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                                                          EXHIBIT 10.176


             AMENDED AND RESTATED BAREBOAT CHARTER


                        M. G. HULME, JR.


                            BETWEEN


              DEEP SEA INVESTORS, L.L.C., as OWNER


                              AND


           READING & BATES DRILLING CO., as CHARTERER

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                       TABLE OF CONTENTS

                                                             Page

ARTICLE 1 DEFINITIONS                                           1

ARTICLE 2 SCHEDULES AND OBJECTIVES                             10
     2.1  Schedules                                            10
     2.2  Objectives                                           11
     2.3  Condition of the Property                            11

ARTICLE 3 TERM, DELIVERY DATE AND PURCHASE OPTION              12
     3.1  Duration                                             12
     3.2  Delivery of the Vessel to the Charterer              13
     3.3  Early Termination                                    13
     3.4  Remedies                                             16
     3.5  Redelivery of the Vessel                             18
     3.6  Survey of the Vessel at End of Charter Period        19
     3.7  Purchase Option                                      20
     3.8  Determination of Purchase Option Price               21

ARTICLE 4 NATURE OF COMPENSATION                               21
     4.1  Absolute Obligation                                  21
     4.2  Net Charter                                          23

ARTICLE 5 CONDITIONS TO EFFECTIVENESS                          23
     5.1  Conditions                                           23

ARTICLE 6 REPRESENTATIONS AND WARRANTIES                       25
     6.1  Representations and Warranties of the Owner          25
     6.2  Representations and Warranties of the Charterer      26

ARTICLE 7 USE AND OPERATION OF THE VESSEL                      29
     7.1  Use of the Vessel                                    29
     7.2  Manning, etc., of the Vessel                         30
     7.3  Documentation of the Vessel                          30
     7.4  General and Particular Average                       31
     7.5  Site and Access                                      31
     7.6  Owner Liability for Materials Furnished
            by the Charterer                                   31
     7.7  Environmental and Related Reporting and Inspection   31
     7.8  Notice of Entry                                      32

ARTICLE 8 MAINTENANCE OF CONDITION AND CLASSIFICATION;
            REPAIRS                                            32
     8.1  Maintenance of Classification                        32
     8.2  Repair                                               33
     8.3  Drydocking or Underwater Survey in Lieu of
            Drydocking                                         33
     8.4  Required Survey                                      33

ARTICLE 9 EQUIPMENT AND STORES                                 34
     9.1  Fuel, etc.                                           34
     9.2  Equipment, etc.                                      34
     9.3  The Charterer's Additional Equipment, etc.           35
     9.4  Title to Improvements; Option to Purchase            35
     9.5  No Lease of Essential Severables                     36

ARTICLE 10 THE CHARTERER'S CHANGES,
             ADDITIONS AND REPLACEMENTS                        36
     10.1 Structural  Changes or Alterations;
             Installation of  Equipment, etc.                  36
     10.2 Replacement of Parts                                 37
     10.3 Vessel Markings                                      37

ARTICLE 11 ADDITIONAL COVENANTS                                38
     11.1 General Covenants                                    38
     11.2 No Impairment                                        38
     11.3 Financial Information                                38
     11.4 Compliance Certificates                              39
     11.5 Further Assurances, etc.                             40
     11.6 Maintenance of Corporate Existence, etc.             40
     11.7 Conditions of Consolidation, Merger, etc.            41
     11.8 Indemnity of  the  Owner by Customers for
            Oil Pollution and Related Environmental Claims     42

ARTICLE 12 PAYMENTS, INVOICES AND SECURITY                     43
     12.1 Basic Hire                                           43
     12.2 Supplemental Hire                                    43
     12.3 Payment Terms                                        44
     12.4 Invoices                                             44
     12.5 Security for Obligations                             44

ARTICLE 13 GENERAL OBLIGATIONS AND PERFORMANCE                 48
     13.1 Independent Owner Relationships                      48
     13.2 Inspection                                           48
     13.3 Performance of the Charterer                         48
     13.4 Operations Outside of U.S. Waters                    49

ARTICLE 14 LIABILITY AND INDEMNITY                             49
     14.1 Survival of Indemnities                              49
     14.2 Pollution                                            49
     14.3 The Charterer's Indemnity                            50
     14.4 Patent Infringement                                  50
     14.5 Both-to-Blame Collision Clause                       51
     14.6 Liens, Attachments and Encumbrances                  51
     14.7 Indemnification by the Charterer                     52
     14.8 The Charterer's Duties to Remove Liens, etc.         52

ARTICLE 15 INSURANCE                                           53
     15.1 The Charterer's Insurance                            53
     15.2 Nonperformance of Insurance Companies                53
     15.3 Subrogation                                          54

ARTICLE 16 ASSIGNMENT OF CHARTER                               54
     16.1 Assignment and Subcontract by the Owner              54
     16.2 Assignment by the Charterer                          54
     16.3 Assignment of Subcharter Hire                        56

ARTICLE 17 LOSS, TAKING OR SEIZURE                             57
     17.1 Taking by the U.S. Government                        57
     17.2 Event of Loss not a Total Loss                       57
     17.3 Payment of Stipulated Loss Value                     58
     17.4 Application of Payments                              58
     17.5 Date of Loss                                         58
     17.6 Effect of Payment of Stipulated Loss Value           59

ARTICLE 18 TAX                                                 59
     18.1 Characterization as a Lease                          59
     18.2 Representations                                      60
     18.3 Tax Indemnity                                        61
     18.4 Payments                                             63
     18.5 Records                                              63

ARTICLE 19 GENERAL                                             64
     19.1 Notices                                              64
     19.2 Expenses                                             65
     19.3 The Owner's Right to Perform for the Charterer       66
     19.4 Waivers                                              66
     19.5 Entire Agreement                                     66
     19.6 Successors and Assigns                               66
     19.7 Law                                                  66
     19.8 Parties' Intention                                   67
     19.9 Counterparts; Uniform Commercial Code                68
     19.10 Warranty of Authority                               68
     19.11 Usage; Headings                                     68
     19.12 Waiver of Jury Trial                                68
     19.13 Venue; Service of Process                           69
     19.14 Agent for Service of Process                        69

SIGNATURES                                                     70

Schedule A    Description of Vessel M. G. Hulme, Jr., Including
                Specifications
Schedule B-1  First Upgrade Program
Schedule B-2  Second Upgrade Program
Schedule C    Charterer's Insurance
Schedule D    Stipulated Loss Value
Schedule E    Pending Litigation
Schedule F    Computation of Basic Hire Upgrade Adjustment

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             AMENDED AND RESTATED BAREBOAT CHARTER

                       "M.G. HULME, JR."

          This Amended and Restated Bareboat Charter dated as of July 23,
1997  is between Deep Sea Investors, L.L.C., a Delaware limited liability
company  (the  "Owner"), and Reading & Bates Drilling  Co.,  an  Oklahoma
corporation, as the Charterer (the "Charterer");

                      W I T N E S S E T H:

          WHEREAS,  the  Charterer and the Owner have  entered  into  the
Bareboat Charter dated as of November 28, 1995 (the "Original Agreement")
under  which  the Owner as the owner of the Vessel M.G.  HULME,  JR.  (as
described hereunder at Schedule A (the "Vessel") chartered such Vessel to
the Charterer on a bareboat basis to conduct drilling activities;

          WHEREAS,  with the concurrence of the Owner and the  Charterer,
the Vessel is undergoing an upgrade;

          WHEREAS,  the  Charterer  desires to continue  to  charter  the
Vessel as upgraded, and the Charterer and the Owner have agreed to  amend
and  restate  the  Original Agreement in accordance with  the  terms  and
conditions set forth herein;

          NOW,  THEREFORE,  the parties hereto, each in consideration  of
the  promises and agreements of the other, hereby amend and  restate  the
Original Agreement in its entirety as follows:

                           ARTICLE 1
                          DEFINITIONS

When used in this Charter (in addition to the terms defined elsewhere  in
this Charter), the following terms shall have the following meanings:

     "Additional  Collateral" has the meaning assigned to  such  term  in
     Section 12.5(a).

     "Adequate  Provision"  means,  with  respect  to  any  Lien,  claim,
     liability  or other obligation, the posting with or for the  benefit
     of  the Owner Group, of a bond or letter of credit issued by a bank,
     surety or other similar institution acceptable to the Owner or other
     collateral  acceptable  to  the Owner, in  each  case,  pursuant  to
     documentation in form and substance acceptable to the Owner,  having
     a  face  amount  or fair market value no less than the  amount  owed
     under such Lien, claim, liability or other obligation.

     "Affiliate(s)"  in  relation to a party  hereto,  means  any  person
     controlling, controlled by or under common control with such  party,
     with  the concept of control in such context meaning the possession,
     directly  or  indirectly,  of  the power  to  direct  or  cause  the
     direction of the management and policies of another, whether through
     the ownership of voting securities, by contract or otherwise.

     "Appraisal   Procedure"  means  the  procedure  specified   in   the
     succeeding sentences for determining an amount or value.  If  either
     the  Owner  or the Charterer shall give written notice to the  other
     requesting  determination of such amount or value by appraisal,  the
     Owner  and the Charterer shall consult for the purpose of appointing
     a  mutually  acceptable qualified independent  appraiser.   If  such
     parties  shall be unable to agree on an appraiser within 20 days  of
     the  giving of such notice, such amount or value shall be determined
     by  a  panel of three independent appraisers, one of whom  shall  be
     selected by the Charterer, another of whom shall be selected by  the
     Owner  and  the  third  of whom shall be selected  by  the  American
     Arbitration  Association  (or  its  successor)  if  such  other  two
     appraisers shall be unable to agree upon a third appraiser within 10
     days  of  the  selection date of the second of such two  appraisers;
     provided,  that if (a) either party shall not select  its  appraiser
     within  35  days after giving of such notice, such amount  or  value
     shall  be  determined solely by the appraiser selected by the  other
     party,  and  (b)  if both parties shall not select their  respective
     appraisers  within  such  period, such  amount  or  value  shall  be
     determined   solely  by  an  appraiser  selected  by  the   American
     Arbitration  Association  (or  its  successor).   The  appraiser  or
     appraisers  appointed pursuant to the foregoing procedure  shall  be
     instructed  to determine such amount or value within the lesser  of:
     (i)  45  days after such appointment and (ii) the applicable  period
     remaining  until delivery of such appraisal is required  under  this
     Charter  and the Charter Documents; and such determination shall  be
     final  and binding upon the parties.  If three appraisers  shall  be
     appointed, the determination of the appraiser that shall differ most
     from  the other two appraisers shall be excluded, the remaining  two
     determinations  shall be averaged and such average shall  constitute
     the  determination of the appraisers.  The Charterer shall  pay  all
     fees  and  expenses relating to an appraisal for any  purpose  under
     this Charter.

     "Basic  Hire" means the charter hire amount payable on  the  Payment
     Dates as set forth in Section 12.1.

     "Business Day" means any day on which commercial banks are open  for
     business in New York City, New York.

     "Charter" means this Bareboat Charter as it may from time to time be
     supplemented,  amended, waived or modified in  accordance  with  the
     terms hereof.

     "Charter  Documents" means this Charter, the Guaranty, the  Security
     Documents,  the Upgrade Documents and any other document, instrument
     or agreement executed in connection herewith or therewith.

     "Charter Period" means, collectively, the Primary Term and, if  any,
     the Extended Term.

     "Charterer"  means  Reading  &  Bates  Drilling  Co.,  an   Oklahoma
     corporation, and its successors and assigns to the extent  permitted
     by the terms hereof.

     "Charterer   Group"   means,  individually  and  collectively,   the
     Charterer   and   its  subsidiaries,  its  and  their  co-venturers,
     contractors and subcontractors and its and their Affiliates, and the
     employees, invitees and insurers of all of those entities, but shall
     expressly exclude the Owner Group.

     "Code"  means the United States Internal Revenue Code  of  1986,  as
     amended,  and  any amending or superseding tax laws  of  the  United
     States of America.

     "Contractor" means Ham Marine, Inc., a Mississippi corporation,  and
     any  other  Person performing all or any part of the Second  Upgrade
     Program.

     "Cunningham Mortgage" means the Preferred Ship Mortgage dated as  of
     November  28,  1995 made by the Charterer in favor  of  the  Trustee
     covering  the Jim Cunningham, as amended by the First Supplement  to
     Preferred  Ship Mortgage dated as of July ___, 1997, and  any  other
     amendment,  supplement  or  modification  thereof  entered  into  in
     accordance with the term thereof or hereof.

     "Crude Oil" means any hydrocarbon product that is in liquid form  at
     surface temperature and pressure, including condensate.

     "Debt" means, for any Person (without duplication), whether recourse
     is  to all or a portion of the assets of such Person and whether  or
     not  contingent,  (a)  every obligation of  such  Person  for  money
     borrowed,  (b) every obligation of such Person evidenced  by  bonds,
     debentures,   notes   or  other  similar  instruments,   (c)   every
     reimbursement obligation of such Person with respect to  letters  of
     credit,  bankers' acceptances or similar facilities issued  for  the
     account  of such Person, (d) every obligation of such Person  issued
     or  assumed  as the deferred purchase price of property or  services
     (but excluding trade accounts payable or accrued liabilities arising
     in  the  ordinary course of business), (e) every obligation of  such
     Person  under  a  lease  that  under generally  accepted  accounting
     principles  is  required to be capitalized on the balance  sheet  of
     such Person, (f) every obligation under any charter, operating lease
     or  title  retention arrangement with an original term in excess  of
     one  year  or which is renewable at the option of the tenant  for  a
     total term of one year or more, (g) the maximum fixed redemption  or
     repurchase  price  of redeemable stock of such Person  that  by  its
     terms  or otherwise is required to be redeemed, if any, at the  time
     of  determination plus accrued but unpaid dividends, and  (h)  every
     obligation  of  the type referred to in clauses (a) through  (g)  of
     another  Person and all dividends of another Person the  payment  of
     which,  in either case, such Person has guaranteed or is responsible
     or  liable  for,  directly or indirectly, as obligor,  guarantor  or
     otherwise.

     "Default" means any event or condition which after notice  or  lapse
     of time or both would become an Event of Default.

     "Delivery Date" means November 29, 1995.

     "Drilling Contracts" means any contractual arrangement with  respect
     to  the Vessel providing for the use or employment of the Vessel for
     the  locating  of,  drilling for, development of, extraction  of  or
     processing  of Crude Oil, Natural Gas or mineral deposits  found  in
     underwater locations, and activities ancillary thereto.

     "Escalated" means, with respect to any amount and as at any date  of
     determination,  such  amount as multiplied by  a  fraction  (a)  the
     numerator  of  which is the Consumer Price Index - U.S.  Average  as
     published by the Bureau of Statistics of the Department of Labor (or
     if  the  publication of the Consumer Price Index is discontinued,  a
     comparable  index similar in nature to the discontinued index  which
     clearly  reflects  the change in the real value  of  the  purchasing
     power  of  the Dollar as reasonably selected by the Owner (hereafter
     in  this  definition referred to as the "index")) reported  for  the
     calendar   year  immediately  preceding  such  date  and   (b)   the
     denominator of which is equal to the index reported for 1995.

     "Event  of  Default"  means any of the events  defined  as  such  in
     Section 3.3(b).

     "Event  of Loss" means any of the following events:  (a) the  actual
     or  constructive loss of the Vessel for the lesser of  (i)  six  (6)
     months  (or such longer period of up to 12 months from the  date  of
     such  loss  so  long  as the Charterer shall have made  arrangements
     within  such six (6) month period for the repair and restoration  of
     the  Vessel  satisfactory to the Owner and the Independent  Engineer
     and  is  diligently proceeding with such repair and restoration)  or
     (ii)  the  remainder of the Charter Period, (b) the loss,  theft  or
     destruction of the Vessel, (c) damage or destruction of  the  Vessel
     or  damage to the Vessel to such extent as shall make repair thereof
     uneconomical  or  other  event  resulting  in  the  Vessel's   being
     permanently rendered unfit for normal use for any reason whatsoever,
     other  than  obsolescence,  or  (d) the condemnation,  confiscation,
     requisition, seizure, forfeiture or other taking of title to or  use
     of  the  Vessel (except that, in the case of a taking of  title,  or
     taking of use by the United States Government, a period equal to the
     lesser of (i) six (6) months and (ii) the then remaining term of the
     Charter Period shall have elapsed from the date of such taking),  in
     each case as determined by the Owner.

     "Expiration Date" means the last day of the Primary Term.

     "Extended  Term"  has the meaning assigned to such term  in  Section
     3.1(b).

     "Fair  Market  Sale Value" means, for any property,  the  cash  sale
     value  of  such  property that would be obtained in an  arm's-length
     transaction  between  an  informed  and  willing  seller  under   no
     compulsion  to  sell and an informed and willing  buyer-user  (other
     than  a  person currently in possession or a used equipment dealer),
     which  determination shall be made (a), in the case of  the  Vessel,
     without  deduction for any costs of removal of the Vessel  from  the
     location  of  current  use  and in the case  of  the  First  Upgrade
     Severables  without deduction for the cost of removal  or  delivery,
     and  (b)  on the assumption that such property is free and clear  of
     all  liens, charges and encumbrances and, in the case of the  Vessel
     is  in  the  condition  and repair in which it  is  required  to  be
     returned pursuant to Section 3.5 hereof (but otherwise on an "as-is"
     basis).

     "First  Upgrade Maintenance" means that portion of the  improvements
     contemplated by the First Upgrade Program that constitutes  ordinary
     and usual maintenance as more fully described on Schedule B-1.

     "First Upgrade Nonseverables" means that portion of the improvements
     contemplated  by  the  First Upgrade Program  that  is  not  readily
     removable  without  causing material damage to the  Vessel  as  more
     fully described on Schedule B-1.

     "First Upgrade Program" means the upgrade of the Vessel from its 850
     meter water capacity to 1,000 meters as more fully described in  the
     First  Upgrade Contract, any other Upgrade Documents related thereto
     and the plans, specifications and schedules set forth on Schedule B-
     1.

     "First  Upgrade  Severables" means that portion of the  improvements
     contemplated by the First Upgrade Program that is readily  removable
     from  the  Vessel without causing material damage to the  Vessel  as
     more fully described on Schedule B-1.

     "Guarantor"   means   Reading  &  Bates  Corporation,   a   Delaware
     corporation,  or  any  other  Person  that  guarantees  or  provides
     collateral  or  other  credit support for  the  obligations  of  the
     Charterer hereunder.

     "Guaranty" shall mean the Guaranty entered into by any Guarantor for
     the  benefit  of  the Owner, as the same may from time  to  time  be
     supplemented,  amended, waived or modified in  accordance  with  the
     terms thereof.

     "Highest Lawful Rate" means the maximum nonusurious contract rate of
     interest permitted by applicable law.

     "Hire" means Basic Hire and Supplemental Hire, collectively.

     "Income  Taxes" means all income, franchise or similar  Taxes  which
     are based on, or measured by or with respect to, net income.

     "Indemnitee" has the meaning assigned to such term in Section 14.3.

     "Independent  Engineer"  means Barnett &  Casbarian,  or  any  other
     Person  selected  by the Owner and approved by the Charterer,  which
     approval shall not be unreasonably withheld or delayed.

     "Investor"  means  each of GATX Marine Investors  Corporation,  MDFC
     Equipment  Leasing Corporation, Heller Financial Leasing,  Inc.  and
     their respective successors and assigns.

     "Jim  Cunningham"  means the drilling rig Jim  Cunningham,  official
     number 651643.

     "Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
     right, security interest or claim of any nature.

     "Limited Liability Company Agreement" means the Amended and Restated
     Limited Liability Company Agreement dated as of July ___, 1997 among
     GATX   Marine   Investors   Corporation,  MDFC   Equipment   Leasing
     Corporation, and Heller Financial Leasing, Inc. creating the Owner.

     "MOA"  means  the Memorandum of Agreement dated as of  November  28,
     1995 between Reading and Bates, Inc. and the Owner.

     "Moody's"  means  Moody's  Investor  Service,  Inc.,  a   New   York
     corporation, and its successors and assigns.

     "Mortgages"  means  the Cunningham Mortgage and any  other  mortgage
     that may from time to time secure the Obligations.

     "Natural  Gas" means any mixture of hydrocarbons or of  hydrocarbons
     and  noncombustible gases, in a gaseous form at surface  temperature
     and  pressure, which consists essentially of methane,  but  includes
     ethane, propane, butanes, and other liquefiable hydrocarbons.

     "1954  Code" means the United States Internal Revenue Code of  1954,
     as  amended  and in effect prior to the enactment of the Tax  Reform
     Act of 1986 (Pub. L. No. 99-514).

     "Nonseverables" means improvements, modifications and  additions  to
     the Vessel that are not readily removable without causing damage  to
     the  Vessel or that in accordance with applicable statutes,  orders,
     cases, rules, regulations and other laws may not be removed from the
     Vessel.

     "Obligations"  means  the  obligations of  the  Obligors  under  the
     Charter Documents.

     "Obligors" means, collectively, the Charterer and each Guarantor.

     "Operating Area" means any area in which the Charterer shall operate
     the Vessel with notice to the Owner pursuant to Section 13.4.

     "Overdue Rate" means an interest rate per annum equal to the  lesser
     of  (a) the Prime Rate plus four percent (4%) per annum and (b)  the
     Highest Lawful Rate.

     "Owner"  means  Deep  Sea  Investors, L.L.C.,  a  limited  liability
     company organized under the laws of the State of Delaware.

     "Owner  Group" means, individually and collectively, the  Owner  and
     its  subsidiaries,  its and their co-venturers and  contractors  and
     subcontractors   and  the  Investors,  its  and   their   respective
     Affiliates   (other  than  the  Charterer),  and   its   and   their
     shareholders,    directors,   officers,   attorneys,    accountants,
     consultants   and  representatives,  the  employees,  insurers   and
     invitees  of all of those entities, the Trustee and the Vessel,  but
     shall expressly exclude Charterer Group.

     "Owner  Liens" means Liens described in clause (b) of the definition
     of Permitted Liens.

     "Owner's  Cost" means, as of any date, the sum of (a)  the  purchase
     price of the Vessel, (b) the First Upgrade Nonseverable Cost and (c)
     the Second Upgrade Cost.

     "Payment Date" means each date that is a monthly anniversary date of
     the  calendar day immediately before the Delivery Date (such monthly
     date  being deemed for this purpose to be the day of each succeeding
     month  corresponding  to such date immediately before  the  Delivery
     Date  or, if such month does not have a corresponding day, the  last
     day  of  such  month), up to and including the end  of  the  Charter
     Period.

     "Permitted Liens" means, as of any date, (a) any lien arising out of
     a  claim  for  crew's wages, supplies or the like,  or  salvage  not
     covered   by   insurance,  or  for  taxes,  assessments   or   other
     governmental charges, in each case, incurred in the ordinary  course
     of  business,  and in existence as of the date of determination  for
     not  more than 30 days and, as of the date of determination, neither
     overdue nor in the aggregate in excess of $1,000,000 unless such are
     being  contested  in  good  faith and  by  appropriate  Persons  and
     proceedings,  in  each  case,  in the Owner's  judgment  and  unless
     Adequate Provision has been provided by the Charterer for payment of
     such  amounts that may become due and payable and such Lien attaches
     only  to  such  Adequate Provision and not to the Vessel,  any  part
     thereof  or  any Drilling Contract and, in the Owner's judgment,  no
     risk of forfeiture or other loss of the Vessel, any part thereof, or
     any right of the Charterer or the Owner under any Drilling Contract,
     exists,  or  is  threatened or imminent; (b) any  lien  created  by,
     through  or under the Owner as a result of claims against the  Owner
     for  which  the  Owner is not entitled to indemnification  from  the
     Charterer  or  any  Guarantor, or discharge  of  which  is  not  the
     obligation  of the Charterer or any Guarantor, whether  at  law,  by
     contract, in equity or under admiralty principles; and (c)  Drilling
     Contracts  complying  with the provisions of this  Charter  and  the
     other  Charter Documents and the rights of the Charterer under  this
     Charter, including subcharters of the Vessel in accordance with  the
     terms  of  this Charter, provided that no such contracts, rights  or
     subcharters  shall  suffer or permit to be  continued  any  Lien  or
     encumbrance  incurred  by Charterer or any subcharterer  or  any  of
     their  agents which might have priority over the title and  interest
     of the Owner in the Vessel or any part thereof or equipment or other
     property used in connection with the Vessel.

     "Person"   means  any  individual,  corporation,  limited  liability
     company,  partnership,  joint  venture,  association,  joint   stock
     company,  trust or unincorporated organization or any government  or
     any agency or any political subdivision thereof.

     "Primary  Term"  has the meaning assigned to such  term  in  Section
     3.1(a).

     "Prime  Rate"  means the per annum rate of interest  published  from
     time  to  time  in  the Eastern edition of The Wall Street  Journal,
     which  rate  shall change with each published change in  such  rate,
     effective as of the date of such publication.

     "Purchase  Option  Price" means the Fair Market Sale  Value  of  the
     Vessel determined in accordance with Section 3.8, not to exceed  40%
     of Owner's Cost.

     "Randolph Yost" means the Randolph Yost, Official Number 601699, and
     all  fixtures,  equipment and improvements of  any  kind  whatsoever
     installed or located thereon and owned by the Charterer.

     "Rated Securities" means the implied long-term senior unsecured debt
     of Reading & Bates.

     "Reading  &  Bates"  means Reading & Bates Corporation,  a  Delaware
     corporation.

     "Rights Assignment" has the meaning assigned to such term in Section
     16.3.

     "Sale  Date" means the date, if any, on which the Charterer acquires
     the  Vessel  by exercise of its purchase option granted pursuant  to
     Section 3.7.

     "Second Upgrade Agreement" means the Upgrade Agreement dated July __
     and  effective  as  of  April 22, 1997 between  the  Owner  and  R&B
     Drilling, individually and as agent.

     "Second  Upgrade Contract" means the Ship Repair Agreement dated  as
     of   April   22,  1997  between  Ham  Marine,  Inc.,  a  Mississippi
     corporation, and the Charterer.

     "Second   Upgrade  Cost"  means  an  amount  not   to   exceed   (i)
     $25,346,756.15  to be paid under the Second Upgrade  Agreement  plus
     (ii) any amounts authorized by the Owner to be paid to construct the
     Second Upgrade Program.

     "Second Upgrade Default" means the occurrence of an Upgrade Event of
     Default (as defined in the Second Upgrade Agreement).

     "Second  Upgrade Program" means the upgrade of the Vessel  from  its
     current  1,000  meter water capacity to 4,000  feet  as  more  fully
     described  in  the  Second  Upgrade  Agreement,  any  other  Upgrade
     Documents  (as  defined  in the Second Upgrade  Agreement)  and  the
     plans, specifications and schedules set forth on Schedule B-2.

     "Second  Upgrade  Severables"  means  the  severables  acquired   in
     connection with the Second Upgrade Program.

     "Security Agreement" means the Security Agreement dated November 28,
     1995  between  the Owner and the Trustee, as amended  by  the  First
     Amendment  to Security Agreement dated as of July ___, 1997  between
     the Owner and the Trustee, as such agreement may be further amended,
     supplemented  or modified in accordance with the terms  thereof  and
     hereof.

     "Security  Documents" means the Mortgages, the  Security  Agreement,
     and  any  other  agreement,  instrument  or  document  executed  and
     delivered for the purpose of supporting or securing the Obligations.

     "Severables" means improvements, modifications or additions  to  the
     Vessel  that  are readily removable without causing  damage  to  the
     Vessel  and may, in accordance with all applicable statutes, orders,
     cases,  rules,  regulations  and other laws,  be  removed  from  the
     Vessel.

     "S&P"  means Standard & Poor's Ratings Group, a division of  McGraw-
     Hill Companies, Inc., a New York corporation, and its successors and
     assigns.

     "Shipping  Act,  1916"  shall mean the United States  Shipping  Act,
     1916, as amended.

     "Shipyard"   means  Ham  Marine,  Inc.'s  shipyard  in   Pascagoula,
     Mississippi.

     "Stipulated Loss Value" as of any Payment Date listed by  number  in
     Schedule D hereto means an amount determined by multiplying  Owner's
     Cost by the percentage set forth in Schedule D opposite such Payment
     Date number.

     "Subsidiary"   means   for  any  Person,  any   other   corporation,
     partnership,  joint  venture, limited  liability  company  or  other
     entity  at  least  a  majority  of the  voting  stock  of  which  is
     beneficially  owned, directly or indirectly by such  Person  or  its
     Subsidiaries.

     "Substitute  Collateral" has the meaning assigned to  such  term  in
     Section 12.5(d).

     "Supplemental Hire" shall mean any and all amounts, liabilities  and
     obligations  other  than Basic Hire that the  Charterer  assumes  or
     agrees to pay hereunder to the Owner, including, without limitation,
     Stipulated Loss Value and indemnity payments.

     "Taxes"  means all federal, foreign, state, local or  other  net  or
     gross  income,  gross  receipts,  sales,  use,  stamp,  documentary,
     transfer,  general consumption, ad valorem, property,  value  added,
     franchise,   production,  import,  export,   withholding,   payroll,
     employment,  excise  or  similar taxes, assessments,  duties,  fees,
     levies  or other governmental charges, including without limitation,
     license,  recording, documentation and registration  fees,  together
     with  any  interest  thereon, any penalties,  additions  to  tax  or
     additional amounts with respect thereto and any interest in  respect
     of such penalties, additions or additional amounts.

     "Third  Parties"  means  all  persons  and  entities  that  are  not
     Charterer Group or Owner Group.

     "Timely  Liquidation Value" means, for any property, the  cash  sale
     value  of  such  property that would be obtained in an  arm's-length
     transaction between a seller that must sell such property in no more
     than   90  days  and  an  informed  and  willing  buyer-user,  which
     determination shall be made with a deduction for the removal of  the
     property  from its location and on the assumption that such property
     is  in  its current actual condition, which condition shall  reflect
     its  current  physical  condition and location  and  any  applicable
     legal, governmental, physical, contractual and other impediments  to
     sale or use.

     "Trustee"  means  Wilmington Trust Company  not  in  its  individual
     capacity  but solely as trustee for the benefit of the  Owner  under
     the Mortgages and any of its successors or assigns in such capacity.

     "UCC"  means the Uniform Commercial Code as enacted in the State  of
     New York.

     "Upgrade  Documents" has the meaning assigned to such  term  in  the
     Second Upgrade Agreement.

     "Upgrade  Programs" means, collectively, the First  Upgrade  Program
     and the Second Upgrade Program.

     "Vessel" means the M. G. HULME, JR., as described on Schedule A,  as
     upgraded  pursuant  to  the  Upgrade  Programs,  and  all  fixtures,
     equipment  and  improvements  of any kind  whatsoever  installed  or
     located   thereon  pursuant  to  this  Charter  (including,  without
     limitation,  the  First Upgrade Severables and  the  Second  Upgrade
     Severables)  or  as  otherwise agreed to by the  Charterer  and  the
     Owner.

                           ARTICLE 2
                    SCHEDULES AND OBJECTIVES

2.1  Schedules

     The  following schedules are attached hereto and made a part  hereof
     for  all purposes.  In the event there are any conflicts between the
     body  of  this  Charter  and  the  schedules  attached  hereto,  the
     provisions in the body of this Charter will prevail.

     (a)  Schedules

          Schedule A - Description   of   the   Vessel,   including
                         specifications.
 
          Schedule B-1 - First Upgrade Program

          Schedule B-2 - Second Upgrade Program

          Schedule C - Charterer's Insurance

          Schedule D - Stipulated Loss Value

          Schedule E - Pending Litigation

          Schedule F - Computation of Basic Hire Adjustment for  Second
                         Upgrade

2.2  Objectives

     The Owner shall provide the Vessel to the Charterer on a bareboat or
     demise  charter basis.  The Owner shall not be responsible  for  any
     other service, manning, operations or equipment whatsoever.  By  the
     Owner providing the Vessel to the Charterer in accordance with  this
     Charter,  upon the terms and subject to the conditions  hereof,  the
     Charterer shall take and have command, possession and control of the
     Vessel  during  the  term of this Charter; as  a  part  hereof,  and
     without  limit to the foregoing, the Charterer's command, possession
     and  control of the Vessel shall specifically include the obligation
     to  have  the  Vessel under the command of an Offshore  Installation
     Manager  certified  by  and for the area  in  which  the  Vessel  is
     operating from time to time.

2.3  CONDITION  OF THE PROPERTY.  THE CHARTERER ACKNOWLEDGES  AND  AGREES
     THAT  IT  IS CHARTERING THE VESSEL AND OTHER PROPERTY HEREUNDER  "AS
     IS",   "WHERE  IS",  AND  "WITH  ALL  FAULTS,  WHETHER   LATENT   OR
     DISCERNIBLE", WITHOUT REPRESENTATION, WARRANTY OR COVENANT  (EXPRESS
     OR  IMPLIED) BY THE OWNER, OWNER GROUP OR ANY INVESTOR AND  IN  EACH
     CASE  SUBJECT TO (A) THE EXISTING STATE OF TITLE, (B) THE RIGHTS  OF
     ANY   PARTIES  IN  POSSESSION  THEREOF,  (C)  ALL  APPLICABLE  LEGAL
     REQUIREMENTS  AND  (D)  VIOLATIONS OF LEGAL REQUIREMENTS  WHICH  MAY
     EXIST  ON THE DATE HEREOF.  NONE OF OWNER, ANY MEMBER, OWNER  GROUP,
     OR  ANY  INVESTOR  HAS  MADE OR SHALL BE DEEMED  TO  HAVE  MADE  ANY
     REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED)  OR  SHALL
     BE  DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE,  VALUE,
     HABITABILITY, USE, SEAWORTHINESS, CONDITION, STABILITY, SUITABILITY,
     DESIGN,  OPERATION,  CLASS,  COMPLIANCE WITH  LAWS,  CONFORMANCE  TO
     SPECIFICATIONS, MERCHANTABILITY OR FITNESS FOR USE OF  ANY  PROPERTY
     (OR  ANY  PART THEREOF FOR A PARTICULAR PURPOSE OR WITH  RESPECT  TO
     PATENT  INFRINGEMENT),  OR  ANY OTHER  REPRESENTATION,  WARRANTY  OR
     COVENANT  WHATSOEVER,  EXPRESS  OR  IMPLIED,  WITH  RESPECT  TO  ANY
     PROPERTY  (OR ANY PART THEREOF), AND NONE OF OWNER, OWNER  GROUP  OR
     ANY INVESTOR SHALL BE LIABLE FOR ANY LATENT, HIDDEN OR PATENT DEFECT
     THEREIN,  ANY  REPRESENTATION,  WARRANTY  OR  PROMISE,  EXPRESS   OR
     IMPLIED,  WHICH  ANY MANUFACTURER OR BUILDER OF THE  VESSEL  OR  ANY
     PROPERTY  (OR  ANY PART THEREOF) MAY HAVE MADE OR MAY BE  DEEMED  TO
     HAVE  MADE  OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF,  TO
     COMPLY  WITH  ANY LEGAL REQUIREMENT OR ANY DAMAGES, WHETHER  ACTUAL,
     SPECIAL, CONSEQUENTIAL OR INCIDENTAL, ARISING HEREFROM OR THEREFROM.
     THE  CHARTERER  HAS BEEN AFFORDED FULL OPPORTUNITY  TO  INSPECT  THE
     VESSEL,  IS (INSOFAR AS THE OWNER IS CONCERNED) SATISFIED  WITH  THE
     RESULTS OF ITS INSPECTIONS AND IS ENTERING INTO THIS CHARTER  SOLELY
     ON  THE  BASIS OF THE RESULTS OF ITS OWN INSPECTIONS, AND ALL  RISKS
     INCIDENT  TO  THE  MATTERS DESCRIBED IN THE PRECEDING  SENTENCE,  AS
     BETWEEN  OWNER, THE OWNER GROUP AND THE INVESTORS, ON THE ONE  HAND,
     AND  THE  CHARTERER,  ON THE OTHER HAND, ARE  TO  BE  BORNE  BY  THE
     CHARTERER.  NOTHING IN THIS SECTION 2.3 OR THE CHARTER SHALL OPERATE
     TO  NEGATE  OR  DIMINISH ANY CLAIM FOR BREACH OF ANY REPRESENTATION,
     WARRANTY OR COVENANT THAT THE OWNER MAY NOW OR HEREAFTER HAVE  UNDER
     ANY CHARTER DOCUMENT OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED
     THEREBY.

                           ARTICLE 3
            TERM, DELIVERY DATE AND PURCHASE OPTION

3.1  Duration

     (a)  Subject to the terms and conditions of this Charter, the  Owner
          bareboat  (demise) charters to the Charterer, and the Charterer
          bareboat  (demise) charters from the Owner, the  Vessel  for  a
          period  beginning on the Delivery Date and ending on  the  10th
          anniversary of the Delivery Date (the "Primary Term"), with the
          option to extend this Charter pursuant to Section 3.1(b).

     (b)  At  the  end of the Primary Term, and subject to the terms  and
          conditions  of  this Charter, the term of this Charter  may  be
          extended for a period of 90 days (the "Extended Term")  by  the
          Charterer providing 180 days' written notice to the Owner prior
          to  the end of the Primary Term if, and only if, such extension
          is  necessary to complete a Drilling Contract in progress  that
          is  in  full force and effect on the date such extension notice
          is  delivered  and no Default or Event of Default has  occurred
          and  is  continuing.   The Charterer,  at  its  sole  cost  and
          expense,  shall provide the Owner with independent verification
          of  the  necessity of any such extension in form and  substance
          satisfactory to the Owner.  During such Extended Term, if  any,
          all  of  the  obligations of the Charterer under  this  Charter
          during the Charter Period shall continue for the Extended Term,
          including, without limitation, the obligation to pay Basic Hire
          under  Section  12.1.  Prior to any extension  of  the  Primary
          Period  for the Vessel, the Charterer shall give the Owner  its
          good  faith estimate of the date on which the existing Drilling
          Contract will be completed.

     (c)  The  Charterer shall, at all reasonable times during  the  last
          180 days of the Charter Period, permit access to the Vessel  to
          the  Owner and to Persons designated by the Owner in connection
          with  any prospective sale or prospective rechartering  of  the
          Vessel  by  the Owner, and shall permit the inspection  of  the
          Vessel by such Persons; provided, however, that the exercise of
          such rights shall in no way unreasonably interfere with the use
          of the Vessel by the Charterer.

3.2  Delivery of the Vessel to the Charterer

     The  Vessel  was delivered by the Owner to the Charterer  at  Garden
     Banks Block 387, Outer Continental Shelf, Gulf of Mexico on November
     29,  1995,  pursuant  to the MOA.  Upon such  delivery,  the  Vessel
     became subject to all the terms and conditions of this Charter.

     Such  delivery of the Vessel by the Owner to the Charterer,  without
     further  action, irrevocably constituted acceptance by the Charterer
     of  the  Vessel  for  all  purposes of this Charter,  and  shall  be
     conclusive proof that the Vessel was at such time in compliance with
     all  requirements of this Charter and that the Vessel  was  at  such
     time  seaworthy, in accordance with specifications, in good  working
     order,  condition and repair and without defect or inherent vice  in
     title,  condition, design, operation or fitness for use, whether  or
     not  discoverable by the Charterer as of the date hereof,  and  free
     and  clear  of  all  Liens,  other than Permitted  Liens;  provided,
     however, that nothing contained herein shall in any way diminish  or
     otherwise affect any right the Charterer,  the Owner or any of their
     respective  Affiliates may have against any shipyard,  manufacturer,
     supplier, vendor or any other Person in respect of the Vessel.  FROM
     AND AFTER THE DELIVERY DATE, THE CHARTERER SHALL NOT BE ENTITLED  TO
     MAKE  OR  ASSERT  ANY CLAIM AGAINST OWNER, THE OWNER  GROUP  OR  ANY
     INVESTOR  ON ACCOUNT OF ANY REPRESENTATION OR WARRANTY WITH  RESPECT
     TO THE VESSEL, THE CONSUMABLE STORES ON BOARD OR WITH RESPECT TO ITS
     TITLE, SEAWORTHINESS, MERCHANTABILITY, FITNESS, HABITABILITY, VALUE,
     USE,  CONDITION, SUITABILITY, CLASS, COMPLIANCE WITH  LAWS,  DESIGN,
     OPERATION,  CONFORMANCE TO SPECIFICATIONS NOR  ABSENCE  OF  DEFECTS,
     LATENT,  HIDDEN,  PATENT  OR  OTHER,  NOR  WITH  RESPECT  TO  PATENT
     INFRINGEMENT.   FROM  AND  AFTER THE DELIVERY  DATE,  THE  CHARTERER
     WAIVES ANY CLAIM IT MIGHT HAVE AGAINST OWNER, THE OWNER GROUP OR ANY
     INVESTOR  FOR ANY LIABILITY, CLAIM, LOSS, DAMAGE OR EXPENSE  OF  ANY
     KIND OR NATURE BY OR WITH RESPECT TO THE VESSEL OR ANY DEFICIENCY OR
     DEFECT  THEREIN  OR  INADEQUACY  THEREOF,  THE  USE  OR  MAINTENANCE
     THEREOF, ANY INTERRUPTION OR LOSS OF SERVICE OR USE THEREOF, WHETHER
     IN CONTRACT, TORT OR ANY THEORY OF PRODUCT OR STRICT LIABILITY.

3.3  Early Termination

     This  Charter  shall  terminate in accordance  with  any  notice  of
     termination given in accordance with this Section 3.3.  This Charter
     shall  also  terminate at the time stipulated below for any  of  the
     following reasons:

     (a)  At  the  option  of  the  Owner, this Charter  shall  terminate
          immediately  and  upon written notice to the Charterer  if  any
          Event  of  Loss occurs and upon such termination the  Charterer
          shall  pay the Owner on the earlier of (i) the receipt  of  any
          insurance payable in respect of such Event of Loss and (ii)  60
          days after the occurrence of such Event of Loss, the Stipulated
          Loss  Value  of the Vessel set forth on Schedule D  as  of  the
          Payment  Date  preceding the occurrence of such Event  of  Loss
          plus  any past due Hire, plus the sum of  the per diem  of  the
          Basic  Hire  due on the next Payment Date, for each day  during
          the period from the next preceding Payment Date to the date  of
          such  Event of Loss (unless the Event of Loss shall occur on  a
          Payment Date, in which case, such payment shall be equal to the
          Stipulated Loss Value on such Payment Date plus any Hire due on
          such  Payment  Date),  in  each case,  together  with  interest
          thereon  computed from the date of such Event of  Loss  to  the
          date of actual payment at a rate per annum equal to the Overdue
          Rate.  If the time of such loss be uncertain, the loss shall be
          deemed  to  have occurred as of the time at which communication
          from  the  Vessel  was last heard.  It is expressly  understood
          that the Charterer shall bear all risk of any such loss.

     (b)  Each of the following events shall be an "Event of Default":

          (i)  the  Charterer shall fail to pay the Owner any amounts due
               and payable hereunder when due; or

          (ii) the Charterer shall fail to perform any of its obligations
               under  Article 5, Sections 7.3, 10.1, 11.1(a), 11.6, 11.7,
               11.8,  12.5,  13.4, or 14.6, Article 15, Section  17.3  or
               Article 18 hereof or any other obligation as to which  the
               Charterer  is  specifically accorded elsewhere  herein  or
               otherwise  any  notice and/or grace  period  in  which  to
               perform such obligation or to cure such breach thereof  or
               default  therein  and such notice shall  have  been  given
               and/or  such grace period shall have expired without  cure
               of such failure; or

        (iii)  any   Obligor  shall   fail  to   perform   any   of   its
               obligations hereunder or under any Charter Document (other
               than those specified in Section 3.3(a) or (b)(i)) which is
               not cured within the lesser of (A) 10 days or (B) the then
               remaining  term  of the Charter Period of  the  occurrence
               thereof; or

          (iv) any  representation, warranty or statement made or  deemed
               made by any Obligor in any Charter Document or information
               furnished  by  or  on  behalf  of  any  Obligor   in   any
               instrument, certificate or other document delivered by  or
               on  behalf of any Obligor shall be untrue in any  material
               respect on the date made or deemed made;  or

          (v)  (i)  any  Obligor  shall fail to pay any principal  of  or
               premium or interest on any Debt (excluding Debt under this
               Charter) of such Obligor under which any aggregate  amount
               of  at least $1,000,000 is outstanding or committed,  when
               the  same becomes due and payable, and such failure  shall
               continue  after any applicable grace period; or  (ii)  any
               other event shall occur or condition shall exist under any
               agreement  or  instrument relating to any  such  Debt  and
               shall  continue after any applicable grace period, if  the
               effect   of  such  event  or  condition  results  in   the
               acceleration of, the maturity of such Debt;  or  any  such
               Debt  shall be declared to be due and payable, or required
               to  be  prepaid  (other  than  by  a  regularly  scheduled
               required prepayment), redeemed, purchased or defeased,  or
               an  offer to prepay, redeem, purchase or defease such Debt
               shall  be required to be made, in each case, prior to  the
               stated  maturity thereof; or legal action shall  be  taken
               with  respect  to  such other event  (including,  but  not
               limited   to,  the  commencement  of  proceedings  seeking
               specific  performance  or injunctive  or  other  equitable
               relief); or

          (vi) any  Obligor  shall generally not pay its  debts  as  such
               debts  become due, or shall admit in writing its inability
               to  pay  its  debts  generally, or shall  make  a  general
               assignment for the benefit of creditors; or voluntarily or
               involuntarily dissolves or is dissolved, or terminates  or
               is terminated; or any proceeding shall be instituted by or
               against such Person or any of its subsidiaries seeking  to
               adjudicate   it  a  bankrupt  or  insolvent,  or   seeking
               liquidation,   winding  up,  reorganization,  arrangement,
               adjustment, protection, relief, or composition  of  it  or
               its debts under any law relating to bankruptcy, insolvency
               or  reorganization or relief of debtors,  or  seeking  the
               entry  of  an  order for relief or the  appointment  of  a
               receiver, trustee, custodian or other similar official for
               it or for any substantial part of its property and, in the
               case of any such proceeding instituted against it (but not
               instituted  by  it), either such proceeding  shall  remain
               undismissed or unstayed for a period of 30 days, or any of
               the  actions sought in such proceeding (including, without
               limitation,  the entry of an order for relief against,  or
               the appointment of a receiver, trustee, custodian or other
               similar  official for, it or for any substantial  part  of
               its  property) shall occur; or any such Person or  any  of
               its   subsidiaries  shall  take  any  corporate  or  other
               organizational action to authorize any of the actions  set
               forth  above  in this subsection (vi); provided,  however,
               that  nothing  contained  in this  Section  3.3(b)(vi)  or
               otherwise  shall be deemed to limit, restrict or  prohibit
               Owner   in  any  manner  from  intervening  in  any   such
               proceeding described above and enforcing any of its rights
               and  remedies  whether under this Charter or  any  of  the
               Charter  Documents,  at  law, in admiralty  or  equity  or
               otherwise; or

         (vii) a  judgment  or  order  for  the  payment  of money in the
               amount  of  at least $1,000,000 or more shall be  rendered
               against any Obligor and either (i) enforcement proceedings
               shall  have  been  commenced by  any  creditor  upon  such
               judgment or order or (ii) there shall be any period of  10
               consecutive  days  during which a stay of  enforcement  of
               such  judgment or order, by reason of a pending appeal  or
               otherwise, shall not be in effect; or

        (viii) any  provision  of  this  Charter  or any Charter Document
               shall  at  any time for any reason cease to be  valid  and
               binding  on any Obligor, or shall be declared to  be  null
               and  void, or the validity or enforceability thereof shall
               be  contested  by any Obligor, or any Obligor  shall  deny
               that  it has any or further liability or obligation  under
               this Charter or any Charter Document; or

          (ix) failure  of  any Obligor to comply with, or to  incur  any
               liability, whether fixed or contingent, under or  pursuant
               to,  any  statute,  law, regulation or other  governmental
               requirement  to  which such Obligor is subject,  including
               but  not  limited to ERISA, the Oil Pollution Act of  1990
               ("OPA") and any other environmental, health or safety  law
               or  regulation,  in each case, which might  reasonably  be
               expected  to  have  a  material  adverse  effect  on   the
               condition (financial and otherwise), business prospects or
               the  ability  of  such Obligor to perform its  obligations
               under the Charter Documents; or

          (x)  any  Lien  securing  the  Obligations  shall  fail  to  be
               perfected,  valid or enforceable, or any material  adverse
               effect shall occur respecting the value or suitability  as
               collateral of any property encumbered by such Lien (unless
               the Charterer shall have provided Substitute Collateral in
               accordance  with  Section  12.5(c)),  including,   without
               limitation,  any levy, attachment or seizure  thereof  or,
               subject to Section 12.5, the Lien securing the Obligations
               under  the  Cunningham Mortgage shall fail to be  a  first
               priority  preferred  ship  mortgage  at  any  time   after
               December 31, 1997; or

          (xi) the   Completion   (as  defined  in  the  Second   Upgrade
               Agreement)  shall  not  occur on or before  September  30,
               1997; or

         (xii) a Second Upgrade Default shall occur and be continuing.

3.4  Remedies

     Upon  the  occurrence and during the continuation of  any  Event  of
     Default, the Owner may, at its option, declare this Charter to be in
     default;  and  at  any time thereafter, the Owner may  do,  and  the
     Charterer  shall comply with, one or more of the following,  as  the
     Owner in its sole discretion shall elect:

     (a)  Upon  written  demand (which demand shall have  the  effect  of
          terminating all of the Charterer's rights to use or possess the
          Vessel  or act as agent under the Upgrade Programs), the  Owner
          may  cause  the  Charterer to, and the Charterer hereby  agrees
          that  it  will,  at  the  Charterer's sole  cost  and  expense,
          promptly  redeliver  the  Vessel, or cause  the  Vessel  to  be
          redelivered, to the Owner with all reasonable dispatch  and  in
          the same manner and in the same condition as if the Vessel were
          being  redelivered at the expiration of the Charter  Period  in
          accordance with all of the provisions of Section 3.5,  and  all
          obligations of the Charterer under said Section shall apply  to
          such  redelivery;  or the Owner or its agent,  at  the  Owner's
          option,  without  further notice, may, but shall  be  under  no
          obligation  to, retake the Vessel wherever found, whether  upon
          the  high  seas  or  at any port, harbor  or  other  place  and
          irrespective of whether the Charterer, any subcharterer or  any
          other  person may be in possession of the Vessel,  all  without
          prior  demand  and without legal process, and for that  purpose
          the  Owner or its agent may enter upon any dock, pier or  other
          premises  where  the  Vessel may be  and  may  take  possession
          thereof, without the Owner or its agent incurring any liability
          by  reason  of  such retaking, whether for the  restoration  of
          damage  to  property caused by such retaking or for damages  of
          any kind to any Person for or with respect to any cargo carried
          or  to  be  carried  by  the Vessel or for  any  other  reason.
          Henceforth, the Owner shall hold, possess and enjoy the Vessel,
          free  and clear of any right of the Charterer or its successors
          or  assigns  to  possess  or  use the  Vessel  for  any  reason
          whatsoever.   The exercise by the Owner of its  remedies  under
          this paragraph (a) shall be without prejudice, and in addition,
          to  any  of  the  Owner's other remedies referred  to  in  this
          Charter  or  any of the other Charter Documents or at  law,  in
          admiralty or equity.

     (b)  The  Owner,  by  written notice to the Charterer  specifying  a
          payment  date  not less than 10 days, nor more  than  30  days,
          after the date of such notice, may require the Charterer to pay
          to  the Owner, and the Charterer hereby agrees that it will pay
          to  the Owner, on the payment date specified in such notice, as
          liquidated damages for loss of a bargain and not as  a  penalty
          and  in  lieu of any further Basic Hire payments hereunder,  an
          amount  equal to all unpaid Basic Hire payable on each  Payment
          Date  occurring on or before the payment date specified in such
          notice,  plus  the  Stipulated Loss Value computed  as  of  the
          Payment  Date  preceding  the payment date  specified  in  such
          notice  plus the sum of the per diem of the Basic Hire  due  on
          the  next Payment Date for each day during the period from  the
          next  preceding Payment Date to the date of such Event of  Loss
          (or  as  of such payment date specified in such notice if  such
          payment  date  specified in such notice  is  a  Payment  Date),
          together with interest on such amounts at the Overdue Rate  for
          the  period,  if any, from the Payment Date as  of  which  such
          Stipulated Loss Value is calculated to and including  the  date
          of  actual  payment.  Upon such payment of liquidated  damages,
          the  Owner shall pay over to the Charterer the net proceeds  of
          any  sale,  charter or other disposition of the Vessel  as  and
          when  received but only after deducting all costs and  expenses
          whatsoever  incurred by the Owner in connection  therewith,  to
          the  extent such net proceeds do not exceed the amount of  such
          Stipulated  Loss Value actually so paid.  Nothing contained  in
          the preceding sentence or otherwise shall require the Owner  to
          sell, charter or otherwise dispose of the Vessel at any time.

     (c)  The  Owner may exercise any other right or remedy that  may  be
          available to it under applicable law, in equity or admiralty or
          proceed  by  appropriate court action to enforce the  terms  of
          this Charter or to recover damages for the breach hereof or  to
          terminate this Charter.

     (d)  The Owner or its agent may sell the Vessel at public or private
          sale, with or without notice to the Charterer, advertisement or
          publication,  as  the  Owner may determine,  or  otherwise  may
          dispose of, hold, possess, use, operate, charter (whether for a
          period greater or less than the balance of what would have been
          the  Charter  Period in the absence of the termination  of  the
          Charterer's  rights to the Vessel) to others or keep  idle  the
          Vessel,  all on such terms and conditions and at such place  or
          places as the Owner may determine and all free and clear of any
          rights  of  the Charterer and of any claim of the Charterer  in
          admiralty, in equity, at law or by statute, whether for loss or
          damage  or  otherwise, and without any duty  to  the  Charterer
          except  to  the  extent provided in paragraph (b)  above.   The
          Charterer  and the Owner agree that 10 days' written notice  of
          the  sale to be made by the Owner or its designee or after  the
          time  in  which  a  private sale shall  occur  is  commercially
          reasonable notice for all purposes.

     In  addition,  the  Charterer  shall  be  liable  for  any  and  all
     Supplemental  Hire  payable hereunder before, during  or  after  the
     exercise  of  any  of the foregoing remedies and for  all  insurance
     premiums  and all demurrage, docking and anchorage charges  and  all
     legal  fees and any other costs and expenses whatsoever incurred  by
     the  Owner or any Investor by reason of the occurrence of any  Event
     of Default or by reason of the exercise by the Owner of any right or
     remedy  hereunder,  including, without  limitation,  any  costs  and
     expenses  incurred by the Owner in connection with any  retaking  of
     the  Vessel  or, upon the redelivery or retaking of  the  Vessel  in
     accordance with this Section 3.4, the placing of the Vessel  in  the
     condition  required by and otherwise complying  with  the  terms  of
     Section  3.5 hereof.  No right or remedy referred to in this Section
     3.4 is intended to be exclusive, but each shall be cumulative and is
     in  addition to, and may be exercised concurrently with,  any  other
     right  or  remedy which is referred to in this Section 3.4 or  which
     may  otherwise  be available to the Owner at law, in  equity  or  in
     admiralty, including without limitation the right to terminate  this
     Charter.   There  shall  be deducted from the  aggregate  amount  so
     recoverable by the Owner, the net balance, if any, remaining of  any
     monies held by the Owner which would have been required by the terms
     hereof to have been paid to the Charterer but for the occurrence  of
     an Event of Default.  The rights of the Owner and the obligations of
     the  Charterer  under  this  Section  3.4  shall  be  effective  and
     enforceable regardless of the pendency of any proceeding  which  has
     or  might  have the effect of preventing the Owner or the  Charterer
     from  complying  with  the terms of this  Charter.   No  express  or
     implied waiver by the Owner of any Event of Default shall in any way
     be,  or  be  construed to be, a waiver of any further or  subsequent
     Event  of  Default.  To the extent permitted by applicable law,  the
     Charterer  hereby  waives any rights now or hereafter  conferred  by
     statute or otherwise which may require the Owner to sell, charter or
     otherwise use the Vessel in mitigation of the Owner's damages.
     
3.5  Redelivery of the Vessel

     Upon  termination of this Charter, the Charterer shall, at its  sole
     cost  and  expense not to exceed $2,500,000 as Escalated,  redeliver
     the  Vessel to the Owner at an anchorage of the Owner's choice.  The
     Charterer shall notify the Owner in writing at least 360 days  prior
     to the expiration of the Charter Period of the location in which the
     Vessel  will  be operating at the expiration of the Charter  Period.
     The  Charterer agrees that at the time of such redelivery the Vessel
     shall be free and clear of all Liens (other than Owner Liens), shall
     be entitled to and shall have the classification and rating required
     by   Section   8.1,   with   no  requirements,   specifications   or
     recommendations  of  the  American Bureau  of  Shipping  or  of  any
     governmental agency or department unfulfilled and with all  required
     certificates  in  effect,  shall be in  compliance  with  all  laws,
     conventions,  treaties and customs and rules and regulations  issued
     thereunder  or  applicable in any way to the Vessel or  any  use  or
     operation thereof, shall be free of any insignia of the Charterer or
     others,  shall be charter free, cargo free, safely afloat,  securely
     moored,  free of charge  and be in the same good order and condition
     as  described  in the third sentence of Section 3.2,  but  with  the
     Upgrade  Programs completed and as required by Section 8.1, ordinary
     wear and tear excepted; provided however, that in the event that the
     Owner  elects  not  to  exercise its option to  purchase  Severables
     (other  than Second Upgrade Severables) acquired after the  Delivery
     Date  pursuant  to  Section 9.4, the Charterer shall  redeliver  the
     Vessel  to  the  Owner with Severables comparable to the  Severables
     aboard  the  Vessel when the Vessel was delivered to  the  Charterer
     pursuant  to  Section 3.2 and Severables comparable  to  the  Second
     Upgrade  Severables.  Any Coast Guard certificates  required  to  be
     issued  annually with respect to the Vessel shall have  been  issued
     within  12 months of the date of redelivery of the Vessel.   At  the
     time and place of redelivery of the Vessel, the Charterer shall also
     deliver   to   the   Owner  all  documentation,   plans,   drawings,
     specifications,  logbooks, classification and  inspection,  records,
     operating  manuals,  records of modification, overhaul,  use  and/or
     maintenance  and  other  warranties  and  documents  then   in   its
     possession  or control which were furnished by the manufacturers  or
     builders of the Vessel, the Upgrade Programs or any other upgrade of
     the  Vessel or any supplier of equipment on the Vessel or  otherwise
     maintained  by  the  Charterer.   Upon  redelivery  of  the   Vessel
     hereunder, the Charterer, if requested in writing by the Owner, will
     arrange  for,  at  the  Charterer's cost  and  expense,  docking  or
     appropriate  anchorage or storage facilities for the  Vessel  for  a
     period  not exceeding 150 days, including, but not limited  to,  any
     crew,  staffing, materials, fuel or other costs or expenses incurred
     to stack the Vessel with full marine and maintenance crews.

3.6  Survey of the Vessel at End of Charter Period

     At  least  120  days  before redelivery of the  Vessel  pursuant  to
     Section 3.5, but sufficiently in advance of such redelivery date  to
     permit any needed repairs to be completed by such redelivery date, a
     joint  survey  shall be made by the Charterer and  the  Owner  (with
     drydocking  or  underwater survey in lieu of drydocking  and  bottom
     painting,  unless  the Owner shall otherwise agree  in  writing)  to
     determine  the  condition and fitness of the  Vessel,  during  which
     survey  the  Vessel's  tanks  shall be gas-freed  and  the  Vessel's
     engines  and  boilers opened for inspection; the  redelivery  survey
     shall  meet  all  requirements of the next  special  survey  of  the
     Vessel,  provided that if a special survey of the  Vessel  has  been
     made,  pursuant  to the provisions of Article 8,  within  30  months
     prior  to such redelivery, the records of such special survey  shall
     be  taken into account in determining the scope of the joint  survey
     required pursuant to this Section 3.6.  If requested by the Owner, a
     surveyor  from the American Bureau of Shipping shall be present  and
     the  Charterer shall permit such surveyor to examine  all  areas  of
     hull  and  items  of machinery and other parts of the  Vessel.   The
     Charterer  will  pay  for the costs of such  survey,  drydocking  or
     underwater survey in lieu of drydocking and bottom painting and  the
     Charterer shall notify the Owner at least 10 days in advance of  the
     time  and place of such drydocking or underwater survey in  lieu  of
     drydocking, bottom painting and survey.  The Charterer, at its  sole
     cost  and  expense,  will  fully correct and  repair  any  condition
     disclosed  by  such  survey to the extent  necessary  to  cause  the
     Vessel,  on or before the date specified for redelivery,  to  comply
     with  all  of  the terms of Section 8.1.  The term  of  the  Charter
     Period  shall  be extended for any period necessary  (a)  so  as  to
     permit  the survey described in this Section 3.6 to occur  at  least
     120  days  before redelivery of the Vessel pursuant to  Section  3.5
     whether  as  a result of this Vessel's use in completing a  Drilling
     Contract in progress under Section 3.1(b) or otherwise; and  (b)  to
     make such repairs.  During such extension period, if any, all of the
     obligations  of  the Charterer under this Charter applicable  during
     the  Charter  Period  shall continue in respect  of  such  extension
     period.   Upon redelivery of the Vessel under this or the  preceding
     paragraph, the Charterer, if requested in writing by the Owner, will
     provide  docking or appropriate anchorage or storage facilities  for
     the  Vessel  (if available at the designated port) for a period  not
     exceeding  150 days at the Charterer's cost and expense,  including,
     but  not  limited to, any crew, staffing, materials, fuels or  other
     cost or expense to stack the Vessel with full marine and maintenance
     crews.

3.7  Purchase Option.

     No  more than 540, but no less than 360 days prior to the Expiration
     Date,  the Charterer may, so long as no Default or Event of  Default
     has  occurred and is continuing, give the Owner irrevocable  written
     notice  (the  "Expiration Date Election Notice") that the  Charterer
     elects to exercise its option to purchase the Vessel (except for the
     First Upgrade Severables).  If the Charterer elects to exercise such
     option,  then the Charterer shall pay to the Owner on the Expiration
     Date  an amount in immediately available funds equal to the Purchase
     Option Price and, upon receipt of such amount plus all other amounts
     payable  under  this  Charter and the other Charter  Documents,  the
     Owner shall transfer all of the Owner's right, title and interest in
     the  Vessel (except for the First Upgrade Severables), such transfer
     shall  be  "AS  IS", "WHERE IS", without recourse  and  without  any
     representation or warranty of any kind or nature whatsoever,  either
     express  or  implied (except for the absence of Liens arising  as  a
     result  of  claims  against the Owner for which  the  Owner  is  not
     entitled  to indemnification from the Charterer or any Guarantor  or
     the  payment  or  discharge of which is not the  obligation  of  the
     Charterer  or any Guarantor), in the then-current physical condition
     of  the  Vessel and without any other representation or warranty  on
     the part of, or recourse to, the Owner.

3.8  Determination of Purchase Option Price

     During  the period from the delivery of the Expiration Date Election
     Notice  to  the  Owner until 210 days prior to the  Sale  Date,  the
     Charterer  and the Owner may mutually agree on the Fair Market  Sale
     Value  of  the Vessel as of the Sale Date, and if the Charterer  and
     the  Owner  fail to so agree, such Fair Market Sale Value  shall  be
     determined not less than 90 days before the Sale Date by application
     of the Appraisal Procedure.

                           ARTICLE 4
                     NATURE OF COMPENSATION

4.1  Absolute Obligation

     The obligation of the Charterer to pay to the Owner the fees, rates,
     hires,  indemnities  and reimbursements specified  in  this  Charter
     shall be absolute and unconditional and shall not be affected by any
     circumstance whatsoever, and the Charterer waives (and agrees not to
     allege  or pursue) any right to any such defense, including  without
     limitation,  (a)  any  setoff, counterclaim,  abatement,  reduction,
     recoupment,  defense,  or other right that the  Charterer  may  have
     against the Owner or any other Person, firm, company, or entity  for
     any  reason  whatsoever; (b) any unavailability of the Vessel  after
     its  delivery to the Charterer for any reason; (c) any damage,  loss
     or   destruction  of  or  damage  to  the  Vessel  or  interruption,
     restriction,  interference, or cessation in the  use  or  possession
     thereof by the Charterer for any reason whatsoever, at whatever time
     and  of  whatever  duration;  (d) any  confiscation,  expropriation,
     nationalization,   requisition,  seizure,   inability   to   export,
     deprivation, or other taking of title to or possession or use of the
     Vessel  or  any  part  thereof  by any  government  or  governmental
     authority or otherwise; (e) any restriction on possession or use  of
     the  Vessel;  (f)  the  interference  with  or  prohibition  of  the
     Charterer's  possession or use of the Vessel; (g) any invalidity  or
     unenforceability or lack of due authorization or other infirmity  of
     this Charter or the lack of right, power or authority of any Obligor
     or  the  Owner  to enter into this Charter or any Charter  Document;
     (h)  any  default  by  the  Owner; (i)  any  defect  in  the  title,
     condition, quality or fitness for a particular purpose of the Vessel
     or  other  property or service provided hereunder; (j) any amendment
     or  modification  of  or  supplement to the Charter  Documents,  any
     agreements  relating  to  any thereof or  any  other  instrument  or
     agreement  applicable  to the Vessel or any  part  thereof,  or  any
     assignment  or  transfer  of  any  thereof,  or  any  furnishing  or
     acceptance  of additional security, or any release of any  security,
     or any failure or inability to perfect any security; (k) any failure
     on  the  part of the Owner, the Owner Group or any Investor  or  any
     other Person to perform or comply with any term of any instrument or
     agreement; (l) any waiver, consent, change, extension, indulgence or
     other  action or inaction under or in respect of any such instrument
     or  agreement  or any exercise or nonexercise of any right,  remedy,
     power  or  privilege under or in respect of any such  instrument  or
     agreement   or   this  Charter;  (m)  any  bankruptcy,   insolvency,
     reorganization, arrangement, readjustment, composition, liquidation,
     or  similar  proceeding with respect to any Obligor, the Owner,  the
     Owner  Group  or  any  Investor, or their respective  properties  or
     creditors, or any action taken by any trustee or receiver or by  any
     court  in  any  such proceeding, including, without limitation,  any
     termination  or  rejection  of this Charter  by  any  court  or  any
     trustee,  receiver  or liquidating agent of any Obligor,  the  Owner
     Group,  any  Investor, or the Owner or of any  of  their  respective
     properties  in  connection  with  any  such  proceeding;   (n)   any
     assignment or other transfer of this Charter by the Charterer or the
     Owner  or  any  lien,  charge or encumbrance  on  or  affecting  the
     Charterer's estate in, or any subchartering of, all or any  part  of
     the   Vessel;   (o)   any   libel,  attachment,   levy,   detention,
     sequestration  or  taking  into  custody  of  the  Vessel,  or   any
     interruption or prevention of or restriction on or interference with
     the use or possession of the Vessel; (p) any act, omission or breach
     on  the  part  of  the Owner under this Charter or under  any  other
     agreement  at  any time existing among the Owner or any  Obligor  or
     under  any  other  law, governmental regulation or  other  agreement
     applicable to such Persons or the Vessel; (q) any claim as a  result
     of  any  other  dealing between the Owner and any Obligor;  (r)  any
     ineligibility of the Vessel, or any denial of the Vessel's right, to
     engage  in  any  trade or activity; (s) any failure  to  obtain  any
     required  governmental consent for any transfer of rights  or  title
     required  to  be  made  by the Owner under  this  Charter;  (t)  any
     ineligibility of the Vessel for documentation under the laws of  any
     jurisdiction; (u) the recovery of any judgment against any Person or
     any action to enforce the same; (v) any defect in the seaworthiness,
     condition,   design,  operation  or  fitness  for   use   or   other
     characteristics  of  the Vessel; (w) any change  in  the  ownership,
     direct or indirect, of the capital stock of the Owner or any of  the
     Obligors;  or  (x)  any  other  cause, circumstance,  or  happening,
     whether  similar  or  dissimilar to the foregoing,  any  present  or
     future  law to the contrary notwithstanding and whether or  not  any
     Obligor could have foreseen or shall have notice or knowledge of any
     of  the  foregoing.   Except as specifically  provided  herein,  the
     Charterer hereby waives any and all rights that it may now  have  or
     which at any time hereafter may be conferred upon it, by statute, at
     law, in admiralty or equity or otherwise, to terminate, cancel, quit
     or surrender this Charter.

     All  payments hereunder shall be final and, once paid, be fully  and
     finally  earned and nonrefundable, and the Charterer shall not  seek
     to  recover all or any part of such payment from the Owner  for  any
     reason whatsoever.

     The   Charterer  shall  remain  obligated  under  this  Charter   in
     accordance  with  its  terms  and  shall  not  take  any  action  to
     terminate, rescind or avoid this Charter, notwithstanding any action
     for    bankruptcy,    insolvency,    reorganization,    liquidation,
     dissolution,   or  other  proceeding  affecting   the   Owner,   any
     governmental  authority  or any other Person,  or  any  action  with
     respect  to this Charter or any Charter Document which may be  taken
     by   any   trustee,  receiver  or  liquidator  of  the  Owner,   any
     governmental  authority or any other Person or  by  any  court  with
     respect  to the Owner or any governmental authority.  The  Charterer
     hereby  waives all right (i) to terminate or surrender this  Charter
     or  (ii)  to  avail itself of any abatement, suspension,  deferment,
     reduction,  setoff,  counterclaim or defense  with  respect  to  any
     amount  payable  hereunder.  The Charterer  shall  remain  obligated
     under  this  Charter in accordance with its terms and the  Charterer
     hereby  waives  any  and  all rights now or hereafter  conferred  by
     statute,  at  law, in admiralty or equity or otherwise to  limit  or
     modify  any  of  the  Owner's  rights or  remedies  or  any  of  the
     Charterer's   rights,  remedies,  obligations  or   liabilities   as
     described  in this Charter or any Charter Document (such  waiver  to
     include, without limitation, any and all rights and remedies against
     a  lessor  under Article 2A of the UCC or to avoid strict compliance
     with its obligations under this Charter).

4.2  Net Charter

     This  Charter is a net Charter and it is intended that the Charterer
     shall  pay  all costs, charges, fees, assessments, expenses,  duties
     and  taxes  of  every  character incurred  in  connection  with  the
     delivery, storage, use, possession, operation, maintenance,  repair,
     chartering, recovery, retaking, and return of the Vessel,  including
     without  limitation those described elsewhere in this Charter.   The
     parties intend that the obligations of the Charterer hereunder shall
     be covenants and agreements that are separate and independent of the
     Owner's  obligations hereunder or hereafter arising or existing  and
     shall continue unaffected.

                           ARTICLE 5
                  CONDITIONS TO EFFECTIVENESS

5.1  Conditions

     This Charter shall become effective upon (i) receipt by the Owner of
     each  of  the  documents described in subsections  (a)  through  (k)
     below,  in  form  and substance satisfactory to the Owner  and  each
     Investor, and (ii) satisfaction of each of the other conditions  set
     forth  in subsections (l) through (p) below in a manner satisfactory
     to the Owner and each Investor in all respects.

     (a)  This Charter duly executed by Charterer.

     (b)  A  confirmation of Guaranty duly executed by Reading & Bates in
          form and substance satisfactory to the Owner.

     (c)  A  First  Supplement to Preferred Mortgage,  duly  executed  by
          Charterer, mortgaging the Jim Cunningham in form and  substance
          satisfactory to the Owner.

     (d)  A  First  Supplement  to Security Agreement  duly  executed  by
          Charterer in form and substance satisfactory to the Owner.

     (e)  Duly  executed Officers' Certificates, dated as of the  Closing
          Date,  from an executive officer and the Secretary or Assistant
          Secretary  of  each  of  the  Charterer  and  Reading  &  Bates
          (collectively,  the  "R&B  Companies")  certifying  copies   of
          resolutions of each of the R&B Companies approving this Charter
          and  the  other Charter Documents to which each is a party  and
          authorizing  the transactions contemplated herein and  therein,
          duly  adopted  at  a  meeting of, or by the  unanimous  written
          consent of, the Board of Directors of each corporation, and the
          articles  or certificates of incorporation and by-laws  of  the
          R&B Companies, as in effect at such time.

     (f)  An  original executed opinion dated the Closing Date from Wayne
          K.  Hillin, General Counsel to the R&B Companies, setting forth
          customary  opinions  regarding  (i)  the  R&B  Companies'   due
          organization,  valid existence, good standing, corporate  power
          and authority, (ii) the legal, valid and binding nature of this
          Charter  and the other Charter Documents, (iii) the absence  of
          violations    of,   or   conflicts   with,   laws,    corporate
          organizational  and governance documents or  other  agreements,
          (iv)  the absence of any required consents, and (v) such  other
          matters  as the Owner may reasonably require be addressed.   In
          addition,  such  opinion shall also opine that  no  consent  or
          approval  of  the  U.S.  Department of Transportation  Maritime
          Administration,  the United States Coast  Guard  or  any  other
          entity  having  jurisdiction over the  Vessel,  the  Collateral
          Vessels  or  any of the R&B Companies is required in  order  to
          consummate the transactions contemplated hereby or  by  any  of
          the other Charter Documents.

     (g)  An  original  executed  opinion from  Baker  &  Botts,  L.L.P.,
          counsel  to  the  Owner, regarding (i)  the  legal,  valid  and
          binding  nature  of  this  Charter and  certain  other  Charter
          Documents and (ii) certain tax matters.

     (h)  UCC  financing  statements,  duly  executed  by  Charterer,  as
          required by the Owner to perfect the security interest  granted
          under  the Security Agreement, to be filed with the appropriate
          filing offices.

     (i)  An  appraisal  report  for the Vessel  in  form  and  substance
          satisfactory to the Owner.

     (j)  A  certificate  of  insurance for the  Vessel  and  a  detailed
          written  report  signed  by  an  independent  marine  insurance
          broker,  evidencing compliance with the insurance  requirements
          set forth in the Charter.

     (k)  A duly executed Second Upgrade Agreement.

     (l)  No  loss,  constructive loss or requisitioning for use  by  any
          governmental authority of the Vessel shall have occurred.

     (m)  No  change shall have occurred in applicable law or regulations
          thereunder  or  in  interpretations thereof by  any  regulatory
          authority  which would make it illegal for the  Charterer,  the
          Owner  or  any  Investor to enter into any of the  transactions
          contemplated  in the Charter Documents or which  would  subject
          the  Charterer,  the owner or any Investor to  any  penalty  or
          other liability as a result of any transaction contemplated  in
          any of the Charter Documents.

     (n)  No  material adverse change shall have occurred in the physical
          condition of the Vessel since December 31, 1995.

     (o)  All   governmental  and  regulatory  approvals,  licenses   and
          authorizations necessary or, in the opinion of the  Owner,  the
          Investors  or their respective counsel, advisable in connection
          with  the  transactions contemplated in the  Charter  Documents
          shall have been duly received or obtained.

     (p)  The  Owner's  determination that, since December 31,  1996,  no
          material  adverse  change  has occurred  with  respect  to  the
          financial or other condition of Charterer or Reading & Bates.

                           ARTICLE 6
                 REPRESENTATIONS AND WARRANTIES

6.1  Representations and Warranties of the Owner.

     To induce the Charterer to enter into this Charter and to consummate
     the  transactions  contemplated hereby,  the  Owner  represents  and
     warrants to the Charterer that as of the date of execution  of  this
     Charter:

     (a)  Organization  and  Good  Standing.   The  Owner  is  a  limited
          liability company duly organized, validly existing and in  good
          standing under the laws of the State of Delaware.

     (b)  Authority.  The Owner has taken all action required by Delaware
          law,  and  by  the  Limited  Liability  Company  Agreement   to
          authorize  the  execution and delivery of this  Charter.   This
          Charter constitutes the legal, valid and binding obligation  of
          the Owner, enforceable against the Owner in accordance with its
          terms,  subject  to bankruptcy, insolvency or similar  laws  of
          general  application relating to the enforcement of  creditors'
          rights  and  by  general  principles of  equity.   Neither  the
          execution   and  delivery  of  this  Charter   nor   will   the
          consummation of the transactions by it in accordance  with  the
          terms  hereof:  (i) violate or conflict with any  provision  of
          the  Limited Liability Company Agreement of the Owner, or  (ii)
          violate  or  conflict  with any provision  of  any  law,  rule,
          regulation,   order,  permit,  certificate,   writ,   judgment,
          injunction,  decree, determination, award or other decision  of
          any  court,  government, government agency or  instrumentality,
          domestic  or  foreign, or arbitrator binding  upon  the  Owner,
          which violation or conflict is reasonably likely to prevent the
          Owner's performance of its obligations hereunder.

          Neither  the  execution and delivery of this  Charter  nor  the
          consummation  of  the  transactions  contemplated  hereby  will
          result  in a breach of, or constitute a default (or with notice
          or lapse of time or both result in a breach of or constitute  a
          default)  under  or  otherwise give any  person  the  right  to
          terminate  any  mortgage, indenture, loan or credit  agreement,
          lease,  license, contract or any other agreement or  instrument
          to  which  the Owner is a party or by which it or  any  of  its
          properties is bound or affected.

     (c)  EXCEPT  AS  EXPRESSLY  SET  OUT  IN  THIS  SECTION  6.1,  OWNER
          EXPRESSLY  DISCLAIMS ANY EXPRESS OR IMPLIED REPRESENTATIONS  OR
          WARRANTIES,   INCLUDING   WITHOUT  LIMITATION,   SEAWORTHINESS,
          MERCHANTABILITY,  FITNESS  FOR A PARTICULAR  PURPOSE,  OR  WITH
          RESPECT   TO   PATENT  INFRINGEMENT,  VALUE,  USE,   CONDITION,
          SUITABILITY,  CLASS, OPERATION, COMPLIANCE WITH  LAWS,  DESIGN,
          CONFORMANCE WITH SPECIFICATIONS, OR ABSENCE OF DEFECTS, HIDDEN,
          PATENT, LATENT OR OTHER.

6.2  Representations and Warranties of the Charterer.

     To induce the Owner to enter into this Charter and to consummate the
     transactions  contemplated  hereby,  the  Charterer  represents  and
     warrants  to  the  Owner that as of the date of  execution  of  this
     Charter:

     (a)  Organization and Good Standing.  The Charterer is a corporation
          duly organized, validly existing and in good standing under the
          laws of the State of Oklahoma and is duly qualified or licensed
          and  in  good standing as a foreign corporation in  each  other
          jurisdiction  in  which  it  owns or  leases  any  facility  or
          property  or has any office, or in which the character  of  its
          business   or   operations  requires  such   qualification   or
          licensing, in each case related to the subject matter  of  this
          Charter or any of the Charter Documents.

     (b)  Authority.  The Charterer has taken all action required by law,
          its  Certificate of Incorporation, as amended, and its  By-Laws
          to  authorize  the execution and delivery of this  Charter  and
          each  of  the  Charter Documents to which it is a party.   This
          Charter  and  each of the Charter Documents to which  it  is  a
          party  constitute the legal, valid and binding  obligations  of
          the  Charterer, enforceable against the Charterer in accordance
          with  their respective terms, subject to bankruptcy, insolvency
          or   similar  laws  of  general  application  relating  to  the
          enforcement  of creditors' rights and by general principles  of
          equity.  Neither the execution and delivery of this Charter  or
          any  of the Charter Documents, nor will the consummation of the
          transactions  by  it  in accordance with the  terms  hereof  or
          thereof:   (i)  violate or conflict with any provision  of  its
          Certificate  of  Incorporation  or  By-Laws,  (ii)  violate  or
          conflict  with  any  provision of any  law,  rule,  regulation,
          order, permit, certificate, writ, judgment, injunction, decree,
          determination,   award  or  other  decision   of   any   court,
          government,  government agency or instrumentality, domestic  or
          foreign,  or arbitrator binding upon it, or  (iii)  create  any
          conflicts or resulting liens or require any consents  that  the
          Charterer has not obtained.

          Neither the execution and delivery of this Charter and each  of
          the   Charter  Documents  to  which  it  is  a  party  nor  the
          consummation of the transactions contemplated hereby or thereby
          will  result in a breach of, or constitute a default  (or  with
          notice  or  lapse  of time or both result in  a  breach  of  or
          constitute  a default) under or otherwise give any  person  the
          right  to  terminate any mortgage, indenture,  loan  or  credit
          agreement,  lease,  license,  contract  or  any  agreement   or
          instrument to which the Charterer is a party or by which it  or
          any of its properties is bound or affected.

     (c)  Litigation.   There  is no action, suit, proceeding,  claim  or
          investigation  pending  or,  to the  best  of  the  Charterer's
          knowledge after due and reasonable inquiry, threatened  against
          or  affecting the Charterer or any of its properties or related
          to  the  subject matter of this Charter or any of  the  Charter
          Documents  before  any court, government agency  or  regulatory
          authority (federal, state, local or foreign) that questions the
          validity  or  enforceability of this  Charter  or  any  Charter
          Document  or  is  reasonably likely to impair  its  ability  to
          perform  its  obligations under this  Charter  or  any  of  the
          Charter Documents or to cause a material adverse effect on  the
          business,  financial condition or prospects of  the  Charterer.
          There   are   no   orders,   writs,  judgments,   stipulations,
          injunctions, decrees, determinations, awards or other decisions
          of   any   court,   government  or   governmental   agency   or
          instrumentality,  domestic  or  foreign,  or   any   arbitrator
          outstanding against the Charterer having or likely to have  any
          such effect.

     (d)  No  Defaults.   No  event  or condition  has  occurred  and  is
          continuing that constitutes, or with the lapse of time  or  the
          giving of notice or both, would constitute, an Event of Default
          by the Charterer or any other Member of the Charterer Group, as
          the  case  may  be, under this Charter or any  of  the  Charter
          Documents or a default or by the Charterer or any other  Member
          of  the Charterer Group under any indenture, trust, deed,  loan
          agreement,  lease  other  instrument  or  contract,  agreement,
          instrument or obligation (i) under which any such Person  pays,
          receives, borrows, lends, or is obligated or entitled  to  pay,
          receive,  borrow or lend, consideration in excess of $1,000,000
          to  which it is a party or by which it is bound or affected, or
          (ii)  which  is  reasonably likely to have a  material  adverse
          effect on the business, financial condition or prospects of the
          Charterer  or its ability to perform its obligations under  the
          Charter.

     (e)  Obligations and Liens.  Except as disclosed in writing to,  and
          specifically  consented  to  in  writing  by,  the  Owner,  the
          Charterer  has  no outstanding obligations,  or  Liens  on  its
          properties, for unpaid Taxes other than Taxes incurred  in  the
          ordinary course of business, and in existence for not more than
          30 days and which are not overdue unless such Taxes are, in the
          Owner's reasonable judgment, being contested in good faith  and
          by appropriate Persons and proceedings.

     (f)  Government  Regulations.  The Charterer is not in violation  of
          and  is  not  alleged  to be in violation  of  any  law,  rule,
          regulation,   order,  permit,  certificate,   writ,   judgment,
          stipulation,  injunction,  decree,  determination,   award   or
          decision  of any court, government, or governmental  agency  or
          instrumentality,  domestic or foreign,  or  arbitrator  binding
          upon  it,  which violation or alleged violation  is  reasonably
          likely  to  have  a  material adverse effect on  the  business,
          financial  condition  or  prospects of  the  Charterer  or  its
          ability to perform its obligations under this Charter or any of
          the Charter Documents.

     (g)  No  Labor  Unrest.   There are no strikes or other  significant
          labor  disputes in progress or pending or, to the best  of  the
          Charterer's   knowledge  after  due  and  reasonable   inquiry,
          threatened against or affecting the Charterer.

     (h)  Pollution Regulations.  Neither the Charterer nor any member of
          the  Charterer Group is the subject of any actual or threatened
          environmental,  health or safety investigation  or  enforcement
          proceeding related to its operations or business or the subject
          matter of this Charter or any of the Charter Documents.  To the
          best  of  the  Charterer's knowledge after due  and  reasonable
          inquiry,  the  Charterer is in compliance with  all  applicable
          laws   and  regulations  relating  to  pollution  control   and
          environmental,  health and safety matters in all  jurisdictions
          in which the Charterer is doing business.

     (i)  Providing  of Information.  All information that the  Charterer
          at  any time has furnished or will furnish the Owner for use in
          any statement, application or other filing provided for in this
          Charter or any of the Charter Documents, does or shall (as  the
          case  may  be) meet all requirements of applicable laws,  rules
          and  regulations and does not or shall not (as the case may be)
          as  of the date prepared or delivered to the Owner contain  any
          statement  which  is false or misleading with  respect  to  any
          material fact and does not or shall not (as the case may be) as
          of  the  date  prepared  or delivered to  the  Owner  omit  any
          material  fact  required to be stated therein or  necessary  in
          order to make such information not false or misleading for  the
          purpose  for  which  such  information  was  furnished  and  no
          correction  of any information or omission that  is  no  longer
          true  and  correct in all material respects that has  not  been
          made need be made or updated in order to make such information,
          taken  as  a  whole, not false or misleading  in  any  material
          respect.   For  purposes of this Section 6.2(i),  "information"
          includes, without limitation, all information contained in  the
          data  sheets,  projections, pro forma  sources  and  uses,  the
          Drilling  Contracts, the "M.G. Hulme, Jr."  1,000  Meter  Water
          Depth Upgrade Shipyard Specification, Rev. 5, dated October 21,
          1995  by  D.N.  Edelson,  Project Engineer,  the  Enserch-Green
          Canyon  Analysis, dated September 11, 1995 and  the  Reading  &
          Bates Corporation/GATX Due Diligence Confidential Binder, dated
          July  20, 1995, in each case as provided to the Investors prior
          to the date hereof.

          Each  audited income statement, balance sheet and statement  of
          operation and cash flows dated as of December 31, 1996 and  for
          the  fiscal year then ended and the unaudited income statement,
          balance  sheet and statement of operation and cash flows  dated
          as  of March 31, 1997 and for the three months then ended  were
          prepared  in  accordance  with  generally  accepted  accounting
          principles,  consistently  applied,  are  true,  complete   and
          correct,  and  fairly  present  the  financial  condition,  the
          results  of operations and cash flows for Reading &  Bates  and
          its consolidated subsidiaries, including the Charterer, for the
          dates  and  periods  stated; and there is no outstanding  Debt,
          lien  or  liability,  whether direct  or  contingent,  that  is
          material  to  the  Charterer and not shown  in  such  financial
          statements.

     (j   Insurance.   The  Charterer  maintains  insurance   listed   on
          Schedule  C  and  other insurance in a manner  consistent  with
          persons  engaged  in  the  same  or  similar  business  and  in
          compliance with this Charter.

     (k   Certain Federal Laws and Requirements.

          (i)  The  Charterer  and  its affiliates are  exempt  from  the
               Public Utility Holding Company Act of 1935.

          (ii) None  of  the  Charterer  and  its  subsidiaries,  whether
               separately or together, is an investment company under the
               Investment Company Act of 1940.

         (iii) Except  as   expressly   identified   in   this   Charter,
               neither  the Charterer nor any affiliate of the Charterer,
               as  that term is defined in the Employee Retirement Income
               Security  Act  of  1974, as amended,  and  the  rules  and
               regulations   thereunder  ("ERISA"),  has   any   material
               unfunded ERISA liabilities.

     (l   Permits  and  Authorizations.  The Charterer has  obtained  all
          governmental   permits,   authorizations,   certificates    and
          approvals  and  given or made all notices and filings  required
          under   applicable   law  for  the  execution,   delivery   and
          performance of this Charter and the other Charter Documents and
          its  possession,  use  and operation of  the  Vessel.   Without
          limiting   the   generality   of  the   foregoing,   and   more
          specifically,    the   Charterer   has   and   maintains    all
          environmental,   health  and  safety   permits   necessary   or
          appropriate for its operations and all such permits are in good
          standing and the Charterer is in compliance with all terms  and
          conditions  of  such permits and all applicable  environmental,
          health or safety requirements of law.

                           ARTICLE 7
                USE AND OPERATION OF THE VESSEL

7.1  Use of the Vessel

     The Charterer shall have the full use of the Vessel and may, subject
     to the terms and conditions of this Charter, employ the Vessel as  a
     semisubmersible  drilling unit throughout the world consistent  with
     its  design  capability, except that the Vessel shall  not  be  used
     contrary  to  and  shall  comply with (a)  all  applicable  laws  or
     regulations  of any governmental authority, treaties or  conventions
     (including, but not limited to, all environmental, health and safety
     laws)  and (b) the terms or policies of any insurance then  required
     hereunder;  and provided that, with respect to the use or possession
     of  the  Vessel outside of the territorial waters and/or  the  Outer
     Continental  Shelf  of the United States, the Charterer  shall  give
     such  indemnities suitable to the Owner in an amount and  form,  and
     obtain  and  continue such additional insurance  coverage,  in  such
     amounts, having such terms and conditions and with such carriers, as
     the Owner may reasonably require at any time or from time to time in
     connection  with the use or possession of the Vessel  in  any  given
     area  outside  the  territorial waters and/or the Outer  Continental
     Shelf  of  the  United States.  The Charterer,  in  respect  of  the
     Vessel,  shall  at  all times comply with all  applicable  laws  and
     regulations  (including,  but  not limited  to,  all  environmental,
     health  and  safety  laws), and with the applicable  provisions  and
     conditions of all licenses, permits, consents and approvals  of  any
     governmental authority.

7.2  Manning, etc., of the Vessel

     During  the  Charter Period, the Charterer shall have the  exclusive
     possession  and  control  of  the Vessel  and  shall  man,  victual,
     navigate  and operate, supply, fuel, maintain and repair the  Vessel
     at its own expense or by its own measurement and shall pay all other
     charges  and expenses of every kind and nature whatsoever incidental
     to  the  possession,  use and operation of the Vessel.   During  the
     Charter  Period, the possession, use, operation and  maintenance  of
     the  Vessel  shall  be at the sole risk, cost  and  expense  of  the
     Charterer  until  redelivery pursuant to the terms hereof  upon  the
     termination or expiration of this Charter.  As between the Owner and
     the  Charterer, the Offshore Installation Manager, officers and crew
     of  the Vessel and all other persons at any time on board the Vessel
     shall  be  deemed  to  be engaged and employed  exclusively  by  the
     Charterer  and  shall  be  deemed to be and remain  the  Charterer's
     servants, navigating and working the Vessel solely on behalf of  and
     at  the  risk  of  the Charterer and the Charterer shall  hold  each
     Indemnitee harmless from any and all claims against it by, or as the
     result  of  any  act or omission of, any such Offshore  Installation
     Manager, officer, member of the crew or other person.  The Charterer
     assumes  and  shall  satisfy all costs and liabilities  incurred  in
     connection with all salvage services received by the Vessel.

7.3  Documentation of the Vessel

     Neither  the  Owner  nor the Charterer (without  the  prior  written
     consent  of  the  other) will do or suffer  or  permit  to  be  done
     anything  which  can  or  might change  or  injuriously  affect  the
     documentation  of the Vessel for foreign trade under  the  laws  and
     flag  of the United States of America.  The Charterer covenants  and
     agrees  that  it  will  not (a) cause or permit  the  Vessel  to  be
     operated in any manner which could subject the Owner to any criminal
     penalty,  or (b) operate or locate the Vessel, or permit the  Vessel
     to  be operated or located, in any area excluded from coverage  from
     any insurance required by the provisions of Article 15 or (c) unless
     there  shall  have  been  an  actual or  total  loss  or  agreed  or
     compromised  total  loss of the Vessel, abandon the  Vessel  in  any
     foreign  port.   The  Owner  and the Charterer  hereby  respectively
     represent that they are as of the date of execution of this Charter,
     and  covenant  that  they shall remain during  the  Charter  Period,
     "citizens of the United States" within the meaning of Section  2  of
     the  Shipping Act, 1916, as amended.  The Charterer agrees that  the
     Vessel  will be operated solely in the domestic or foreign  commerce
     of  the  United States.  The Charterer shall throughout the  Charter
     Period  maintain to the satisfaction of the Owner at the Charterer's
     sole  cost  and expense such documentation of the Vessel, and  shall
     not  do  or suffer or permit to be done anything which can or  might
     change  or  injuriously affect the documentation of the  Vessel  for
     foreign  trade under the laws and the flag of the United  States  or
     which  would result in a violation of any law or regulation  of  the
     United  States  applicable to a vessel owned by  a  citizen  of  the
     United States, as defined in the Shipping Act, 1916.

7.4  General and Particular Average

     Whenever  necessary,  average adjusters shall be  appointed  by  the
     Charterer,  who  shall, at the Charterer's sole  cost  and  expense,
     attend  to  the  settlement  and  collection  of  both  general  and
     particular average losses.

7.5  Site and Access

     The  Charterer  will be responsible for selecting  and  mooring  the
     Vessel  in  a safe and prudent manner at a location in the Operating
     Area.   The  Charterer  will  conduct sea bottom  condition  surveys
     acceptable  to  the  Owner  where  required  by  the  Vessel's  hull
     underwater  surveyor at the Charterer's sole cost  and  expense  and
     will  be  responsible  for  identifying, marking  and  clearing  the
     location  of  all  major  impediments or hazards  to  operations  or
     causing  same  to  be done.  Removal of all impediments  or  hazards
     shall  be,  as  between Owner and the Charterer, at the  Charterer's
     sole cost and expense.

7.6  Owner Liability for Materials Furnished by the Charterer

     Without limiting any indemnity provided by the Charterer, the  Owner
     shall not be liable for any loss or damage resulting from the use or
     possession   of  equipment,  materials,  supplies  or  other   items
     furnished by the Charterer.

7.7  Environmental and Related Reporting and Inspection

     The Charterer shall notify the Owner in writing within five days  of
     the  Charterer's  obtaining  notice  or  knowledge  thereof  of  any
     (a)  notice  of  claim that there has been a release  or  threatened
     release  of any contaminant into the environment from the Vessel  or
     any equipment, machinery or property related thereto; (b) notice  of
     any  investigation by any governmental authority evaluating  whether
     any  remedial action is necessary or appropriate to respond  to  any
     release   or  threatened  release  of  any  contaminant   into   the
     environment from the Vessel or any equipment, machinery or  property
     related  thereto;  (c)  notice that the  Vessel  or  any  equipment,
     machinery or property related thereto is subject to an environmental
     Lien; (d) the commencement or threat of any judicial, administrative
     or  other  proceeding  alleging a violation  of  any  environmental,
     health  or  safety requirements of law; or (e) any new  or  proposed
     changes  to any existing environmental, health or safety requirement
     of  law  that could have a material adverse effect upon the  use  or
     operations  of  the  Vessel or the Charterer.  The  Charterer  shall
     provide from time to time documentation deemed adequate by the Owner
     showing  the  Charterer's  compliance with financial  responsibility
     requirements  of  all applicable environmental,  health  and  safety
     laws.

7.8  Notice of Entry

     The  Charterer will provide written notice within ten (10)  days  of
     entry  of  the Vessel into the jurisdictional waters of any  foreign
     country or of any state or territory of the United States other than
     Louisiana,  Texas and any other state in which the Owner  has  filed
     financing statements or taken other action to perfect its Lien  upon
     the equipment owned by the Charterer and its Affiliates and used  in
     connection with the Vessel.

                           ARTICLE 8
      MAINTENANCE OF CONDITION AND CLASSIFICATION; REPAIRS

8.1  Maintenance of Classification

     The  Charterer shall at all times and, at its sole cost and expense,
     procurement  and risk (a) have exclusive control of the Vessel,  (b)
     maintain  and preserve the Vessel in accordance with good commercial
     maintenance  practices, and keep the Vessel  and  her  drilling  and
     other equipment in good running order, condition and repair, so that
     the Vessel shall be tight, staunch, strong and well and sufficiently
     tackled,  appareled,  furnished,  equipped  and  in  every   respect
     seaworthy  and in good operating condition, and (to the extent  that
     such prescribes a standard of maintenance that exceeds the foregoing
     standard in any respect) in the condition, running order and  repair
     which  equals  or  exceeds  industry standards  and  the  condition,
     running order and repair of vessels and their equipment owned by the
     Charterer of like kind and age, and, in addition, shall

     (i)  cause the Vessel to be a semi-submersible drilling unit capable
          of  operating  in  water  depths of up  to  3,280  feet  before
          completion  of the Second Upgrade Program and 4,000 feet  after
          completion of the Second Upgrade Program and to have  technical
          specifications, characteristics and capabilities at  least  the
          substantial equivalent of those set forth in Schedule A  hereto
          as  upgraded  in accordance with the First Upgrade Program  and
          after completion of the Second Upgrade Program as set forth  in
          Schedule B-2; and

     (ii) keep  the Vessel in such condition as will entitle her,  during
          the  Charter Period and at the date of redelivery to the Owner,
          to the highest applicable classification and rating to which an
          existing vessel of the same age and type can qualify under  the
          then  existing  rules and standards of the American  Bureau  of
          Shipping  and shall furnish to the Owner within 90  days  after
          each  anniversary of the Delivery Date and at  any  other  time
          upon  the  request  of  the Owner true and correct  photostatic
          copies  of  all certificates issued by the American  Bureau  of
          Shipping evidencing the maintenance of such classification.

    (iii) The  Vessel  shall, and the Charterer covenants  that  it will,
          at all times comply with all applicable safety, operational and
          maintenance requirements of the United  States Coast Guard  and
          any other United States, international or other  authority  and
          all laws, treaties and conventions, and rules and   regulations
          (including, but not limited to, all environmental,  health  and
          safety  laws)  issued  thereby  or  applicable  in  any  way to
          the  Vessel  or  any  use, possession or operation thereof  and
          shall  have on board, when required thereby, valid certificates
          and   appropriate  environmental,  health  and  safety  permits
          showing  compliance  therewith.  The Charterer  shall,  at  its
          expense,  make all modifications and alterations to the  Vessel
          which  may be necessary to comply with the provisions  of  this
          Section 8.1.

8.2  Repair

     The Vessel shall be repaired and overhauled by the Charterer and the
     Charterer shall install, affix and attach replacement parts thereon,
     at  its  sole cost and expense, in each case, whenever necessary  to
     keep  the  same  in  good condition, repair  and  working  order  in
     accordance  with  Section  8.1 or as a  result  of  any  requirement
     hereof.   The  Vessel  shall likewise be  drydocked  or  undergo  an
     underwater survey in lieu of drydocking, cleaned and bottom  painted
     by  the  Charterer, at its expense, whenever necessary, but  in  any
     event  at  least  as  often as necessary in order  to  maintain  the
     classification referred to in Section 8.1.  The Charterer shall,  at
     its  expense, promptly and duly comply with all requirements of  the
     applicable  classification society including  those  resulting  from
     each  special  survey of the Vessel.  The Charterer  shall,  at  its
     expense, promptly furnish the Owner with written information  as  to
     any casualty involving any loss or damage to the Vessel in excess of
     $500,000  and,  upon  request,  all  survey  reports  in  connection
     therewith.

8.3  Drydocking or Underwater Survey in Lieu of Drydocking

     The   Charterer  shall  give  the  Owner  notice  of  each  proposed
     drydocking  or underwater survey in lieu of drydocking  20  days  in
     advance  if  practicable, otherwise as long in  advance  as  may  be
     practicable under the circumstances.  The Owner, any Investor or any
     authorized  representative of any thereof  may  at  any  time,  upon
     reasonable notice at its own expense (but after the occurrence of an
     Event of Default, at the Charterer's sole cost and expense), inspect
     the  Vessel at drydocking or underwater survey in lieu of drydocking
     or  otherwise,  at any time or from time to time,  and  inspect  the
     Vessel's logs, but neither the Owner nor any Investor shall have any
     duty to do so.

8.4  Required Survey

     At  the  request  of  the  Owner following  any  explosion,  release
     accident,  storm, act of God or other event or incident  that  gives
     the   Owner  reasonable  concern  for  the  physical  condition  and
     operating  ability of the Vessel and at the Charterer's  expense,  a
     qualified  independent  marine surveyor or surveyors  of  recognized
     standing,  acceptable to the Owner, shall conduct a  survey  of  the
     Vessel.   For  purpose  of  such surveys, the  Vessel  need  not  be
     drydocked  (or  subjected  to  an  underwater  survey  in  lieu   of
     drydocking)  unless  required  by  customary  survey  practices  for
     drilling  vessels of similar age, type and service.   The  Charterer
     shall submit a detailed report of the independent marine surveyor to
     the Owner promptly upon the completion of such survey, containing:

     (a)  the location of the Vessel at the time of inspection;

     (b)  the  findings  and  recommendations of the  independent  marine
          surveyor with respect to the condition of the Vessel; and

     (c)  the  opinion of the independent marine surveyor as  to  whether
          the Vessel has been maintained in accordance with the terms  of
          this Article 8.

                           ARTICLE 9
                      EQUIPMENT AND STORES

9.1  Fuel, etc.

     The   Owner  acknowledges  that  such  fuel,  lubricating  oil   and
     unbroached consumable stores as may be aboard the Vessel at the time
     of  its  delivery  to  the Charterer will be  the  property  of  the
     Charterer.

9.2  Equipment, etc.

     The  Charterer shall have the use, without additional payment to the
     Owner,   of   such   equipment,  outfit,   furniture,   furnishings,
     appliances, spare or replacement parts and nonconsumable  stores  as
     shall have been on board the Vessel on the Delivery Date.  The  same
     or  their  substantial equivalent shall be returned to the Owner  on
     redelivery  or  retaking of the Vessel in the same  good  order  and
     condition  as  received  by  the Charterer  on  the  Delivery  Date,
     ordinary  wear and tear excepted, and any such items damaged  or  so
     worn in service as to be unfit for use, or used as a spare part  for
     replacement purposes, or lost or destroyed shall be replaced by  the
     Charterer  with an identical or substantially equivalent replacement
     item in at least as good working order and condition as those of the
     replaced item when received by the Charterer on the Delivery Date at
     or  before  redelivery  of the Vessel.  Such  replacement,  whenever
     made, shall be deemed part of the "Vessel" for all purposes of,  and
     its  use  or possession shall be subject to the terms and conditions
     of, this Charter.

9.3  The Charterer's Additional Equipment, etc.

     The  Charterer  shall  at  its own expense provide  such  additional
     equipment,  outfit, tools, replacement parts, crockery,  linen,  and
     other  items  not  included  in  inventories  as  provided  in  this
     Article  9  as may be required in the operation of the  Vessel,  and
     such  equipment, and other items, shall become, on being  placed  on
     board the Vessel and without further act, part of the Vessel and the
     property  of  the  Owner for all purposes of this Charter,  provided
     that  so  long as no Default or Event of Default shall have occurred
     and  be  continuing, any such equipment and other items, so provided
     by  the  Charterer (and not required to be provided or to have  been
     provided by Section 9.2 or any other provision of this Charter other
     than  this Section 9.3) and capable of being removed without causing
     damage  to  the  Vessel  may be removed  by  the  Charterer  at  the
     expiration  of  the  Charter Period, and such equipment,  and  other
     items,  shall  become,  without further act,  the  property  of  the
     Charterer.   At least 90 days prior to delivery or retaking  of  the
     Vessel  (or such lesser time as may be available in connection  with
     any  retaking), the Charterer shall give notice to the Owner of  any
     such  equipment or other items leased from third parties, which  the
     Charterer has elected not to remove, and will furnish the Owner with
     copies  of all leases and contracts relating thereto, and the  Owner
     may,  within  30  days thereafter (or such lesser  time  as  may  be
     applicable in connection with any retaking), elect to retain all  or
     any  part  of  such  equipment on board the Vessel  subject  to  any
     required approval of the lessors of such equipment.  Upon redelivery
     or  retaking  the  Owner  shall assume the rights,  obligations  and
     liabilities  of the lessee under such leases arising  subsequent  to
     delivery or retaking in connection with any equipment that the Owner
     elects  to  so  retain.  The Charterer shall at its  sole  cost  and
     expense  remove from the Vessel any such leased equipment which  the
     Owner does not so elect to retain and shall cause to be repaired  at
     its  sole cost and expense any damage to the Vessel or any  part  or
     property  thereof  resulting  in any  manner  from  the  Charterer's
     removal of any equipment.

     By  its  acceptance  of  the  Vessel upon  delivery,  the  Charterer
     represents  and  warrants to the Owner that there is  on  board  the
     Vessel   an  inventory  of  equipment,  outfit,  appliances,  tools,
     replacement parts, nonconsumable stores, crockery, linen, and  other
     items, as in the reasonable judgment and experience of the Charterer
     are necessary or appropriate to the possession, use and operation of
     the  Vessel  and  the Charterer hereby covenants  that,  subject  to
     Section 9.3, upon redelivery or retaking of the Vessel by the Owner,
     such  inventory, which may include replacement items  of  equivalent
     value, shall be on board the Vessel.

9.4  Title to Improvements; Option to Purchase

     Title  to  Nonseverables of the Vessel acquired after  the  Delivery
     Date shall without further act vest in the Owner and shall be deemed
     to  constitute a part of the Vessel and be subject to this  Charter.
     Title  to  all Severables of the Vessel acquired after the  Delivery
     Date   (other  than  Severables  that  replace  or  substitute   for
     Severables  that  have  been provided by the  Owner  and  Severables
     provided in connection with the Second Upgrade Program, the title to
     which  shall  vest  in  the  Owner) shall  vest  in  the  Charterer;
     provided,  however,  that the Charterer may not remove  any  thereof
     from  the Vessel (except to the extent subsequently replaced or worn
     out)  prior  to  the  end  of the Charter  Period  except  that  the
     Charterer may, so long as no Default or Event of Default shall  have
     occurred  and be continuing, remove at the Charterer's  expense  and
     risk  any  such  Severables, provided, further, that the  Owner  may
     elect  to  purchase  for cash any such Severables  at  the  time  of
     redelivery of the Vessel to the Owner in accordance with any of  the
     provisions of this Charter.  Contemporaneously with its delivery  of
     the  Expiration Date Election Notice, the Charterer shall notify the
     Owner  of the Severables described above that it intends to  remove.
     To  exercise the election referred to in the second proviso  to  the
     second preceding sentence of this Section 9.4, the Owner shall  give
     to  the Charterer written notice of its election to purchase  on  or
     prior  to  such  redelivery.  The purchase price of such  Severables
     shall be equal to the Fair Market Sale Value thereof, as of the date
     of  purchase as determined by mutual agreement or, in the absence of
     such  agreement,  by the Appraisal Procedure.  The  Charterer  shall
     repair  any  damage caused by the removal of any Severables  to  the
     Owner's reasonable satisfaction.

9.5  No Lease of Essential Severables

     The  Charterer shall not lease any Severables that are necessary  or
     appropriate  for the use, possession or operation of the  Vessel  in
     accordance  with  the terms and conditions of this Charter  and  the
     Charter  Documents but shall hold good and marketable title  to  all
     such  Severables  that  are, in accordance with  industry  practice,
     customarily  owned  by  drilling contractors engaged  in  businesses
     similar  to  the Charterer's business, free and clear of  all  Liens
     other than Permitted Liens.

                           ARTICLE 10
      THE CHARTERER'S CHANGES, ADDITIONS AND REPLACEMENTS

10.1 Structural Changes or Alterations; Installation of Equipment, etc.

     Except as may be required by Article 8 or 9 or the Upgrade Programs,
     the  Charterer shall not make any structural changes or  alterations
     in the Vessel, or any change, alteration, addition or improvement to
     the  Vessel  that is Nonseverable (except for changes,  alterations,
     additions or improvements required to be made pursuant to applicable
     law),  and  shall  make no material changes or  alterations  in  the
     Vessel's  machinery or boilers, unless and to the  extent  that,  in
     each  instance, (a) it first secures written approval of  the  Owner
     (which may be withheld in the Owner's sole discretion if such change
     or  alteration would materially change the type or character of  the
     Vessel  or  would adversely affect Owner's status as  a  lessor  for
     federal  income tax purposes, but otherwise such approval shall  not
     be  unreasonably withheld) and (b) any such change or alteration  is
     made  at the Charterer's expense and risk and does not diminish  the
     value, utility, useful life or seaworthiness of the Vessel below the
     value,   utility,  useful  life  and  seaworthiness  of  the  Vessel
     immediately  prior to such change if the Vessel  were  then  in  the
     condition  and  state of seaworthiness required to be maintained  by
     the  terms of this Charter.  Subject to the foregoing provision, the
     Charterer may install any pumps, gear or equipment it may require in
     addition to that on board the Vessel on delivery, provided that such
     installations are accomplished at the Charterer's sole cost, expense
     and  risk.   Pumps, gear and equipment so installed  shall,  without
     necessity of further act, become part of the Vessel and the property
     of  the  Owner;  provided that so long as no  Default  or  Event  of
     Default shall have occurred and be continuing, any such pumps,  gear
     or  equipment  not  required to be installed in order  to  meet  the
     requirements  of Articles 8 and 9 and not installed as  replacements
     for  property included in the Vessel on the date hereof are  subject
     to  the Owner's option to purchase set forth in Section 9.4, and, if
     not  purchased by the Owner, may be removed (so long as such removal
     can  be accomplished without damage to the Vessel) by the Charterer,
     at  its  own  expense  and  risk, at any  time  during,  or  at  the
     expiration  of,  the Charter Period, whereupon such pumps,  gear  or
     equipment  shall,  without  necessity of  further  act,  become  the
     property of the Charterer.

10.2 Replacement of Parts

     In  addition to the permitted structural changes or alterations  and
     the   addition  of  pumps,  gear  and  equipment  referred   to   in
     Section  10.1,  the  Charterer  may,  in  the  ordinary  course   of
     maintenance, repair or overhaul of the Vessel, remove  any  item  of
     property  (including  any item referred to in  Section  9.2  or  9.3
     constituting a part of the Vessel), provided such item  is  replaced
     as  promptly  as possible by an item of property which is  free  and
     clear  of  all Liens and is in as good operating condition,  working
     order  and  repair, and is as seaworthy as, and has a value,  useful
     life  and  utility at least equal to that of, the item  of  property
     being  replaced (including each item of equipment) and assuming  the
     Vessel  is in the working order, condition and repair and  state  of
     seaworthiness required by the terms of this Charter.   Any  item  of
     property so removed from the Vessel shall remain the property of the
     Owner  until replaced in accordance with the terms of the  preceding
     sentence,  but shall then, without further act, become the  property
     of  the Charterer but shall remain subject to the Owner's option  to
     purchase  set  forth in Section 9.4.  Any such replacement  item  of
     property  shall,  without further act, become the  property  of  the
     Owner,  deemed  part  of  the "Vessel" as  defined  herein  for  all
     purposes,  and its use and possession shall be subject to the  terms
     and conditions hereof.

10.3 Vessel Markings

     The Charterer shall not allow the name of any person, association or
     corporation,  other than as required hereby, to  be  placed  on  the
     Vessel  (other  than the current name of "M. G. Hulme,  Jr.")  as  a
     designation  which  might be interpreted as indicating  a  claim  of
     ownership  thereof  by any person, association or corporation  other
     than  the  Owner, but, for purposes of identification, the Charterer
     shall  have  the  right at its sole cost and expense  to  paint  the
     Vessel  in its own colors, to install and display its stack insignia
     or  name,  and to fly its own house flag, or to utilize the  colors,
     insignia,  name  or  flag of any Affiliate of  the  Charterer.   The
     Charterer  shall  notify the Owner of each such  choice  of  colors,
     name, insignia or flag before making any such change.

                           ARTICLE 11
                      ADDITIONAL COVENANTS

11.1 General Covenants

     From  and after the date of execution of this Charter and until  the
     termination or expiration of this Charter, the Charterer shall:

     (a   continue  its business as presently conducted and maintain  its
          existence, rights and privileges;

     (b   comply  with its obligations set forth in this Charter and  all
          applicable    laws   (including,   without   limitation,    all
          environmental, health and safety laws); and

     (c   maintain  its  books and records in compliance  with  generally
          accepted accounting principles, consistently applied with  such
          adjustments  or  changes  as to which  the  independent  public
          accountants referred to in Section 11.3 concur.

11.2 No Impairment

     Notwithstanding any other contract or other claim of right, from and
     after  the  date  of  execution  of  this  Charter  and  until   the
     termination or expiration of this Charter, the Charterer Group shall
     not  enter any contract or agreement or perform or omit any act that
     in  any  way  materially limits or impairs, or the effect  of  which
     would be to materially limit or impair, the ability of any member of
     the  Charterer Group to comply with and fulfill its obligations  set
     forth in the Charter Documents.

11.3 Financial Information

     The Charterer  will  furnish, or cause to be furnished, to the Owner
and each Investor:

     (a)  within  45 days after the end of each of the first three fiscal
          quarters  during  each  fiscal  year  of  Reading  &  Bates,  a
          consolidated  balance  sheet  of  Reading  &  Bates   and   its
          consolidated Subsidiaries as of the close of each  such  fiscal
          quarter,  together  with a consolidated  income  statement  and
          consolidated  statement of cash flows of Reading  &  Bates  and
          such Subsidiaries for such fiscal quarter, in each case setting
          forth   in  comparative  form  the  corresponding  consolidated
          figures for the same period of the next preceding fiscal  year,
          all  in  reasonable detail and certified by the chief financial
          officer  of Reading & Bates as being true, complete and correct
          and  as  fairly  presenting  the financial  condition  and  the
          results  of  operations of the respective corporations  covered
          thereby, subject to year-end adjustments;

     (b)  within 90 days after the close of each fiscal year of Reading &
          Bates,  (i)  audited consolidated balance sheets of  Reading  &
          Bates and its consolidated Subsidiaries as of the close of such
          fiscal  year,  together  with  consolidated  profit  and   loss
          statements  and  consolidated  statements  of  cash  flows   of
          Reading  &  Bates and such Subsidiaries for such  fiscal  year,
          certified  as  being  true,  complete  and  correct  by  Arthur
          Andersen  & Co. or independent public accountants of comparable
          national  standing  and  reputation as  fairly  presenting  the
          consolidated financial position, results of operations and cash
          flow of Reading & Bates and such Subsidiaries as of the end  of
          such   fiscal  year  and  the  consolidated  results  of  their
          operations  for such fiscal year, and as fairly  presenting  in
          all  material  respects in conformity with  generally  accepted
          accounting principles applied on a basis consistent with  prior
          fiscal years with such adjustments or changes as to which  such
          independent  public accountants concur; and (ii) an  update  of
          the  Contract Data Sheet previously submitted to the  Investors
          (including,  but  not limited to, rig and contract  status  and
          updated  annual budget) true, complete and correct  and  fairly
          presenting the information contained therein as of the date and
          of its submission to the Owner and the Investors);

     (c)  within 30 days after the filing thereof with the Securities and
          Exchange  Commission, a copy of each report, form or prospectus
          filed  by  Reading & Bates or any of its Subsidiaries with  the
          Securities  and Exchange Commission, within three days  of  the
          issuance  of any press release or similar materials  issued  by
          Reading & Bates or any of its Subsidiaries; and

     (d)  such  other  financial  or other information  relating  to  the
          affairs of Reading & Bates and its consolidated Subsidiaries as
          the  Owner  or  any Investor may from time to  time  reasonably
          request.

11.4 Compliance Certificates

     The  Charterer shall furnish or cause to be furnished, to the  Owner
and the Investors:

     (a)  within  45  days after the end of the first, second  and  third
          quarterly  accounting period in each fiscal year of  Reading  &
          Bates, and within 90 days after the end of each fiscal year  of
          Reading  &  Bates, a certificate of the Chairman, the President
          or  a  Vice  President  and  the  Chief  Financial  Officer  of
          Reading  &  Bates stating that each of the Charterer  and  each
          Guarantor  has  performed and complied with all the  terms  and
          provisions  of  this Charter or the Guaranty and/or  the  other
          Charter Documents, as the case may be, or, if there shall  have
          been an Event of Default hereunder or if any Guarantor shall be
          in default under the Guaranty, specifying all such defaults and
          the  nature thereof of which the signer of such certificate may
          have notice or knowledge;

     (b)  within  90 days after the end of each fiscal year of Reading  &
          Bates,  a  certificate  of the independent  public  accountants
          reporting on the financial statements for such year (i) stating
          that  their  examination  in  connection  with  such  financial
          statements has been made in accordance with generally  accepted
          auditing  standards and has included a review of  the  relevant
          terms  of  the  Guaranty, the Charter  and  the  other  Charter
          Documents,  (ii)  stating whether or not such  examination  has
          disclosed the existence, during or at the end of such year,  of
          any default by the Charterer or any Guarantor in the observance
          of  any of the terms of the Guaranty, this Charter or the other
          Charter   Documents,  insofar  as  they  relate  to  accounting
          matters,  and,  if  such  examination has  disclosed  any  such
          default,  specifying all such defaults and the  nature  thereof
          (it  being understood that such accountants shall not be liable
          for  any failure to obtain knowledge of any such default  which
          would not be disclosed in the course of such examination),  and
          (iii)  stating that they have reviewed the certificate  of  the
          officers  of  Reading & Bates, delivered with respect  to  such
          year  pursuant  to  paragraph (a) of  this  Section  11.4,  and
          confirming the matters set forth in such certificate;

     (c)  promptly  after  Reading & Bates' receipt  thereof,  any  audit
          management letter or similar document submitted after the  date
          hereof  by  independent  accountants in  connection  with  each
          annual  or interim audit made by such accountants with  respect
          to  the financial condition or affairs of Readings and Bates or
          any Guarantor; and

     (d)  as  promptly as practicable (but in any event not later than 15
          days)  after  any  officer of the Charterer  or  any  Guarantor
          obtains  notice or knowledge of the occurrence of  any  default
          (which  has not been remedied or waived) in the performance  or
          observance of any of the terms or provisions of the Guaranty or
          any  of  the  other Charter Documents or any Event  of  Default
          under  the  Charter, a certificate of either the Chairman,  the
          President  or a Vice President and the Chief Financial  Officer
          of  the  Charterer or Guarantor (as the case may be) describing
          the  default  or  Event  of Default and  stating  the  date  of
          commencement  thereof,  what action the Charterer  proposes  to
          take  with respect thereto and the estimated date when it  will
          be remedied.

11.5 Further Assurances, etc.

     The Charterer shall, at its sole cost and expense, promptly and duly
     execute,   acknowledge  and  deliver  to  the  Owner  such   further
     documents,   instruments,  financing  and  similar  statements   and
     assurances and take such further action as the Owner may  from  time
     to  time  reasonably request in order more effectively to carry  out
     the intent and purpose of this Charter or the Charter Documents,  to
     establish and protect the rights and remedies created or intended to
     be  created  in  favor of the Owner hereunder or under  the  Charter
     Documents,  and  to protect the title of the Owner  in  and  to  the
     Vessel.  The Charterer shall also promptly furnish to the Owner such
     information  as may be required to enable the Owner timely  to  file
     any  reports  required  to be filed by it as  the  owner  under  the
     Charter  or  as  the  owner  of  the Vessel  with  any  governmental
     authority.

11.6 Maintenance of Corporate Existence, etc.

     The  Charterer  shall at all times maintain its corporate  existence
     except as permitted by Section 11.7 and will do or cause to be  done
     all  things necessary to preserve and keep in full force and  effect
     its  rights  (charter and statutory) and franchises;  provided  that
     (a)  it shall not be required to preserve any right or franchise  if
     its Board of Directors shall determine that the preservation thereof
     is  no  longer desirable in the conduct of its business and (b)  the
     loss  thereof  does not materially adversely affect or diminish  the
     rights of the Owner or any Investor.

11.7 Conditions of Consolidation, Merger, etc.

     The  Charterer  shall not consolidate with or merge into  any  other
     corporation or convey, transfer, or lease, all or substantially  all
     of  its  assets  as an entirety to any Person, unless  each  of  the
     following conditions is satisfied:

     (a)  The  Person formed by such consolidation, merger or acquisition
          by  conveyance, transfer or lease all or substantially all  the
          assets   of  the  Charterer  as  an  entirety  (the  "Resulting
          Entity"),  shall,  at the same time, by consolidation,  merger,
          conveyance, transfer or lease, acquire all or substantially all
          of  the  assets  of  the Guarantor as entireties,  shall  be  a
          citizen of the United States within the meaning of the Shipping
          Act,  1916  or  shall have obtained the approval  of  the  U.S.
          Maritime Administration for any such consolidation, merger (and
          the  Owner and the Investors, without any expense to any of the
          foregoing,  shall have received an opinion of counsel  selected
          by  the  Owner as to such citizenship of the United  States  of
          such Person, in form and substance satisfactory in all respects
          to  the  Owner),  and  shall  be a  corporation  organized  and
          existing  under the laws of one of the several  states  of  the
          United  States  of America or the District of  Columbia.   Such
          Person,   prior  to  or  upon  the  occurrence  of   any   such
          transaction,  shall  execute  and  deliver  to  the  Owner   an
          agreement  in  form and substance satisfactory  to  the  Owner,
          containing an assumption by such Person of the due and punctual
          performance  and observance of each covenant and  condition  of
          the  Charter  and  the Charter Documents  to  be  performed  or
          observed by the Charterer.

     (b)  Before and immediately after giving effect to such transaction,
          no  Default,  or  Event of Default shall have occurred  and  be
          continuing.

     (c)  After giving effect to such transaction, the rating of the long-
          term  unsecured  senior  debt  or implied  long-term  unsecured
          senior  debt rating of the Resulting Entity shall be and  shall
          be  maintained for six months thereafter at least "B+"  by  S&P
          and, if rated by Moody's, at least "B1".

     (d)  The  Charterer  shall  have delivered to  the  Owner  and  each
          Investor,  prior to or upon the occurrence of such transaction,
          a  Certificate of either the Chairman or the President and  the
          Chief  Financial Officer of the Charterer, and  an  opinion  of
          counsel  satisfactory  to the Owner,  each  stating  that  such
          consolidation, merger, conveyance, transfer or  lease  and  the
          assumption  agreement described in Section 11.7(a) comply  with
          this Section 11.7 and that all conditions precedent relating to
          such  transaction herein provided for have been fully  complied
          with.

     Upon  any  consolidation or merger, or any conveyance,  transfer  or
     lease of all or substantially all of the assets of the Charterer  as
     an  entirety  in  accordance with this Section 11.7,  the  Resulting
     Entity shall succeed to, and be substituted for, and any exercise of
     every  right  and power, obligation and liability of, the  Charterer
     under this Charter and the Charter Documents with the same effect as
     if  such Resulting Entity had been named as the Charterer herein and
     therein.   No  such  conveyance,  transfer  or  lease  of   all   or
     substantially  all of the assets of the Charterer,  as  an  entirety
     shall  have  the effect of releasing the Charterer or any Guarantor,
     as  the case may be, or any Resulting Entity which shall theretofore
     have  become such in the manner prescribed in this Section 11.7 from
     its  liability  under  this Charter, the  Guaranty  or  the  Charter
     Documents.   Nothing  contained herein  shall  permit  any  charter,
     subcharter or other arrangement for the use, operation or possession
     of the Vessel except in compliance with the applicable provisions of
     this Charter.

11.8 Indemnity  of the Owner by Customers for Oil Pollution  and  Related
     Environmental Claims

     The  Charterer shall cause each of its customers or operators  under
     any Drilling Contract to (a) indemnify, defend and hold harmless the
     Owner,  the Investors and their Affiliates from any and all  claims,
     demands,   liabilities,  losses,  damages,  lawsuits  and   expenses
     respecting pollution claims resulting from the release of Crude  Oil
     as  a consequence of a blowout, crater or other cause arising out of
     or  in  connection with operations under such Drilling Contract,  in
     accordance  with normal industry practice, and any and  all  related
     environmental, health or safety matters (including, but not  limited
     to,  all  cost and expense of controlling clean-up of pollution  and
     all  penalties  imposed by any Person) irrespective of  whether  the
     Charterer, the Owner or any of their Affiliates may have been or may
     be alleged to have been negligent or otherwise legally at fault; and
     (b)  if  any customer under such Drilling Contract does not maintain
     (i)  a  consolidated tangible net worth as determined in  accordance
     with   generally  accepted  accounting  principles   of   at   least
     $500,000,000  (or be a consolidated Subsidiary of  a  parent  entity
     having  such  consolidated tangible net  worth)  or  (ii)  a  senior
     unsecured  debt rating by S&P of "BBB-" or by Moody's of "Baa3"  (or
     be  a  consolidated direct or indirect Subsidiary of a parent entity
     having  a senior unsecured debt rating meeting such criteria),  such
     customer  shall  provide (or the Charterer shall provide)  operators
     extra  expense  or  energy  exploration  and  development  insurance
     coverage   in   an  amount  of  at  least  the  difference   between
     $150,000,000  (or such greater amount, as may be necessary  to  meet
     the  applicable financial responsibility requirements under the  Oil
     Pollution Act of 1990, or any other applicable laws, as amended from
     time to time) and the amount of the Charterer's contingent operators
     extra  expense  or energy exploration and development  insurance  or
     other  coverage  in effect at such time, with such  underwriters  or
     carriers  and containing such terms and conditions as the Owner  may
     require, in the form normally and customarily carried by oil and gas
     operators engaged in offshore drilling operations, for oil pollution
     liability  and expense, with the Owner, Investors, the  Owner  Group
     and  the  Charterer  named  as additional insureds  and  having  the
     benefit of waivers of subrogation.

                           ARTICLE 12
                PAYMENTS, INVOICES AND SECURITY

12.1 Basic Hire

     The  Charterer  shall pay to the Owner, in arrears on  each  Payment
     Date  through  the  Primary Term, an amount  equal  to  1.17860%  of
     Owner's Cost (the "Primary Term Basic Hire") as adjusted on the date
     of  each  disbursement to the Charterer as agent  under  the  Second
     Upgrade   Agreement  according  to  the  methodology   outlined   on
     Schedule  F attached hereto, and during any Extended Term,  125%  of
     the Primary Term Basic Hire payable on each Payment Date during such
     Extended Term.  The payment each month of the Basic Hire shall be  a
     continuing obligation for each month during which this Charter is in
     effect,  and  no  invoice for such amount  need  be  issued  to  the
     Charterer  by  the Owner.  The Charterer's obligation to  make  such
     payment  is  unconditional and absolute during the term  hereof  and
     shall not be affected by any event of force majeure or otherwise.

12.2 Supplemental Hire

     In  addition  to  its  obligation to pay Basic Hire  hereunder,  the
     Charterer  shall pay to the Owner any and all Supplemental  Hire  as
     and  when  the same shall become due and owing, and in the event  of
     any  failure  on  the part of the Charterer to pay any  Supplemental
     Hire,  the Owner shall have all rights, powers and remedies provided
     for  herein or at law or in equity or admiralty or otherwise in  the
     case of nonpayment of Basic Hire.

     The  Charterer  shall  pay to the Owner, as Supplemental  Hire,  all
     costs  incurred  by  the Owner in performing or complying  with  the
     Charter  Documents if the Charterer fails to perform or comply  with
     any  of  its  agreements contained in this Charter, or  any  Charter
     Document including, but not limited to:

     (a   Direct  and  indirect cost of permits, licenses  and  the  like
          required of the Owner as owner of the Vessel.  Owner shall  use
          reasonable  efforts, without filing suit or  incurring  out-of-
          pocket or other additional cost or expense, to avail itself  of
          applicable exemptions and/or reductions of such costs.

     (b   All  premiums  and  other costs to the Owner for  insurance  as
          specified in Articles 11.8 and 15.

     (c   Unless  otherwise expressly set forth herein in  Section  19.2,
          the  Charterer shall bear directly or reimburse the Owner, upon
          proof of payment by the Owner, all fees and expenses (including
          fees and expenses of the Owner's counsel) incurred by the Owner
          in the performance of or related to this Charter or any Charter
          Documents.

12.3 Payment Terms

     The  Charterer shall pay all amounts for Supplemental Hire  invoiced
     by  the  Owner  within 10 days after receipt of such  invoice.   Any
     Basic  Hire  not  paid  when  due  and  any  invoices  not  paid  in
     immediately  available funds within 10 days  after  receipt  by  the
     Charterer  shall accrue interest from the due date until paid  at  a
     per annum rate of interest equal to the Overdue Rate, computed on  a
     basis of 360 days, for actual days elapsed.  Payments shall be  made
     by wire transfer in immediately available funds prior to 12:00 noon,
     New  York City time, on the day when each such payment shall be  due
     to  the  Owner's account at a financial institution located  in  the
     State of New York or at such other office as the Owner may from time
     to  time designate in writing to the Charterer.  All payments to the
     Owner  hereunder shall be without any offset, counterclaim, discount
     or  deduction  and  shall  be made in United  States  Dollars.   All
     payments  to the Owner stated in this Charter are exclusive  of  any
     Taxes,  including, without limitation, sales, excise,  value  added,
     stamp,  documentary,  transfer,  ad  valorem,  general  consumption,
     property,  use, export, import, employment, payroll, withholding  or
     other  similar  Taxes, which may be imposed on or  incurred  by  the
     Owner,  its  employees  or  the Investors  (other  than,  except  as
     otherwise  provided herein, Taxes on the net income or franchise  of
     the Owner, its employees or the Investors), and all costs associated
     therewith,  in connection with performance by the Owner of,  or  the
     Owner's  rights under, this Charter, including the costs  associated
     with  bonds  or  letters  of  credit  that  are  not  otherwise  the
     responsibility of the Charterer under this Charter.   The  Charterer
     shall  pay the Owner the amount of all such charges, Taxes and costs
     upon  receipt  of  an invoice, subject to the Charterer's  right  to
     reasonably  verify the Owner's payment of such amounts.   The  Owner
     shall  use reasonable efforts, without filing suit or incurring  any
     out-of-pocket or other additional costs, to avail itself of any  and
     all  applicable  exemptions and/or reductions of  such  taxes.   The
     Charterer  shall, at the Owner's request, pay such sums directly  or
     post  any  required bonds or letter of credit required on  any  such
     items.

12.4 Invoices

     The  Owner  shall render to the Charterer a monthly  invoice  on  or
     before  the  15th  day of each month showing all  Supplemental  Hire
     payable to the Owner for the preceding month.

12.5 Security for Obligations

     (a   To  secure  the  Obligations, the Obligors  have  executed  and
          delivered the Security Documents.  Subject to Section  12.5(b),
          (c),  (d)  and  (e),  the  Charterer  shall  maintain  (i)  the
          Cunningham Mortgage or (ii) any Substitute Collateral that  has
          a fair market value at least equal to the Stipulated Loss Value
          at  the  time  of  any  delivery of such Substitute  Collateral
          (collectively,  the  "Additional  Collateral")  to  secure  the
          Obligations.

     (b   In  the  event that, at any time during the periods  set  forth
          below, the Timely Liquidation Value of the Vessel as determined
          in  accordance with the Appraisal Procedure at such time is  at
          least  the Stipulated Loss Value at such time, neither S&P  nor
          Moody's has a negative outlook for Reading & Bates at such time
          and  a  Drilling Contract is in full force and effect  at  such
          time   that   provides  adequate  cash  flow  to  service   the
          Obligations  for  the  term  of  such  Drilling  Contract,  the
          Charterer  may request a reduction in the amount of  Additional
          Collateral as follows:

          (i)  after  the fourth anniversary of the Delivery Date and  so
               long  as (A) the rating of S&P of the Rated Securities  is
               at  least "BB+" and the rating, if any, of Moody's of  the
               Rated Securities is at least "Ba1", and (B) no Default has
               occurred,  the  Timely  Liquidation  Value  of   the   Jim
               Cunningham  or the Timely Liquidation Value of  Substitute
               Collateral  (as  determined by  the  Appraisal  Procedure)
               required to be maintained shall be reduced to 50%  of  the
               Stipulated Loss Value;

          (ii) after the seventh anniversary of the Delivery Date and  so
               long  as (A) the rating of S&P of the Rated Securities  is
               at  least "BBB-" or higher by S&P and the rating, if  any,
               of Moody's of the Rated Securities is at least "Baa3", and
               (B)  no  Default  has  occurred, no Additional  Collateral
               shall be required to be maintained; or

         (iii) at  any  time,  and  so  long  as (A) the rating of S&P of
               the  Rated Securities is at least "BBB+" or higher by  S&P
               and the rating, if any, of Moody's of the Rated Securities
               is  at  least "Baa1", and (B) no Default has occurred,  no
               Additional Collateral shall be required to be maintained.

     (c   The  Owner shall release its lien and security interest in that
          portion of the Additional Collateral that is in excess  of  the
          Additional Collateral (the "Released Collateral") the Charterer
          is  required to maintain pursuant to Section 12.5(b).  From and
          after  such release the Charterer shall maintain such  Released
          Collateral  or other property (the "Negative Pledge  Property")
          mutually agreed upon by the Owner and the Charterer that has  a
          Timely Liquidation Value equal to the Stipulated Loss Value  at
          the  time  of such release, free and clear of all Liens  (other
          than  Permitted  Liens as defined in the Cunningham  Mortgage).
          The  Charterer shall immediately notify the Owner and  each  of
          the  Investors  of the occurrence of any event that  would  not
          entitle the Charterer to maintain reduced Additional Collateral
          pursuant  to  Section 12.5(b) and shall promptly  reinstate  or
          grant,  as  the  case  may be, Liens upon the  Negative  Pledge
          Property  or,  with  the approval of the Owner,  provide  other
          Substitute  Collateral in accordance with  Section  12.5(d)  as
          required under Section 12.5(b).

     (d   The  Charterer shall be entitled to exchange collateral for the
          Obligations or discharge its obligation to reinstate Additional
          Collateral  or  Substitute Collateral by  providing  substitute
          property   as   collateral  securing   the   Obligations   (the
          "Substitute  Collateral") if each of the  following  conditions
          precedent shall have been satisfied:

          (i)  The  Charterer  shall  have  notified  the  Owner  of  its
               intention   to   provide  Substitute   Collateral,   which
               Substitute Collateral shall be cash, cash equivalents,  or
               a  mobile  offshore  drilling unit and  otherwise  in  all
               respects satisfactory in form and substance to the Owner.

          (ii) All  instruments  conveying or granting to  the  Charterer
               such  Substitute Collateral and any related agreements  or
               instruments shall in all respects be satisfactory in  form
               and substance to the Owner.

         (iii) The   Owner   and   each   of  the  Investors  shall  have
               received  with  respect  to such Substitute  Collateral  a
               report  at  the  sole cost and expense  of  the  Charterer
               prepared  in  accordance with the Appraisal Procedure,  in
               form  and substance reasonably satisfactory to the  Owner,
               that  the  fair market value of such Substitute Collateral
               when  added  to the fair market value  of other Additional
               Collateral for the Obligations shall, after giving  effect
               to  any release, be in compliance with Section 12.5 (a) or
               (b), as applicable.

          (iv) The  Charterer  shall at its sole cost  and  expense  have
               obtained (to the satisfaction of the Owner) all government
               approvals required in connection with the ownership,  use,
               occupancy,  possession, operation or ordinary  maintenance
               of  such Substitute Collateral, compliance with applicable
               environmental, health and safety laws and regulations  and
               the mortgaging of such Substitute Collateral to the Owner.
               Each such governmental approval shall be in full force and
               effect.

          (v)  The  Charterer  shall at its sole cost  and  expense  have
               conducted or caused to be conducted such title examination
               or title review with respect to such Substitute Collateral
               as  a reasonably prudent operator would conduct under  the
               circumstances,  and  the  Owner shall  have  approved  the
               status  of  title  of  such  Substitute  Collateral.   The
               Charterer  shall  have furnished to the Owner  such  title
               policy  or  other  title  assurances  as  it  receives  in
               connection   with  the  acquisition  of  such   Substitute
               Collateral.

          (vi) The  Charterer  shall at its sole cost  and  expense  have
               obtained such casualty, liability and other insurance with
               respect   to  such  Substitute  Collateral  as  shall   be
               requested  by  the  Owner, which insurance  shall  in  all
               respects comply with, and shall be in all respects subject
               to, Article 15.  The Owner and each of the Investors shall
               have  received  a certificate of an independent  insurance
               broker  setting forth the insurance obtained in accordance
               with   this  paragraph  (vi)  and  certifying  that   such
               insurance  is  in  full  force and  effect  and  that  all
               premiums then due thereon have been paid.

         (vii) The  Charterer  shall  at  its  sole cost and expense have
               executed  and  delivered to the Owner or to a  trustee  or
               collateral  agent designated by them and acting  on  their
               behalf,  a  mortgage  and  security  agreement  or   other
               instrument or other document granting to the Owner or such
               trustee  or collateral agent a mortgage Lien and  security
               interest,  subject to no other Liens (other than Permitted
               Liens  as defined in the Cunningham Mortgage), in  and  to
               such  Substitute Collateral, each deed, lease,  assignment
               or   other  instrument  of  conveyance  referred   to   in
               paragraph  (ii) above, each government action as  referred
               to  in  paragraph (iv) above, each ancillary contract  and
               any   agreement  providing  for  the  operation  of   such
               Substitute Collateral (which assignment shall be consented
               to  by  the operator, on terms satisfactory to the Owner),
               subject to no Liens (other than Permitted Liens as defined
               in  the  Cunningham Mortgage).  Such mortgage and security
               agreement or such other instrument shall be in full  force
               and  effect  and shall be in all respects satisfactory  in
               form  and  substance to the Owner.  Each of the  foregoing
               instruments and any necessary documents relating  thereto,
               including, without limitation, financing statements  under
               the   applicable   Uniform  Commercial   Code   or   other
               instruments  for  filing or recordation, shall  have  been
               duly  recorded  and filed in all public offices  in  which
               such  recordation  or  filing is  necessary  in  order  to
               provide  constructive  notice  to  third  parties  of  the
               interests  and  Liens  created thereby  and  in  order  to
               establish, perfect, preserve and protect the validity  and
               effectiveness thereof and the mortgage Lien  and  security
               interest  created by such mortgage and security  agreement
               or  other  instrument  on  all property  purported  to  be
               subject  thereto;  and all taxes, fees and  other  charges
               payable  in  connection with any and all of the  foregoing
               shall have been paid in full by the Charterer.

        (viii) The  Owner  and  the  Investors  shall  have received such
               environmental  reports  with respect  to  such  Substitute
               Collateral  (in  form  and substance satisfactory  to  the
               Owner) as they may request.

          (ix) The  Owner  and each of the Investors shall have  received
               such  opinions of counsel satisfactory to the Owner as  to
               such   matters  relating  to  the  acquisition   of   such
               Substitute   Collateral,  including   the   validity   and
               enforceability  of all documents and instruments  referred
               to  in  this Section 12.5(d) and the validity, extent  and
               priority   of  the  Owner's  Lien,  as  the  Owner   shall
               reasonably  request, which opinions shall be in  form  and
               substance  satisfactory  to the  Owner  and  from  counsel
               acceptable to the Owner.

          (x)  The  Charterer  shall  have paid all  costs  and  expenses
               incurred by the Owner and each of the Investors in respect
               of  obtaining  any release of Additional  Collateral,  the
               Mortgages  or  the  Substitute Collateral,  regardless  of
               whether   such   release,   Collateral,   the   Mortgages,
               Substitute   Collateral   or  Additional   Collateral   is
               delivered.

          (xi) The  Owner  shall have received an Officer's  Certificate,
               containing   such  representations  and  warranties   with
               respect to such Substitute Collateral and the matters  set
               forth  in  this Section 12.5(d) and any other  matters  as
               shall be reasonably requested by the Owner, and such other
               documents  or  evidence  as to  the  satisfaction  of  the
               conditions set forth in this Section 12.5(d), as the Owner
               shall reasonably request.

                           ARTICLE 13
              GENERAL OBLIGATIONS AND PERFORMANCE

13.1 Independent Owner Relationships

     In  the  performance of this Charter, the Owner  is  an  independent
     contractor.  In the performance of this Charter, the Charterer is an
     independent contractor and shall control and direct the operation of
     the  Vessel  and the performance of the details of the  work  to  be
     performed by the Charterer's personnel and shall be responsible  for
     the  results  of  such work, all in accordance with the  obligations
     imposed   upon  the  Charterer  hereunder  and  under  the   Charter
     Documents.   The  presence  of and the observation  by  the  Owner's
     representative(s)  at  the site of any work shall  not  relieve  the
     Charterer  from  the  Charterer's obligations  and  responsibilities
     hereunder.

13.2 Inspection

     The  Owner  shall have the right, at the Charterer's sole  cost  and
     expense,  to  inspect the Vessel and its book  and  records  at  all
     reasonable times if the exercise of such inspection right would  not
     unreasonably interfere with the operator's operations on the  Vessel
     at the time or any applicable governmental approval, which approvals
     the Charterer shall endeavor to obtain in good faith, and shall have
     the  right  to  confer  with and have access  to  the  officers  and
     employees of the Charterer and any Guarantor in connection with  any
     such  inspection.  The Owner shall have the right annually to  cause
     the  Vessel to be surveyed by a marine surveyor at the Owner's (but,
     after the occurrence and during the continuance of any Default,  the
     Charterer's) expense.  The Charterer shall correct at its sole  cost
     expense all material deficiencies discovered during any such  survey
     or inspection.

13.3 Performance of the Charterer

     The  Charterer shall exercise due diligence to carry out any and all
     operations with respect to the Vessel in a safe, workmanlike  manner
     in   accordance   with  good  offshore  industry   practice,   which
     requirement shall specifically include, not by way of limitation  in
     any  manner whatsoever, the obligations to have the Vessel under the
     command of an offshore instillation manager certified by and for the
     area in which the Vessel is operating.

13.4 Operations Outside of U.S. Waters

     In  the  event  that  the Charterer intends to  operate  the  Vessel
     outside  of  U.S.  territorial waters and/or the  Outer  Continental
     Shelf,  the Charterer shall submit at least 15 days before  movement
     of  the  Vessel to the intended area of operation such documentation
     demonstrating  to  the  Owner's  reasonable  satisfaction  (a)  that
     operation  of  the  Vessel  within the intended  area  of  operation
     complies  with  all applicable laws and regulations  of  the  United
     States  and  of the intended area of operation; (b) that the  Vessel
     can  be  removed  from such intended area of operation  upon  either
     cessation  of  the Vessel's operation in the area or termination  of
     this  Charter;  (c)  that  the  Charterer  provides  all  additional
     indemnities and has secured political risk insurance for  such  area
     additive to the insurances provided for herein and (d) the Vessel is
     not  subject  to any lien or interest that might have priority  over
     the  title  and  interest of the Owner.  Each move  to  a  new  area
     outside  U.S.  territorial waters, whether or  not  subject  to  the
     jurisdiction  of  a  different  foreign  country,  shall  meet   the
     foregoing requirements and those of Section 7.1.

                           ARTICLE 14
                    LIABILITY AND INDEMNITY

14.1 Survival of Indemnities

     The  indemnities  set  forth  in  this  Charter  shall  survive  the
     termination  of this Charter, and shall remain enforceable  (subject
     only  to debtor relief laws and general equitable principles) as  to
     any  claim, demand, liability, damage and expense arising out of  or
     incidental  to  this Charter, without regard to the  termination  of
     this Charter.

14.2 Pollution

     The  Charterer shall assume all responsibility for the  control  and
     removal of, and hold Owner Group harmless from loss, liabilities  or
     damage or claims arising from, directly or indirectly, pollution  or
     contamination   by  any  liquid  or  nonliquid  or  waste   material
     wheresoever  found that is discharged, spilled or  leaked  from  the
     Vessel  or noncompliance with environmental, health and safety  laws
     (including  but  not  limited to, those  stemming  from  release  of
     pollutants, private toxic tort claims, off-site disposal of waste or
     other pollutants, PCB's, and asbestos-containing materials on or  in
     the  Vessel (irrespective of whether any of the foregoing  occurred,
     existed  or arose before or after the date hereof)).  To the  extent
     that  any  law, regulation or governmental entity acting within  its
     jurisdiction  imposes  on  Owner  Group  liability  for   any   such
     pollution, notwithstanding such imposition of direct liability,  the
     Charterer shall have designated Owner Group as an additional insured
     under  its insurance policies and the Charterer shall hold the Owner
     harmless from such loss, liabilities, damage or claims and reimburse
     Owner Group for any amounts that Owner Group may be required to pay.
     This  indemnity  is valid irrespective of the negligence  or  fault,
     whether sole, joint, active or passive of the indemnified party  and
     whether  predicated on strict liability, statutory duty, contractual
     indemnity or any other theory of liability of the indemnified party.

14.3 The Charterer's Indemnity

     (a)  The Charterer shall defend, indemnify and hold Owner Group, its
          officers,   directors,   employees,   agents   and   Affiliates
          (collectively, the "Indemnitees") harmless from and against all
          claims,  liabilities,  damages, Taxes and expenses  (including,
          without   limitation,  attorneys'  fees  and  other  costs   of
          defense),   including  all  claims  of  any  type   whatsoever,
          irrespective of insurance coverage, arising out of,  incidental
          to,  or  related to this Charter, any of the Charter Documents,
          any  of  the  transactions contemplated hereby or thereby,  the
          Vessel, the Jim Cunningham, the Randolph Yost or any Additional
          Collateral  or Substitute Collateral, except, unless  otherwise
          specifically provided herein, any claims directly  arising  out
          of the Owner's gross negligence or willful misconduct.

     (b)  If  it  is  judicially determined that the monetary  limits  of
          insurance  required  under this Charter or of  the  indemnities
          voluntarily  and  mutually assumed in this Charter  (which  the
          Owner  and the Charterer hereby agree will be supported  either
          by  available liability insurance, under which the insurer  has
          no  right of subrogation against the indemnitee, or voluntarily
          self-insured  in respect of permitted deductibles)  exceed  the
          maximum  limits permitted under applicable law,  it  is  agreed
          that   such   insurance  requirements  or   indemnities   shall
          automatically  be  amended to conform to the  maximum  monetary
          limits permitted under such law.

     (c)  The  Charterer  shall  indemnify, pay and hold  harmless  Owner
          Group against any loss, liability, cost or expense incurred  in
          respect of the Vessel, including actual or constructive loss of
          the Vessel, or any effort to interdict the payment to the Owner
          of proceeds arising out of or related to this Charter.

     (d)  The  indemnities in this Charter apply without  regard  to  any
          conflicting  rules  of liability under any  applicable  law  or
          regulation  and shall include indemnification for any  and  all
          claims  in  which recovery, indemnification or contribution  is
          sought  directly or indirectly by any person or entity  against
          Owner Group whether predicated on negligence, strict liability,
          statutory  duty  or  contractual  indemnity,  except  any  such
          liability  directly  arising out of  the  gross  negligence  or
          willful  misconduct  of  the Owner unless  otherwise  expressly
          specified herein.

14.4 Patent Infringement

     (a)  The  Charterer  shall assume liability for, and  shall  defend,
          indemnify  and  hold the Owner harmless from and  against,  all
          suits  and  actions alleging that the Vessel, any equipment  or
          part  thereof,  or  any  operation  of  the  Vessel,  any  such
          equipment  or part thereof constitutes an infringement  of  any
          letters patent.

     (b)  If,  as  a  result of any changes required by the Charterer  in
          equipment  furnished by the Owner, or any changes  required  by
          the Charterer in operation of such equipment or part thereof, a
          claim  is  filed against the Owner alleging that such equipment
          or  any  such operation conducted infringes any letters patent,
          then  the  Charterer shall be liable for all  such  claims  and
          indemnify and hold the Owner harmless from all such claims.

14.5 Both-to-Blame Collision Clause

     Without limitation on any other indemnity of the Charterer contained
     herein,  if the liability for any collision in which the  Vessel  is
     involved  while  performing this Charter  should  be  determined  in
     accordance  with  the  laws of the United  States  of  America,  the
     following clauses shall apply:

     (a)  If  the  Vessel  comes into collision with another  ship  as  a
          result of the negligence of the other ship and any act, neglect
          or default of the Master, mariner, pilot or the servants of the
          Charterer in the navigation or in the management of the Vessel,
          the  Charterer  shall indemnify the Owner against  all  direct,
          consequential or special loss or liability to the other ship or
          her owner.

     (b)  The  foregoing  provisions shall also apply where  the  owners,
          operators  or those in charge of any ship or ships  or  objects
          other  than, or in addition to, the colliding ships or  objects
          are at fault in respect of a collision or contact.

14.6 Liens, Attachments and Encumbrances

     None  of  the  Charterer, any subcharterer or party  to  a  Drilling
     Contract  shall have the right, power or authority to create,  incur
     or  permit  to exist any Lien upon the Vessel, except for  Permitted
     Liens.   The Charterer further agrees to carry a true copy  of  this
     Charter  with the ship's papers on board the Vessel, and to  exhibit
     the  same  to any person having business with the Vessel  which  may
     give  rise  to  any  lien  or claim upon the  Vessel  other  than  a
     Permitted Lien or to the sale, conveyance or mortgage of the Vessel,
     and  on demand, to any person having business with the Vessel or  to
     any  representative of the Owner, the Owner Group or  any  Investor.
     The  Charterer  shall also place and keep prominently  displayed  on
     board the Vessel a notice, framed under glass, printed in plain type
     of  such  size  that the paragraph of reading matter shall  cover  a
     space not less than six inches wide by nine inches high, reading  as
     follows:

                       NOTICE OF CHARTER

          This Vessel is owned by Deep Sea Investors, L.L.C.  It  is
          under  bareboat demise charter to Reading & Bates Drilling
          Co.    Under  the  terms  of  this  Charter  none  of  the
          Charterer,  any  subcharterer, the Master  nor  any  other
          person has any right, power or authority to create,  incur
          or  permit  to  be  imposed on the  Vessel  (a)  any  lien
          whatsoever  other  than  liens for current  crew's  wages,
          general average and salvage, in each case, incurred in the
          ordinary  course of business and that are not yet  overdue
          complying with the provisions of such charter and (b)  any
          claims  whatsoever under any drilling contracts in respect
          of  the  Vessel  other  than  claims  complying  with  the
          provisions of such charter.

     Such  notice shall be promptly changed from time to time to  reflect
     the identity of the successors or assigns of the Owner.

14.7 Indemnification by the Charterer

     The  Charterer  shall indemnify and hold harmless the Owner  against
     any  Liens,  claims or liabilities of whatsoever nature, other  than
     Permitted  Liens  (but  if the Vessel is being  redelivered  to,  or
     otherwise coming into the possession of, the Owner pursuant  to  the
     terms  and  conditions of this Charter, other than  Permitted  Liens
     arising  as  the result of claims against the Owner  for  which  the
     Owner  is  not entitled to indemnification hereunder only),  whether
     such Liens, claims or liabilities now exist or are created hereafter
     or  are  founded or unfounded, upon or relating to the  Vessel,  its
     possession,   management,  maintenance,  repair,  use,   employment,
     chartering  or subchartering or operation or any act or omission  of
     the Charterer.

14.8 The Charterer's Duties to Remove Liens, etc.

     Without  limitation of the generality of the Charterer's indemnities
     provided  for  in  Section 8.2 and Article 14, the Charterer  agrees
     that  if  a  libel  or a complaint in admiralty or any  other  legal
     proceeding shall be filed against the Vessel, or if the Vessel shall
     be  otherwise  levied  upon or taken into  custody  or  detained  or
     sequestered by virtue of proceedings in any court or tribunal or  by
     any  government or other authority because of any Liens,  claims  or
     liabilities  arising from any claims, other than claims against  the
     Owner the payment or discharge of which is not the obligation of the
     Charterer or any Guarantor or with respect to which the Owner is not
     entitled  to  indemnification from the Charterer or  any  Guarantor.
     The  Charterer  shall at its own expense within 15  days  thereafter
     cause  the  Vessel to be released and all such Liens and (except  to
     the  extent  that  the  same shall currently  be  contested  by  the
     Charterer  in  good  faith  by appropriate persons  and  appropriate
     proceedings  in the Owner's sole judgment and shall not  affect  the
     continued release, or until any risk of forfeiture or other loss  of
     or to the Vessel, or in any manner whatsoever interfere with the use
     and   operation  of  the  Vessel)  claims  and  liabilities  to   be
     discharged.   The  Charterer shall forthwith  notify  the  Owner  by
     telecopy, telex or telegram, confirmed by letter, of each such event
     and  of each such release and discharge.  The Charterer shall advise
     the Owner in writing at least once in each three-month period as  to
     the  status  and merits of all such excepted claims and  liabilities
     being  so  contested  by  the Charterer and  not  discharged  within
     fifteen  days  as  provided above, which are either  not  bonded  or
     affect  the  ability  of  the Charterer to use  any  Vessel  in  the
     ordinary  course  of  its  business.  The  Charterer  will  pay  and
     discharge when due all claims for repairs and other charges incident
     to  current operations of the Vessel or with respect to any  change,
     alteration  or addition made pursuant to this Charter and  will  not
     permit  any  lien referred to in clause (b) or (c) of the definition
     of  "Permitted Liens" which has ripened into a cause of action to be
     in effect for more than 30 days unless it is fully bonded or covered
     by insurance or Adequate Provision.

                           ARTICLE 15
                           INSURANCE

15.1 The Charterer's Insurance

     The  Charterer shall, at its own expense,  procure and  maintain  in
     effect  with  respect to and for the duration of  this  Charter  the
     insurance policies with limits of at least, and with deductibles, if
     any,  of no more than, those as set forth in Schedule C approved  by
     the  Owner  and having such terms and conditions, and with  carriers
     and/or underwriters approved by the Owner (such approval not  to  be
     unreasonably  withheld).  Any policies of insurance carried  by  the
     Charterer in accordance with this Article 15 shall (a) provide  that
     the  interests  of  Owner  Group  in  such  policies  shall  not  be
     invalidated by any action, inaction, neglect, breach of warranty  or
     misrepresentation  of the Charterer or change in  ownership  of  the
     Vessel  and  shall insure Owner Group's interests  as  they  appear,
     regardless  of  any  breach or violation by  the  Charterer  of  any
     warranty,  declaration or condition contained in such policies,  and
     (b)  be  primary  without  right  of  contribution  from  any  other
     insurance  which may be carried by Owner Group with respect  to  its
     interests  in  the  Vessel.  The Charterer shall immediately  notify
     underwriters   of  and  shall  furnish  all  necessary   information
     concerning any occurrence which may give rise to a claim  under  any
     of said insurance policies.  Prior to commencement of any operations
     under  this  Charter  and  any renewal  of  the  insurance  policies
     required to be maintained hereunder, the Charterer shall provide the
     Owner   with   insurance  certificates  evidencing  the  Charterer's
     insurance coverage; such certificates shall provide for at least  30
     days' (seven days, in the case of war risk) prior written notice  to
     the  Owner  and  each  of the Investors of any material  change  in,
     reduction  or  cancellation of any of said  insurance  policies  and
     shall  show  the  Charterer, the Owner,  the  Owner  Group  and  the
     Investors as sole loss payees and additional insureds thereunder  as
     their  interests appear.  If requested, copies of all correspondence
     and documents sent to underwriters, related to any accident or claim
     arising  out  of or in connection with the performance of  the  work
     hereunder, shall be provided to the Owner.

15.2 Nonperformance of Insurance Companies

     The insolvency, liquidation, bankruptcy, or failure of any insurance
     company providing insurance for the Charterer or the Owner or  their
     respective subcontractors, or failure of any such insurance  company
     to  pay  claims accruing, shall not be considered a waiver  of,  nor
     shall  it  excuse  the Charterer from complying  with,  any  of  the
     provisions  of this Charter or any of the Charter Documents,  except
     that  any such act or omission by an insurance company shall not  be
     deemed a breach of this Charter by the Charterer.

15.3 Subrogation

     The  Charterer agrees to endorse each such insurance policy to waive
     the underwriters' and insurance providers' right of subrogation with
     respect  to  Owner Group; and the Charterer agrees to indemnify  and
     hold  Owner Group harmless with respect to any rights of subrogation
     pursued  by  the  Charterer's underwriters  or  insurance  providers
     against Owner Group.

                           ARTICLE 16
                     ASSIGNMENT OF CHARTER

16.1 Assignment and Subcontract by the Owner

     The  Owner shall have the right, at any time, to assign all or  part
     of  this Charter to any Person, so long as such Person agrees to  be
     bound  by this Charter and, at the time of such assignment, has,  or
     is   a  consolidated  Subsidiary  of  a  parent  entity  having,   a
     consolidated  net  worth of at least $50,000,000  as  determined  in
     accordance with generally accepted accounting principles and is  not
     primarily engaged in the offshore drilling business, other than as a
     financier or lessor of offshore drilling equipment or operations.

16.2 Assignment by the Charterer

     The Charterer shall not have the right to assign this Charter or  to
     subcharter  the  Vessel  without the prior written  consent  of  the
     Owner.  Subject to the terms of applicable law, the Charterer  shall
     have  the  right, without the consent of the Owner, so  long  as  no
     Default  or  Event of Default shall have occurred and be continuing,
     to  subcharter  the  Vessel  on a bareboat  or  time  basis  to  any
     Subsidiary  of  Reading & Bates that is and remains  throughout  the
     term  of  such  subcharter a Subsidiary of Reading  &  Bates  and  a
     citizen of the United States within the meaning of the Shipping Act,
     1916,  and  to enter into, and to permit the Vessel to serve  under,
     Drilling  Contracts that comply with the terms hereof and the  other
     Charter Documents (provided no such Drilling Contract constitutes  a
     demise  or a bareboat charter or any grant of any property right  or
     other  interest  in  the  Vessel between the Charterer  and  others)
     provided that:

     (a)  each  such subcharter and Drilling Contract shall be consistent
          with  the terms of this Charter and the subcharterer shall have
          agreed  not further to subcharter the Vessel without  complying
          with this Section 16.2 with respect to such further subcharter;

     (b)  either  (i)  the  subcharterer under  such  subcharter  or  the
          customer  under a Drilling Contract is a citizen of the  United
          States  within  the  meaning  of the  Shipping  Act,  1916  and
          evidence thereof satisfactory to the Owner in its sole judgment
          shall be submitted to the Owner within 30 days of entering into
          such  subcharter, (ii) the prior approval of the U.S.  Maritime
          Administration under the Shipping Act, 1916 of such subcharter,
          in  form satisfactory to the Owner in its sole judgment,  shall
          have  been  obtained and, within 30 days of entering into  such
          subcharter  or Drilling Contract, evidence thereof satisfactory
          to the Owner in its sole judgment, shall have been submitted to
          the  Owner or (iii) such subcharter or Drilling Contract  shall
          be   covered  by  a  general  approval  of  the  U.S.  Maritime
          Administration under sections 9 and 37 or any other  applicable
          sections of the Shipping Act, 1916 and the Charterer shall have
          given  written notice to the Owner to that effect, which notice
          shall  set forth in reasonable detail the facts which establish
          such  coverage  with  respect to such  subcharter  or  Drilling
          Contract;

     (c)  such subcharter or Drilling Contract shall not violate any laws
          of  the  United  States of America or any  regulations,  rules,
          interpretations or orders thereunder;

     (d)  irrespective of any such subcharter, the Charterer shall remain
          liable  for all of its obligations under this Charter  and  the
          Charter  Documents to the same extent as if such subcharter  or
          Drilling Contract were not in effect;

     (e)  the  subcharterer under each such subcharter shall comply  with
          all  applicable laws and regulations, provided that  violations
          of  laws or regulations by any such subcharterer that (i)  will
          not result in the Owner, the Owner Group or the Vessel being in
          violation of, or subject to any fine, penalty or other sanction
          under  any  applicable  law  or  regulation  or  any  risk   of
          forfeiture  or  other  loss of or to the Vessel,  (ii)  do  not
          otherwise  adversely affect the interests of the Owner  or  the
          Owner  Group  or  the Investors hereunder, and  (iii)  are  not
          consented  to  by the Charterer shall not, by  reason  of  this
          clause (e), constitute a breach, or cause such subcharter to be
          in  violation  of  the terms of this Charter  so  long  as  the
          Charterer  is  taking  appropriate  action  to  terminate  such
          violation or to terminate such subcharter;

     (f)  such  subcharter  or  Drilling Contract shall,  by  its  terms,
          expire  no  later than the end of the Charter  Period,  or  any
          extension thereof, and Charterer shall not suffer or permit  to
          be continued under any such subcharter or Drilling Contract any
          lien  or encumbrance incurred by it or its agents, which  might
          have  priority over the title and interest of the Owner in  the
          Vessel  and  any part thereof,  or equipment or other  property
          used in connection with the Vessel; and

     (g)  any  Drilling  Contract  shall be on terms  and  conditions  in
          substantially the form generally used in offshore drilling  and
          with  an  operator and having (i) a consolidated  tangible  net
          worth  as  determined  in  accordance with  generally  accepted
          accounting  principles  of  at  least  $500,000,000  (or  be  a
          consolidated  Subsidiary  of  a parent  entity  having  such  a
          consolidated  tangible net worth), or (ii) a  senior  unsecured
          debt  rating by S&P of "BBB-" or by Moody's of "Baa3" (or be  a
          consolidated  direct or indirect Subsidiary of a parent  entity
          having a senior unsecured debt rating meeting such criteria) or
          (iii)  maintaining (or the Charterer providing) operators extra
          expense   or  energy  exploration  and  development   insurance
          coverage  in  an  amount  of at least  the  difference  between
          $150,000,000  (or such greater amount, as may be  necessary  to
          meet the applicable financial responsibility requirements under
          the Oil Pollution Act of 1990, or any other applicable laws, as
          amended  from  time to time) and the amount of the  Charterer's
          contingent  operators extra expense or energy  exploration  and
          development insurance or other coverage in effect at such time,
          with  such  underwriters or carriers and containing such  terms
          and  conditions as the Owner may require, in the form  normally
          and customarily maintained by oil and gas operators engaged  in
          offshore  drilling operations, for oil pollution liability  and
          expense,  with  the Owner, Investors, the Owner Group  and  the
          Charterer  named as additional insureds and having the  benefit
          of  waivers  of  subrogation and with carriers or  underwriters
          reasonably acceptable to the Owner.

     The Charterer shall within 30 days after entering into each Drilling
     Contract  notify the Owner of the period thereof and of the identity
     of the other party and its relationship with the Charterer, if any.

16.3 Assignment of Subcharter Hire.

     The  Charterer hereby sells, assigns, transfers, creates a  security
     interest  in  and  sets over unto the Owner all of  the  Charterer's
     right,  title  and interest in and to all accounts,  chattel  paper,
     contract  rights and general intangibles, and all monies and  claims
     for  monies due and to become due under, or arising out of, and  all
     claims  for damages arising out of the breach of, any subcharter  or
     Drilling Contract (Drilling Contracts being considered, for purposes
     of  this  Section 16.3, subcharters) relating to the Vessel, whether
     now  existing  or  hereafter entered into.  It is  expressly  agreed
     that, anything herein contained to the contrary notwithstanding, the
     Charterer shall remain liable under each such subcharter to  perform
     all  of  its  obligations thereunder, and the Owner  shall  have  no
     obligations or liabilities thereunder by reason of or arising out of
     the foregoing assignment (herein, the "Rights Assignment").

     Upon  the  demand of the Owner after the occurrence and  during  the
     continuation of an Event of Default, the Charterer will specifically
     authorize and direct each person liable therefor to make payment  of
     all  monies due and to become due under or arising out of each  such
     subcharter to the Owner or as the Owner shall direct, and upon  such
     demand irrevocably authorizes and empowers the Owner to ask, demand,
     receive,  receipt and give acquittance for any and all such  amounts
     which  may be or become due or payable or remain unpaid at any  time
     or  times to the Charterer by each such person under or arising  out
     of  such subcharters; to endorse any checks, drafts or other  orders
     for  the  payment  of  money  payable to the  Charterer  in  payment
     therefor;  and  in  its discretion to file any claims  or  take  any
     action  or proceeding either in its own name or in the name  of  the
     Charterer  or otherwise which the Owner may deem to be necessary  or
     advisable in the premises.

     The Charterer hereby irrevocably authorizes the Owner after any such
     demand  has been made, in its own name or in the name and on  behalf
     of  the  Charterer, to give notification to persons obligated  under
     such  subcharters that payment is to be made to the Owner or as  the
     Owner  directs  and hereby agrees to cause to be  delivered  to  the
     Owner consents of such persons to the Rights Assignment, in form and
     substance satisfactory to the Owner.

     The  Charterer agrees that at any time and from time to  time,  upon
     the  Owner's written request, the Charterer will execute and deliver
     such  further documents and do such further acts and things  as  the
     Owner  may  request in order to effect further the purposes  of  the
     Rights Assignment, provided that no such consent referred to in  the
     preceding paragraph may be required under this sentence.

     The  Charterer  hereby  irrevocably authorizes  the  Owner,  at  the
     Charterer's  expense, to file such financing statements relating  to
     the  Rights  Assignment, without the Charterer's signature,  as  the
     Owner at its option may deem appropriate, and appoints the Owner  as
     the  Charterer's  attorney-in-fact to  execute  any  such  financing
     statements  in  the Charterer's name and to perform all  other  acts
     which  the  Owner  deems  appropriate to perfect  and  continue  the
     security interest created hereby.

     The Charterer covenants and agrees with the Owner that the Charterer
     will (a) duly perform and observe all of the terms and provisions of
     such  subcharters on the part of the Charterer to  be  performed  or
     observed,  (b)  clearly  record in the  books  and  records  of  the
     Charterer  notations of the Rights Assignment and (c) in  the  event
     that  the Charterer shall receive payment of any money which  should
     have  been paid directly to the Owner pursuant to a demand  made  or
     notice given under this Section 16.3 forthwith turn over the same to
     the Owner or as the Owner may direct, in the identical form in which
     received (except for such endorsements as may be required thereon).

                           ARTICLE 17
                    LOSS, TAKING OR SEIZURE.

17.1 Taking by the U.S. Government

     A taking of the Vessel for use by the United States Government shall
     not  terminate  this Charter, but the Charterer shall remain  liable
     for  all  its  obligations hereunder, including  its  liability  for
     payment of Hire, until the expiration of the Charter Period.  If, at
     the  expiration  of  the lesser of the then remaining  term  of  the
     Charter Period or 180 days after the taking of the Vessel for use by
     the  United States Government Charter Period, the Vessel shall still
     be  subject  to such taking for use by the United States Government,
     an Event of Loss shall be deemed to have occurred on the last day of
     such 180-day period or the Charter Period, whichever occurs first.

17.2 Event of Loss not a Total Loss

     In the case of any Event of Loss arising out of damage to the Vessel
     other  than actual total loss, the Charterer shall notify the  Owner
     that  the  Vessel is deemed to be subject to an Event  of  Loss  and
     shall not consent to a compromise or arranged total loss without the
     prior  written  agreement  of its insurance  underwriters  that  the
     Vessel  is  a constructive or compromised total loss and  that  such
     underwriters  agree to pay an amount at least equal  to  the  amount
     payable by the Charterer under Section 17.3.

17.3 Payment of Stipulated Loss Value

     Upon  the  occurrence  of  an  Event of Loss,  the  Charterer  shall
     forthwith  give the Owner written notice of such Event of  Loss  and
     shall  pay  to the Owner within 60 days following the  date  of  the
     occurrence  of such Event of Loss the Stipulated Loss Value  of  the
     Vessel calculated as of such Basic Hire Payment Date occurring after
     the  occurrence of the Event of Loss plus interest  at  a  rate  per
     annum  equal to the Overdue Rate.  The Charterer shall also  pay  to
     the  Owner  all  Basic Hire due on the Payment Dates next  occurring
     after the date of occurrence of such Event of Loss and, if the  date
     on  which such Stipulated Loss Value actually is paid in full is not
     such  a  Payment Date, an amount equal to the Overdue Rate (computed
     on  the  basis  of  a 360-day year for actual days elapsed)  on  the
     amount  of  such  Stipulated Loss Value for  the  period  from  such
     Payment Date to the date such Stipulated Loss Value is paid in full.

17.4 Application of Payments

     In the case of all payments (other than insurance proceeds) received
     by  the  Owner  or the Charterer from any governmental authority  or
     otherwise  as  compensation for an Event of Loss, so  much  of  such
     payments  as shall not exceed the sum of the Stipulated  Loss  Value
     and  an  amount equal to interest hereon required to be paid by  the
     Charterer as above provided and any Hire then due and owing  by  the
     Charterer hereunder shall be applied, provided no Default  or  Event
     of  Default  shall  have  occurred  and  be  continuing,  first,  in
     reduction  of the Charterer's obligation to pay such Hire,  if  any,
     then  due  and  owing; and second, in reduction of  the  Charterer's
     obligation  to pay such Stipulated Loss Value and such amount  equal
     to  interest  thereon as provided above if not already paid  by  the
     Charterer  or,  if already paid by the Charterer, to  reimburse  the
     Charterer  for  its payment of such Stipulated Loss  Value  and  the
     balance, if any, of such payments remaining thereafter shall be paid
     over to, or retained by, the Owner.

17.5 Date of Loss

     For  the purpose of this Charter, the date of the occurrence  of  an
     Event  of Loss shall be the date of the casualty or other occurrence
     giving  rise to such Event of Loss (or the earlier of the expiration
     of  the  remaining term of the Charter Period or the date  180  days
     after  such taking thereafter, in the case of a taking of  title  or
     use or possession of the government of the United States of America,
     as  provided  in  the  definition of Event  of  Loss  set  forth  in
     Section  1  hereof),  and  if the date of  such  casualty  or  other
     occurrence  shall be uncertain, such date shall be deemed  the  date
     the Vessel was last heard from.

17.6 Effect of Payment of Stipulated Loss Value

     In  the  event that the Charterer shall make payment in full of  any
     overdue  payments of Basic Hire, and of such Stipulated  Loss  Value
     and  an  amount  equal  to interest thereon as provided  above,  the
     Charterer  shall have no further obligation to make any  payment  of
     Basic  Hire  payable  after  the  Payment  Date  as  of  which  such
     Stipulated Loss Value was calculated, and the Charterer, subject  to
     the   Charterer's  obtaining  any  governmental  consent   required,
     (a)  shall  be subrogated to all rights which the Owner  shall  have
     with  respect to the Vessel, (b) shall receive assignments and bills
     of  sale  from  the  Owner (in such form described  in  Section  3.7
     hereof,  but without any representation or warranty of any character
     on  the part of the Owner) of any or all such rights, together  with
     all  of  the Owner's right, title and interest in and to the  Vessel
     and  all  machinery and equipment pertaining thereto, and (c)  shall
     have  the  right to abandon the Vessel to underwriters on behalf  of
     the  Owner as well as itself.  In such case, the Owner shall execute
     such  documents  and  take such other action as  the  Charterer  may
     reasonably  require to effect the surrender of  the  Vessel  to  the
     insurance underwriters.  Nothing herein contained shall relieve  the
     Charterer  or the Owner of any of its obligations under  Article  18
     incurred  up to and including the date of the Event of Loss.   After
     the  payment in full of the Stipulated Loss Value of the Vessel  and
     such  other amounts, the Charterer's obligation to pay further Basic
     Hire  with  respect to such Vessel shall terminate.   All  insurance
     proceeds received as the result of an Event of Loss with respect  to
     the  Vessel,  and  all  payments  (other  than  insurance  proceeds)
     received  by  the  Owner  or  the Charterer  from  any  governmental
     authority  or  otherwise as compensation for an Event of  Loss  with
     respect  to  the  Vessel,  shall be  applied  in  reduction  of  the
     Charterer's obligation to pay Stipulated Loss Value with respect  to
     the  Vessel  (plus any other amounts of Basic Hire and  Supplemental
     Hire  then  due  and  payable with respect to the  Vessel),  if  not
     already paid by the Charterer, or, if already paid by the Charterer,
     shall  be applied to reimburse the Charterer for its payment of  the
     Stipulated Loss Value with respect to the Vessel and the balance, if
     any, of such proceeds or payments remaining thereafter shall be paid
     over to, or retained by, the Charterer.

                           ARTICLE 18
                              TAX

18.1 Characterization as a Lease

     Each  of  the parties hereto intends that, for Income Tax  purposes,
     this  Charter will be treated as a lease of the Vessel  (except  for
     the Severables to which Charterer has title pursuant to Section 9.4)
     from  the Owner to the Charterer, the Owner will be treated  as  the
     sole  owner  of  the  Vessel (except for  the  Severables  to  which
     Charterer has title pursuant to Section 9.4) and the Charterer  will
     be  treated  as  not  having any ownership interest  in  the  Vessel
     (except for the Severables to which Charterer has title pursuant  to
     Section 9.4), the Owner or any partnership or joint venture with the
     Owner.  The Charterer, the Owner, each of  the  Investors  and   any
     Affiliate thereof will not take any  action  or  file any return  or
     other document which is inconsistent with such characterization.

18.2 Representations

     The  Charterer represents, warrants and covenants to the Owner, each
     of the Investors and any Affiliate thereof as follows:

     (a)  All information provided by the Charterer and its Affiliates to
          any  independent  appraiser or engineer  with  respect  to  the
          Vessel  and the Upgrade Programs was and is true, complete  and
          accurate, and the Charterer and its Affiliates did not omit any
          factual  information  necessary to  make  such  first-mentioned
          information  not  misleading or omit  any  factual  information
          required  to permit any such independent appraiser or  engineer
          to perform the duties for which he was retained;

     (b)  Reading  and Bates, Inc. was the original owner of  the  Vessel
          and  initially placed the Vessel in service during its  taxable
          year ended December 31, 1983;

     (c)  The  Charterer is not, and will not become at any  time  during
          any  period  in which the Owner is claiming federal income  tax
          depreciation  deductions,  a "tax-exempt  entity"  (within  the
          meaning  of  Section  168(h)(1)(A)  of  the  Code  and  Section
          168(j)(3)(A) of the 1954 Code);

     (d)  During  any  period during which the Owner is claiming  federal
          income tax depreciation deductions, the Charterer will take  no
          action and will not suffer any action to be taken by any Person
          (other  than  the  Owner)  which  would  cause  the  Vessel  to
          constitute  "tax-exempt use property"  within  the  meaning  of
          Section  168(h)(1) of  the Code (or Section  168(j)(3)  of  the
          1954  Code), or property used "predominantly outside the United
          States" within the meaning of Section 168(g)(1)(A) of the  Code
          (or Section 168(f)(2) of the 1954 Code);

     (e)  Immediately prior to the Delivery Date, Reading and Bates, Inc.
          was  entitled  to  accelerated cost  recovery  deductions  with
          respect  to  the  Vessel, computed on the basis  that  (i)  the
          Vessel  is  "5-year  property" (within the meaning  of  Section
          168(c)(2)(B)  of  the 1954 Code) and (ii) recovery  percentages
          applicable  to  the  Vessel  are those  set  forth  for  5-year
          property pursuant to Section 168(b)(1) of the 1954 Code;

     (f)  Neither the Charterer nor any of its Affiliates bore any of the
          cost of the First Upgrade Nonseverables.  Neither the Charterer
          nor  any  of  its Affiliates will bear any of the cost  of  the
          Second Upgrade Program;

     (g)  The  total cost of the First Upgrade Program was reasonable and
          based on arm's-length negotiations;

     (h)  All  of  the First Upgrade Severables will be readily removable
          from the Vessel without causing material damage to the Vessel;

     (i)  The  allocation of the total cost of the First Upgrade  Program
          among  the  First  Upgrade  Nonseverables,  the  First  Upgrade
          Severables, and the First Upgrade Maintenance as set  forth  on
          Schedule B-1 is reasonable;

     (j)  The  First Upgrade Maintenance consisted solely of ordinary and
          routine maintenance and repairs that did not materially add  to
          the  Vessel's value or appreciably prolong the Vessel's  useful
          life;

     (k)  The  Charterer has not made and will not make, with respect  to
          the period beginning with the Delivery Date and ending with the
          date  (if  any) on which the Charterer acquires  title  to  the
          Vessel  from  the Owner, any claim predicated on tax  or  legal
          ownership of such Vessel;

     (l)  Immediately after the First Upgrade Completion, the  basis  for
          Income  Tax  purposes of the Vessel in the hands of  the  Owner
          took  into  account  (a)  the purchase  price  of  the  Vessel,
          including all related costs, expenses, commissions, taxes, etc.
          incurred by the Owner in connection with the acquisition of the
          Vessel, and (b) all costs incurred by the Owner pursuant to the
          First Upgrade Program;

     (m)  The  Vessel  does not require any improvements,  modifications,
          upgrades  or  additions  in order to be  rendered  complete  or
          suitable  for  its intended use, and the Vessel  is  ready  and
          available for the Charterer's intended use; and

     (n)  No  member  of the "Lessee Group" (as such term is  defined  in
          Revenue  Procedure  75-21,  1975-1 C.B.  715,  as  modified  by
          Revenue  Procedure  79-48,  1979-2  C.B.   529)  of  which  the
          Charterer  is  a member has, nor will it acquire  at  any  time
          during  the Charter Period, any investment in the Vessel within
          the meaning of Section 4(4) of said Revenue Procedures that  is
          not permitted thereunder.

18.3 Tax Indemnity

     The  Charterer  shall  indemnify and hold the  Owner,  each  of  the
     Investors and any Affiliate thereof harmless from:

     (a)  Any  Taxes (other than Income Taxes) imposed on or incurred  by
          the  Owner, such Investor or any Affiliate, employee, agent  or
          representative thereof with respect to this Charter or  any  of
          the  Charter  Documents,  the Vessel, any  direct  or  indirect
          interest  therein or any amounts paid or payable in  connection
          therewith;

     (b)  Any Income Taxes (other than U.S. federal Income Taxes) imposed
          on  or  incurred by the Owner, such Investor or  any  Affiliate
          thereof (i) caused by or arising from the location or operation
          of  the Vessel in any particular waters or (ii) imposed by  any
          jurisdiction,  other than the jurisdiction of incorporation  of
          such  Investor  or the jurisdiction of a place of  business  of
          such  Investor (unless such place of business is determined  on
          the basis of the location of the Vessel or the operation of the
          Vessel  or  this  Charter or any of the Charter Documents),  in
          respect  of  the  Vessel  or  by  reason  of  the  transactions
          contemplated by the Charter or any of the Charter Documents;

     (c)  Any  Income  Taxes imposed on or incurred by  the  Owner,  such
          Investor or any Affiliate thereof caused by or arising from the
          Vessel's  failing  to  qualify for  accelerated  cost  recovery
          deductions,  computed  on the basis  that  (i)  the  Vessel  is
          "5-year  property" (within the meaning of Section  168(c)(2)(B)
          of  the 1954 Code) and (ii) recovery percentages applicable  to
          the Vessel are those set forth for 5-year property pursuant  to
          Section  168(b)(1) of the 1954 Code, by reason of  any  act  of
          commission  or  omission, misrepresentation or  breach  of  any
          agreement, covenant or warranty contained in the Charter or any
          of  the  Charter  Documents on the part of the  Charterer,  any
          subcharterer,  assignee or user of the Vessel or any  Affiliate
          thereof;

     (d)  Any  Income  Taxes imposed on or incurred by  the  Owner,  such
          Investor or any Affiliate thereof caused by or arising from the
          charter, subcharter or use of the Vessel to or by a "tax-exempt
          entity" (within the meaning of Section 168(h)(1)(A) of the Code
          or Section 168(j)(3)(A) of the 1954 Code);

     (e)  Any  Income  Taxes imposed on or incurred by  the  Owner,  such
          Investor or any Affiliate thereof caused by or arising from the
          Vessel's becoming limited use property;

     (f)  Any  Income  Taxes imposed on or incurred by  the  Owner,  such
          Investor or any Affiliate thereof caused by or arising from any
          item  of  loss  or deduction attributable to the  Vessel,  this
          Charter  or  any  of the Charter Documents or the  transactions
          contemplated by the Charter or any of the Charter Documents not
          being  treated as derived from, or allocable to, sources within
          the United States;

     (g)  Any  Income  Taxes imposed on or incurred by  the  Owner,  such
          Investor or any Affiliate thereof caused by or arising from any
          replacement,  improvement, modification, upgrade,  addition  or
          capital expenditure made or to be made to or in connection with
          the  Vessel  or  pursuant to this Charter, any of  the  Charter
          Documents  or the transactions contemplated by the  Charter  or
          any of the Charter Documents or otherwise;

     (h)  Any  Taxes  payable as a result of any inaccuracy or breach  of
          any representation, warranty or covenant of the Charterer under
          this Charter or any of the Charter Documents;

     (i)  Any  Income  Taxes imposed on or incurred by  the  Owner,  such
          Investor or any Affiliate thereof caused by or arising from the
          inclusion  in  income  of any amount paid  or  payable  by  the
          Charterer under this Section 18.3; and

     (j)  Any  attorneys' fees or other costs incurred by the Owner, such
          Investor  or  any  Affiliate thereof  in  connection  with  any
          payment from the Charterer under this Section 18.3.

18.4 Payments

     Any amount to which the Owner, any of the Investors or any Affiliate
     thereof  is entitled under Section 18.3 shall be paid in a lump  sum
     equal  to  the  present value of the amounts  of  the  existing  and
     anticipated  Taxes  described  in  Section  18.3  payable  by   such
     indemnitee  for all affected taxable periods.  In the  case  of  any
     such  amount caused by a loss of Income Tax deductions, such  amount
     shall  be  reduced (but not below zero) by an amount  equal  to  the
     present  value of the amounts of existing and anticipated reductions
     in  Income Taxes payable by such indemnitee for all affected taxable
     periods  that  would  not  be realized but  for  the  loss  of  such
     deductions.   Any  amount  to which such an indemnitee  is  entitled
     under  Section  18.3  shall be calculated on  the  basis  of  (i)  a
     conclusive  presumption  that  such indemnitee  has  and  will  have
     sufficient  amounts  of taxable income, foreign-source  income,  and
     foreign income tax liability so as to be able to fully utilize on  a
     current  basis any Income Tax benefits which could be  derived  from
     the  Owner's  ownership of the Vessel, (ii) a conclusive presumption
     that  such indemnitee is and will be liable for Taxes at the highest
     marginal rates in effect for the relevant taxable period, (iii)  the
     date  or  dates  on which any payment of Taxes (including  estimated
     Taxes)  shall be due or would be due for the relevant taxable period
     if  such  indemnitee was actually liable for Taxes for such relevant
     period,  and  (iv)  an after-tax discount rate of 4.42%  per  annum,
     discounted  quarterly.   Any  such  amount  shall  be  paid  by  the
     Charterer  to such indemnitee within thirty (30) days following  the
     receipt  by  the  Charterer of written notice from  such  indemnitee
     which  requests  such  amount and provides  details  supporting  the
     calculation of such amount.

18.5 Records

     The  Charterer will maintain sufficient records with respect to  the
     Vessel  and this Charter, will preserve and retain any such  records
     until   the  expiration  of  the  statutory  period  of  limitations
     (including  extensions) of the taxable periods  to  which  any  such
     records relate and will provide copies of such records as the  Owner
     or  any  of  the  Investors or any Affiliate thereof may  reasonably
     request  to enable the Owner, such Investor or any Affiliate thereof
     to fulfill its Tax filing obligations.


                           ARTICLE 19
                            GENERAL

19.1 Notices

     Notices  and  other  communications required or permitted  hereunder
     shall  be in writing and shall be deemed sufficient for all purposes
     if  sent  by  registered or certified letter, nationally  recognized
     overnight courier service specifying one-day delivery, facsimile  or
     telex  to  the  recipient's address stipulated below  and  shall  be
     effective from the date of receipt thereof.  Other addresses may  be
     substituted for those below upon giving notice thereof in the manner
     provided above:

     if to the Owner:    Deep Sea Investors, L.L.C.
                         "GATX Marine Investors Corporation
                         Four Embarcadero Center, Suite 2200
                         San Francisco, California  94111
     Attn:                  Portfolio Management
     Fax:                (415) 955-3415
     
                         Heller Financial
                         150 East 42nd Street
                         New York, New York  10017
     Attn:                  Legal Department
     Fax:                (212) 880-7158

                         Heller Financial Leasing, Inc.
                         500 W. Monroe Street
                         Chicago, Illinois  60661
     Attn:               CEFD - Central Region Credit Manager
     Fax:                (312) 441-7519
     
                         MDFC Equipment Leasing Corporation
                         4060 Lakewood Boulevard, 6th Floor
                         Long Beach, California  90808
     Attn:               Senior Documentation Officer
     Fax:                (310) 627-3002

     if to the Charterer:     Reading & Bates Drilling Co.
                              901 Threadneedle, Suite 200
                              Houston, Texas 77079
     Attn:                    Chief Financial Officer
     Fax:                    (281) 496-0285

19.2 Expenses

     Whether  or  not  any  of the transactions contemplated  hereby  are
     consummated, each of the Charterer and the Owner shall pay  its  own
     expenses,  including  legal  and appraisal  fees  and  expenses,  in
     connection  with  the negotiation, execution and  delivery  of  this
     Charter.  In addition, the Charterer shall pay upon demand all other
     costs  and  expenses  incurred by the Owner  and  the  Investors  in
     connection with the enforcement of any of their rights or  remedies,
     any future amendments, supplements, waivers or consents with respect
     to any of the Charter Documents, including, without limitation:

     (a)  the  reasonable expenses and disbursements of counsel  for  the
          Owner  and  the reasonable fees, expenses and disbursements  of
          Baker  &  Botts, L.L.P., special counsel for the Investors,  or
          any other counsel for services rendered after the Delivery Date
          in  connection  with  any Charter Document or  any  transaction
          contemplated thereby, or any modification, amendment or  waiver
          of any thereof;

     (b)  all   other   reasonable  expenses  in  connection  with   such
          transactions  including, without limitation,  the  expenses  of
          appraisers,  other  counsel or of experts  whose  opinions  are
          required  by  the terms hereof (to the extent not  specifically
          required  to  be  paid by third parties by the  terms  hereof),
          printing expenses and all fees, taxes and other charges payable
          in  connection with the recording or filing of instruments  and
          financing statements desirable under the Charter Documents;

     (c)  reimbursement  to the Owner and Investors for their  reasonable
          out-of-pocket  expenses in connection with entering  into  such
          transactions,  and any and all fees, expenses and disbursements
          of the character referred to in clauses (a) and (b) above which
          shall have been paid by the Owner or any of the Investors; and

     (d)  reimbursement  to  the  Owner  and  Investors  in   an   amount
          sufficient  to hold each of them harmless from and against  any
          and  all  liability and loss with respect to or resulting  from
          any  and  all claims for or on account of brokers' or  finders'
          fees  or commissions or financial advisory fees by any brokers,
          finders or financial advisors engaged by the Charterer  or  the
          Guarantor with respect to such transactions.

19.3 The Owner's Right to Perform for the Charterer

     If  the  Charterer  fails  to perform or  comply  with  any  of  its
     agreements contained herein other than its obligations to pay  Hire,
     the Owner, may upon notice to the Charterer itself perform or comply
     with  such  agreement, and the amount of any expenses of  the  Owner
     incurred in connection with such performance or compliance, together
     with  interest on such amount at the Overdue Rate, shall  be  deemed
     Supplemental Hire, payable by the Charterer upon demand.

     Without  in  any  way  limiting  the obligations  of  the  Charterer
     hereunder,  the Charterer hereby irrevocably appoints the  Owner  as
     its agent and attorney, with full power and authority at any time at
     which the Charterer is obligated to deliver possession of the Vessel
     to  the  Owner, to demand and take possession of the Vessel  in  the
     name and on behalf of the Charterer from whomsoever shall be at  the
     time in possession thereof in the manner described in, and with  all
     rights and remedies conferred under, Section 3.4(a) hereof.

19.4 Waivers

     None  of  the  requirements of this Charter shall be  considered  as
     waived by either party unless the same is done in writing, and  then
     only by the persons executing this Charter, or other duly authorized
     agent  or  representative of the Person designated in writing  by  a
     senior  officer of such Person and then any such waiver shall  apply
     only in the specific instance and for the specific purpose for which
     such is given.

19.5 Entire Agreement

     This  Charter and the Charter Documents contain the entire agreement
     between  the parties with respect to the subject matter  hereof  and
     supersede  and replace any oral or written communications heretofore
     made between the parties relating to the subject matter hereof.

19.6 Successors and Assigns

     This  Charter shall inure to the benefit of and be binding upon  the
     successors  and  assigns of the parties, provided  that,  except  as
     expressly set forth herein, the Charterer may not assign its  rights
     hereunder without the express written consent of the Owner and  that
     the assignor shall remain liable for the performance of its assignee
     unless specifically released by the other party hereto.

19.7 Law

     The  validity,  construction,  interpretation  and  effect  of  this
     Charter shall be governed by the general maritime laws of the United
     States,  without  regard  to any choice  of  law  rules  that  would
     otherwise  require  the  application  of  the  laws  of  any   other
     jurisdiction,  except that where the general maritime  laws  of  the
     United  States  look to or adopt state law, this  Charter  shall  be
     governed by the laws of the State of New York, without regard to any
     choice of law rules that would otherwise require the application  of
     the laws of any other jurisdiction.

19.8 Parties' Intention

     It  is  the intent of all parties hereto and affected hereby in  the
     execution and performance of this Charter, the Charter Documents and
     all  related documentation to remain in strict compliance  with  all
     applicable  laws from time to time in effect.  Further,  it  is  the
     intent  of  all parties hereto and affected hereby to  evidence,  by
     this  Charter,  a  lease  between the  Owner,  as  lessor,  and  the
     Charterer,  as  lessee,  rather than any  other  form  of  financial
     arrangement including specifically, but without limitation,  a  loan
     or   other   debt   financing.   Any  and  all  payments,   amounts,
     liabilities,   commitment  fees  and  other  amounts  expended   and
     obligations of the Charterer incurred or arising in connection  with
     this  Charter,  the Charter Documents and all related  documentation
     are intended to evidence, lease payment obligations of the Charterer
     or  reimbursements to the Owner and the Investors or  their  agents,
     representatives or designees, for services actually performed, goods
     actually furnished or provided, or other expenses or liabilities for
     which reimbursement is provided in connection with this Charter  and
     the  Charter  Documents.  To the extent that any such charge  herein
     provided for or payment herein made is held or deemed to be held  by
     a  court  of  competent jurisdiction to be "interest",  the  parties
     hereto  and  affected hereby stipulate and agree that  none  of  the
     terms and provisions contained in or pertaining to this Charter, the
     Charter Documents or any related document shall ever be construed to
     create  a  contract to pay for the use, forbearance or detention  of
     money  with  interest at a rate or in an amount  in  excess  of  the
     maximum lawful non-usurious rate or amount of interest permitted  to
     be  charged, paid or received under said laws.  For purposes of this
     Charter,  the  Charter  Documents  and  all  related  documentation,
     "interest"  shall  include  the  aggregate  of  all  charges   which
     constitute  interest under applicable laws, which  term  "applicable
     laws" shall include, but not be limited to, the laws of the State of
     New  York and, to the extent they may apply, the laws of the  United
     States of America, that are contracted for, chargeable or receivable
     under  this  Charter and all related documentation.   The  Charterer
     shall  never  be required to pay unearned interest  on  any  of  its
     obligations hereunder or in connection herewith and shall  never  be
     required to pay interest on any of its obligations hereunder  or  in
     connection  herewith  at a rate or in an amount  in  excess  of  the
     maximum lawful non-usurious rate or amount of interest that  may  be
     lawfully charged under applicable laws, and the provisions  of  this
     paragraph  shall control over all other provisions of this  Charter,
     the Charter Documents and all related documentation which may be  in
     apparent  conflict  herewith.  If the effective rate  or  amount  of
     interest  which  would otherwise be payable under or  in  connection
     with  this  Charter or any related documentation  would  exceed  the
     maximum lawful non-usurious rate or amount of interest the Owner  or
     any  Investor or any assignee thereof is allowed by applicable  laws
     to  charge, collect and receive, or in the event any such person  or
     entity  shall charge, collect or receive monies that are  deemed  to
     constitute   interest   which  would,  in  the   absence   of   this
     Section  19.8,  be in excess of an amount permitted to  be  charged,
     collected  and  received under the applicable laws then  in  effect,
     then  any such excess amount shall be reduced to the amount  allowed
     under  said  laws  as now or hereafter construed  by  courts  having
     jurisdiction, and all such monies so collected, charged or  received
     that  are  deemed to constitute interest in excess  of  the  maximum
     lawful  non-usurious  rate  or  amount  of  interest  permitted   by
     applicable laws shall be immediately, at the option of the recipient
     thereof, be applied to principal, if any outstanding, or returned to
     or credited to the account of the Charterer upon such determination.

19.9 Counterparts; Uniform Commercial Code

     This  Charter  may  be executed by the parties  hereto  in  separate
     counterparts, each of which when so executed and delivered shall  be
     an original, but all such counterparts shall together constitute but
     one and the same instrument.  Each counterpart of this Charter which
     has  been executed by the parties hereto shall be prominently marked
     to identify the party to whom originally delivered.  If this Charter
     constitutes  chattel paper (as such term is defined in  the  Uniform
     Commercial  Code  as  in effect in any applicable  jurisdiction),  a
     security  interest  in  this Charter may  be  created  only  by  the
     transfer or possession of the counterpart marked "Owner's Copy"  and
     containing  a  receipt  therefor  executed  by  the  Owner   on   or
     immediately  following the signature page thereof and, in  addition,
     the  Owner may file Uniform Commercial Code Financing Statements  in
     any relevant jurisdiction.

19.10     Warranty of Authority

     By executing this Charter on behalf of any entity, each signatory to
     this  Charter  represents and warrants that he or she has  full  and
     valid  authority to enter into this Charter on behalf of the  entity
     for which he or she signs.

19.11 Usage; Headings

     Unless the context otherwise requires, use of the singular number in
     this Charter shall include the plural number and vice versa, and use
     of one gender herein shall include each other gender and vice versa.
     Use   of   the   words   "hereof",  "herein",  "hereto",   "hereby",
     "hereunder",  or  words of similar import in this Charter  refer  to
     this  Charter  as  a  whole  and  not  to  any  specific  paragraph,
     subparagraph,  section, sentence, clause or part  of  this  Charter.
     Section headings and numbers herein are for reference purposes  only
     and  do  not  constitute a part of this Charter (unless the  context
     indicates otherwise).

19.12 WAIVER OF JURY TRIAL

     EACH OF THE CHARTERER AND THE OWNER WAIVE ANY AND ALL RIGHT TO TRIAL
     BY  JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO  THIS
     CHARTER,  THE  CHARTER  DOCUMENTS OR THE  TRANSACTIONS  CONTEMPLATED
     HEREBY.

19.13 VENUE; SERVICE OF PROCESS

     THE  CHARTERER,  FOR  ITSELF,  ITS SUCCESSORS  AND  ASSIGNS,  HEREBY
     KNOWINGLY  AND  INTENTIONALLY  AND IRREVOCABLY  AND  UNCONDITIONALLY
     a)  SUBMITS,  FOR  ITSELF  AND  ITS PROPERTY,  TO  THE  NONEXCLUSIVE
     JURISDICTION  OF THE STATE COURTS OF THE STATE OF NEW YORK  AND  THE
     FEDERAL  COURTS  SITTING IN THE STATE OF NEW  YORK  AND  AGREES  AND
     CONSENTS  THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN  ANY  LEGAL
     PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS CHARTER OR  THE
     OTHER  CHARTER  DOCUMENTS BY SERVICE OF PROCESS AS PROVIDED  BY  NEW
     YORK  LAW,  b) WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY OBJECTION
     WHICH  IT  MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE  OF  ANY
     LITIGATION ARISING OUT OF OR IN CONNECTION WITH THIS CHARTER OR  THE
     OTHER  CHARTER  DOCUMENTS BROUGHT IN ANY NEW  YORK  STATE  COURT  OR
     FEDERAL COURT SITTING IN THE STATE OF NEW YORK, c) WAIVES ANY CLAIMS
     THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
     INCONVENIENT FORUM, d) CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY
     OF  THE  AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE MAILING
     OF  COPIES  THEREOF  BY  CERTIFIED MAIL, RETURN  RECEIPT  REQUESTED,
     POSTAGE  PREPAID, TO THE CHARTERER AT THE ADDRESS SET  FORTH  HEREIN
     AND  e)  AGREES  THAT  ANY LEGAL PROCEEDING  AGAINST  THE  CHARTERER
     ARISING OUT OF, RELATED TO OR IN CONNECTION WITH THIS CHARTER OR THE
     OTHER  CHARTER DOCUMENTS OR THE OBLIGATIONS HEREUNDER OR  THEREUNDER
     MAY  BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE  STATE
     OF  NEW YORK.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE OWNER TO
     COMMENCE   LEGAL  PROCEEDINGS  OR  OTHERWISE  PROCEED  AGAINST   THE
     CHARTERER OR ANY OF THE OTHER MEMBER OF THE CHARTERER GROUP  IN  ANY
     OTHER  JURISDICTION OR TO SERVE PROCESS IN ANY MANNER  PERMITTED  BY
     APPLICABLE LAW.

19.14 Agent for Service of Process

     The   Charterer  hereby  irrevocably  designates  The  Prentice-Hall
     Corporation,  with offices at 500 Central Avenue, Albany,  New  York
     12206-2290,  as agent to receive for and on behalf of the  Charterer
     service of process in New York.  In the event that The Prentice-Hall
     Corporation  System,  Inc.  resigns  or  ceases  to  serve  as   the
     Charterer's  agent for service of process hereunder,  the  Charterer
     agrees  forthwith  (a)  to designate another agent  for  service  of
     process  in  the  State of New York and (b) to give  prompt  written
     notice  to  the  Owner of the name and address of such  agent.   The
     Owner  agrees  to use reasonable efforts to cause  a  copy  of  such
     process  served  on  such  agent to be  promptly  forwarded  to  the
     Charterer at its address set forth herein, and the Charterer  agrees
     that  the  failure of the Charterer to receive such copy  shall  not
     impair  or affect in any way the validity of such service of process
     or  of  any judgment based thereon.  The Charterer agrees  that  the
     failure  of its agent for service of process to give any  notice  of
     any  such  service of process to the Charterer shall not  impair  or
     affect  the  validity  of  such service or  of  any  judgment  based
     thereon.   If,  despite the foregoing, there is for  any  reason  no
     agent  for  service  of  process of the Charterer  available  to  be
     served,  then  the  Charterer further irrevocably  consents  to  the
     service of process by the mailing thereof by the Owner by registered
     or  certified mail, postage prepaid, to the Charterer at its address
     herein.  Nothing in this Section 19.14 shall affect the right of the
     Owner to serve legal process in any other manner permitted by law or
     affect  the  right  of the Owner to bring any action  or  proceeding
     against  the  Charterer or its property in the courts of  any  other
     jurisdiction.

          IN  WITNESS  HEREOF,  the  parties hereto  have  executed  this
Charter on the _____ day of July, 1997.

DEEP SEA INVESTORS, L.L.C.              READING & BATES DRILLING CO.

By:  GATX MARINE INVESTORS
     CORPORATION, Member


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


By:  HELLER FINANCIAL LEASING, INC.
     Member


     By:
     Name:
     Title:


By:  MDFC EQUIPMENT LEASING CORPORATION,
     Member


     By:
     Name:
     Title:

                           SCHEDULE A
             DESCRIPTION OF VESSEL M.G. HULME, JR.,
                    INCLUDING SPECIFICATIONS
                          SCHEDULE B-1
                     FIRST UPGRADE PROGRAM

                          SCHEDULE B-2
                     SECOND UPGRADE PROGRAM


                           SCHEDULE C
                     CHARTERER'S INSURANCE

As  specified  in Article 15, the Charterer shall maintain the  following
insurance coverage:

1.   Workmen's Compensation and Employers' Liability Insurance

     All  of  the  Charterer's employees shall be covered  for  statutory
     benefits as set forth and required by applicable law in the Area  of
     Operation  or such other jurisdiction under which the Charterer  may
     become  obligated to pay benefits.  Employers' Liability  insurance,
     including  appropriate  maritime coverage  covering  all  employees,
     shall be provided with minimum primary policy limits as required  by
     applicable statute, or U.S. $1 million per occurrence, whichever  is
     greater.

2.   Comprehensive General Liability

     Insurance coverage shall be provided for liability arising from  all
     operations of the Charterer.  The policy shall include coverage  for
     premises   and   operations,  independent   contractors,   completed
     operations,   and  contractual  liability  (or  their  equivalents).
     Insurance coverage shall also be provided for all owned, hired,  and
     nonowned vehicles.  The minimum primary  policy limits shall be U.S.
     $1  million single limit per occurrence under the General  Liability
     policies.  Automobile Liability insurance shall have minimum  policy
     limits  of  U.S.  $1,000,000 single limit per  occurrence,  or  such
     greater amount as required by law.

3.   Protection and Indemnity (Marine Liability) Insurance

     Full form marine protection and indemnity insurance, including,  but
     not  limited  to,  sudden  and accidental  pollution  liability  and
     contractual  liability coverage or equivalent  insurance  (including
     equivalent  insurance  against liability  for  fines  and  penalties
     arising out of the operation of the Vessel) with such club or  under
     forms  of  policies  approved  by the Owner.   Such  protection  and
     indemnity  insurance  shall  be maintained  in  the  broadest  forms
     generally  available in the United States market,  shall  be  in  an
     amount  not  less  than that carried by experienced and  responsible
     companies  engaged  in the drilling of petroleum,  shall  include  a
     cross-liability endorsement and shall be placed through  independent
     brokers  of  recognized  standing and with first-class  underwriters
     reasonably  acceptable  to  the Owner.  No  hull  and  machinery  or
     protection  and indemnity insurance shall provide for  a  deductible
     amount in excess of $500,000 with respect to the Vessel without  the
     prior written consent of the Owner.

4.   Excess Liability

     The  Charterer shall carry Excess Liability Insurance in amounts not
     less  than $200 million each occurrence in addition to and in excess
     of  all  primary Liability Coverages carried by Charterer, including
     but  not limited to insurance required under Paragraphs 1, 2  and  3
     (oil pollution sublimit $80 million per Paragraph 6).

5.   Marine Physical Damage, Including Hull and Machinery

     All  risk  Marine  and hull and machinery shall be provided  with  a
     limit  equal to that normally carried by experienced and responsible
     companies  engaged in offshore drilling, but shall not be less  than
     the  greater of (a) 110% of the Stipulated Loss Value of the Vessel;
     or  (b)  the  Fair Market Sale Value of the Vessel.  Coverage  shall
     include  collision liability and navigation limits adequate for  the
     Vessel's trade.

6.   Oil Pollution Insurance

     Oil  pollution insurance coverage issued by the Vessel's P & I  Club
     or equivalent coverage in the amount of not less than US $80,000,000
     per  occurrence, unless additional insurance or proof  of  financial
     responsibility  of  a  greater  amount  shall  be  required   by   a
     governmental authority, in which case such greater amount  shall  be
     obtained  and  kept in full force and effect by the Charterer.   The
     Charterer  shall maintain insurance, if available, covering  similar
     oil  removal  risks  or liabilities and civil or criminal  penalties
     incident  thereto and not attributable to the action or inaction  of
     the  Owner under any law, regulation or judicial decision of any  of
     the   United   States   of  America  or  foreign   jurisdiction   or
     jurisdictions  or  political subdivision thereof applicable  to  the
     Vessel  or  its operations to the extent such insurance is requested
     in  writing  by  the Owner and recommended by an independent  marine
     insurance  broker  as insurance which it would be imprudent  not  to
     carry  for the protection of the Charterer and the Owner in view  of
     the nature of the Vessel and the Vessel's operations.

7.   War, Political Risk, Confiscation and Expropriation Insurance

     If  and  to  the extent that the Vessel is operated outside  of  the
     territorial waters and/or the Outer Continental Shelf of the  United
     States  (and in addition to any coverage required by the  Owner  for
     such   operations   under  this  Charter),  War,   Political   Risk,
     Confiscation and Expropriation Insurance shall be provided  for  the
     Vessel  with  a limit equal to the value insured under  Paragraph  5
     above.

8.   Other Losses

     Losses  not  covered  by  the  above  stated  policies  because   of
     deductibles and policy limits stated above shall be borne  according
     to the liability and indemnity provisions of this Charter.

9.   Owner Group as Additional Insured

     All  coverages and other insurance policies carried by the Charterer
     or  that  the Charterer is required at any time to maintain pursuant
     to  this Charter shall name Owner Group as an additional insured and
     loss  payee  for  all risks and losses for which  the  Charterer  is
     liable under this Charter.

10.  Additional Provisions

     The  Charterer  will deliver to the Owner and each of the  Investors
     copies  of  all  cover notes and certificates of insurance  and,  if
     requested  by  the  Owner copies of all binders  and  policies  with
     respect  to  insurance  carried on the Vessel.   On  or  before  the
     Delivery Date of the Vessel, and on each anniversary of the Delivery
     Date,  and each time there is a reduction or material change in  the
     insurance coverage carried on the Vessel, the Charterer will furnish
     to  the Owner and each of the Investors a detailed report signed  by
     independent  marine  insurance brokers (who  may  be  the  insurance
     brokers  regularly  employed  by the  Charterer)  appointed  by  the
     Charterer  and  reasonably acceptable to the Owner,  describing  the
     insurance  policies  then  carried  and  maintained  on  the  Vessel
     (including the names of the underwriters, the types of risk  covered
     by  such  polices, the amount insured thereunder and the  expiration
     date  thereof)  and  stating that in the opinion of  said  insurance
     brokers such insurance is adequate and reasonable for protection  of
     the  Owner,  is in compliance with the terms of Article  15  and  is
     comparable  with  that  carried by other  responsible  operators  of
     similar drilling vessels.  All policies shall include the following:
     (i) breach of warranty protection to the Owner Group, (ii) waiver of
     subrogation clause and (iii) at least 30 days' prior written  notice
     of  cancellation or material modification.  The insurance  shall  be
     primary,  without  right of contribution from  any  other  insurance
     which may be carried by the Owner Group, and contain a waiver of set
     off  of premiums against claims proceeds and provide for no recourse
     for premium payments by the Owner Group.

                           SCHEDULE D
                     STIPULATED LOSS VALUE*

                           SCHEDULE E
                       PENDING LITIGATION


          Proceedings disclosed in Reading & Bates' Report on  Form  10-Q
dated March 31, 1997 filed with the Securities & Exchange Commission.

                           SCHEDULE F

    Computation of Basic Hire Adjustment for Second Upgrade


          Effective  as of each Upgrade Disbursement Date (as defined  in
the  Second Upgrade Agreement), the Basic Hire shall be adjusted for  the
amount  to be funded by the Owner on such date by reference to the  yield
of  the 6.375% coupon August 2002 U.S. Treasury note as published in  The
Wall Street Journal on the second Business Day immediately preceding such
date and otherwise in accordance with the methodology used in the example
shown below.

Example:

Upgrade Disbursement Date:                          July 29, 1997
Assumed Published U.S. Treasury note yield:                 6.11%
Value of Severables in respect of which
  reimbursement is sought:                        $  5,560,683.00
Value of Nonseverables in respect of which
  reimbursement is sought:                        $  4,720,896.00
Total amount in respect of which reimbursement
  is sought:                                      $ 10,281,579.00
Revised Primary Term Basic Hire (expressed as
  a % of Owner's Cost):                                   1.1896%

_______________________________

     *   Immediately prior to an Upgrade Disbursement Date (as defined in
the Second Upgrade Agreement), the Owner will deliver to the Charterer  a
revised  schedule of Stipulated Loss Values.  The revised schedule  shall
reflect the amount which the Charterer has requested be reimbursed by the
Owner  on  such  date  and  shall otherwise be produced  using  the  same
methodology  as  was used in preparation of the figures which  appear  in
this Schedule D.  Upon the relevant disbursement being made, such revised
schedule shall for all purposes be and become Schedule D of this Charter.