          Agreement;

          (e)   Costs  or expenses of any other kind shall be allocated  to
          each  Member  in accordance with its respective contribution,  or
          obligation to contribute, to such costs or expenses; and,

          (f)   Any other income item shall be allocated to the Members  in
          accordance  with the manner in which such income is  realized  by
          each Member.

6.5.2     Tax Returns and Tax Basis Capital Account Allocation.
          (a)   Unless  otherwise expressly provided herein the allocations
          of  Company  items  of income, gain, loss or  deduction  for  tax
          return  and  tax basis capital account purposes shall follow  the
          principles  of  allocation  under Section  6.5.1.   However,  the
          Company's gain or loss on the taxable disposition of any  Company
          property  in excess of the gain or loss under Section  6.5.1,  if
          any,  is  allocated to the contributing Member to the  extent  of
          such Member's pre-contribution gain or loss;

          (b)  Depreciation shall be allocated to each Member in accordance
          with   its  contribution  to  the  adjusted  tax  basis  of   the
          depreciable asset;

          (c)  Any recapture of depreciation or any other item of deduction
          or  credit shall, to the extent possible, be allocated among  the
          Members  in accordance with their sharing of the depreciation  or
          other item or deduction or credit which is recaptured;

          (d)   For  Company  properties with values different  from  their
          adjusted tax bases, the Members intend that allocations described
          in  this  Section  6.5.2  constitute  a  "reasonable  method"  of
          allocating gain or loss under Treasury Regulations Section 1.704-
          3(a)(1).

6.6  Termination and Liquidating Distributions

     6.6.1   Termination.  Termination shall occur on the  earlier  of  the
     events described in Code Sections 708(b)(1)(B) or 708 (b)(1)(A).

          (a)    Termination   Under  Code  Section   708(b)(1)(B).    Upon
          termination  under Code Section 708(b)(1)(B), each  Member's  FMV
          capital  account  shall  be  adjusted  as  provided  for  in  the
          regulations,  Section 1.704-1(b)(2)(iv)(1),  and  Section  6.6.3.
          The  distributions provided for in Sections 6.6.2  through  6.6.4
          shall  be  deemed  to have occurred, with the  Company  cash  and
          properties deemed contributed to a new limited liability company,
          the  terms  of  which are identical to those  contained  in  this
          Agreement.

          (b)    Termination   Under  Code  Section   708(b)(1)(A).    Upon
          termination  under Code Section 708(b)(1)(A), the business  shall
          be wound-up and concluded, and the assets shall be distributed to
          the  Members as described below by the end of such calendar  year
          (or,  if  later, within ninety (90) days after the date  of  such
          termination).  The assets shall be valued and distributed to  the
          creditors of the Company, if any, and to the Members in the order
          provided in Sections 6.6.2 through 6.6.4.

     6.6.2   Section  708(b)(1)(A) Termination.  In the  event  of  a  Code
     Section 708(b)(1)(A) termination, the assets shall be valued, and  the
     Company  shall first comply with Section 18-804(a)(1) of the Act,  and
     second,  all cash representing unexpended contributions by any  Member
     shall be returned to the contributor.

     6.6.3   Balancing.   Third, the FMV capital accounts  of  the  Members
     shall be determined under this Section 6.6.3.  The TMP shall take  the
     actions specified under this Section 6.6.3 in order to cause the ratio
     of the Members' FMV capital accounts to reflect as closely as possible
     their Sharing Ratios under the Agreement.  The ratio of a Member's FMV
     capital  account is represented by a fraction, the numerator of  which
     is  the  Member's FMV capital account balance and the  denominator  of
     which  is the sum of all Members' FMV capital account balances.   This
     is  hereafter referred to as "balancing of the FMV capital  accounts",
     and  when completed, the FMV capital accounts of the Members shall  be
     referred to as being "balanced".  The manner in which the FMV  capital
     accounts  of  the Members are to be balanced under this Section  6.6.3
     shall be determined as follows:

          (a)   The  fair market value of all Company properties  shall  be
          determined  and  the gain or loss for each property  which  would
          have  resulted  if a sale thereof at such fair market  value  had
          occurred shall be allocated in accordance with Section 6.5.1.  If
          thereafter any Member has a negative FMV capital account balance,
          that is, a balance less than zero, in accordance with Treas. Reg.
          Section  1.704-1(b)(2)(ii)(b)(3)  such  Member  is  obligated  to
          contribute  an  amount of cash to the Company to  facilitate  the
          balancing   of  the  FMV  capital  accounts.   If   after   these
          adjustments  the  FMV capital accounts are not balanced,  Article
          6.6.3(b) shall apply; or

          (b)   If  all  the  Members consent, any  cash  or  an  undivided
          interest  in certain selected properties shall be distributed  to
          one or more Members as necessary for the purpose of balancing the
          FMV capital accounts;

          (c)   Unless (b) above applies, an undivided interest in each and
          every  property  shall be distributed to one or more  Members  in
          accordance with the ratios of their FMV capital accounts;

          (d)  If a property is to be valued under (a) above or distributed
          pursuant  to  (b)  or  (c) above, the fair market  value  of  the
          property shall be agreed to by the Members.  In the event all  of
          the Members do not reach agreement as to the fair market value of
          property, the TMP shall cause a nationally recognized independent
          engineering firm to prepare an evaluation of fair market value of
          such property.

     6.6.4  Final Distribution.  Fourth, after the FMV capital accounts  of
     the  Members have been adjusted, pursuant to Section 6.6.3 above,  all
     other  or  remaining property and interest then held  by  the  Company
     shall  be distributed to the Members in accordance with their positive
     FMV capital account balances.

6.7  Transfers, Indemnification, and Correspondence.

     6.7.1   Transfers  of  Company  Interests.   Transfers  of  Membership
     Interests  shall be governed by the Agreement.  A Member  transferring
     its Membership Interest, or any part thereof, shall notify the TMP  in
     writing within two weeks of such transfer.

     6.7.2   Indemnification.   This Agreement does  not  provide  for  any
     indemnification provisions to protect Members against any harm  caused
     by  a  Code  Section 708(b)(1)(B) termination.  However,  the  Members
     agree that if any of them makes a sale or assignment of its Membership
     Interest  under  this  Agreement, such sale  or  assignment  shall  be
     structured,  if reasonably possible, to avoid causing an Code  Section
     708(b)(1)(B) termination.

     6.7.3  Correspondence.  All correspondence relating to the preparation
     and  filing  of the Company's income tax returns and capital  accounts
     shall be forwarded to the TMP.

     6.8  No Interest.  No Member shall be entitled to be paid interest  in
respect  of either its capital account or any contributions made by  it  to
the Company.

     6.9   Return of Capital.  Except as set forth in Section 6.6.2  hereof
and  notwithstanding anything in this Agreement to the contrary, no  Member
is  entitled to a return on any cash or property that it has contributed to
the capital of the Company, but shall look solely to distributions from the
Company.  No unrepaid capital contribution shall be deemed or considered to
be  a  liability  of  the Company or of any Member.   No  Member  shall  be
required  to contribute any cash or property to the Company to  enable  the
Company to return any Member's capital contribution.

                                ARTICLE VII

                          ADMINISTRATIVE MATTERS

     7.1  Books and Records. The books and records of the Company shall  be
kept,  at the expense of the Company, by  the Member from which the Manager
is  appointed  in accordance with this Agreement, following  that  Member's
normal  accounting  systems,  procedures  and  practices,  consistent  with
generally accepted accounting principles, on a calendar year basis for  all
purposes, and shall reflect all Company transactions and be appropriate and
adequate  for  recording  and  reporting the  financial  condition  of  the
Company.   Within  forty-five  days following  the  end  of  each  calendar
quarter,  the  Manager  shall cause to be prepared  and  submitted  to  the
Members  Committee  and  each  Member an unaudited  balance  sheet  and  an
unaudited  income statement of the Company and a comparison to  budgets  in
respect of such calendar quarter.  In addition, on or before March  31  (or
as  soon  thereafter as may be practicable) of each year the Manager  shall
cause  to  be  delivered  to  each Member, in respect  of  the  immediately
preceding  year, an audited balance sheet, an audited income statement,  an
audited  annual statement of changes in financial position of  the  Company
together  with  a  report by the Company's Independent Accountants  to  the
effect that such financial statements have been prepared in accordance with
generally  accepted accounting principles and present fairly the  Company's
financial   position,  results  of  operation,  and  changes  in  financial
position,  and  a report indicating each Member's share for federal  income
tax  purposes of the Company income, gain, credits, losses, and  deductions
prepared, in each case, by the Company's Independent Accountants.   A  copy
of  each  Company  tax  return required to be filed with  any  governmental
authority  shall be delivered to each Member at least ten days before  such
return is filed.

     7.2   Inspection.   Each Member, at its sole cost and  expense,  shall
have  the  right to inspect, copy, and audit the books and records  of  the
Company during reasonable business hours at the principal place of business
of  the  Company.   No Person other than a Member (or its  duly  authorized
representative) and the Company's Independent Accountants  shall  have  any
right  to  inspect  the books and records of the Company  for  any  purpose
whatsoever.  Each Person that inspects the books and records of the Company
shall maintain the confidentiality of the information received pursuant  to
or in connection with such inspection.

     7.3   Bank  Accounts; Investments.  All funds of the Company shall  be
deposited in its name in an account or accounts maintained in one  or  more
national or state bank or banks designated from time to time by the Members
Committee.  The funds of the Company shall not be commingled with the funds
of  any  other Person.  Checks shall be drawn upon the Company  account  or
accounts only for the purposes of the Company and shall be signed  by  such
signatory  party or parties as may be designated by the Members  Committee.
The  Manager shall have the obligation from time to time to deposit Company
funds  that (i) are not required for the operation of the business  of  the
Company  and  (ii) should not, in the Manager's opinion, be used  to  repay
Company  debt, in interest bearing bank accounts or to purchase  commercial
paper, treasury bills, or other high grade short term instruments following
guidelines approved by the Members Committee.

     7.4  Monthly Progress Reports.  At least once a month, the Manager, at
Company  expense, shall furnish to the Members a progress report  regarding
the operations of the Company.

                               ARTICLE VIII

                  MANAGEMENT; MEMBERS COMMITTEE; MANAGER;
                     STANDARD OF CARE; INDEMNIFICATION

     8.1   Management.   (a)  The management and  control  of  the  Company
business shall be vested in the Members, who shall exercise such management
and  control  through  and  by virtue of their  selection  of  the  Members
Committee in accordance with the succeeding provisions of this Article VIII
and  their  participation in the making of the decisions accorded  to  them
pursuant to this Agreement.

     (b)   The  Members  shall  be  entitled to  delegate  any  powers  and
authority  required  for  the  management of the  Company  to  the  Members
Committee, save that the Members reserve the following powers and authority
exclusively to themselves, namely:

     (i)             to  amend the purposes of the Company, as set  out  in
            Section 3.2;

     (ii)           to liquidate or otherwise dissolve the Company;

     (iii)  to  approve the merger or consolidation of the Company with  or
            into  an  "other business entity," as such term is  defined  in
            Section  18-209(a) of the Act, or the sale, exchange, or  other
            disposition  of  all,  or substantially all  of  the  Company's
            assets  which  is to occur as part of a single  transaction  or
            plan;

     (iv)             to   designate  from  time  to  time  the   Company's
            Independent Accountants; and

     (v)            to amend this Agreement.

     (c)   In the exercise of any powers and authority the Members may have
in connection with the management and control of the Company, all decisions
or actions of the Members must be unanimous.

     8.2  Members Committee.

     (a)   The  Members  Committee  (herein referred  to  as  the  "Members
Committee")  shall be responsible for the making of decisions with  respect
to the Company business that are not accorded to the Members or the Manager
pursuant to this Agreement.

     (b)   Without limiting the generality of paragraph (a) of this Section
and  subject  always  to  the  provisions of Section  8.1(b),  the  Members
Committee  shall have the power to delegate to the Manager of  the  Company
any  powers  and  authority necessary for the day-to-day operation  of  the
business  of  the Company, except that the Members Committee  reserves  the
following powers and authority exclusively to itself, namely:

     (i)             to set the overall policy and vision of the Company in
            accordance with the purposes set out in Section 3.2;

     (ii)            to  recommend to the annual meeting of the Members the
            distribution   policy  of  the  Company  and   the   level   of
            distribution to be declared;

     (iii)  to elect or appoint the Manager;

     (iv)            to  approve  capital expenditures of  the  Company  in
            such amount as the Members may from time to time determine;

     (v)             to  approve the business and strategic plans  and  the
            annual operating plans of the Company;
     (vi)            to  recommend approval by the Members of  any  of  the
            matters referred to in Section 8.1(b);

     (vii)  to  approve  from  time to time the location of  the  Company's
            principal executive office;

     (viii) to  determine the banking policy of the Company and further  in
            that  regard:  to grant financial authorization (including  the
            opening   and  closing  of  bank  accounts  and  to   designate
            signatories  for such accounts) to the Manager; to approve  all
            borrowings  by  the  Company  of  sums  of  money  within   the
            limitations  regarding amount as the Members may from  time  to
            time  determine,  from banks, other lending  institutions,  the
            Members  or  Affiliates of the Members, on such  terms  as  the
            Members   Committee  deems  appropriate,  and,  in   connection
            therewith,   to  hypothecate,  encumber,  and  grant   security
            interests  in the assets of the Company to secure repayment  of
            the  borrowed  sums.  No debt shall be contracted or  liability
            incurred  by or on behalf of the Company except to  the  extent
            permitted under the Act by the Manager or authorized agents  of
            the  Company  expressly authorized by the Members Committee  to
            contract such debt or incur such liability;

     (ix)             to  approve  the  purchase  of  liability  and  other
            insurance to protect the Company's property and business;

     (x)             to  establish guidelines for the Manager in connection
            with the temporary investment of Company funds;

     (xi)            to  approve the execution on behalf of the Company  of
            all  instruments and documents with a value in excess  of  such
            amount  as  the  Members  may  from  time  to  time  determine,
            including,  without  limitation:   checks;  drafts;  notes  and
            other  negotiable  instruments; mortgages or  deeds  of  trust;
            security  agreements; financing statements; documents providing
            for  the  acquisition, mortgage or disposition of the Company's
            property;  assignments;  bills  of  sale;  leases;  partnership
            agreements;  operating  agreements of other  limited  liability
            companies;  agreements between the Company and  either  of  the
            Members  or  their  Affiliates; and any  other  instruments  or
            documents  necessary, in the opinion of the  Members  Committee
            to the business of the Company;
     (xii)  to assess the performance of the Manager of the Company;

     (xiii) to   approve  the  commencement  or  settlement  of  litigation
            directly  or indirectly involving the Company, where the  claim
            or  potential  liability of the Company or the amount  of  such
            settlement is in excess of such amount as the Members may  from
            time to time determine;

     (xiv)  to  determine  the accounting policies of the  Company  and  to
            recommend  to  the  Members the appointment  of  the  Company's
            Independent Accountants;

     (xv)             to   approve  the  ethics,  safety  and  health   and
            environmental policies of the Company; and

     (xvi)  to  review  and  approve the terms of any  public  announcement
            proposed to be made by the Company, as determined from time  to
            time by the Members Committee.

     (c)   The  Members  Committee shall be comprised of  six  individuals,
three   of   whom   shall   be  named  by  each  Member   (individually   a
"Representative"     and     collectively    "Representatives").      These
Representative(s) may be changed at any time by the Members appointing such
Representative(s) by written notice to the other Member.

     (d)   Meetings  of the Members Committee may be held at  such  regular
times as may be specified by the Members Committee and, in addition, may be
called  by  any  Representative by giving at least ten  days  prior  notice
thereof to each of the other Representatives.  Notice of each meeting shall
be  in  writing  and shall state the date, time, and place  at  which  such
meeting  is  to be held and the purposes for which such meeting is  called.
Prior  notice  of a meeting need not be given, however, if such  notice  is
waived  in  writing  by all of the Representatives  or  if  the  action  in
question  is  taken  pursuant to the provisions of  the  second  succeeding
sentence.  In addition, the attendance in person or by a Person having  the
written proxy of a Representative at a meeting shall constitute a waiver of
notice of such meeting, except where the Representative attends the meeting
for the express purpose of objecting to the transaction of any business  on
the  ground  that  the meeting is not lawfully called  or  convened.)   Any
action  required  or  permitted to be taken at a  meeting  of  the  Members
Committee  may be taken (i) by means of a telephone conference  (notice  of
which  shall  be  given  to  each  of the  Representatives)  in  which  all
Representatives  participating in the meeting in  person  or  by  a  Person
having  the written proxy and constituting a quorum can hear and  speak  to
each  other (with the action taken during such telephone conference  to  be
reduced  to writing and filed in the records of the Members Committee),  or
(ii) by means of one Representative submitting to the other Representatives
in accordance with the provisions of Section 14.3 a statement of the matter
to  be  voted  on,  the purposes thereof, and the period within  which  the
Representatives must respond either in the affirmative or in  the  negative
to  the  matter  in respect of which the vote is requested (which  response
period  shall  not  be less than seven business days nor more  than  twenty
business  days  from the date on which the Representative  in  question  is
deemed to have received such request pursuant to Section 14.3).  All action
taken  pursuant to the immediately preceding sentence shall be  deemed  for
all purposes to have been taken at a meeting of the Members Committee.  The
Members  Committee  shall conduct its proceedings in accordance  with  such
rules  as  it  may  from time to time establish and shall keep  appropriate
records of the action taken by it.

     (e)    At  all  meetings  of  the  Members  Committee,  at  least  one
Representative representing each Member shall constitute a quorum  for  the
transaction of business, and subject to this Section 8.2, the unanimous act
of  all of the Member Representatives present at any meeting at which there
is  a quorum shall be the act of the Members Committee, except as set forth
in  Section 8.2(f).  If a quorum shall not be present at any meeting of the
Members Committee, the meeting may be rescheduled by any Representative  by
giving   seven   days   prior  notice  thereof  to  each   of   the   other
Representatives.

     (f)   Notwithstanding any provision of this Agreement to the contrary:
(i)  neither a Member nor a Representative appointed by any Member that  is
the subject of a vote with respect to the exercise of remedies relating  to
such Member's delinquency or default under this Agreement, in the case of a
vote   with  respect  to  such  matters;  (ii)  neither  a  Member  nor   a
Representative  appointed  by  any  Member  that  attempts  to   effect   a
Disposition of an interest or right, or any part thereof, in or in  respect
of  the  Company in willful contravention of Article IV, or in the case  of
any vote with respect to any matter whatsoever subsequent to such attempted
Disposition;  or  (iii) neither a Delinquent Member nor the  Representative
appointed  by  any  Delinquent Member, in the case of  any  vote  occurring
during  the period in which such Delinquent Member is a Delinquent  Member;
will  be entitled to vote on the issue in question, and such Representative
shall  not be counted for voting or quorum purposes in respect of the  vote
in  question or the Members Committee meeting at which the vote  is  taken.
Instead, a quorum in respect of the vote in question shall be comprised  of
one  or  more of all Representatives other than those that are not entitled
to  vote on such issue, and the decisions in respect of such issue shall be
made by the unanimous vote of all Representatives present that are entitled
to vote on such issue.

     8.3  Manager.  The Manager (who shall be an employee of a Member or of
an  Affiliate  of a Member) shall be appointed by, and shall serve  at  the
pleasure  of,  the  Members Committee, subject  to  the  direction  of  the
Members  Committee,  and shall be responsible for the  general  supervision
and  management of the business, affairs, and property of the  Company  and
for  the  implementation  of the decisions of the  Members  Committee,  and
shall have, as may be delegated by the Members Committee, the authority  to
conduct the day-to-day affairs of the Company.  Without limitation  of  the
generality  of the preceding provisions of this Section, the Manager  shall
have  (subject to the limitations of Sections 8.1 and 8.2 and to  budgetary
limitations and such other limitations as may be imposed from time to  time
by  the  Members  Committee) the authority, the right, and  the  power,  on
behalf of the Company:

      (a)  to enter into, make, and perform all contracts, agreements,  and
other undertakings binding the Company as may be necessary, appropriate, or
advisable in furtherance of the purposes of the Company as the Manager  may
determine in his or her discretion;

     (b)   to  open,  maintain, and close bank accounts, to  designate  and
change  signatories on such accounts, and to draw checks and  other  orders
for the payment of monies;

     (c)  to maintain the assets of the Company in good order and repair;

     (d)  to collect all sums due the Company;

     (e)   to  prepare  and file all Company tax returns and  to  make  all
elections for the Company thereunder in accordance with the instructions of
the TMP and the Members Committee;

     (f)   to  the extent that funds of the Company are available therefor,
to  pay  as  they  become  due  all debts and obligations  of  the  Company
(including, without limitation, the Purchase Note); and

     (g)  within any limitations as may be imposed from time to time by the
Members  Committee, to take any and all other action that may be necessary,
appropriate, or advisable in furtherance of the purposes of the Company.

     In  addition,  the Company shall reimburse the Manager, on  a  monthly
basis,  for  all  reasonable  out-of-pocket  transportation,  lodging   and
entertainment  expenses, incurred in connection with the  business  of  the
Company,  consistent with the normal reimbursement policies of  the  Member
which is providing the individual to be Manager of the Company.

     8.4   Standard of Care.  In the performance of their respective duties
under  this  Agreement,  the  Representatives and  the  Manager  shall  use
reasonable  efforts to conduct the business of the Company in  a  good  and
businesslike  manner  and  in  accordance with  good  practice  within  the
industry.  Notwithstanding any provision of this Agreement to the contrary,
however, neither any Representative nor the Manager shall be held liable or
responsible  to any Member or to the Company for any losses  sustained,  or
liabilities  incurred, in connection with, or attributable  to,  errors  in
judgment, negligence, or other fault of such individual, except that  which
is caused by such Person's bad faith or willful misconduct.

     8.5   Indemnification  of the Representatives and  the  Manager.   The
Company   hereby  agrees  to  defend,  indemnify  and  hold  harmless   the
Representatives  and  the  Manager from and against  any  and  all  claims,
damages,  liabilities, costs (including, without limitation, the  costs  of
litigation and reasonable attorneys' fees), damages, and causes  of  action
arising out of, resulting from, or attributable to the Representatives' and
the Manager's management of the Company affairs, except where the claim  at
issue   is  based  upon  the  bad  faith  or  willful  misconduct  of   the
Representative  in  question  or the Manager.  The  indemnification  rights
herein  contained shall be (i) cumulative of, and in addition to,  any  and
all  rights, remedies, and recourses to which the Representatives  and  the
Manager shall be entitled at law or in equity, and (ii) shall only  be  for
the  benefit of the Company, the Representatives, and the Manager,  to  the
exclusion of all other purported third party beneficiaries.

                                ARTICLE IX

                           VOLUNTARY WITHDRAWAL

     9.1  Resignation by Member.

     Each of the Members acknowledges:

     (i)             the  unique  nature of the business the  Company  will
            engage  in  and  the expertise and skills each of  the  Members
            brings to the business and management of the Company;

     (ii)            the  commitment  of the Company to fully  perform  the
            terms  and  conditions  of  the  Drilling  Contracts  and   the
            Purchase Note; and

     (iii)  the  need  for the Company to enter into the Purchase Note  and
            to  assure  any  lenders  of the Company's  commitment  to  the
            business of the Company.

In  furtherance of those objectives, the Members agree that no Member  will
have  the  right  to, and each Member agrees that it will  not,  resign  or
withdraw from the Company prior to the expiration of the Base Term.  In the
event  any  Member, prior to the expiration of the Base Term, resigns  from
the  Company,  or  otherwise  takes any  action  having  the  effect  of  a
withdrawal  or termination of its participation as a Member of the  Company
(a  "Wrongful Withdrawal"), such withdrawal shall be null and void and such
Member  shall remain fully liable as a Member hereunder.  In the event  the
Company  is  required  by  law  to recognize  a  Wrongful  Withdrawal,  the
withdrawing Member will:

     (w)    pay  to  the Company the withdrawing Member's  Sharing Ratio of
            the  Company's  then  known,  outstanding  and  due obligations
            and liabilities, including amounts  then  due  and owing  under
            the Purchase Note, at the time of  such  Wrongful Withdrawal;

     (x)    as they thereafter become known, pay to the Company its Sharing
            Ratio of the Company's liabilities that arose, or resulted from
            activities of the Company, prior to the Wrongful Withdrawal;

     (y)    forfeit its Membership Interest in the  Company  to  the  other
            Members on a pro-rata basis based on their  respective  Sharing
            Ratios;  and

     (z)    be  liable  for all  damages  attributable  to  the withdrawing
            Member's breach of this Agreement.

Pursuant to Section 18-603 of the Act, the Members agree that no Member may
resign  from  the  Company prior to the expiration of the  Base  Term,  and
thereafter any Member may resign from the Company in accordance  with  this
Agreement.

     9.2  Wrongful Withdrawal. If a Wrongful Withdrawal occurs, then within
a  reasonable time after the expiration of the Base Term, there will  be  a
winding  up  of the Company and a distribution of the assets in  accordance
with Section 11.2 of this Agreement, provided that, (i) the non-withdrawing
Member  will  act as the liquidating trustee under Section  11.2,  (ii)  no
adjustment will be made to the capital account of the Member who wrongfully
withdrew, and (iii) the wrongfully withdrawing Member's Membership Interest
in  the Company to be forfeited to the other Members will be valued to  the
non-withdrawing   Member  at  the  amount  of  such  withdrawing   Member's
contributions to the Company pursuant to Sections 5.1 and 5.2 hereof.

                                 ARTICLE X

                          [INTENTIONALLY DELETED]

                                ARTICLE XI

                  DISSOLUTION; RECONSTITUTION; WINDING UP

     11.1  Events Deemed to Cause Dissolution.  Unless the business of  the
Company is continued either by the consent of all remaining Members  within
90  days following the occurrence of any such event or pursuant to a  right
to  continue provided under this Agreement, the Company shall be  dissolved
upon the first to occur of the following:

          (a)  The expiration of the term provided in Section 3.4;

          (b)  The  resignation  of  a Member upon 365 days  prior  written
               notice given after the expiration of the Base Term, provided
               however,  the  Company shall not be dissolved  if  the  Non-
               Resigning Member exercises its rights under Section 4.8;

          (c)  the Bankruptcy of a Member;

          (d)  The  sale of all or substantially all of the assets  of  the
               Company;

          (e)  The unanimous vote of the Members to dissolve the Company;

          (f)  Unless  the Members otherwise agree in writing, the  failure
               of  one  or  more of the events set out in Section  15.1  to
               occur on or before April 30, 1997;

          (g)  By  order  of a court of competent jurisdiction pursuant  to
               Section 18-802 of the Act, at such time as specified in such
               order; or

          (h)  Upon  the  dissolution of either Member or any  other  event
               that terminates the membership of a Member in the Company.

     or  otherwise  as provided in Section 9.1 with respect to  a  Wrongful
     Withdrawal.  Subject to the provisions of Section 9.1 with respect  to
     Wrongful Withdrawal, dissolution of the Company shall be effective  on
     the day on which the event occurs giving rise to such dissolution, but
     the  Company shall not terminate until the assets of the Company  have
     been distributed as provided in Section 11.2.

     11.2 Distribution of Assets.  If the Company is dissolved pursuant  to
this  Article  XI,  an accounting of the Company assets,  liabilities,  and
operations  through  the  last day of the month in  which  the  dissolution
occurs  shall  be  made by the Company's Independent Accountants,  and  the
affairs  of  the  Company  shall be wound up and terminated.   The  Members
Committee shall serve as the liquidating trustee.  The liquidating  trustee
shall  be  responsible for winding up and terminating the  affairs  of  the
Company and shall determine all matters in connection therewith (including,
without limitation, the arrangements to be made with creditors, whether and
to what extent and under what terms of assets of the Company are to be sold
or  distributed  in kind to the Members, and, after consultation  with  the
Company's Independent Accountants, the amount or necessity of cash reserves
to cover contingent liabilities) as the liquidating trustee deems advisable
and  proper;  provided,  however, that all  decisions  of  the  liquidating
trustee  shall be made in accordance with the fiduciary duty  owed  by  the
liquidating trustee to the Company and to each of the Members.

     All  assets remaining after the payment (or provision for payment)  of
Company  obligations to third parties shall be distributed to  the  Members
(i)  first, in such amounts and proportions as may be necessary  to  effect
and  carry out the provisions of Sections 5.5(b)(iv), 14.1 and 14.12,  (ii)
second,  in such amounts and proportions as may be necessary to  cause  the
ratios  of  the  Members' respective capital accounts to be  equal  to  the
Members'  respective Sharing Ratios, and (iii) third, in the proportion  of
the Members'  respective Sharing Ratios then in effect.

     The distribution (if any) to the Members of an interest in the Company
assets may be subject to such liens, encumbrances, and restrictions, and to
such  leases,  contracts, and agreements as in effect on the date  of  such
distribution.

     11.3  Termination.  After all of the assets of the Company  have  been
distributed, the Company shall terminate, and the Members shall (i) cause a
certificate  of  cancellation to be filed with the  Delaware  Secretary  of
State,  and (ii) file appropriate documentation reflecting such termination
in  all  other  jurisdictions in which the Company may be qualified  to  do
business.

                                ARTICLE XII

                          [INTENTIONALLY DELETED]

                               ARTICLE XIII

                                 INSURANCE

     13.1  Insurance  Coverage.   The Company  shall  carry  the  following
insurance  or  such  other  insurance as the  Members  Committee  may  deem
appropriate  (to  the  extent  in each case  that  same  is  obtainable  on
reasonably  commercial terms) for the protection of  the  Company  and  the
Members:

          (a)   Insurance  which shall comply with all applicable  worker's
     compensation and occupational disease laws and which shall  cover  all
     employees  of the Company  engaged in operations under this Agreement;
     if  applicable, such insurance shall include coverage for claims under
     the United States Longshoremen's and Harbor Worker's Act;

          (b)  Employer's liability insurance with a limit of not less than
     $500,000  per  occurrence  , including maritime  employer's  liability
     coverage with respect to the Jones Act, and general maritime liability
     (if not covered by the protection & indemnity coverage referred to  in
     Section 13.1(f) below);

          (c)   Comprehensive general liability insurance with  a  combined
     single limit of not less than $1,000,000 per occurrence;

          (d)   Automobile liability insurance with a combined single limit
     of not less than $1,000,000 per occurrence;

          (e)   Marine  "all risk" hull and machinery insurance  (including
     war risks, confiscation, nationalization and deprivation  coverage for
     operations outside the United States of America) to the full value  of
     the Drillship;

          (f)   Marine  protection and indemnity insurance,  or  equivalent
     coverage,  including war risk protection and indemnity  insurance  for
     operations outside the United States of America, to the full value  of
     the Drillship;

          (g)  Excess liability insurance (over the insurances set forth in
     subparagraphs  (b), (c), (d) and (f) above) with limits  of  not  less
     than $50,000,000 per occurrence;

          (h)   Contingent  Operators Extra Expense Energy Exploration  and
     Development  (well control and blowout) insurance including  costs  to
     regain  control  of  a well including underground  blowout;  costs  to
     restore  or redrill a well as a result of a blowout, crater, or  fire;
     costs  to  remove,  clean up, or contain pollution  and  contaminating
     substances  emanating from a well; legal liability  costs  for  bodily
     injury  and/or  loss of life, damage to, or loss to  use  of  property
     caused  by  contaminating substances from a well; with limits  of  not
     less than $50,000,000; and

          (i)   Such  other  insurance as the Members  Committee  may  deem
     necessary, appropriate, or advisable in furtherance of the purposes of
     the Company.

     13.2  Certain  Requirements.  All insurance shall  be  placed  through
underwriters  and/or  insurance companies which are financially  sound  and
responsible,  and licensed to do business in all jurisdictions  where  such
licensing  is  required.   Each  policy of insurance  [except  that  policy
referred  to  in  Section 13.1(a)] shall, to the extent  that  the  Members
Committee  deems  same practicable, either on its face  or  by  appropriate
endorsement, (i) name the Company as a named insured and each Member as  an
additional   named   assured,  (ii)  provide  for  reasonable   deductibles
acceptable  to the Members Committee, (iii) provide that it  shall  not  be
cancelled or amended or its coverage reduced except upon thirty days  prior
notice  to  the Company (seven (7) days in the case of war risk coverages),
and  (iv)  contain waiver of subrogation provisions pursuant to which  each
underwriter  and/or  insurer  waives all  express  and  implies  rights  of
subrogation against the Company and each Member.

     13.3   The types, limits and terms of insurance coverages set  out  in
this  Article  may  be  modified  as  deemed  appropriate  by  the  Members
Committee.

                                ARTICLE XIV

                               MISCELLANEOUS

     14.1  Offset.   In  the event that any sum is payable  to  any  Member
pursuant to this Agreement, any amounts owed by said Member to the  Company
shall be deducted from said sum before payment to said Member.

     14.2  Choice of Law; Submission to Jurisdiction.  This Agreement shall
be  subject to and governed by the laws of the State of Delaware, excluding
any conflicts-of-law rule or principle that might refer to the construction
or  interpretation  of this Agreement to the laws of another  state.   Each
Member  hereby submits to the jurisdiction of the state and federal  courts
in  the  State  of Delaware and to venue in Wilmington, New Castle  County,
Delaware.

     14.3  Notices.   All notices or requests or consents provided  for  or
permitted  to  be given pursuant to this Agreement must be in  writing  and
must  be  given by depositing same in the United States mail, addressed  to
the  Person  to  be  notified, postpaid, and registered or  certified  with
return  receipt  requested or by delivering such notice in person  to  such
party.   Notices  given or served pursuant hereto shall be  effective  upon
receipt  by  the  Person to be notified.  All notices to  be  sent  to  the
Members  shall  be  sent  to  or  made at the  addresses  given  under  the
respective  parties'  signatures below, or such  other  addresses  as  such
parties  may stipulate to the other parties in the manner provided in  this
Section 14.3.

     14.4   Entire  Agreement.   This  Agreement  constitutes  the   entire
agreement  of  the  Members  relating  to  the  matters  contained  herein,
superseding all prior contracts or agreements, whether oral or written.

     14.5  Effect of Waiver or Consent.  No waiver or consent,  express  or
implied, by any Member to or of any breach or default by any Person in  the
performance by such Person of its obligations hereunder shall be deemed  or
construed to be a consent or waiver to or of any other breach or default in
the performance by such Person of the same or any other obligations of such
Person  hereunder.  Failure on the part of a Member to complain of any  act
of any Person or to declare any Person in default, irrespective of how long
such failure continues, shall not constitute a waiver by such Member of its
rights hereunder until the applicable statute of limitation period has run.

     14.6  Amendment  or Modification.  This Agreement may  be  amended  or
modified  from time to time only by the unanimous vote of all the  Members.
Each such instrument shall be reduced to writing and shall be designated on
its face an "Amendment" or an "Addendum" to this Agreement.

     14.7  Binding Effect; Joinder of Additional Parties.  Subject  to  the
restrictions  on  Dispositions set forth herein, this  Agreement  shall  be
binding  upon  and  shall inure to the benefit of  the  Members  and  their
respective successors and assigns.

     14.8  Counterparts.  This Agreement may be executed in any  number  of
counterparts  with the same effect as if all signatory parties  had  signed
the  same document.  All counterparts shall be construed together and shall
constitute one and the same instrument.

     14.9  Severability.  It is the express intention of the Members  that,
except  to  the extent a provision of this Agreement expressly incorporates
federal  income  tax  rules  by  reference to  the  Code  or  is  expressly
prohibited  or ineffective under the Act, this Agreement shall  govern  the
relations  among the Members in their capacities as such.  If any provision
of  this Agreement or the application thereof to any Member or circumstance
shall  be  held invalid or unenforceable to any extent, (a) such  provision
shall  be  ineffective  to the extent, and only  to  the  extent,  of  such
unenforceability  or  prohibition  and shall  be  enforced  to  the  extent
permitted  by  law;   (b)  such  unenforceability  or  prohibition  in  any
jurisdiction shall not invalidate or render unenforceable such provision as
applied  (i)  to  any other Member or circumstance or  (ii)  in  any  other
jurisdiction;   and  (c)  such unenforceability or  prohibition  shall  not
affect  or invalidate any other provision of this Agreement.  To the extent
any provision of this Agreement is prohibited or ineffective under the Act,
this Agreement shall be considered amended to the least degree possible  in
order to make this Agreement effective under the Act.  In the event the Act
is  subsequently amended or interpreted in such a way as to make valid  any
provision of this Agreement that was formerly invalid, such provision shall
be considered to be valid from the effective date of such interpretation or
amendment.   To the extent any provision of this Agreement is held  invalid
or unenforceable, the Members shall negotiate, in good faith, concerning an
amendment  to  the  Agreement that will achieve,  to  the  extent  possible
consistent  with  applicable law, the intended effect  of  the  invalid  or
unenforceable provision.

     14.10      Headings.  The headings in this Agreement are inserted  for
convenience  and  identification only and are  not  intended  to  describe,
interpret, define, or limit the scope, extent, or intent of this  Agreement
or any provision hereof.

     14.11       Gender;  Articles  and  Sections.   Whenever  the  context
requires, the gender of all words used in this Agreement shall include  the
masculine, feminine, and neuter, and the number of all words shall  include
the singular and the plural.  All references to article and section numbers
refer to articles and sections of this Agreement.

     14.12      Indemnity.  Each Member hereby agrees to defend, indemnify,
and  hold  harmless the Company and the other Members from and against  any
and  all  losses,  costs  (including,  without  limitation,  the  costs  of
litigation  and  attorneys' fees), claims, causes of action,  damages,  and
liabilities that are attributable to the breach by the indemnifying  Member
of  any of the provisions of this Agreement (including, without limitation,
the  provisions  of Section 9.1 hereof);  provided however,  the  indemnity
provided in this Section 14.12 shall be only for the benefit of the Company
and  other  Members,  to the exclusion of all other purported  third  party
beneficiaries.

     14.13      Further Assurances.  In connection with this Agreement,  as
well  as  all  transactions contemplated by this Agreement, each  signatory
party  hereto  agrees to execute and deliver such additional documents  and
instruments  and  to perform such additional acts as may  be  necessary  or
appropriate to effect, carry out, and perform all of the terms, provisions,
and conditions of this Agreement and all such transactions.

     14.14      Independent Conduct.  The Representatives and  the  Manager
shall  not  be  required to manage the Company as their sole and  exclusive
function and such Manager and Representatives and Affiliates of any  Member
may  have  other business interests and may engage in other investments  or
activities  in  addition to those relating to the Company, irrespective  of
whether some may be in competition with the business and activities of  the
Company.   Neither  the Company nor any Member shall  have  any  right,  by
virtue  of  this Agreement, to share or participate in such other  business
interests, investments or activities of a Manager or a Representative or an
Affiliate of a Member, or to the income or proceeds derived therefrom.   No
Manager  or Representative shall incur liability to the Company or  to  any
Member  solely by reason of engaging in any such other business, investment
or  activity.   Nothing in this Agreement shall affect any obligations  and
liabilities  of  a Member Representative to the Member that  selected  such
Member Representative.

     14.15      Deemed Assent.  The failure of a Representative to respond,
within  the  response period set forth in the request  in  question  (which
response  period shall not be less than seven (7) business  days  nor  more
than   twenty  (20)  business  days  for  from  the  date  on   which   the
Representative in question is deemed to have received such request pursuant
to  Section  14.3)  either in the affirmative or in the  negative,  to  any
request it receives from another Representative relating to a proposed  act
in  respect  of which such Representative is entitled to vote  pursuant  to
this  Agreement, shall conclusively be deemed for all purposes to be a vote
by such Representative in favor of any act set forth in such request.

     14.16      Signing  Members;  Certificate of Authority.   The  Members
Committee  shall designate from time to time one or more of the Members  to
execute (when requested to do so by the Manager) documents on behalf of the
Company.  Each Member agrees to execute (and acknowledge, if requested) and
deliver such documents and instruments as the Members Committee may request
to evidence and confirm to third parties the power, authority, and right of
the Members Committee, the Manager, and the Members designated pursuant  to
the immediately preceding sentence to act on behalf of and bind the Company
(but  only to the extent, in each case, that the action in question is  one
that the Members Committee or Manager or Member in question is entitled  to
take pursuant to, and not in violation of, this Agreement).

     14.17      Withholding or Granting of Consent.  Each  Member  and  the
Members Committee may, with respect to any consent or approval that  it  is
entitled  to  grant  pursuant to this Agreement,  grant  or  withhold  such
consent  or  approval  in  its sole and uncontrolled  discretion,  with  or
without cause, and subject to such conditions as it shall deem appropriate.

     14.18      Waiver  of Certain Rights.  Each Member irrevocably  waives
the  right  it  might  have to maintain any action  for  partition  of  the
property of the Company.

     14.19      U.S.  Currency.   All sums and amounts  payable  or  to  be
payable  pursuant to the provisions of this Agreement shall be  payable  in
coin  or  currency of the United States of America that,  at  the  time  of
payment, is legal tender for the payment of public and private debts in the
United States of America.

     14.20      Dispute  Resolution.  In the event  the  Members  Committee
cannot  reach  a decision as to any matter concerning the business  of  the
Company and remains unable to do so with respect to any such matter  for  a
period  of  not  less  than  30 days, it shall refer  such  matter  to  the
Designated Representative of each of the Members for resolution.

     14.21      Proprietary  Information. Each of the Members  acknowledges
and agrees that, to the extent in the performance of this Agreement and the
conduct  of  the  business  and  operations of  the  Company,  it  receives
Proprietary  Information from the other Member, it  will  exert  reasonable
efforts  to hold such Proprietary Information confidential and not disclose
the  same to any third party without the prior written consent of the other
Member  hereto.   Neither Member shall by virtue of this Agreement  acquire
any  right,  title or interest in the Proprietary Information belonging  to
the other Member.

     14.22      Publicity.     Except as otherwise required  by  applicable
federal or state securities laws, regulations or rules or the rules of  any
national  stock  exchange,  neither of the Members  will  issue  any  press
release or other form of publicity without the prior written consent of the
other Member, such consent not to be unreasonably withheld.

                                ARTICLE XV

                                DISSOLUTION

     15.1  Dissolution.  Unless the Members otherwise agree in writing, and
as  provided in Section 11.1(f), the Company shall be dissolved  if  on  or
before April 30, 1997 all of the following events have not occurred:

     a.   The  execution and delivery of this Agreement have been  ratified
          by  the  board  of  directors of Conoco, and  Conoco  shall  have
          notified Reading & Bates in writing of such ratification;

     b.   The  execution and delivery of this Agreement have been  ratified
          by the board of directors of Reading & Bates, and Reading & Bates
          shall have notified Conoco in writing of such ratification;

     c.   The  execution and delivery of an assignment of all rights, title
          and  interests  of  Deepwater  Drilling  L.L.C.  in  and  to  the
          Shipbuilding Contract (together with the related Unit Rate Letter
          Agreement  dated  February  7,  1997  between  the  Builder   and
          Deepwater  Drilling L.L.C. and the Commission  Agreement  of  the
          same  date  between  Samsung  Heavy  Industries  Co.,  Ltd.   and
          Deepwater Drilling L.L.C.) to the Company; and

     d.   Conoco  Drilling Inc. and Reading & Bates Corporation shall  have
          entered into the Drilling Contracts with the Company.

     15.2 Ancillary Agreements.    Upon the last to occur of the events set
out  in Sections 15.1.a, 15.1.b, 15.1.c and 15.1.d above, the Company shall
enter into the following agreements:

     a.   the  Marine Services Agreement with Conoco Shipping  Company,  or
          one  of  its  Affiliates, in  substantially the form attached  as
          Exhibit "G" to this Agreement; and

     b.   the  Drilling  Services Agreement with Reading &  Bates  Drilling
          Co.,  or  one  of  its  Affiliates, substantially  in   the  form
          attached as Exhibit "H" to this Agreement.

     EXECUTED on this 30th day of April, 1997.

                                       MEMBERS

                              CONOCO DEVELOPMENT II INC.

                         By:
                         Its:

                         600 North Dairy Ashford
                         Houston, Texas  77079

                              Attention:  President

                         Telecopy No.:  (713) 293-3700


                              RB DEEPWATER EXPLORATION II INC.

                         By:
                         Its:

                         901 Threadneedle, Suite 200
                         Houston, Texas  77079

                              Attention:  President

                         Telecopy No.: (713) 496-0285


STATE OF TEXAS

COUNTY OF HARRIS

     BEFORE  me,                  , a Notary Public, on this day personally
appeared                               ,                              ,  of
Conoco  Development II Inc., a corporation, known to me to  be  the  person
whose  name is subscribed to the foregoing instrument, and acknowledged  to
me  that  he  executed said instrument for the purposes  and  consideration
therein expressed.

     Given under my hand and seal of office this       day  of            ,
1997 in                       .


My commission expires:
                              Notary Public



STATE OF TEXAS

COUNTY OF HARRIS

     BEFORE  me,                  , a Notary Public, on this day personally
appeared                               ,                              ,  of
RB  Deepwater Exploration II Inc., a corporation,  known to me  to  be  the
person   whose  name  is  subscribed  to  the  foregoing  instrument,   and
acknowledged  to me that he executed said instrument for the  purposes  and
consideration therein expressed.

     Given under my hand and seal of office this       day  of            ,
1997 in                       .

My commission expires:
                              Notary Public


                  EXHIBIT "A" - DESCRIPTION OF DRILLSHIP


                 EXHIBIT "B" - INDEMNIFICATION AGREEMENTS


                         INDEMNIFICATION AGREEMENT


          THIS  INDEMNIFICATION  AGREEMENT (the "Agreement")  dated  as  of
April  30,  1997, is made by CONOCO INC., a Delaware corporation ("Conoco")
in favor of RB DEEPWATER EXPLORATION II INC., a Nevada corporation ("RB").

          WHEREAS,   RB  and  Conoco  Development  II  Inc.,   a   Delaware
corporation ("CDC") have entered into a Limited Liability Company Agreement
(the  "LLC Agreement") dated of even date with respect to the formation  of
Deepwater Drilling II L.L.C. (the "Company") herewith;

          WHEREAS,  RB  has  requested  Conoco  execute  and  deliver  this
Indemnification Agreement as partial consideration for RB's  entering  into
the LLC Agreement.

          NOW  THEREFORE, in consideration of the premises and in order  to
induce RB to enter into the LLC Agreement, Conoco hereby agrees as follows:

          SECTION  1.   Indemnification.   Conoco  hereby  agrees  to  pay,
protect, indemnify, hold harmless and defend RB from any failure of CDC  to
make  any  equity contribution to the Company, as and when  required  under
Sections 5.1 and 5.2 of the LLC Agreement, and agrees that in the event  of
such  failure, Conoco will promptly pay on behalf of CDC any  such  amounts
due under Sections 5.1 or 5.2 of the LLC Agreement.  No payment required to
be made by Conoco under this Section 1 shall be subject to any right of set
off,  counterclaim, defense, abatement, suspension, deferment or reduction.
Capitalized  terms not otherwise defined in this Agreement shall  have  the
meanings ascribed to them in the LLC Agreement.

          SECTION  2.   Representations and Warranties.  Conoco  represents
and warrants to RB as follows:

          (a)  Conoco (i) is a corporation duly organized, validly existing
     and   in   good  standing  under  the  law  of  its  jurisdiction   of
     incorporation  and is in good standing in all jurisdictions  in  which
     failure to be or remain in good standing would have a material adverse
     effect  upon  its  ability  to  perform  its  duties,  obligations  or
     liabilities  hereunder and (ii) has all requisite corporate  power  to
     conduct  its  business  and to execute and  deliver  and  perform  its
     obligations under this Indemnification Agreement.

          (b)   The  execution, delivery and performance by Conoco of  this
     Indemnification Agreement has been duly authorized and approved by all
     necessary   corporate   action  on   the   part   of   Conoco.    This
     Indemnification  Agreement constitutes the legal,  valid  and  binding
     obligation  of Conoco and is enforceable against Conoco in  accordance
     with  its  terms, except insofar as enforceability may be  limited  by
     applicable  debtor  relief laws or subject to  general  principles  of
     equity (regardless of whether such enforceability is considered  in  a
     proceeding in equity or at law).

          (c)   No  order,  consent, approval, license, permit,  franchise,
     waiver,  exemption,  authorization of or  validation  of,  or  filing,
     recording or registration with (except those that have been heretofore
     obtained  or  made and of which RB has heretofore been  given  written
     notice)  or  exemption  by,  any person or  tribunal  is  required  to
     authorize, or is required in connection with, the execution, delivery,
     performance,  legality, validity, binding effect or enforceability  of
     this Indemnification Agreement.

          (d)   No  bankruptcy,  insolvency,  reorganization,  arrangement,
     readjustment  of debt, dissolution, liquidation or similar  proceeding
     with  respect to Conoco or any of its subsidiaries has been  commenced
     in any jurisdiction.

          (e)   There  are no actions, suits or proceedings pending  or  to
     Conoco's knowledge, threatened against or affecting Conoco or  any  of
     its  subsidiaries before any court or arbitrator which  is  reasonably
     likely  to  have a material adverse effect on the financial condition,
     business  or  operations of Conoco and its subsidiaries,  taken  as  a
     whole,  or  would  impair  the  validity  or  enforceability  of  this
     Agreement.

          SECTION  3.   Amendments, Etc.  No amendment  or  waiver  of  any
provision of this Indemnification Agreement nor consent to any departure by
Conoco  therefrom shall in any event be effective unless the same shall  be
in  writing  and  signed by RB, and each such waiver or  consent  shall  be
effective  only in the specific instance and for the specific  purpose  for
which given.

          SECTION  4.   Notices, Etc.  All notices and other communications
provided for herein shall be given or made in writing and addressed, if  to
Conoco, at its address set forth under its signature below, or if to RB, at
its address set forth under its signature below, such notice or notices  to
be  effective  only  upon  receipt by the party to  which  such  notice  is
addressed.

          SECTION 5.  No Waiver; Remedies.  No failure on the part of RB to
exercise, and no delay in exercising, any right hereunder shall operate  as
a  waiver  thereof; nor shall any single or partial exercise of  any  right
hereunder preclude any other or further exercise thereof or the exercise of
any  other right.  No course of dealing between Conoco and RB shall operate
as  a  waiver  of  any  right  of  RB.  The remedies  herein  provided  are
cumulative  and  not exclusive of any remedies provided by law,  admiralty,
equity or otherwise.

          SECTION   6.    Separability.   Should  any   clause,   sentence,
paragraph,  sub-section  or  Section of this Indemnification  Agreement  be
judicially  declared  to be invalid, unenforceable or void,  such  decision
will  not have the effect of invalidating or voiding the remainder of  this
Indemnification Agreement, and Conoco agrees that the part or parts of  the
Indemnification Agreement so held to be invalid, unenforceable or void will
be  deemed to have been stricken herefrom and the remainder will  have  the
same  force  and  effectiveness as if such part or  parts  had  never  been
included herein.

          SECTION  7.   Captions.   The captions  in  this  Indemnification
Agreement  have been inserted for convenience only and shall  be  given  no
substantive  meaning or significance whatever in construing the  terms  and
provisions of this Indemnification Agreement.

          SECTION   8.    Successors   and   Assigns;   Assignment.    This
Indemnification Agreement shall (a) remain in full force and  effect  until
CDC  has  met  its  obligations under Sections  5.1  and  5.2  of  the  LLC
Agreement; (b) be binding upon Conoco, its successors and assigns; provided
that  Conoco's rights and obligations hereunder may not be assigned without
the  prior written consent of RB;  and (c) inure to the benefit of  and  be
enforceable only by RB and its successors and assigns.

          SECTION  9.  Limitation by Law.  All rights, remedies and  powers
provided  in  this Indemnification Agreement may be exercised only  to  the
extent  that the exercise thereof does not violate any applicable provision
of  law,  and  all  the  provisions of this Indemnification  Agreement  are
intended to be subject to all applicable mandatory provisions of law  which
may  be controlling and to be limited to the extent necessary so that  they
will  not  render the Indemnification Agreement invalid, unenforceable,  in
whole or in part, or not entitled to be recorded, registered or filed under
the provisions of any applicable law.

          SECTION   10.    Survival  of  Covenants,   Representations   and
Warranties.   All  covenants, representations and warranties  contained  in
this Indemnification Agreement shall survive the execution and delivery  of
this Indemnification Agreement and shall continue until CDC has met all  of
its  obligations  under  Sections 5.1 and 5.2 of the  LLC  Agreement.   Any
investigation by RB shall not diminish in any respect whatsoever its  right
to rely on such covenants, representations and warranties.

          SECTION 11.  Fees and Expenses.  Conoco shall pay all costs, fees
and expenses (including, but not limited to, reasonable attorneys' fees and
disbursements)   incurred  by  RB  in  collecting  or  enforcing   Conoco's
obligations   or   RB's  rights  or  remedies  under  this  Indemnification
Agreement.

          SECTION 12.  Governing Law.  This Indemnification Agreement shall
be  governed by and construed in accordance with the laws of the  state  of
Delaware, without regard to principles of conflict of laws.

          SECTION  13.   Final  Agreement.  This Indemnification  Agreement
represents  the final agreement between RB and Conoco with respect  to  the
subject  matter  hereof.    Each of Conoco and RB   hereby  represents  and
warrants that it is not relying on any statement, representation, warranty,
covenant  or  agreement  of any kind except for those  set  forth  in  this
Indemnification Agreement.

          IN  WITNESS  WHEREOF,  Conoco  has  caused  this  Indemnification
Agreement to be duly executed by its officer thereunto duly authorized,  as
of the date first above written.

                              CONOCO INC.


                              By:
                              Name:
                              Title:

                              600 North Dairy Ashford
                              Houston, Texas  77079
                              Attention:
                              Telecopier No. (281)

ACCEPTED THIS 30TH DAY
OF APRIL 1997.

RB DEEPWATER EXPLORATION II INC.


By:
Name:
Title:

901 Threadneedle, Suite 200
Houston, Texas  77079
Attention:  Chief Financial Officer
Telecopier No. (281) 496-0285

                         INDEMNIFICATION AGREEMENT

          THIS  INDEMNIFICATION  AGREEMENT (the "Agreement")  dated  as  of
April  30,  1997,  is  made  by  READING & BATES  CORPORATION,  a  Delaware
corporation  ("RB")  in favor of CONOCO DEVELOPMENT  II  INC.,  a  Delaware
corporation ("Conoco").

          WHEREAS,  Conoco and RB Deepwater Exploration II Inc.,  a  Nevada
corporation  ("Reading  &  Bates") have entered into  a  Limited  Liability
Company  Agreement (the "LLC Agreement") dated of even date  herewith  with
respect to the formation of Deepwater Drilling II L.L.C. (the "Company");

          WHEREAS,  Conoco  has  requested  RB  execute  and  deliver  this
Indemnification  Agreement as partial consideration for  Conoco's  entering
into the LLC Agreement.

          NOW  THEREFORE, in consideration of the premises and in order  to
induce Conoco to enter into the LLC Agreement, RB hereby agrees as follows:

          SECTION  1.  Indemnification.  RB hereby agrees to pay,  protect,
indemnify,  hold harmless and defend Conoco from any failure of  Reading  &
Bates  to make any equity contribution to the Company, as and when required
under  Sections 5.1 and 5.2 of the LLC Agreement, and agrees  that  in  the
event  of such failure, RB will promptly pay on behalf of Reading  &  Bates
any  such  amounts due under Sections 5.1 or 5.2 of the LLC Agreement.   No
payment required to be made by RB under this Section 1 shall be subject  to
any  right  of  set  off,  counterclaim,  defense,  abatement,  suspension,
deferment  or  reduction.  Capitalized terms not otherwise  defined  herein
shall have the meanings ascribed to them in the LLC Agreement.

          SECTION  2.   Representations and Warranties.  RB represents  and
warrants to Conoco as follows:

          (a)  RB (i) is a corporation duly organized, validly existing and
     in  good  standing under the law of its jurisdiction of  incorporation
     and is in good standing in all jurisdictions in which failure to be or
     remain in good standing would have a material adverse effect upon  its
     ability  to  perform its duties, obligations or liabilities  hereunder
     and (ii) has all requisite corporate power to conduct its business and
     to  execute  and  deliver  and  perform  its  obligations  under  this
     Indemnification Agreement.

          (b)   The  execution,  delivery and performance  by  RB  of  this
     Indemnification Agreement has been duly authorized and approved by all
     necessary  corporate  action on the part of RB.  This  Indemnification
     Agreement  constitutes the legal, valid and binding obligation  of  RB
     and  is  enforceable against RB in accordance with its  terms,  except
     insofar  as enforceability may be limited by applicable debtor  relief
     laws or subject to general principles of equity (regardless of whether
     such  enforceability is considered in a proceeding  in  equity  or  at
     law).

          (c)   No  order,  consent, approval, license, permit,  franchise,
     waiver,  exemption,  authorization of or  validation  of,  or  filing,
     recording or registration with (except those that have been heretofore
     obtained or made and of which Conoco has heretofore been given written
     notice)  or  exemption  by,  any person or  tribunal  is  required  to
     authorize, or is required in connection with, the execution, delivery,
     performance,  legality, validity, binding effect or enforceability  of
     this Indemnification Agreement.

          (d)   No  bankruptcy,  insolvency,  reorganization,  arrangement,
     readjustment  of debt, dissolution, liquidation or similar  proceeding
     with  respect  to RB or any of its subsidiaries has been commenced  in
     any jurisdiction.

          (e)   There  are no actions, suits or proceedings pending  or  to
     RB's  knowledge,  threatened against or affecting RB  or  any  of  its
     subsidiaries before any court or arbitrator which is reasonably likely
     to have a material adverse effect on the financial condition, business
     or  operations of RB and its subsidiaries, taken as a whole, or  would
     impair the validity or enforceability of this Agreement.

          SECTION  3.   Amendments, Etc.  No amendment  or  waiver  of  any
provision of this Indemnification Agreement nor consent to any departure by
RB  therefrom shall in any event be effective unless the same shall  be  in
writing  and  signed by Conoco, and each such waiver or  consent  shall  be
effective  only in the specific instance and for the specific  purpose  for
which given.

          SECTION  4.   Notices, Etc.  All notices and other communications
provided for herein shall be given or made in writing and addressed, if  to
RB, at its address set forth under its signature below, or if to Conoco, at
its address set forth under its signature below, such notice or notices  to
be  effective  only  upon  receipt by the party to  which  such  notice  is
addressed.

          SECTION  5.   No  Waiver; Remedies.  No failure on  the  part  of
Conoco  to exercise, and no delay in exercising, any right hereunder  shall
operate  as  a waiver thereof; nor shall any single or partial exercise  of
any  right hereunder preclude any other or further exercise thereof or  the
exercise  of any other right.  No course of dealing between RB  and  Conoco
shall  operate  as  a waiver of any right of Conoco.  The  remedies  herein
provided are cumulative and not exclusive of any remedies provided by  law,
admiralty, equity or otherwise.

          SECTION   6.    Separability.   Should  any   clause,   sentence,
paragraph,  sub-section  or  Section of this Indemnification  Agreement  be
judicially  declared  to be invalid, unenforceable or void,  such  decision
will  not have the effect of invalidating or voiding the remainder of  this
Indemnification  Agreement, and RB agrees that the part  or  parts  of  the
Indemnification Agreement so held to be invalid, unenforceable or void will
be  deemed to have been stricken herefrom and the remainder will  have  the
same  force  and  effectiveness as if such part or  parts  had  never  been
included herein.

          SECTION  7.   Captions.   The captions  in  this  Indemnification
Agreement  have been inserted for convenience only and shall  be  given  no
substantive  meaning or significance whatever in construing the  terms  and
provisions of this Indemnification Agreement.

          SECTION   8.    Successors   and   Assigns;   Assignment.    This
Indemnification Agreement shall (a) remain in full force and  effect  until
Reading & Bates has met its obligations under Sections 5.1 and 5.2  of  the
LLC Agreement; (b) be binding upon RB, its successors and assigns; provided
that RB's rights and obligations hereunder may not be assigned without  the
prior  written consent of Conoco;  and (c) inure to the benefit of  and  be
enforceable only by Conoco and its successors and assigns.

          SECTION  9.  Limitation by Law.  All rights, remedies and  powers
provided  in  this Indemnification Agreement may be exercised only  to  the
extent  that the exercise thereof does not violate any applicable provision
of  law,  and  all  the  provisions of this Indemnification  Agreement  are
intended to be subject to all applicable mandatory provisions of law  which
may  be controlling and to be limited to the extent necessary so that  they
will  not  render the Indemnification Agreement invalid, unenforceable,  in
whole or in part, or not entitled to be recorded, registered or filed under
the provisions of any applicable law.

          SECTION   10.    Survival  of  Covenants,   Representations   and
Warranties.   All  covenants, representations and warranties  contained  in
this Indemnification Agreement shall survive the execution and delivery  of
this Indemnification Agreement and shall continue until Reading & Bates has
met all of its obligations under Sections 5.1 and 5.2 of the LLC Agreement.
Any  investigation  by Conoco shall not diminish in any respect  whatsoever
its right to rely on such covenants, representations and warranties.

          SECTION 11.  Fees and Expenses.  RB shall pay all costs, fees and
expenses  (including, but not limited to, reasonable  attorneys'  fees  and
disbursements)   incurred  by  Conoco  in  collecting  or  enforcing   RB's
obligations  or  Conoco's  rights or remedies  under  this  Indemnification
Agreement.

          SECTION 11.  Governing Law.  This Indemnification Agreement shall
be  governed by and construed in accordance with the laws of the  state  of
Delaware, without regard to principles of conflict of laws.

          SECTION  12.   Final  Agreement.  This Indemnification  Agreement
represents  the final agreement between Conoco and RB with respect  to  the
subject  matter  hereof.    Each  of RB and Conoco  hereby  represents  and
warrants that it is not relying on any statement, representation, warranty,
covenant  or  agreement  of any kind except for those  set  forth  in  this
Indemnification Agreement.

          IN  WITNESS WHEREOF, RB has caused this Indemnification Agreement
to  be  duly executed by its officer thereunto duly authorized, as  of  the
date first above written.

                              READING & BATES CORPORATION

                              By:
                              Name:
                              Title:

                              901 Threadneedle, Suite 200
                              Houston, Texas  77079
                              Attention:  Chief Financial Officer
                              Telecopier No. (281) 496-0285



ACCEPTED THIS 30TH DAY
OF APRIL 1997.
CONOCO DEVELOPMENT II INC.

By:
Name:
Title:

600 North Dairy Ashford
Houston, Texas  77079
Attention: President
Telecopier No. (281)


                       EXHIBIT "C" - SHARING RATIOS

            Conoco Development II Inc.              0.40 (40%)
               RB Deepwater Exploration II Inc.   0.60 (60%)


                  EXHIBIT "D" - CERTIFICATE OF FORMATION

                         CERTIFICATE OF FORMATION

                                    OF

                       DEEPWATER DRILLING II L.L.C.

The   Certificate  of  Formation  of  Deepwater  Drilling  II  L.L.C.  (the
"Company") is being executed by the undersigned for the purpose of  forming
a  limited  liability  company pursuant to the Delaware  Limited  Liability
Company Act.

(a)  The name of the Company is Deepwater Drilling II L.L.C.

(b)  The  address  of the registered office of the Company in  Delaware  is
     1209   Orange  Street,  Wilmington,  Delaware  19801.   The  Company's
     registered agent at that address is The Corporation Trust Company.

(c)  Any  rights of indemnification or guaranties provided for or  referred
     to  in the Company's Limited Liability Company Agreement shall only be
     for   the   benefit  of  the  Company,  the  Members,   the   Members'
     Representatives or the Manager, as applicable, to the exclusion of all
     other purported third party beneficiaries.

IN  WITNESS  WHEREOF,  the undersigned, each an authorized  person  of  the
Company,  have caused this Certificate of Formation to be duly executed  as
of the        day of                   , 1997.

RB DEEPWATER EXPLORATION II INC.,       CONOCO DEVELOPMENT II INC.,
  An Authorized Person                    An Authorized Person


By:                                By:
Name:                              Name:
Title:                             Title:



               EXHIBIT "E" - FORM OF DEMAND PROMISSORY NOTE

                          DEMAND PROMISSORY NOTE

$                                                         [Houston, Texas]
                                                       [            , 1997]


     This  Demand  Promissory Note is given the day and  year  first  above
written          and          made         and         executed          by
("Maker"),  a              corporation.  Capitalized terms used herein  and
not  defined herein will have the respective meanings assigned  thereto  in
the Limited Liability Company Agreement dated April 30, 1997 between Conoco
Development II Inc. and RB Deepwater Exploration II Inc. (the "Agreement").

     For  value  received, Maker hereby promises to pay  to  the  order  of
Deepwater  Drilling II L.L.C. ("Payee"), on the earlier of (i)  demand,  as
set  out in the Agreement, or (ii) February 28, 1999, or (iii) one business
day  prior to delivery of the Drillship (in each case the "Maturity"),  the
principal  amount of                  Dollars ($            ).   Payee  may
make demand for the entire principal amount or for any part thereof, and if
only a part thereof is demanded, Payee shall be entitled to make subsequent
demand(s)  for the balance, or any portion thereof prior to Maturity,  with
the  remaining balance, if any, due on Maturity.  All amounts due hereunder
will  paid  to  Payee  in New York, New York, at such  bank  as  Payee  may
designate by written notice to Maker, as provided in the Agreement.

     No  interest shall accrue under this Demand Promissory Note unless  or
until the earlier of demand or Maturity, and if a demand is made only  with
respect  to  a portion of the principal amount, interest shall accrue  only
with  respect  to  that portion not paid on demand.  Any interest  accruing
under  this  Demand Promissory Note shall accrue at the lesser of  (i)  the
interest rate publicly quoted by Texas Commerce Bank, N.A., Houston, Texas,
as  its  prime commercial rate, plus five percent (5%), or (ii) the maximum
non-usurious interest rate permitted by applicable law.  Such interest will
accrue  only if payment of the principal amount hereunder, or in the  event
of  a demand for a portion thereof, such portion, is not paid forthwith  by
Maker, and such interest will continue to accrue thereafter until such time
as the unpaid amount  has been paid.

     This Demand Promissory Note is delivered in accordance with  the terms
and the conditions of the Agreement.

     THIS  DEMAND  PROMISSORY NOTE SHALL BE GOVERNED BY  AND  CONSTRUED  IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


                                                          Maker

                                   By:
Name:
                                   Its:



                                EXHIBIT "F"


     PROMISSORY NOTE

$                                                  Houston, Texas
                                                           April     , 1997


     This Promissory Note is given the day and year first above written and
made  and  executed by Deepwater Drilling II L.L.C. ("Maker"),  a  Delaware
limited  liability company.  Capitalized terms used herein and not  defined
herein  will  have the respective meanings assigned thereto in the  Limited
Liability Company Agreement dated April 30, 1997 between Conoco Development
II Inc. and RB Deepwater Exploration II Inc. ("Agreement").

     For  value  received, Maker hereby promises to pay  to  the  order  of
[Insert  name of Payee]("Payee"), on the earlier of (i) the date the  Maker
receives  construction financing proceeds with respect  to  the  Drillship,
(ii)   the  date  the  Maker  receives  the  applicable  refund  of   prior
installment(s)  from the Builder following termination of the  Shipbuilding
Contract  for  the Drillship, or (iii) October 15, 1997 (in each  case  the
"Maturity"), the principal amount of                                Dollars
($               ).   All amounts due hereunder will paid to Payee  in  New
York,  New  York, at such bank as Payee may designate by written notice  to
Maker.

     No  interest shall accrue under this Promissory Note unless  or  until
Maturity.   After  Maturity, interest on the amount or amounts  outstanding
shall  accrue  at  the lesser of (x) the interest rate publicly  quoted  by
Texas  Commerce  Bank, N.A., Houston, Texas, as its prime commercial  rate,
plus  five  percent  (5%),  or (y) the maximum non-usurious  interest  rate
permitted  by  applicable law,  until such time as the unpaid  amount,  and
accrued interest thereon,  has been paid.

     This Promissory Note is delivered in accordance with the terms and the
conditions of the Agreement.


     THIS  DEMAND  PROMISSORY NOTE SHALL BE GOVERNED BY  AND  CONSTRUED  IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                         DEEPWATER DRILLING II L.L.C.
                                                            Maker


                         By:
                         Name:
                         Its:



                                EXHIBIT "G"

                         MARINE SERVICES AGREEMENT

          This  Agreement  is  made as of April 30, 1997,  by  and  between
DEEPWATER DRILLING II L.L.C., a limited liability company under the laws of
the  state  of Delaware and having an office in Houston, Texas, hereinafter
called   "the   Company",  and  CONOCO  SHIPPING  COMPANY,  a   corporation
incorporated under the laws of Liberia with a registered office at 80 Broad
Street, Monrovia, Liberia, hereinafter called "Contractor".

WITNESSETH

     WHEREAS, the Company desires to provide offshore drilling services  to
the  oil  and  gas industry utilizing the dynamically positioned  drillship
under  construction  by  Samsung Heavy Industries  Co.,  Ltd.  and  Samsung
Corporation  at  Koje Island, Korea, Builder's Hull No.  1231,  hereinafter
called "the Drilling Unit", to be  delivered to the Company upon completion
of such construction;

     WHEREAS,  the  Company intends to enter into drilling  contracts  with
Conoco Drilling Inc. ("Conoco") and Reading & Bates Corporation ("Reading &
Bates") having a term of two and one-half (2-1/2) years, or an aggregate of
five (5) years, plus options as further set out therein, hereinafter called
the  "Drilling  Contracts",  to  provide drilling  services  utilizing  the
Drilling  Unit  upon  completion of construction and  mobilization  of  the
Drilling Unit to a U.S. Gulf of Mexico port;

     WHEREAS,  the group of companies of which Contractor is a  member  has
been engaged in operating tankers and other vessels for many years and  has
acquired a qualified and experienced operational, marketing, technical  and
administrative staff with the knowledge, skill and experience to assist the
Company  in  the marine aspects of the construction and operations  of  the
Drilling Unit;

     WHEREAS,  the  Company desires to avail itself of certain operational,
marketing,  technical  and  administrative staff  of   Contractor  and  has
requested  Contractor  to provide certain services  and  personnel  to  the
Company; and

     WHEREAS,  Contractor has agreed to provide such services and personnel
to the Company in accordance with the following terms and conditions.

     NOW  THEREFORE,  in  consideration of the mutual  covenants  contained
herein, the parties agree as follows:

     1.   Services to be Provided by Contractor

          Pursuant  to  the  terms of this Agreement Contractor  agrees  to
          provide the following services as requested from time to time  by
          the Company.

          A.   Engineering   and   related  technical   services   in   the
               mechanical,  electrical, structural and  marine  engineering
               disciplines,  pertaining to the construction,  installation,
               testing,  commissioning and operation of the marine  systems
               applicable to the Drilling Unit.

          B.   Assistance  to the Company for the procurement and  delivery
               of  necessary equipment, spare parts and supplies applicable
               to  the  marine  system of the Drilling  Unit  in  a  timely
               manner.

          C.   Policies,  procedures  and systems for  project  management,
               management  information, safety, preventive maintenance  and
               inventory  control applicable to the marine systems  of  the
               Drilling Unit.

          D.   Assistance  in the recruitment of qualified and  experienced
               marine  personnel for the Drilling Unit by the  Company  and
               for  the training of marine personnel to be assigned to  the
               Drilling Unit.

          E.   Project   management,  inspection  and   related   technical
               assistance services applicable to the marine systems of  the
               Drilling  Unit prior to delivery of the Drilling  Unit  from
               the shipyard.

          If  Contractor  is unable to provide the services  requested  for
          whatever reason, (i) Contractor shall promptly advise Company  of
          same  in  writing, (ii) Contractor will owe no further obligation
          to  Company  with respect to Contractor providing  the  requested
          services,  and  (iii)  Contractor agrees  that  it  will  at  the
          Company's   request  provide  assistance  to   the   Company   in
          identifying and procuring direct for the Company's account  other
          contractors who may be able to provide such services.

          All services provided by Contractor under this Agreement shall be
          in  conformance  with  good  and  accepted  marine  practice  and
          standard operating procedures and practices of the industry.

     2.   Personnel

          Contractor  agrees to provide, or cause to be  provided,  to  the
          Company  all  marine and support personnel in the categories  set
          out  in  Exhibit  A  to  this Agreement,  as  may  be  reasonably
          requested by the Company from time to time, to assist the Company
          in  connection with the construction, installation,  testing  and
          commissioning and operation of the marine system of the  Drilling
          Unit,  and  in order for the Company to meet the requirements  of
          any drilling contract for the Drilling Unit.  With respect to the
          Drilling  Contracts, Contractor agrees to provide at the  request
          of  the Company the marine personnel set out in Appendix B of the
          Drilling Contracts.

          If  Contractor  is unable to provide the personnel requested  for
          whatever reason, (i) Contractor shall promptly advise Company  of
          same  in  writing, (ii) Contractor will owe no further obligation
          to  Company  with respect to Contractor providing such personnel,
          and (iii) Contractor agrees that it will at the Company's request
          provide  assistance to the Company in identifying  and  procuring
          direct  for  the Company's account other contractors who  may  be
          able to provide such personnel.

     3.   Other Services

          Contractor  further agrees to provide, or assist the  Company  in
          procuring   for  its  own  account,  administrative,   financial,
          technical,  marketing and other support services as  the  Company
          may  request  in  connection with the Company's business  and  as
          Contractor may be able to reasonably provide.

     4.   Remuneration

          A.    In  consideration of the services being provided hereunder,
          the  Company  agrees  to pay Contractor, on a  monthly  basis  in
          arrears,  a  sum not to exceed U.S. $1,000 per day commencing  on
          the  Commencement Date of the Drilling Contract under  which  the
          Drilling  Unit first commences operation and continuing  for  the
          duration  of  the  Drilling Contracts,  such  rate  to  be  based
          initially  on  the  level of services Company has  requested  and
          Contractor  is providing, and such rate to be adjusted  quarterly
          based on changes in the Consumer Price Index, as published in the
          Survey  of  Current Business Bulletin by the U.S.  Department  of
          Labor,  commencing with the index for the month of  March,  1999.
          The  parties  agree to negotiate, in good faith,  adjustments  in
          such  rate  from  time  to time, based on  the  level  of  marine
          services  Contractor provides to Company and the level of  marine
          services provided to Contractor by third parties.

          B.   The Company agrees to reimburse Contractor for:

               (1)   Any  and all payroll and payroll burden costs incurred
                     by  Contractor in providing personnel to  the  Company
                     pursuant  to  Section  2 of this  Agreement  from  and
                     after  April 25, 1997, such payroll and payroll burden
                     costs  to  be in conformance with Contractor's  normal
                     accounting practices and employee benefits  in  effect
                     from time to time;

               (2)   Any  and  all third party costs incurred by Contractor
                     in  the procurement of equipment, materials, supplies,
                     spare  parts  or personnel requested by  the  Company,
                     including  all  relevant  transportation,  travel  and
                     insurance costs.

          C.   As   additional  consideration  for  the  services  provided
               hereunder, the Company agrees to pay, on a monthly basis  in
               arrears,  to Contractor an amount equal to one percent  (1%)
               of  the  monthly  revenues accruing  to  Company  under  the
               Drilling  Contracts excluding, however,  amounts  for  which
               Company is entitled to cost reimbursement under the terms of
               the Drilling Contracts.

     5.   Payment

          A.   The  Company  shall pay all amounts due to Contractor  under
               this  Agreement by wire transfer, in freely available funds,
               to a bank to be designated by Contractor in                ,
               for credit to Contractor's account.

          B.   All  such amounts shall be paid within twenty days following
               receipt  by  the  Company of monthly invoices  supported  by
               reasonable  documentation.  All amounts not  paid  when  due
               shall  earn  interest until paid at the  rate  of  50  basis
               points over the 3 month LIBOR in effect, from time to  time,
               as published in the "Wall Street Journal".

     6.   Confidential Information

          Any  proprietary or confidential information, documents, manuals,
     systems,  designs,  drawings  or other  like  or  unlike  material  or
     information made available to the Company by Contractor is for the use
     only  by  the  Company for use with the services  to  be  provided  by
     Contractor  pursuant to this Agreement and shall be so  designated  at
     the  time  of  disclosure.  Title to all such material and information
     shall  at  all times be in Contractor, and the Company shall not  have
     any  rights  with respect to such material and information except  the
     use provided by this Agreement.  During the term of this Agreement and
     thereafter  for five years after the expiration or earlier termination
     thereof  or  the date of disclosure of such information, whichever  is
     earlier,  the Company will not permit the use of any such  information
     by  a  third  party  and will at all times keep it  in  the  strictest
     confidence.   Upon  the  expiration or  earlier  termination  of  this
     Agreement,  the Company shall return to Contractor all  such  material
     received  from Contractor or prepared by Contractor pursuant  to  this
     Agreement  and  shall  neither retain any copy of  such  material  nor
     thereafter use any such information.  It is expressly agreed that  the
     obligation of the Company under this section will continue and survive
     any expiration or earlier termination of this Agreement, provided that
     this section shall not apply to information which is:

          A.   Contained in a publication of general circulation;

          B.   Disclosed in good faith by a third party not in privity with
               the party originally disclosing such information which has a
               bona fide right to disclose such information; or

          C.   Information  substantially acquired  or  developed  for,  or
               from, the operations or maintenance of the Drilling Unit;

     save that the Company shall be entitled, after reasonable prior notice
     to  Contractor, to disclose any such confidential information,  report
     or document:

          (a)  in  connection with any proceedings arising  out  of  or  in
               connection  with this Agreement to the extent  necessary  to
               protect its interests;

          (b)  to  any  prospective assignee of any interest in the Company
               subject to it obtaining an undertaking from such prospective
               assignee in the terms of this section;

          (c)  if  required to do so by an order of any court of  competent
               jurisdiction;

          (d)  in  pursuance of any procedure for discovery of documents in
               any proceedings before any such court;

          (e)  pursuant to any law or regulation having the force of law or
               any national stock exchange requirement;

          (f)  pursuant  to  a  requirement  of  any  authority  being   an
               authority with whose requirement, of the nature and  to  the
               extent in question, it is accustomed to comply; or

          (g)  to the technical or legal advisers of the Company subject to
               it  obtaining an undertaking from such advisers in the terms
               of this section;

     and  the  Company  shall be entitled so to disclose or  use  any  such
     information,  report or document if the information contained  therein
     shall have emanated in conditions free from confidentiality bona  fide
     from some person other than Contractor or the agent of Contractor  and
     such  party  would,  but  for the preceding provisions  of  this  sub-
     section,  be  free so to disclose or use the same; provided  that  the
     Company shall use all reasonable endeavors to avoid disclosure to  any
     third party in accordance with sub-sections (c) (d) (e) and (f) above.

     7.   Term

          A.   This  Agreement shall remain in effect until the  expiration
               or earlier termination of the Drilling Contracts as same may
               be  amended  or  extended from time to time,  and  shall  be
               automatically  renewed on an annual basis thereafter  unless
               either  party gives six months' prior written notice of  its
               intention  to  terminate this Agreement or  renegotiate  its
               terms  to  the  other party.  If such notice is  given,  the
               parties  agree  to meet promptly and discuss in  good  faith
               such  termination or renegotiation, as the case may be,  and
               if  mutual  agreement  is not reached regarding  same,  this
               Agreement may be terminated by either party, effective  upon
               expiration of such six month period.

          B.   In  case of termination of this Agreement, Contractor  shall
               be  entitled  to  any  payments  with  respect  to  services
               performed  or  costs  or  expenses incurred  prior  to  such
               termination.

          C.   If  either  party materially defaults in the fulfillment  of
               any  obligation  under  this  Agreement  without  reasonable
               justification therefor, the other party will  not  have  any
               further  obligation  to  fulfil its obligations  until  such
               default  has  been cured.  If such default continues  for  a
               period of more than 30 days, the non-defaulting party  shall
               have   the  option  to  terminate  this  Agreement,  without
               prejudice to any other rights it may have.

     8.   Taxes

          The  remuneration  payable under Sections 3.A and  3.B  has  been
     calculated on the basis that Contractor will be liable for all federal
     and  state  income and franchise taxes on the profits  arising  to  it
     under this Agreement but no other taxes.  Any and all such other taxes
     that  may  be imposed by any governmental authority shall be borne  by
     the Company.

     9.   Assignment

          Neither party shall assign or transfer any of its right, title or
     interest   in  or  to  this  Agreement  (except  to  a  successor   to
     substantially  all of such party's business or to a corporation  owned
     by  or  under common ownership with such party which agrees to  assume
     all obligations of such party, provided that the assigning party shall
     not  thereby  be released from its obligations hereunder) without  the
     prior  written  consent of the other party, and any  such  attempt  to
     assign  or  transfer  without  such  consent  shall  have  no  effect.
     Contractor  may  subcontract  for any services  requested  by  Company
     hereunder,  provided Company has approved any such  subcontract,  such
     approval not to be unreasonably withheld.

     10.  Notices

          Any  notice  or  other  communication for  which  this  Agreement
     provides  shall be in writing and will be delivered to  the  addressee
     thereof  or  sent  to  the  address thereof  by  electronic  facsimile
     communication  or  by  registered or certified  mail,  return  receipt
     requested, or by other method which will constitute adequate  evidence
     of delivery, as follows:

               If to the Company:

                     Deepwater Drilling II L.L.C.
                     901 Threadneedle, Suite 200
                     Houston, Texas  77079

                     Attention:  Manager


               If to Contractor:

                     Conoco Shipping Company
                     % Conoco Inc.
                     600 N. Dairy Ashford
                     Houston, Texas  77079

                     Attention:  President

     or  addressed at such other address as the addressee thereof may  have
     designated for that purpose by written notice given as above provided.
     Any notice given in conformance with this clause will be considered as
     received for all purposes on the date of delivery.

     11.  Governing Law

          This  Agreement shall be governed by and construed in  accordance
     with  the general maritime law of the United States and to the  extent
     state  law  may  be applicable by the internal laws of Texas  and  the
     parties hereto submit to the non-exclusive jurisdiction of the federal
     and state courts in Harris County, Texas.

     12.  Consequential Damages

          In no event shall either party to this Agreement be liable to the
     other party for loss of profits or other incidental, consequential  or
     special damages.

     13.  Indemnity

          A.   Contractor agrees to defend, indemnify and hold harmless the
               Company,  to  the  extent  the Company  is  not  insured  or
               otherwise  indemnified, for all losses, claims, liabilities,
               obligations  or  the  like incurred by the  Company  or  any
               member in the Company either directly or through the Company
               arising from Contractor's failure to perform its obligations
               hereunder  according to good marine practice and  consistent
               with the standard operating procedures and practices of  the
               industry,  whether such obligations are to be  performed  by
               itself  or  through an affiliate or sub-contractor appointed
               by  it.   Further, it is agreed that Contractor's liability,
               if  any, under this paragraph shall not in any event  exceed
               U.S.   $100,000.00  per  occurrence,  not  to  exceed   U.S.
               $1,000,000 in any one year.

          B.   Notwithstanding  the foregoing it is agreed that  Contractor
               shall  have no liability to the Company for pollution,  well
               control  costs, reservoir or underground damage or  loss  of
               hole,  regardless of how caused, including, but not  limited
               to,  the  sole,  joint  or concurrent negligence,  or  gross
               negligence of Contractor, its employees or sub-contractors.

     14.  Additional Insured and Waiver of Subrogation

          The  Company agrees to cause the relevant insurance policies  and
     cover  notes  being maintained at the expense of the Company  for  the
     benefit of both parties to include both parties as named insureds  and
     to   cause  the  interested  underwriters  to  waive  all  rights   of
     subrogation against the parties hereto.

     15.  Force Majeure

          The  obligations  (other than any obligations to  pay  money)  of
     either party to the Agreement shall be suspended (and failure to carry
     out  the same shall not constitute a breach of this Agreement) to  the
     extent,  and  during  the period, that such party  is  prevented  from
     carrying out is obligations by virtue of any act or event outside  the
     reasonable control of that party.

     16.  Amendment

          This  Agreement may be amended, from time to time, only by mutual
     agreement of the parties in writing.


     IN  WITNESS WHEREOF, the parties thereto have caused this Agreement to
be  executed  by its duly authorized representatives in Houston,  Texas  on
April 30, 1997.

                              CONOCO SHIPPING AND MARINE
                               DEVELOPMENT COMPANY

                         By:
                         Its:

                              DEEPWATER DRILLING II L.L.C.

                         By:
                         Its:


                                EXHIBIT "H"

                        DRILLING SERVICES AGREEMENT

     This  Agreement is made as of April 30, 1997, by and between DEEPWATER
DRILLING II L.L.C., a limited liability company under the laws of the state
of Delaware and having an office in Houston, Texas, hereinafter called "the
Company",  and  READING  &  BATES DRILLING CO., a corporation  incorporated
under  the  laws  of  Oklahoma  and having an  office  in  Houston,  Texas,
hereinafter called "Contractor".

WITNESSETH

     WHEREAS, the Company desires to provide offshore drilling services  to
the  oil  and  gas industry utilizing the dynamically positioned  drillship
under  construction  by  Samsung Heavy Industries  Co.,  Ltd.  and  Samsung
Corporation  at  Koje Island, Korea, Builder's Hull No.  1231,  hereinafter
called  "the Drilling Unit", to be delivered to the Company upon completion
of such construction;

     WHEREAS,  the  Company intends to enter into drilling  contracts  with
Conoco Drilling Inc. ("Conoco") and Reading & Bates Corporation ("Reading &
Bates") having a term of two and one-half years (2-1/2), or an aggregate of
five (5) years, plus options as further set out therein, hereinafter called
the  "Drilling Contracts", to provide offshore drilling services  utilizing
the  Drilling Unit upon completion of construction and mobilization of  the
Drilling Unit to a U.S. Gulf of Mexico port;

     WHEREAS,  the group of companies of which Contractor is a  member  has
been  engaged in operating offshore drilling units for many years  and  has
acquired a qualified and experienced operational, marketing, technical  and
administrative staff with the knowledge, skill and experience to assist the
Company in the drilling aspects of the construction and operations  of  the
Drilling Unit;

     WHEREAS,  the  Company desires to avail itself of certain operational,
marketing,  technical  and  administrative staff  of   Contractor  and  has
requested  Contractor  to provide certain services  and  personnel  to  the
Company; and

     WHEREAS,  Contractor has agreed to provide such services and personnel
to the Company in accordance with the following terms and conditions.
     NOW  THEREFORE,  in  consideration of the mutual  covenants  contained
herein, the parties agree as follows:

     1.   Services to be Provided by Contractor

          Pursuant  to  the  terms of this Agreement Contractor  agrees  to
          provide the following services as requested from time to time  by
          the Company.

          A.   Engineering   and   related  technical   services   in   the
               mechanical,  electrical, structural and  marine  engineering
               disciplines,  pertaining to the construction,  installation,
               testing,  commissioning and operation of  the  drilling  and
               topsides systems of the Drilling Unit.

          B.   Assistance to the Company's purchasing organization for  the
               procurement and delivery of necessary equipment, spare parts
               and supplies applicable to the marine system of the Drilling
               Unit in a timely manner.

          C.   Policies,  procedures  and systems for  project  management,
               management  information, safety, preventive maintenance  and
               inventory  control applicable to the drilling  and  topsides
               systems of the Drilling Unit.

          D.   Assistance  in the recruitment of qualified and  experienced
               drilling personnel for the Drilling Unit by the Company  and
               for the training of drilling personnel to be assigned to the
               Drilling Unit.

          E.   Project   management,  inspection  and   related   technical
               assistance  services applicable to the drilling  systems  of
               the  Drilling  Unit prior to delivery of the  Drilling  Unit
               from the shipyard.

          If  Contractor  is unable to provide the services  requested  for
          whatever reason, (i) Contractor shall promptly advise Company  of
          same  in  writing, (ii) Contractor will owe no further obligation
          to  Company  with respect to Contractor providing  the  requested
          services,  and  (iii)  Contractor agrees  that  it  will  at  the
          Company's   request  provide  assistance  to   the   Company   in
          identifying and procuring direct for the Company's account  other
          contractors who may be able to provide such services.

     All  services provided by Contractor under this Agreement shall be  in
     conformance  with  good  and accepted oilfield practice  and  standard
     operating procedures and practices of the industry.

     2.   Personnel

          Contractor  agrees to provide, or cause to be  provided,  to  the
          Company all drilling and support personnel in the categories  set
          out  in  Exhibit  A  to  this Agreement,  as  may  be  reasonably
          requested by the Company from time to time, to assist the Company
          in  connection  with  the  construction,  installation,  testing,
          commissioning and operation of the drilling and topsides  systems
          of  the  Drilling Unit, and in order for the Company to meet  the
          requirements  of  any drilling contract for  the  Drilling  Unit.
          With  respect  to  the Drilling Contracts, Contractor  agrees  to
          provide  at  the request of the Company the drilling and  support
          personnel set out in Appendix B of the Drilling Contracts.

          If  Contractor  is unable to provide the personnel requested  for
          whatever reason, (i) Contractor shall promptly advise Company  of
          same  in  writing, (ii) Contractor will owe no further obligation
          to  Company  with respect to Contractor providing such personnel,
          and (iii) Contractor agrees that it will at the Company's request
          provide  assistance to the Company in identifying  and  procuring
          direct  for  the Company's account other contractors who  may  be
          able to provide such personnel.

     3.   Other Services

          Contractor  further agrees to provide, or assist the  Company  in
          procuring   for  its  own  account,  administrative,   financial,
          technical,  marketing and other support services as  the  Company
          may  request  in  connection with the Company's business  and  as
          Contractor may be able to reasonably provide.

     3.   Remuneration

          A.    In  consideration of the services being provided hereunder,
          the  Company  agrees  to pay Contractor, on a  monthly  basis  in
          arrears,  a  sum not to exceed U.S. $2,500 per day commencing  on
          the  Commencement Date of the Drilling Contract under  which  the
          Drilling  Unit first commence operations and continuing  for  the
          duration  of  the  Drilling Contracts,  such  rate  to  be  based
          initially  on  the  level of services Company has  requested  and
          Contractor  is providing, and such rate to be adjusted  quarterly
          based on changes in the Consumer Price Index, as published in the
          Survey  of  Current Business Bulletin by the U.S.  Department  of
          Labor,  commencing with the index for the month of  March,  1999.
          The  parties  agree to negotiate, in good faith,  adjustments  to
          such  rate  based  on  the level of drilling services  Contractor
          provides to Company as compared to drilling services obtained  by
          the Company from third parties.

          B.   The Company agrees to reimburse Contractor for:

               (1)   Any  and all payroll and payroll burden costs incurred
                     by  Contractor in providing personnel to  the  Company
                     pursuant  to the Section 2 of this Agreement from  and
                     after  April 25, 1997, such payroll and payroll burden
                     costs  to  be in conformance with Contractor's  normal
                     accounting practices and employee benefits  in  effect
                     from time to time;

               (2)   Any  and  all third party costs incurred by Contractor
                     in  the procurement of equipment, materials, supplies,
                     spare  parts  or personnel requested by  the  Company,
                     including  all  relevant  transportation,  travel  and
                     insurance costs.

          C.   As  additional  consideration for the services  provided  in
               construction  hereunder the Company  agrees  to  pay,  on  a
               monthly  basis in arrears, to Contractor an amount equal  to
               one percent (1%) of the monthly revenues accruing to Company
               under the Drilling Contract (excluding, however, amounts for
               which  Company is entitled to cost reimbursement  under  the
               terms of the Drilling Contracts).

     5.   Payment

          A.   The  Company  shall pay all amounts due to Contractor  under
               this  Agreement by wire transfer, in freely available funds,
               to  a  bank to be designated by Contractor in New York,  New
               York for credit to Contractor's account.

          B.   All  such amounts shall be paid within twenty days following
               receipt  by  the  Company of monthly invoices  supported  by
               reasonable  documentation.  All amounts not  paid  when  due
               shall  earn  interest until paid at the  rate  of  50  basis
               points over the 3 month LIBOR in effect, from time to  time,
               as published in the "Wall Street Journal".

     6.   Confidential Information

          Any  proprietary or confidential information, documents, manuals,
     systems,  designs,  drawings  or other  like  or  unlike  material  or
     information made available to the Company by Contractor is for the use
     only  by  the  Company for use with the services  to  be  provided  by
     Contractor  pursuant to this Agreement and shall be so  designated  at
     the  time  of  disclosure.  Title to all such material and information
     shall  at  all times be in Contractor, and the Company shall not  have
     any  rights  with respect to such material and information except  the
     use provided by this Agreement.  During the term of this Agreement and
     thereafter  for five years after the expiration or earlier termination
     thereof  or  the date of disclosure of such information, whichever  is
     earlier,  the Company will not permit the use of any such  information
     by  a  third  party  and will at all times keep it  in  the  strictest
     confidence.   Upon  the  expiration or  earlier  termination  of  this
     Agreement,  the Company shall return to Contractor all  such  material
     received  from Contractor or prepared by Contractor pursuant  to  this
     Agreement  and  shall  neither retain any copy of  such  material  nor
     thereafter use any such information.  It is expressly agreed that  the
     obligation of the Company under this section will continue and survive
     any expiration or earlier termination of this Agreement, provided that
     this section shall not apply to information which is:

          A.   Contained in a publication of general circulation;

          B.   Disclosed in good faith by a third party not in privity with
               the party originally disclosing such information which has a
               bona fide right to disclose such information; or

          C.   Information  substantially acquired  or  developed  for,  or
               from, the operations or maintenance of the Drilling Unit;

     save that the Company shall be entitled, after reasonable prior notice
     to  Contractor, to disclose any such confidential information,  report
     or document:

          (a)  in  connection with any proceedings arising  out  of  or  in
               connection  with this Agreement to the extent  necessary  to
               protect its interests;

          (b)  to  any  prospective assignee of any interest in the Company
               subject to it obtaining an undertaking from such prospective
               assignee in the terms of this section;

          (c)  if  required to do so by an order of any court of  competent
               jurisdiction;

          (d)  in  pursuance of any procedure for discovery of documents in
               any proceedings before any such court;

          (e)  pursuant to any law or regulation having the force of law or
               any national stock exchange requirement;

          (f)  pursuant  to  a  requirement  of  any  authority  being   an
               authority with whose requirement, of the nature and  to  the
               extent in question, it is accustomed to comply; or

          (g)  to the technical or legal advisers of the Company subject to
               it  obtaining an undertaking from such advisers in the terms
               of this section;

     and  the  Company  shall be entitled so to disclose or  use  any  such
     information,  report or document if the information contained  therein
     shall have emanated in conditions free from confidentiality bona  fide
     from some person other than Contractor or the agent of Contractor  and
     such  party  would,  but  for the preceding provisions  of  this  sub-
     section,  be  free so to disclose or use the same; provided  that  the
     Company shall use all reasonable endeavors to avoid disclosure to  any
     third party in accordance with sub-sections (c) (d) (e) and (f) above.

     7.   Term

          A.   This  Agreement shall remain in effect until the  expiration
               or  earlier termination of the Drilling Contracts,  as  same
               may  be amended or extended from time to time, and shall  be
               automatically  renewed on an annual basis thereafter  unless
               either  party gives six months' prior written notice of  its
               intention  to  terminate this Agreement or  renegotiate  its
               terms  to  the  other party.  If such notice is  given,  the
               parties  agree  to meet promptly and discuss in  good  faith
               such  termination or renegotiation, as the case may be,  and
               if  mutual  agreement  is not reached regarding  same,  this
               Agreement may be terminated by either party, effective  upon
               expiration of such six month period.

          B.   In  case of termination of this Agreement, Contractor  shall
               be  entitled  to  any  payments  with  respect  to  services
               performed  or  costs  or  expenses incurred  prior  to  such
               termination.

          C.   If  either  party materially defaults in the fulfillment  of
               any  obligation  under  this  Agreement  without  reasonable
               justification therefor, the other party will  not  have  any
               further  obligation  to  fulfil its obligations  until  such
               default  has  been cured.  If such default continues  for  a
               period of more than 30 days, the non-defaulting party  shall
               have   the  option  to  terminate  this  Agreement,  without
               prejudice to any other rights it may have.

     8.   Taxes

          The  remuneration  payable under Sections 3.A and  3.B  has  been
     calculated on the basis that Contractor will be liable for all federal
     and  state  income and franchise taxes on the profits  arising  to  it
     under this Agreement but no other taxes.  Any and all such other taxes
     that  may  be imposed by any governmental authority shall be borne  by
     the Company.

     9.   Assignment

          Neither party shall assign or transfer any of its right, title or
     interest   in  or  to  this  Agreement  (except  to  a  successor   to
     substantially  all of such party's business or to a corporation  owned
     by  or  under common ownership with such party which agrees to  assume
     all obligations of such party, provided that the assigning party shall
     not  thereby  be released from its obligations hereunder) without  the
     prior  written  consent of the other party, and any  such  attempt  to
     assign  or  transfer  without  such  consent  shall  have  no  effect.
     Contractor  may subcontract for any services requested by the  Company
     hereunder,  provided Company has approved any such  subcontract,  such
     approval not to be unreasonably withheld.

     10.  Notices

          Any  notice  or  other  communication for  which  this  Agreement
     provides  shall be in writing and will be delivered to  the  addressee
     thereof  or  sent  to  the  address thereof  by  electronic  facsimile
     communication  or  by  registered or certified  mail,  return  receipt
     requested, or by other method which will constitute adequate  evidence
     of delivery, as follows:

               If to the Company:

                     Deepwater Drilling II L.L.C.
                     901 Threadneedle, Suite 200
                     Houston, Texas  77079

                     Attention:  Manager


               If to Contractor:

                     Reading & Bates Drilling Co.
                     901 Threadneedle, Suite 200
                     Houston, Texas  77079

                     Attention:  President

     or  addressed at such other address as the addressee thereof may  have
     designated for that purpose by written notice given as above provided.
     Any notice given in conformance with this clause will be considered as
     received for all purposes on the date of delivery.

     11.  Governing Law

          This  Agreement shall be governed by and construed in  accordance
     with  the general maritime law of the United States and to the  extent
     state  law  may  be applicable by the internal laws of Texas  and  the
     parties hereto submit to the non-exclusive jurisdiction of the federal
     and state courts in Harris County, Texas.

     12.  Consequential Damages

          In no event shall either party to this Agreement be liable to the
     other party for loss of profits or other incidental, consequential  or
     special damages.

     13.  Indemnity

          A.   Contractor agrees to defend, indemnify and hold harmless the
               Company,  to  the  extent  the Company  is  not  insured  or
               otherwise  indemnified, for all losses, claims, liabilities,
               obligations  or  the  like incurred by the  Company  or  any
               member in the Company either directly or through the Company
               arising from Contractor's failure to perform its obligations
               hereunder   according  to  good  oil  field   practice   and
               consistent  with  the  standard  operating  procedures   and
               practices of the industry, whether such obligations  are  to
               be  performed  by  itself or through an  affiliate  or  sub-
               contractor  appointed by it.  Further,  it  is  agreed  that
               Contractor's  liability, if any, under this paragraph  shall
               not in any event exceed U.S. $100,000.00 per occurrence, not
               to exceed U.S. $1,000,000 in any one year.

          B.   Notwithstanding  the foregoing it is agreed that  Contractor
               shall  have no liability to the Company for pollution,  well
               control  costs, reservoir or underground damage or  loss  of
               hole,  regardless of how caused, including, but not  limited
               to,  the  sole,  joint  or concurrent negligence,  or  gross
               negligence of Contractor, its employees or sub-contractors.

     14.  Additional Insured and Waiver of Subrogation

          The  Company agrees to cause the relevant insurance policies  and
     cover  notes  being maintained at the expense of the Company  for  the
     benefit of both parties to include both parties as named insureds  and
     to   cause  the  interested  underwriters  to  waive  all  rights   of
     subrogation against the parties hereto.

15.  Force Majeure

          The  obligations  (other than any obligations to  pay  money)  of
     either party to the Agreement shall be suspended (and failure to carry
     out  the same shall not constitute a breach of this Agreement) to  the
     extent,  and  during  the period, that such party  is  prevented  from
     carrying out is obligations by virtue of any act or event outside  the
     reasonable control of that party.

     16.  Amendment

          This  Agreement may be amended, from time to time, only by mutual
     agreement of the parties in writing.


     IN  WITNESS WHEREOF, the parties thereto have caused this Agreement to
be  executed  by its duly authorized representatives in Houston,  Texas  on
April 30, 1997.

                              READING & BATES DRILLING CO.

                         By:
                         Its:

                              DEEPWATER DRILLING II L.L.C.

                         By:
                         Its: