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                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                             ________________

                                 FORM 10-K
(Mark One)
 _X_    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
        OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
        For the fiscal year ended December 31, 1997
                               OR
 ___    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
        OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
        For the transition period from ___________ to ___________.

                        Commission File No. 1-13729

                          R&B FALCON CORPORATION
          (Exact name of registrant as specified in its charter)

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

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

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

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


                                                Name of Each Exchange
   Title of Each Class                           on Which Registered
   -------------------                           -------------------
Common Stock, $.01 par value                    New York Stock Exchange
Series A Junior Participating
 Preferred Stock Purchase Rights                New York Stock Exchange

     SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

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


Indicate  by  check mark if disclosure of delinquent filers  pursuant  to
Item  405  of  Regulation S-K is not contained herein, and  will  not  be
contained, to the best of registrant's knowledge, in definitive proxy  or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [  ]

            AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY
             NONAFFILIATES ON MARCH 23, 1998 - $4,461,232,007

               NUMBER OF SHARES OF COMMON STOCK OUTSTANDING
                        ON MARCH 23, 1998 - 165,016,297

                    DOCUMENTS INCORPORATED BY REFERENCE
 1)  Proxy Statement for Annual Meeting of Stockholders to be held on May
                            19, 1998 - Part III

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                       TABLE OF CONTENTS
                       -----------------

                             PART I
                             ------
Item 1.  Business
Item 2.  Properties
Item 3.  Legal Proceedings
Item 4.  Submission of Matters to a Vote of Security Holders

                            PART II
                            -------
Item 5.  Market for the Registrant's Common Stock and Related Stockholder
            Matters
Item 6.  Selected Financial Data
Item 7.  Management's Discussion and Analysis of Financial Condition and
            Results of Operations
Item 8.  Financial Statements and Supplementary Data
Item 9.  Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure

                            PART III
                            --------
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions

                            PART IV
                            -------
Item 14. Exhibits, Financial Statements and Reports on Form 8-K

Signatures

                 ________________________________________

                FORWARD LOOKING STATEMENTS AND ASSUMPTIONS

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

                             PART I

Item 1. Business and Item 2. Properties

                                The Company

   R&B  Falcon  Corporation  ("R&B Falcon"), a  Delaware  corporation,  was
incorporated in July 1997. Prior to December 31, 1997, R&B Falcon  did  not
own any material assets or conduct any business.  Effective on December 31,
1997,  pursuant  to an Agreement and Plan of Merger dated as  of  July  10,
1997,  Falcon  Drilling  Company, Inc. ("Falcon"), a  Delaware  corporation
incorporated in 1991, and Reading & Bates Corporation ("R&B"),  a  Delaware
corporation incorporated in 1955, became wholly owned subsidiaries  of  R&B
Falcon  (the  "Merger").  In the Merger, each outstanding share  of  common
stock  of Falcon was converted into one share of common stock of R&B Falcon
and  each outstanding share of common stock of R&B was converted into  1.18
shares  of  common  stock  of R&B Falcon. The above  transaction  has  been
accounted  for  as  a  pooling of interests and the consolidated  financial
statements  for  the periods presented have been restated  to  include  the
accounts  of  Falcon and R&B.  Unless the context otherwise indicates,  the
term  "Company" herein refers to the total business conducted by R&B Falcon
and its subsidiaries.

   Falcon is a provider of contract drilling and workover services for  the
domestic  and  international oil and gas industry.  Falcon  was  formed  in
1991.  Falcon's fleet consists of barge drilling rigs, barge workover rigs,
jack-ups,  submersibles and drillships.  Falcon's barge rig  fleet  is  the
largest  in  the world.  Falcon also owns tugboats, crewboats  and  utility
barges, which are primarily used in conjunction with its barge drilling and
workover  operations.  Falcon's fleet operates in the U. S. Gulf Coast  and
Gulf  of  Mexico,  Brazil, Indonesia, Southeast Asia,  Venezuela  and  West
Africa.

   R&B  is  a  provider of contract drilling and other related services  in
major offshore oil and gas producing areas worldwide.  R&B began as one  of
the  first  offshore contract drillers in 1956.  R&B's  fleet  consists  of
semisubmersibles,  a semisubmersible support vessel, drillships,  jack-ups,
drilling  tenders  and  a  floating  production  vessel.   R&B's  fleet  is
internationally diversified with drilling units located in the U.  S.  Gulf
of  Mexico and in various parts of the world, including in waters  offshore
Angola,  Australia, Egypt, Indonesia, Italy, Nigeria, United Arab Emirates,
and the United Kingdom.

                            Business - General

   The  Company's  primary business is providing marine  contract  drilling
and ancillary services on a worldwide basis.

   The  Company provides the equipment and personnel for drilling wells and
conducting  workover operations on wells in marine environments.   Drilling
operations  essentially involve the boring of a hole in the  earth's  crust
with the objective of locating hydrocarbon reservoirs.  Workover operations
involve  efforts  to  repair damage to, or stimulate  production  from,  an
existing  well.   Drilling operations in general require heavier  and  more
powerful  equipment  due  to  the  weight of  the  drillpipe  and  downhole
equipment  involved  and the potential pressures that  may  be  encountered
while  drilling  through rock formations.  Most of the Company's  rigs  are
capable  of providing both drilling and workover services, although certain
of  such rigs are limited in the depth of wells that they can drill, and as
a result engage primarily in workover operations.

   The  Company  owns  and  operates  power  vessels  and  barges  used  to
transport  and store equipment, material and personnel.  These  assets  are
primarily  deployed  in the barge rig business, for example,  moving  barge
rigs  to  and  from  their operating location, transporting  materials  and
personnel to barge rigs, and providing storage adjacent to barge  rigs  for
equipment,  materials, and drill cuttings.  The Company also engages  to  a
minor  extent  in  providing  such equipment for  ocean  transportation  of
materials and in connection with marine construction projects.

   In  February  1996, the Company and Intec Engineering,  Inc.,  formed  a
joint  venture  named  Total  Offshore  Production  Systems  (TOPS).   TOPS
provides complete field development engineering services on a turnkey basis
to  operators  desiring  to contract field developments  through  a  single
provider.  TOPS utilizes a pre-approved group of preferred contractors  and
manufacturers  to  meet  its contractual commitments  on  time  and  within
budgeted limits.

   The   Company,  primarily  through  its  subsidiary  Reading   &   Bates
Development  Co.  ("DEVCO"), engages in exploration for oil  and  gas.   In
March  1998,  the  Company decided to divest itself of this  business,  and
intends  to  complete this divestiture prior to March 1999.  The  Company's
oil and gas business has been accounted for as a discontinued operation  in
the  financial statements included in this report.  See Note L of Notes  to
Consolidated Financial Statements.

                                 Strategy

   Contract  Drilling and Related Services.  The Company's overall strategy
is  to  enhance its competitive positions in markets that generate superior
long term returns.

   A  major element of the Company's strategy involves the expansion of its
deepwater fleet.  The Company believes that the major oil companies of  the
world  will  continue  to increase their exploration efforts  in  deepwater
areas  for  two  reasons.   First, improvements  in  technology  have  made
production  of  hydrocarbons  from these areas  more  economically  viable.
Second,  the  number  of significant reservoirs remaining  undiscovered  in
shallow waters continues to dwindle, leading operators to move into  deeper
waters  in  their  efforts  to find hydrocarbon  reserves.   The  Company's
deepwater fleet consists of eight semisubmersibles and five drillships that
are currently operating.  In addition, the Company has two semisubmersibles
and  seven  drillships  undergoing construction or upgrade.  The  Company's
focus  on  deepwater equipment also allows it to obtain long-term contracts
that  serve  as  a  balance to the short-term contracts  prevalent  in  the
shallower water markets.

   A  second  element of the Company's strategy involves the  refurbishment
and  return to operational status of non-operational barge rigs in response
to  increasing demand.  The Company returned four barge rigs to service  in
1997, and anticipates activating an additional five barge rigs during 1998.

   The  Company seeks opportunities to provide services related to its core
drilling  business.   In  1997,  the  Company  entered  the  inland  marine
transportation business, purchasing tugs and utility barges  that  it  uses
primarily in conjunction with its barge rig fleet.  The Company also owns a
floating production storage and shuttle vessel.

   The  Company  has from time to time in the past engaged  in  preliminary
discussions  with  other  industry participants with  respect  to  business
combinations that would potentially strengthen its competitive position  in
the  marine drilling industry.  The Company will also continue to  consider
the selective acquisition of drilling rigs and other assets.

   Hydrocarbon  Exploration.  DEVCO engages in the acquisition  of  working
interests in offshore oil and gas properties pursuant to which it shares in
reservoir and oil and gas price risks and thus profits and losses from such
properties.   The  Company  is able, from time to  time,  to  acquire  such
interests as a result of being able to provide access to the Company's rigs
and  to  the services provided by TOPS.  The Company expects to divest  its
oil  and  gas  business  during 1998 and this  business  is  treated  as  a
discontinued operation in the Company's financial statements.

                   Significant Developments During 1997

   The  most  significant development for the Company during 1997  was  the
business combination of R&B and Falcon to create the Company.  As a  result
of  the  Merger,  the  Company  is  one  of  the  largest  marine  drilling
contractors in the world.

   The  following are the other significant developments that  occurred  in
1997:

 1.  The  construction  of the dynamically positioned drillship  "DEEPWATER
     PATHFINDER"  continued  on schedule.  This drillship  is  owned  by  a
     limited  liability company which is in turn owned 50% by  the  Company
     and  50%  by an affiliate of Conoco, Inc.  The estimated cost  of  the
     drillship  is approximately $ 235.0 million plus capitalized interest.
     Immediately  following delivery of the drillship  from  the  shipyard,
     which  is  expected to be in the fourth quarter of 1998, the drillship
     is contracted for five years to Conoco.

 2.  The  Company  and  an  affiliate  of Conoco,  Inc.  formed  a  limited
     liability  company (owned 60% by the Company) to build and  operate  a
     dynamically  positioned  drillship  (the  "DEEPWATER  FRONTIER").  The
     estimated  cost of the drillship is approximately $240.0 million  plus
     capitalized   interest.   Immediately  following   delivery   of   the
     drillship  from  the shipyard, which is expected to be  in  the  first
     quarter  of 1999, the drillship is contracted for five years.   During
     the  initial  five  years,  the drillship will  be  contracted  to  an
     affiliate  of  Conoco Inc. for an aggregate of 2.5 years  and  to  the
     Company  for  operations for its own account  for  the  remaining  2.5
     years.

 3.  The   Company  commenced  construction  of  a  dynamically  positioned
     drillship  (tentatively called "DRILLSHIP III").  The  estimated  cost
     of  the  drillship  is approximately $245.0 million  plus  capitalized
     interest.  Immediately following delivery of the  drillship  from  the
     shipyard,  which is expected to be in the third quarter of  1999,  the
     drillship  is committed for a minimum of 2.5 years over  a  five  year
     period with Statoil.  Statoil has an option, exercisable by May  1998,
     to  increase its commitment from the 2.5 year minimum up to the  total
     five year period.

 4.  The   Company  commenced  construction  of  a  new  generation   ultra
     deepwater moored semisubmersible, the "RBS-6".  The estimated cost  of
     the  unit  is approximately $280.0 million plus capitalized  interest.
     Immediately  following  the delivery of the unit  from  the  shipyard,
     which  is  expected to be in the first quarter of 2000,  the  unit  is
     committed under a letter of intent for five years to Shell.

 5.  The  construction  of the dynamically positioned drillship  "PEREGRINE
     IV" continued satisfactorily.  The estimated cost of the drillship  is
     approximately  $160.0 million plus capitalized interest.   Immediately
     following  delivery  of  the drillship from  the  shipyard,  which  is
     expected  to  be  in  the  fourth quarter of 1998,  the  drillship  is
     contracted for six years to Petrobras.

 6.  The  Company  purchased  an oil/bulk/ore carrier  (renamed  "PEREGRINE
     VI")  for $7.5 million and commenced the conversion of this vessel  to
     a  drillship.   The  conversion  is estimated  to  cost  approximately
     $192.5  million plus capitalized interest. Immediately  following  the
     delivery of the drillship from the shipyard, which is expected  to  be
     in  the  first quarter of 1999, the drillship is contracted for  three
     years (with two one-year extensions) to Mobil/Phillips.

 7.  The  Company purchased a drillship (renamed "PEREGRINE VII") for $33.8
     million  and commenced the upgrade and refurbishment of the drillship.
     The  upgrade  and  refurbishment is estimated  to  cost  approximately
     $120.0  million plus capitalized interest. Immediately  following  the
     delivery of the drillship from the shipyard, which is expected  to  be
     in  the fourth quarter of 1998, the drillship is contracted for  three
     years (with five one- year extensions) to Amoco.

 8.  The  Company  purchased  an oil/bulk/ore carrier  (renamed  "PEREGRINE
     VIII")  for  $9.2 million and commenced the conversion of this  vessel
     to  a  drillship.   The conversion is estimated to cost  approximately
     $190.8  million plus capitalized interest. Immediately  following  the
     delivery of the drillship from the shipyard, which is expected  to  be
     in  the  third quarter of 1999, the drillship is contracted for  three
     years to Texaco.

 9.  The   Company   commenced  the  upgrade  and  refurbishment   of   the
     semisubmersible   rig  "FALCON  100"  which  is  estimated   to   cost
     approximately  $65.0 million plus capitalized interest.   Delivery  is
     expected  to  be  in  the  fourth quarter of 1998.   The  Company  has
     entered  into  a  letter  of  intent with Petrobras  for  a  four-year
     contract for the rig following delivery.

10.  The  Company refurbished and  returned to  active  service  four barge
     rigs that had previously been cold stacked.

11.  In  a  series  of  transactions,  the  Company acquired 68 tugs and 44
     utility barges for an aggregate cost of $49.0 million.

12.  The  Company  purchased  a 200 foot cantilevered mat-supported jack-up
     (renamed "PHOENIX VI") for $22.0 million.

13.  The Company purchased a  semisubmersible  accommodation  unit (renamed
     "RIG  82")  for  $34.2  million.  "RIG 82" was originally  built as  a
     drilling unit,  but  was  converted  to  an  accommodation  vessel  in
     1978.   Prior to commencing any upgrade, the unit will be marketed  to
     operators for conversion back to a full drilling mode.

                            The Company's Fleet

   The  Company's  active  fleet  at March  23,  1998  consisted  of  eight
semisubmersibles,  five  drillships,  31  barge  drilling  rigs,  15  barge
workover  rigs, 26 jack-ups, three submersibles, two drilling  tenders  and
one  floating production vessel.  In addition, at such date the Company had
seven  drillships and two semisubmersibles under construction  or  upgrade,
one  cold stacked semisubmersible being marketed for upgrade and return  to
service, two cold stacked barge drilling rigs being refurbished for  active
service,  11  cold stacked barge drilling rigs, and one barge workover  rig
under  construction.  The following sets forth a brief description  of  the
types and capabilities of the rigs operated by the Company.  Rigs shown  as
"operating"  are  under  contract (including  rigs  being  mobilized  under
contract).  Rigs shown as "available" are ready for service and  are  being
actively marketed.  Rigs shown as "cold stacked" are in need of substantial
refurbishment to be activated.

   Semisubmersible  Rigs.   Semisubmersible  rigs  are  floating  platforms
which,  by  means  of  a water ballasting system, can  be  submerged  to  a
predetermined  depth so that the lower hulls, or pontoons,  are  below  the
water  surface  during  drilling operations.  The rig is  "semi-submerged",
remaining afloat, in a position in which the lower hull is about 60-80 feet
below  the water line and the upper deck protrudes well above the  surface.
The upper deck is attached to the pontoons by columns.  These rigs maintain
their  position  over  the well through the use of an anchoring  system  or
computer controlled thruster system. Some semisubmersible rigs are designed
to work in water depths up to 6,000 feet.  Some are self-propelled and move
between  locations  under  their own power when  afloat  on  the  pontoons;
however,  most  semisubmersible rigs are relocated with the  assistance  of
tugs.   Some   semisubmersible  rigs  are  capable  of  operating  in   the
"submersible"  mode, sitting on the bottom in water depths of approximately
40 to 50 feet.

   Semisubmersibles are frequently classified into four generations,  based
primarily   on  rig  capabilities.   The  fourth-generation  classification
generally  refers to semisubmersibles that have been built since 1984,  and
have  large  physical  size,  harsh environment capability,  high  variable
loads,  top drive units, 15,000 psi blowout preventers and superior  motion
characteristics.  There are currently 13 fourth-generation semisubmersibles
worldwide.   These  drilling units are the best  choice  for  operators  in
deepwater  and/or harsh environments or for drilling that  requires  larger
variable  loads and the ability to handle large pieces of subsea equipment.
There  are  limited markets for this type of drilling unit and a relatively
small group of users.  The principal markets are the North Sea/Norway,  the
Gulf of Mexico, the Far East and offshore Brazil.

   The  Company currently operates eight semisubmersibles, one of which  it
leases  (with  an  option to purchase).  In addition, the Company  has  two
semisubmersibles undergoing construction or upgrade and one being  marketed
for  upgrade and return to service. (See "Liquidity and Capital  Resources"
under  Item 7.)  The following table provides certain information regarding
the Company's semisubmersible fleet as of March 23, 1998:

                            Water      Drilling
                      Year  Depth      Depth
   Rig Name           Built Capability Capability Location        Status
   --------           ----- ---------- ---------- --------        ------
                             (expressed in feet)

Fourth-Generation Semisubmersibles

JACK BATES             1986   4,500      30,000   Italy           Operating
HENRY GOODRICH (1)     1985   2,000      30,000   United Kingdom  Operating
PAUL B. LOYD, JR. (1)  1987   2,000      25,000   United Kingdom  Operating
RBS-6                     -   8,000      25,000   Korea           Under
                                                                  Construction

Third-Generation Semisubmersibles
JIM CUNNINGHAM         1982   4,600      25,000   Nigeria          Operating
M. G. HULME, JR. (2)   1983   4,000      25,000   U.S. Gulf        Operating
IOLAIR (3)             1982   2,000           -   United Kingdom   Operating

Second-Generation Semisubmersibles
C. KIRK RHEIN, JR.     1976   3,300      25,000   U. S. Gulf       Operating
J. W. McLEAN           1974   1,500      25,000   United Kingdom   Operating
FALCON 100             1974   2,450      25,000   Brazil           Under
                                                                    Upgrade
RIG 82 (4)             1975   3,800           -   Norway           Cold
                                                                    Stacked
________________________

(1)  Unit  is  owned  by Arcade Drilling AS ("Drilling"), a majority  owned
     subsidiary  of  the Company.  The Company is a party to  an  agreement
     with  Transocean Offshore, Inc., the largest minority  shareholder  of
     Drilling,   which  subjects  the Company to  certain  restrictions  on
     engaging in transactions with Drilling.  Such agreement will expire no
     later than September 1, 1998.
(2)  The  "M.  G. HULME, JR." is accounted for as an operating lease  as  a
     result of the sale/lease-back in November 1995. See Note D of Notes to
     Consolidated Financial Statements.
(3)  The  "IOLAIR"  is designed for field support and living accommodations
     and  is expected to be upgraded in 1999 to include a derrick floor and
     ancillary workover equipment.
(4)  "RIG 82" was originally built as a drilling unit, but was converted to
     an accommodation vessel in 1978.  Prior to commencing any upgrade, the
     unit  will  be  marketed to operators for conversion back  to  a  full
     drilling mode.

   Drillships.    A   drillship  is  a  self-propelled  ship   specifically
outfitted for drilling operations.  Many of the drillships built after 1975
feature  a  dynamic positioning system which allows the  ship  to  position
itself  over  the  well site through the use of thrusters controlled  by  a
satellite  navigation  system.  The prior generation of  drillships,  often
called  conventionally moored drillships, are anchored over the  well  site
and  thus  are  generally  more  limited  in  terms  of  water  depth  than
dynamically positioned drillships.  Drillships typically have greater  load
capacity  than semisubmersible drilling rigs.  This enables them  to  carry
more  supplies  on board, which makes them better suited  for  drilling  in
remote locations where resupply is more difficult.  However, drillships are
limited to calmer water conditions than those in which semisubmersibles can
operate, and thus cannot compete with semisubmersibles in areas with  harsh
environments, such as the North Sea.

   The  Company currently operates five drillships, four of which  it  owns
and  one of which it leases (with an option to purchase).  In addition, the
Company  has  seven  drillships undergoing construction  or  upgrade.   See
"Liquidity  and Capital Resources" under Item 7 for further discussions  of
the  seven  drillships.  The following table provides  certain  information
regarding the Company's drillship fleet as of March 23, 1998:

                   Year      Water      Drilling
                   Built or  Depth      Depth
 Rig Name          Converted Capability Capability Location     Status
 --------          --------- ---------- ---------- --------     ------
                              (expressed in feet)

PEREGRINE I            1982   7,500      25,000   Brazil        Operating(1)
PEREGRINE II           1979   3,300      25,000   Brazil        Operating
PEREGRINE III          1976   4,200      25,000   West Africa   Operating
FALCON DUCHESS         1975   1,500      20,000   Indonesia     Operating
FALCON ICE             1975   1,500      20,000   Indonesia     Operating
DEEPWATER
  PATHFINDER (2)          -  10,000      30,000   Korea         Under
                                                                  Construction
DEEPWATER
  FRONTIER  (3)           -  10,000      30,000   Korea         Under
                                                                  Construction
DRILLSHIP   III           -  10,000      30,000   Korea         Under
                                                                  Construction
PEREGRINE   IV            -   9,200      30,000   Singapore     Under
                                                                  Construction
PEREGRINE   VI            -  10,000      30,000   Portugal      Under
                                                                  Construction
PEREGRINE VII             -   8,200      25,000  United Kingdom Under Upgrade
PEREGRINE VIII            -  10,000      30,000   Portugal      Under
                                                                  Construction
  __________________________

  (1)  Subsequent  to  March  23,  1998,  the "PEREGRINE I" sustained damages
       during operations and will be undergoing repairs for an indeterminable
       period.
  (2)  Unit  is  being  constructed for a limited liability company in  which
       the Company owns a 50% interest.
  (3)  Unit  is  being  constructed for a limited liability company in  which
       the Company owns a 60% interest.

  Floating  Production Vessels.  Floating production vessels  are  equipped
for  oil production, processing and storage. The oil produced is discharged
either to tankers by means of an offloading facility on the vessel as on  a
floating  production storage and offloading (FPSO) vessel or the vessel  is
deployed  to  a  shore  terminal for discharge as on a floating  production
storage  and  shuttle  (FPSS) vessel.   These vessels hold  their  position
through  the  use  of either a computer controlled thruster  system  or  an
anchoring  system  and  can operate in various water  depths.   The  moored
vessels  may  be  spread  moored  or be equipped  with  a  mooring  turret,
depending on the environmental conditions.

   The   Company   currently  owns  and  operates  one  FPSS  vessel,   the
"SEILLEAN".   The  Company purchased the vessel  in  September  1996.   The
vessel was built in 1990 and was designed for extended well testing,  early
production  and  life  of  field production.  This  dynamically  positioned
vessel  has  an oil storage capacity of approximately 310,000  barrels  and
process capacity of 20,000 barrels of oil per day and can operate in up  to
650 feet of water.  As of March 23, 1998, the "SEILLEAN" was not operating;
however, negotiations are in progress for potential work offshore Brazil.

  Drilling   Tenders.   Drilling  tenders  are  usually  non-self-propelled
barges  or  semisubmersibles  which are moored  alongside  a  platform  and
contain  the quarters, mud pits, mud pumps, power generation,  etc.   Thus,
the  only equipment on the platform is the derrick equipment set consisting
of  the  substructure, drillfloor, derrick and drawworks.  Drilling tenders
allow  smaller, less costly platforms to be used for development  projects.
Self-erecting  tenders carry their own derrick equipment  set  and  have  a
crane capable of erecting it on the platform, thereby eliminating the  cost
associated  with  a  separate derrick barge and related  equipment.   Older
tenders  frequently require the assistance of a derrick barge to erect  the
derrick equipment set.

  The  following table provides certain information regarding the Company's
drilling tenders as of March 23, 1998:

                            Water      Drilling
                      Year  Depth      Depth
   Rig Name           Built Capability Capability Location       Status
   --------           ----- ---------- ---------- --------       ------
                             (expressed in feet)
Self-Erecting Drilling Tenders
CHARLEY GRAVES         1975   400        20,000   Egypt           Operating
W. D. KENT (1)         1977   400        20,000   Malaysia        Shipyard
     _______________

     (1) Under repair.  The platform set is being replaced as a result of a
        casualty.

   Jack-Up  Rigs.  Jack-up rigs are mobile self-elevating drilling platforms
equipped  with  legs  which  can be lowered  to  the  ocean  floor  until  a
foundation  is  established to support the drilling platform which  is  then
jacked  further up the legs so it is above the highest expected waves.   The
rig  hull includes the drilling rig, jacking system, crew quarters,  loading
and  unloading  facilities,  storage areas for bulk  and  liquid  materials,
helicopter  landing deck and other related equipment.  The rig legs  may  be
independent or may have a lower hull ("mat") attached to the bottom of  them
in  order  to  provide  a  more  stable foundation  in  soft  bottom  areas.
Independent  leg  rigs  are  better  suited  for  harder  or  uneven  seabed
conditions  while  mat  rigs are better suited for soft  bottom  conditions.
Jack-up  rigs  may  be  designed to operate in  a  maximum  water  depth  of
approximately 400 feet (however, most jack-up rigs have a lesser water depth
capability).  Some jack-up rigs may drill in water depths as shallow as  ten
feet.   The  water depth limit of a particular rig is determined  by  design
limitations,  the  length of the rig's legs and the  operating  environment.
Moving  a rig from one drill site to another involves jacking the hull  down
into the water until it is afloat and then jacking up its legs with the hull
floating  on the surface of the water.  The hull is then towed  to  the  new
drilling site by tugs and the legs are then jacked down to the ocean  floor.
The jacking operation continues until the hull is raised out of the water to
a  level  that  provides  a  final air gap above the  effects  of  the  sea.
Drilling operations are then conducted with the hull in its raised position.
A  cantilever  jack-up  has a feature which allows the  drill  floor  to  be
extended  out  from  the hull, allowing it to perform drilling  or  workover
operations  over  pre-existing platforms or structures.  Certain  cantilever
jack-up  rigs have "skid-off" capability, which allows the derrick equipment
set  to  be  skidded  onto  an  adjacent platform,  thereby  increasing  the
operational  capability of the rig.  Slot type jack-up rigs  are  configured
for  the drilling operations to take place through a slot in the hull.  Slot
type  rigs  are  usually  used  for  exploratory  drilling,  in  that  their
configuration  makes them difficult to position over existing  platforms  or
structures.

The  following  table provides certain information regarding  the  Company's
jack-up fleet as of March 23, 1998:

                                     Water      Drilling
                  Rig          Year  Depth      Depth
Rig Name          Description  Built Capability Capability Location   Status
--------          -----------  ----- ---------- ---------- --------   ------
                                      (expressed in feet)
Cantilevered Independent
  Leg Jack-up
Rigs
F.G. McClINTOCK    MLT 53-C      1975     300   25,000  United       Operating
                                                          Kingdom
RON TAPPMEYER      MLT 116-C     1978     300   25,000  Australia    Operating
C. E. THORNTON     MLT 53-C      1974     300   25,000  United Arab  Operating
                                                          Emirates
RANDOLPH YOST      MLT 116-C     1979     300   25,000  Angola       Operating
D. R. STEWART      MLT 116-C     1980     300   25,000  Italy        Operating
HARVEY H. WARD(1)  F&G L780      1981     300   25,000  Singapore    Shipyard
ROGER W. MOWELL    F&G L780      1982     300   25,000  Indonesia    Operating
GEORGE H. GALLOWAY F&G L780      1985     300   25,000  U.S. Gulf    Operating
J. T. ANGEL        F&G L780      1982     300   25,000  Under tow to Operating
                                                          S.E. Asia

Slot type Mat-Supported
  Jack-up Rigs
FALRIG 17      Bethlehem JU-     1974     250   25,000  U.S. Gulf    Operating
               250MS
FALRIG 18      Bethlehem JU-     1978     250   25,000  U.S. Gulf    Operating
               250MS
FALRIG 19      Bethlehem JU-     1978     250   25,000  U.S. Gulf    Operating
               250MS
FALRIG 20      Bethlehem JU-     1982     250   25,000  U.S. Gulf    Operating
               250MS
FALRIG 82 (2)  Baker Marine BMC  1978     200   25,000  U.S. Gulf    Operating
               250
FALRIG 83      Bethlehem JU-     1978     250   25,000  Nigeria      Operating
               250MS
FALRIG 84      Bethlehem JU-     1975     250   25,000  U.S. Gulf    Operating
               250MS
ACHILLES       Baker Marine BMC  1981     250   25,000  U.S. Gulf    Operating
               250
SEA HAWK       Bethlehem JU-     1976     250   25,000  U.S. Gulf    Operating
               250MS
TAURUS         Bethlehem JU-     1976     250   25,000  U.S. Gulf    Operating
               250MS

Cantilevered
Mat-Supported
  Jack-up Rigs
PHOENIX I      Bethlehem JU-     1981     200   25,000  U.S. Gulf    Operating
               200MC
PHOENIX II     Bethlehem JU-     1982     200   25,000  U.S. Gulf    Operating
               200MC
PHOENIX III    Bethlehem JU-     1981     200   25,000  U.S. Gulf   Operating
               200MC
PHOENIX IV     Bethlehem JU-     1981     200   25,000  U.S. Gulf   Operating
               200MC
FALRIG 85      Bethlehem JU-     1979     200   25,000  U.S. Gulf   Operating
               200MC
FALRIG 86      Bethlehem JU-     1980     200   25,000  U.S. Gulf   Operating
               200MC
PHOENIX VI (3) Bethlehem JU-     1981     200   25,000  Mexico      Operating
               200MC
_____________________

(1)  Under repair as the unit's legs, jacking system and hull were damaged
     as a result of a casualty.
(2)  Operated by the Company under a lease with an option to purchase.
(3)  The Company has bareboat chartered this rig to another contractor for
     one well.  It is estimated such charter will expire in November 1998.

   Submersible   Rigs.    Submersible  rigs   are   somewhat   similar   in
configuration to semisubmersible rigs, but the lower hull of the rig  rests
on the sea floor during drilling operations.  A submersible rig is towed to
the  well  site where it is submerged by flooding its lower hull  until  it
rests on the sea floor, with the upper hull above the water surface.  After
completion  of  the  drilling operations, the rig is refloated  by  pumping
water  out  of  the  lower  hull  and it  is  towed  to  another  location.
Submersible  rigs  typically operate in water depths  of  12  to  70  feet,
although some submersible rigs are capable of operating at greater depths.

  The  following table provides certain information regarding the Company's
submersible rig fleet as of March 23, 1998:

                                    Water      Drilling
              Rig             Year  Depth      Depth
Rig Name      Description     Built Capability Capability Location Status
--------      -----------     ----- ---------- ---------- -------- ------
                                     (expressed in feet)

Rig 203       Pace 85G         1983    85      30,000     U.S. Gulf  Operating
FALRIG 77     Donhaiser Marine 1983    85      30,000     U.S. Gulf  Operating
                DMI85
FALRIG 78     Donhaiser Marine 1983    85      30,000     U.S. Gulf  Operating
                DMI85

   Domestic  Barge Drilling Rigs.  Barge drillings rigs are mobile drilling
platforms that are submersible and are built to work in eight to 20 feet of
water.  They are towed by tugboats to the drill site with the derrick lying
down.   The lower hull is then submerged by flooding until it rests on  the
sea  floor.   The  derrick  is  then raised  and  drilling  operations  are
conducted  with the barge in this position.  There are two basic  types  of
barge rigs, "conventional" and "posted".  A posted barge is identical to  a
conventional barge except that the hull and superstructure are separated by
10  to 14 foot columns, which increases the water depth capabilities of the
rig.

   The following table provides certain information regarding the
Company's domestic barge drilling fleet as of March 23, 1998:

                                                     Maximum
                                 Horsepower   Year   Drilling
Rig Drilling Equipment/Main Power  Rating     Built Depth(feet)  Status
--- ----------------------------   ------     ----- -----------  ------
Conventional Barges
 1  Skytop Brewster/Caterpillar     2,000      1980    20,000    Operating
 3  Mid-Continent/Caterpillar (1)   3,000      1981    25,000    Operating
 4  Oilwell/Caterpillar             3,000      1981    25,000    Cold Stacked
 6  Mid-Continent/Caterpillar       3,000      1981    25,000    Cold Stacked
11  Gardner Denver/Caterpillar      3,000      1982    30,000    Operating
15  National/EMD                    2,000      1981    25,000    Operating
21  Oilwell/Caterpillar             1,500      1982    15,000    Operating
25  Continental Emsco/Caterpillar   3,000      1976    25,000    Cold Stacked
28  Continental Emsco/Caterpillar   3,000      1979    30,000    Operating
29  Continental Emsco/Caterpillar   3,000      1980    30,000    Operating
30  Continental Emsco/Caterpillar   3,000      1981    30,000    Shipyard (2)
31  Continental Emsco/Caterpillar   3,000      1981    30,000    Operating
32  Continental Emsco/Caterpillar   3,000      1982    30,000    Operating
37  National/EMD                    3,000      1965    20,000    Cold Stacked
38  National/EMD                    3,000      1965    20,000    Cold Stacked

Posted Barges
 2  Skytop Brewster/Caterpillar     2,000      1980    20,000    Cold Stacked
 5  National/Caterpillar            3,000      1981    25,000    Cold Stacked
 7  Oilwell/Caterpillar             2,000      1978    25,000    Operating
 8  Oilwell/Caterpillar             2,000      1978    25,000    Cold Stacked
 9  Oilwell/Caterpillar             2,000      1981    25,000    Operating
10  Oilwell/Caterpillar             2,000      1981    25,000    Operating
16  National/EMD                    3,000      1981    30,000    Operating
17  National/EMD                    3,000      1981    30,000    Operating
27  Continental Emsco/Caterpillar   3,000      1978    30,000    Operating
39  National/EMD                    3,000      1970    30,000    Cold Stacked
41  National/EMD                    3,000      1981    30,000    Shipyard (3)
44  Oilwell/Superior                3,000      1979    30,000    Cold Stacked
45  Oilwell/Superior                3,000      1979    30,000    Cold Stacked
46  Oilwell/EMD                     3,000      1981    30,000    Operating
47  Oilwell/EMD                     3,000      1982    30,000    Operating
48  Gardner Denver/Caterpillar      3,000      1982    30,000    Operating
49  Oilwell/Caterpillar             3,000      1980    30,000    Operating
52  Oilwell/Caterpillar             2,000      1981    25,000    Operating
54  National/EMD                    3,000      1970    30,000    Operating
55  Ideco/EMD                       3,000      1981    30,000    Operating
56  National/Caterpillar            2,000      1973    25,000    Operating
57  National/Caterpillar            2,000      1975    25,000    Shipyard (3)
61  Mid-Continent/EMD               3,000      1978    30,000    Operating
62  Mid-Continent/EMD               3,000      1978    30,000    Operating
63  Mid-Continent/EMD               3,000      1978    30,000    Operating
64  Mid-Continent/EMD               3,000      1979    30,000    Operating
     ____________________
(1)  This rig is leased to the Company.
(2)  This rig is undergoing routine maintenance.
(3)  These are previously cold stacked rigs that are undergoing
     refurbishment.

   Lake  Maracaibo  Barge Rigs. Rigs designed to work  in  Lake  Maracaibo,
Venezuela,  require modification to work in a floating mode in  up  to  150
feet  of water. The typical domestic barge is modified by widening the hull
to 100 feet, installing a mooring system and cantilevering the drill floor.
Three  of  the Company's barge rigs have been so modified and are currently
operating in Lake Maracaibo, pursuant to contracts with Maraven. After such
modifications,  these  rigs generally are not suitable  for  deployment  to
other locations.

  The following table provides certain information regarding the Company's
Lake Maracaibo barge rigs as of March 23, 1998:

                                                       Maximum
     Drilling Equipment/ Horsepower     Year  Year     Drilling
 Rig    Main Power         Rating       Built Rebuilt  Depth(feet) Status
 ---   -----------         ------       ----- -------  ----------- ------
 40    Oilwell/EMD          3,000        1980   1994     25,000    Operating
 42    National/EMD         3,000        1982   1994     25,000    Operating
 43    National/EMD         3,000        1982   1994     25,000    Operating

   Barge  Workover Rigs.  Barge workover rigs typically differ  from  barge
drilling  rigs  both  in  the size of the hull and the  capability  of  the
drilling equipment. Because workover operations require less pulling  power
and  mud  system capacity, a smaller, lower capacity unit can be  used.  In
addition,  workover  rigs, which are equipped with  specialized  pumps  and
handling  tools, do not require heavy duty drill pipe. Operating costs  for
workover  rigs are lower because the rigs require smaller crews,  use  less
fuel  and  require less repair and maintenance.  Certain workover rigs  can
also  be  utilized to drill shallow wells to depths ranging to 16,000  feet
depending upon the rig's capabilities.

   The   following   table  provides  certain  information  regarding   the
Company's workover fleet as of March 23, 1998:

                                                 Maximum  Maximum
                                Mast             Workover Drilling
                              Capacity  Year     Depth    Depth
Rig       Drawworks           (Pounds)  Built    (feet)   (feet)  Status
---       ---------           --------  -----    -------  ------  ------
SD-1      Ideco H-30           250,000  1990 (1)  15,000       -  Available
 4        IRI 1287             250,000  1981      15,000       -  Available
 5        IRI 2042             300,000  1981      15,000       -  Available
 6        Ideco H-35           450,000  1978      20,000       -  Operating
 7        IRI 1287             250,000  1996 (1)  15,000       -  Available
12        Wilson 75            369,000  1991 (1)  20,000       -  Available
14        Wilson 75            400,000  1996 (1)  20,000       -  Operating
15        Wilson 75            400,000  1997 (1)  20,000       -  Operating
16        Mid-Continent U36A   550,000  1979      25,000       -  Available
17        Gardner Denver 800   800,000  1972      25,000       -  Operating
Blake 18  Skytop Brewster N75  530,000  1980      25,000  12,000  Available
Blake 19  National 80UE        750,000  1996 (1)  25,000  14,000  Operating
Blake 20  National 80UE        750,000  1998 (1)  25,000  14,000  Shipyard (2)
Blake 23  Mid-Continent
            U-914 (3)        1,000,000  1995 (1)  25,000  14,000  Operating
Blake 24  National 110M (3)    760,000  1978      25,000  14,000  Operating
Blake 30  Skytop Brewster
            N95              1,000,000  1978      30,000  16,000  Available
____________
(1)  These rigs were reconstructed on the date indicated using the existing
     hull.
(2)  This rig is under construction.
(3)  These rigs are leased to the Company.

   Inland  Marine Vessels.  In connection with barge drilling and  workover
operations, it is necessary to utilize other types of vessels:

  -  Utility  barges  are barges generally  100 to 120 feet in length, which
     are  positioned  alongside  the  barge  rig  and  are used (i) to store
     materials or (ii) as a container in  which  to  dump  cuttings from the
     well bore, which cuttings then are transported elsewhere for disposal.

  -  Service  tugs  are  ships approximately 50 to 60 feet in length, having
     400  to  900  horsepower,  which  are used to move and position utility
     barges and transport materials and personnel to and from the barge rig.

  -  Rig moving tugs are ships approximately 60 to 70 feet in length, having
     900  horsepower  or  greater,  which are used to move barge rigs to and
     from the drilling location.  They can also be used to move and position
     utility barges and  move materials  and personnel to and from the barge
     rig.

   A  rig  moving  tug  is typically used to move barge  rigs  and  utility
barges  to and from location, and is normally contracted by the  hour.   If
water  conditions require a more powerful vessel or if no  smaller  vessels
are available, it may sometimes be used in a service tug capacity, in which
event it is normally contracted on a dayrate basis.  Once a barge rig is on
location,  the  movement  of  utility barges, supplies  and  personnel  can
normally  be  more  economically handled with service tugs,  which  are  on
contract  throughout  the operation, usually on a  dayrate  basis.   During
drilling operations, anywhere from two to six utility barges may be in  use
throughout the operation, as well as one to three service tugs.  In a barge
rig operation, the Company's customer may contract directly for the utility
barges  and tugs, or may ask the Company to provide them.  As of March  23,
1998,  the  Company  owned  80 tugs and 54 utility  barges.   Although  the
Company  expects  that these assets will be used primarily  in  conjunction
with  the  Company's barge rig business, they will also be  used  in  other
applications.

   Fleet  Maintenance.   The  Company  follows  a  policy  of  keeping  its
equipment  well maintained and technologically competitive.   However,  its
equipment  could be made obsolete by the development of new techniques  and
equipment.  In  addition, industry-wide shortages  of  supplies,  services,
skilled personnel and equipment necessary to conduct the Company's business
have occurred in the past, and such shortages could occur again.

  Almost  all of the Company's rigs, like most of the rigs with which  they
compete, were constructed during the last drilling boom, which ended  about
1982.   With  increasing age, the likelihood that a rig will require  major
repairs in order to remain operational increases.  The Company expects that
repair  and  maintenance  of its rigs will require  increasing  amounts  of
capital,  and  will result in such rigs being unavailable for service  from
time  to time.  During any such period of repair to a rig, the Company will
not  earn  revenues from such rig, but will continue to incur a substantial
portion of the costs that would be incurred while the rig is operating.

  Real  Property.  The Company owns and leases real property in  connection
with  the conduct of its business.  The Company owns (i) an office and yard
facility  in  Broussard, Louisiana; (ii) an office  and  yard  facility  in
Houma,  Louisiana; (iii) an office building in New Iberia, Louisiana;  (iv)
an  office and yard facility in Macae, Brazil; and (v) an office  and  yard
facility in Houston, Texas.  The Company leases a two story, 86,000  square
foot  office  building  in  Houston, Texas that  serves  as  its  corporate
headquarters  and  as  to  which the Company has  exercised  an  option  to
purchase  for  $5.8 million.  In addition, the Company leases other  office
space  in  Houston,  Texas, an office and yard facility  in  Belle  Chasse,
Lousiana  and  facilities  in  most  of the  countries  where  it  conducts
operations.

                           Oil & Gas Properties

   The  Company's  oil and gas business is operated primarily  through  its
wholly owned subsidiary DEVCO, and to an insignificant extent, through  its
wholly  owned subsidiary Raptor Exploration Company, Inc.  In  March  1998,
the  Company  decided to divest its oil and gas business.   It  expects  to
accomplish this divestiture prior to March 1999.  The Company's oil and gas
business is treated as a discontinued operation in the financial statements
included  in  this  report. See Note L of Notes to  Consolidated  Financial
Statements.

   Domestic  Operations.  In October 1995, DEVCO purchased  a  20%  working
interest in the Green Canyon 254 Allegheny oil and gas development  project
in  the  U.S.  Gulf  of  Mexico  from Enserch Exploration,  Inc.,  now  EEX
Corporation,  ("EEX")  which  was  the  operator  at  that   time.    Mobil
Exploration  & Production, Inc., ("Mobil") owned a 40% working interest  in
the  project and EEX retained the remaining 40% working interest.   In  the
third quarter of 1997, DEVCO acquired an additional 20% working interest in
the Allegheny field and British-Borneo Petroleum, Inc., ("British-Borneo"),
as  successor operator to EEX, acquired the remaining 60% working  interest
in  the  field.   As part of an omnibus transaction involving  DEVCO,  EEX,
Mobil and British-Borneo, British-Borneo committed to develop the Allegheny
field utilizing a mini-TLP production system.  First production is targeted
for July 1999.  DEVCO has the option to either participate in the Allegheny
development  with British-Borneo for its 40% working interest on  a  ground
floor basis or sell its 40% interest in the field ("Put Option") to British-
Borneo  for  approximately $25.0 million.  DEVCO must make its  Put  Option
election on or before August 28, 1998.  Prior to the election date, British-
Borneo  bears  all  cost associated with the agreed development  plan.   If
DEVCO  elects  to  participate, it will be required to  reimburse  British-
Borneo  for  its  proportionate 40% share of costs plus  interest.   As  of
December 31, 1997, DEVCO had accumulated costs related to its ownership  in
the Allegheny project of approximately $41.2 million which are included  in
Net Liabilities of Discontinued Operations.

   In  July 1996, DEVCO entered into an agreement with Shell Offshore  Inc.
("Shell")  to drill an appraisal well at DEVCO's expense to earn a  working
interest in Shell's East Boomvang prospect in the U.S. Gulf of Mexico.  The
appraisal  well was drilled in the first quarter of 1997 and was  suspended
pending  completion  at  a  later date after  further  delineation  of  the
reservoir.

   In  February  1997,  Shell  waived its  election  to  remain  a  working
interest  owner  in  the  East Boomvang, North  Boomvang  and  East  Bequia
prospects  ("Boomvang") and assigned its 100% interest  in  eight  offshore
blocks to DEVCO. Shell retained an overriding royalty interest in the three
prospects  and  has  the option to either increase its  overriding  royalty
interest   or  convert  to  a  working  interest  if  specified  cumulative
production levels are achieved.

   In  July 1997, DEVCO entered into an Equity Participation Agreement with
Norcen  Explorer,  Inc.  ("Norcen") pursuant to which  the  North  Boomvang
prospect would be drilled at Norcen's expense (up to an agreed cap) and  in
which Norcen committed to participate in drilling an appraisal well at East
Boomvang.   Participation  by  Norcen in the  two  wells  earns  Norcen  an
assignment of a 37.5% working interest in all three Boomvang prospects.  In
August  1997,  drilling  commenced on North  Boomvang.   Hydrocarbons  were
encountered  in  the  initial wellbore and two  sidetracks.   Drilling  was
completed  in  the fourth quarter of 1997 and the well was suspended  as  a
potential   producer  pending  a  decision  to  proceed   with   commercial
development.   The Company's drilling rig "M.G. HULME, JR."  drilled  North
Boomvang  for  DEVCO and Norcen.  Just prior to year end  1997,  the  "M.G.
HULME, JR." was moved to East Boomvang where the appraisal well was spud to
assess  the extent of the reservoir discovered earlier in the year on  that
prospect.   In addition to the activity at Boomvang, as part of the  Norcen
transaction  DEVCO  acquired  the opportunity to  participate  in  drilling
Norcen's Betelguese, Renegade and Zia prospects in the Green Canyon area of
the  Gulf  of  Mexico.   The initial test well at  Betelguese  was  spudded
December 17, 1997.  Norcen is the operator. As of December 31, 1997,  DEVCO
had  accumulated costs relating to its ownership in East Boomvang and North
Boomvang  of  approximately  $21.5  million  which  are  included  in   Net
Liabilities of Discontinued Operations.

   During   1997,  DEVCO  participated  with  Santa  Fe  Energy  Resources,
Marathon Oil Company and Shell in 10 Gross/4.35 Net wells that were plugged
and  abandoned.   A total of $66.2 million in well and prospect  investment
costs  were charged against income in the fiscal quarter in 1997  in  which
the prospects were condemned.

   International Operations. In October 1997, DEVCO contracted  with  Vanco
Energy  Company  ("Vanco") and its subsidiary companies to  acquire  a  20%
working  interest  in  the  Anton Marin and Astrid  Marin  Exploration  and
Production Sharing Contracts covering 2,831,392 acres in deepwater offshore
Gabon, West Africa.  As consideration for the acquisitions, DEVCO agreed to
loan  Vanco up to $7.0 million for signing bonuses and operating costs  and
up  to  an additional $2.0 million for seismic data.  Repayment in full  of
principal and interest is due on or before October 10, 1998.  Processing of
new  seismic data covering the Gabon prospect area commenced at the end  of
1997.   Vanco is seeking a major oil company to participate in the project.
DEVCO  will  have the option to sell a pro-rata portion of its interest  if
Vanco  sells  an  interest  to  a third party participant.   The  drillship
"DEEPWATER   FRONTIER,"   which  is  currently  under   construction   (see
"Significant Developments During 1997"), has been tentatively scheduled  to
drill the initial well on the Gabon project in the second quarter of 1999.

   In  June  1997,  DEVCO  acquired a farmout from  Avner  Oil  Exploration
Limited  Partnership of a 10% working interest in five  petroleum  licenses
and  one  permit covering 854,200 acres in deepwater offshore Israel.   The
assignment of the 10% working interest was made at no cost to DEVCO.  DEVCO
has  participated  in shooting new seismic data across the  prospect.   The
data was submitted for processing at year end 1997.  DEVCO has a contingent
option to acquire an additional 5% working interest at cost.

                    Industry Conditions and Competition

   The  financial  performance  of the marine contract  drilling  industry,
domestically  and abroad, is dependent upon the exploration and  production
programs  of  oil  and  gas  companies.  These programs  are  substantially
influenced  by costs to find, develop and produce oil and gas;  demand  for
and   price   of  oil  and  natural  gas  (which  can  fluctuate   widely);
technological   advancements,   exploration   success,   restrictions   and
incentives  relative to exploration and production imposed by  governmental
authorities and economic conditions in general.

   A  dramatic decline in demand for marine drilling services began in 1982
as a result of a precipitous decline in oil prices.  This decline reflected
the effects of lower earnings of oil and gas producers and the unstable oil
and  gas  price  environment.   As a result,  the  entire  marine  drilling
industry experienced lower dayrates and associated earnings. Although there
were  periods  of  improvements,  the  marine  drilling  industry  remained
generally  depressed from 1985 until 1995.  The industry  has  improved  in
recent years, but there is no assurance that such improvement will continue
or be maintained.

   Political  and  military events in the Middle East  and  in  the  former
Soviet  Union  are  an example of the factors which can contribute  to  the
volatility  of  world  oil and gas prices.  Other factors  which  influence
demand  for  the Company's services include the ability of the Organization
of  Petroleum  Exporting Countries ("OPEC") to set and maintain  production
targets,  the  level of production by non-OPEC countries, worldwide  demand
for  oil and gas, domestic production of natural gas, general economic  and
political  conditions, availability of new offshore oil and gas leases  and
concessions   to   explore  and  develop,  and  governmental   regulations.
Accordingly,  there is and probably will continue to be uncertainty  as  to
the  future  level of demand for the Company's services and the timing  and
duration of any increases or decreases in demand.

   Drilling   in  these  international  markets  is  typically  driven   by
exploration  for  oil as opposed to gas. International  markets  frequently
offer  a  drilling  contractor the opportunity to enter  into  longer  term
contracts  at  higher operating margins than can be obtained  domestically.
Offsetting  these  benefits  can  be the  risk  of  political  uncertainty,
currency fluctuations, and the increased overhead in establishing a foreign
base of operation.

   The  marine contract drilling industry is highly competitive and no  one
competitor  is  dominant.   Although  the  demand  for  rigs  has  improved
significantly  since  1995, the supply of rigs has, since  1982,  generally
exceeded  demand. The result has been a prolonged period of  intense  price
competition  during  which many drilling units  have  been  idle  for  long
periods  of  time.  Consequently, some drilling contractors have previously
gone   out   of   business   or   consolidated  with   other   contractors.
Notwithstanding   these  events,  the  industry  remains   fragmented   and
competitive.  The  Company  believes that strong competition  for  drilling
contracts  will continue for the foreseeable future. In addition to  price,
factors  such as the quality of a company's fleet, the experience,  quality
and  reputation of its management and employees, and customer relationships
determine a contract drilling company's ability to compete favorably.

   Increasing dayrates may encourage contractors to construct new  drilling
units.   The entry of newbuild offshore units into the active market  could
depress dayrates and utilization rates of the Company's offshore units.

   Recent  technological advancements have made it more economical for  oil
and  gas producers to pursue deepwater programs and demand for rigs capable
of  drilling in deepwater environments has increased accordingly.  However,
no  assurance can be given that such increased demand will be sustained  in
the future.

   In  response  to changing demand, offshore units can be moved  from  one
region to another.  The cost of such moves is significant, however, and  is
weighed  against the benefits expected to be derived.  The Company normally
will  not undertake a major mobilization of a mobile offshore unit  without
its  customer  agreeing to reimburse the Company for all or  a  substantial
portion of such costs, unless the dayrates in the new area are expected  to
be sufficient to justify such expenditures.

                                  Markets

   General.   Rigs  can be moved from one region to another,  and  in  this
sense  the  marine  contract drilling market is one  international  market.
Because  the  cost  of  a  rig move is significant  and  there  is  limited
availability of rig moving vessels, the demand/supply balance for rigs  may
vary  somewhat  from  region  to region.  However,  significant  variations
between  regions tend not to exist on a long term basis due to the  ability
to move rigs.  For this reason, in marketing its rigs, the Company tends to
divide the drilling market by general equipment types based on water  depth
capability, rather than by region.

  Transition  Zone.   The  Company's barge rig fleet operates  in  marshes,
rivers, lakes and shallow bay and coastal water areas that are referred  to
as  the  "transition zone".  The Company's principal barge  market  is  the
shallow-water  areas  of the U.S. Gulf Coast.  This area  historically  has
been the world's largest market for barge rigs.  International markets  for
barge rigs include Venezuela, West Africa, Southeast Asia, and Tunisia.

  Shallow  Water.   The shallow water market is serviced by  the  Company's
jack-ups, submersibles and drilling tenders.  It begins at the outer  limit
of  the transition zone and extends to water depths of about 400 feet.   It
has  been  developed to a significantly greater degree than  the  deepwater
market,  as technology required to explore for and produce hydrocarbons  in
these  water  depths is not as demanding as in the deepwater  markets,  and
accordingly the costs are lower.  Shallow water drilling is currently being
conducted primarily in the Gulf of Mexico, West Africa, the North Sea,  the
Mediterranean, and Southeast Asia.

  Deepwater.    The   deepwater  market  is  serviced  by   the   Company's
semisubmersibles and  drillships. It begins in water depths  of  about  400
feet  and  extends to the maximum water depths in which rigs are  currently
capable  of  drilling, being approximately 10,000 feet.  In  recent  years,
there  has  been  increased  emphasis by oil  companies  on  exploring  for
hydrocarbons  in  deeper waters.  This is, in part,  due  to  technological
developments  that  have made it both more feasible and less  expensive  to
explore  for and produce hydrocarbons in deeper waters.  Deepwater drilling
is  currently being conducted primarily in the North Sea, Gulf  of  Mexico,
Brazil and West Africa.

  Marine  Transportation.  The Company's marine transportation  assets  are
primarily  deployed  in the same market as its domestic  barge  rig  fleet.
These assets are used mostly in conjunction with barge drilling operations,
but  also  are  used in connection with other types of work, mostly  energy
related  (such  as pipeline and well platform construction). Although  such
assets  can be deployed to other uses, any significant downturn in oil  and
gas  activity  in the transition zone would have a negative impact  on  the
Company's marine transportation business that could not be fully offset  by
deployment of such assets to other markets.

                    Contracts, Marketing and Customers

   There  are several factors that determine the type of rig most  suitable
for  a  particular  job,  the most significant  of  which  are  the  marine
environment,  water  depth and seabed conditions at the  proposed  drilling
location, whether the drilling or workover is being done over a platform or
other  structure,  and  the  intended  well  depth.  Thus,  there  may   be
considerable  variation in utilization and dayrates  for  various  drilling
units  as  a function of demand for their capabilities. The Company's  rigs
all  provide  the  same basic function, namely, drilling  wells.   However,
because of the varying marine conditions in which wells are drilled,  there
is a wide variety of rig designs.

   Drilling  in  the areas served by the Company ranges from shallow  wells
(up  to  12,000  feet)  to deep wells (up to 25,000  feet).   Deeper  wells
generally take disproportionately longer to drill than shallower wells, due
primarily  to  more  varied  and difficult subsurface  conditions  and  the
frequent  need to run protective casing.  The Company's drilling  rigs  are
competitive  for  all types of drilling, but are particularly  designed  to
drill to depths in excess of 12,000 feet.

   Rigs  are  generally  employed under individual contracts  which  extend
over  a  period of time covering either the drilling of a well or wells  (a
"well-to-well  contract") or a stated term (a "term contract").   Contracts
for  the  employment  of rigs are most often awarded based  on  competitive
bidding; however, some contracts are the result of negotiations between the
drilling  contractor  and the customer.  Contracts may  provide  for  early
termination  by  the  customer, either with or  without  penalty,  and  may
provide  for extension options exercisable by the customer.  The  Company's
contracts  generally  provide for payment in U.S. dollars.   The  Company's
contracts  typically provide for compensation on a "daywork"  basis,  under
which the Company receives a fixed amount per day that the rig is operating
under  contract  and the Company generally pays operating expenses  of  the
rig,  including wages and the cost of incidental supplies.  A contract  may
allow  the  Company  to  recover  some  or  all  of  its  mobilization  and
demobilization  costs associated with moving a unit,  depending  on  market
conditions  then prevailing.  The dayrate under such daywork contracts  may
be  lower or not payable when the drilling unit is under tow to or from the
drill  site  (other  than  field moves) or when  operations  are  suspended
because  of  weather or mechanical problems.  Under daywork contracts,  the
Company generally is responsible for paying the operating expenses  of  the
unit, including wages and the cost of incidental supplies.

   Although  the majority of the Company's contracts are daywork contracts,
the  Company  has participated via a joint venture in "turnkey"  contracts.
Essentially, a turnkey contract provides for the drilling of a  well  on  a
fixed  price  basis.  In 1993, the Company formally established  a  turnkey
department and in 1994 the Company entered into a joint venture with F.  J.
Brown   &   Associates,  Inc.  to  offer  turnkey  services  in  both   the
international  markets and the U.S. Gulf of Mexico market.  The  cumulative
net results of  the Company's turnkey contracts are immaterial in total and
insignificant  as  compared  to the Company's  operating  income  from  the
traditional daywork contracting method.  Additionally,  the Company's joint
venture  approach to entering the turnkey  market minimized  the  Company's
overhead  costs  and  capital  investment  costs,  thus  somewhat  reducing
financial  risks  to  the Company.  The Company is  not  currently  seeking
turnkey work.

   The  Company  maintains  a  decentralized  organization,  with  regional
offices throughout the world.  The Company's primary marketing efforts  are
carried out through these regional offices and its Houston office.

   When   the  Company's  offshore  units  operate  in  foreign  locations,
operations  are  often  conducted  in conjunction  with   local  companies.
Representative  of  the offshore areas where the Company  has  arrangements
with  local  companies are Abu Dhabi, Brazil, Brunei, China, Egypt,  India,
Indonesia,  Italy,  Korea,  Malaysia and Nigeria.   The  purpose  of  these
arrangements is to draw on the marketing, technical, supply and  government
relations  assistance of  local third parties and in some cases  to  comply
with  local  legal requirements.  Typically, the financial terms  of  these
arrangements are such that the third party  receives a stated percentage of
drilling  revenues.  Many of the Company's existing arrangements  are  with
third parties with which the Company has had a relationship for ten or more
years.

   The   Company  has  a  base  of  customers  which  includes  major   and
independent foreign and domestic oil and gas companies, as well as  foreign
state-owned oil companies.  During 1997, the Company performed services for
approximately 400 different customers.

   For  the  year  ended December 31, 1997, there were  no  customers  that
individually  accounted for 10.0% or more of the Company's total  operating
revenues.   For the year ended December 31, 1996, revenues of approximately
$70.6 million from British Petroleum and affiliates accounted for 11.6%  of
the  Company's total operating revenues.  For the year ended  December  31,
1995,  revenues of approximately $42.6 million from Royal Dutch/Shell Group
and  revenues  of  approximately $39.3 million from British  Petroleum  and
affiliates  accounted for 10.9% and 10.1%, respectively, of  the  Company's
total operating revenues.

   The  loss of one of the Company's major customers could, at least  on  a
short-term basis, have a material adverse impact on the Company's  business
or  results  of  operations.  However, the Company would  have  alternative
customers for its services in the event of the loss of any single  customer
and  that  the  loss of any one customer would not have a material  adverse
effect on the Company on a long-term basis.

   Financial  information  by geographic area is furnished  in  Note  J  of
Notes to Consolidated Financial Statements.

             Governmental Regulation and Environmental Matters

   Many  aspects  of the Company's operations are affected by domestic  and
foreign  political  developments and are subject to numerous  domestic  and
foreign  governmental  laws and regulations that  may  relate  directly  or
indirectly  to  the  Company's business and operations, including,  without
limitation,  laws  and regulations controlling the discharge  of  materials
into   the  environment,  requiring  removal  and  cleanup  under   certain
circumstances  or otherwise relating to the protection of the  environment,
and  certification,  licensing, safety and training and other  requirements
imposed by treaties, laws, regulations and conventions in the jurisdictions
in which the Company operates.  The contract drilling industry is dependent
on  demand  for  services  from the oil and gas exploration  industry  and,
accordingly,  is  affected by changing taxes, regulations  and  other  laws
relating  to  the energy business generally.  The Company does not  believe
that  governmental regulations have had any material adverse effect on  its
capital  expenditures, results of operations or competitive  position,  and
does  not  anticipate that any material expenditures will  be  required  to
enable  it  to  comply  with existing laws and regulations.   However,  the
modification of existing laws and regulations or the adoption of  new  laws
and  regulations curtailing or increasing the effective cost of exploratory
or  developmental  drilling for oil and gas for economic, environmental  or
other  reasons  could  have  a material adverse  effect  on  the  Company's
operations.   The  Company cannot currently determine the extent  to  which
future  earnings  may  be  affected by new legislation  or  regulations  or
compliance with new or existing regulations which may become applicable  as
a result of rig relocation.

   There is great concern, particularly in developed countries such as  the
United  States, over protection of the environment.  Offshore  drilling  in
certain  areas  has been opposed by environmental groups  and,  in  certain
areas,  has  been  restricted.  To the extent laws  are  enacted  or  other
governmental actions are taken that prohibit or restrict offshore  drilling
or  impose  environmental protection requirements that result in  increased
costs  to  the  oil  and gas industry in general and the offshore  contract
drilling industry in particular, the business and prospects of the  Company
could be adversely affected.

   The  Company's operations may involve the use or handling  of  materials
that   may   be   classified  as  environmentally   hazardous   substances.
Environmental  laws  and regulations applicable in the  United  States  and
other  countries  in which the Company conducts operations  have  generally
become  more  stringent,  and may in certain circumstances  impose  "strict
liability",  rendering  a  person liable for environmental  damage  without
regard  to negligence or fault on the part of such person.  Such  laws  and
regulations  may  expose the Company to liability for  the  conduct  of  or
conditions  caused  by  others, or for acts of the Company  which  were  in
compliance with all applicable laws at the time such acts were taken.   The
Company  does  not  believe  that environmental regulations  have  had  any
material  adverse effect on its capital expenditures, results of operations
or  competitive  position,  and  does  not  anticipate  that  any  material
expenditures will be required to enable it to comply with existing laws and
regulations.  However, the modification of existing laws or regulations  or
the  adoption  of  new  laws  or  regulations  curtailing  exploratory   or
developmental drilling for oil and gas for economic, environmental or other
reasons could have a material adverse effect on the Company's operations.

   The  transition zone and shallow-water areas of the U.S. Gulf Coast  are
ecologically  sensitive.  Environmental issues have led to higher  drilling
costs,  a  more  difficult  and lengthy well  permitting  process  and,  in
general, have adversely affected decisions of the oil companies to drill in
these  areas.   U.S.  laws  and  regulations applicable  to  the  Company's
operations  include those controlling the discharge of materials  into  the
environment, requiring removal and cleanup of materials that may  harm  the
environment,  or  otherwise relating to the protection of the  environment.
For  example, as an operator of drilling rigs in navigable U.S. waters  and
certain  offshore  areas, the Company may be liable for damages  and  costs
incurred in connection with spills or discharges of oil or other substances
for which it is held responsible.  The discharge of oil or other substances
in  a  wetland or inland waterway could produce substantial damage  to  the
environment,  including  wildlife and groundwater.   Laws  and  regulations
protecting the environment have become more stringent in recent years,  and
may,  in  certain  circumstances, impose "strict  liability,"  rendering  a
person  liable  for environmental damage without regard  to  negligence  or
fault on the part of such person.  Such laws and regulations may expose the
Company to liability for the conduct of or conditions caused by others,  or
for acts of the Company that were in compliance with all applicable laws at
the  time  such acts were performed.  The application of these requirements
or the adoption of new requirements could have a material adverse effect on
the Company.

   The  Federal  Water Pollution Control Act of 1972, commonly referred  to
as  the  Clean  Water  Act  ("CWA")  prohibits  the  discharge  of  certain
substances into the navigable waters of the United Stated without a permit.
The  regulations implementing the CWA require permits to be obtained by  an
operator  before  certain  exploration  activities  occur.   Violations  of
monitoring,  reporting  and  permitting  requirements  can  result  in  the
imposition  of civil and criminal penalties.  The provisions of  the  Clean
Water Act can also be enforced by citizen's groups.

   The  Oil  Pollution Act of 1990 ("OPA '90") and regulations  promulgated
pursuant  thereto impose a variety of regulations on "responsible  parties"
related to the prevention of oil spills and liability for damages resulting
from such spills.  A "responsible party" includes the owner or operator  of
a  facility or vessel, or the lessee or permittee of the area in  which  an
offshore  facility  is  located.   OPA  '90  assigns  liability   to   each
responsible party for oil removal costs and a variety of public and private
damages.   While  liability limits apply in some  circumstances,  a   party
cannot take advantage of liability limits if the spill was caused by  gross
negligence  or willful misconduct or resulted from violation of  a  federal
safety, construction or operating regulation.  If the party fails to report
a  spill or to cooperate fully in the cleanup, liability limits likewise do
not  apply.  Few defenses exist to the liability imposed by OPA  '90.   OPA
'90  also  imposes  ongoing  requirements on a  responsible  party.   These
include proof of financial responsibility (to cover at least some costs  in
a  potential  spill) and preparation of an oil spill contingency  plan.   A
failure to comply with ongoing requirements or inadequate cooperation in  a
spill   event  may  subject  a  responsible  party  to  civil  or  criminal
enforcement  action.   In short, OPA '90 places a burden  on  drilling  rig
owners  or operators to conduct safe operations and take other measures  to
prevent oil spills.  If a spill occurs, OPA '90 then imposes liability  for
resulting damages.

   The  Company  generally  seeks to obtain indemnity  agreements  whenever
possible from the Company's customers requiring such customers to hold  the
Company  harmless in the event of liability for pollution  that  originates
below  the water surface, including, where applicable, liability under  OPA
'90,  and  maintains  marine  liability  insurance  and  contingent  energy
exploration  and  development  coverage  (normal  energy,  exploration  and
development coverage is maintained, to the extent of the Company's interest
in oil and gas properties, for operations of such properties) which affords
limited  protection  to  the  Company.  There is  no  assurance  that  such
insurance or contractual indemnification will be sufficient or effective to
protect the Company from liability under OPA '90.

   In  addition,  the  Outer Continental Shelf Lands  Act  and  regulations
promulgated  pursuant thereto impose a variety of  regulations relating  to
safety  and  environmental protection applicable to lessees, permitees  and
other  parties  operating on the Outer Continental Shelf.  Specific  design
and  operational  standards may apply to Outer Continental  Shelf  vessels,
rigs,  platforms, vehicles and structures.  Violations of lease  conditions
or regulations issued pursuant to the Outer Continental Shelf Lands Act can
result  in  substantial civil and criminal penalties as well  as  potential
court  injunctions  curtailing operations and the cancellation  of  leases.
Such enforcement liabilities can result from either governmental or citizen
prosecution.

   The  Company  believes  it  is  in material compliance  with  applicable
federal,  state, local and foreign legislation and regulations relating  to
environmental   controls.   However,  the  existence  of  such   laws   and
regulations has had and will continue to have a restrictive effect  on  the
Company and its customers.

                       Operating Risks and Insurance

   The  Company's  operations  are subject to the  many  hazards.   In  the
drilling of oil and gas wells, especially exploratory wells where little is
known  of  the subsurface formations, there always exists a possibility  of
encountering unexpected conditions of extreme pressure and temperature  and
the  risk  of  a  blowout, cratering and fires that could cause  injury  or
death,   damage  to  property,  pollution,  and  suspension   of   drilling
operations.   The  Company's fleet is also subject to hazards  inherent  in
marine  operations, either while on site or under tow, such  as  capsizing,
grounding,  collision,  damage from heavy weather  or  sea  conditions  and
unsound  location.   The Company may also be subject to liability  for  oil
spills,  reservoir damage and other accidents that could cause  substantial
damage.   The  Company  maintains such insurance  protection  as  it  deems
prudent, including liability insurance and insurance against damage  to  or
loss  of  equipment.  In addition, the Company generally  seeks  to  obtain
indemnity  agreements  whenever  possible  from  the  Company's  customers,
requiring such customers to hold the Company harmless in the event of  loss
of  production, reservoir damage or liability for pollution that originates
below  the  water surface.  When obtained, such contractual indemnification
protection  may  not  in  all  cases  be supported  by  adequate  insurance
maintained  by the customer.  There is no assurance that such insurance  or
contractual indemnity protection will be sufficient or effective under  all
circumstances or against all hazards to which the Company may  be  subject.
The principal hazards against which the Company may not be fully insured or
indemnified are environmental liabilities which  may result from a  blowout
or  similar accident or a liability resulting from reservoir damage alleged
to  be  caused  by  the  negligence or other legal fault  of  the  Company.
Further,  there  is no assurance that the Company will be  able  to  obtain
adequate insurance coverage at the rates it deems reasonable in the future.
Recognizing these risks, the Company has various programs that are designed
to promote a safe environment for its personnel and equipment.

   R&B  traditionally  maintained business interruption  insurance;  Falcon
did  not.   At present, the Company intends generally to maintain  business
interruption insurance with respect to its semisubmersibles and drillships,
but not the other rigs or vessels in its fleet.

   The  Company's foreign operations are also subject to certain political,
economic  and other uncertainties, including, among others, risks  of  war,
expropriation, nationalization, renegotiation or nullification of  existing
contracts,  taxation  policies,  foreign  exchange  restrictions,  changing
political conditions, international monetary fluctuations and other hazards
arising out of foreign governmental sovereignty over certain areas in which
the   Company  conducts  operations.  Currently,  when  conducting  foreign
drilling operations in areas the Company perceives as politically unstable,
the  Company  may  (i)  negotiate contracts providing  for  indemnification
against  expropriation and certain other political risks or  (ii)  purchase
insurance covering such risks, to the extent available at reasonable  cost.
The  Company  believes  it  is  adequately covered  by  insurance,  but  no
assurance  can be given with respect to the availability of such  insurance
at  acceptable  rates  in  the future.  Since 1979,  the  Company  has  not
experienced   any  material  losses  associated  with  the  above-described
political risks.

                                 Employees

   The  Company  emphasizes employee safety, training and  retention.   The
number of employees varies depending on the level of drilling activity.  As
of  December  31, 1997, the Company employed approximately  5,700  persons.
There  are  no  collective  bargaining  contracts  covering  the  Company's
domestic  employees.   As of December 31, 1997, the  Company  employed  116
local  personnel in Venezuela, all of whom  are covered by  the  Collective
Labor  Contract of the Venezuelan Petroleum Industry.  The Company believes
its relations with its employees are good.

   The  recent increase in rig utilization has resulted in increased demand
for  the  personnel  necessary  to  operate  the  rigs.   The  Company  has
experienced  delays  in  placing refurbished rigs in  service  due  to  the
shortage of qualified personnel.  The increased demand for labor may in the
future  result in increases in the compensation the Company is required  to
pay to attract and retain qualified personnel.  In order to expand its pool
of qualified personnel, the Company has sometimes placed extra personnel on
certain  of  its rigs in order to have them gain experience.  The  cost  of
these  extra personnel is borne by the Company, and increases its operating
costs.

   The  Company believes that one of the biggest challenges facing it  over
the  next  few  years will be hiring and retention of sufficient  qualified
personnel  to  operate its rigs.  This problem is particularly  acute  with
respect to the additional deepwater rigs that the Company expects to  bring
into service.  (See "Significant Developments During 1997").  The Company's
deepwater  rigs  will require certain personnel having skills  that  differ
from  those  required  in the operation of jack-ups  and  barge  rigs.   In
addition,  the  Company's  deepwater rigs will generally  be  crewed  on  a
"twenty-eight on, twenty-eight off" rotation, as compared to a  "seven  on,
seven  off"  rotation typical for barges and a "fourteen on, fourteen  off"
rotation typical for jack-ups.  These two factors limit the ability of  the
Company  to  fill its deepwater personnel requirements with personnel  from
its  barge  and jack-up rigs.  The Company intends to expand  its  training
programs  in order to help meet its personnel requirements.  Such  expanded
training programs will increase the Company's operating costs.

   Other  drilling  contractors  are also  expanding  their  active  fleets
through  refurbishments and new construction, and  will  compete  with  the
Company  for  qualified  personnel.  Such competition  for  personnel  will
likely  lead  to increasing wages for such personnel, which would  directly
increase the Company's operating costs.

Item 3.  Legal Proceedings

   In  November  1988, a lawsuit was filed in the U.S. District  Court  for
the Southern District of West Virginia against Reading & Bates Coal Co.,  a
wholly  owned  subsidiary of the Company, by SCW Associates, Inc.  claiming
breach of an alleged agreement to purchase the stock of Belva Coal Company,
a  wholly owned subsidiary of Reading & Bates Coal Co. with coal properties
in  West  Virginia.  When those coal properties were sold in July  1989  as
part  of  the disposition of the Company's coal operations, the  purchasing
joint  venture indemnified Reading & Bates Coal Co. and the Company against
any  liability Reading & Bates Coal Co. might incur as the result  of  this
litigation.   A judgment for the plaintiff of $32,000 entered  in  February
1991  was  satisfied  and Reading & Bates Coal Co. was indemnified  by  the
purchasing joint venture.  On October 31, 1990, SCW Associates,  Inc.,  the
plaintiff in the above-referenced action, filed a separate ancillary action
in  the  Circuit Court, Kanawha County, West Virginia against the  Company,
Caymen  Coal,  Inc.  (former  owner of the  Company's  West  Virginia  coal
properties),  as  well  as  the  joint venture,  Mr.  William  B.  Sturgill
personally  (former  President of Reading & Bates Coal  Co.),  three  other
companies  in  which  the  Company believes Mr. Sturgill  holds  an  equity
interest,  two  employees  of the joint venture,  First  National  Bank  of
Chicago  and  First  Capital Corporation.  The  lawsuit  seeks  to  recover
compensatory damages of $50.0 million and punitive damages of $50.0 million
for  alleged  tortious  interference with the  contractual  rights  of  the
plaintiff  and to impose a constructive trust on the proceeds  of  the  use
and/or  sale  of  the  assets  of Caymen Coal,  Inc.  as  they  existed  on
October  15,  1988. The Company intends to defend its interests  vigorously
and believes the damages alleged by the plaintiff in this action are highly
exaggerated.  In any event, the Company believes that it has valid defenses
and that it will prevail in this litigation.

   The  Company is  involved in various other legal  actions arising in the
normal  course  of business.  The great majority  of these actions  involve
claims arising out of injuries to employees of the Company who work on  the
Company's  rigs and other vessels.   After  taking  into consideration  the
evaluation  of  such  actions  by counsel for the Company and the Company's
insurance coverage, management is of the opinion that outcome of all  known
and potential claims and litigation will not have a material adverse effect
on the Company's business or consolidated financial position or results  of
operations.  See Note D of Notes to Consolidated  Financial Statements.

Item 4.  Submission of Matters to a Vote of Security Holders

   On  December  23,  1997, R&B held a special meeting of  stockholders  to
consider  and  vote upon a proposal to approve and adopt the Agreement  and
Plan  of Merger, dated as of July 10, 1997, among the Company, Falcon,  and
R&B.  The proposal received 46,463,835 votes FOR, 85,120 votes AGAINST, and
129,081 ABSTENTIONS, and therefore, was adopted by the stockholders of R&B.

   On  December 23, 1997, Falcon held a special meeting of stockholders  to
consider  and  vote upon a proposal to approve and adopt the Agreement  and
Plan  of Merger, dated as of July 10, 1997, among the Company, Falcon,  and
R&B.  The proposal received 66,632,944 votes FOR, 14,640 votes AGAINST, and
78,131  ABSTENTIONS,  and therefore, was adopted  by  the  stockholders  of
Falcon.

                                  PART II

Item   5.    Market   for  the  Registrant's  Common  Stock   and   Related
Stockholder Matters

   The  combination of Falcon and R&B became effective at 11:59 p.m. E.S.T.
on  December 31, 1997.  The common stock of R&B Falcon began trading on the
New York Stock Exchange ("NYSE") on January 2, 1998 under the symbol "FLC."
During 1996 and 1997, the Falcon common stock was traded on the NYSE  under
the  symbol "FLC" and the R&B common stock was traded on the NYSE  and  the
Pacific  Stock  Exchange under the symbol "RB."  The following  table  sets
forth,  for  the calendar periods indicated, the high and low sales  prices
per  share of Falcon common stock and R&B common stock as reported  by  the
NYSE Composite Tape for the periods indicated.  All share price information
for  Falcon common stock has been adjusted to reflect the two-for-one stock
split  effected on July 15, 1997.  No adjustment to these prices  has  been
made  in  respect of the share exchange ratio in the Merger (one  share  of
Company common stock for each share of Falcon common stock; 1.18 shares  of
Company  common stock for each share of R&B common stock).  Neither  Falcon
nor  R&B  have  declared  any dividends on common  stock  for  the  periods
indicated.

                                      Falcon              R&B
                                   Common Stock       Common Stock
                                 ----------------   ----------------
                                   High     Low       High     Low
                                 -------  -------   -------  -------
      1996
       First Quarter             $ 12.81  $  6.00   $ 20.38  $ 14.25
       Second Quarter              14.25    11.13     26.13    19.75
       Third Quarter               13.94    10.00     27.88    20.00
       Fourth Quarter              21.63    12.88     31.13    25.00

       1997
       First Quarter             $ 21.50  $ 15.13   $ 32.25  $ 22.50
       Second Quarter              28.81    15.56     28.25    20.13
       Third Quarter               38.13    25.44     44.63    26.75
       Fourth Quarter              42.81    28.19     49.81    33.38

   There  were  approximately  3,300 holders of  record  of  the  Company's
common stock as of March 18, 1998.

   In   December  1997,  the  Company  adopted  a  preferred  share  Rights
Agreement. See Note G of Notes to Consolidated Financial Statements.

   During  1997,  Falcon  sold shares of its common  stock  that  were  not
registered  under  the  Securities Act of 1933.  On May  21,  1997,  Falcon
issued  44,000  shares of its common stock, par value $.01, to  Michael  J.
Smith as partial consideration for the acquisition by Falcon of all of  the
issued  and  outstanding  stock of Sun Towing Co.,  Inc.  ("SUN")  and  MNS
Towing, Inc. ("MNS").  The agreed price for the shares issued to Mr.  Smith
was  $18.75 per share (after giving effect for the two-for-one stock  split
effected by Falcon on July 15, 1997).  Falcon relied upon Section  4(2)  of
the  Securities  Act of 1933, as amended, for exemption from  registration.
The  shares were issued pursuant to a negotiated transaction wherein Falcon
agreed  to buy, and Mr. Smith agreed to sell, all of the shares of Sun  and
MNS, which companies were wholly owned by Mr. Smith.

Item 6.  Selected Financial Data

                          R&B FALCON CORPORATION
                             AND SUBSIDIARIES
                  (in millions except per share amounts)

     The  following  table includes the accounts of R&B  and  Falcon  as  a
result  of  the  Merger.   See  Note B of Notes to  Consolidated  Financial
Statements.

                                        Years Ended December 31,
                            -------------------------------------------------
                               1997       1996     1995      1994      1993
                            ---------  ---------  ------    -------   -------
Operating revenues          $   942.1  $   609.6  $ 390.3   $ 307.6   $ 245.6
                            =========  =========  =======   =======   =======
Income (loss) from
 continuing operations      $   156.0  $   106.4  $  23.5   $ (12.7)  $   8.5

Income (loss) from
 discontinued operations       (162.2)        .3        -         -         -

Extraordinary gain (1)              -          -      3.4         -         -
                            ---------  ---------  -------   -------   -------
Net income (loss)                (6.2)     106.7     26.9     (12.7)      8.5

Dividends and accretion
 on preferred stock (2)             -        3.6      5.2       5.4       2.8
                            ---------  ---------  -------   -------   -------
Net income (loss) applicable
 To common stockholders     $    (6.2) $   103.1  $  21.7   $ (18.1)  $   5.7
                            =========  =========  =======   =======   =======
Net income (loss) per
 common share:
  Basic:
    Continuing operations   $     .95  $     .70  $   .16   $  (.18)  $   .06
    Discontinued operations      (.99)         -        -         -         -
    Extraordinary gain              -          -      .03         -         -
                            ---------  ---------  -------   -------   -------
       Net income (loss)    $    (.04) $     .70  $   .19   $  (.18)      .06
                            =========  =========  =======   =======   =======
  Diluted:
    Continuing operations   $     .94  $     .67  $   .15   $  (.18)  $   .05
    Discontinued operations      (.98)         -        -         -         -
    Extraordinary gain              -          -      .03         -         -
                            ---------  ---------  -------   -------   -------
       Net income (loss)    $    (.04) $     .67  $   .18   $  (.18)  $   .05
                            =========  =========  =======   =======   =======

Total assets                $ 1,928.4  $ 1,455.8  $ 946.8   $ 810.9   $ 722.5
                            =========  =========  =======   =======   =======
Long-term obligations
 (including current portion)
 and redeemable stocks      $   827.4  $   514.2  $ 296.7   $ 288.6   $ 166.3
                            =========  =========  =======   =======   =======
Dividends on Common Stock   $       -  $       -  $     -   $     -   $     -
                            =========  =========  =======   =======   =======
-----------------

(1)  Extraordinary gain for 1995 is due to the extinguishment of an R&B debt
     obligation.
(2)  In 1995,  Falcon's Series A Convertible Preferred Stock  was  converted
     into approximately  15.6 million shares of common stock  and  in  1996,
     R&B's  $1.625   Convertible   Preferred  Stock   was   converted   into
     approximately 10.2 million shares of common stock.


Item  7.   Management's Discussion and Analysis of Financial Condition  and
           Results of Operations

Business Combination

   On  July  10, 1997, Falcon Drilling Company, Inc. ("Falcon") and Reading
& Bates Corporation ("R&B") announced that they had agreed to combine their
companies under a new company -- R&B Falcon Corporation ("R&B Falcon") (the
"Merger"). On December 23, 1997, the Merger was approved by both companies'
shareholders  and  on  December 31, 1997 the Merger was  consummated.  Each
outstanding share of common stock of Falcon was converted into one share of
R&B  Falcon and each outstanding share of common stock of R&B was converted
into  1.18  shares of R&B Falcon. The Merger has been accounted  for  as  a
pooling   of   interests  and,  accordingly,  the  consolidated   financial
statements  for  the periods presented have been restated  to  include  the
accounts of R&B and Falcon.

Results of Operations

   The  Company reported a net loss for 1997 of $6.2 million ($.04 net loss
per  share)  compared to net income of $106.7 million  ($.70  earnings  per
share  after  preferred stock dividends of $3.6 million) for 1996  and  net
income  of  $26.9  million ($.19 earnings per share after  preferred  stock
dividends  of  $5.2 million) for 1995.  Included in the  1997  results  are
merger  expenses  of  $66.4  million and  losses  related  to  discontinued
operations  of  $162.2  million.   Included  in  the  1995  results  is  an
extraordinary gain of $3.4 million related to the extinguishment of a  debt
obligation.

   Operating Revenues
                                          Years Ended December 31,
                                        ---------------------------
    Operating Revenues (in millions)     1997       1996     1995
                                        -------   -------   -------
       Deepwater                        $ 348.8   $ 211.8   $ 104.6
       Shallow water                      321.7     224.9     161.8
       Inland water                       271.6     172.9     123.9
                                        -------   -------   -------
            Total                       $ 942.1   $ 609.6   $ 390.3
                                        =======   =======   =======

   Operating   revenues   are  primarily  a  function   of   dayrates   and
utilization.  Operating revenues from 1996 to 1997 increased $332.5 million
due  to  the  following:  The  deepwater  fleet  increased  $137.0  million
primarily due to an increase in dayrates for the semisubmersibles  and  due
to  the addition of two drillships. The shallow water fleet increased $96.8
million primarily due to an increase in dayrates for the jack-up fleet. The
inland water fleet increased $98.7 million primarily due to an increase  in
dayrates and utilization for the domestic and workover barges, and  due  to
the  purchase of 68 tugs and 44 utility barges during 1997.  See "Purchases
of Equipment".

   Operating  revenues from 1995 to 1996 increased $219.3  million  due  to
the  following: The deepwater fleet increased $107.2 million primarily  due
to an increase in dayrates for the semisubmersibles and due to the purchase
of  drillships  in  1996. The shallow water fleet increased  $63.1  million
primarily due to an increase in dayrates for the jack-up fleet and  due  to
the  addition  of  four  jack-ups in late  1995.  The  inland  water  fleet
increased  $49.0  million  primarily due to an  increase  in  dayrates  and
utilization for the domestic barges.  See "Purchases of Equipment".

   The  Company earned revenues of $167.6 million, $69.6 million  and  $3.6
million  for  1997, 1996 and 1995, respectively, as a result  of  equipment
acquisitions.  See "Purchases of Equipment".

   Operating Expenses
                                         Years Ended December 31,
                                       ---------------------------
   Operating Expenses (in millions)      1997      1996      1995
                                       -------   -------   -------
       Deepwater                       $ 141.6   $  91.1   $  58.1
       Shallow water                     151.8     128.3     113.0
       Inland water                      154.2     110.2      78.2
                                       -------   -------   -------
            Total                      $ 447.6   $ 329.6   $ 249.3
                                       =======   =======   =======

   Operating  expenses  do  not  necessarily  fluctuate  in  proportion  to
changes in operating revenues due to the continuation of personnel on board
and equipment maintenance when the Company's units are stacked.  It is only
during  prolonged stacked periods that the Company is able to significantly
reduce  labor costs and equipment maintenance expense. Additionally,  labor
costs  fluctuate  due to the geographic diversification  of  the  Company's
units  and the mix of labor between expatriates and nationals as stipulated
in the contracts.  In general, labor costs increase primarily due to higher
salary  levels  and  inflation.  Equipment maintenance  expenses  fluctuate
depending upon the type of activity the unit is performing and the age  and
condition  of  the  equipment.   Scheduled  maintenance  of  equipment  and
overhauls  are  performed  on  a  basis of  number  of  hours  operated  in
accordance  with  the Company's preventive maintenance  program.  Operating
expenses  for  an  offshore unit are typically deferred or  capitalized  as
appropriate  during  periods of mobilization, contract  preparation,  major
upgrades  or  conversions  unless  corresponding  mobilization  revenue  is
recognized, in which case such operating expenses are expensed as incurred.

     Operating expenses from 1996 to 1997 increased $118.0 million  due  to
the following: The deepwater fleet increased $50.5 million primarily due to
the  addition  of  two drillships and the purchase of an FPSS  vessel.  The
shallow water fleet increased $23.5 million primarily due to the change  in
the geographic location of the jack-up fleet from one year to the next. The
inland  water fleet increased $44.0 million primarily due to the  increased
utilization of the domestic barges, and due to the purchase of 68 tugs  and
44 utility barges during 1997. See "Purchases of Equipment".

     Operating  expenses from 1995 to 1996 increased $80.3 million  due  to
the following: The deepwater fleet increased $33.0 million primarily due to
the purchase of drillships in 1996. The shallow water fleet increased $15.3
million  primarily due to the purchase of four jack-ups in late  1995.  The
inland  water fleet increased $32.0 million primarily due to the  increased
utilization of the domestic barges. See "Purchases of Equipment".

   Depreciation
                                          Years Ended December 31,
                                         ---------------------------
                                           1997      1996      1995
                                         -------   -------   -------
   Depreciation (in millions)            $  82.9   $  62.3   $  46.9
                                         =======   =======   =======

   The  increase  in  depreciation expense in each  of  1996  and  1997  is
primarily  due  to  the purchase and/or significant upgrades  of  rigs  and
inland marine vessels.

   General and Administrative Expenses

                                          Years Ended December 31,
                                         ---------------------------
                                           1997      1996     1995
                                         -------   -------   -------
    General and Administrative
      Expenses (in millions)             $  51.9   $  37.0   $  29.2
                                         =======   =======   =======

   General  and  administrative expenses increased $14.9  million  in  1997
compared to 1996 primarily due to increases in payroll and related expenses
associated with employee incentive plans.

   General  and  administrative expenses increased  $7.8  million  in  1996
compared to 1995 primarily due to increases in payroll and related expenses
associated with employee incentive plans and a $2.2 million charge  related
to  severance  benefits for two executives whose employment was  terminated
during 1996.

   Merger Expenses

   In  connection  with  the  Merger between R&B and  Falcon,  the  Company
recorded  $66.4 million of merger expenses in the fourth quarter  of  1997.
Merger expenses consisted primarily of employment contract termination fees
associated   with   executives  of  R&B,  the  acceleration   of   unearned
compensation  of  certain stock grants previously awarded  to  certain  R&B
employees,  fees  for investment bankers, attorneys, and  accountants,  and
printing and other related costs.

   Interest Expense
                                          Years Ended December 31,
                                         ---------------------------
                                           1997      1996      1995
                                         -------   -------   -------
   Interest Expense, net of interest
      capitalized (in millions)          $  46.3   $  43.0   $  34.6
                                         =======   =======   =======

   Despite  an increase in capitalized interest during 1997 as compared  to
1996 primarily due to the capitalization of interest related to significant
upgrade and new build projects, interest expense increased by $3.3 million.
This  increase is primarily attributable to increased borrowings under  the
Company's  credit  facilities.  Noncash interest  expense  attributable  to
amortization  of  discount  and deferrals associated  with  the  8%  Senior
Subordinated  Convertible Debentures due 1998 for the year  ended  December
31, 1997 was $2.6 million.

   The  $8.4  million increase in interest expense in 1996 as  compared  to
1995  is primarily attributable to increased borrowings under the Company's
revolving credit facilities and the issuance by Falcon of $120.0 million in
senior notes in 1996.  This was partially offset by the 1996 capitalization
of  interest  related to the significant refurbishment  and  upgrade  of  a
drillship.   Noncash  interest  expense  attributable  to  amortization  of
discount   and   deferrals  associated  with  the  8%  Senior  Subordinated
Convertible  Debentures due 1998 for the year ended December 31,  1996  was
$2.2 million.

   Income Tax Expense
                                           Years Ended December 31,
                                         ---------------------------
                                           1997      1996     1995
                                         -------   -------   -------
   Income Tax Expense (in millions)      $  84.7   $  27.0   $   6.3
                                         =======   =======   =======

   The  increases  in  income tax expense in each of  1996  and  1997  were
primarily due to increases in the Company's pretax income.

   Minority Interest
                                           Years Ended December 31,
                                         ---------------------------
                                           1997      1996      1995
                                         -------   -------   -------
   Minority Interest (in millions)       $   9.4   $   6.7   $   2.8
                                         =======   =======   =======

   Minority  interest relates primarily to the results of  Arcade  Drilling
and  the  percentage attributable to stockholders other than  the  Company.
Arcade Drilling reported income in 1997, 1996 and 1995 of $36.9, $26.3  and
$5.6  million,  respectively.   The ownership  percentage  attributable  to
stockholders  other than the Company was 25.6%, 25.6%  and  25.7%  for  the
years ending December 31, 1997, 1996 and 1995, respectively.

Purchases of Equipment

   The  following  is a summary of significant equipment purchases  by  the
Company during the last three years.

1997

   -    In January 1997, the Company purchased the "PEREGRINE VI" (ex "COASTAL
     GOLDEN"), a bulk carrier, for approximately $7.5 million.

   -    In June 1997, the Company purchased the "PEREGRINE VII" (ex "DEEPSEA
     WORKER"),   a  purpose-built  dynamically  positioned  drillship   for
     approximately $33.8 million.

   -      In   the  third  quarter  of  1997,  the  Company  purchased  the
     semisubmersible  accommodation  unit "RIG  82"  (ex  "ALLEGHENY")  for
     approximately $34.2 million.

   -    In October 1997, the Company purchased a cantilevered, mat-supported
     jack-up for $22.0 million.

   -     In  November 1997, the Company purchased the "PEREGRINE VIII"  (ex
     "KASSOS"), a bulk carrier, for $9.2 million.

   -     During  the  fourth quarter of 1997, the Company  purchased  three
     offshore supply vessels for an aggregate cost of $7.5 million.

   -    During 1997, the Company purchased 68 tugs and 44 utility barges for
     an aggregate cost of $49.0 million.

1996

   -     In  January 1996, the Company purchased a drilling barge for  $6.0
     million.

   -     In  February  1996, the Company purchased the  "PEREGRINE  II",  a
     dynamically positioned drillship, for $24.1 million.

   -    In May 1996, the Company purchased the "PEREGRINE III", a dynamically
     positioned drillship, for $34.5 million.

   -     In  September 1996, the Company purchased the floating  production
     storage and shuttle (FPSS) vessel, the "SEILLEAN", for $42.2 million.

   -     In  December 1996, the Company purchased the "FALCON  DUCHESS",  a
     conventionally  moored  drillship,  for $5.0 million in cash and $15.0
     million in shares of the Company's common stock.

   -     In  December 1996, the Company purchased a substantially completed
     drillship hull (the "PEREGRINE IV") for approximately $8.0 million.

1995

   -     In  September  1995, the Company purchased two  cantilevered  mat-
     supported  jack-ups,  two  slot-type mat-supported  jack-ups  and  one
     submersible all for $37.8 million.

   -     In  September  1995, the Company purchased the  "PEREGRINE  I",  a
     dynamically positioned drillship, for $9.8 million.

   -    In September 1995, the Company purchased the support vessel "IOLAIR".

   -     In  September  1995,  the Company purchased the  second-generation
     semisubmersible drilling unit "J.W. McLEAN".  In connection  with  the
     purchase of the "J.W. McLEAN" the Company issued 1.5 million shares of
     the Company's common stock.

   -     In  the fourth quarter of 1995, the Company purchased three posted
     barge drilling rigs for an aggregate purchase price of $12.2 million.

Sale/Lease-back of Drilling Unit

   In  November 1995, the Company entered into a sale/lease-back of the "M.
G.  HULME,  JR." and agreed to lease the drilling unit for ten years.   The
lease-back  is accounted for as an operating lease and a deferred  gain  of
$7.4  million  was recorded and is being amortized over  the  life  of  the
lease.   In  addition,  the  lease contains a provision  which  allows  the
Company to repurchase the drilling unit at the end of the lease for a  fair
market price, but not to exceed a pre-established maximum price.

Oil & Gas Activities

   In  October  1995,  the  Company purchased an  approximate  20%  working
interest in the Green Canyon 254 Allegheny oil and gas development  project
in  the U.S. Gulf of Mexico from Enserch Exploration, Inc. ("Enserch")  who
was  the  operator  at that time.  Mobil Exploration & Producing  Inc.,  an
affiliate  of Mobil Corporation, had a 40% working interest in the  project
and  Enserch had retained the remaining 40% working interest.  In the third
quarter of 1997, the Company acquired an additional 20% working interest in
the  Allegheny field and British-Borneo Petroleum, Inc., the new  operator,
acquired  the remaining 60% working interest in the field.  As of  December
31,  1997,  the Company had accumulated costs related to its  ownership  in
such  project  of  approximately $41.2 million which are  included  in  Net
Liabilities of Discontinued Operations.

   In  July 1996, the Company entered into an agreement with Shell Offshore
Inc.  to  drill an appraisal well at the Company's expense in Shell's  East
Boomvang prospect in the U.S. Gulf of Mexico with terms that if the results
were  positive  the Company would earn a working interest.   The  estimated
cost to drill the appraisal well, which was drilled in the first quarter of
1997  and  was  suspended as a potential producer, was approximately  $12.1
million.  In  February  1997, Shell Offshore Inc. waived  its  election  to
remain  a  working interest owner in the East Boomvang, North Boomvang  and
East  Bequia  prospects  ("Boomvang"), but retained an  overriding  royalty
interest in the three prospects.  In July 1997, the Company entered into an
agreement  with Norcen Explorer, Inc. ("Norcen") whereby an appraisal  well
on  the  North  Boomvang  prospect would be drilled primarily  at  Norcen's
expense  (up  to an agreed upon cap) in exchange for a working interest  in
Boomvang.   In  August  1997,  drilling commenced  on  the  North  Boomvang
prospect  and  the  well was completed in the fourth quarter  of  1997  and
suspended  as  a  potential  producer pending a decision  to  proceed  with
commercial  development.   As  of  December  31,  1997,  the  Company   had
accumulated  costs  related to its ownership in  East  Boomvang  and  North
Boomvang  of  approximately  $21.5  million  which  are  included  in   Net
Liabilities of Discontinued Operations.

   In  March  1998, the Company decided to divest its oil and gas business,
and expects such divestiture to occur by March 1999.  The Company's oil and
gas  business  has  been accounted for as a discontinued operation  in  the
financial  statements  included in this report.   The  Company  recorded  a
charge  of  $78.8  million for losses on ultimate disposal  and  operations
until disposal.  See Note L of Notes to Consolidated Financial Statements.

Year 2000

   The  Company  is  currently in the process of  evaluating  its  computer
software programs and operating systems to ensure such programs and systems
will be able to process transactions in the year 2000. However, the Company
does not expect that such costs to modify its programs and systems will  be
material to its financial condition or results of operations.  The  Company
does not currently have information concerning the year 2000 compliance  of
its suppliers and customers.  In the event the Company's major suppliers or
customers do not successfully and timely achieve year 2000 compliance,  the
Company's operations could be adversely affected.

Accounting Pronouncements

   In  March  1995,  Statement of Financial Accounting Standards  No.  121,
Accounting  for  the  Impairment of Long-Lived Assets  and  for  Long-Lived
Assets  to be Disposed of ("SFAS 121") was issued.  SFAS 121, which  became
effective in 1996, requires that certain long-lived assets be reviewed  for
impairment  whenever events indicate that the carrying amount of  an  asset
may  not  be  recoverable, and that an impairment loss be recognized  under
certain circumstances in the amount by which the carrying value exceeds the
fair  value of the asset.  In 1995, the Company adopted SFAS 121 which  had
no   effect  on  the  Company's  consolidated  results  of  operations   or
consolidated financial position.

   In  October 1995, Statement of Financial Accounting Standards  No.  123,
Accounting for Stock Based Compensation ("SFAS 123") was issued.  SFAS  123
requires  either  recognition  of compensation  expense  in  the  financial
statements  for those companies that adopt the fair value based  accounting
method  or  expanded disclosure of pro forma net income  and  earnings  per
share  information  for those companies that retain the current  accounting
method  set  forth  in  Accounting  Principles  Board  (APB)  Opinion   25,
Accounting  for  Stock  Issued  to  Employees.   The  Company  follows  the
accounting  method set forth in APB 25 and provides the expanded disclosure
requirements.  See Note H of Notes to Consolidated Financial Statements.

   In  February 1997, Statement of Financial Accounting Standards No.  128,
Earnings  per Share ("SFAS 128") was issued.  SFAS 128 establishes  revised
standards  for  computing and presenting earnings per share.   The  Company
adopted  SFAS  128  in the fourth quarter of 1997 and  restated  all  prior
periods presented.

   In  June  1997,  Statement of Financial Accounting  Standards  No.  130,
Reporting  Comprehensive  Income  ("SFAS  130")  was  issued.    SFAS   130
establishes standards for reporting and display of comprehensive income and
its  components  in  a  full set of general purpose  financial  statements.
Comprehensive  income  is the total of net income and  all  other  nonowner
changes in equity.  The Company is required to adopt SFAS 130 in the  first
quarter   of   fiscal  1998.  Reclassification  of  comparative   financial
statements  provided  for earlier periods will be  required.   The  Company
believes  that  the  display  of  comprehensive  income  will  not   differ
materially  from  the currently reported net income (loss) attributable  to
common stockholders.

   In  June  1997,  Statement of Financial Accounting  Standards  No.  131,
Disclosures about Segments of an Enterprise and Related Information  ("SFAS
131")  was  issued.  SFAS 131 requires that companies report financial  and
descriptive information about their reportable operating segments.  Segment
information to be reported is to be based upon the way management organizes
the  segments for making operating decisions and assessing performance. The
Company will adopt SFAS 131 in 1998.

                      LIQUIDITY AND CAPITAL RESOURCES

   Net  cash provided by operating activities was $342.8 million for  1997,
compared   to  $167.3  million  and  $56.0  million  for  1996  and   1995,
respectively.   The  increases in each year were primarily  the  result  of
improved operating results from continuing operations.

   Net  cash  used  in  investing activities was $611.0 million  for  1997,
compared  to  $365.1  million for 1996 and $101.3 million  for  1995.   The
increases   in  each  year  were  due  to  increasing  levels  of   capital
expenditures,  primarily  related to rig and vessel  acquisitions  and  the
expansion of the Company's deepwater drilling rig fleet.

   Net  cash provided in financing activities was $301.2 million for  1997,
compared  to  $319.6  million for 1996 and $55.7  million  for  1995.   The
decrease in net cash provided by financing activities in 1997 over 1996 was
primarily  the result of a decline in proceeds from the issuance of  common
stock more than offsetting increased borrowings under two credit facilities
with two syndicates of commercial banks.  The increase in net cash provided
by  financing  activities for 1996 over 1995 was primarily  the  result  of
increased borrowings and increased issuance of common stock.

   Net  cash  used in discontinued operations was $105.3 million for  1997,
compared  to  $39.2  million  for 1996 and $12.4  million  for  1995.   The
increases  in each year were due to increasing levels of purchases  of  oil
and gas properties.

   At  December 31, 1997, the Company had approximately $233.9  million  in
the  aggregate  of  cash,  cash  equivalents,  short-term  investments  and
borrowing capacity under its revolving credit facilities.

   During  1998  and 1999, the Company expects to spend approximately  $1.4
billion to expand and upgrade its operating rig fleet.  Approximately  $1.1
billion of this total will be expended in connection with the expansion  of
the   Company's  deepwater  rig  fleet.   The  remaining  expected  capital
expenditures  of approximately $300.0 million would be used  to  reactivate
currently  idle barge drilling rigs and upgrade the Company's existing  rig
fleet.

   The  following are the significant capital expenditure projects  of  the
Company:

   "DEEPWATER  PATHFINDER".   This  is a dynamically  positioned  drillship
being  constructed  for a joint venture in which the  Company  owns  a  50%
interest.   The  estimated  cost  is  approximately  $235.0  million   plus
capitalized interest, with delivery expected to be in 1998.  The  Company's
portion of the project is expected to be funded through working capital and
project  financing which is expected to be provided by a third party  on  a
limited recourse basis.

   "DEEPWATER FRONTIER".  This is a dynamically positioned drillship  being
constructed  for a joint venture in which the Company owns a 60%  interest.
The  estimated  cost  is  approximately  $240.0  million  plus  capitalized
interest,  with delivery expected to be in the first quarter of 1999.   The
Company's  portion of the project is expected to be funded through  working
capital and project financing of the joint venture which is expected to  be
provided  by a third party on a limited recourse basis.  During  1997,  the
Company had advanced approximately $46.4 million to the joint venture which
was  reimbursed in November 1997, after financing was obtained by the joint
venture.   The  Company has agreed to guarantee repayment  of  60%  of  the
$175.0 million financing which was obtained.

   Drillship  III.   This  is  a  dynamically  positioned  drillship  being
constructed  by  the  Company at an estimated cost of approximately  $245.0
million  plus capitalized interest.  Delivery of the drillship is  expected
to be in the third quarter of 1999.  The cost of this drillship is expected
to  be  funded through non-recourse project financing.  As of December  31,
1997,  the  Company had spent approximately $40.5 million on  this  project
which is included in "Property and Equipment: Drilling".

   "RBS-6".   The  Company has entered into a letter of intent  with  Shell
Deepwater  Development  Inc.  ("Shell") to build  a  new  generation  ultra
deepwater  moored  semisubmersible to be used by Shell under  a  five  year
drilling  contract. The estimated cost of the unit is approximately  $280.0
million plus capitalized interest and other non-hardware costs and delivery
of  the  unit  is  scheduled for the first quarter of 2000.   The  drilling
contract  is being structured to facilitate non-recourse financing  by  the
Company by using the five year contract with Shell as the primary financing
collateral.  As  of December 31, 1997, the Company had spent  approximately
$15.2 million which is included in "Property and Equipment: Drilling".

   "PEREGRINE  IV".   This  is  a  dynamically positioned  drillship  being
constructed  by  the  Company at an estimated cost of approximately  $160.0
million  plus  capitalized interest.  Delivery is  expected  in  the fourth
quarter  of  1998.  As  of  December  31,  1997,  the  Company  had   spent
approximately $52.8 million on this project which is included in  "Property
and Equipment:  Drilling".

   "PEREGRINE  VI".   This  is  a  dynamically positioned  drillship  being
constructed  by  the  Company at an estimated cost of approximately  $200.0
million  plus  capitalized interest.  Delivery is  expected  in  the  first
quarter  of  1999.   As  of  December  31,  1997,  the  Company  had  spent
approximately $36.8 million on this project which is included in  "Property
and Equipment:  Drilling".

   "PEREGRINE  VII".  This is a dynamically positioned drillship  that  was
purchased  by  the  Company  in 1997 for $33.8 million.   It  is  currently
undergoing an upgrade that is expected to cost approximately $120.0 million
plus  capitalized interest.  Delivery of the drillship is expected  in  the
fourth  quarter  of 1998.  As of December 31, 1997, the Company  had  spent
approximately $61.4 million on this project which is included in  "Property
and Equipment:  Drilling".

   "PEREGRINE  VIII".   This  is a dynamically positioned  drillship  being
constructed  by  the  Company at an estimated cost of approximately  $200.0
million  plus  capitalized interest.  Delivery is  expected  in  the  third
quarter  of  1999.   As  of  December  31,  1997,  the  Company  had  spent
approximately $21.7 million on this project which is included in  "Property
and Equipment:  Drilling".

   "FALCON 100".  This  is  a  second-generation  semisubmersible  that was
purchased by the Company in 1995 and is being upgraded to  third-generation
capability at an estimated cost of $65.0 million plus capitalized interest.
Delivery is expected in the  fourth  quarter of  1998.  As of  December 31,
1997, the Company had spent  approximately  $14.2  million  on this project
which is included in "Property and Equipment-Drilling".

   The  Company's  cash on hand and available borrowing  capacity  together
with  its  expected future cash flows will likely be insufficient to  fully
fund  its currently expected capital spending program.  Accordingly, during
the  first  half  of  1998, the Company will initiate  a  debt  refinancing
program  which  is  planned to retire substantially all  of  the  Company's
existing subsidiary debt obligations and provide the liquidity necessary to
complete  its  capital  spending plans.  This debt refinancing  program  is
intended to include a new $500.0 million revolving credit facility  and  an
approximate $1.0 billion bond financing.  The Company has received a $500.0
million  revolving  credit commitment from a financial  institution,  which
commitment  is subject to, among other things, successful completion  of  a
bond offering and retirement of substantially all of the Company's existing
subsidiary debt obligations.

   Future  cash flows and credit market conditions are subject to a  number
of  uncertainties.  Liquidity of the Company should be considered in  light
of  the  significant  fluctuations in demand that  may  be  experienced  by
drilling   contractors  as  rapid  changes  in  oil  and   gas   producers'
expectations and budgets occur.  These fluctuations can rapidly impact  the
Company's   liquidity  as  supply  and  demand  factors   directly   affect
utilization and dayrates, which are the primary determinates of  cash  flow
from  the  Company's operations.  There can be no assurance that internally
generated cash resources and externally provided capital will be sufficient
to fund the Company's liquidity requirements.  Should conditions occur that
significantly  delay  or otherwise impede the Company's  refinancing  plan,
management believes that the Company could delay capital spending  programs
or  alternatively  sell assets in order to maintain adequate  liquidity  to
meet its needs.

   At  December 31, 1997, approximately $49.8 million of total consolidated
cash,  cash  equivalents and short-term investments of $100.9 million  were
restricted  from  the Company's use outside of Drilling's  activities.  See
Note A of Notes to Consolidated Financial Statements.

   In  1998,  the  Company will begin recording income taxes  at  the  full
statutory rates as tax benefit carryforwards will no longer be reserved.

   The  impact of inflation on the Company's operations for the three years
ended December 31, 1997 has not been material.

Public Equity Offerings

1996

   In  December 1996, Falcon sold 6.4 million shares of its common stock in
a  public  offering,  resulting  in net proceeds  of  approximately  $108.5
million.   Proceeds  were  used  primarily for  the  purchase  of  drilling
equipment.  See Note G of Notes to Consolidated Financial Statements.

1995

   In August 1995, Falcon sold 8.5 million shares of its common stock in  a
public  offering, resulting in net proceeds of approximately $34.4 million.
Proceeds  were used primarily for the purchase of drilling equipment.   See
Note G of Notes to Consolidated Financial Statements.

   In  November 1995, Falcon sold 6.4 million shares of its common stock in
a  public  offering,  resulting  in  net proceeds  of  approximately  $30.9
million.  Proceeds  were  used  primarily  for  the  purchase  of  drilling
equipment.  See Note G of Notes to Consolidated Financial Statements.

Debt Offerings

1996

   Pursuant  to  an  offering in March 1996, Falcon issued  $120.0  million
principal  amount  of  8 7/8% Senior Notes resulting  in  net  proceeds  of
approximately $116.0 million. See Note C of Notes to Consolidated Financial
Statements.

1995

   Pursuant  to  an  offering in March 1995, Falcon  issued  $50.0  million
principal  amount  of  Subordinated Notes  resulting  in  net  proceeds  of
approximately $48.0 million. See Note C of Notes to Consolidated  Financial
Statements.

Credit Facilities

   CBK  Facility.  The Company has entered into a credit facility agreement
with  Christiania Bank og Kreditkasse (the "CBK Facility") as agent  for  a
syndicate  of  banks (including itself).  The CBK Facility  consists  of  a
$400.0  million  reducing  revolving credit facility  to  be  utilized  for
revolving loans and/or issuance of standby letters of credit (subject to  a
maximum of $30.0 million).  At December 31, 1997, there were no letters  of
credit  outstanding under the CBK Facility, leaving $48.0 million available
for  revolving loans and/or issuance of standby letters of credit  (maximum
of  $30.0  million).  In addition, the Company has  entered into a separate
$20.0  million  letter  of  credit  agreement  with  Christiania  Bank   og
Kreditkasse.  At December 31, 1997, $9.2 million was available  under  such
agreement.   See  Notes  C  and  D  of  Notes  to  Consolidated   Financial
Statements.

   Paribas  Facility.   The Company has  entered into  a  revolving  credit
facility  agreement with Banque Paribas (the "Paribas Facility")  as  agent
for a syndicate of banks (including itself).  The Paribas Facility consists
of  (i)  a  $25.0  million  secured revolving loan  facility,  maturing  in
November  1999,  (ii)  a  $60.0  million secured  revolving  loan  facility
maturing  in  November 1998 and (iii) a $130.0 million unsecured  revolving
loan  facility maturing in October 1998.  At December 31, 1997, there  were
available borrowings of $85.0 million under the Paribas Facility.  See Note
C of Notes to Consolidated Financial Statements.

Item 8.  Financial Statements and Supplementary Data

                R&B FALCON CORPORATION AND SUBSIDIARIES
                REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

We  have audited the accompanying consolidated balance sheets of R&B Falcon
Corporation  (a Delaware corporation) and Subsidiaries as of  December  31,
1997  and 1996, and the related consolidated statements of operations, cash
flows  and  stockholders' equity for each of the three years in the  period
ended   December   31,   1997.   These  financial   statements    are   the
responsibility  of  the  Company's management.  Our  responsibility  is  to
express an opinion on these financial statements based on our audits.

We  conducted  our  audits in accordance with generally  accepted  auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement.  An audit includes examining, on a test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements.   An  audit  also includes assessing the accounting  principles
used  and  significant estimates made by management, as well as  evaluating
the  overall financial statement presentation.  We believe that our  audits
provide a reasonable basis for our opinion.

In  our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of R&B Falcon
Corporation  and  Subsidiaries as of December 31, 1997 and  1996,  and  the
consolidated results of their operations and their cash flows for  each  of
the  three  years in the period ended December 31, 1997 in conformity  with
generally accepted accounting principles.

/s/Arthur Andersen LLP

Houston, Texas
March 24, 1998

                          R&B FALCON CORPORATION
                             AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEET
                        December 31, 1997 and 1996
                    (in millions except share amounts)

                                                    1997       1996
 ASSETS                                          ---------   ---------
 ------
 CURRENT ASSETS:
   Cash and cash equivalents                     $    55.5   $   127.8
   Short-term investments                             45.4        16.3
   Accounts receivable:
    Trade, net                                       165.1       128.9
    Other                                             22.3        14.8
   Materials and supplies inventory                   15.1        13.4
   Other current assets                               13.1         5.5
                                                 ---------   ---------
    Total current assets                             316.5       306.7
                                                 ---------   ---------
 PROPERTY AND EQUIPMENT:
   Drilling                                        1,925.9     1,412.9
   Other                                              81.1        14.1
                                                 ---------   ---------
    Total property and equipment                   2,007.0     1,427.0
   Accumulated depreciation                         (426.3)     (355.3)
                                                 ---------   ---------
    Net property and equipment                     1,580.7     1,071.7
                                                 ---------   ---------
 DEFERRED CHARGES AND OTHER ASSETS                    31.2        26.3
                                                 ---------   ---------
 NET ASSETS OF DISCONTINUED OPERATIONS                 -          51.1
                                                 ---------   ---------
 TOTAL ASSETS                                    $ 1,928.4   $ 1,455.8
                                                 =========   =========

 LIABILITIES AND STOCKHOLDERS' EQUITY
 ------------------------------------
 CURRENT LIABILITIES:
   Long-term obligations due within one year     $   135.2   $    14.3
   Accounts payable - trade                           51.5        44.6
   Accrued liabilities                               144.7        52.5
                                                 ---------   ---------
    Total current liabilities                        331.4       111.4
 LONG-TERM OBLIGATIONS                               692.2       499.9
 OTHER NONCURRENT LIABILITIES                         38.6        52.1
 DEFERRED INCOME TAXES                                76.8        29.6
 NET LIABILITIES OF DISCONTINUED OPERATIONS            5.8         -
                                                 ---------   ---------
    Total liabilities                              1,144.8       693.0
                                                 ---------   ---------
 COMMITMENTS AND CONTINGENCIES
 MINORITY INTEREST                                    55.6        46.1
                                                 ---------   ---------
 STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value, 550,000,000
    shares authorized, 164,312,224 shares and
    163,398,663 shares issued and outstanding
    at December 31, 1997 and 1996, respectively        1.6         1.6
  Capital in excess of par value                     631.4       630.8
  Retained earnings                                   96.3       102.5
  Other                                               (1.3)      (18.2)
                                                 ---------   ---------
     Total stockholders' equity                      728.0       716.7
                                                 ---------   ---------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $ 1,928.4   $ 1,455.8
                                                 =========   =========

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


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

                                               Years Ended December 31,
                                             ----------------------------
                                               1997      1996      1995
                                             --------  --------  --------
OPERATING REVENUES                           $  942.1  $  609.6  $  390.3
                                             --------  --------  --------
COSTS AND EXPENSES:
  Operating expenses                            447.6     329.6     249.3
  Depreciation                                   82.9      62.3      46.9
  General and administrative                     51.9      37.0      29.2
  Merger expenses                                66.4       -         -
                                             --------  --------  --------
     Total costs and expenses                   648.8     428.9     325.4
                                             --------  --------  --------
OPERATING INCOME                                293.3     180.7      64.9
                                             --------  --------  --------
OTHER INCOME (EXPENSE):
  Interest expense, net of interest
   capitalized                                  (46.3)    (43.0)    (34.6)
  Interest income                                 5.8       3.4       3.0
  Other, net                                     (2.7)     (1.0)      (.7)
                                             --------  --------  --------
     Total other income (expense)               (43.2)    (40.6)    (32.3)
                                             --------  --------  --------
INCOME FROM CONTINUING OPERATIONS BEFORE
  INCOME TAX EXPENSE, MINORITY INTEREST
  AND EXTRAORDINARY GAIN                        250.1     140.1      32.6
                                             --------  --------  --------
INCOME TAX EXPENSE:
  Current                                        39.3       6.3       2.9
  Deferred                                       45.4      20.7       3.4
                                             --------  --------  --------
     Total income tax expense                    84.7      27.0       6.3
                                             --------  --------  --------
MINORITY INTEREST                                (9.4)     (6.7)     (2.8)
                                             --------  --------  --------
INCOME FROM CONTINUING OPERATIONS
   BEFORE EXTRAORDINARY GAIN                    156.0     106.4      23.5
                                             --------  --------  --------
DISCONTINUED OPERATIONS:
  Income (loss) from operations                 (83.4)       .3        -
  Loss on disposal                              (78.8)       -         -
                                             --------  --------  --------
     Total discontinued operations             (162.2)       .3        -
                                             --------  --------  --------
EXTRAORDINARY GAIN                                 -         -        3.4
                                             --------  --------  --------
NET INCOME (LOSS)                                (6.2)    106.7      26.9
DIVIDENDS ON PREFERRED STOCK                       -        3.6       5.2
                                             --------  --------  --------
NET INCOME (LOSS) APPLICABLE TO
 COMMON STOCKHOLDERS                         $   (6.2) $  103.1  $   21.7
                                             ========  ========  ========
NET INCOME (LOSS) PER COMMON SHARE:
  Basic:
     Continuing operations                   $     .95 $     .70 $     .16
     Discontinued operations                      (.99)      -         -
     Extraordinary gain                             -        -         .03
                                             --------- --------- ---------
       Net income (loss)                     $    (.04)$     .70 $     .19
                                             ========= ========= =========
  Diluted:
     Continuing operations                   $     .94 $     .67 $     .15
     Discontinued operations                      (.98)      -         -
     Extraordinary gain                             -        -         .03
                                             --------- --------- ---------
       Net income (loss)                     $    (.04)$     .67 $     .18
                                             ========= ========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
  Basic                                         164.1     147.4     115.7
                                             ========  ========  ========
  Diluted                                       166.2     157.7     121.8
                                             ========  ========  ========

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

                   CONSOLIDATED STATEMENT OF CASH FLOWS
                               (in millions)

                                              Years Ended December 31,
                                            ----------------------------
                                               1997      1996     1995
                                            --------  --------  --------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                         $   (6.2) $  106.7  $   26.9
  Adjustments to reconcile net income
   (loss) to net cash provided by
   operating activities:
    Depreciation                                82.9      62.3      46.9
    Gain on dispositions of property
      and equipment                             (6.9)     (3.7)     (0.3)
    Deferred income taxes                       49.9      15.9       3.4
    Recognition of deferred expenses             7.1       8.0       9.2
    Deferred compensation                       17.8       3.2       0.2
    Minority interest in income of
      consolidated subsidiaries                  9.4       6.7       2.8
    Loss (income) from discontinued
      operations                               162.2       (.3)       -
    Extraordinary gain from extinguishment
      of debt                                     -         -       (3.4)
    Changes in assets and liabilities:
      Accounts receivable, net                 (39.8)    (56.1)    (17.0)
      Materials and supplies inventory          (1.4)     (2.3)     (0.5)
      Deferred charges and other assets        (19.6)     (8.2)     (8.1)
      Accounts payable - trade                   6.9       9.2     (14.7)
      Accrued interest                           7.1       6.2       5.4
      Accrued liabilities                       74.6      13.5      10.5
      Other, net                                (1.2)      6.2      (5.3)
                                            --------  --------  --------
        Net cash provided by
          operating activities                 342.8     167.3      56.0
                                            --------  --------  --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Dispositions of property and equipment        10.4       3.9      53.1
  Purchases of property and equipment,
    exclusive of noncash items                (593.2)   (352.3)   (155.9)
  Sale (purchase) of short-term investments    (29.1)    (15.5)      2.4
  Other                                           .9      (1.2)      (.9)
                                            --------  --------  --------
    Net cash used in investing activities     (611.0)   (365.1)   (101.3)
                                            --------  --------  --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on short-term
    obligations                                   -         -      (12.2)
  Net proceeds from revolving credit
    facilities                                 316.0     141.0      20.0
  Proceeds from long-term obligations           38.0     120.0      80.0
  Principal payments on long-term
    obligations                                (49.6)    (45.8)    (92.1)
  Dividends paid on preferred stock               -       (3.6)     (5.2)
  Distribution to minority shareholders
    of consolidated subsidiaries                  -       (5.1)     (1.8)
  Issuance of common stock, net                  2.7     110.7      70.4
  Other                                         (5.9)      2.4      (3.4)
                                            --------  --------  --------
    Net cash provided by financing
      activities                               301.2     319.6      55.7
                                            --------  --------  --------

CASH USED IN DISCONTINUED OPERATIONS          (105.3)    (39.2)   (12.4)
                                            --------  --------  -------
NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                               (72.3)     82.6     (2.0)

CASH AND CASH EQUIVALENTS AT BEGINNING
 OF YEAR                                        127.8      45.2      47.2
                                             --------  --------  --------
CASH AND CASH EQUIVALENTS AT END OF YEAR     $   55.5  $  127.8  $   45.2
                                             ========  ========  ========
Supplemental Cash Flow Disclosures:
  Interest paid, net of capitalized
   interest                                  $   36.5  $   35.2  $   29.4
  Income taxes paid                          $   13.9  $    5.7  $    3.0
  Noncash investing activities:
    Purchase of property and equipment
     in exchange for equity or debt          $    8.0  $   30.9  $   31.0
    Purchase of property included in
     discontinued operations in
     exchange for debt                       $     -   $     -   $   12.0

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

                          R&B FALCON CORPORATION
                             AND SUBSIDIARIES

              CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                For the Three Years Ended December 31, 1997
                               (in millions)

                                 Common Stock
                                 ------------   Capital in Retained
                                        Amount  Excess of  Earnings
                                Shares    (1)   Par Value (Deficit)   Other
                                ------  ------  ---------  -------   -------

Balances at December 31, 1994    102.3   $ 1.0   $ 361.5   $(22.3)   $ (1.1)

Net income                                                   26.9
Dividends paid on
  preferred stock                                            (5.2)
Conversion of preferred stock     15.6      .2      14.2
Purchase of assets                 2.9              21.0
Activity in Company stock plans    7.3      .1       8.2                 .2
Restricted stock grant              .6               7.5               (7.6)
Issuance of common stock          14.8      .1      65.2
Additional minimum liability                                            (.3)
Other                                                 .2                (.2)
                                 -----   -----   -------   ------   -------
Balances at December 31, 1995    143.5     1.4     477.8      (.6)     (9.0)

Net income                                                  106.7
Dividends paid on peferred
  stock                                                      (3.6)
Conversion of preferred
  stock                           10.2      .1       2.9
Purchase of assets                  .8              15.0
Activity in Company stock plans    1.9              13.0                 .1
Restricted stock grant              .6              13.8              (10.6)
Issuance of common stock           6.4      .1     108.4
Additional minimum liability                                            1.2
Other                                                (.1)                .1
                                 -----   -----   -------   -------   ------
Balances at December 31, 1996    163.4     1.6     630.8     102.5    (18.2)

Net loss                                                      (6.2)
Activity in Company stock plans    1.2               8.9
Restricted stock grant                                .9                6.8
Acceleration of stock grants       (.3)             (9.3)              10.1
Other                                                 .1
                                 -----   -----   -------   -------   -------
Balances at December 31, 1997    164.3   $ 1.6   $ 631.4   $  96.3   $  (1.3)
                                 =====   =====   =======   =======   =======

____________________
(1) Amounts less than one-tenth of a million are not shown.

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


                           R&B FALCON CORPORATION
                              AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               ______________

(A)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   CONSOLIDATION  -  The  consolidated  financial  statements  include  the
accounts  of  R&B  Falcon Corporation ("R&B Falcon") and  its  subsidiaries
(collectively,  the  "Company"),  including  Reading  &  Bates  Corporation
("R&B"),  Falcon Drilling Company, Inc. ("Falcon"), and its  majority-owned
(approximately   74.4%)   subsidiary  Arcade  Drilling   AS   ("Drilling").
Investments  in unconsolidated investees are accounted for  on  the  equity
method.   All significant intercompany accounts and transactions have  been
eliminated.

   CASH  AND  CASH  EQUIVALENTS - The Company considers all  highly  liquid
investments purchased with an original maturity of three months or less  to
be  cash  equivalents.  At December 31, 1997, $4.4 million of the cash  and
cash   equivalents  balance  related  to  Drilling.   Such  cash  and  cash
equivalents balance as well as the short-term investments discussed  below,
are  available  to Drilling for all purposes subject to restrictions  under
the  Standstill  Agreement  dated as of August  31,  1991  among  Drilling,
Transocean Offshore Inc. (as successor to Sonat Offshore Drilling Inc.) and
R&B  which restrictions preclude R&B from borrowing any cash from  Drilling
unless  (i) Transocean is offered a pro-rata loan (based on stock ownership
in  Drilling)  on similar terms and (ii) any such loan(s) otherwise  comply
with  applicable  laws. Drilling declared a distribution  of  approximately
$14.3  million in the first quarter of 1996, of which the Company  received
approximately $10.6 million.

   SHORT-TERM  INVESTMENTS - Short-term investments  consist  of  interest-
bearing  deposits with a commercial bank with an original maturity  greater
than  three  months but less than one year from the date of the investment.
At  December 31, 1997, all of the short-term investments balance related to
Drilling (see CASH AND CASH EQUIVALENTS above).

   MATERIALS AND SUPPLIES INVENTORY - Materials and supplies are stated  at
the lower of average cost or market.

   PROPERTY  AND  EQUIPMENT - Property and equipment are  stated  at  cost.
Drilling units and marine equipment are depreciated under the straight-line
method.   Estimated  useful lives range from three  to  twenty-five  years.
Gain (loss) on disposal of properties is credited (charged) to income.  The
amount  of  construction  in progress included  in  drilling  equipment  at
December   31,  1997  and  1996  was  $255.0  million  and  $99.3  million,
respectively.  Certain barge drilling rigs and other related equipment  are
being  held  in  non-operating status pending  modification  and  decisions
regarding their deployment.  Management believes their market value exceeds
their  net  book value of $14.4 million and $17.8 million at  December  31,
1997 and 1996, respectively.

   INCOME  TAXES  - Deferred income taxes are recognized for  revenues  and
expenses  reported in different years for financial statement purposes  and
income tax purposes.

   REVENUE  RECOGNITION  -  Revenues are recognized  as  they  are  earned.
Proceeds  associated with the early termination of a contract are  recorded
as  deferred income and recognized as contract revenues over the  remaining
term  of the contract or until such time as the mobile offshore unit begins
a  new contract.  There were no such amounts deferred at December 31,  1997
or  1996.  In addition, when a unit's mobilization revenue exceeds the cost
of  the  mobilization by a significant amount, the Company  recognizes  the
excess as contract revenue during the contract preparation and mobilization
period  on  a  dayrate  basis.   If there is  revenue  that  has  not  been
recognized  by  the  time the unit has arrived on location,  the  remaining
amount is recognized over the primary term of the contract.

   CAPITALIZED  INTEREST - The Company capitalizes interest  applicable  to
the construction and significant upgrades of its marine equipment as a cost
of  such  assets.   Interest capitalized for the years ended  December  31,
1997,  1996  and  1995  was $10.8 million, $4.9 million  and  $.4  million,
respectively  and  is  shown net of interest expense  in  the  Consolidated
Statement of Operations.

   FOREIGN CURRENCY TRANSACTIONS - The net gains and losses resulting  from
foreign  currency transactions included in determining net income  amounted
to  a net loss of $.4 million in 1997 and a net gain of $.8 million and $.2
million in 1996 and 1995, respectively.  The Company may enter into forward
exchange   contracts   to  hedge  specific  commitments   and   anticipated
transactions  but not for speculative or trading purposes.   In  the  third
quarter  of  1996,  the Company entered into a short-term foreign  exchange
forward  contract to hedge a firm commitment relating to  the  purchase  of
equipment.   This  contract  was  intended to  reduce  currency  risk  from
exchange rate movements.  Insignificant gains and losses were deferred  and
accounted for as part of the underlying transaction.  At December 31, 1997,
the  Company  did  not  have  any outstanding forward  exchange  contracts.
During  1997  and 1995 the Company did not enter into any forward  exchange
contracts.

   MINORITY  INTEREST - Minority interest relates primarily to the  results
of  Drilling, which owns the drilling units "HENRY GOODRICH" and  "PAUL  B.
LOYD,   JR."    The  ownership  percentage  of  Drilling  attributable   to
stockholders  other than the Company was 25.6%, 25.6%  and  25.7%  for  the
years  ending  December  31, 1997, 1996 and 1995,  respectively.   Drilling
reported income in 1997, 1996 and 1995 of $36.9 million, $26.3 million  and
$5.6 million, respectively.

   EXTRAORDINARY  GAIN  -  In  December  1995,  the  Company  recorded   an
extraordinary  gain  of  $3.4  million for the  extinguishment  of  a  debt
obligation.

   CONCENTRATION OF CREDIT RISK -  The Company maintains cash balances  and
short-term  investments with commercial banks throughout  the  world.   The
Company's cash equivalents and short-term investments generally consist  of
commercial  paper, money-market mutual funds and interest-bearing  deposits
with strong credit rated financial institutions, therefore, bearing minimal
risk. No losses were incurred during 1997, 1996 and 1995.

   The  Company's revenues were generated primarily from its drilling rigs.
Revenues  can  be  generated from a relatively small number  of  customers,
which are primarily major and independent foreign and domestic oil and  gas
companies,  as  well  as foreign state-owned oil and  gas  companies.   The
Company  performs  ongoing credit evaluations of its  customers'  financial
conditions  and  generally requires no collateral from its customers.   The
Company's allowance for doubtful accounts at December 31, 1997 and 1996 was
$7.4 million and $3.4 million, respectively.

   INDUSTRY CONDITIONS -  Results of operations and financial condition  of
the  Company  should be considered in light of the fluctuations  in  demand
experienced   by  drilling  contractors  as  changes  in  exploration   and
production programs of oil and gas companies occur.  These fluctuations can
impact  the  Company's  results of operations and  financial  condition  as
supply  and demand factors directly affect utilization and dayrates,  which
are the primary determinants of cash flow from the Company's operations.

   LIQUIDITY - The Company's cash on hand and available borrowing  capacity
together with its expected future cash flows will likely be insufficient to
fully  fund  its currently expected capital spending program.  Accordingly,
during the first half of 1998, the Company will initiate a debt refinancing
program  which  is  planned to retire substantially all  of  the  Company's
existing subsidiary debt obligations and provide the liquidity necessary to
complete  its  capital  spending plans.  This debt refinancing  program  is
intended to include a new $500.0 million revolving credit facility  and  an
approximate $1.0 billion bond financing.  The Company has received a $500.0
million  revolving  credit commitment from a financial  institution,  which
commitment  is subject to, among other things, successful completion  of  a
bond offering and retirement of substantially all of the Company's existing
subsidiary debt obligations.

   Future  cash flows and credit market conditions are subject to a  number
of  uncertainties.  Liquidity of the Company should be considered in  light
of  the  significant  fluctuations in demand that  may  be  experienced  by
drilling   contractors  as  rapid  changes  in  oil  and   gas   producers'
expectations and budgets occur.  These fluctuations can rapidly impact  the
Company's   liquidity  as  supply  and  demand  factors   directly   affect
utilization and dayrates, which are the primary determinates of  cash  flow
from  the  Company's operations.  There can be no assurance that internally
generated cash resources and externally provided capital will be sufficient
to fund the Company's liquidity requirements.  Should conditions occur that
significantly  delay  or otherwise impede the Company's  refinancing  plan,
management believes that the Company could delay capital spending  programs
or  alternatively  sell assets in order to maintain adequate  liquidity  to
meet its needs.

   NEWLY  ISSUED  ACCOUNTING  STANDARDS  -  In  March  1995,  Statement  of
Financial  Accounting Standards No. 121, Accounting for the  Impairment  of
Long-Lived Assets and for Long-Lived Assets to be Disposed of ("SFAS  121")
was  issued.   SFAS  121,  which became effective in  1996,  requires  that
certain  long-lived  assets  be  reviewed for  impairment  whenever  events
indicate  that the carrying amount of an asset may not be recoverable,  and
that  an impairment loss be recognized under certain circumstances  in  the
amount by which the carrying value exceeds the fair value of the asset.  In
1995,  the  Company adopted SFAS 121 which had no effect on  the  Company's
consolidated results of operations or financial position.

   In  October 1995, Statement of Financial Accounting Standards  No.  123,
Accounting for Stock Based Compensation ("SFAS 123") was issued.  SFAS  123
requires  either  recognition  of compensation  expense  in  the  financial
statements  for those companies that adopt the fair value based  accounting
method  or  expanded disclosure of pro forma net income  and  earnings  per
share information for those companies that retain the accounting method set
forth in Accounting Principles Board (APB) Opinion 25, Accounting for Stock
Issued  to Employees.  The Company follows the accounting method set  forth
in APB 25 and provides the expanded disclosure requirements (See Note H).

   In  February 1997, Statement of Financial Accounting Standards No.  128,
Earnings  per Share ("SFAS 128") was issued.  SFAS 128 establishes  revised
standards  for  computing and presenting earnings per share.   The  Company
adopted  SFAS  128  in the fourth quarter of 1997 and  restated  all  prior
period earnings per share data presented.

   In  June  1997,  Statement of Financial Accounting  Standards  No.  130,
Reporting  Comprehensive  Income  ("SFAS  130")  was  issued.    SFAS   130
establishes standards for reporting and display of comprehensive income and
its  components  in  a  full set of general purpose  financial  statements.
Comprehensive  income  is the total of net income and  all  other  nonowner
changes in equity.  The Company is required to adopt SFAS 130 in the  first
quarter   of  fiscal  1998.   Reclassification  of  comparative   financial
statements  provided  for earlier periods will be  required.   The  Company
believes  that  the  display  of  comprehensive  income  will  not   differ
materially  from  the currently reported net income (loss) attributable  to
common stockholders.

   In  June  1997,  Statement of Financial Accounting  Standards  No.  131,
Disclosures about Segments of an Enterprise and Related Information  ("SFAS
131")  was  issued.  SFAS 131 requires that companies report financial  and
descriptive information about their reportable operating segments.  Segment
information to be reported is to be based upon the way management organizes
the  segments for making operating decisions and assessing performance. The
Company will adopt SFAS 131 in 1998.

   ESTIMATES  - The preparation of financial statements in conformity  with
generally  accepted  accounting  principles  requires  management  to  make
estimates  and assumptions that affect the reported amounts of  assets  and
liabilities and disclosure of contingent assets and liabilities at the date
of  the  financial  statements and the reported  amounts  of  revenues  and
expenses  during  the reporting period.  Actual results could  differ  from
those estimates.

(B)  BUSINESS COMBINATION

   On  December  31, 1997, R&B and Falcon completed a business  combination
(merger)  whereby  each outstanding share of common  stock  of  Falcon  was
converted  into  one share of R&B Falcon common stock and each  outstanding
share  of common stock of R&B was converted into 1.18 shares of R&B  Falcon
common  stock.  The merger qualified as a tax-free exchange  and  has  been
accounted  for as a pooling of interests and, accordingly, the consolidated
financial  statements  for  the periods presented  have  been  restated  to
include the accounts of R&B and Falcon.

   There  was  one transaction between R&B and Falcon prior to  the  merger
which  resulted  in  an  adjustment  to  the  combined  restated  financial
statements of R&B Falcon.  In 1996, R&B sold the drilling unit,  the  "D.K.
McINTOSH"  to Falcon.  The resulting gain of $3.8 million recorded  by  R&B
has been eliminated from the accompanying financial statements.

   The  results  of operations for the separate companies and the  combined
amounts  presented in the consolidated financial statements for  the  years
ended December 31, 1997, 1996 and 1995 are as follows (in millions):

                                1997         1996        1995
                              -------      -------      -------
        Operating revenues
          R&B                 $ 424.2      $ 290.3      $ 212.8
          Falcon                517.9        319.3        177.5
                              -------      -------      -------
             Combined         $ 942.1      $ 609.6      $ 390.3
                              =======      =======      =======
        Extraordinary gain
          R&B                 $     -      $     -      $   3.4
          Falcon                    -            -            -
                              -------      -------      -------
             Combined         $     -      $     -      $   3.4
                              =======      =======      =======
        Net income (loss)
          R&B                 $ (73.5)     $  74.1      $  21.8
          Falcon                 67.3         32.6          5.1
                              -------      -------      -------
             Combined         $  (6.2)     $ 106.7      $  26.9
                              =======      =======      =======

   In  connection  with the merger, the Company recorded $66.4  million  of
expenses in the fourth quarter of 1997.  Such expenses consist primarily of
employment contract termination fees associated with executives of R&B, the
acceleration  of  unearned compensation of certain stock grants  previously
awarded  to  certain R&B employees, fees for investment bankers, attorneys,
and accountants, and printing and other related costs.

(C)  LONG-TERM OBLIGATIONS

   Long-term  obligations at December 31, 1997 and 1996  consisted  of  the
following (in millions):
                                                           1997       1996
                                                         -------    -------
  Christiania Bank (1)                                   $ 352.0    $ 166.0
  Banque Paribas (2)                                       130.0          -
  8% Senior Subordinated Convertible Debentures, due
     December 1998 ("8% Debentures") (3)                    15.6       13.1
  8 7/8% Senior Notes, due March 2003
     ("8 7/8% Notes") (4)                                  120.0      120.0
  9 3/4% Senior Notes, due January 2001
     ("9 3/4% Notes") (5)                                  110.0      110.0
  12 1/2 % Subordinated Notes, due
     March 2005 ("12 1/2% Notes") (6)                       50.0       50.0
  Floating Rate Notes (7)                                   10.0       10.0
  NIC (8)                                                   25.3          -
  Deferred payment obligation (9)                            7.5        7.5
  Secured promissory note (10)                               6.4          -
  Chase Manhattan (11)                                         -       32.5
  Other debt obligations                                      .6        5.1
                                                         -------    -------
  Total                                                    827.4      514.2
  Less long-term obligations due within one year          (135.2)     (14.3)
                                                         -------    -------
  Long-term obligations                                  $ 692.2    $ 499.9
                                                         =======    =======
  __________________________

(1)   The  Company  has entered into  a  credit  facility  agreement  with
      Christiania Bank og Kreditkasse (the "CBK Facility") as agent  for  a
      syndicate of banks (including itself). The CBK Facility consists of a
      $400.0 million reducing revolving credit facility to be utilized  for
      revolving loans and/or issuance of standby letters of credit (subject
      to a maximum of $30.0 million) (see Note D).  The CBK Facility  shall
      be  reduced/repaid  by five semi-annual installments of $37.0 million
      commencing in May  1999  and  one final reduction/repayment of $215.0
      million in November 2001  and  bears interest at the London Interbank
      Offered Rate ("LIBOR") (5.84375% at December 31, 1997) plus .85%.  In
      addition, a fee of .85% per  annum  is paid on outstanding letters of
      credit and a commitment fee of .35% per annum is paid on  the  unused
      portion of the CBK Facility.  At  December 31,  1997, there  were  no
      letters of credit outstanding under the  CBK  Facility, leaving $48.0
      million  available  for  revolving  loans  and/or issuance of standby
      letters  of  credit  (maximum  of  $30.0  million). The CBK  Facility
      contains covenants which require  R&B  to  meet  certain  ratios  and
      working capital conditions, and is collateralized by vessel mortgages
      on  fourteen  of  the drilling  units  owned  by the Company, related
      assignments of  insurance and earnings, and a pledge of the Company's
      shares of stock of Drilling. As of December 31, 1997, the Company was
      in compliance with the CBK Facility covenants, as amended.

(2)   The  Company  has  entered into a revolving credit facility agreement
      with Banque Paribas (the "Paribas Facility") as agent for a syndicate
      of  banks (including itself).  The Paribas Facility consists of (i) a
      $25.0  million  tranche  secured  by accounts receivable, maturing in
      November  1999,  (ii)  a  $60.0  million  tranche  secured by certain
      drilling rigs and  receivables, maturing in November 1998 and (iii) a
      $130.0 million tranche   that is unsecured, maturing in October 1998.
      At  December  31,  1997,  there  were available borrowings  of  $85.0
      million under the Paribas Facility.  The facilities require Falcon to
      meet certain tests related to its net worth, interest coverage ratio,
      and   current  ratio,  and  places  restrictions  on  dividends   and
      investments by Falcon.  The facility provides generally for  interest
      at LIBOR plus 1% on the $25.0 million tranche, at LIBOR plus 1.5%  on
      the $60.0  million  tranche,  and  at  LIBOR plus 1.75% on the $130.0
      million tranche.  The  interest  rate  on  the $130.0 million tranche
      increases  by  .50%  during  each  calendar quarter commencing in the
      second quarter of 1998. The Company has paid fees to the banks in the
      aggregate amount of approximately  $1.5 million in order to implement
      the facilities, and pays a commitment  fee  equal  to  (i)  .375% per
      annum of the unused portion of the $25.0 million  and  $60.0  million
      tranches,  and  .20%  per  annum on the unused portion of the  $130.0
      million tranche.

(3)   The  8% Debentures  are convertible into the Company's common stock at
      $31.386 per share.  Accrued interest associated with the 8% Debentures
      at December 31, 1997  and 1996, was $11.9 million and  $11.9  million,
      respectively.  The 8% Debentures were recorded at amounts equal to the
      net  present  value of their respective future cash payments required,
      discounted at  15%, which is the interest rate the Company believes it
      would  have  been  required  to  pay  to obtain financing of a similar
      nature from  other  sources  during  1991.  The face  amount of the 8%
      Debentures and the related unamortized  discount  at December 31, 1997
      totaled $18.6 million and $3.0  million, respectively. The face amount
      of the 8% Debentures and the related unamortized  discount at December
      31, 1996 totaled $18.6 million and $5.5 million, respectively.

(4)   The  8 7/8%  Notes  were issued by Falcon  pursuant to an offering  in
      March 1996, resulting in net proceeds of  approximately $116.0 million
      to the Company after deducting offering  related expenses.  The 8 7/8%
      Notes consist of $120.0 million principal  amount and bear interest at
      a rate of 8 7/8%, payable semiannually on  March  15 and September 15.
      The 8 7/8% Notes  are  unsecured  obligations  of Falcon, ranking pari
      passu in  right  of payment  with  all  other  senior  indebtedness of
      Falcon.  The  8 7/8%  Notes  are  not  guaranteed  by  any of Falcon's
      subsidiaries, and thus are  structurally  subordinated  to  the 9 3/4%
      Notes (defined below) and  other  indebtedness  of  the  subsidiaries.
      Further, they are effectively subordinated to any secured indebtedness
      of  Falcon  to  the  extent  of  the  collateral securing such secured
      indebtedness.

(5)   The  9 3/4%  Notes  were issued by Falcon  pursuant to an offering  in
      January 1994 resulting in net proceeds of approximately $104.9 million
      to the Company after deducting offering  related expenses.  The 9 3/4%
      Notes consist of  $110.0 million principal amount and bear interest at
      a rate of 9 3/4%, payable semiannually on January 15 and July 15.  The
      9 3/4% Notes are guaranteed by certain  of the Company's subsidiaries.
      The 9 3/4%  Notes  are  unsecured  obligations of Falcon, ranking pari
      passu in right  of  payment  with  all  other  senior  indebtedness of
      Falcon, but are  effectively subordinated to any  secured indebtedness
      of  Falcon  to  the  extent  of  the  collateral securing such secured
      indebtedness.

(6)   The  12 1/2%  Notes  were  issued by Falcon pursuant to an offering in
      March 1995, resulting  in net  proceeds of approximately $48.0 million
      to the Company after deducting offering related expenses.  The 12 1/2%
      Notes consist of $50.0 million principal amount and bear interest at a
      rate of 12 1/2%, payable  semiannually  on  March 15 and September 15.
      The 12 1/2% Notes are subordinated  to  all other indebtedness of  the
      Company  except  indebtedness  that expressly provides it shall not be
      senior in right of  payment to the 12 1/2% Notes.

(7)   On  February 23, 1994,  Falcon  issued $10.0 million of Floating  Rate
      Notes which bear interest at LIBOR plus 3.5%.  The  principal  amounts
      of the Floating Rate Notes are due in payments  of  $1.0 million, $2.0
      million  and  $2.0  million  on  January  24  of  1998, 1999 and 2000,
      respectively, with the balance due January 24, 2001. The Floating Rate
      Notes are guaranteed  by  certain  of the Company's subsidiaries.  The
      Floating Rate Notes  are unsecured obligations of Falcon, ranking pari
      passu in right of payment  with  all   other  senior  indebtedness  of
      Falcon,  but  are effectively subordinated to any secured indebtedness
      of  Falcon  to  the  extent  of  the  collateral securing such secured
      indebtedness.

(8)   In April  1997, a  wholly owned  subsidiary  of  the  Company  entered
      into a five year $38.0 million  loan agreement with Nissho Iwai Europe
      PLC ("NIC"). The  loan  is  collateralized by a vessel mortgage on the
      "SEILLEAN" without recourse to the Company and bears interest at LIBOR
      plus 2%.  Principal repayments are monthly based on the greater of the
      excess cash flow  of  the  "SEILLEAN"  or  the  outstanding  principal
      balance divided by  the  remaining  monthly  periods  of the loan.  In
      addition, NIC has the option to purchase up to 10% of the ownership in
      the  "SEILLEAN",  any time prior to April 25, 2000, at a minimum price
      of $4.2 million.

(9)   In  September 1995,  the Company entered into a $10.0 million deferred
      payment obligation  in  connection  with  the  purchase of the support
      vessel "IOLAIR". The deferred payment  obligation  bears interest at a
      fixed rate of 8%.  A principal  repayment  of $2.5 million was paid in
      September 1996 and payments of $7.0 million and $.5 million are due in
      September 1998 and  September  2000,  respectively.  The obligation is
      collateralized by a vessel mortgage on the support vessel "IOLAIR".

(10)  In  January  1997,  the   Company   issued  a  $6.4  million   secured
      promissory note, payable to Coastal Capital Corporation, in connection
      with the  purchase of  the "PEREGRINE VI".  The note bears interest at
      7.5%, payable monthly,  and  matures  in  January  1999.  The  note is
      collateralized by a vessel mortgage on the "PEREGRINE VI".

(11)  In  August  1997,  Drilling's term loan payable to The Chase Manhattan
      Bank,  N.A. was repaid in full with Drilling's cash on hand.  The term
      loan   bore  interest  at  LIBOR plus .45%.  The drilling units "HENRY
      GOODRICH" and "PAUL B. LOYD, JR." collateralized the loan.

   The  indentures  pursuant to which the 8 7/8% Notes, 9 3/4%  Notes,  and
the  12  1/2%  Notes were issued (i) provide that Falcon  may  redeem  such
obligations  at a premium at certain times prior to maturity, (ii)  require
Falcon  to  offer to redeem such obligations at a premium  if  there  is  a
change  of control of Falcon (see below), and (iii) impose restrictions  on
certain  actions by Falcon, including payment of dividends,  incurrence  of
debt, pledging of assets, sale of assets, and making investments.

   The  consummation of the merger between R&B and Falcon caused a  "change
of control" as defined in Falcon's note indentures representing outstanding
principal indebtedness of $290.0 million at December 31, 1997.  On  January
28, 1998, Falcon made a purchase offer to each note holder at a price equal
to  101%  of  the  aggregate principal amount outstanding or  approximately
$293.0 million, plus accrued interest.  The date for tender of notes by any
electing  bond holder is March 24, 1998, and the redemption date  is  March
27,  1998.   As  of  March 24, 1998, none of the bonds  were  tendered  for
redemption.

   The  Company  estimates  the fair value of its debt  obligations  to  be
$846.0  million  compared to a book value of $827.4  million,  both  as  of
December 31, 1997.

   Aggregate  annual  maturities of long-term obligations,  (including  the
current portion) for the next five years and thereafter are as follows  (in
millions):

               1998                                    $ 138.2
               1999                                       65.8
               2000                                       82.7
               2001                                      373.2
               2002                                         .5
               Thereafter                                170.0
                                                       -------
                                                         830.4
               Less the unamortized discount
                 on the 8% Debentures                     (3.0)
                                                       -------
               Total long-term obligations and long-
                 term obligations due within one year
                 at December 31, 1997                  $ 827.4
                                                       =======

(D)  COMMITMENTS AND CONTINGENCIES

   GENERAL  - In 1992, in connection with the acquisition of certain  barge
drilling  rig  operations,  the  Company entered  into  contingent  profits
interest agreements with the former rig owners and former mortgage  holder.
The periods for determination of these payments began in 1993 and continued
through 1997.

   Pursuant  to certain of the Company's long-term drilling contracts,  the
operator  may  purchase  three of the Company's  barge  drilling  rigs  for
specified prices which decrease each year through 1999.  Management of  the
Company  estimates  that the option price will be less  than  the  carrying
value for one of these rigs by approximately $.9 million in 1998, and  that
the  aggregate option price for the three rigs will be below the  aggregate
carrying value for such rigs by approximately $1.2 million and $3.5 million
in  1998  and 1999, respectively.  Management does not expect the  purchase
option to be exercised and will continue to evaluate the net book value  of
these rigs for possible future impairment.

   The  Company has a contract with Petrobras that requires the Company  to
pay penalties, not to exceed $34.8 million in total, should the Company not
deliver  a  drillship  and should such drillship  not  pass  inspection  by
certain dates.

   CAPITAL  EXPENDITURES  - During 1998 and 1999, the  Company  expects  to
spend  approximately $1.4 billion to expand and upgrade its  operating  rig
fleet.   Approximately  $1.1  billion of this total  will  be  expended  in
connection  with the expansion of the Company's deepwater rig  fleet.   The
remaining  expected  capital expenditures of approximately  $300.0  million
would  be used to reactivate currently idle barge drilling rigs and upgrade
the  Company's  existing  rig fleet. These amounts exclude  $475.0  million
related  to  construction commitments of two joint ventures funded  through
working capital and project financing which is expected to be provided by a
third party on a limited recourse basis.

   OPERATING  LEASES  - The Company has operating leases covering  premises
and  equipment.  Certain operating leases contain renewal options and  have
options to purchase the asset at fair market value at the end of the  lease
term.  Lease expense amounted to $40.2 million (1997), $22.7 million (1996)
and  $10.6 million (1995).  As of December 31, 1997, future minimum  rental
payments relating to operating leases were as follows (in millions):

                   1998     1999     2000     2001     2002    Thereafter
                  ------   ------   ------   ------   ------   ----------
  Drilling units  $ 21.8   $ 20.6   $ 12.6   $ 11.7   $ 11.7     $ 34.3
  Other              2.2       .9       .6       .4       .4          -
                  ------   ------   ------   ------   ------     ------
  Total           $ 24.0   $ 21.5   $ 13.2   $ 12.1   $ 12.1     $ 34.3
                  ======   ======   ======   ======   ======     ======

   In  November 1995, the Company entered into a sale/lease-back of the "M.
G.  HULME,  JR." and agreed to lease the drilling unit for ten years.   The
lease-back  is accounted for as an operating lease and a deferred  gain  of
$7.4 million was recorded and is being amortized over the life of the lease
(see Note E).

   GUARANTY  - In November 1997, the Company agreed to guarantee  repayment
of  60%  of a loan in the principal amount of $175.0 million by a syndicate
of  banks led by Bank of America National Trust and Savings Association and
National  Westminster Plc to Deepwater Drilling II  L.  L.  C.,  a  limited
liability company in which the Company has a 60% interest, and accounts for
using the equity method.

   LITIGATION - In November 1988, a lawsuit was filed in the U.S.  District
Court  for the Southern District of West Virginia against Reading  &  Bates
Coal Co., a wholly owned subsidiary of the Company, by SCW Associates, Inc.
claiming breach of an alleged agreement to purchase the stock of Belva Coal
Company,  a wholly owned subsidiary of Reading & Bates Coal Co.  with  coal
properties in West Virginia.  When those coal properties were sold in  July
1989  as  part  of  the disposition of the Company's coal  operations,  the
purchasing  joint  venture indemnified Reading & Bates  Coal  Co.  and  the
Company against any liability Reading & Bates Coal Co. might incur  as  the
result  of this litigation. A judgment for the plaintiff of $32,000 entered
in February 1991 was satisfied and Reading & Bates Coal Co. was indemnified
by  the  purchasing  joint venture.  On October 31, 1990,  SCW  Associates,
Inc.,  the  plaintiff  in  the above-referenced action,  filed  a  separate
ancillary  action  in  the  Circuit Court, Kanawha  County,  West  Virginia
against the Company, Caymen Coal, Inc. (former owner of the Company's  West
Virginia  coal  properties), as well as the joint venture, Mr.  William  B.
Sturgill  personally (former President of Reading & Bates Coal Co.),  three
other  companies in which the Company believes Mr. Sturgill holds an equity
interest,  two  employees  of the joint venture,  First  National  Bank  of
Chicago  and  First  Capital Corporation.  The  lawsuit  seeks  to  recover
compensatory damages of $50.0 million and punitive damages of $50.0 million
for  alleged  tortious  interference with the  contractual  rights  of  the
plaintiff  and to impose a constructive trust on the proceeds  of  the  use
and/or  sale  of  the  assets  of Caymen Coal,  Inc.  as  they  existed  on
October  15, 1988.  The Company intends to defend its interests  vigorously
and believes the damages alleged by the plaintiff in this action are highly
exaggerated.  In any event, the Company believes that it has valid defenses
and that it will prevail in this litigation.

   The  Company is involved in various other legal actions arising  in  the
normal  course  of business.  The great majority of these  actions  involve
claims arising out of injuries to employees of the Company who work on  the
Company's  rigs  and  power vessels.  After taking into  consideration  the
evaluation  of  such actions by counsel for the Company and  the  Company's
insurance  coverage, management is of the opinion that the outcome  of  all
known  and potential claims and litigation will not have a material adverse
effect  on  the  Company's business or consolidated financial  position  or
results of operations.

   SELF  INSURANCE - The Company is self-insured for the deductible portion
of its insurance coverage.  In the opinion of management, adequate accruals
have  been made based on known and estimated exposures up to the deductible
portion  of  the Company's insurance coverages.  Management  believes  that
future  claims and liabilities in excess of the amounts accrued  are  fully
insured.

   LETTERS  OF  CREDIT - At December 31, 1997, the Company had  letters  of
credit  outstanding and unused totalling $10.8 million  and  $9.2  million,
respectively (see Note C).

(E) ACCRUED LIABILITIES AND OTHER NONCURRENT LIABILITIES

   The  components of "Accrued liabilities" at December 31, 1997  and  1996
were as follows (in millions):

                                                 1997       1996
                                               -------    -------
       Accrued expenses - general              $  64.8    $  13.8
       Accrued interest expense                   28.6       12.9
       Accrued payroll                             6.2        2.6
       Accrued worker compensation claims          8.4        3.7
       Accrued income and sales tax               29.8        3.7
       Other                                       6.9       15.8
                                               -------    -------
       Total                                   $ 144.7    $  52.5
                                               =======    =======

   The  components of "OTHER NONCURRENT LIABILITIES" at December  31,  1997
and 1996 were as follows (in millions):

                                                             1997      1996
                                                          -------    -------
  Postretirement benefit obligations                      $  14.9    $  15.7
  Accrued interest expense related to the 8% Debentures         -       10.4
  Deferred gain on sale of drilling unit (see Note D)         5.6        6.5
  Foreign income taxes                                        6.1        6.0
  Pension obligations                                         3.5        4.0
  Other                                                       8.5        9.5
                                                          -------    -------
  Total                                                   $  38.6    $  52.1
                                                          =======    =======

(F)  INCOME TAXES

   Income tax expense for the years ended December 31, 1997, 1996 and  1995
consisted of the following (in millions):

                                     1997        1996       1995
                                   -------     -------     -------
              Current:
                Foreign            $   9.4     $   5.8     $   2.4
                Federal               26.9          .4          .5
                State                  3.0          .1           -
                                   -------     -------     -------
              Total current           39.3         6.3         2.9
                                   -------     -------     -------
              Deferred:
                Foreign               17.9         4.0         1.8
                Federal               26.6        15.0          .9
                State                   .9         1.7          .7
                                   -------     -------     -------
              Total deferred          45.4        20.7         3.4
                                   -------     -------     -------
              Total                $  84.7     $  27.0     $   6.3
                                   =======     =======     =======

   The   domestic   and  foreign  components  of  income  from   continuing
operations before income taxes for the years ended December 31, 1997,  1996
and 1995 were as follows (in millions):

                                     1997        1996        1995
                                   -------     -------     -------
              Domestic             $  31.2     $   4.6     $ (23.3)
              Foreign                218.9       135.5        55.9
                                   -------     -------     -------
              Total                $ 250.1     $ 140.1     $  32.6
                                   =======     =======     =======

   The   effective  tax  rate,  as  computed  on  income  from   continuing
operations before income taxes, differs from the statutory U.S. income  tax
rate  for  the  years ended December 31, 1997, 1996 and  1995  due  to  the
following:

                                                  1997       1996       1995
                                                 -----      -----      -----
  Statutory rate                                   35 %       35 %       35 %
  Use of previously reserved tax benefits         (13)       (11)       (12)
  Foreign tax expense (net of federal benefit)      1         (6)        (5)
  State tax expense (net of federal benefit)        1          1          1
  Non-deductible merger expenses                    8          -          -
  Other                                             2          -          -
                                                 -----      -----      -----
  Effective rate                                   34 %       19 %       19 %
                                                 =====      =====      =====

   Deferred  income  taxes  result  from those  transactions  which  affect
financial  and  taxable  income in different years.  The  nature  of  these
transactions  (all of which were long-term) and the income  tax  effect  of
each as of December 31, 1997 and 1996 were as follows (in millions):


                                                  1997        1996
                                                -------     -------
       Deferred tax liabilities:
           Depreciation                         $ 208.0     $ 169.7
           Discontinued operations, net               -         5.4
           Undistributed earnings                   8.3           -
           Other                                      -          .5
                                                -------     -------
       Total deferred tax liabilities             216.3       175.6
                                                -------     -------
       Deferred tax assets:
           Rig leases                                 -        (6.3)
           Postretirement benefits                 (5.4)       (5.6)
           Tax benefit carryforwards             (169.8)     (185.8)
           Discontinued operations, net           (22.3)          -
           Accrued expenses                        (3.5)       (2.0)
           Valuation allowance                     63.5        53.7
           Other                                   (2.0)          -
                                                -------     -------
        Total deferred tax assets                (139.5)     (146.0)
                                                -------     -------
       Net deferred tax liability               $  76.8     $  29.6
                                                =======     =======

   Valuation  allowance reflects the possible expiration  of  tax  benefits
(primarily  net  operating loss carryforwards) prior to their  utilization.

   Recapitalizations of R&B in 1989 and 1991 resulted in ownership  changes
for  federal income tax purposes.  As a result of these ownership  changes,
the  amount  of tax benefit carryforwards generated prior to the  ownership
changes  which may be utilized to offset federal taxable income is  limited
by  the  Internal Revenue Code to approximately $3.8 million annually  plus
certain  built-in gains that existed as of the date of such  changes.   Net
tax operating losses of approximately $114.9 million arising since the 1991
ownership change are not subject to this limitation.

(G)  CAPITAL SHARES

   RIGHTS  - On December 31, 1997, the effective date of the merger between
R&B  and  Falcon  (see  Note B), each share of the Company's  common  stock
received  one  preferred  share purchase right  (a  "Right").   Each  Right
entitles  the  registered  holder to purchase from  the  Company  one  one-
hundredth of a share of Series A Junior Participating Preferred Stock, (the
"Preferred   Shares")  of  the  Company at a  price  of  $150,  subject  to
adjustment.  The Rights will not become exercisable until 10 days  after  a
public announcement that a person or group has acquired 15% or more of  the
Company's  common  stock (thereby becoming an "Acquiring  Person")  or  the
commencement of a tender or exchange offer upon consummation of which  such
person  or  group would own 15% or more of the Company's common stock  (the
earlier  of  such  dates being called the "Distribution Date").  Until  the
Distribution  Date,  the  Rights  will be  evidenced  by  the  certificates
representing the Company's common stock and will be transferrable only with
the  Company's common stock.  In the event that any person or group becomes
an  Acquiring Person, each Right, other than Rights beneficially  owned  by
the  Acquiring  Person  (which will thereafter be  void),  will  thereafter
entitle its holder to purchase shares of the Company's common stock  having
a  market value of two times the exercise price of the Right.  If  after  a
person or group has become an Acquiring Person, the Company is acquired  in
a  merger or other business combination transaction or 50% or more  of  its
assets  or  earning power are sold, each Right will entitle its  holder  to
purchase, at the Right's then current exercise price, that number of shares
of  common  stock  of  the acquiring company which  at  the  time  of  such
transaction will have a market value of two times the exercise price of the
Right.   The  board of directors of the Company may redeem  the  Rights  in
whole,  but not in part, at a price of $.01 per Right at any time prior  to
ten  business days following a public announcement that a person  or  group
becomes  an  Acquiring  Person.  The Rights expire  on  November  1,  2007.
Preferred  Shares  purchasable upon exercise of  the  Rights  will  not  be
redeemable.  Each  Preferred  Share will  be  entitled  to  a  preferential
quarterly  dividend payment equal to the greater of $1  per  share  or  100
times the dividend declared per common share.  Liquidation preference  will
be  equal  to  100  times the par value per share plus an amount  equal  to
accrued and unpaid dividends and distributions to the date of such payment.
Each  Preferred Share will have 100 votes, voting together with the  common
stock, and certain rights to elect two directors during certain periods  of
default in the payment of dividends on the Preferred Shares.

   PREFERRED  STOCK  -  In  January 1993, Falcon issued  25,989  shares  of
Series  A  Convertible Preferred Stock in association with the satisfaction
of  a  debt obligation.  In August 1995, such preferred stock was converted
into  approximately  15.6  million  shares  of  Falcon's  common  stock  in
connection with a public offering.

   In  July  1993,  R&B  effected a public offering  of  approximately  3.0
million  shares of $1.625 Convertible Preferred Stock, par value $1.00  per
share.   On  August  5,  1996, R&B announced it would  redeem  all  of  the
outstanding shares of such preferred stock on September 30, 1996.  However,
the  majority  of  such  preferred  stock outstanding  was  converted  into
approximately  10.2  million shares of R&B's  common  stock  on  or  before
September 30, 1996.

   COMMON  STOCK  -  On July 28, 1995, Falcon, a participating  stockholder
and  a  group  of underwriters entered into an agreement resulting  in  the
initial public sale by Falcon of 8.5 million shares of common stock and the
sale   of   1.5  million  shares  of  common  stock  by  the  participating
shareholder.   The  initial public offering closed on August  2,  1995  and
resulted  in  net  proceeds  to  Falcon of $34.4  million  after  deducting
offering related expenses of $3.9 million.

   In  September 1995, R&B issued 1.5 million shares of R&B's common  stock
in association with the purchase of the "J.W. McLEAN".

   On  November 15, 1995, Falcon, participating stockholders and a group of
underwriters entered into an agreement resulting in the public sale of  6.4
million shares of common stock by Falcon and the sale of 4.0 million shares
of  common  stock by selling shareholders.  The public offering  closed  on
November  21, 1995 and resulted in net proceeds to Falcon of $30.9  million
after deducting offering related expenses of $2.4 million.

   On  December 9, 1996, Falcon, participating stockholders and a group  of
underwriters entered into an agreement resulting in the public sale of  6.4
million shares of common stock by Falcon and the sale of 9.4 million shares
of  common  stock by selling shareholders.  The public offering  closed  on
December 13, 1996 and resulted in net proceeds to Falcon of $108.5  million
after deducting offering related expenses of $5.5 million.

   During  June  1997, Falcon declared a two-for-one stock split  effective
on July 15, 1997.  Accordingly, all share amounts for all periods presented
have been restated to reflect this stock split.

   WARRANTS  - In 1992, Falcon issued (a) 2,800 Class A warrants,  each  of
which represented the right to purchase 600 shares of Falcon's common stock
for  $1.665  per  share,  and (b) 2,600 Class B  warrants,  each  of  which
represented the right to purchase 1,200 shares of Falcon's common stock  at
an  exercise price of $1.665 per share.  The exercise price of the Class  A
and  B  warrants  was  adjusted  to $1.21 per  share  subsequent  to  their
issuance.   Two hundred Class A warrants were exercised on July  31,  1993,
while  1,200  Class  A  warrants expired on such date.   During  1995,  the
remaining  1,400 Class A warrants, and all of the 2,600 Class  B  warrants,
were exercised.

   In  connection  with the issuance of preferred stock  in  January  1993,
Falcon  issued a shadow warrant exercisable for up to an aggregate  of  3.7
million  shares of Falcon's common stock at a purchase price of  $.005  per
share of common stock.  Such warrant is exercisable only to the extent that
certain  other warrants, options and convertible securities of  Falcon  are
exercised  or  converted.  The aggregate number of  shares  for  which  the
shadow  warrant was exercisable was reduced to 3.1 million shares upon  the
expiration of 1,200 of the Class A warrants and the exercise of 200 Class A
warrants on July 31, 1993, as discussed above.  On March 31, 1994,  various
convertible subordinated debtholders exercised options to convert  $605,000
in  convertible subordinated debt for .4 million shares of common stock and
holders  of  bonus  warrants (issued in connection with the  prepayment  of
convertible  subordinated  debt) exercised such  warrants.   In  connection
therewith,  .3 million shares of common stock were issued under the  shadow
warrant.  Additionally, rights to acquire .2 million shares of common stock
pursuant  to  the shadow warrant expired during 1994. As a  result  of  the
exercise of the Class A and Class B warrants in 1995, 2.6 million shares of
common  stock  were  issued  pursuant to the shadow  warrant.   The  shadow
warrant expired on December 31, 1997.

   As  of  December 31, 1997, authorized, unissued shares of  common  stock
were reserved for issuance as follows:

         Issuance under the Company's stock
             plans (net of forfeitures)            8,285,704
         Conversion of 8% Debentures                 969,532
                                                   ---------
         Total                                     9,255,236
                                                   =========

(H)  EMPLOYEE BENEFIT PLANS

   PENSION  PLANS  - The Company has three noncontributory  pension  plans.
Substantially all of the R&B employees paid from a U.S. payroll are covered
by  one or more of these plans.  Plan benefits are primarily based on years
of service and average high thirty-six month compensation.

   The  Reading  &  Bates Pension Plan (the "Domestic Plan")  is  qualified
under  the  Employee  Retirement Income Security Act (ERISA).   It  is  the
Company's  policy to fund this plan not less than the minimum  required  by
ERISA.   It  is the Company's policy to contribute to the Reading  &  Bates
Offshore  Pension Plan (the "Offshore Plan") an amount equal to the  normal
cost  plus  amounts  sufficient to amortize the initial unfunded  actuarial
liability  and  subsequent unfunded liability caused by plan or  assumption
changes  over thirty years.  The unfunded liability arising from  actuarial
gains  and  losses is funded over fifteen years.  The Offshore  Plan  is  a
nonqualified  plan  and is not subject to ERISA funding requirements.   The
Domestic  and Offshore Plans invest in cash equivalents, fixed  income  and
equity securities.

   The   Reading   &  Bates  Retirement  Benefit  Replacement   Plan   (the
"Replacement  Plan") is a self-administered unfunded excess  benefit  plan.
All  members of the Domestic Plan or the Reading & Bates Savings  Plan  are
potential participants in the Replacement Plan.

   Net  pension costs for the years ended December 31, 1997, 1996 and  1995
included the following components (in millions):

                                                   1997      1996      1995
                                                  ------    ------    ------
 Service cost - benefits earned during the year   $  1.6    $  1.8    $  1.3
 Interest cost on projected benefit obligation       4.9       4.6       4.5
 Actual gain on plan assets                        (10.2)     (5.2)    (10.0)
 Net amortization and deferral                       4.1       (.2)      5.2
                                                  ------    ------    ------
 Net pension costs                                $   .4    $  1.0    $  1.0
                                                  ======    ======    ======

   The  funded status of the plans at December 31, 1997 was as follows  (in
millions):

                                                Domestic Offshore Replacement
                                                  Plan     Plan       Plan
                                                -------- -------- -----------
     Actuarial present value of
         benefit obligations:
     Vested benefit obligation                   $  48.4  $  13.5  $   3.2
     Nonvested benefit obligation                    1.6       .5       .1
                                                 -------  -------  -------
     Accumulated benefit obligation                 50.0     14.0      3.3
     Effect of projected future
        compensation levels                          7.5      2.5       .2
                                                 -------  -------  -------

     Projected benefit obligation                   57.5     16.5      3.5
     Plan assets at fair value                      52.8     17.0        -
                                                 -------  -------  -------
     Projected benefit obligation in
         excess of plan assets                       4.7      (.5)     3.5
     Unrecognized cumulative net (loss) gain       (12.7)     (.5)     2.3
     Prior service cost unrecognized
         in pension cost                             1.7       .1       .2
    Unrecognized net implementation
         asset (obligation)                          1.4        -     (2.1)
                                                 -------  -------  -------
    Accrued (prepaid) pension cost               $  (4.9) $   (.9) $   3.9
                                                 =======  =======  =======

   The  weighted  average  discount rate and rate  of  increase  in  future
compensation levels used in determining the actuarial present value of  the
projected  benefit  obligations  was  7.4%  and  4.5%,  respectively.   The
weighted average expected long-term rate of return on assets was 10%.

   POSTRETIREMENT  BENEFITS  - In addition to providing  pension  benefits,
R&B  provides  certain  health care and life  insurance  benefits  for  its
retired  employees.  Employees may become eligible for  these  benefits  if
they reach normal or early retirement age while working for R&B and if they
have  accumulated 25 years of service (15 years prior to January 1,  1996).
Health  care  costs are paid as they are incurred. Life insurance  benefits
are  provided  through  an insurance company whose premiums  are  based  on
benefits paid during the year.

   Postretirement  benefit  costs for the years ended  December  31,  1997,
1996 and 1995 included the following (in millions):

                                                   1997     1996     1995
                                                 -------  -------  -------
     Service cost - benefits earned
       during the year                           $    .1  $    .1  $    .2
     Interest cost on projected
       benefit obligations                            .7       .8      1.0
     Amortization benefit
         Accumulated Projected
           Benefit Obligation                        (.9)     (.9)     (.8)
                                                 -------  -------  -------
     Total postretirement benefit costs          $   (.1) $     -  $    .4
                                                 =======  =======  =======

   The  health care cost trend rates used to measure the expected  cost  in
1998  for  medical,  dental and vision benefits were  8%,  5.5%  and  5.5%,
respectively, each graded down to an ultimate trend rate of  5%,  4.5%  and
4.5%,  respectively, to be achieved in the year 2021.  The weighted average
discount  rate and rate of increase in future compensation levels  used  in
determining the actuarial present value of the projected benefit obligation
was  7.4%  and 4.5%, respectively.  The effect  of  a  one-percentage-point
increase  in health care cost trend rates for future periods would increase
the  service  cost and interest cost portion of net periodic postretirement
benefit  cost approximately 16.8%.  The accumulated postretirement  benefit
obligation would increase by approximately 14.6%.

   The  amounts recognized in the Company's Consolidated Balance  Sheet  at
December 31, 1997 and 1996 were as follows (in millions):

                                                         1997      1996
                                                        ------    ------
     Plan assets at fair value                          $    -    $    -
     Accumulated postretirement benefit obligation:
        Retirees                                           8.1       8.1
        Fully eligible active plan participants             .5        .5
        Other active plan participants                     1.9       1.7
     Unrecognized prior service cost                       1.7       2.7
     Unrecognized cumulative net gain                      3.4       3.5
     Other                                                 (.1)      (.4)
                                                        ------    ------
     Postretirement benefit liability recognized
       in the Consolidated Balance Sheet                $ 15.5    $ 16.1
                                                        ======    ======

   SAVINGS  PLANS  -  The Company has three savings plans  which  allow  an
employee  to contribute up to 16% of their base salary (subject to  certain
limitations)  and  the  Company  may make  matching  contributions  at  its
discretion. Employees may direct the investment of their contributions  and
the contributions of the Company in various plan investment options.

   The  Company's  matching  contributions vest within  five  years  of  an
employee's  service with the Company.  Compensation costs under  the  plans
amounted to $2.7 million in 1997, $1.6 million in 1996, and $1.0 in 1995.

   STOCK  OPTION PLANS - The Company has six stock option plans  which  are
intended  to provide an incentive that will allow the Company to retain  in
its  employ, persons of the training, experience and ability necessary  for
the  development and financial success of the Company.  Four of these plans
were  originally adopted by Falcon and two were originally adopted by  R&B.
All  of  these  plans  were assumed by R&B Falcon in the  merger,  and  the
options outstanding thereunder were converted to options to acquire  common
stock  of  R&B Falcon (with appropriate adjustments to reflect the exchange
ratio for R&B stock in the merger).

   The  Company's Reading & Bates Corporation 1990 Stock Option  Plan  (the
"1990  Stock Option Plan") authorized options with respect to approximately
2.3  million  shares of common stock to be granted to certain employees  of
R&B at an adjusted option price of $6.25 per share.  On September 25, 1991,
options with respect to all 2.3 million shares were granted and vested over
a  four-year  period.  Such grant's option price was less than  the  market
price  on the date of grant and the difference was recorded as compensation
expense during the vesting period.  Such options will expire in 2001.

   The  Company's Falcon Drilling Company, Inc. 1992 Stock Option Plan (the
"1992  Stock  Option Plan") authorized options with respect to 1.0  million
shares of common stock to be granted to certain employees and directors  of
Falcon.  On  November 10, 1992, options with respect  to  all  1.0  million
shares were granted at adjusted option prices ranging from $1.665 to  $1.85
per share and vested immediately.  No compensation expense was recorded  as
a  result  of the option price being the estimated market price of Falcon's
common stock on the date of grant.  Such options will expire in 2002.

   The  Company's Falcon Drilling Company, Inc. 1994 Stock Option Plan (the
"1994 Stock Option Plan") authorized options with respect to 570,000 shares
of common stock to be granted to certain employees and directors of Falcon.
On  January  26,  1994,  options with respect to all  570,000  shares  were
granted  at  an  adjusted option price of $5.00 per share, vesting  ratably
over three years.  No compensation expense was recorded as a result of  the
option  price being the estimated market price of Falcon's common stock  on
the date of grant.  Such options will expire in 2004.

   The  Company's Falcon Drilling Company, Inc. 1995 Stock Option Plan (the
"1995  Stock  Option Plan") authorized options with respect to 1.0  million
shares of common stock to be granted to certain employees and directors  of
Falcon.  On February 16, 1995, options with respect to 250,000 shares  were
granted  at  an  adjusted option price of $5.00 per share, vesting  ratably
over  three  years,  and expiring in 2005.  In January 1996,  options  with
respect  to  280,000  shares were granted at an adjusted  option  price  of
$6.065  per share, vesting over two years, and expiring in 2006.  In  April
1996,  options with respect to 150,000 shares were granted at  an  adjusted
option  price  of  $9.72 per share, vesting ratably over  five  years,  and
expiring in 2006.  In February 1997, options with respect to 258,000 shares
were  granted to certain employees and directors of Falcon at  an  adjusted
option  price  of $12.50 per share.  These option grants were rescinded  by
Falcon  in November 1997.  No compensation expense was recorded as a result
of  the  option  price being the estimated market price of Falcon's  common
stock on the date of grant.

   The  Company's  Reading & Bates Corporation 1995 Director  Stock  Option
Plan  (the  "1995  Director Plan") is intended to obtain  and  retain  non-
employee  members of the board of directors by rewarding  them  for  making
major contributions to the success of the Company.  The 1995 Director  Plan
authorized  options with respect to 236,000 shares of common  stock  to  be
granted  at  an  adjusted option price of $6.25 per share.   In  1995,  R&B
granted  141,600 options.  The market value of R&B's common  stock  at  the
date  of  grant was less than the option price, and no compensation expense
was recorded.

   The  Company's Falcon Drilling Company, Inc. 1997 Stock Option Plan (the
"1997  Stock  Option Plan") authorized options with respect to 1.2  million
shares of common stock to be granted to certain employees and directors  of
Falcon.  In July 1997, options for 3,000 shares were granted at an exercise
price  of  $12.50  per  share, which options were rescinded  by  Falcon  in
November 1997.  In July 1997, options for 40,000 shares were granted at  an
exercise  price of $29.00 per share, vesting ratably over three years,  and
expiring in 2007.  The market value of Falcon's common stock on the date of
the  grant was equal to the exercise price, and no compensation expense was
recorded.

   STOCK  INCENTIVE  PLANS  - The Company has four stock  incentive  plans,
which provide for grants of stock options, stock appreciation rights, stock
awards and cash awards, which may be granted singly, in combination  or  in
tandem. Such plans are intended to provide an incentive that will allow the
Company  to  retain in its employ, persons of the training, experience  and
ability necessary for the development and financial success of the Company.
These plans were originally adopted by R&B and assumed by R&B Falcon in the
merger.

   The  Company's Reading & Bates Corporation 1992 Long-Term Incentive Plan
(the "1992 Incentive Plan") authorized 1,180,000 shares of common stock  to
be  available for awards.  In 1992, restricted stock awards with respect to
354,000  shares  were  granted to certain officers  of  R&B.   Such  shares
awarded  were restricted as to transfer until vested pursuant to a schedule
whereby  1/24th  of the total number of shares vested per calendar  quarter
from  June 30, 1992 through March 31, 1998 (subject to certain conditions).
The  market  value  at the date of grant of the common  stock  granted  was
recorded  as  unearned compensation and was amortized to expense  over  the
periods during which the restrictions lapse or shares vest.  In 1995, stock
options  with  respect  to the remaining 826,000  shares  were  granted  to
certain  officers  and employees of R&B at adjusted option  prices  ranging
from  $7.627 to $11.759 per share (the market price on the date of grants).
Such  options become exercisable either over a one or four year period from
the  date of grant.  All stock awards under the 1992 Incentive Plan  vested
on  December 31, 1997 as a result of the merger of R&B and Falcon (see Note
B).

   The  Company's Reading & Bates Corporation 1995 Long-Term Incentive Plan
("1995 Incentive Plan") authorized 2,950,000 shares of common stock  to  be
available for awards. In 1995, stock options with respect to 708,000 shares
were  granted to an officer of R&B at an adjusted option price  of  $11.759
per  share  (the  market price on the date of grants). Such options  became
exercisable one year from the date of grant. Also in 1995, restricted stock
awards with respect to 642,156 shares were granted to certain employees  of
R&B.  Such shares awarded were restricted as to transfer until fully vested
three  years from the date of grant.  The market value at the date of grant
of  the common stock granted was recorded as unearned compensation and  was
amortized  to  expense over the period during which the  shares  vest.   In
1996,  stock  options with respect to 177,000 shares  were  granted  to  an
officer of R&B at an adjusted option price of $23.729 per share (the market
price  on the date of the grant).  Such options became exercisable  over  a
three-year  period from the date of grant.  Also in 1996, restricted  stock
awards with respect to 489,228 shares were granted to certain employees  of
R&B.  Such shares awarded were restricted as to transfer until fully vested
three  years from the date of grant.  The market value at the date of grant
of  the common stock granted was recorded as unearned compensation and  was
amortized  to  expense over the period during which the  shares  vest.   In
1997, stock options with respect to 902,582 shares were granted to officers
of R&B at an adjusted option price of $20.127 per share, which options were
rescinded in August 1997.  Under the 1995 Incentive Plan, stock options and
restricted  stock awards with respect to 868,700 shares vested on  December
31, 1997 as a result of the merger of R&B and Falcon (See Note B).

   The  Company's  Reading  &  Bates Corporation 1996  Director  Restricted
Stock  Award  Plan (the "1996 Director Plan") authorized 63,720  shares  of
common  stock to be available for awards.  In 1996, restricted stock awards
with respect to all 63,720 shares were granted to non-employee directors of
R&B.   Such  shares  awarded were restricted as to  transfer  in  one-third
increments  over three years from the date of grant.  The market  value  at
the  date  of  grant of the common stock granted was recorded  as  unearned
compensation and was amortized to expense over the period during which  the
shares  vest.   All  stock awards under the 1996 Director  Plan  vested  on
December 31, 1997 as a result of the merger of R&B and Falcon (see Note B).

   The  Company's Reading & Bates Corporation 1997 Long-Term Incentive Plan
(the "1997 Incentive Plan") authorized 2,950,000 shares of common stock  to
be  available for awards.  In 1997, restricted stock awards with respect to
33,866  shares  were  granted to certain employees  of  R&B.   Such  shares
awarded were restricted as to transfer until fully vested three years  from
the  date  of grant.  The market value at the date of grant of  the  common
stock  granted was recorded as unearned compensation and was  amortized  to
expense over the period during which the shares vest.  Also in 1997,  stock
options with respect to 6,018 shares were granted to an officer of  R&B  at
an adjusted option price of $20.127 per share, which options were rescinded
by  R&B  in  August 1997.  Under the 1997 Incentive Plan, restricted  stock
awards  with  respect to 33,866 shares vested on December  31,  1997  as  a
result of the merger of R&B and Falcon (see Note B).

   Unearned  compensation relating to the Company's stock  incentive  plans
is  shown  as a reduction of stockholders' equity.  Compensation recognized
under  the  stock incentive plans for the years ending December  31,  1997,
1996  and  1995 totaled approximately $17.8 million, $3.2 million  and  $.2
million, respectively.

Stock option transactions under the plans were as follows:

                             1997              1996               1995
                     ------------------ ------------------ ------------------
                               Weighted           Weighted           Weighted
                       Number   Average   Number   Average   Number   Average
                     of options  Price  of options  Price  of options  Price
                     ---------- ------- ---------- ------- ---------- -------
Outstanding at
 beginning of year   3,836,159  $  8.20  5,009,071  $ 6.52  3,646,594  $ 4.83
    Granted             40,000    29.00    607,000   12.12  1,925,600    9.46
    Exercised         (997,731)    5.04 (1,771,888)   4.79   (554,863)   5.63
    Forfeited           (8,496)    7.63     (8,024)   7.22     (8,260)   7.23
                     ---------           ---------          ---------
Outstanding at
 end of year         2,869,932     9.59  3,836,159    8.20  5,009,071    6.52
                     =========           =========          =========
Exercisable at
 end of year         2,377,433     9.95  2,776,413    7.84  3,213,271    4.75
Available for grant
 at end of year      5,415,772        -  1,338,694       -  2,450,144       -

   The  fair value of each grant since January 1, 1995 was estimated as  of
the  date  of the grant using the Black-Scholes option pricing model.   The
following  weighted-average assumptions were used for the  options  granted
pursuant  to the 1997 Stock Option Plan:  risk-free interest rate of  6.4%,
an expected life of 10 years and expected volatility of 50%.  The resulting
fair value of such options granted was $20.38.

   The  Company  accounts for these plans under APB Opinion No.  25,  under
which no compensation cost has been recognized.  Had compensation cost  for
these  plans  been determined consistent with SFAS 123, the  Company's  net
income and earnings per share would have been reduced to the following  pro
forma amounts (in millions except per share amounts):

                                       1997       1996        1995
                                      ------     ------     ------
     Net income (loss) applicable
       to common stockholders:
         As reported                  $ (6.2)     $ 103.1    $ 21.7
         Pro forma                    $(10.0)     $  98.4    $ 20.7
     Basic EPS:
         As reported                  $  (.04)    $    .70   $   .19
         Pro forma                    $  (.06)    $    .67   $   .18
     Diluted EPS:
         As reported                  $  (.04)    $    .67   $   .18
         Pro forma                    $  (.06)    $    .64   $   .17

   Because  the  SFAS  123 method of accounting has  not  been  applied  to
options  granted  prior  to  January  1,  1995,  the  resulting  pro  forma
compensation  cost  may not be representative of that  to  be  expected  in
future years.

(I)  RELATED PARTY TRANSACTIONS

   Drilling  had  rig management agreements with Transocean  Offshore  Inc.
(as  successor  to  Sonat Offshore Drilling Inc.), a major  shareholder  of
Drilling,  for  the operation and marketing of both of its drilling  units.
The  management agreement for one of Drilling's drilling units  expired  in
December  1995  and the other expired in October 1996, and a subsidiary  of
the  Company now manages both drilling units.  For each of the years ending
December  31,  1996  and  1995, Drilling paid to Transocean  Offshore  Inc.
approximately  $1.2  million  and  $2.6  million,  respectively,  for  such
management services.  Additionally, for the years ended December  31,  1996
and  1995,  Drilling  received from Transocean Offshore Inc.  approximately
$15.1  million  and  $11.8 million, respectively, pursuant  to  a  bareboat
charter agreement on one of the rigs.  At December 31, 1996, Drilling had a
net receivable from Transocean Offshore Inc. of $.8 million.

   The  former owners of a company acquired by the Company in 1992, who are
also  officers of Falcon, lease crewboats, tugboats and supply  barges  and
other  vessels to Falcon at a contracted bareboat rate of $100 per day  for
crewboats  and  tugboats  and $60 per day for other  vessels,  with  Falcon
responsible  for  drydocking,  painting  and  repairs.  The  former  owners
received  revenues of $.9 million for each of the years ended December  31,
1997, 1996 and 1995.

   A  director and stockholder of the Company  is a partner in a  law  firm
which  provided legal services to the Company and certain of its affiliated
entities.  Fees paid by the Company to this law firm were $.2 million,  $.6
million  and $1.1 million for the years ended December 31, 1997, 1996,  and
1995, respectively.

   A  director  of  the Company who performs financial consulting  services
for  the  Company  from  time  to time and is also  an  officer  of  Raptor
Exploration  Company,  Inc.,  a wholly-owned  subsidiary  of  the  Company,
received $.1 million for such services in the year ended December 31, 1995.
In addition, during 1996, Raptor paid such officer $.1 million for services
rendered in connection with the sale of certain assets of Raptor.

   In  June  1994, the Company entered into an agreement with  Eilert-Olsen
Investments,  Inc.  (Eilert-Olsen), to buy the equity interest  of  Eilert-
Olsen for a nominal purchase price.  In June of 1994, Eilert-Olsen acquired
three  barge  drilling  rigs  for  a cost  of  approximately  $2.8  million
consisting of cash of approximately $.9 million and the assumption of  debt
of  approximately  $1.9 million secured by the three barge  drilling  rigs.
The  Company advanced $.9 million to Eilert-Olsen in June of 1994  and  has
subsequently  advanced  approximately $.5  million,  $.5  million  and  $.8
million to pay principal and interest due on this debt for the years  ended
December  31,  1997,  1996 and 1995, respectively.  Due  to  the  Company's
affiliation with Eilert-Olsen, the financial statements of Eilert-Olsen and
the  option  to purchase Eilert-Olsen from inception have been consolidated
with the financial statements of the Company and, accordingly, the accounts
and  transactions between the Company and Eilert-Olsen have been eliminated
in consolidation.

   In  1995,  the  Company paid $.1 million in fees  to  a  privately  held
company controlled by a stockholder, for financial advisory services.

   In  1997, 1996, and 1995, the Company paid $.4 million, $.9 million, and
$.5  million  respectively,  to  Bantam Services,  Inc.  under  a  contract
pursuant  to which Bantam is to supply, at cost, groceries and supplies  to
be  used  on certain of the Company's rigs.  Bantam is entitled  under  the
contract  to  bill  third parties for meals and lodging supplied  to  their
personnel on such rigs.  In the absence of such contract, the Company would
be  entitled  to bill the third parties for the food and lodging  provided.
Bantam  is owned by an officer of Falcon Workover Company, Inc., a  wholly-
owned subsidiary of the Company.

(J)  MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION

   For  the  year  ended December 31, 1997, there were  no  customers  that
individually  accounted for 10.0% or more of the Company's total  operating
revenues.  For the year ended December 31, 1996, revenues from one customer
of  $70.6  million  accounted for 11.6% of the  Company's  total  operating
revenues.   For  the  year  ended December  31,  1995,  revenues  from  two
customers  of  $42.6 million and $39.3 million accounted  for  10.9  %  and
10.1%, respectively, of the Company's total operating revenues.

   Geographic  information  about the Company's operations  for  the  three
years ended December 31, 1997 is as follows (in millions):

                                          1997        1996      1995
                                       ---------   ---------   -------
       Operating revenues:
        United States                  $   460.3   $   276.7   $ 170.7
        Southeast Asia                      82.4        59.0      63.6
        Mediterranean-
            Middle East                      7.9         8.7      31.4
        Europe                             247.3       146.9      63.6
        Australia                           23.4        39.6      20.9
        West Africa                         69.9        25.5       8.5
        South America                       50.9        52.2      31.3
        Other Foreign                          -         1.0        .3
        Corporate                              -           -         -
                                       ---------   ---------   -------
          Total                        $   942.1   $   609.6   $ 390.3
                                       =========   =========   =======
       Operating profit:(1)
        United States                  $   166.1   $    69.1   $  21.6
        Southeast Asia                      40.9        23.6      22.4
        Mediterranean-
           Middle East                       2.2         2.4      10.7
        Europe                             143.4        73.9      16.2
        Australia                            5.2        11.4       (.3)
        West Africa                         25.5         8.9       2.7
        South America                        2.3        14.0       9.8
        Other Foreign                         -          3.0        .2
        Corporate                          (28.6)      (26.6)    (19.1)
                                       ---------   ---------   -------
           Total                       $   357.0   $   179.7   $  64.2
                                       =========   =========   =======
       Identifiable assets:
        United States                  $   823.8   $   458.5   $ 316.4
        Southeast Asia                      92.7       133.4     163.1
        Mediterranean-
           Middle East                      52.2        14.0      61.0
        Europe                             535.2       402.2     258.9
        Australia                           21.9        47.9       3.9
        West Africa                        190.3        47.0      14.4
        South America                      175.1       234.6      77.2
        Other Foreign                          -        76.2        .1
        Corporate                           37.2        42.0      51.8
                                       ---------   ---------   -------
           Total                       $ 1,928.4   $ 1,455.8   $ 946.8
                                       =========   =========   =======

     (1)   Operating  profit represents operating revenues  less  operating
       expenses, depreciation,  general and administrative and other, net.

(K)  NET INCOME (LOSS) PER COMMON SHARE

   Basic  net  income per common share is computed by dividing net  income,
after  deducting  the  preferred stock dividend, by  the  weighted  average
number  of common shares outstanding during the period. Diluted net  income
per  common  share  is  the  same as basic  and  assumes  the  exercise  of
outstanding stock options as computed using the treasury stock  method  and
the  conversion of preferred stock if dilutive, and is approximately  equal
to  the combined primary earnings per share previously reported by R&B  and
Falcon adjusted for merger related adjustments.

   The   following   table  reconciles  weighted  average   common   shares
outstanding  from basic to diluted for the years ended December  31,  1997,
1996 and 1995 as follows (in millions):

                                            1997     1996     1995
                                           -----    -----    -----
   Weighted average common shares
    outstanding - basic                    164.1    147.4    115.7
     Outstanding stock options               2.1      2.7      1.2
     Convertible preferred stock               -      7.6        -
     Outstanding stock warrants                -        -      4.9
                                           -----    -----    -----
   Weighted average common shares
    outstanding - diluted                  166.2    157.7    121.8
                                           =====    =====    =====

(L)  DISCONTINUED OPERATIONS

   The  Company,  primarily through its wholly owned subsidiary  Reading  &
Bates Development Co. ("Devco") and to an insignificant extent through  its
wholly  owned subsidiary Raptor Exploration Company, Inc., engages  in  oil
and gas exploration activities.  Devco engages primarily in the acquisition
of  working interests in offshore oil and gas properties pursuant to  which
it  shares  in reservoir and oil and gas price risks and thus  profits  and
losses  from such properties.  In March 1998, the Company decided to divest
its  oil  and gas segment, and expects such divestiture to occur  by  March
1999.   The  Company's  oil and gas segment has been  accounted  for  as  a
discontinued operation.

   Oil  and  gas assets held for sale at December 31, 1997 which  consisted
primarily  of  oil  and  gas  properties were  $81.2  million  and  related
liabilities  totaled $87.0 million, including a $78.8 million  reserve  for
losses  on ultimate disposal and operations until disposal.  Net assets  of
discontinued operations at December 31, 1996 consisted primarily of oil and
gas  properties.   There were no revenues from the discontinued  operations
during the years ended December 31, 1997, 1996, and 1995.

   The  successful efforts method of accounting was used for  oil  and  gas
exploration  and  production activities.  Under  this  method,  acquisition
costs  for  proved and unproved properties were capitalized when  incurred.
Exploration costs, including geological and geophysical costs and costs  of
carrying  and  retaining unproved properties, were charged  to  expense  as
incurred.  The costs of drilling exploratory wells were capitalized pending
determination  of  whether each well had discovered  proved  reserves.   If
proved  reserves were not discovered, such drilling costs were  charged  to
expense.  Costs  incurred to drill and equip development  wells,  including
unsuccessful development wells, were capitalized.

   In  1997,  R&B  approved, in principle, an option plan for Devco  stock.
This plan was rescinded in November 1997 prior to any grants being made.

(M)  QUARTER FINANCIAL DATA (UNAUDITED)

   Summarized  quarterly  financial data for the two years  ended  December
31, 1997, are as follows (in millions except for per share amounts):

                                                   Quarter
                             ------------------------------------------------
                               First    Second    Third     Fourth    Total
                             --------  --------  --------  --------  --------
1997:
----
Operating revenues           $ 203.1   $ 222.2   $ 247.8   $ 269.0   $ 942.1
Gross income (1)             $  80.8   $ 100.9   $ 115.7   $ 111.5   $ 408.9
Income (loss) from
 continuing operations (2)   $  44.7   $  60.7   $  77.2   $ (26.6)  $ 156.0
Loss from discontinued
  operations                 $  (5.8)  $ (16.7)  $ (42.2)  $ (97.5)  $(162.2)
Net income (loss)            $  38.9   $  44.0   $  35.0   $(124.1)  $  (6.2)
Net income (loss) per
 common share:
  Basic:
    Continuing operations    $    .27  $    .37  $    .47  $   (.16) $    .95
    Discontinued operations      (.03)     (.10)     (.26)     (.59)     (.9)
                             --------  --------  --------  --------  --------
      Net income (loss)      $    .24  $    .27  $    .21  $   (.75) $   (.04)
                             ========  ========  ========  ========  ========
  Diluted:
    Continuing operations    $    .27  $    .37  $    .47  $   (.16) $    .94
    Discontinued operations      (.04)     (.10)     (.25)     (.59)     (.98)
                             --------  --------  --------  --------  --------
      Net income (loss)      $    .23  $    .27  $    .22  $   (.75) $   (.04)
                             ========  ========  ========  ========  ========
1996:
----
Operating revenues           $ 117.3   $ 135.7   $ 167.3   $ 189.3   $ 609.6
Gross income (1)             $  34.2   $  43.2   $  61.0   $  78.3   $ 216.7
Income from continuing
 operations                  $  14.5   $  18.3   $  33.4   $  40.2   $ 106.4
Income (loss) from
 discontinued operations     $   (.1)  $    .1   $    .2   $    .1   $    .3
Net income                   $  14.4   $  18.4   $  33.6   $  40.3   $ 106.7
Net income per common
 share:
  Basic:
    Continuing operations    $    .09  $    .12  $    .22  $    .26  $    .70
    Discontinued operations         -         -         -         -         -
                             --------  --------  --------  --------  --------
      Net income             $    .09  $    .12  $    .22  $    .26  $    .70
                             ========  ========  ========  ========  ========
  Diluted:
    Continuing operations    $    .09  $    .12  $    .21  $    .25  $    .67
    Discontinued operations         -         -         -         -         -
                             --------  --------  --------  --------  --------
      Net income             $    .09  $    .12  $    .21  $    .25  $    .67
                             ========  ========  ========  ========  ========
--------------------------
(1)  Gross  income  represents operating revenues  less  operating  expenses,
     depreciation, and other, net.
(2)  The fourth quarter of 1997 includes merger expenses of $66.4 million.

(N)  SUBSEQUENT EVENTS

    On March 23, 1998, the Company offered to redeem the 8 7/8% Notes, the  9
3/4%  Notes and the 12 1/2% Notes subject to (a) the execution by the trustee
of  each  of these notes of an amended indenture which modifies the terms  of
the existing indenture including removal of certain restrictive covenants and
events  of default, and (b) receipt by the Company of proceeds of an issuance
of  debt  securities  in an amount sufficient to pay the  aggregate  cost  of
redeeming these notes and all related costs and expenses of the tender offer.

   Subsequent to December 31, 1997, the Company purchased the following:  (1)
outstanding shares of common stock of a company which owns six workover  rigs
in  exchange for 204,900 shares of the Company's common stock.  In connection
with  this  purchase, the Company is contingently obligated to issue  (a)  an
additional  36,494  shares of its common stock based upon a  working  capital
adjustment,  as  defined and (b) an additional 59,581 shares  of  its  common
stock  based upon the operating results of the Company's workover operations,
as  defined.  (2) Eight tugs and five ocean going barges in exchange for cash
of  $1.5  million  and  517,184 shares of the  Company's  common  stock.   In
addition,  the  Company  is contingently obligated  to  issue  an  additional
172,250  shares  of its common stock based on certain potential  adjustments.
(3) Eight tugs in exchange for cash of approximately $8.9 million.

Item  9.   Changes in and Disagreements with Accountants on Accounting  and
           Financial Disclosure

           Not applicable.

                               PART III

The  information  called for by Part III of Form 10-K  is  incorporated  by
reference  from  the Registrant's Proxy Statement relating  to  its  annual
meeting of Stockholders to be held May 19, 1998, which will be filed by the
Registrant  with the Securities and Exchange Commission no later  than  120
days after the close of the fiscal year.

                                PART IV

Item 14.  Exhibits, Financial Statements and Reports on Form 8-K

  (a)Financial Statements and Exhibits

    1.Financial Statements:

      Report of Independent Public Accountants
      Consolidated Balance Sheet as of December 31, 1997 and 1996
      Consolidated  Statement of Operations for the  years  ended  December
        31, 1997, 1996 and 1995
      Consolidated  Statement of Cash Flows for the  years  ended  December
        31, 1997, 1996 and 1995
      Consolidated  Statement of Stockholders' Equity for the  years  ended
        December 31, 1997, 1996 and 1995
      Notes to Consolidated Financial Statements

    2.   Exhibits:

      2.1     -  Agreement  and Plan of Merger, dated July 10, 1997,  among
                 R&B   Falcon,  FDC  Acquisition  Corp.,  Reading  &  Bates
                 Acquisition Corp., Falcon and R&B.  (Filed as Exhibit  2.1
                 to  R&B Falcon's Registration Statement on Form S-4  dated
                 November 20, 1997 and incorporated herein by reference.)

      3.1     -  Amended and Restated Certificate of Incorporation  of  R&B
                 Falcon.

      3.2     -  Amended and Restated Bylaws of R&B Falcon.

      4.1     -  Form of R&B Falcon's Common Stock Certificate.

      4.2     -  Rights  Agreement  dated as of December 23,  1997  between
                 R&B Falcon and American Stock Transfer and Trust Company.

      4.3     -  Indenture   relating  to  R&B's  8%  Senior   Subordinated
                 Convertible Debentures due  1998  dated as of  August  29,
                 1989,  between R&B and IBJ Schroder Bank & Trust  Company,
                 as  Trustee.  (Filed as Exhibit 4.1 to R&B's Annual Report
                 on   Form  10-K  for  1989  and  incorporated  herein   by
                 reference.)

      4.4     -  Form   of   R&B's   registered  8%   Senior   Subordinated
                 Convertible  Debentures due 1998.  (Filed as  Exhibit  4.2
                 to   R&B's  Registration  No.  33-28580  and  incorporated
                 herein by reference.)

      4.5     -  Form  of  R&B's bearer 8% Senior Subordinated  Convertible
                 Debentures  due  1998.   (Filed as Exhibit  4.3  to  R&B's
                 Registration  No.  33-28580  and  incorporated  herein  by
                 reference.)

      4.6     -  First  Supplemental  Indenture dated as  of  December  23,
                 1997  among the Company, R&B and IBJ Schroder Bank & Trust
                 Company.

      4.7     -  Indenture  dated  as of January 15, 1994,  between  Falcon
                 and Texas Commerce Bank National Association, including  a
                 form   of   Note.  (Filed  as  an  exhibit   to   Falcon's
                 Registration  Statement on Form S-4, filed  on  April  29,
                 1994,  Registration  No. 33-78369 and incorporated  herein
                 by reference.)

      4.8     -  Supplemental Indenture dated as of June 3, 1994,  pursuant
                 to   which   Falcon  Workover  Company,  Inc.,  became   a
                 Guarantor.  (Filed as an exhibit to Falcon's  Registration
                 Statement on Form S-4, Amendment No.1, filed on  June  30,
                 1994,  Registration  No. 33-78360 and incorporated  herein
                 by reference.)

      4.9     -  Supplemental  Indenture  dated  as  of  June   28,   1994,
                 pursuant  to  which Raptor Exploration Company,  Inc.  and
                 FALRIG  Offshore (USA), L.P., and FALRIG Offshore Partners
                 became  Guarantors.  (Filed  as  an  exhibit  to  Falcon's
                 Registration Statement on Form S-4, Amendment No.1,  filed
                 on   June   30,   1994,  Registration  No.  33-78360   and
                 incorporated herein by reference.)

      4.10    -  Supplemental  Indenture dated as  of  December  30,  1994,
                 pursuant  to  which Falcon Inland, Inc.,  Falcon  Services
                 Company,  Inc.  and  FALRIG  de  Venezuela,  Inc.   became
                 Guarantors.  (Filed  as  an  exhibit  to  Falcon's  Annual
                 Report  on form 10-K for the year ended December 31,  1994
                 and incorporated herein by reference.)

       4.11   -  Floating Rate Senior Note Purchase Agreement, dated as  of
                 February   23,   1994,   by   and   between   Falcon   and
                 Crescent/Mach I partners, L.P., including a form of  Note.
                 (Filed  as  an exhibit to Falcon's Registration  Statement
                 of  Form  S-1,  Amendment No. 3, filed on July  19,  1995,
                 Registration  No.  33-84582  and  incorporated  herein  by
                 reference.)

      4.12    -  Joinder  Agreement dated as of June 3, 1994,  pursuant  to
                 which  Falcon  Workover Company, Inc. became a  Guarantor.
                 (Filed  as  an exhibit to Falcon's Registration  Statement
                 of  Form  S-1,  Amendment No. 3, filed on July  19,  1995,
                 Registration  No.  33-84582  and  incorporated  herein  by
                 reference.)

      4.13    -  Joinder  Agreement dated as of June 28, 1994, pursuant  to
                 which  Raptor  Exploration Company, Inc., FALRIG  Offshore
                 (USA),   L.P.,   and  FALRIG  Offshore   partners   became
                 Guaranctors.   (Filed   as   an   exhibit   to    Falcon's
                 Registration  Statement  of Form  S-1,  Amendment  No.  3,
                 filed  on  July  19, 1995, Registration No.  33-84582  and
                 incorporated herein by reference.)

      4.14    -  Joinder  Agreement dated as of December 30, 1994, pursuant
                 to  which  Falcon  Inland, Inc., Falcon Services  Company,
                 Inc.  and  FALRIG  de  Venezuela, Inc. became  Guarantors.
                 (Filed  as  an exhibit to Falcon's Registration  Statement
                 of  Form  S-1,  Amendment No. 3, filed on July  19,  1995,
                 Registration  No.  33-84582  and  incorporated  herein  by
                 reference.)

      4.15    -  Joinder  Agreement dated as of March 1, 1996, pursuant  to
                 which  Falcon Atlantic,  Ltd., Falcon Drilling do  Brasil,
                 Ltda.,   Falcon   Drilling   de   Venezuela,   Inc.    and
                 perforaciones   FALRIG   de   Venezuela,    C.A.    became
                 Guarantors.  (Filed  as  an  exhibit  to  Falcon's  Annual
                 Report  on Form 10-K for the year ended December 31,  1995
                 and incorporated herein by reference.)

      4.16    -  Indenture  dated as of March 15, 1995, between Falcon  and
                 Texas  Commerce  Bank  National Association,  including  a
                 form   of   Note.  (Filed  as  an  exhibit   to   Falcon's
                 Registration  Statement on Form S-4, filed  on  March  24,
                 1995,  Registration  No. 33-90582 and incorporated  herein
                 by reference.)

      4.17    -  Indenture  dated as of March 1, 1996, between  Falcon  and
                 Bank  One, Texas, N. A., including a form of Note.  (Filed
                 as  an exhibit to Falcon's Registration Statement on  Form
                 S-4,  filed  on March 8, 1996, Registration  No.  333-2114
                 and incorporated herein by reference.)

                 Falcon  hereby  agrees to furnish  to  the Commission upon
                 its request any instrument defining the rights of  holders
                 of   long-term   debt   of  Falcon  and  its  consolidated
                 subsidiaries  and  for  any  of its unconsolidated subsid-
                 iaries for which financial statements are required  to  be
                 filed with respect to long-term  debt not being registered
                 which does not exceed  10%  of  the total assets of Falcon
                 and its subsidiaries  on  a  consolidated basis.

      9.1     -  Voting  Trust  Agreement dated as of  November  12,  1991,
                 between  Lydia  Richardson and  Linda  Webster  as  common
                 stockholders  and  Steven A. Webster  as  voting  trustee.
                 (Filed  as  an exhibit to Falcon's Registration  Statement
                 on Form S-4, filed on April 29, 1994, Registration No. 33-
                 78369 and incorporated herein by reference.)

      9.2     -  Amendment  to Voting Trust Agreement dated as of  November
                 1,  1995.  (Filed as an exhibit to Falcon's Annual  Report
                 on  Form  10-K  for the year ended December 31,  1995  and
                 incorporated herein by reference.)

      9.3     -  Voting  Trust  Agreement dated as of  November  21,  1989,
                 between  Lydia  Richardson and  Linda  Webster  as  common
                 stockholders  and  Steven A. Webster  as  voting  trustee.
                 (Filed  as  an exhibit to Falcon's Registration  Statement
                 on  Form  S-1,  Amendment No.2, filed  on  July  6,  1995,
                 Registration  No.  33-84582  and  incorporated  herein  by
                 reference.)

      9.4     -  Voting  Trust Agreement dated as of May 30, 1990,  between
                 Lydia  Richardson and Linda Webster as common stockholders
                 and  Steven  A. Webster as voting trustee.  (Filed  as  an
                 exhibit  to Falcon's Registration Statement on  Form  S-1,
                 Amendment  No.2,  filed on July 6, 1995, Registration  No.
                 33-84582 and incorporated herein by reference.)

      10.1*   -  Reading  &  Bates  1990  Stock  Option  Plan.   (Filed  as
                 Appendix  A to R&B's Proxy Statement dated April 26,  1993
                 and incorporated herein by reference.)

      10.2*   -  1992   Long-Term  Incentive  Plan  of  Reading   &   Bates
                 Corporation.    (Filed  as  Exhibit  B  to   R&B's   Proxy
                 Statement dated April 27, 1992 and incorporated herein  by
                 reference.)

      10.3*   -  1995   Long-Term  Incentive  Plan  of  Reading   &   Bates
                 Corporation   (Filed  as  Exhibit  99.A  to  R&B's   Proxy
                 Statement dated March 29, 1995 and incorporated herein  by
                 reference.)

      10.4*   -  1995  Director  Stock  Option  Plan  of  Reading  &  Bates
                 Corporation   (Filed  as  Exhibit  99.B  to  R&B's   Proxy
                 Statement dated March 29, 1995 and incorporated herein  by
                 reference.)

      10.5*   -  Director Stock Option Agreement dated as of September  14,
                 1993  between  R&B  and  C.  A.  Donabedian.    (Filed  as
                 Exhibit  10.15  to R&B's Annual Report on  Form  10-K  for
                 1993 and incorporated herein by reference.)

      10.6*   -  Surrender  Letter dated as of February 7, 1995  by  C.  A.
                 Donabedian.     (Filed as Exhibit 10.33  to  R&B's  Annual
                 Report  on  Form 10-K for 1995 and incorporated herein  by
                 reference.)

      10.7*   -  Director Stock Option Agreement dated as of September  14,
                 1993  between  R&B and J. W. McLean.   (Filed  as  Exhibit
                 10.16  to  R&B's Annual Report on Form 10-K for  1993  and
                 incorporated herein by reference.)

      10.8*   -  Surrender  Letter dated as of February 7, 1995  by  J.  W.
                 McLean.    (Filed as Exhibit 10.35 to R&B's Annual  Report
                 on   Form  10-K  for  1995  and  incorporated  herein   by
                 reference.)

      10.9*   -  Director Stock Option Agreement dated as of September  14,
                 1993  between  R&B  and  R.  L.  Sandmeyer.     (Filed  as
                 Exhibit  10.17  to R&B's Annual Report on  Form  10-K  for
                 1993 and incorporated herein by reference.)

      10.10*  -  Surrender  Letter dated as of February 7, 1995  by  R.  L.
                 Sandmeyer.   (Filed  as  Exhibit  10.37  to  R&B's  Annual
                 Report  on  Form 10-K for 1995 and incorporated herein  by
                 reference.)

      10.11*  -  Director Stock Option Agreement dated as of September  14,
                 1993  between R&B and S. A. Webster.   (Filed  as  Exhibit
                 10.18  to  R&B's Annual Report on Form 10-K for  1993  and
                 incorporated herein by reference.)

      10.12*  -  Surrender  Letter dated as of February 7, 1995  by  S.  A.
                 Webster.   (Filed as Exhibit 10.39 to R&B's Annual  Report
                 on   Form  10-K  for  1995  and  incorporated  herein   by
                 reference.)

      10.13*  -  Stock  Option  Agreement  dated as  of  February  7,  1995
                 between  A.L.  Chavkin and R&B.   (Filed as Exhibit  10.40
                 to   R&B's  Annual  Report  on  Form  10-K  for  1995  and
                 incorporated herein by reference.)

      10.14*  -  Stock  Option  Agreement  dated as  of  February  7,  1995
                 between  Willem Cordia and R&B.   (Filed as Exhibit  10.41
                 to   R&B's  Annual  Report  on  Form  10-K  for  1995  and
                 incorporated herein by reference.)

      10.15*  -  Stock  Option  Agreement  dated as  of  February  7,  1995
                 between  C.A.  Donabedian and  R&B.    (Filed  as  Exhibit
                 10.42  to  R&B's Annual Report on Form 10-K for  1995  and
                 incorporated herein by reference.)

      10.16*  -  Stock  Option  Agreement  dated as  of  February  7,  1995
                 between Ted Kalborg and R&B.   (Filed as Exhibit 10.43  to
                 R&B's   Annual   Report  on  Form  10-K   for   1995   and
                 incorporated herein by reference.)

      10.17*  -  Stock  Option  Agreement  dated as  of  February  7,  1995
                 between J.W. McLean and R&B.   (Filed as Exhibit 10.44  to
                 R&B's   Annual   Report  on  Form  10-K   for   1995   and
                 incorporated herein by reference.)

      10.18*  -  Stock  Option  Agreement  dated as  of  February  7,  1995
                 between R.L. Sandmeyer and R&B.   (Filed as Exhibit  10.45
                 to   R&B's  Annual  Report  on  Form  10-K  for  1995  and
                 incorporated herein by reference.)

      10.19*  -  Stock  Option  Agreement  dated as  of  February  7,  1995
                 between  S.A.  Webster and R&B.   (Filed as Exhibit  10.46
                 to   R&B's  Annual  Report  on  Form  10-K  for  1995  and
                 incorporated herein by reference.)

      10.20*  -  Stock  Option Agreement dated as of April 19, 1995 between
                 M.A.E.  Lacqueur  and R&B.   (Filed as  Exhibit  10.47  to
                 R&B's   Annual   Report  on  Form  10-K   for   1995   and
                 incorporated herein by reference.)

      10.21*  -  Stock  Option Agreement with respect to the 1995 Long-Term
                 Incentive  Plan  dated February 6, 1996  between  R&B  and
                 Paul  B.  Loyd,  Jr.   (Filed as Exhibit  10.48  to  R&B's
                 Annual  Report  on  Form  10-K for 1995  and  incorporated
                 herein by reference.)

      10.22*  -  Amendment  No.  1, dated as of December 3, 1996  to  Stock
                 Option  Agreement  with  respect  to  the  1995  Long-Term
                 Incentive  Plan between R&B and Paul B. Loyd, Jr.   (Filed
                 as  Exhibit 10.22 to R&B's Annual Report on Form 10-K  for
                 1996 and incorporated herein by reference.)

      10.23*  -  Stock  Option Agreement with respect to the 1992 Long-Term
                 Incentive  Plan  dated February 6, 1996  between  R&B  and
                 Paul  B.  Loyd,  Jr.   (Filed as Exhibit  10.49  to  R&B's
                 Annual  Report  on  Form  10-K for 1995  and  incorporated
                 herein by reference.)

      10.24*  -  Amendment  No.  1, dated as of December 3, 1996  to  Stock
                 Option  Agreement  with  respect  to  the  1992  Long-Term
                 Incentive  Plan between R&B and Paul B. Loyd, Jr.   (Filed
                 as  Exhibit 10.24 to R&B's Annual Report on Form 10-K  for
                 1996 and incorporated herein by reference.)

      10.25*  -  Employment Agreement dated as of November 1, 1991  between
                 R&B  and L. E. Voss, Jr.  (Filed as Exhibit 10.34 to R&B's
                 Annual  Report  on  Form  10-K for 1991  and  incorporated
                 herein by reference.)

      10.26*  -  Amendment  No.  1, dated as of October  1,  1993,  to  the
                 Employment Agreement dated as of November 1, 1991  between
                 R&B  and  L.  E.  Voss, Jr.   (Filed as Exhibit  10.22  to
                 R&B's   Annual   Report  on  Form  10-K   for   1993   and
                 incorporated herein by reference.)

      10.27*  -  Employment Agreement dated as of November 1, 1991  between
                 R&B  and  T. W. Nagle.  (Filed as Exhibit 10.35  to  R&B's
                 Annual  Report  on  Form  10-K for 1991  and  incorporated
                 herein by reference.)

      10.28*  -  Amendment  No.  1, dated as of October  1,  1993,  to  the
                 Employment Agreement dated as of November 1, 1991  between
                 R&B  and  T. W. Nagle.   (Filed as Exhibit 10.24 to  R&B's
                 Annual  Report  on  Form  10-K for 1993  and  incorporated
                 herein by reference.)

      10.29*  -  Employment Agreement dated as of November 1, 1991  between
                 R&B  and  C. R. Ofner.  (Filed as Exhibit 10.36  to  R&B's
                 Annual  Report  on  Form  10-K for 1991  and  incorporated
                 herein by reference.)

      10.30*  -  Amendment  No.  1, dated as of October  1,  1993,  to  the
                 Employment Agreement dated as of November 1, 1991  between
                 R&B  and  C. R. Ofner.   (Filed as Exhibit 10.26 to  R&B's
                 Annual  Report  on  Form  10-K for 1993  and  incorporated
                 herein by reference.)

      10.31*  -  Employment Agreement dated as of November 1, 1991  between
                 R&B  and D. L. McIntire.  (Filed as Exhibit 10.37 to R&B's
                 Annual  Report  on  Form  10-K for 1991  and  incorporated
                 herein by reference.)

      10.32*  -  Amendment  No.  1, dated as of October  1,  1993,  to  the
                 Employment Agreement dated as of November 1, 1991  between
                 R&B  and  D.  L.  McIntire.   (Filed as Exhibit  10.28  to
                 R&B's   Annual   Report  on  Form  10-K   for   1993   and
                 incorporated herein by reference.)

      10.33*  -  Employment Agreement dated as of November 1, 1991  between
                 R&B  and  W. K. Hillin.  (Filed as Exhibit 10.38 to  R&B's
                 Annual  Report  on  Form  10-K for 1991  and  incorporated
                 herein by reference.)

      10.34*  -  Amendment  No.  1, dated as of October  1,  1993,  to  the
                 Employment Agreement dated as of November 1, 1991  between
                 R&B  and W. K. Hillin.   (Filed as Exhibit 10.30 to  R&B's
                 Annual  Report  on  Form  10-K for 1993  and  incorporated
                 herein by reference.)

      10.35*  -  Employment  Agreement dated as of January 1, 1992  between
                 R&B  and  Paul  B. Loyd, Jr.  (Filed as Exhibit  10.42  to
                 Registration  No.  33-51120  and  incorporated  herein  by
                 reference.)

      10.36*  -  Amendment  No.  1, dated as of October  1,  1993,  to  the
                 Employment  Agreement dated as of January 1, 1992  between
                 R&B  and  Paul B. Loyd, Jr.   (Filed as Exhibit  10.32  to
                 R&B's   Annual   Report  on  Form  10-K   for   1993   and
                 incorporated herein by reference.)

      10.37*  -  Restricted  Stock Award Agreement dated December  5,  1995
                 under  the  1995 Long-Term Incentive Plan  between  L.  E.
                 Voss,  Jr.  and  R&B.  (Filed as Exhibit  10.41  to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.38*  -  Restricted  Stock Award Agreement dated December  5,  1995
                 under  the  1995 Long-Term Incentive Plan  between  T.  W.
                 Nagle  and  R&B.  (Filed as Exhibit 10.42 to R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.39*  -  Restricted  Stock Award Agreement dated December  5,  1995
                 under  the  1995 Long-Term Incentive Plan  between  C.  R.
                 Ofner  and  R&B.  (Filed as Exhibit 10.43 to R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.40*  -  Restricted  Stock Award Agreement dated December  5,  1995
                 under  the  1995 Long-Term Incentive Plan  between  D.  L.
                 McIntire  and  R&B.   (Filed as  Exhibit  10.44  to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.41*  -  Restricted  Stock Award Agreement dated December  5,  1995
                 under  the  1995 Long-Term Incentive Plan  between  W.  K.
                 Hillin  and R&B.  (Filed as Exhibit 10.45 to R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.42*  -  1996  Director Restricted Stock Award Plan  of  Reading  &
                 Bates  Corporation. (Filed as Exhibit 99.B to R&B's  Proxy
                 Statement dated March 28, 1997 and incorporated herein  by
                 reference.)

      10.43*  -  Restricted  Stock Award Agreement dated December  3,  1996
                 under  the  1996  Director  Restricted  Stock  Award  Plan
                 between  A.  L. Chavkin and R&B.  (Filed as Exhibit  10.46
                 to   R&B's  Annual  Report  on  Form  10-K  for  1996  and
                 incorporated herein by reference.)

      10.44*  -  Restricted  Stock Award Agreement dated December  3,  1996
                 under  the  1996  Director  Restricted  Stock  Award  Plan
                 between  C.  A.  Donabedian and R&B.   (Filed  as  Exhibit
                 10.47  to  R&B's Annual Report on Form 10-K for  1996  and
                 incorporated herein by reference.)

      10.45*  -  Restricted  Stock Award Agreement dated December  3,  1996
                 under  the  1996  Director  Restricted  Stock  Award  Plan
                 between  M.  A.  E.  Laqueur and R&B.  (Filed  as  Exhibit
                 10.49  to  R&B's Annual Report on Form 10-K for  1996  and
                 incorporated herein by reference.)

      10.46*  -  Restricted  Stock Award Agreement dated December  3,  1996
                 under  the  1996  Director  Restricted  Stock  Award  Plan
                 between R. L. Sandmeyer and R&B.  (Filed as Exhibit  10.51
                 to   R&B's  Annual  Report  on  Form  10-K  for  1996  and
                 incorporated herein by reference.)

      10.47*  -  Restricted  Stock Award Agreement dated December  3,  1996
                 under  the 1995 Long-Term Incentive Plan between  Paul  B.
                 Loyd,  Jr.  and  R&B.  (Filed as Exhibit  10.52  to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.48*  -  Stock  Option Agreement dated December 3, 1996  under  the
                 1995  Long-Term  Incentive Plan between T.  W.  Nagle  and
                 R&B.   (Filed as Exhibit 10.53 to R&B's Annual  Report  on
                 Form 10-K for 1996 and incorporated herein by reference.)

      10.49*  -  Restricted  Stock Award Agreement dated December  3,  1996
                 under  the  1995 Long-Term Incentive Plan  between  C.  R.
                 Ofner  and  R&B.  (Filed as Exhibit 10.54 to R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.50*  -  Restricted  Stock Award Agreement dated December  3,  1996
                 under  the  1995 Long-Term Incentive Plan  between  D.  L.
                 McIntire  and  R&B.   (Filed as  Exhibit  10.55  to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.51*  -  Restricted  Stock Award Agreement dated December  3,  1996
                 under  the  1995 Long-Term Incentive Plan  between  W.  K.
                 Hillin  and R&B.  (Filed as Exhibit 10.56 to R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.52*  -  1997   Long-Term  Incentive  Plan  of  Reading   &   Bates
                 Corporation.   (Filed as Exhibit 99.A to  R  &  B's  Proxy
                 Statement dated March 18, 1997 and incorporated herein  by
                 reference.)

      10.53*  -  Stock  Option Agreement dated as of April 24, 1997 between
                 R&B   and  P.B.  Loyd,  Jr.  under  R&B's  1995  Long-Term
                 Incentive Plan.

      10.54*  -  Stock  Option Agreement dated as of April 24, 1997 between
                 R&B  and  T. W. Nagle under R&B's 1995 Long-Term Incentive
                 Plan.

      10.55*  -  Stock  Option Agreement dated as of April 24, 1997 between
                 R&B  and  C. R. Ofner under R&B's 1995 Long-Term Incentive
                 Plan.

      10.56*  -  Stock  Option Agreement dated as of April 24, 1997 between
                 R&B   and   D.L.  McIntire  under  R&B's  1995   Long-Term
                 Incentive Plan.

      10.57*  -  Stock  Option Agreement dated as of April 24, 1997 between
                 R&B  and W. K. Hillin under R&B's 1995 Long-Term Incentive
                 Plan.

      10.58*  -  Stock  Option Agreement dated as of April 24, 1997 between
                 R&B  and  W.K. Hillin under R&B's 1997 Long-Term Incentive
                 Plan.

      10.59*  -  Amended  and Restated Stock Option Agreement dated  as  of
                 February 16, 1995 between Falcon and Robert F. Fulton.

      10.60*  -  Amended  and Restated Stock Option Agreement dated  as  of
                 January 23, 1996 between Falcon and Steven A. Webster.

      10.61*  -  Stock  Option Agreement dated as of April 15, 1996 between
                 Falcon and Bernie W. Stewart.

      10.62*  -  Rescission Agreement dated August 5, 1997 between R&B  and
                 P.B. Loyd, Jr.

      10.63*  -  Rescission Agreement dated August 5, 1997 between R&B  and
                 T. W. Nagle.

      10.64*  -  Rescission Agreement dated August 5, 1997 between R&B  and
                 C. R. Ofner.

      10.65*  -  Rescission Agreement dated August 5, 1997 between R&B  and
                 D. L. McIntire.

      10.66*  -  Rescission Agreement dated August 5, 1997 between R&B  and
                 W. K. Hillin.

      10.67*  -  Affiliate  Agreement effective December 31,  1997  between
                 R&B and P. B. Loyd, Jr.

      10.68*  -  Affiliate  Agreement effective December 31,  1997  between
                 R&B and A. L. Chavkin.

      10.69*  -  Affiliate  Agreement effective December 31,  1997  between
                 R&B and C. A. Donabedian.

      10.70*  -  Affiliate  Agreement effective December 31,  1997  between
                 R&B and M. A. E. Laqueur.

      10.71*  -  Affiliate  Agreement effective December 31,  1997  between
                 R&B and R. L. Sandmeyer.

      10.72*  -  Affiliate  Agreement effective December 31,  1997  between
                 R&B and T. W. Nagle.

      10.73*  -  Affiliate  Agreement effective December 31,  1997  between
                 R&B and C. R. Ofner.

      10.74*  -  Affiliate  Agreement effective December 31,  1997  between
                 R&B and D. L. McIntire.

      10.75*  -  Affiliate  Agreement effective December 31,  1997  between
                 R&B and W. K. Hillin.

      10.76*  -  Affiliate  Agreement  effective December 31, 1997  between
                 Falcon and Steven A. Webster.

      10.77*  -  Affiliate  Agreement  effective  December 31, 1997 between
                 Falcon and Bernie W. Stewart.

      10.78*  -  Affiliate  Agreement  effective  December 31, 1997 between
                 Falcon and Robert F. Fulton.

      10.79*  -  Affiliate  Agreement  effective  December 31, 1997 between
                 Falcon and Leighton E. Moss.

      10.80*  -  Affiliate  Agreement  effective  December 31, 1997 between
                 Falcon and Rodney W. Meisetschlaeger.

      10.81*  -  Affiliate  Agreement  effective  December 31, 1997 between
                 Falcon and Steven R. Meheen.

      10.82*  -  Affiliate  Agreement  effective  December 31, 1997 between
                 Falcon and Douglas A.P. Hamilton.

      10.83*  -  Affiliate  Agreement  effective  December 31, 1997 between
                 Falcon and Michael Porter.

      10.84*  -  Affiliate  Agreement  effective  December 31, 1997 between
                 Falcon and William R. Ziegler.

      10.85*  -  Affiliate  Agreement effective December 31,  1997  between
                 Falcon and Don P. Rodney.

      10.86   -  Reading  & Bates Stock Option Agreement dated as  of  July
                 10,  1997  between R&B and Falcon.  (Filed as Annex  E  to
                 R&B  Falcon's  Registration Statement on  Form  S-4  dated
                 November 20, 1997 and incorporated herein by reference.)

      10.87   -  Falcon  Stock Option Agreement dated as of July  10,  1997
                 between  Falcon  and  R&B.   (Filed  as  Annex  D  to  R&B
                 Falcon's   Registration  Statement  on  Form   S-4   dated
                 November 20, 1997 and incorporate herein by reference.)

      10.88   -  Agreement  dated as of August 31, 1991 among  R&B,  Arcade
                 Shipping  AS and Sonat Offshore Drilling Inc.   (Filed  as
                 Exhibit  10.40  to R&B's Annual Report on  Form  10-K  for
                 1991 and incorporated herein by reference.)

      10.89   -  Facility Agreement dated February 21, 1991 between  Arcade
                 Drilling  AS,  Chase  Investment Bank Limited,  The  Chase
                 Manhattan Bank, N.A. and others.  (Filed as Exhibit  10.51
                 to  Registration No. 33-51120 and incorporated  herein  by
                 reference.)

      10.90   -  Amendment  Agreement dated November 30, 1995  to  Facility
                 Agreement dated February 21, 1991 between Arcade  Drilling
                 AS,  Chase  Investment Bank Limited, The  Chase  Manhattan
                 Bank,  N.A. and others.  (Filed as Exhibit 10.71 to  R&B's
                 Annual  Report  on  Form  10-K for 1995  and  incorporated
                 herein by reference.)

      10.91   -  Second  Amendment  Agreement dated October,  1996  between
                 Arcade  Drilling  AS, Chase Investment Bank  Limited,  The
                 Chase  Manhattan Bank, N.A. and others.  (Filed as Exhibit
                 10.60  to  R&B's Annual Report on Form 10-K for  1996  and
                 incorporated herein by reference.)

      10.92   -  Agreement  for  the sale and purchase of  Semi-Submersible
                 Emergency  Support Vessel Iolair dated September  8,  1995
                 between  BP  Exploration  Operating  Company  Limited  and
                 Reading & Bates (Caledonia) Limited, a subsidiary of  R&B.
                 (Filed  as Exhibit 10.3 to R&B's Quarterly Report on  Form
                 10-Q  for  the  Third  Quarter of  1995  and  incorporated
                 herein by reference.)

      10.93   -  Mortgage  of  a  Ship  dated  September  8,  1995  between
                 Reading & Bates (Caledonia) Limited, a subsidiary of  R&B,
                 and  BP Exploration Operating Company Limited.  (Filed  as
                 Exhibit  10.4 to R&B's Quarterly Report on Form  10-Q  for
                 the  Third  Quarter  of  1995 and incorporated  herein  by
                 reference.)

      10.94   -  Mortgage  of  a  Ship  dated  September  8,  1995  between
                 Reading & Bates (Caledonia) Limited, a subsidiary of  R&B,
                 and   Britoil  plc.   (Filed  as  Exhibit  10.5  to  R&B's
                 Quarterly  Report  on Form 10-Q for the Third  Quarter  of
                 1995 and incorporated herein by reference.)

      10.95   -  Deed  of  Covenant dated September 8, 1995 between Reading
                 &  Bates (Caledonia) Limited, a subsidiary of R&B, and  BP
                 Exploration Operating Company Limited.  (Filed as  Exhibit
                 10.6  to R&B's Quarterly Report on Form 10-Q for the Third
                 Quarter of 1995 and incorporated herein by reference.)

      10.96   -  Deed  of  Covenant dated September 8, 1995 between Reading
                 &  Bates  (Caledonia) Limited, a subsidiary  of  R&B,  and
                 Britoil  Public Limited Company.  (Filed as  Exhibit  10.7
                 to  R&B's  Quarterly  Report on Form 10-Q  for  the  Third
                 Quarter of 1995 and incorporated herein by reference.)

      10.97   -  Performance Guarantee dated September 8, 1995  by  R&B  in
                 favour   of  BP  Exploration  Operating  Company  Limited.
                 (Filed  as Exhibit 10.8 to R&B's Quarterly Report on  Form
                 10-Q  for  the  Third  Quarter of  1995  and  incorporated
                 herein by reference.)

      10.98   -  Performance Guarantee dated September 8, 1995  by  R&B  in
                 favour  of Britoil plc.  (Filed as Exhibit 10.9  to  R&B's
                 Quarterly  Report  on Form 10-Q for the Third  Quarter  of
                 1995 and incorporated herein by reference.)

      10.99   -  Initial   Services  Agreement  dated  September  8,   1995
                 between  Britoil  Public Limited  Company  and  Reading  &
                 Bates  (Caledonia) Limited, a subsidiary of  R&B.   (Filed
                 as  Exhibit 10.10 to R&B's Quarterly Report on  Form  10-Q
                 for  the Third Quarter of 1995 and incorporated herein  by
                 reference.)

      10.100  -  Heads of Agreement for the provision  of  Vessel  Services
                 dated  September  8, 1995 between Britoil  Public  Limited
                 Company,   Reading   &   Bates  (Caledonia)   Limited,   a
                 subsidiary  of R&B, and R&B.  (Filed as Exhibit  10.11  to
                 R&B's  Quarterly Report on Form 10-Q for the Third Quarter
                 of 1995 and incorporated herein by reference.)

      10.101  -  Credit  Agreement dated as of April 30,  1996  among  R&B,
                 Reading    &   Bates   Drilling   Co.,   certain   lending
                 institutions  named  therein,  Credit  Lyonnais  New  York
                 Branch,  as  co-agent, and Christiana Bank og Kreditkasse,
                 New  York  Branch, as agent.  (Filed as Exhibit  10.85  to
                 R&B's   Annual   Report  on  Form  10-K   for   1996   and
                 incorporated herein by reference.)

      10.102  -  Security  Agreement  dated as  of  April  30,  1996  among
                 Reading  & Bates Drilling Co., Reading & Bates Exploration
                 Co.,  Reading  &  Bates (A) Pty. Ltd., Reading  and  Bates
                 Borneo   Drilling  Co.,  Ltd,  and  Christiana   Bank   og
                 Kreditkasse,   New  York  Branch,  as  collateral   agent.
                 (Filed as Exhibit 10.86 to R&B's Annual Report on Form 10-
                 K for 1996 and incorporated herein by reference.)

      10.103  -  Subsidiary  Guaranty  dated  as  of  April  30,  1996   by
                 Reading & Bates Exploration Co., Reading & Bates (A)  Pty.
                 Ltd.,  and  Reading  and Bates Borneo Drilling  Co.,  Ltd.
                 (Filed as Exhibit 10.87 to R&B's Annual Report on Form 10-
                 K for 1996 and incorporated herein by reference.)

      10.104  -  First  Preferred  Mortgage on the "D.  R.  STEWART"  dated
                 April 30, 1996 between Reading & Bates Exploration Co.  in
                 favor of Wilmington Trust Company, as trustee.  (Filed  as
                 Exhibit  10.88  to R&B's Annual Report on  Form  10-K  for
                 1996 and incorporated herein by reference.)

      10.105  -  First  Preferred Mortgage on the "JACK BATES" dated  April
                 30, 1996 between Reading & Bates Drilling Co. in favor  of
                 Wilmington  Trust Company, as trustee.  (Filed as  Exhibit
                 10.89  to  R&B's Annual Report on Form 10-K for  1996  and
                 incorporated herein by reference.)

      10.106  -  First  Preferred Mortgage on the "W. D. KENT" dated  April
                 30,  1996 between Reading & Bates Exploration Co. in favor
                 of  Wilmington  Trust  Company,  as  trustee.   (Filed  as
                 Exhibit  10.90  to R&B's Annual Report on  Form  10-K  for
                 1996 and incorporated herein by reference.)

      10.107  -  Indenture of First Naval Mortgage on the "CHARLEY  GRAVES"
                 dated  April  30,  1996 between Reading and  Bates  Borneo
                 Drilling Co. Ltd. and Christiana Bank og Kreditkasse,  New
                 York  Branch,  as mortgagee.  (Filed as Exhibit  10.91  to
                 R&B's   Annual   Report  on  Form  10-K   for   1996   and
                 incorporated herein by reference.)

      10.108  -  First  Priority  Mortgage  on the  "RON  TAPPMEYER"  dated
                 April  30, 1996 between Reading & Bates (A) Pty. Ltd.  and
                 Christiana  Bank  og  Kreditkasse,  New  York  Branch,  as
                 mortgagee.   (Filed  as  Exhibit  10.92  to  R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.109  -  Deed  of  Covenant on the "J. W. McLEAN" dated  April  30,
                 1996  between Reading & Bates Drilling Co. and  Christiana
                 Bank  og  Kreditkasse,  New  York  Branch,  as  mortgagee.
                 (Filed as Exhibit 10.93 to R&B's Annual Report on Form 10-
                 K for 1996 and incorporated herein by reference.)

      10.110  -  Indenture  of  Trust  dated as of  April  30,  1996  among
                 Reading  & Bates Drilling Co., Reading & Bates Exploration
                 Co., and Wilmington Trust Company, as trustee.  (Filed  as
                 Exhibit  10.94  to R&B's Annual Report on  Form  10-K  for
                 1996 and incorporated herein by reference.)

      10.111  -  Collateral  Assignment of Insurance dated April  30,  1996
                 with  respect  to the "JACK BATES" between Reading & Bates
                 Drilling  Co.  and Wilmington Trust Company,  as  trustee.
                 (Filed as Exhibit 10.95 to R&B's Annual Report on Form 10-
                 K for 1996 and incorporated herein by reference.)

      10.112  -  Collateral  Assignment of Insurance dated April  30,  1996
                 with  respect   to the "D. R. STEWART" between  Reading  &
                 Bates  Exploration  Co. and Wilmington Trust  Company,  as
                 trustee.   (Filed as Exhibit 10.96 to R&B's Annual  Report
                 on   Form  10-K  for  1996  and  incorporated  herein   by
                 reference.)

      10.113  -  Collateral  Assignment of Insurance dated April  30,  1996
                 with  respect  to the "W. D. KENT" between Reading & Bates
                 Exploration Co. and Wilmington Trust Company, as  trustee.
                 (Filed as Exhibit 10.97 to R&B's Annual Report on Form 10-
                 K for 1996 and incorporated herein by reference.)

      10.114  -  Collateral  Assignment of Insurance dated April  30,  1996
                 with  respect to the "CHARLEY GRAVES" between Reading  and
                 Bates  Borneo  Drilling Co., Ltd. and Christiana  Bank  og
                 Kreditkasse,  New  York  Branch,  as  agent.   (Filed   as
                 Exhibit  10.98  to R&B's Annual Report on  Form  10-K  for
                 1996 and incorporated herein by reference.)

      10.115  -  Collateral  Assignment of Insurance dated April  30,  1996
                 with  respect to the "RON TAPPMEYER" between  Reading  and
                 Bates  (A)  Pty. Ltd. and Christiana Bank og  Kreditkasse,
                 New  York  Branch, as agent.  (Filed as Exhibit  10.99  to
                 R&B's   Annual   Report  on  Form  10-K   for   1996   and
                 incorporated herein by reference.)

      10.116  -  Collateral  Assignment of Insurance dated April  30,  1996
                 with  respect  to the "J. W. McLEAN" between  Reading  and
                 Bates  Borneo  Drilling Co., Ltd. and Christiana  Bank  og
                 Kreditkasse,  New  York  Branch,  as  agent.   (Filed   as
                 Exhibit  10.100 to R&B's Annual Report on  Form  10-K  for
                 1996 and incorporated herein by reference.)

      10.117  -  First  Amendment  dated  as of  July  9,  1996  to  Credit
                 Agreement dated as of April 30, 1996 among R&B, Reading  &
                 Bates  Drilling  Co., certain lending  institutions  named
                 therein,  Credit  Lyonnais New York Branch,  as  co-agent,
                 and  Christiana Bank og Kreditkasse, New York  Branch,  as
                 agent.   (Filed  as Exhibit 10.101 to R&B's Annual  Report
                 on   Form  10-K  for  1996  and  incorporated  herein   by
                 reference.)

      10.118  -  Subsidiary Assumption Agreement dated as of July  9,  1996
                 by  RB  Drilling Co. and HRB Rig Corporation.   (Filed  as
                 Exhibit  10.102 to R&B's Annual Report on  Form  10-K  for
                 1996 and incorporated herein by reference.)

      10.119  -  Indenture  of First Naval Mortgage on the "J.  W.  McLEAN"
                 dated  July  9,  1996 by Reading & Bates Drilling  Co.  in
                 favor  of Christiana Bank og Kreditkasse, New York Branch,
                 as  mortgagee.  (Filed as Exhibit 10.103 to  R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.120  -  First  Preferred Mortgage on the "HARVEY  H.  WARD"  dated
                 July   9,  1996  by  HRB  Rig  Corporation  in  favor   of
                 Wilmington  Trust Company, as trustee.  (Filed as  Exhibit
                 10.104  to R&B's Annual Report on Form 10-K for  1996  and
                 incorporated herein by reference.)

      10.121  -  Amendment  No. 1 to Indenture of First Naval  Mortgage  on
                 the  "CHARLIE  GRAVES" dated July 9, 1996 by  Reading  and
                 Bates  Borneo  Drilling Co., Ltd. in favor  of  Christiana
                 Bank  og  Kreditkasse,  New  York  Branch,  as  mortgagee.
                 (Filed  as Exhibit 10.105 to R&B's Annual Report  on  Form
                 10-K for 1996 and incorporated herein by reference.)

      10.122  -  Amendment to First Preferred Mortgage on the "JACK  BATES"
                 dated  July  9,  1996 by Reading & Bates Drilling  Co.  in
                 favor of Wilmington Trust Company, as trustee.  (Filed  as
                 Exhibit  10.106 to R&B's Annual Report on  Form  10-K  for
                 1996 and incorporated herein by reference.)

      10.123  -  Amendment  to  First  Preferred Mortgage  on  the  "D.  R.
                 STEWART"   dated   July  9,  1996  by  Reading   &   Bates
                 Exploration  Co. in favor of Wilmington Trust Company,  as
                 trustee.  (Filed as Exhibit 10.107 to R&B's Annual  Report
                 on   Form  10-K  for  1996  and  incorporated  herein   by
                 reference.)

      10.124  -  Amendment to First Preferred Mortgage on the "W. D.  KENT"
                 dated July 9, 1996 by Reading & Bates Exploration  Co.  in
                 favor  of Wilmington Trust Company, as trustee. (Filed  as
                 Exhibit  10.108 to R&B's Annual Report on  Form  10-K  for
                 1996 and incorporated herein by reference.)

      10.125  -  Collateral  Assignment of Insurance  dated  July  9,  1996
                 with  respect   to the "HARVEY H. WARD"  between  HRB  Rig
                 Corporation  and  Wilmington Trust  Company,  as  trustee.
                 (Filed  as Exhibit 10.109 to R&B's Annual Report  on  Form
                 10-K for 1996 and incorporated herein by reference.)

      10.126  -  Collateral  Assignment of Insurance  dated  July  9,  1996
                 with respect  to the "RIG 41" between RB Drilling Co.  and
                 Christiana  Bank  og  Kreditkasse,  New  York  Branch,  as
                 agent. (Filed as Exhibit 10.110 to R&B's Annual Report  on
                 Form 10-K for 1996 and incorporated herein by reference.)

      10.127  -  Amended  and Restated Indenture of Trust dated as of  July
                 9,  1996  among  Reading & Bates Drilling Co.,  Reading  &
                 Bates   Exploration   Co.,   HRB   Rig   Corporation   and
                 Wilmington  Trust Company, as trustee. (Filed  as  Exhibit
                 10.111  to R&B's Annual Report on Form 10-K for  1996  and
                 incorporated herein by reference.)

      10.128  -  Second  Amendment dated as of August 30,  1996  to  Credit
                 Agreement dated as of April 30, 1996 among R&B, Reading  &
                 Bates  Drilling  Co., certain lending  institutions  named
                 therein,  Credit  Lyonnais New York Branch,  as  co-agent,
                 and  Christiana Bank og Kreditkasse, New York  Branch,  as
                 agent. (Filed as Exhibit 10.112 to R&B's Annual Report  on
                 Form 10-K for 1996 and incorporated herein by reference.)

      10.129  -  Subsidiary  Assumption Agreement dated as  of  August  30,
                 1996  by Reading & Bates Development Co. (Filed as Exhibit
                 10.113  to R&B's Annual Report on Form 10-K for  1996  and
                 incorporated herein by reference.)

      10.130  -  Subsidiary  Guaranty  dated  as  of  August  30,  1996  by
                 Reading  & Bates Development Co. (Filed as Exhibit  10.114
                 to   R&B's  Annual  Report  on  Form  10-K  for  1996  and
                 incorporated herein by reference.)

      10.131  -  Indenture  of  First  Naval Mortgage on  "SEILLEAN"  dated
                 August  30,  1996  by Reading & Bates Development  Co.  in
                 favor  of Christiana Bank og Kreditkasse, New York Branch,
                 as  mortgagee.  (Filed as Exhibit 10.115 to  R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.132  -  Collateral Assignment of Insurance dated August  30,  1996
                 with  respect  to the "SEILLEAN"  between Reading &  Bates
                 Development  Co.  and Christiana Bank og Kreditkasee,  New
                 York  Branch, as agent. (Filed as Exhibit 10.116 to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.133  -  Credit Agreement dated as of November 13, 1996 among  R&B,
                 Reading    &   Bates   Drilling   Co.,   certain   lending
                 institutions   named   therein,   Banque   Indosuez,    as
                 documentation agent, Credit Lyonnais New York  Branch,  as
                 documentation  agent, and Christiana Bank og  Kreditkasse,
                 New  York  Branch, as administrative agent,  arranger  and
                 security  trustee.  (Filed  as  Exhibit  10.117  to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.134  -  Security  Agreement dated as of November  13,  1996  among
                 Reading  & Bates Drilling Co., Reading & Bates Exploration
                 Co.,   Reading   &  Bates  Offshore,  Limited,   HRB   Rig
                 Corporation,  Reading & Bates (A) Pty. Ltd.,  Reading  and
                 Bates  Borneo  Drilling Co., Ltd, and Christiana  Bank  og
                 Kreditkasse, New York Branch, as collateral agent.  (Filed
                 as  Exhibit 10.118 to R&B's Annual Report on Form 10-K for
                 1996 and incorporated herein by reference.)

      10.135  -  Subsidiary  Guaranty  dated as of November  13,  1996   by
                 Reading & Bates Exploration Co., Reading & Bates (A)  Pty.
                 Ltd.,   Reading  and  Bates  Borneo  Drilling  Co.,  Ltd.,
                 Reading   &   Bates   Offshore,  Limited   and   HRB   Rig
                 Corporation.  (Filed  as Exhibit 10.119  to  R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.136  -  First  Preferred  Mortgage on the "D.  R.  STEWART"  dated
                 November 13, 1996 between Reading & Bates Exploration  Co.
                 in  favor  of  Christiana Bank og  Kreditkasse,  New  York
                 Branch,  as security trustee. (Filed as Exhibit 10.120  to
                 R&B's   Annual   Report  on  Form  10-K   for   1996   and
                 incorporated herein by reference.)

      10.137  -  First   Preferred  Mortgage  on  the  "JACK  BATES"  dated
                 November 13, 1996 between Reading & Bates Drilling Co.  in
                 favor  of Christiana Bank og Kreditkasse, New York Branch,
                 as  security  trustee. (Filed as Exhibit 10.121  to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.138  -  First  Preferred  Mortgage  on  the  "W.  D.  KENT"  dated
                 November  13,   1996  between Reading & Bates  Exploration
                 Co.  in  favor  of  Christiana  Bank  og  Kreditkasse,  as
                 security  trustee.  (Filed  as  Exhibit  10.122  to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.139  -  First  Preferred  Mortgage on the  "RANDOLPH  YOST"  dated
                 November  13,   1996 between Reading & Bates Drilling  Co.
                 in  favor  of Christiana Bank og Kreditkasse, as  security
                 trustee.  (Filed as Exhibit 10.123 to R&B's Annual  Report
                 on   Form  10-K  for  1996  and  incorporated  herein   by
                 reference.)

      10.140  -  First  Preferred  Mortgage  on the  "GEORGE  H.  GALLOWAY"
                 dated   November  13,   1996  between  Reading   &   Bates
                 Offshore,   Limited  in  favor  of  Christiana   Bank   og
                 Kreditkasse,  as  security  trustee.  (Filed  as   Exhibit
                 10.124  to R&B's Annual Report on Form 10-K for  1996  and
                 incorporated herein by reference.)

      10.141  -  First  Preferred Mortgage on the "F. G. MCCLINTOCK"  dated
                 November  13,   1996  between Reading  &  Bates  Offshore,
                 Limited  in  favor of Christiana Bank og  Kreditkasse,  as
                 security  trustee.  (Filed  as  Exhibit  10.125  to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.142  -  First  Preferred  Mortgage on  the  "J.  T.  ANGEL"  dated
                 November  13,   1996 between Reading & Bates Drilling  Co.
                 in  favor  of Christiana Bank og Kreditkasse, as  security
                 trustee.  (Filed as Exhibit 10.126 to R&B's Annual  Report
                 on   Form  10-K  for  1996  and  incorporated  herein   by
                 reference.)

      10.143  -  First  Preferred Mortgage on the "ROGER W.  MOWELL"  dated
                 November  13,   1996 between Reading & Bates Drilling  Co.
                 in  favor  of Christiana Bank og Kreditkasse, as  security
                 trustee.  (Filed as Exhibit 10.127 to R&B's Annual  Report
                 on   Form  10-K  for  1996  and  incorporated  herein   by
                 reference.)

      10.144  -  First  Preferred Mortgage on the "HARVEY  H.  WARD"  dated
                 November  13,  1996 between HRB Rig Corporation  in  favor
                 of  Christiana  Bank og Kreditkasse, as security  trustee.
                 (Filed  as Exhibit 10.128 to R&B's Annual Report  on  Form
                 10-K for 1996 and incorporated herein by reference.)

      10.145  -  Indenture of First Naval Mortgage on the "CHARLEY  GRAVES"
                 dated  November 13, 1996 between Reading and Bates  Borneo
                 Drilling Co. Ltd. and Christiana Bank og Kreditkasse,  New
                 York  Branch,  as mortgagee. (Filed as Exhibit  10.129  to
                 R&B's   Annual   Report  on  Form  10-K   for   1996   and
                 incorporated herein by reference.)

      10.146  -  Indenture  of First Naval Mortgage on the "J.  W.  McLEAN"
                 dated  November 13, 1996 between Reading & Bates  Drilling
                 Co.  and  Christiana Bank og Kreditkasse, New York Branch,
                 as  mortgagee.  (Filed as Exhibit 10.130 to  R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.147  -  Indenture  of First Naval Mortgage on the "RIG  41"  dated
                 November  13,  1996  between  Reading  and  Bates   Borneo
                 Drilling Co. Ltd. and Christiana Bank og Kreditkasse,  New
                 York  Branch,  as mortgagee. (Filed as Exhibit  10.131  to
                 R&B's   Annual   Report  on  Form  10-K   for   1996   and
                 incorporated herein by reference.)

      10.148  -  First  Priority  Mortgage  on the  "RON  TAPPMEYER"  dated
                 November  13, 1996 between Reading & Bates (A)  Pty.  Ltd.
                 and  Christiana Bank og Kreditkasse, New York  Branch,  as
                 mortgagee.  (Filed  as  Exhibit  10.132  to  R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.149  -  Pledge  Agreement  dated as of November 13,  1996  between
                 R&B  and  Christiana Bank og Kreditkasse, New York Branch,
                 as  collateral  agent. (Filed as Exhibit 10.133  to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.150  -  Amended  and  Restated  Credit  Agreement  dated   as   of
                 November 13, 1996 and amended and restated as of  July  3,
                 1997  among  R&B,  Reading & Bates Drilling  Co.,  certain
                 lending   institutions  named  therein,  Credit   Agricole
                 Indosuez,  as  documentation agent,  Credit  Lyonnais  New
                 York  Branch, as documentation agent, and Christiana  Bank
                 og  Kreditkasse, New York Branch, as administrative agent,
                 arranger and security trustee.

      10.151  -  Letter  of Credit Agreement dated as of December 30,  1996
                 between  R&B, Reading & Bates Drilling Co., and Christiana
                 Bank  og  Kreditkasse, New York Branch. (Filed as  Exhibit
                 10.134  to R&B's Annual Report on Form 10-K for  1996  and
                 incorporated herein by reference.)

      10.152  -  Memorandum  of Agreement dated November 28,  1995  between
                 Reading  and  Bates, Inc., a subsidiary of R&B,  and  Deep
                 Sea  Investors, L.L.C.   (Filed as Exhibit 10.110 to R&B's
                 Annual  Report  on  Form  10-K for 1995  and  incorporated
                 herein by reference.)

      10.153  -  Bareboat  Charter  "M.G. Hulme, Jr."  dated  November  28,
                 1995  between  Deep Sea Investors, L.L.C.  and  Reading  &
                 Bates  Drilling  Co., a subsidiary  of  R&B.    (Filed  as
                 Exhibit  10.111 to R&B's Annual Report on  Form  10-K  for
                 1995 and incorporated herein by reference.)

      10.154  -  Purchase  and  Sale  Agreement  dated  October  18,   1995
                 between  Enserch  Exploration, Inc. and  Reading  &  Bates
                 Development Co., a subsidiary of R&B.   (Filed as  Exhibit
                 10.112  to R&B's Annual Report on Form 10-K for  1995  and
                 incorporated herein by reference.)

      10.155  -  Operating  Agreement made effective  as  of  May  1,  1995
                 among  Enserch  Exploration, Inc., Mobil Oil  Corporation,
                 Mobil  Oil  exploration  & Producing  Southeast  Inc.  and
                 Reading  &  Bates  Development Co., a subsidiary  of  R&B.
                 (Filed  as Exhibit 10.125 to R&B's Annual Report  on  Form
                 10-K for 1995 and incorporated herein by reference.)

      10.156  -  Participation  Agreement dated December  4,  1996  between
                 Santa  Fe  Energy  Resources, Inc.  and  Reading  &  Bates
                 Development  Co. (Filed as Exhibit 10.152 to R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.157  -  Joint  Venture  Agreement dated December  16,  1996  among
                 Shell  Deepwater Development Inc.,  SOI Finance  Inc.  and
                 Reading  & Bates Development Co. (Filed as Exhibit  10.161
                 to   R&B's  Annual  Report  on  Form  10-K  for  1996  and
                 incorporated herein by reference.)

      10.158  -  Limited  Liability  Company Agreement  dated  October  28,
                 1996  between Conoco Development Company and RB  Deepwater
                 Exploration Inc. (Filed as Exhibit 10.162 to R&B's  Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.159  -  Limited  Liability Company Agreement dated April 30,  1997
                 between  Conoco  Development  II  Inc.  and  RB  Deepwater
                 Exploration II Inc.

      10.160  -  Joint  Venture Agreement dated February 22,  1996  between
                 INTEC  Engineering, Inc. and Reading &  Bates  Development
                 Co.  (Filed  as Exhibit 10.163 to R&B's Annual  Report  on
                 Form 10-K for 1996 and incorporated herein by reference.)

      10.161  -  Loan  Agreement  dated as of December 14, 1996  among  TRB
                 Holding  Corporation, Reading & Bates (U.K.)  Limited  and
                 Nissho Iwai Europe PLC. (Filed as Exhibit 10.164 to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.162  -  First Naval Mortgage on the "SEILLEAN" dated December  14,
                 1996  between TRB Holding Corporation in favor  of  Nissho
                 Iwai  Europe PLC. (Filed as Exhibit 10.165 to R&B's Annual
                 Report  on  Form 10-K for 1996 and incorporated herein  by
                 reference.)

      10.163  -  Collateral  Assignment  of  Deposit  Account,  Pledge  and
                 Security  Agreement dated December 14, 1996  with  respect
                 to  the  "SEILLEAN"  between TRB Holding  Corporation  and
                 Nissho Iwai Europe PLC. (Filed as Exhibit 10.166 to  R&B's
                 Annual  Report  on  Form  10-K for 1996  and  incorporated
                 herein by reference.)

      10.164  -  Assignment  of  Insurances dated December  14,  1996  with
                 respect  to the "SEILLEAN" between TRB Holding Corporation
                 and  Reading & Bates (U.K.) Limited and Nissho Iwai Europe
                 PLC.  (Filed as Exhibit 10.167 to R&B's Annual  Report  on
                 Form 10-K for 1996 and incorporated herein by reference.)

      10.165  -  Contract  dated  November 14, 1997  for  Construction  and
                 Sale  of  Vessel  (Hull No. HRBS6) between  Hyundai  Heavy
                 Industries   Co.,   Ltd.,  Hyundai  Corporation   and   RB
                 Exploration Co.

      10.166  -  Contract  dated  September 5, 1997  for  Construction  and
                 Sale  of  a  103,000  Metric Tons  Displacement  Drillship
                 (Hull  No.  1255)  between Samsung Heavy  Industries  Co.,
                 Ltd.,  Samsung  Corporation and Reading &  Bates  Drilling
                 Co.

      10.167  -  1992 Stock Option Plan of Falcon. (Filed as an exhibit  to
                 Falcon's  Registration Statement on  Form  S-4,  filed  on
                 April   29,   1994,   Registration   No.   33-78369    and
                 incorporated herein by reference.)

      10.168  -  1994 Stock Option Plan of Falcon. (Filed as an exhibit  to
                 Falcon's  Annual Report on form 10-K for  the  year  ended
                 December 31, 1994 and incorporated herein by reference.)

      10.169  -  Uncommitted  Acquisition  Credit  Agreement  dated  as  of
                 January  24,  1996,  between Falcon  and  Banque  Paribas.
                 (Filed as an exhibit to Falcon's Annual Report on Form 10-
                 K  for  the  year ended December 31, 1995 and incorporated
                 herein by reference.)

      10.170  -  First   Amendment,  dated  as  of  March   4,   1996,   to
                 Uncommitted  Acquisition Credit Agreement.  (Filed  as  an
                 exhibit  to  Falcon's Annual Report on Form 10-K  for  the
                 year  ended December 31, 1995 and incorporated  herein  by
                 reference.)

      10.171  -  1995 Stock Option Plan of Falcon. (Filed as an exhibit  to
                 Falcon's  Annual Report on form 10-K for  the  year  ended
                 December 31, 1994 and incorporated herein by reference.)

      10.172  -  Bank  Earn-Out Agreement, dated as of December  23,  1992,
                 by  and  between Falcon and Whitney National Bank.  (Filed
                 as  an exhibit to Falcon's Registration Statement of  Form
                 S-1,   Amendment   No.  3,  filed  on   July   19,   1995,
                 Registration  No.  33-84582  and  incorporated  herein  by
                 reference.)

      10.173  -  Senior  Executive Incentive Compensation Agreement,  dated
                 as  of  December 24, 1992, by and among Falcon, Robert  H.
                 Reeves,  Jr., and Charles E. Reeves. (Filed as an  exhibit
                 to  Falcon's Registration Statement of Form S-1, Amendment
                 No.  3,  filed on July 19, 1995, Registration No. 33-84582
                 and incorporated herein by reference.)

      10.174  -  Registration  Rights  Agreement  dated  August  15,  1995,
                 between  Falcon and Blake Holding Co., Inc. (Filed  as  an
                 exhibit  to  Falcon's Annual Report on Form 10-K  for  the
                 year  ended December 31, 1995 and incorporated  herein  by
                 reference.)

      10.175  -  Credit  Agreement  dated as of November  12,  1996,  among
                 Falcon,  Banque  Paribas,  and  Arab  Banking  Corporation
                 (B.S.C.)  relating  to a $25 million facility.  (Filed  as
                 Exhibit  10.24 to Falcon's Annual Report on Form 10-K  for
                 the  year ended December 31, 1996 and incorporated  herein
                 by reference.)

      10.176  -  First  Amendment  to Credit Amendment,  dated  October  3,
                 1997,   among   Falcon,  Banque  Paribas,   Arab   Banking
                 Corporation  (B.S.C.), and ING (U.S.) Capital Corporation,
                 amending   Credit  Agreement  dated  November  12,   1996,
                 relating to a $25 million facility.

      10.177  -  Credit  Agreement  dated as of November  12,  1996,  among
                 Falcon,  Banque  Paribas,  and  Arab  Banking  Corporation
                 (B.S.C.)  relating  to a $40 million facility.  (Filed  as
                 Exhibit  10.25 to Falcon's Annual Report on Form 10-K  for
                 the  year ended December 31, 1996 and incorporated  herein
                 by reference.)

      10.178  -  First  Amendment  to Credit Agreement,  dated  October  3,
                 1997,   among   Falcon,   Bank   Paribas,   Arab   Banking
                 Corporation  (B.S.C.), and ING (U.S.) Capital Corporation,
                 amending   Credit  Agreement  dated  November   12,   1996
                 relating  to  a  $40  million  facility,  increasing  such
                 facility to $60 million.

      10.179  -  Credit  Agreement  dated  as of  October  3,  1997,  among
                 Falcon,   Banque   Paribas,   Arab   Banking   Corporation
                 (B.S.C.),  and ING (U.S.) Capital Corporation relating  to
                 an $80 million facility.

      10.180  -  First  Amendment to Credit Agreement, dated  December  22,
                 1997,   among   Falcon,   Bank   Paribas,   Arab   Banking
                 Corporation  (B.S.C.), and ING (U.S.) Capital Corporation,
                 amending  Credit Agreement dated October 3, 1997  relating
                 to  an  $80 million facility, increasing such facility  to
                 $130 million.

      10.181  -  Registration  Rights Agreement dated  December  10,  1996,
                 between  Falcon  and  KS  Deepsea  Drillships.  (Filed  as
                 Exhibit  10.26 to Falcon's Annual Report on Form 10-K  for
                 the  year ended December 31, 1996 and incorporated  herein
                 by reference.)

      10.182  -  Participation  Agreement made effective August  28,  1997,
                 between  Reading & Bates Development Co., a subsidiary  of
                 R&B,  British-Borneo  Petroleum, Inc.  and  British-Borneo
                 Exploration, Inc.

      10.183  -  Purchase  and  Sale  and Acreage Exchange  Agreement  made
                 effective  August  28,  1997 between Enserch  Exploration,
                 Inc.,  and  Reading & Bates Development Co., a  subsidiary
                 of R&B.

      21      -  Schedule of Subsidiaries of the Company (Filed as  Exhibit
                 21.1  to  R&B Falcon's Registration Statement on Form  S-4
                 dated  November  20,  1997  and  incorporated  herein   by
                 reference.)

      23      -  Consent of Arthur Andersen LLP

      27      -  Financial  Data Schedule.  (Exhibit 27 is being  submitted
                 as  an  exhibit  only  in the electronic  format  of  this
                 Annual  Report  on  Form  10-K  being  submitted  to   the
                 Securities and Exchange Commission.)

      99      -  Annual  Report  on  Form 11-K with respect  to  Reading  &
                 Bates  Savings  Plan.  (To be filed by  amendment  to  the
                 Annual Report on Form 10-K.)

           Instruments  with  respect to certain long-term  obligations  of
      the  Company are not being filed as exhibits hereto as the securities
      authorized  thereunder  do  not exceed 10%  of  the  Company's  total
      assets.   The  Company  agrees  to  furnish  a  copy  of  each   such
      instrument  to  the  Securities  and  Exchange  Commission  upon  its
      request.

      *Management contract or compensatory plan or arrangement required  to
       be  filed  as an exhibit pursuant to the requirements of Item  14(c)
       of Form 10-K.

 (b) Reports on Form 8-K

      R&B  filed twelve Current Reports on Form 8-K during the three months
      ended  December  31, 1997.  A Current Report on Form 8-K  was:  filed
      October  3,  1997  announcing the acquisition of the  semisubmersible
      accommodation  unit  "ALLEGHENY", filed October 14,  1997  announcing
      additional  unsuccessful exploratory expenses for the third  quarter,
      filed  October 16, 1997 announcing third quarter 1997 earnings, filed
      October   27,  1997  announcing  the  postponement  of  the   special
      stockholders meeting, filed October 29, 1997 announcing the award  of
      a  two  year contract for the "J.W. McLEAN", filed November  4,  1997
      announcing the award of a three to four well contract for  the  "M.G.
      HULME,  JR.", filed November 6, 1997 announcing an update on newbuild
      projects, filed November 21, 1997 announcing the rescheduling of  the
      special stockholders meeting, filed December 16, 1997 announcing  the
      extension  of  the "JACK BATES" contract with Mobil,  filed  December
      17,   1997   announcing  the  board  of  directors  of   R&B   Falcon
      Corporation,  filed  December 23, 1997 announcing  oil  discovery  on
      East   Breaks  643,  North  Boomvang  and  filed  December  29,  1997
      announcing   Reading   &   Bates'   shareholders   approve   business
      combination with Falcon.

      Falcon  filed  2 current Reports on Form 8-K during the three  months
      ended  December  31, 1997. A Current Report on Form  8-K  was:  filed
      December  17,  1997 announcing the board of directors of  R&B  Falcon
      Corporation   and   filed  December  24,  1997  announcing   Falcon's
      shareholders  approve  business  combination  with  Reading  &  Bates
      Corporation.

                                SIGNATURES


      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange  Act  of 1934, the Registrant has duly caused this  report  to  be
signed on its behalf by the undersigned, thereunto duly authorized on March
30, 1998.

                              R&B FALCON CORPORATION

                              By /s/ Steven A. Webster
                                -------------------------------------
                                 Steven A. Webster
                                 President, Chief Executive Officer
                                 and Director

      Pursuant to the requirements of the Securities Exchange Act of  1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated on March 30, 1998.


By  /s/ Paul B. Loyd, Jr.              By  /s/ Steven A. Webster
   ---------------------------            -----------------------------
    Paul B. Loyd, Jr.                      Steven A. Webster
    Chairman and Director                  President, Chief Executive
                                           Officer and Director

By  /s/ Tim W. Nagle                   By  /s/ Robert F. Fulton
   ---------------------------            -----------------------------
    Tim W. Nagle                           Robert F. Fulton
    Executive Vice President               Executive Vice President
    (Principal Accounting Officer)         (Principal Financial Officer)


By  /s/ Purnendu Chatterjee             By
   ---------------------------             ----------------------------
    Purnendu Chatterjee                     Macko A. E. Laqueur
    Director                                Director


By  /s/ Arnold L. Chavkin               By  /s/ Michael E. Porter
   ---------------------------             -----------------------------
    Arnold L. Chavkin                       Michael E. Porter
    Director                                Director


By  /s/ Charles A. Donabedian           By  /s/ Robert L. Sandmeyer
   ---------------------------             -----------------------------
    Charles A. Donabedian                   Robert L. Sandmeyer
    Director                                Director


By  /s/ Douglas A. P. Hamilton          By  /s/  William R. Ziegler
   ---------------------------             -----------------------------
    Douglas A. P. Hamilton                  William R. Ziegler
    Director                                Director