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

                                FORM 10-K
(Mark One)
 _X_    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
        OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
        For the fiscal year ended December 31, 1998
                               OR
 ___    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
        OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
        For the transition period from ___________ to ___________.

                  Commission File No. 1-13729

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

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

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

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

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


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

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

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

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

           AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY
                NONAFFILIATES ON MARCH 15, 1999 - $1,281,215,842

              NUMBER OF SHARES OF COMMON STOCK OUTSTANDING
                     ON MARCH 15, 1999 - 193,381,376
                                    
                   DOCUMENTS INCORPORATED BY REFERENCE
1)  Proxy Statement for Annual Meeting of Stockholders to be held on
                        May 19, 1999 - Part III
                                    

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                       TABLE OF CONTENTS


                             PART I

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


                             PART II

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


                             PART III

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


                             PART IV

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

Signatures


                ________________________________________
                                    
                                    
               FORWARD LOOKING STATEMENTS AND ASSUMPTIONS

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


                                 PART I

Item 1. Business and Item 2. Properties
                                    
                               The Company
                                    
    R&B  Falcon  Corporation ("R&B Falcon"), a Delaware corporation,  was
incorporated in July 1997. Prior to December 31, 1997, R&B Falcon did not
own  any  material assets or conduct any business.  Effective on December
31,  1997,  pursuant to an Agreement and Plan of Merger  dated  July  10,
1997,  Falcon  Drilling Company, Inc. ("Falcon"), a Delaware  corporation
incorporated in 1991, and Reading & Bates Corporation ("R&B"), a Delaware
corporation incorporated in 1955, became wholly owned subsidiaries of R&B
Falcon  (the "Merger").  On December 1, 1998, R&B Falcon acquired all  of
the  outstanding stock of Cliffs Drilling Company ("Cliffs Drilling"),  a
Delaware corporation incorporated in 1988.  Cliffs Drilling is a contract
drilling  company  which provides daywork and turnkey drilling  services,
mobile  offshore  production  units and well engineering  and  management
services.   Unless  the context otherwise indicates, the  term  "Company"
herein  refers  to  the total business conducted by R&B  Falcon  and  its
subsidiaries.

                           Business - General
                                    
   The  Company's primary business is providing marine contract  drilling
and ancillary services on a worldwide basis.
   
   The  Company  provides the equipment and personnel for drilling  wells
and conducting workover operations on wells in marine environments and on
land.   Drilling operations essentially involve the boring of a  hole  in
the  earth's crust with the objective of locating hydrocarbon reservoirs.
Workover  operations involve efforts to repair damage  to,  or  stimulate
production  from,  an  existing  well.  Drilling  operations  in  general
require  heavier  and more powerful equipment due to the  weight  of  the
drillpipe  and  downhole equipment involved and the  potential  pressures
that may be encountered while drilling through rock formations.  Most  of
the  Company's rigs are capable of providing both drilling  and  workover
services.
   
   The  Company  owns  and operates towing vessels  and  barges  used  to
transport   and   store  equipment  and  material  to  support   drilling
operations.   These  assets are deployed in the  jack-up  and  barge  rig
businesses.  The Company also provides, to a minor extent, such equipment
for  ocean  transportation  of materials and in  connection  with  marine
construction projects.
   
   In  February 1996, the Company and Intec Engineering, Inc.,  formed  a
joint  venture  named  Total Offshore Production  Systems  (TOPS).   TOPS
provides  complete field development engineering services  on  a  turnkey
basis.
   
   The   Company,  primarily  through  its  subsidiary  Reading  &  Bates
Development  Co. ("Devco"), engages in exploration for oil  and  gas.  In
March  1998, the Company decided to divest its oil and gas business,  and
in  the Company's financial statements previously filed with the SEC  for
the  three  years ended December 31, 1997, 1996 and 1995  and  the  first
three  quarters of 1998, the business was accounted for as a discontinued
operation.   As  of March 1999, the Company has not been able  to  divest
this  business  on  terms  it found acceptable  and  in  accordance  with
generally accepted accounting principles the Company has reclassified its
financial  statements as if this business had not been discontinued.  The
Company  does  not  intend to engage in any material activities  in  this
business  and still intends to divest this business. See Note N of  Notes
to Consolidated Financial Statements.
   
                                Strategy

   A  major  element of the Company's strategy since 1996  has  been  the
expansion  of its deepwater fleet.  The Company believes that  the  major
oil  companies  of the world will continue to increase their  exploration
efforts  in  deepwater  areas for two reasons.   First,  improvements  in
technology  have  made production of hydrocarbons from these  areas  more
economically  viable.   Second,  the  number  of  significant  reservoirs
remaining  undiscovered in shallow waters continues to  dwindle,  leading
operators to move into deeper waters in their efforts to find hydrocarbon
reserves.   The  Company's  deepwater fleet consists  of  12  drillships,
including  five  under  construction  or  upgrade;  11  semisubmersibles,
including three under construction or upgrade and one floating production
vessel.  The  Company's focus on deepwater equipment also  allows  it  to
obtain  long-term  contracts that serve as a balance  to  the  short-term
contracts prevalent in the shallower water markets.
   
   Another  element  of the Company's strategy is to  expand  in  markets
that  can  benefit  from consolidation and allow it to  provide  services
related  to  its core drilling business.  Pursuant to this strategy,  the
Company has become the largest competitor in the worldwide shallow  water
and  barge  rig markets and is also a leading competitor in the  domestic
offshore and inland marine transportation markets.
   
                  Significant Developments During 1998

   The  two  most  significant developments for the Company  during  1998
were  the  acquisition of Cliffs Drilling and the rapid  and  significant
decline in demand for contract drilling services.
   
  1.  Effective on December 1, 1998, pursuant to an Agreement and Plan of
      Merger  dated  August  21,  1998,  R&B  Falcon  acquired all of the
      outstanding  stock of Cliffs Drilling in exchange for approximately
      27.1 million  shares  of  R&B  Falcon  common stock.  Each share of
      Cliffs Drilling's common stock was converted into 1.7 shares of R&B
      Falcon common stock. Total  consideration  for  Cliffs Drilling was
      approximately  $405.1  million.  The  above  transaction  has  been
      recorded using the  purchase  method  of   accounting,  accordingly
      Cliffs Drilling's  results of  operations  are  included  with  the
      Company's results of operations since the acquisition date.
   
  2.  A significant  decline in the demand for contract drilling services
      began  in mid-1998 and has continued into 1999. The Company expects
      these  adverse  market  conditions  to  continue  through  1999 and
      perhaps  into  2000.  The decline has been particularly dramatic in
      the  domestic  barge rig  and jack-up markets, where the Company is
      one  of the largest  contractors. In  response to these conditions,
      the Company has implemented cost-cutting measures, primarily laying
      off employees and taking rigs off the market.  In addition to cost-
      cutting  measures,  the  Company  will  try  to  expand its turnkey
      drilling   activities  as  a   means   of   generating   additional
      opportunities for its idle rigs to be put to work.
   
The following are  other significant developments that  occurred in 1998:
   
   1. The  dynamically  positioned  drillship  Deepwater  Pathfinder  was
      delivered  in  September  1998 at a cost  of  approximately  $275.0
      million.   This  drillship is owned by a limited liability  company
      which  is  in turn owned 50% by the Company and 50% by an affiliate
      of  Conoco, Inc.  The Deepwater Pathfinder commenced its five  year
      contract with an affiliate of Conoco, Inc. in the first quarter  of
      1999.
   
   2. The   dynamically  positioned  drillship  Deepwater  Frontier   was
      delivered in March 1999 at a cost of approximately $270.0  million.
      This  drillship is owned by a limited liability company,  which  is
      in  turn  owned  60%  by the Company and 40%  by  an  affiliate  of
      Conoco,  Inc.   During  the initial five years following  delivery,
      the  drillship will be contracted to an affiliate of  Conoco,  Inc.
      for  an  aggregate of 2.5 years and to the Company  for  operations
      for its own account for the remaining 2.5 years.
   
   3. The  construction of the dynamically positioned drillship Deepwater
      Millennium  continued  on  schedule.  The  estimated  cost  of  the
      drillship  is  approximately $270.0 million. Immediately  following
      delivery  of the drillship from the shipyard, which is expected  to
      be  in the second quarter of 1999, the drillship is contracted  for
      4 years to Statoil.
   
   4. The   Company   commenced  the  construction  of  the   dynamically
      positioned  drillship  Deepwater IV.  The  estimated  cost  of  the
      drillship  is  approximately $305.0 million. Immediately  following
      delivery  of the drillship from the shipyard, which is expected  to
      be in the third quarter of 2000, the drillship is contracted for  3
      years  to Texaco.  This contract is a substitute for the previously
      contracted Peregrine VIII (see note 7 below).
   
   5. Significant delays and cost overruns have been experienced  in  the
      construction of the dynamically positioned drillship Peregrine  IV.
      The  estimated  cost  of  the  drillship  is  approximately  $210.0
      million   (original   estimate:   $160.0   million).    Immediately
      following  delivery  of the drillship from the shipyard,  which  is
      expected  to  be in the second quarter of 1999 (original  estimate:
      fourth quarter of 1998), the drillship is contracted for six  years
      to  Petrobras. Under the Petrobras contract, the Company is subject
      to  late delivery penalties up to a maximum of approximately  $38.6
      million.
   
   6. Significant delays and cost overruns have been experienced  in  the
      upgrade  and refurbishment of the dynamically positioned  drillship
      Peregrine  VII.  It is currently estimated that  this  vessel  will
      cost  approximately  $270.0  million  (original  estimate:   $145.0
      million)  and  will  be delivered from the shipyard  in  the  third
      quarter of 1999 (original estimate:  second quarter of 1998).   The
      drillship  is  contracted  for  three  years  (with  five  one-year
      extensions)  to Amoco. However, Amoco has indicated that  they  may
      cancel  this contract as a result of delivery delays.  The  Company
      believes  that  it will be able to find work for the Peregrine  VII
      at   dayrates  comparable  to  its  previously  contracted  levels.
      However, the Company expects that any new contracts will likely  be
      short-term or on a well-to-well basis.
   
   7. In  the  third quarter of 1998, the Company cancelled the Peregrine
      VI  and  the  Peregrine  VIII  drillship conversion projects due to
      continuing uncertainty as to final cost and expected delivery dates.
      As  a  result,  the  drilling contract  on  the  Peregrine VIII was
      terminated on September  24, 1998, and the drilling contract on the
      Peregrine VI was terminated  on  January 1, 1999. Both terminations
      were without prejudice to the rights  of  the  oil  companies.  The
      Company believes that based on provisions  of  the  contracts  that
      preclude   recovery  of  indirect  or  consequential  damages,  and
      projected rig availability in  the offshore  drilling industry, the
      Company will not have any material  liability under these  drilling
      contracts as a  result  of  the  termination thereof. The contracts
      with  the  shipyard  for  conversion  of  the  Peregrine VI and the
      Peregrine VIII have  been  cancelled.  In  addition,  in the fourth
      quarter of 1998,  the  Company  cancelled two additional  drillship
      conversion  projects  that  were  in  the preliminary phases.  As a
      result  of  the  termination  of these  four  drillship  conversion
      projects,  the Company expensed  $118.3 million in related costs in
      1998.
   
   8. The  construction  of  the  new generation ultra  deepwater  moored
      semisubmersible,   the  RBS8M,  formerly  the  RBS6,  continued  on
      schedule but  over  budget.  The  estimated  cost  of the  unit  is
      approximately $315.0  million (original estimate:  $275.0 million).
      Immediately following the  delivery of the unit from  the shipyard,
      which is expected to be in the  first quarter of 2000,  the unit is
      contracted for five years to Shell.
   
   9. The  Company  commenced the construction of a new generation  ultra
      deepwater  moored semisubmersible, the RBS8D.  The  estimated  cost
      of  the unit is approximately $325.0 million. Immediately following
      delivery of the unit from the shipyard, which is expected to be  in
      the  fourth  quarter of 2000, the unit is contracted  for  3  years
      (with five one-year options) to Vastar.
   
  10. Significant delays and cost overruns have been experienced  in  the
      upgrade  and  refurbishment of the semisubmersible rig Falcon  100.
      The  upgrade  and refurbishment is estimated to cost  approximately
      $118.0  million  (original estimate:  $60.0  million).  Immediately
      following  the  delivery of the unit from the  shipyard,  which  is
      expected  to  be in the second quarter of 1999 (original  estimate:
      fourth  quarter of 1998), the unit is contracted for four years  to
      Petrobras.  Under the terms of the Petrobras contract, the  Company
      is   subject  to  late  delivery  penalties  up  to  a  maximum  of
      approximately $14.7 million.
   
  11. In  September  1998,  the  Company  and  Navis  ASA  ("Navis"),   a
      Norwegian  public  company  which  is  constructing  a  dynamically
      positioned  drillship  (the  Navis Explorer  I),  entered  into  an
      agreement  pursuant  to  which  the Company  will  make  a  capital
      contribution  to Navis of $50.0 million in exchange  for  stock  in
      Navis  at  the  rate of 11 NOK per share. The Navis Explorer  I  is
      designed  to drill in 10,000 feet of water and is being constructed
      at  Samsung  at  an  estimated  cost  of  $280.0  million,  with  a
      scheduled  delivery  in the second quarter  of  2000.  The  Company
      expects   its  capital  contribution  will  be  in  the   form   of
      approximately  $30.0  million of equipment and  equipment  purchase
      orders  and  approximately $20.0 million in cash.  It  is  expected
      that  the  Company  will own approximately 38% of  the  outstanding
      stock  of Navis following such contributions and the completion  of
      an  equity  offering  currently underway  by  Navis.  Most  of  the
      equipment  and  equipment purchase orders that will be  contributed
      by  the Company was acquired by the Company in connection with  the
      Peregrine VI and Peregrine VIII projects and is no longer  required
      for  such projects in light of their cancellation.  Navis  and  the
      Company  have entered into agreements pursuant to which the Company
      will  supervise  construction  of  the  drillship  and  manage   it
      following its delivery.
   
  12. In  a  series  of  transactions, the Company acquired 25 tugs, five
      ocean  going barges and  six workover rigs for an aggregate cost of
      $33.4  million  in  cash and  the issuance of 763,680 shares of its
      common stock.  The Company has reserved for issuance 282,192 shares
      of its common  stock for  contingent  obligations relating to these
      transactions.
   
  13. The  Company  paid $10.7 million in cash for the acquisition of the
      previously leased jackup Falrig 82.
   
  14. The Company  paid $5.8 million in cash for the acquisition of a two
      story, 86,000  square  foot  office building in Houston, Texas that
      serves as its corporate headquarters.
   
  15. In December 1998, Mobil U.K. Ltd. ("Mobil") terminated its contract
      to  use the Company's Jack Bates semisubmersible rig on the grounds
      that two of the rig's anchor cables broke.  The  contract  provided
      for Mobil's  use of the rig at a dayrate of  approximately $115,000
      for  the  primary  term  through  January 1999  and   approximately
      $200,000 for the extension term from February 1999 through December
      2000.  The Company does not believe that  Mobil  had  the  right to
      terminate this contract.  The Company has  received a proposal from
      Mobil  to  recontract  the Jack Bates at a dayrate of approximately
      $156,000  for  a  one  or  two  well drilling program.  The Company
      believes  this  program  may  last  approximately six months.  This
      proposal  is  without  prejudice  to  either  party's rights in the
      dispute  over  the  termination  of the original contract.  If  the
      Company  is not successful in settling its dispute over the termin-
      ation of the original  contract,  the  Company  intends to commence
      legal  proceedings  to enforce its rights under the  contract.  The
      Company believes that  it  will  be able to find other work for the
      Jack  Bates, but that any such work will be at lower dayrates  than
      the  $200,000  dayrate  established  for  the  extended term of the
      original contract.

                           The Company's Fleet

   The  following  sets  forth  a  brief description  of  the  types  and
capabilities  of  the rigs operated by the Company.   Rigs  described  as
"operating"  are  under  contract (including rigs being  mobilized  under
contract).  Rigs described as "available" are ready for service  and  are
being  actively  marketed.  Rigs described as  "stacked"  are  not  being
actively  marketed  but  are capable of being returned  to  service  with
little or no refurbishment.  Rigs described as "cold stacked" are in need
of substantial refurbishment to be activated.

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

   Semisubmersibles  are  frequently classified  into  four  generations,
based    primarily    on   rig   capabilities.    The   fourth-generation
classification generally refers to semisubmersibles that have been  built
since  1984,  and have large physical size, harsh environment capability,
high  variable loads, top drive units, 15,000 psi blowout preventers  and
superior  motion  characteristics.  These drilling  units  are  the  best
choice  for  operators  in  deepwater and/or harsh  environments  or  for
drilling  that requires larger variable loads and the ability  to  handle
large  pieces  of subsea equipment.  There are limited markets  for  this
type  of  drilling  unit  and a relatively small  group  of  users.   The
principal markets are the North Sea/Norway, the Gulf of Mexico,  the  Far
East and offshore Brazil.
   
   The   following  table  provides  certain  information  regarding  the
Company's semisubmersible fleet as of March 15, 1999:

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

Fourth-Generation Semisubmersibles
JACK BATES           1986/97     6,000    30,000    United Kingdom Under Repair
HENRY GOODRICH(1)     1985       2,000    30,000    United Kingdom Operating
PAUL B. LOYD,JR.(1)   1987       2,000    25,000    United Kingdom Operating
RBS8M (formerly RBS6)    -       8,000    30,000    Korea          Under
                                                                    Construction
RBS8D                    -      10,000    30,000    Korea          Under
                                                                    Construction

Third-Generation Semisubmersibles
JIM CUNNINGHAM      1982/95      5,000    25,000    Angola         Operating
M.G.HULME,JR.(2)    1983/96      5,000    25,000    Singapore      Under Upgrade
IOLAIR (3)            1982       2,000        -     United Kingdom Operating

Second-Generation Semisubmersibles
C.KIRK RHEIN,JR.    1976/97      3,300    25,000    U. S. Gulf     Operating
J.W. McLEAN         1974/96      1,500    25,000    United Kingdom Operating
FALCON 100(4)       1974/99      2,450    25,000    U. S. Gulf     Under Upgrade
RIG 82(5)            1975        1,500        -     Norway         Cold Stacked

________________________

(1)  Unit  is  owned  by Arcade Drilling AS ("Arcade"), a majority  owned
     subsidiary of the Company.  The Company was a party to an  agreement
     with Transocean Offshore, Inc., the largest minority shareholder  of
     Arcade,  which  subjected  the Company to  certain  restrictions  on
     engaging  in  transactions  with  Arcade.   Such  agreement  expired
     September 1, 1998.
(2)  The  M.  G. Hulme, Jr. is accounted for as an operating lease  as  a
     result of the sale/lease-back in November 1995. See Note E of  Notes
     to Consolidated Financial Statements.
(3)  The Iolair is designed for field support and living accommodations.
(4)  The Falcon 100 is scheduled to be delivered in the second quarter of
     1999.
(5)  Rig 82 was originally built as a drilling unit, but was converted to
     an accommodation vessel in 1978.
   
   Drillships.    A  drillship  is  a  self-propelled  ship  specifically
outfitted  for drilling operations.  Many of the drillships  built  after
1975  feature  a  dynamic positioning system which  allows  the  ship  to
position  itself  over  the  well  site  through  the  use  of  thrusters
controlled  by  a satellite navigation system.  The prior  generation  of
drillships,  often called conventionally moored drillships, are  anchored
over  the well site and thus are generally more limited in terms of water
depth than dynamically positioned drillships.  Drillships typically  have
greater  load capacity than semisubmersible drilling rigs.  This  enables
them to carry more supplies on board, which makes them better suited  for
drilling  in remote locations where resupply is more difficult.  However,
drillships  are  limited to calmer water conditions than those  in  which
semisubmersibles   can   operate,   and   thus   cannot   compete    with
semisubmersibles in areas with harsh environments, such as the North Sea.
   
   The   following  table  provides  certain  information  regarding  the
Company's drillship fleet as of March 15, 1999:
   
                  Year      Water    Drilling
                Built or    Depth     Depth
Rig Name       Converted Capability Capability Location       Status
--------       --------- ---------- ---------- --------       ------
                         (expressed in feet)
  
PEREGRINE I      1996 (1)   7,200     25,000   Brazil         Under Repair
PEREGRINE II     1979       3,300     25,000   Malaysia       Stacked
PEREGRINE III    1976       4,200     25,000   Angola         Operating
FALCON DUCHESS   1975       1,500     20,000   Malaysia       Stacked
FALCON ICE (2)   1975       1,500     20,000   Indonesia      Cold Stacked
DEEPWATER                                                          
  PATHFINDER (3) 1998      10,000     30,000   U.S. Gulf      Operating
DEEPWATER                                                           
  FRONTIER  (4)  1999      10,000     30,000   Korea          Delivered
DEEPWATER                                                                 
  MILLENNIUM        -      10,000     30,000   Korea          Under Construction
DEEPWATER IV                                                            
  (unnamed)         -      10,000     30,000   Korea          Under Construction
PEREGRINE IV        -       9,200     30,000   Singapore      Under Construction
PEREGRINE VII       -       7,800     25,000   United Kingdom Under Construction
NAVIS                                                                  
  EXPLORER I (5)    -      10,000     30,000   Korea          Under Construction
  __________________________
  
  (1) Although originally constructed in 1982, this unit was substantially
      upgraded in 1996.
  (2) Unit is  being operated by the Company under an operating lease.
  (3) Unit is  owned  by a limited liability company in which the Company
      owns a 50% interest.
  (4) Unit is  owned  by a limited liability company in which the Company
      owns a 60% interest.
  (5) Unit is  being constructed for a  company in which the Company will
      own a 38% interest.
  
  
  Floating  Production Vessels.  Floating production vessels are equipped
for  oil  production, processing and storage. The Company currently  owns
and  operates one floating production storage and offloading vessel,  the
Seillean.  The  Seillean is currently operating in Brazil pursuant  to  a
long-term  contract.  During 1998, the Seillean was upgraded to  work  in
6,000 feet of water.
  
  Drilling  Tenders.   Drilling  tenders are  usually  non-self-propelled
barges  or  semisubmersibles which are moored alongside  a  platform  and
contain  the  quarters,  mud  pits, mud  pumps,  power  generation,  etc.
Drilling  tenders allow smaller, less costly platforms  to  be  used  for
development  projects.   Self-erecting tenders carry  their  own  derrick
equipment  set  and have a crane capable of erecting it on the  platform,
thereby eliminating the cost associated with a separate derrick barge and
related equipment.
  
  The   following  table  provides  certain  information  regarding   the
Company's drilling tenders as of March 15, 1999:
  
                             Water     Drilling
                  Year       Depth       Depth
Rig Name          Built    Capability  Capability   Location      Status
--------          -----    ----------  ----------   --------      ------
                         (expressed in feet)

Self-Erecting Drilling Tenders
CHARLEY GRAVES    1975        400        20,000     Ivory Coast   Stacked
W. D. KENT        1977        400        20,000     Malaysia      Operating
     
   Jack-Up   Rigs.   Jack-up  rigs  are  mobile  self-elevating   drilling
platforms equipped with legs which can be lowered to the ocean floor until
a foundation is established to support the drilling platform which is then
jacked further up the legs so it is above the highest expected waves.  The
rig hull includes the drilling rig, jacking system, crew quarters, loading
and  unloading  facilities, storage areas for bulk and  liquid  materials,
helicopter landing deck and other related equipment.  The rig legs may  be
independent  or may have a lower hull ("mat") attached to  the  bottom  of
them  in  order to provide a more stable foundation in soft bottom  areas.
Independent  leg  rigs  are  better suited for  harder  or  uneven  seabed
conditions  while  mat rigs are better suited for soft bottom  conditions.
Jack-up  rigs  may  be  designed to operate in a maximum  water  depth  of
approximately  400 feet (however, most jack-up rigs have  a  lesser  water
depth capability).  Some jack-up rigs may drill in water depths as shallow
as  ten  feet. A cantilever jack-up has a feature which allows  the  drill
floor to be extended out from the hull, allowing it to perform drilling or
workover  operations  over pre-existing platforms or structures.   Certain
cantilever  jack-up  rigs  have "skid-off" capability,  which  allows  the
derrick  equipment  set to be skidded onto an adjacent  platform,  thereby
increasing the operational capability of the rig.  Slot type jack-up  rigs
are configured for the drilling operations to take place through a slot in
the  hull.   Slot type rigs are usually used for exploratory drilling,  in
that  their  configuration makes them difficult to position over  existing
platforms or structures.
   
   The   following  table  provides  certain  information  regarding   the
Company's jack-up fleet as of March 15, 1999:
   
                                     Water      Drilling                     
                    Rig       Year    Depth      Depth
Rig Name         Description  Built Capability Capability Location     Status
--------         -----------  ----- ---------- ---------- --------     ------
                                     (expressed in feet)
Cantilevered Independent                                    
 Leg Jack-up Rigs
F. G. McCLINTOCK  MLT 53-C    1975     300       25,000 United Kingdom Operating
RON TAPPMEYER     MLT 116-C   1978     300       25,000 Australia      Stacked
C. E. THORNTON    MLT 53-C    1974     300       25,000 Greece         Stacked
RANDOLPH YOST     MLT 116-C   1979     300       25,000 Angola         Stacked
D. R. STEWART     MLT 116-C   1980     300       25,000 Italy          Operating
HARVEY H. WARD    F&G L780    1981     300       25,000 Singapore      Stacked
ROGER W. MOWELL   F&G L780    1982     300       25,000 Indonesia      Operating
GEORGE H.GALLOWAY F&G L780    1985     300       25,000 U.S. Gulf      Stacked
J. T. ANGEL       F&G L780    1982     300       25,000 India          Operating
LaSALLE           DMI 200-IC  1982     190       25,000 Qatar          Operating
CLIFFS                        
 DRILLING 150    MLT 150-44-C 1979     150       20,000 U.S. Gulf      Operating
CLIFFS
 DRILLING 151     BMC 150-H   1981     150       25,000 U.S. Gulf      Stacked
CLIFFS
 DRILLING 154    MLT 150-44-C 1979     150       20,000 U.S. Gulf      Cold
                                                                         Stacked
CLIFFS
 DRILLING 155 Levingston011-C 1980     150       20,000 U.S. Gulf      Stacked
CLIFFS
 DRILLING 156    BMC 150-H    1983     150       25,000 U.S. Gulf      Stacked
CLIFFS
 DRILLING 160    BMC 150-IC   1980     160       20,000 Qatar          Operating
                                                            
Slot type Mat-Supported                                     
 Jack-up Rigs
FALRIG 17       Bethlehem     1974     250       25,000 U.S. Gulf      Stacked
                JU-250MS
FALRIG 18       Bethlehem     1978     250       25,000 U.S. Gulf      Operating
                JU-250MS
FALRIG 19       Bethlehem     1978     250       25,000 U.S. Gulf      Stacked
                JU-250MS
FALRIG 20       Bethlehem     1982     250       25,000 U.S. Gulf      Stacked
                JU-250MS
FALRIG 82 (1)   Baker Marine  1978     200       25,000 U.S. Gulf      Operating
                BMC 250
FALRIG 83       Bethlehem     1978     250       25,000 Nigeria        Stacked
                JU-250MS
FALRIG 84       Bethlehem     1975     250       25,000 U.S. Gulf      Operating
                JU-250MS
ACHILLES        BMC 250-MS    1981     250       25,000 U.S. Gulf      Stacked
SEA HAWK        Bethlehem     1976     250       25,000 U.S. Gulf      Stacked
                JU-250MS
TAURUS          Bethlehem     1976     250       25,000 U.S. Gulf      Stacked
                JU-250MS
CLIFFS
 DRILLING 180  BMC 250-MS     1978     184       25,000 U.S. Gulf      Stacked
                                                            
Cantilevered Mat-Supported                     
 Jack-up Rigs
PHOENIX I       Bethlehem     1981     200       25,000 U.S. Gulf      Stacked
                JU-200MC
PHOENIX II      Bethlehem     1982     200       25,000 U.S. Gulf      Stacked
                JU-200MC
PHOENIX III     Bethlehem     1981     200       25,000 U.S. Gulf      Stacked
                JU-200MC
PHOENIX IV      Bethlehem     1981     200       25,000 U.S. Gulf      Operating
                JU-200MC
FALRIG 85       Bethlehem     1979     200       25,000 U.S. Gulf      Stacked
                JU-200MC
FALRIG 86       Bethlehem     1980     200       25,000 U.S. Gulf      Stacked
                JU-200MC
PHOENIX         Bethlehem     1981     200       25,000 Mexico         Operating
 VI (2)         JU-200MC
CLIFFS          Bethlehem     1982     100       25,000 U.S. Gulf      Stacked
 DRILLING 100   JU-100MC
CLIFFS          McDermott     1973     100         -    Trinidad       Operating
 DRILLING 101   87-C
CLIFFS          Bethlehem     1982     110       25,000 Trinidad       Operating
 DRILLING 110   JU-100MC
CLIFFS          Bethlehem     1980     150       25,000 U.S. Gulf      Stacked
 DRILLING 152   JU-150MC
CLIFFS          Bethlehem     1980     150       25,000 U.S. Gulf      Operating
 DRILLING 153   JU-150MC
CLIFFS          Bethlehem     1979     200       25,000 U.S. Gulf      Operating
 DRILLING 200   JU-200MC
CLIFFS          Bethlehem     1980     200       20,000 Mexico         Stacked
 DRILLING 201   JU-200MC
CLIFFS          Bethlehem     1980     200       25,000 Venezuela      Operating
 DRILLING 202   JU-200MC
_____________________

  (1) Operated  by the Company under a lease with an option to purchase.
  (2) The Company has bareboat chartered this rig to another contractor
      for one  well.  As of March 15, 1999 such charter was on a month-
      to-month basis.

   Submersible   Rigs.    Submersible  rigs  are  somewhat   similar   in
configuration to semisubmersible rigs but the lower hull of the rig rests
on  the sea floor during drilling operations.  A submersible rig is towed
to  the well site where it is submerged by flooding its lower hull  until
it  rests  on the sea floor, with the upper hull above the water surface.
Submersible rigs typically operate in water depths of 12 to 85 feet.

  The   following  table  provides  certain  information  regarding   the
Company's submersible rig fleet as of March 15, 1999:

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

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

  Mobile  Offshore  Production Units. MOPUs are mobile offshore  drilling
units  which have been converted from drilling operations to a production
application.  Conversion  from  drilling  to  production  mode   normally
requires  removal  of  the drilling package, leaving  an  open  deck  for
placement of production equipment.
   
   The   following  table  provides  certain  information  regarding  the
Company's mobile offshore production units as of March 15, 1999:
   
                                  Water                       
                       Year       Depth                       
   Rig Name            Built    Capability  Location     Status
   --------            -----    ----------  --------     ------
                                (expressed                
                                 in feet)
                                                      
   CLIFFS DRILLING 4   1967        150      U. S. Gulf   Operating
   LANGLEY             1965        150      Nigeria      Operating
   CLIFFS DRILLING 8   1977        250      U. S. Gulf   Operating
   CLIFFS DRILLING 10  1979        250      Qatar        Stacked
                                                      
   
   Platform  Drilling  Rigs. Platform drilling rigs are  designed  to  be
placed  on  existing or newly built production platforms.  The production
platform's crane is generally capable of lifting the modules that make up
the rig or lift the modularized rig crane that would set the rig modules.
The  assembled  rig has all the drilling, housing and support  facilities
necessary  for drilling multiple production wells but does not have  many
of   the  marine  systems  that  would  be  provided  on  a  jack-up   or
semisubmersible rig.  The platform drilling rig requires a  significantly
larger platform than a tender rig but is not as weather sensitive.   Most
platform  drilling  rig  contracts are for multiple  wells  and  extended
periods of time on the same platform.
   
   The   following  table  provides  certain  information  regarding  the
Company's platform drilling rigs as of March 15, 1999:

                                       Drilling                  
                      Year   Year       Depth                    
   Rig Name           Built  Rebuilt  Capability  Location  Status
   --------           -----  -------  ----------  --------  ------ 
                                      (expressed            
                                       in feet)
                                                           
   CLIFFS DRILLING 1   1988   1998      18,000     Trinidad  Stacked
   CLIFFS DRILLING 3   1993   1998      25,000     Trinidad  Operating
   CLIFFS DRILLING 17  1996     -       12,000     Brazil    Operating
                                                            
   
   Domestic  Barge  Drilling  Rigs.   Barge  drillings  rigs  are  mobile
drilling platforms that are submersible and are built to work in eight to
20  feet of water.  They are towed by tugboats to the drill site with the
derrick  lying down.  The lower hull is then submerged by flooding  until
it  rests  on  the  sea floor.  The derrick is then raised  and  drilling
operations are conducted with the barge in this position.  There are  two
basic  types of barge rigs, "conventional" and "posted".  A posted  barge
is   identical  to  a  conventional  barge  except  that  the  hull   and
superstructure  are separated by ten to 14 foot columns, which  increases
the  water  depth capabilities of the rig. The Company's barge  rigs  are
generally rated for drilling to depths in excess of 20,000 feet.

   The following table provides certain information regarding the
Company's domestic barge drilling fleet as of March 15, 1999:
   
                             Horse-        Drilling
    Drilling Equipment/      power   Year  Depth
Rig Main Power               Rating  Built Capability Status
--- -------------------      ------  ----- ---------- ------
                                           (expressed
                                            in feet)
Conventional Barges
 1 Skytop Brewster/
      Caterpillar             2,000   1980  20,000    Operating
 3 Mid-Continent/
      Caterpillar (1)         3,000   1981  25,000    Stacked
 4 Oilwell/Caterpillar        3,000   1981  25,000    Cold Stacked
 6 Mid-Continent/Caterpillar  3,000   1981  25,000    Cold Stacked
11 Gardner Denver/
      Caterpillar             3,000   1982  30,000    Operating
15 National/EMD               2,000   1981  25,000    Stacked
18 Skytop Brewster/
      Caterpillar (2)         1,000   1980  12,000    Stacked
19 National/Caterpillar (2)   1,000 1996(3) 14,000    Stacked
20 National/Caterpillar (2)   1,000 1998(3) 14,000    Operating
21 Oilwell/Caterpillar        1,500   1982  15,000    Stacked
23 Mid-Continent/
      Caterpillar (1)(2)      1,000 1995(3) 14,000    Stacked
24 National/
      Caterpillar (1)(2)      1,500   1978  16,000    Stacked
25 Continental Emsco/
      Caterpillar             3,000   1976  25,000    Cold Stacked
28 Continental Emsco/
      Caterpillar             3,000   1979  30,000    Stacked
29 Continental Emsco/
      Caterpillar             3,000   1980  30,000    Stacked
30 Continental Emsco/
      Caterpillar             3,000   1981  30,000    Stacked
31 Continental Emsco/
      Caterpillar             3,000   1981  30,000    Stacked
32 Continental Emsco/
      Caterpillar             3,000   1982  30,000    Stacked
37 National/EMD               3,000   1965  20,000    Cold Stacked
38 National/EMD               3,000   1965  20,000    Cold Stacked
74 National/EMD (1)           2,000   1981  25,000    Cold Stacked
75 National/EMD (1)           3,000   1979  30,000    Cold Stacked

Posted Barges
 2 Skytop Brewster/
      Caterpillar             2,000   1980  20,000    Cold Stacked
 5 National/Caterpillar       3,000   1981  25,000    Cold Stacked
 7 Oilwell/Caterpillar        2,000   1978  25,000    Stacked
 8 Oilwell/Caterpillar        2,000   1978  25,000    Cold Stacked
 9 Oilwell/Caterpillar        2,000   1981  25,000    Stacked
10 Oilwell/Caterpillar        2,000   1981  25,000    Stacked
16 National/EMD               3,000   1981  30,000    Operating
17 National/EMD               3,000   1981  30,000    Operating
22 Skytop Brewster/
     Caterpillar (2)          1,500   1978  16,000    Stacked
27 Continental Emsco/
      Caterpillar             3,000   1978  30,000    Operating
39 National/EMD               3,000   1970  30,000    Cold Stacked
41 National/EMD               3,000   1981  30,000    Stacked
44 Oilwell/Superior           3,000   1979  30,000    Cold Stacked
45 Oilwell/Superior           3,000   1979  30,000    Cold Stacked
46 Oilwell/EMD                3,000   1981  30,000    Stacked
47 Oilwell/EMD                3,000   1982  30,000    Stacked
48 Gardner Denver/Caterpillar 3,000   1982  30,000    Stacked
49 Oilwell/Caterpillar        3,000   1980  30,000    Stacked
52 Oilwell/Caterpillar        2,000   1981  25,000    Stacked
54 National/EMD               3,000   1970  30,000    Stacked
55 Ideco/EMD                  3,000   1981  30,000    Operating
56 National/Caterpillar       2,000   1973  25,000    Stacked
57 National/Caterpillar       2,000   1975  25,000    Stacked
61 Mid-Continent/EMD          3,000   1978  30,000    Stacked
62 Mid-Continent/EMD          3,000   1978  30,000    Operating
63 Mid-Continent/EMD          3,000   1978  30,000    Stacked
64 Mid-Continent/EMD          3,000   1979  30,000    Stacked
     ____________________
     (1)  These rigs are leased to the Company.
     (2)  These rigs are also capable of performing workover operations.
     (3)  These rigs were reconstructed on the date indicated using an
          existing hull.
     
     Lake  Maracaibo Barge Rigs. Rigs designed to work in Lake Maracaibo,
Venezuela, require modification to work in a floating mode in up  to  150
feet  of  water. The typical domestic barge is modified by  widening  the
hull to 100 feet, installing a mooring system and cantilevering the drill
floor.  Three of the Company's barge rigs have been so modified  and  are
currently  operating  in  Lake  Maracaibo,  pursuant  to  contracts  with
Maraven.  After such modifications, these rigs generally are not suitable
for deployment to other locations.

    The  following  table  provides  certain  information  regarding  the
Company's Lake Maracaibo barge rigs as of March 15, 1999:

          Drilling    Horse-                         
          Equipment/  power   Year  Year    Depth
     Rig  Main Power  Rating  Built Rebuilt Capability Status
     ---  ---------   ------  ----- ------- ---------- ------
                                            (expressed
                                             in feet)

     40  Oilwell/EMD  3,000    1980   1994   25,000    Operating
     42  National/EMD 3,000    1982   1994   25,000    Stacked
     43  National/EMD 3,000    1982   1994   25,000    Operating

   Barge  Workover Rigs.  Barge workover rigs typically differ from barge
drilling  rigs  both in the size of the hull and the  capability  of  the
drilling  equipment.  Because workover operations  require  less  pulling
power  and  mud system capacity, a smaller, lower capacity  unit  can  be
used.  In  addition, workover rigs, which are equipped  with  specialized
pumps and handling tools, do not require heavy duty drill pipe. Operating
costs for workover rigs are lower because the rigs require smaller crews,
use less fuel and require less repair and maintenance.

   The   following  table  provides  certain  information  regarding  the
Company's workover fleet as of March 15, 1999:

                                      Mast            Workover
                                      Capacity Year   Depth
      Rig           Drawworks         (Pounds) Built  Capability Status
      ---           ---------         -------- -----  ---------- ------ 
                                                      (expressed
                                                       in feet)

 R&B Falcon Rig 90  Ideco H-30         250,000 1990(1)  15,000   Stacked
 R&B Falcon Rig 91  IRI 1287           250,000 1981     15,000   Stacked
 R&B Falcon Rig 92  IRI 2042           300,000 1981     15,000   Stacked
 R&B Falcon Rig 93  Ideco H-35         450,000 1978     20,000   Stacked
 R&B Falcon Rig 94  IRI 1287           250,000 1996(1)  15,000   Stacked
 R&B Falcon Rig 95  Wilson 75          369,000 1991(1)  20,000   Stacked
 R&B Falcon Rig 96  Wilson 75          400,000 1996(1)  20,000   Stacked
 R&B Falcon Rig 97  Wilson 75          400,000 1997(1)  20,000   Stacked
 R&B Falcon Rig 98  Mid-Continent U36A 550,000 1979     25,000   Stacked
 R&B Falcon Rig 99  Gardner Denver 800 800,000 1972     25,000   Stacked
    ____________
    (1)  These rigs were reconstructed on the date indicated
          using an existing hull.

   Inland  Marine  Vessels.   In  connection  with  barge  drilling   and
workover operations, it is necessary to utilize other types of vessels:
   
  -  Utility barges are barges generally 100 to 120 feet in length, which
     are  positioned alongside the barge rig and are used  (i)  to  store
     materials  or (ii) as a container in which to dump cuttings from the
     well  bore,  which  cuttings  then  are  transported  elsewhere  for
     disposal.
     
  -  Service tugs are ships approximately 50 to 60 feet in length, having
     400  to 900  horsepower, which are used to move and position utility
     barges  and  transport materials and personnel to and from the barge
     rig.
     
  -  Rig  moving  tugs are  ships  approximately 60 to 70 feet in length,
     having  900 horsepower or greater, which are used to move barge rigs
     to and from the drilling location. They can also be used to move and
     position utility barges and move materials and personnel to and from
     the barge rig.

   A  rig  moving  tug is typically used to move barge rigs  and  utility
barges to and from location, and is normally contracted by the hour.   If
water  conditions require a more powerful vessel or if no smaller vessels
are  available,  it may sometimes be used in a service tug  capacity,  in
which  event it is normally contracted on a dayrate basis.  Once a  barge
rig  is  on  location,  the  movement of  utility  barges,  supplies  and
personnel  can  normally be more economically handled with service  tugs,
which  are  on  contract throughout the operation, usually on  a  dayrate
basis.   During  drilling operations, anywhere from two  to  six  utility
barges  may be in use throughout the operation, as well as one  to  three
service  tugs.   In  a  barge rig operation, the Company's  customer  may
contract directly for the utility barges and tugs, or may ask the Company
to provide them.  As of March 15, 1999, the Company owned 102 tugs and 60
utility  barges.  Although the Company expects that these assets will  be
used primarily in conjunction with the Company's barge rig business, they
will also be used in other applications.
   
   Land  Drilling  Rigs.  Land drilling rigs are completely  equipped  to
drill  oil  and  gas  wells  on land.  These  rigs  are  designed  to  be
transported by truck and assembled by crane.  They require a firm,  level
area  to be erected and sometimes require foundation work to be performed
to  support  the drill floor and derrick.  These rigs are  equipped  with
living quarters.
   
   The   following  table  provides  certain  information  regarding  the
Company's land drilling rigs as of March 15, 1999:
   
                                             Drilling                   
                    Rig               Year    Depth                    
Rig Name            Description       Built Capability Location    Status
--------            -----------       ----- ---------- --------    ------
                                            (express              
                                             in feet)
                                                            
CLIFFS DRILLING 28  National 1320      1977   25,000   Venezuela   Operating
CLIFFS DRILLING 34  Oilwell E-2000     1980   18,000   Venezuela   Operating
CLIFFS DRILLING 35  Oilwell E-2000     1980   18,000   Venezuela   Operating
CLIFFS DRILLING 36  Oilwell E-2000     1982   18,000   Venezuela   Operating
CLIFFS DRILLING 37  Oilwell E-2000     1982   18,000   Venezuela   Operating
CLIFFS DRILLING 40  National 1320-UE   1980   25,000   Venezuela   Operating
CLIFFS DRILLING 41  National 1320      1981   25,000   Venezuela   Operating
CLIFFS DRILLING 42  National 1320-UE   1981   25,000   Venezuela   Operating
CLIFFS DRILLING 43  National 1320-UE   1981   25,000   Venezuela   Operating
CLIFFS DRILLING 54  National 1320-UE   1981   30,000   Venezuela   Operating
CLIFFS DRILLING 55  National 1320-UE   1983   35,000   Venezuela   Stacked

   Land Workover Rig.  The  Company  has  one  land workover rig, Rig 89, 
which is a Cabot 300 with a workover depth capability of 15,000 feet  and
it is currently stacked in Louisiana.
   
   Fleet  Maintenance.   The  Company follows a  policy  of  keeping  its
equipment well maintained and technologically competitive.  However,  its
equipment could be made obsolete by the development of new techniques and
equipment.  In  addition, industry-wide shortages of supplies,  services,
skilled  personnel  and  equipment necessary  to  conduct  the  Company's
business have occurred in the past, and such shortages could occur again.
   
   Almost  all  of the Company's rigs, like most of the rigs  with  which
they compete, were constructed during the last drilling boom, which ended
about  1982.  With increasing age, the likelihood that a rig will require
major  repairs  in  order to remain operational increases.   The  Company
expects  that repair and maintenance of its rigs will require  increasing
amounts  of  capital, and will result in such rigs being unavailable  for
service  from time to time.  During any such period of repair to  a  rig,
the  Company  will not earn revenues from such rig, but will continue  to
incur a substantial portion of the costs that would be incurred while the
rig is operating.
  
                          Oil & Gas Properties

   The  Company's oil and gas business is operated primarily through  its
wholly  owned  subsidiary Devco and, to an insignificant extent,  through
its  wholly owned subsidiary Raptor Exploration Company, Inc.   In  March
1998, the Company decided to divest its oil and gas business, and in  the
financial  statements for the three years ended December 31,  1997,  1996
and 1995, the business was accounted for as a discontinued operation.  As
of  March 1999, the Company has not been able to divest this business  on
terms  it  found  acceptable and in accordance  with  generally  accepted
accounting   principles  the  Company  has  reclassified  its   financial
statements  as  if this business had not been discontinued.  The  Company
does not intend to engage in any material activities in this business and
still  intends  to  divest  this  business.  See  Note  N  of  Notes   to
Consolidated Financial Statements.
   
   Domestic  Operations.  In October 1995, Devco purchased a 20%  working
interest  in  the  Green  Canyon 254 Allegheny oil  and  gas  development
project  in the U.S. Gulf of Mexico from Enserch Exploration,  Inc.,  now
EEX  Corporation, ("EEX") which was the operator at that time.  In  1997,
Devco  acquired an additional 20% working interest in the Allegheny field
and  British-Borneo  Petroleum,  Inc.,  ("British-Borneo")  acquired  the
remaining  60% working interest in the field. In August 1998, Devco  sold
its  40% interest in the field to British-Borneo for approximately  $25.0
million.

   In  July  1996,  Devco entered into an agreement with  Shell  Offshore
Inc.  ("Shell") to drill an appraisal well at Devco's expense to  earn  a
working interest in Shell's East Boomvang, North Boomvang and East Bequia
prospects (collectively "Boomvang Area") in the U.S. Gulf of Mexico.  The
appraisal well was drilled in the first quarter of 1997 and was suspended
pending  completion  at  a later date after further  delineation  of  the
reservoir.   In  February 1997, Shell waived its  election  to  remain  a
working  interest  owner  in  the Boomvang Area  and  assigned  its  100%
interest  in eight offshore blocks to Devco. Shell retained an overriding
royalty  interest  in the three prospects and has the  option  to  either
increase its overriding royalty interest or convert to a working interest
if specified cumulative production levels are achieved.
   
   In  July  1997,  Devco entered into an Equity Participation  Agreement
with  Norcen  Explorer,  Inc.  ("Norcen") pursuant  to  which  the  North
Boomvang and East Boomvang prospects were drilled.  Norcen thereby earned
the  right  to  an  assignment of a 37.5% working  interest  in  the  two
prospects.   In lieu of accepting the assignments, Norcen's successor  by
merger,  Union Pacific Resources Company, elected to accept an assignment
of  an  overriding royalty in the Boomvang development.  Devco  currently
owns a 100% working interest.  Devco anticipates bringing in a partner on
a  promoted  basis  to  pay  for drilling a confirmation  well  on  North
Boomvang  in  May  1999.  If successful, Devco anticipates  the  Boomvang
development will be project financed.

   Devco  has  acquired  the right to re-enter and complete  a  gas  well
previously  drilled  by Shell to earn a 100% working  interest  in  Green
Canyon  Block 20, in the U.S. Gulf of Mexico.  Shell has retained  a  net
profits interest with the option to convert to a 40% working interest  in
the  project  upon achieving threshold production levels.  The  gas  well
will  be  completed subsea and tied back at a distance of  2.8  miles  to
Shell's  Boxer  Platform for processing.  TOPS Gyrfalcon LLC,  a  limited
liability company owned by Devco and INTEC Engineering Inc., is  managing
all  subsea  engineering  design  and  contracting.   Completion  of  the
Gyrfalcon gas well is anticipated to commence in August 1999.
   
   International  Operations.  In  the  first  quarter  of  1998,   Devco
completed  a  transaction  with Vanco Energy Company  ("Vanco")  and  its
subsidiary companies to acquire a 22% working interest in the Anton Marin
and  Astrid  Marin Exploration and Production Sharing Contracts  covering
2,831,392   acres   in  deepwater  offshore  Gabon,  West   Africa.    As
consideration  for  the acquisitions, Devco agreed to  loan  Vanco  $11.5
million   for  signing  bonuses  and  operating  costs  ("Vanco   Loan").
Processing of new seismic data covering the Gabon prospect area commenced
at the end of 1997 and continued through 1998.
   
   During  the second quarter of 1998, Vanco and Devco jointly  presented
the  Gabon Project to selected major oil companies in an effort  to  sell
down  their  interests. Bids were taken and evaluated.   The  negotiation
process,  which  began  in July 1998, culminated  in  the  signing  of  a
Participation Agreement on November 2, 1998. Subsidiaries of  Total  S.A.
(28%),  as  Operator,  Unocal Corporation (25%),  Kerr-McGee  Corporation
(14%),  as farminees, joined Vanco Energy Company  (22%) and Devco (11%),
as  farminors, to form the Vanco Gabon Group.  A 3-D seismic  program  is
scheduled to begin in 1999 followed by exploratory drilling in 2000.  The
farminees  will  initially bear Devco's share of  the  cost  of  the  3-D
seismic and the cost of drilling the exploration wells.  As part  of  the
transaction,  Vanco repaid the Vanco Loan to Devco in full with  interest
and  Devco  recorded a gain of $5.7 million on the partial  sale  of  its
interest in the property.
   
   In  June  1997,  Devco acquired a farmout from Avner  Oil  Exploration
Limited  Partnership of a 10% working interest in nine petroleum licenses
covering  854,200 acres in deepwater offshore Israel.  The assignment  of
the  10%  working  interest was made at no cost to Devco.   Devco  has  a
contingent option to acquire an additional 5% working interest  at  cost.
In  1997  and  1998,  Devco participated in shooting and  processing  new
seismic   data  across  the  prospect.   A  subsidiary  of  Samedan   Oil
Corporation has joined the project as operator and an initial  test  well
is  anticipated  to  be  spud  in  July  1999.   Devco's  subsidiary,  RB
Mediterranean Ltd., will participate for its 10% working interest.
   
                            Other Properties
   
   Real  Property.   The  Company  owns  and  leases  real  property   in
connection  with the conduct of its business.  The Company  owns  (i)  an
office and yard facility in Broussard, Louisiana; (ii) an office and yard
facility  in  Houma, Louisiana; (iii) an office building in  New  Iberia,
Louisiana; (iv) an office and yard facility in Macae, Brazil; and (v)  an
office  and  yard  facility and a two story, 86,000  square  foot  office
building that serves as its corporate headquarters in Houston, Texas.  In
addition,  the  Company leases other office space in Houston,  Texas,  an
office and yard facility in Belle Chase, Louisiana and facilities in most
of the countries where it conducts operations.

                   Industry Conditions and Competition

   The  financial  performance of the marine contract drilling  industry,
domestically and abroad, is dependent upon the exploration and production
programs  of  oil  and gas companies.  These programs  are  substantially
influenced by costs to find, develop and produce oil and gas; demand  for
and   price  of  oil  and  natural  gas  (which  can  fluctuate  widely);
technological   advancements,  exploration  success,   restrictions   and
incentives relative to exploration and production imposed by governmental
authorities and economic conditions in general.
   
   A  dramatic  decline in demand for marine drilling services  began  in
1982  as  a result of a precipitous decline in oil prices.  This  decline
reflected the effects of lower earnings of oil and gas producers and  the
unstable  oil and gas price environment.  As a result, the entire  marine
drilling  industry  experienced lower dayrates and  associated  earnings.
Although there were periods of improvements, the marine drilling industry
remained generally depressed from 1985 until 1995 when the industry began
to  see  improved dayrates and utilization. However in 1997,  oil  prices
began  to decline and in 1998 natural gas prices began to decline.  Since
May 1998, demand for marine drilling rigs has decreased significantly. As
a  result, rig utilization and dayrates have also declined significantly,
particularly in the domestic jack-up and barge rig markets.  A  prolonged
depression  in  the  price of oil and gas would have a  material  adverse
effect on the Company.

   Political  and  military events in the Middle East and in  the  former
Soviet  Union are an example of the factors which can contribute  to  the
volatility  of  world oil and gas prices.  Other factors which  influence
demand for the Company's services include the ability of the Organization
of  Petroleum Exporting Countries ("OPEC") to set and maintain production
targets, the level of production by non-OPEC countries, worldwide  demand
for oil and gas, domestic production of natural gas, general economic and
political conditions, availability of new offshore oil and gas leases and
concessions   to  explore  and  develop,  and  governmental  regulations.
Accordingly, there is and probably will continue to be uncertainty as  to
the  future level of demand for the Company's services and the timing and
duration of any increases or decreases in demand.
   
   Drilling  in  these  international  markets  is  typically  driven  by
exploration  for oil as opposed to gas. International markets  frequently
offer  a  drilling contractor the opportunity to enter into  longer  term
contracts  at higher operating margins than can be obtained domestically.
Offsetting  these  benefits  can be the risk  of  political  uncertainty,
currency  fluctuations,  and  the increased overhead  in  establishing  a
foreign base of operation.
   
   The  marine  contract drilling industry is highly competitive  and  no
one competitor is dominant.  Since 1982, the supply of rigs has generally
exceeded demand. The result has been a prolonged period of intense  price
competition  during  which many drilling units have been  idle  for  long
periods of time.  Consequently, some drilling contractors have previously
gone   out   of   business  or  consolidated  with   other   contractors.
Notwithstanding  these  events,  the  industry  remains  fragmented   and
competitive.  The Company believes that strong competition  for  drilling
contracts will continue for the foreseeable future.  While the quality of
a  company's  fleet,  the  experience,  quality  and  reputation  of  its
management  and  employees,  and customer relationships  are  factors  in
obtaining drilling contracts, the over-whelming consideration is normally
the price at which a contractor is willing to provide drilling services.

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

   Deepwater.   The  deepwater  market  is  serviced  by  the   Company's
semisubmersibles and drillships. It begins in water depths of  about  400
feet  and extends to the maximum water depths in which rigs are currently
capable  of drilling, being approximately 10,000 feet.  In recent  years,
there  has  been  increased emphasis by oil companies  on  exploring  for
hydrocarbons  in  deeper waters.  This is, in part, due to  technological
developments  that have made it both more feasible and less expensive  to
explore  for  and  produce  hydrocarbons  in  deeper  waters.   Deepwater
drilling is currently being conducted primarily in the North Sea, Gulf of
Mexico, Brazil and West Africa.
  
   Shallow  Water.  The shallow water market is serviced by the Company's
jack-ups,  submersibles and drilling tenders.  It  begins  at  the  outer
limit  of  the transition zone and extends to water depths of  about  400
feet.   It has been developed to a significantly greater degree than  the
deepwater  market,  as  technology required to explore  for  and  produce
hydrocarbons  in  these  water depths is  not  as  demanding  as  in  the
deepwater  markets,  and accordingly the costs are lower.  Shallow  water
drilling  is currently being conducted primarily in the Gulf  of  Mexico,
West Africa, the North Sea, the Mediterranean, and Southeast Asia.
  
   Transition  Zone.  The Company's barge rig fleet operates in  marshes,
rivers,  lakes and shallow bay and coastal water areas that are  referred
to as the "transition zone".  The Company's principal barge market is the
shallow-water  areas of the U.S. Gulf Coast.  This area historically  has
been  the  world's largest market for barge rigs.  International  markets
for  barge  rigs  include  Venezuela, West Africa,  Southeast  Asia,  and
Tunisia.
  
   Marine  Transportation.   The Company's marine  transportation  assets
are  primarily  deployed  in the same market as its  domestic  barge  rig
fleet.   These assets are used mostly in conjunction with barge  drilling
operations,  but also are used in connection with other  types  of  work,
mostly  energy related (such as pipeline and well platform construction).
Although  such  assets  can be deployed to other  uses,  any  significant
downturn  in  oil and gas activity in the transition zone  would  have  a
negative  impact  on  the Company's marine transportation  business  that
could not be fully offset by deployment of such assets to other markets.
   
   Engineering Services and Land Operations. Through its Cliffs  Drilling
subsidiary,  the  Company  conducts land  rig  operations  in  Venezuela.
Although  the majority of the Company's contracts are daywork  contracts,
the  Company  has conducted "turnkey" operations. Under turnkey  drilling
contracts,  the  Company contracts to drill a well to  a  contract  depth
under  specified conditions for a fixed price. The cumulative net results
of  the  Company's turnkey contracts have been immaterial  in  total  and
insignificant  as  compared to the Company's operating  income  from  the
traditional daywork contracts. However, as a result of the acquisition of
Cliffs  Drilling,  the  Company now provides  a  larger  portion  of  its
services  under turnkey drilling contracts and in particular is operating
seven  of  its land rigs under a large turnkey contract in Venezuela.  In
addition,  because of the significant decline in the demand for  contract
drilling  services  that began in mid 1998 which the Company  expects  to
continue through 1999, the Company expects to pursue more turnkey work as
a way of increasing utilization of its rigs.
   
                   Contracts, Marketing and Customers

   There  are  several  factors  that determine  the  type  of  rig  most
suitable  for  a particular job, the most significant of  which  are  the
marine  environment, water depth and seabed conditions  at  the  proposed
drilling location, whether the drilling or workover is being done over  a
platform or other structure, and the intended well depth. Thus, there may
be  considerable  variation  in  utilization  and  dayrates  for  various
drilling  units  as  a  function of demand for  their  capabilities.  The
Company's  rigs  all  provide the same basic function,  namely,  drilling
wells.  However, because of the varying marine conditions in which  wells
are drilled, there is a wide variety of rig designs.
   
   Drilling in the areas served by the Company ranges from shallow  wells
(up  to  12,000  feet) to deep wells (up to 25,000 feet).   Deeper  wells
generally  take disproportionately longer to drill than shallower  wells,
due  primarily to more varied and difficult subsurface conditions and the
frequent need to run protective casing.  The Company's drilling rigs  are
competitive  for all types of drilling, but are particularly designed  to
drill to depths in excess of 12,000 feet.

   Rigs  are  generally employed under individual contracts which  extend
over a period of time covering either the drilling of a well or wells  (a
"well-to-well contract") or a stated term (a "term contract").  Contracts
for  the  employment of rigs are most often awarded based on  competitive
bidding;  however, some contracts are the result of negotiations  between
the  drilling  contractor and the customer.  Contracts  may  provide  for
early  termination by the customer, either with or without  penalty,  and
may  provide  for  extension options exercisable by  the  customer.   The
Company's  contracts generally provide for payment in U.S. dollars.   The
Company's  contracts typically provide for compensation  on  a  "daywork"
basis,  under which the Company receives a fixed amount per day that  the
rig  is operating under contract and the Company generally pays operating
expenses of the rig, including wages and the cost of incidental supplies.
A  contract  may  allow  the  Company to  recover  some  or  all  of  its
mobilization  and  demobilization costs associated with  moving  a  unit,
depending  on market conditions then prevailing.  The dayrate under  such
daywork  contracts may be lower or not payable when the drilling unit  is
under  tow  to  or from the drill site (other than field moves)  or  when
operations are suspended because of weather or mechanical problems.
   
   Although   the  majority  of  the  Company's  contracts  are   daywork
contracts, the Company has participated via a joint venture in  "turnkey"
contracts.  Under  turnkey drilling contracts, the Company  contracts  to
drill  a well to a contract depth under specified conditions for a  fixed
price.   The  risks  to  the Company on a turnkey drilling  contract  are
substantially  greater than on a well drilled on a daywork basis  because
the Company assumes most of the risks associated with drilling operations
generally  assumed by the operator in a daywork contract, including  risk
of  blowout, loss of hole, stuck drill stem, lost production or damage to
the  reservoir,  machinery breakdowns, abnormal drilling  conditions  and
risks  associated with subcontractors' services, supplies and  personnel.
The  cumulative net results of the Company's turnkey contracts have  been
immaterial  in  total  and  insignificant as compared  to  the  Company's
operating  income  from  the  traditional  daywork  contracting   method.
However, as a result of the acquisition of Cliffs Drillings, the  Company
now  provides  a  larger portion of its services under  turnkey  drilling
contracts.  In addition, because of the significant decline in the demand
for  contract drilling services that began in mid 1998 which the  Company
expects  to  continue through 1999, the Company expects  to  pursue  more
turnkey work as a way of increasing utilization of its rigs.

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

   The  Company  has  a  base  of  customers  which  includes  major  and
independent  foreign  and  domestic oil and gas  companies,  as  well  as
foreign  state-owned oil companies.  During 1998, the  Company  performed
services for approximately 171 different customers.
   
   For  the  year  ended  December 31, 1998,  revenues  of  approximately
$116.0 million from British Petroleum and affiliates accounted for  11.2%
of  the  Company's total operating revenues.  For the year ended December
31,  1997, there were no customers that individually accounted for  10.0%
or  more  of the Company's total operating revenues.  For the year  ended
December  31, 1996, revenues of approximately $70.6 million from  British
Petroleum  and  affiliates accounted for 11.6%  of  the  Company's  total
operating revenues.

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

   Financial  information by geographic area is furnished in  Note  L  of
Notes to Consolidated Financial Statements.
                                    
            Governmental Regulation and Environmental Matters

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

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

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

   The  transition  zone and shallow-water areas of the U.S.  Gulf  Coast
are  ecologically  sensitive.  Environmental issues have  led  to  higher
drilling costs, a more difficult and lengthy well permitting process and,
in  general,  have adversely affected decisions of the oil  companies  to
drill  in  these  areas.   U.S. laws and regulations  applicable  to  the
Company's operations include those controlling the discharge of materials
into the environment, requiring removal and cleanup of materials that may
harm  the  environment, or otherwise relating to the  protection  of  the
environment.   For example, as an operator of drilling rigs in  navigable
U.S.  waters  and certain offshore areas, the Company may be  liable  for
damages and costs incurred in connection with spills or discharges of oil
or  other substances for which it is held responsible.  The discharge  of
oil  or  other  substances in a wetland or inland waterway could  produce
substantial   damage   to   the  environment,  including   wildlife   and
groundwater.  Laws and regulations protecting the environment have become
more stringent in recent years, and may, in certain circumstances, impose
"strict  liability,"  rendering a person liable for environmental  damage
without  regard to negligence or fault on the part of such person.   Such
laws  and regulations may expose the Company to liability for the conduct
of  or conditions caused by others, or for acts of the Company that  were
in  compliance  with  all  applicable laws at the  time  such  acts  were
performed.  The application of these requirements or the adoption of  new
requirements could have a material adverse effect on the Company.
     
   The Federal Water Pollution Control Act of 1972, commonly referred  to
as  the  Clean  Water  Act  ("CWA") prohibits the  discharge  of  certain
substances  into  the  navigable waters of the United  Stated  without  a
permit.   The  regulations implementing the CWA  require  permits  to  be
obtained  by  an  operator before certain exploration  activities  occur.
Violations  of  monitoring,  reporting and  permitting  requirements  can
result in the imposition of civil and criminal penalties.  The provisions
of the CWA can also be enforced by citizen's groups.
     
   The  Oil Pollution Act of 1990 ("OPA '90") and regulations promulgated
pursuant thereto impose a variety of regulations on "responsible parties"
related  to  the  prevention  of oil spills  and  liability  for  damages
resulting from such spills.  A "responsible party" includes the owner  or
operator of a facility or vessel, or the lessee or permittee of the  area
in  which an offshore facility is located.  OPA '90 assigns liability  to
each responsible party for oil removal costs and a variety of public  and
private  damages.  While liability limits apply in some circumstances,  a
party  cannot take advantage of liability limits if the spill was  caused
by gross negligence or willful misconduct or resulted from violation of a
federal safety, construction or operating regulation.  If the party fails
to  report a spill or to cooperate fully in the cleanup, liability limits
likewise  do not apply.  Few defenses exist to the liability  imposed  by
OPA  '90.   OPA  '90 also imposes ongoing requirements on  a  responsible
party.   These  include proof of financial responsibility  (to  cover  at
least  some costs in a potential spill) and preparation of an  oil  spill
contingency  plan.   A  failure to comply with  ongoing  requirements  or
inadequate  cooperation in a spill event may subject a responsible  party
to  civil  or  criminal enforcement action.  In short, OPA '90  places  a
burden on drilling rig owners or operators to conduct safe operations and
take  other measures to prevent oil spills.  If a spill occurs,  OPA  '90
then imposes liability for resulting damages.

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

   In  addition,  the Outer Continental Shelf Lands Act  and  regulations
promulgated pursuant thereto impose a variety of regulations relating  to
safety  and  environmental protection applicable to lessees, permits  and
other  parties operating on the Outer Continental Shelf.  Specific design
and  operational standards may apply to Outer Continental Shelf  vessels,
rigs, platforms, vehicles and structures.  Violations of lease conditions
or  regulations issued pursuant to the Outer Continental Shelf Lands  Act
can  result  in  substantial  civil and criminal  penalties  as  well  as
potential court injunctions curtailing operations and the cancellation of
leases.  Such enforcement liabilities can result from either governmental
or citizen prosecution.
     
   The  Company  believes  it is in material compliance  with  applicable
federal, state, local and foreign legislation and regulations relating to
environmental  controls.   However,  the  existence  of  such  laws   and
regulations has had and will continue to have a restrictive effect on the
Company and its customers.

                      Operating Risks and Insurance

   The  Company's  operations are subject to the many  hazards.   In  the
drilling of oil and gas wells, especially exploratory wells where  little
is  known of the subsurface formations, there always exists a possibility
of encountering unexpected conditions of extreme pressure and temperature
and the risk of a blowout, cratering and fires that could cause injury or
death,   damage  to  property,  pollution,  and  suspension  of  drilling
operations.   The Company's fleet is also subject to hazards inherent  in
marine  operations, either while on site or under tow, such as capsizing,
grounding,  collision, damage from heavy weather or  sea  conditions  and
unsound  location.  The Company may also be subject to liability for  oil
spills, reservoir damage and other accidents that could cause substantial
damage.   The  Company maintains such insurance protection  as  it  deems
prudent, including liability insurance and insurance against damage to or
loss  of  equipment.  In addition, the Company generally seeks to  obtain
indemnity  agreements  whenever possible from  the  Company's  customers,
requiring  such customers to hold the Company harmless in  the  event  of
loss  of  production, reservoir damage or liability  for  pollution  that
originates  below  the  water surface.  When obtained,  such  contractual
indemnification protection may not in all cases be supported by  adequate
insurance  maintained by the customer.  There is no assurance  that  such
insurance  or  contractual indemnity protection  will  be  sufficient  or
effective  under all circumstances or against all hazards  to  which  the
Company  may be subject.  The principal hazards against which the Company
may  not  be  fully insured or indemnified are environmental  liabilities
which  may  result  from  a blowout or similar accident  or  a  liability
resulting from reservoir damage alleged to be caused by the negligence or
other  legal  fault of the Company.  Further, there is no assurance  that
the  Company  will be able to obtain adequate insurance coverage  at  the
rates  it  deems reasonable in the future.  Recognizing these risks,  the
Company  has  various  programs  that are  designed  to  promote  a  safe
environment for its personnel and equipment.
   
   At  present,  the  Company  intends  generally  to  maintain  business
interruption   insurance  with  respect  to  its   semisubmersibles   and
drillships, but not the other rigs or vessels in its fleet.
   
   The   Company's  foreign  operations  are  also  subject  to   certain
political,  economic  and other uncertainties, including,  among  others,
risks   of   war,   expropriation,  nationalization,   renegotiation   or
nullification of existing contracts, taxation policies, foreign  exchange
restrictions,  changing  political  conditions,  international   monetary
fluctuations  and  other  hazards arising  out  of  foreign  governmental
sovereignty  over certain areas in which the Company conducts operations.
Currently,  when  conducting foreign drilling  operations  in  areas  the
Company  perceives as politically unstable, the Company may (i) negotiate
contracts providing for indemnification against expropriation and certain
other political risks or (ii) purchase insurance covering such risks,  to
the  extent available at reasonable cost.  The  Company  believes  it  is
adequately covered by insurance,  but  no  assurance  can  be  given with
respect to the availability of such insurance at  acceptable rates in the
future.  Since 1979, the Company has not experienced any  material losses
associated  with  the  above-described political risks.

                                Employees

   The  Company emphasizes employee safety, training and retention.   The
number  of  employees varies depending on the level of drilling activity.
As  of  March 1, 1999, the Company employed approximately 6,200  persons.
There  are  no  collective bargaining contracts  covering  the  Company's
domestic employees.  As of March 1, 1999, the Company employed 653  local
personnel  in Venezuela, all of whom are covered by the Collective  Labor
Contract of the Venezuelan Petroleum Industry.  The Company believes  its
relations with its employees are good.

Item 3.  Legal Proceedings

   In  November 1988, a lawsuit was filed in the U.S. District Court  for
the  Southern District of West Virginia against Reading & Bates Coal Co.,
a  wholly  owned  subsidiary  of the Company,  by  SCW  Associates,  Inc.
claiming  breach of an alleged agreement to purchase the stock  of  Belva
Coal  Company, a wholly owned subsidiary of Reading & Bates Coal Co. with
coal  properties in West Virginia.  When those coal properties were  sold
in July 1989 as part of the disposition of the Company's coal operations,
the purchasing joint venture indemnified Reading & Bates Coal Co. and the
Company against any liability Reading & Bates Coal Co. might incur as the
result  of  this  litigation.  A judgment for the  plaintiff  of  $32,000
entered  in February 1991 was satisfied and Reading & Bates Coal Co.  was
indemnified  by the purchasing joint venture.  On October 31,  1990,  SCW
Associates, Inc., the plaintiff in the above-referenced action,  filed  a
separate  ancillary  action in the Circuit Court,  Kanawha  County,  West
Virginia  against  the Company, Caymen Coal, Inc. (former  owner  of  the
Company's  West Virginia coal properties), as well as the joint  venture,
Mr.  William B. Sturgill personally (former President of Reading &  Bates
Coal   Co.),  three  other  companies  in  which  the  Company   believes
Mr.  Sturgill  holds  an  equity interest, two  employees  of  the  joint
venture,  First  National Bank of Chicago and First Capital  Corporation.
The  lawsuit  seeks to recover compensatory damages of $50.0 million  and
punitive damages of $50.0 million for alleged tortious interference  with
the  contractual  rights of the plaintiff and to  impose  a  constructive
trust  on  the  proceeds of the use and/or sale of the assets  of  Caymen
Coal,  Inc.  as they existed on October 15, 1988. The Company intends  to
defend  its interests vigorously and believes the damages alleged by  the
plaintiff  in  this  action are highly exaggerated.  In  any  event,  the
Company  believes that it has valid defenses and that it will prevail  in
this litigation.
   
   The  Company is involved in various other legal actions arising in the
normal course of business.  A substantial number of these actions involve
claims  arising out of injuries to employees of the Company who  work  on
the  Company's  rigs and other vessels.  After taking into  consideration
the  evaluation  of  such  actions by counsel for  the  Company  and  the
Company's  insurance coverage, management is of the opinion that  outcome
of all known and potential claims and litigation will not have a material
adverse  effect  on  the  Company's business  or  consolidated  financial
position  or  results of operations.  See Note E of Notes to Consolidated
Financial Statements.

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

   None.
                                    
                                 PART II

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

   The  combination  of  Falcon and R&B became effective  at  11:59  p.m.
E.S.T.  on  December  31, 1997.  The common stock  of  R&B  Falcon  began
trading on the New York Stock Exchange ("NYSE") on January 2, 1998  under
the symbol "FLC."  During 1997, the Falcon common stock was traded on the
NYSE  under the symbol "FLC" and the R&B common stock was traded  on  the
NYSE and the Pacific Stock Exchange under the symbol "RB."  The following
table  sets forth, for the calendar periods indicated, the high  and  low
sales  prices  per share of Falcon common stock and R&B common  stock  as
reported by the NYSE Composite Tape for the periods indicated.  All share
price  information for Falcon common stock has been adjusted  to  reflect
the two-for-one stock split effected on July 15, 1997.  No adjustment  to
these prices has been made in respect of the share exchange ratio in  the
Merger (one share of Company common stock for each share of Falcon common
stock;  1.18 shares of Company common stock for each share of R&B  common
stock). Falcon, R&B and R&B Falcon did not declare any dividends  on  its
common stock for the periods indicated.
   
                                      Falcon           R&B
                                  Common Stock     Common Stock
                                 ---------------  ---------------
                                  High     Low     High     Low
                                 ------   ------  ------   ------
     1997
     First Quarter               $21.50   $15.13  $32.25   $22.50
     Second Quarter               28.81    15.56   28.25    20.13
     Third Quarter                38.13    25.44   44.63    26.75
     Fourth Quarter               42.81    28.19   49.81    33.38
          
                                    R&B Falcon
                                   Common Stock
                                 ----------------
                                   High     Low
                                 -------  -------
     1998
     First Quarter               $35.375  $23.125
     Second Quarter               34.188   20.500
     Third Quarter                23.188    8.750
     Fourth Quarter               16.500    6.750
          
   There  were  approximately 4,800 holders of record  of  the  Company's
common stock as of March 1, 1999.
   
   In  December  1997,  the  Company adopted  a  preferred  share  Rights
Agreement. See Note I of Notes to Consolidated Financial Statements.

Item 6.  Selected Financial Data
                                    
                         R&B FALCON CORPORATION
                            AND SUBSIDIARIES
                 (in millions except per share amounts)

     The  following table includes the accounts of R&B and  Falcon  as  a
result of the Merger and Cliffs Drilling effective December 1, 1998.  See
Note B of Notes to Consolidated Financial Statements.

                                           Years Ended December 31,
                             -------------------------------------------------
                                1998       1997       1996      1995     1994
                             ---------  ---------  ---------  -------  -------
Operating revenues           $ 1,032.6  $   933.0  $   609.6  $ 390.3  $ 307.6
                             =========  =========  =========  =======  =======
Income (loss) from
 continuing operations before
 extraordinary gain (loss)   $    91.0  $    29.8  $   106.7  $  23.5  $ (12.7)

Income (loss) from
 discontinued operations          36.0      (36.0)        -        -        -

Extraordinary gain (loss) (1)    (24.2)        -          -       3.4       -
                             ---------  ---------  ---------  -------  -------
Net income (loss)                102.8      (6.2)      106.7     26.9    (12.7)

Dividends and accretion
 on preferred stock (2)             -         -          3.6      5.2      5.4
                             ---------  ---------  ---------  -------  -------
Net income (loss) applicable
 to common stockholders      $   102.8  $    (6.2) $   103.1  $  21.7  $ (18.1)
                             =========  =========  =========  =======  =======

Net income (loss) per common share:
Basic:
  Continuing operations      $     .54  $     .18  $     .70  $   .16  $  (.18)
  Discontinued operations          .21       (.22)       -        -        -
  Extraordinary gain (loss)       (.14)       -          -        .03      -
                             ---------  ---------  ---------  -------  -------
     Net income (loss)       $     .61  $    (.04) $     .70  $   .19  $  (.18)
                             =========  =========  =========  =======  ======= 
 Diluted:
  Continuing operations      $     .54  $     .18  $     .67  $   .15  $  (.18)
  Discontinued operations          .21       (.22)       -        -        -
  Extraordinary gain (loss)       (.14)       -          -        .03      -
                             ---------  ---------  ---------  -------  -------
     Net income (loss)       $     .61  $    (.04) $     .67  $   .18  $  (.18)
                             =========  =========  =========  =======  =======

Total assets                 $ 3,709.3  $ 1,933.0  $ 1,455.8  $ 946.8  $ 810.9
                             =========  =========  =========  =======  =======

Long-term obligations
 (including current
 portion) and redeemable
 stocks                      $ 1,872.5  $   827.4  $   514.2  $ 296.7  $ 288.6
                             =========  =========  =========  =======  =======

Dividends on Common Stock    $      -   $      -   $      -   $    -   $    -
                             =========  =========  =========  =======  =======
____________________

(1)  The extraordinary gain for 1995 and the extraordinary loss  for  1998
     are  both  due  to  the  extinguishment  of  debt  obligations.   The
     extraordinary loss for 1998 is net of a tax benefit of $13.0 million.

(2)  In  1995, Falcon's Series A Convertible Preferred Stock was converted
     into  approximately  15.6 million shares of common stock and in 1996,
     R&B's  $1.625  Convertible   Preferred  Stock   was  converted   into
     approximately 10.2 million shares of common stock.


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

Business Combinations

   On  July  10,  1997,  Falcon  Drilling Company,  Inc.  ("Falcon")  and
Reading  &  Bates Corporation ("R&B") announced that they had  agreed  to
combine  their  companies under a new company -- R&B  Falcon  Corporation
("R&B  Falcon")  (the  "Merger"). On December 23, 1997,  the  Merger  was
approved  by both companies' shareholders and on December 31,  1997,  the
Merger  was consummated. Each outstanding share of common stock of Falcon
was  converted  into  one share of common stock of R&B  Falcon  and  each
outstanding  share of common stock of R&B was converted into 1.18  shares
of  common stock of R&B Falcon. The Merger has been accounted  for  as  a
pooling   of  interests  and,  accordingly,  the  consolidated  financial
statements  for  the  years ending 1997 and 1996 have  been  restated  to
include the accounts of R&B and Falcon.
   
   On  December  1,  1998, the Company acquired all  of  the  outstanding
stock of Cliffs Drilling Company ("Cliffs Drilling"). Cliffs Drilling  is
a  provider  of  daywork and turnkey drilling services,  mobile  offshore
production  units  and well engineering and management  services.  Cliffs
Drilling's  fleet  consists  of  16 jack-up  rigs,  three  self-contained
platform  rigs, four mobile offshore production units and 11  land  rigs.
The  acquisition was effected pursuant to an Agreement and Plan of Merger
dated  August  21,  1998, whereby each share of Cliffs Drilling's  common
stock  was  converted into 1.7 shares of the Company's common  stock  and
cash  in  lieu  of  fractional  shares. Total  consideration  for  Cliffs
Drilling   was   approximately  $405.1  million.   The   Company   issued
approximately  27.1  million  shares  of  its  common  stock  valued   at
approximately $385.3 million.  This valuation was based upon a  price  of
$14.2125  per share of the Company's common stock, which was the  average
closing  price per share of the Company's common stock during the  period
in  which  the  principal terms of the merger were agreed  upon  and  the
merger  was announced. In addition, the Company assumed Cliffs Drilling's
outstanding  stock options valued at approximately $6.2 million  and  the
Company  paid  approximately  $13.6 million  in  acquisition  costs.  The
acquisition of Cliffs Drilling was recorded using the purchase method  of
accounting.   The  excess of the purchase price over the  estimated  fair
value  of  net  assets acquired amounted to approximately $70.7  million,
which  has been accounted for as goodwill and is being amortized over  40
years   using  the  straight-line  method.  The  consolidated   financial
statements include Cliffs Drilling since December 1, 1998.
   
Recontinuance of Oil and Gas Operations

   In  March  1998,  the  Company decided  to  divest  its  oil  and  gas
business, and in the Company's financial statements previously filed with
the  SEC  for the three years ended December 31, 1997, 1996 and 1995  and
the  first three quarters of 1998, the business was accounted  for  as  a
discontinued operation. As of March 1999, the Company has not  been  able
to  divest  this business on terms it found acceptable and in  accordance
with   generally   accepted  accounting  principles   the   Company   has
reclassified  its financial statements as if this business had  not  been
discontinued.  The  Company does not intend to  engage  in  any  material
activities  in  this business and still intends to divest this  business.
See  "Oil & Gas Activities" and Note N of Notes to Consolidated Financial
Statements.

Results of Operations

   The  Company reported net income for 1998 of $102.8 million ($.61  per
diluted  share) compared to a net loss of $6.2 million ($.04 per  diluted
share) for 1997 and net income of $106.7 million ($.67 per diluted  share
after  preferred stock dividends of $3.6 million) for 1996.  Included  in
the 1998 results was a $118.3 million expense due to the cancellation  of
four  drillship  conversion  projects, an  extraordinary  loss  of  $24.2
million  due  to the extinguishment of debt obligations, the reversal  of
$8.0 million of merger expenses due to an Internal Revenue Service ruling
and  the reversal of discontinued operations expense of $36.0 million  of
accrued  estimated losses from operations until disposal  resulting  from
the  accounting  requirements for recontinuance.  Included  in  the  1997
results  are merger expenses of $66.4 million and accrued losses  related
to discontinued operations of $36.0 million.
   
   
   Operating Revenues
                                          Years Ended December 31,
                                      -------------------------------
     Operating revenues (in millions)   1998        1997       1996
                                      ---------   --------   --------
       Deepwater                      $   392.5   $  349.3   $  211.2
       Shallow water                      382.9      333.2      224.9
       Inland water                       244.3      249.9      172.9
       Engineering services and
         land operations                   12.5       -           -
       Development                           .4         .6         .6
                                      ---------   --------   --------
            Total                     $ 1,032.6   $  933.0   $  609.6
                                      =========   ========   ========

   Operating   revenues  are  primarily  a  function  of   dayrates   and
utilization. Operating revenues increased $99.6 million from 1997 to 1998
due  to  the  following:  The deepwater fleet  revenues  increased  $43.2
million  primarily  due  to  an increase  in  dayrates  and  due  to  the
activation  of  the C. Kirk Rhein, Jr.  The shallow water fleet  revenues
increased $49.7 million primarily due to an increase in dayrates for  the
jack-up  fleet,  specifically the international jack-up fleet.   Although
the  inland water fleet's revenues remained constant from 1997  to  1998,
there  was  an  increase  in  the  marine transportation  fleet  revenues
primarily due to fleet additions offset by a decrease in the barge  fleet
due   to  decreased  utilization.  The  engineering  services  and   land
operations revenues were attributable to the purchase of Cliffs  Drilling
on December 1, 1998.
   
   Operating revenues increased $323.4 million from 1996 to 1997  due  to
the  following:  The  deepwater fleet revenues increased  $138.1  million
primarily due to an increase in dayrates for the semisubmersibles and due
to  the  addition  of  two drillships. The shallow water  fleet  revenues
increased $108.3 million primarily due to an increase in dayrates for the
jack-up  fleet. The inland water fleet revenues increased  $77.0  million
primarily due to an increase in dayrates and utilization for the domestic
and  workover barges, and due to the purchase of 68 tugs and  44  utility
barges during 1997.
   
   Operating Expenses
                                       Years Ended December 31,
                                      ---------------------------
     Operating expenses (in millions)  1998      1997       1996
                                      -------   -------   -------
       Deepwater                      $ 184.4   $ 140.2   $  90.1
       Shallow water                    161.5     158.7     128.3
       Inland water                     169.1     136.7     110.2
       Engineering services and
         land operations                 10.5        -         -
       Development                       22.0     130.2       2.9
                                      -------   -------   -------
            Total                     $ 547.5   $ 565.8   $ 331.5
                                      =======   =======   =======

   Operating  expenses  do  not necessarily fluctuate  in  proportion  to
changes  in  operating revenues due to the continuation of  personnel  on
board and equipment maintenance when the Company's units are stacked.  It
is  only  during prolonged stacked periods that the Company  is  able  to
significantly  reduce  labor  costs and  equipment  maintenance  expense.
Additionally, labor costs fluctuate due to the geographic diversification
of  the  Company's  units  and the mix of labor between  expatriates  and
nationals  as  stipulated  in the contracts.   In  general,  labor  costs
increase  primarily due to higher salary levels and inflation.  Equipment
maintenance  expenses fluctuate depending upon the type of  activity  the
unit is performing and the age and condition of the equipment.  Scheduled
maintenance of equipment and overhauls are performed on a basis of number
of hours operated in accordance with the Company's preventive maintenance
program.  Operating expenses for an offshore unit are typically  deferred
or  capitalized  as appropriate during periods of mobilization,  contract
preparation,   major   upgrades  or  conversions   unless   corresponding
mobilization revenue is recognized, in which case such operating expenses
are expensed as incurred.
   
   Operating  expenses decreased $18.3 million from 1997 to 1998  due  to
the following: The development division expenses decreased $108.2 million
due  to  dryhole  costs and impairment charges relating to  oil  and  gas
properties in 1997. Offsetting this decrease was a $44.2 million increase
in the deepwater fleet expenses primarily due to the activation of the C.
Kirk Rhein, Jr. and increased wage rates, a $32.4 million increase in the
inland  water fleet expenses primarily due to the additions to the marine
transportation fleet and a $10.5 million increase in engineering services
and land operations due to the purchase of Cliffs Drilling.
   
   Operating expenses increased $234.3 million from 1996 to 1997  due  to
the following: The development division expenses increased $127.3 million
due  to  dryhole  costs and impairment charges relating to  oil  and  gas
properties.   The  deepwater  fleet  expenses  increased  $50.1   million
primarily  due to the addition of two drillships and the purchase  of  an
FPSS  vessel.  The shallow water fleet expenses increased  $30.4  million
primarily  due  to the change in the geographic location of  the  jack-up
fleet  from  one  year  to  the  next. The inland  water  fleet  expenses
increased $26.5 million primarily due to the increased utilization of the
domestic barges, and due to the purchase of 68 tugs and 44 utility barges
during 1997.
   
   Cancellation of Conversion Projects
   
   Cancellation of conversion projects expense of $118.3 million in  1998
was  the  result of the termination of the Peregrine VI,  Peregrine  VIII
and  two other drillship conversion projects that were in the preliminary
phases.  Such expense includes shipyard costs (for services performed and
in settlement of contract cancellation), Company personnel and contractor
costs,  engineering costs, capitalized interest, and write  down  of  the
vessels  that were purchased for conversion. Such projects were cancelled
due  to continuing uncertainty as to the final cost and expected delivery
dates.
   
 Depreciation and Amortization
                                                 Years Ended December 31,
                                                 ------------------------
                                                  1998     1997     1996
                                                 ------   ------   ------
    Depreciation and amortization (in millions)  $ 97.6   $ 84.7   $ 62.3
                                                 ======   ======   ======

   Despite  the  reduction in depreciation expense  for  the  year  ended
December 31, 1998 of approximately $20.7 million due to the extension  of
the expected useful lives of the Company's marine units effective January
1,  1998, depreciation expense increased $12.9 million in 1998 from  1997
due  to  the purchase and/or significant upgrades of offshore and  inland
marine vessels during 1998 and late 1997.

   The  $22.4  million increase in depreciation and amortization  expense
in  1997  from  1996 is primarily due to the purchase and/or  significant
upgrades of offshore and inland marine vessels.
   
 General and Administrative Expenses
                                                Years Ended December 31,
                                                ------------------------
                                                 1998     1997     1996
                                                ------   ------   ------  
    General and administrative
        expenses (in millions)                  $ 61.4   $ 55.7   $ 37.0
                                                ======   ======   ======
                                   
   General  and  administrative expenses increased $5.7 million  in  1998
compared  to  1997  primarily due to increases  in  payroll  and  related
expenses.
   
   General  and administrative expenses increased $18.7 million  in  1997
compared  to  1996  primarily due to increases  in  payroll  and  related
expenses associated with employee incentive plans.
   
   Merger Expenses

   In  connection  with  the Merger between R&B and Falcon,  the  Company
recorded $66.4 million of merger expenses in the fourth quarter of  1997.
Merger  expenses  consisted primarily of employment contract  termination
payments  associated with executives of R&B, the acceleration of unearned
compensation  of certain stock grants previously awarded to  certain  R&B
employees,  fees for investment bankers, attorneys, and accountants,  and
printing and other related costs. In 1998, the Company recorded  an  $8.0
million reduction of merger expenses primarily due to an Internal Revenue
Service  ruling  received  relating to  taxes  on  executive  termination
payments.

 Interest Expense
                                                 Years Ended December 31,
                                                 ------------------------
                                                  1998     1997     1996
                                                 ------   ------   ------
    Interest expense, net of interest
          capitalized (in millions)              $ 63.9   $ 41.6   $ 40.8
                                                 ======   ======   ======

   The $22.3 million increase in interest expense in 1998 as compared  to
1997 was primarily attributable to the issuance of $1.1 billion in senior
notes  in  April 1998.  This increase was partially offset  by  increased
capitalized  interest  related  to  significant  upgrade  and  new  build
projects.   Noncash  interest  expense attributable  to  amortization  of
discounts  associated with the Company's debt obligations  for  the  year
ended December 31, 1998 was $3.4 million.
   
   Despite  an  increase in capitalized interest during 1997 as  compared
to  1996  primarily  due  to the capitalization of  interest  related  to
significant upgrade and new build projects, interest expense increased by
$.8  million.   This  increase was primarily  attributable  to  increased
borrowings  under  the  Company's  credit  facilities.  Noncash  interest
expense attributable to amortization of discount and deferrals associated
with  the 8% Senior Subordinated Convertible Debentures due 1998 for  the
year ended December 31, 1997 was $2.6 million.
   
 Income Tax Expense
                                                 Years Ended December 31,
                                                 ------------------------
                                                  1998     1997     1996
                                                 ------   ------   ------
    Income tax expense (in millions)             $ 58.9   $ 84.7   $ 27.0
                                                 ======   ======   ======

   The  $25.8 million decrease in income tax expense in 1998 as  compared
to  1997  was  due  to  the non-deductible merger  expenses,  which  were
incurred  in  1997,  and  the  tax benefits related  to  the  recontinued
operations  being fully reserved in 1997. Despite a decrease  in  taxable
income  in  1997 as compared to 1996, income tax expense increased  $57.7
million in 1997 due to the permanent differences in 1997 discussed in the
previous  sentence  and the use of previously reserved  tax  benefits  in
1996.
   
   In  1998,  the  Company  began recording  income  taxes  at  the  full
statutory  rates as future tax benefit carryforwards will  no  longer  be
reserved.
   
 Minority Interest
                                                 Years Ended December 31,
                                                 ------------------------
                                                  1998     1997     1996
                                                 ------   ------   ------
     Minority interest (in millions)             $ 11.3   $  9.4   $  6.7
                                                 ======   ======   ======
   
   Minority  interest relates primarily to the results of Arcade Drilling
and  the  25.6%  attributable to stockholders  other  than  the  Company.
Arcade  Drilling reported income in 1998, 1997 and 1996 of $44.2 million,
$36.9 million and  $26.3 million, respectively.
   
   Extraordinary Loss
   
   Extraordinary  loss, net of tax, for 1998 is due to the extinguishment
of  debt  obligations  in  connection  with  the  issuance  of  new  debt
obligations  (see  Notes  A  and  D of Notes  to  Consolidated  Financial
Statements).
   
Oil & Gas Activities

  The  Company's oil and gas business is operated primarily  through  its
wholly owned subsidiary Reading & Bates Development Co. ("Devco"), and to
an  insignificant  extent,  through its wholly  owned  subsidiary  Raptor
Exploration Company, Inc.
  
  In  1998,  Devco  incurred  dryhole  costs of $11.7 million  and  asset
impairment  charges of $11.3 million. In  1997,  Devco  incurred  dryhole
costs of $65.1 million and asset impairment charges of $42.8 million.  At
December 31, 1998, none of the Company's oil and gas properties contained
proved  reserves and all such properties had been written off. It is  the
Company's intention to dispose of this operation.
  
Year 2000
  
  The  Company  has focused its Year 2000 ("Y2K") compliance  efforts  in
three  areas: information technology systems, embedded technology systems
and  systems  used  by  third  parties  with  which  the  Company  has  a
substantial  relationship.  The Company has substantially  completed  its
investigation  and evaluation of these systems and is  currently  in  the
process of correcting the identified problems.
  
  Information Technology Systems.  The testing and validation  phase  for
information  technology  systems  includes  testing  of  each  individual
information  technology  system  that could  be  affected.   Through  the
information technology systems investigation, the Company determined that
the  accounting software utilized by Cliffs Drilling required substantial
modification  or  replacement.   The  domestic  accounting  software  was
replaced with Y2K compliant software during the fourth quarter of 1998 at
a  total  cost of approximately $2.0 million, the majority of  which  was
capitalized.  Software replacements in Cliffs Drilling's foreign  offices
will  be  completed  during  1999 at a total cost  of  approximately  $.3
million.   The  Company  additionally  determined  that  certain  of  its
remaining  accounting  software  and  systems  were  not  Y2K  compliant.
Company personnel have completed the majority of these modifications  and
the  remaining  non-compliant software will be  undergoing  a  previously
planned  upgrade in the second quarter of 1999. Additionally, the Company
is  undergoing a third party review of its information technology systems
in the second quarter of 1999.
  
  Embedded  Technology  Systems.  Embedded technology  systems  primarily
relate  to  the  technology on board the Company's drilling  units.   The
testing and validation phase for the embedded technology systems includes
testing each high and medium priority system, which consists primarily of
all  systems  located  on drilling units included in  the  Deepwater  and
Shallow  Water Divisions.  For systems on board the Inland  Water  units,
confirmation  of Y2K compliance has been received from the  manufacturers
of these systems.
  
  To  facilitate  the  embedded  technology  systems  investigation,  the
Company hired an additional employee whose primary responsibility is  the
evaluation  of  these  technology systems.   This  evaluation  should  be
completed  by  the second quarter of 1999.  The equipment evaluated  thus
far,  which  includes all drilling units located in the  United  Kingdom,
Africa,  Greece,  Singapore and the Gulf of Mexico, has not  demonstrated
any  equipment  failures or other Y2K compliance issues.   Based  on  the
number  and type of drilling units tested thus far, the Company estimates
that  the  total  cost  to  replace  or  upgrade  non-compliant  embedded
technology systems will be less than $.5 million.
  
  Third  Party  Systems.  The Company is contacting  third  parties  with
which  it has substantial relationships to determine what actions may  be
needed  to  mitigate  its  risks relating  to  the  effects  third  party
technology  failures  may  have on the Company.   The  Company  sent  out
requests  for  information  to  all  of  our  electrical  and  electronic
contractors in August 1998 and has received information from 80% of  them
regarding  their  Y2K efforts.  Questionnaires were  sent  in  the  first
quarter  of  1999  to  all  of the Company's suppliers  and  third  party
vendors.    Based on the responses received thus far, it is evident  that
our  contractors  and suppliers are placing a priority on  achieving  Y2K
compliance.   In the event the Company's major suppliers or customers  do
not  successfully  and  timely  achieve  Y2K  compliance,  the  Company's
operations could be adversely affected.
  
  Contingency  Plans.   The  Company is  continuing  to  monitor,  on  an
ongoing  basis, the problems and uncertainties associated  with  its  Y2K
issues  and  their potential consequences.  The Company has accepted  the
position that there will be some finite levels of risk that some  systems
will  not fully function after Y2K.  A risk-based approach has identified
those items where absolute compliance is not guaranteed by the vendor  or
supplier,  and  contingency plans are being developed to  deal  with  any
safety  related possibilities.  These contingency plans will be completed
in the second quarter of 1999.
  
  In  addition  to the safety related contingency plans directly  related
to  uncertainties  with equipment, the Company maintains  plans  for  all
critical safety equipment as part of its normal business.  These critical
safety plans are currently being modified to fit the Y2K criteria.  These
modifications primarily include: having personnel standing by at critical
equipment  stations before the specified time changes,  having  no  crane
lifts  in  operation and have all drilling units in a non-drilling  mode.
Failure  of this type of equipment, whether related to normal operational
risk  or  Y2K  problems, must be managed with contingency planning.   For
this  reason,  additional risk due to the Y2K issue does  not  measurably
affect  the risk to personnel or equipment beyond the normal failure  due
to other causes.
  
Liquidity and Capital Resources

  Cash Flows

   Net  cash  provided  by operating activities was  $226.0  million  for
1998,  compared to $331.4 million and $167.6 million for 1997  and  1996,
respectively.   Fluctuations between the years is primarily  due  to  the
result  of improved dayrates and fleet additions, net of changes  in  the
components of working capital.
   
   Net  cash used in investing activities was $1,052.2 million for  1998,
compared  to  $610.9 million for 1997 and $365.1 million for  1996.   The
increases  in  each  year  were  due  to  increasing  levels  of  capital
expenditures,  primarily  related  to the  significant  capital  projects
involving  the  construction or upgrade of drilling  units  and  rig  and
vessel acquisitions.
   
   Net  cash  provided  by financing activities was  $935.6  million  for
1998,  compared to $301.2 million for 1997 and $319.6 million  for  1996.
The  increase in net cash provided by financing activities in  1998  over
1997  was primarily due to proceeds from two senior note offerings during
1998.  The decrease in net cash provided by financing activities in  1997
over  1996  was  primarily the result of a decline in proceeds  from  the
issuance of common stock more than offsetting increased borrowings  under
two credit facilities with two syndicates of commercial banks.
   
   Net  cash  provided  by business held for sale was $12.5  million  for
1998 compared to net cash used in business held for sale of $94.0 million
for  1997  and  $39.5 million for 1996.  The cash provided  in  1998  was
primarily due to the sale of oil and gas properties and the collection of
accounts  receivable.  The increase in use of cash from 1996 to 1997  was
primarily  due  to  the  increased level of  purchases  of  oil  and  gas
properties.
   
  Capital Expenditure Commitments
   
   The  Company  has  numerous significant capital  expenditure  projects
under  way involving the construction or upgrade of drilling units.   The
following is a list of such projects:
   
                         Water                                    Expenditures
                         Depth      Estimated    Contract           Made thru
                       Capability    Delivery     Term   Estimated December 31,
                         (feet)        Date      (years)    Cost      1998
                         ------        ----      -------    ----      ----
Drillships:                                                  (in millions)
DEEPWATER PATHFINDER(1)  10,000       Delivered     5     $  275.0   $  257.7
DEEPWATER FRONTIER(2)    10,000       Delivered    2.5    $  270.0   $  191.9
DEEPWATER MILLENNIUM     10,000  2nd quarter 1999  4(3)   $  270.0   $  151.8
DEEPWATER IV (unnamed)   10,000  3rd quarter 2000   3     $  305.0   $   84.0
PEREGRINE IV              9,200  2nd quarter 1999   6     $  210.0   $  152.8
PEREGRINE VII (4)         8,200  3rd quarter 1999   3     $  270.0   $  181.1

Semisubmersibles:                                                  
FALCON 100                2,450  2nd quarter 1999   4     $  118.0   $   91.4
RBS8M (formerly RBS6)     8,000  1st quarter 2000   5     $  315.0   $  130.9
RBS8D                     8,000  4th quarter 2000   3     $  325.0   $     .2
                                                          --------   --------
                                                          $2,358.0   $1,241.8
                                                          ========   ========
__________________

  (1)  The  Company owns a 50% interest in the limited liability  company
       that operates this drillship.
  (2)  The  Company owns a 60% interest in the limited  liability company
       that operates this  drillship.  Under the  drilling  contract  for
       this drillship,  the Company and Conoco have each committed to use
       this rig for  two  and  one  half  of  the  first five years after
       delivery.  Conoco will use the rig to drill a well after the rig's
       delivery,  and  the  Company  will  use it for the next 12 months.
       After this period, Conoco and the Company   will alternate the use
       of  this  rig.  The Company is currently marketing the rig for the
       periods during which it is obligated to use the rig.
  (3)  Statoil  will use this drillship for the first three  years  after
       delivery,  then  the  Company  will  alternate use of the rig with
       Statoil every six months for the next two years.
  (4)  BP Amoco  has  indicated  that it may cancel this contract because
       the rig  has not been delivered on time.  The Company is currently
       marketing this rig for work if BP Amoco cancels this contract.
   
   In  the third quarter of 1998, the Company cancelled the Peregrine  VI
and  the  Peregrine VIII drillship conversion projects due to  continuing
uncertainty  as to final cost and expected delivery dates. As  a  result,
the  drilling contract on the Peregrine VIII was terminated on  September
24, 1998, and the drilling contract on the Peregrine VI was terminated on
January  1, 1999. Both terminations were without prejudice to any  rights
of  the  oil companies. The Company believes that based on provisions  of
the contracts that preclude recovery of indirect or consequential damages
and  projected  rig availability in the offshore drilling  industry,  the
Company  will  not  have  any  material liability  under  these  drilling
contracts as a result of the termination thereof. The contracts with  the
shipyard  for conversion of the Peregrine VI and the Peregrine VIII  have
been  cancelled. In addition, in the fourth quarter of 1998, the  Company
cancelled two additional drillship conversion projects that were  in  the
preliminary  phases.   As  a  result of the  termination  of  these  four
drillship  conversion projects, the Company expensed  $118.3  million  in
related costs in 1998 (see "Results of Operations").
     
   In  October  1998,  the Company entered into a contract  with  Samsung
Heavy  Industries  Co.  Ltd. ("Samsung") to construct  a  drillship  (the
Deepwater  IV), which will be similar to the Deepwater Pathfinder  (which
was  delivered  by  Samsung to the Company in  September  1998)  and  the
Deepwater  Frontier (which was delivered by Samsung  to  the  Company  in
March  1999)  and  the  Deepwater Millennium (which  is  currently  under
construction by Samsung for the Company). Immediately following  delivery
of  the  Deepwater IV from the shipyard, the drillship is contracted  for
three  years to Texaco.  This contract is a substitute for the previously
contracted Peregrine VIII.
   
   In  December  1998, the Company and Vastar Resources, Inc.  ("Vastar")
entered into a contract pursuant to which the Company will construct  and
provide  a semisubmersible drilling rig (the RBS8D) for a term  of  three
years  (with five one-year options), at an operating dayrate of $199,950.
In  addition, Vastar may elect to extend the primary term to five  years,
with  three one-year options, in which case the dayrate would be  between
$189,200 and $199,200, depending upon when the primary term is extended.
   
   In  September 1998, the Company and Navis ASA ("Navis"),  a  Norwegian
public  company which is constructing a dynamically positioned  drillship
(the  Navis Explorer I), entered into an agreement pursuant to which  the
Company  agreed to make a capital contribution to Navis of $50.0  million
in exchange for stock in Navis. The Navis Explorer I is designed to drill
in  10,000  feet  of  water and is being constructed  at  Samsung  at  an
estimated cost of $280.0 million, with a scheduled delivery in the second
quarter  of 2000. The Company has contributed $20.0 million in  cash  and
will  contribute an additional $30.0 million of equipment  and  equipment
purchase  orders. It is expected that the Company will own  approximately
38%  of the outstanding stock of Navis following such contributions. Most
of  the  equipment and equipment purchase orders that will be contributed
by  the  Company  were  acquired by the Company in  connection  with  the
Peregrine  VI and Peregrine VIII projects and are no longer required  for
such  projects in light of their cancellation. Navis and the Company have
entered  into  an agreement pursuant to which the Company will  supervise
construction of the drillship and manage it following its delivery.
     
   In connection with the Peregrine VI and Peregrine VIII projects and  a
third  drillship project, the Company purchased or committed to  purchase
drilling  equipment  with  an  aggregate  cost  of  approximately  $285.0
million.   This  equipment  constitutes  all  of  the  material  drilling
equipment  necessary  to  outfit  two deepwater  drillships  (although  a
substantial  portion  of  such equipment can be used  on  semisubmersible
rigs). The Company expects to use approximately half of this equipment to
outfit the Deepwater IV, and approximately $30.0 million as a portion  of
its contribution to Navis. The balance of the equipment is expected to be
maintained by the Company as inventory.
   
   The  Peregrine  IV,  Peregrine VII, and Falcon 100 will  be  completed
later  than the required commencement dates under the drilling  contracts
for such rigs and at costs significantly in excess of original estimates.
The  customer for the Peregrine VII has indicated that it may cancel  the
drilling  contract due to construction delays. The Company believes  that
it will be able to find work for the Peregrine VII at dayrates similar to
its  previously contracted levels. However, the Company expects that  any
new contracts will likely be short-term or on a well-to-well basis. Also,
the  Company  will  be  subject  to late  delivery  penalties  under  the
applicable  drilling  contracts for the  Peregrine  IV  and  Falcon  100,
(approximately  $41,500 per day, up to a maximum of  approximately  $38.6
million, for the Peregrine IV, and approximately $26,500 per day, up to a
maximum  of  approximately $14.7 million, for the  Falcon  100).  If  the
Peregrine  IV and Falcon 100 are not delivered within 240 and  180  days,
respectively,  of  the  commencement  date  of  the  applicable  drilling
contract, the customer may cancel its contract.
   
   In  December  1998, Mobil U.K. Ltd. ("Mobil") terminated its  contract
to  use the Company's Jack Bates semisubmersible rig on the grounds  that
two  of the rig's anchor cables broke.  The contract provided for Mobil's
use  of  the  rig at a dayrate of approximately $115,000 for the  primary
term  through  January 1999 and approximately $200,000 for the  extension
term  from  February 1999 through December 2000.  The  Company  does  not
believe that Mobil had the right to terminate this contract.  The Company
has  received  a proposal from Mobil to recontract the Jack  Bates  at  a
dayrate  of  approximately $156,000  for  a  one  or  two  well  drilling
program.   The  Company believes this program may last approximately  six
months.   This proposal is without prejudice to either party's rights  in
the  dispute  over  the  termination of the original  contract.   If  the
Company is not successful in settling its dispute over the termination of
the  original contract, the Company intends to commence legal proceedings
to  enforce its rights under the contract.  The Company believes that  it
will  be  able to find other work for the Jack Bates, but that  any  such
work will be at lower dayrates than the $200,000 dayrate established  for
the extended term of the original contract.

   Liquidity
     
   At  December 31, 1998, the Company had approximately $413.6 million in
the  aggregate of cash, cash equivalents and borrowing capacity under its
revolving credit facilities.
   
   At   December   31,  1998,  approximately  $99.4  million   of   total
consolidated cash and cash equivalents of $177.4 million were  restricted
from  the Company's use outside of Arcade Drilling's activities. See Note
A of Notes to Consolidated Financial Statements.
   
   The  Company  is  currently  constructing or  significantly  upgrading
seven  wholly  owned deepwater drilling rigs.  The Company estimates  the
gross  capital expenditures on these projects will be approximately  $1.8
billion, of which approximately $1.0 billion remains to be funded by  the
Company.  Since May 1998, there has been a downturn in demand for  marine
drilling  rigs  resulting in a decline in rig utilization  and  dayrates.
The decline has been particularly dramatic in the domestic barge and jack-
up rig markets where the Company is one of the largest contractors.  As a
result,  although  the Company's operating revenues  increased  by  $99.6
million  from 1997 to 1998, on a quarterly basis during 1998 the  Company
experienced a decline in operating revenues from $279.4 million  for  the
first  quarter of 1998 to $228.7 million for the fourth quarter of  1998.
As  a result, the Company's cash flow from operations, cash on hand,  and
funds  available  under  its  existing  credit  facilities  will  not  be
sufficient  to  satisfy  the Company's short-term and  long-term  working
capital needs, planned investments, capital expenditures, debt, lease and
other  payment obligations, without selling certain assets or terminating
construction contracts.
   
   On  March  26,  1999, the Company issued three series of senior  notes
with  an  aggregate principal amount of $1.0 billion.  The  senior  notes
consisted of $400.0 million of 11% senior secured notes due 2006,  $400.0
million of  11.375% senior secured notes due 2009 and $200.0  million  of
12.25%  senior  notes  due 2006 (collectively, the "Senior  Notes").  The
$800.0  million senior secured notes are collateralized  by  ten  of  the
Company's  drilling rigs. As a result, the Company received net  proceeds
of  approximately  $971.5  million  after  deducting  estimated  offering
related  expenses.  The  Company  used the  proceeds  to  repay  existing
indebtedness  of approximately $556.0 million and the remainder  will  be
used  to  acquire, construct, repair and improve drilling  rigs  and  for
general corporate purposes.
   
   Proceeds from the Senior Notes met a portion of the Company's  capital
requirements.   However, it will also be necessary  for  the  Company  to
obtain  additional capital through debt and/or equity financings to  meet
its  currently projected obligations. The Company is currently evaluating
two  project  financings  to  meet a portion of  its  additional  capital
requirements.  The first is an approximately $270.0 million financing  in
the  form  of  a  synthetic  lease that would be  collateralized  by  the
drillship  Deepwater Frontier and drilling contract  revenues  from  such
drillship.   Proceeds of such financing, if obtained, would  be  used  in
part  to  refinance  the interim financing facility, under  which  $135.0
million  ($81.0  million  represents  the  Company's  portion)  had  been
borrowed  at March 15, 1999 and was repaid with a portion of the proceeds
from  the  Senior Notes.  The foregoing interim loan has been made  to  a
limited  liability company which will operate the Deepwater Frontier  and
which  is  owned 60% by the Company and 40% by Conoco.  The  Company  has
guaranteed  repayment of 60% of this interim loan. The  second  financing
being  contemplated is an approximately $250.0 million project  financing
that  would be collateralized by the semisubmersible RBS8M (formerly  the
RBS6), as well as the drilling contract revenues from such rig.
   
   The  Company  currently  believes it will be able  to  consummate  the
proposed  project  financings.  However, there can be no  assurance  that
these or any other additional financings can be obtained, or if obtained,
that  they  will be on terms favorable to the Company or for the  amounts
needed.  Further,  the Company has limited ability  under  its  indenture
covenants  to incur additional recourse indebtedness and to  secure  that
debt.   In  the event that the Company is unable to obtain its  requisite
financing,  the Company may have to sell assets or terminate  or  suspend
one  or  more  construction projects.  Termination  or  suspension  of  a
project may subject the Company to claims for penalties or damages  under
the  construction contracts or drilling contracts for rigs that are being
constructed.   In  addition, asset sales made  under  duress  in  today's
drilling market may not yield attractive sales prices.  Accordingly,  the
inability  of  the  Company  to complete such  financings  would  have  a
material  adverse  effect on the Company's financial  condition  and  its
ability to repay its outstanding indebtedness.
   
   Three  of the Company's outstanding credit facilities were repaid  and
terminated in March 1999 from proceeds from the Senior Notes.  To  assist
the Company's liquidity position, the Company may seek to establish a new
revolving  bank  credit facility of up to $180.0 million,  and  may  sell
certain  assets.  There can be no assurance, however, that such  facility
will be obtained or sales completed.
   
   The  liquidity of the Company should also be considered  in  light  of
the  significant  fluctuations  in demand  that  may  be  experienced  by
drilling  contractors  as changes in oil and gas producers'  expectations
and  budgets occur, primarily in response to declines in prices  for  oil
and  gas.   These fluctuations can rapidly impact the Company's liquidity
as  supply  and demand factors directly affect utilization and  dayrates,
which  are  the  primary  determinants of cash flow  from  the  Company's
operations.  The decline in oil and gas prices since 1997 has  negatively
impacted  the  Company's performance, particularly in the  shallow  water
U.S.  Gulf  market, by adversely affecting the Company's rig  utilization
and  dayrates.  Utilization of the Company's domestic jack-up  fleet  has
declined from approximately 100% in January 1998 to approximately 57%  in
January 1999, and dayrates on new contracts have declined from a range of
$35,000  to  $40,000 in January 1998 to a range of $10,000 to $13,000  at
present.   Dayrates for the Company's domestic barge drilling  rig  fleet
have  not declined materially, but utilization of the fleet declined from
approximately  96% in January 1998 to approximately 30% in January  1999.
The  Company's  international jack-up fleet has experienced  declines  in
utilization and dayrates since January 1998, but such declines  have  not
been as dramatic as those experienced in the domestic jack-up fleet.  The
Company believes a continued depression in oil and gas prices will have a
material  adverse effect on the Company's financial position and  results
from operations.
     
   The  Company's  construction and upgrade projects are subject  to  the
risks  of  delay  and  cost overruns inherent in any  large  construction
project,   including  shortages  of  equipment,  unforeseen   engineering
problems,  work  stoppages,  weather  interference,  unanticipated   cost
increases and shortages of materials or skilled labor.  Significant  cost
overruns  or  delays  would  adversely affect  the  Company's  liquidity,
financial condition and results of operations.  Delays could also  result
in  penalties under, or the termination of, the long-term contracts under
which the Company plans to operate these rigs.
     
   The  Company has based its estimates regarding its financing needs  on
the  assumption that conditions in the marine contract drilling  industry
will  remain approximately the same as currently exist through  1999  and
will  improve  in  2000.  If conditions during  these  periods  are  less
favorable  than the Company has assumed, the Company may be  required  to
seek  additional financing.  Any additional financing, if obtained, would
be subject to the risks and contingencies described above.

   The  impact  of general economic inflation on the Company's operations
for the three years ended December 31, 1998 has not been material.

   Debt Offerings

  Pursuant to an offering in April 1998, the Company issued $1.1  billion
principal   amount  of  senior  notes  resulting  in  net   proceeds   of
approximately  $1,082.9  million.  The  senior  notes  bear  interest  at
varying  rates  from 6.5% to 7.375%. See Note D of Notes to  Consolidated
Financial Statements.
     
   Pursuant  to  an offering in December 1998, the Company issued  $400.0
million  principal amount of senior notes resulting in  net  proceeds  of
approximately $392.3 million.  The senior notes bear interest  at  9.125%
and 9.5%.  See Note D of Notes to Consolidated Financial Statements.
   
   Pursuant  to  an  offering  in March 1999,  the  Company  issued  $1.0
billion  principal amount of senior notes resulting in  net  proceeds  of
approximately $971.5 million.  The senior notes bear interest at  varying
rates form 11% to 12.25% (see Liquidity).

   Credit Facilities

   At  December 31, 1998, the Company had four bank facilities, three  of
which were repaid in March 1999 from proceeds from the Senior Notes.  The
first was a $350.0 million revolving credit facility with a syndicate  of
banks.   The first $100.0 million of borrowing under this credit facility
was  secured  by a pledge of the stock one of the Company's  three  major
operating subsidiaries. At December 31, 1998, interest was accruing under
this  credit  facility  at LIBOR plus .75% for borrowings  up  to  $100.0
million  and  at  LIBOR plus 1.375% for borrowings in  excess  of  $100.0
million.  This credit facility would have matured on January 24, 2002. At
December 31, 1998, $200.0 million was available under this facility.  See
Note  D  of  Notes to Consolidated Financial Statements.  In March  1999,
this credit facility which had been fully drawn was terminated and repaid
from proceeds from the Senior Notes (see Liquidity).
   
   The  second  bank  facility was a $125.0 million interim  construction
facility  with a syndicate of banks for the construction of the Deepwater
Millennium.  This facility would have matured on June 30, 1999, and  bore
interest  at  LIBOR plus 1.25%. At December 31, 1998,  $1.6  million  was
available  under  this  facility. See Note C  of  Notes  to  Consolidated
Financial Statements.  In March 1999, this credit facility which had been
fully drawn was terminated and repaid from proceeds from the Senior Notes
(see Liquidity).
   
   The  third bank facility was an interim construction facility  with  a
syndicate of banks for the construction of the Deepwater Frontier.   This
interim  loan was made to a limited liability company which will  operate
the  Deepwater Frontier and which is owned 60% by the Company and 40%  by
Conoco.   The  Company had guaranteed repayment of 60%  of  this  interim
loan.  This facility would have matured March 31, 1999, and bore interest
at LIBOR plus .5%.  In March 1999, this credit facility had been drawn to
$135.0 million and $81.0 million, which represents the Company's portion,
was repaid from proceeds from the Senior Notes (see Liquidity).
   
   The  fourth bank facility is a $35.0 million revolving credit facility
maintained  by Cliffs Drilling.  This facility matures May 31,  2000  and
bears  interest at .25% plus the greater of the prevailing Federal  Funds
Rate  plus  .5%  or a referenced average prime; or at the adjusted  LIBOR
rate  plus 2%.  At December 31, 1998, Cliffs Drilling had $.4 million  in
letters  of  credit outstanding, thereby leaving $34.6 million  available
under  this  credit  facility.   See Note  D  of  Notes  to  Consolidated
Financial Statements.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

  The  Company's earnings and cash flows are subject to fluctuations  due
to  changes  in foreign currency exchange rates.  The Company  may  enter
into  forward  exchange  contracts  to  hedge  specific  commitments  and
anticipated  transactions but not for speculative  or  trading  purposes.
However,  the Company's contracts generally provide for payment  in  U.S.
dollars  and  the Company does not maintain significant foreign  currency
cash balances.  See Note A of Notes to Consolidated Financial Statements.
  
  The  Company  is exposed to changes in interest rates with  respect  to
its  long-term  debt  obligations.  The following table  sets  forth  the
average  interest rate for the scheduled maturity of the Company's  long-
term debt obligations as of December 31, 1998 (dollars in millions):

                                                                    Estimated
                                                                    Fair Value
                                                                        at
                                                                    December 31,
                  1999   2000   2001   2002   2003 Thereafter Total     1998
                 ------ ------ ------ ------ ------ -------- -------- --------
Fixed Rate Debt:
Amount           $   .2 $   .5 $  5.2 $   -  $553.3 $1,150.0 $1,709.2 $1,554.5
Average
 interest rate   7.000% 8.000% 9.750%     -  8.351%  7.647%   7.881%

Variable Rate Debt:
Amount           $  6.1 $  6.1 $  6.1 $150.5 $   -  $     -  $  168.8 $  168.8
Average
 interest  rate  7.375% 7.375% 7.375% 6.046%     -        -   6.190%

   The Company is exposed to changes in the price of oil and natural gas.
The  marine  contract drilling industry is dependent upon the exploration
and  production  programs of oil and gas companies,  which  in  turn  are
influenced by the price of oil and natural gas.


Item 8.  Financial Statements and Supplementary Data



            REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


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

   We  have audited the accompanying consolidated balance sheets  of  R&B
Falcon  Corporation  (a  Delaware corporation)  and  subsidiaries  as  of
December  31,  1998 and 1997, and the related consolidated statements  of
operations,  cash flows and stockholders' equity for each  of  the  three
years  in the period ended December 31, 1998.  These financial statements
are  the  responsibility of the Company's management.  Our responsibility
is  to  express  an opinion on these financial statements  based  on  our
audits.
   
   We   conducted  our  audits  in  accordance  with  generally  accepted
auditing standards.  Those standards require that we plan and perform the
audit   to  obtain  reasonable  assurance  about  whether  the  financial
statements  are  free  of  material  misstatement.   An  audit   includes
examining,  on  a  test  basis,  evidence  supporting  the  amounts   and
disclosures  in  the  financial  statements.   An  audit  also   includes
assessing  the accounting principles used and significant estimates  made
by  management,  as  well as evaluating the overall  financial  statement
presentation.  We believe that our audits provide a reasonable basis  for
our opinion.
   
   In  our  opinion, the financial statements referred to  above  present
fairly, in all material respects, the consolidated financial position  of
R&B Falcon Corporation and subsidiaries as of December 31, 1998 and 1997,
and the consolidated results of their operations and their cash flows for
each  of  the  three  years in the period ended  December  31,  1998,  in
conformity with generally accepted accounting principles.



/s/Arthur Andersen LLP

Houston, Texas
March 26, 1999


                     R&B FALCON CORPORATION
                        AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEET
                   December 31, 1998 and 1997
               (in millions except share amounts)

                                                       1998        1997
                                                    ---------   ---------
 ASSETS
 ------
 CURRENT ASSETS:
   Cash and cash equivalents                        $   177.4   $    55.5
   Short-term investments                                  -         45.4
   Accounts receivable:
    Trade, net                                          197.0       168.0
    Other                                                62.1        22.4
   Materials and supplies inventory                      36.1        15.2
   Drilling contracts in progress                        29.5          -
   Other current assets                                  25.0        14.3
                                                    ---------   ---------
    Total current assets                                527.1       320.8
                                                    ---------   ---------
 PROPERTY AND EQUIPMENT:
   Drilling                                           3,369.2     1,926.5
   Other                                                180.8        82.8
                                                    ---------   ---------
    Total property and equipment                      3,550.0     2,009.3
   Accumulated depreciation                            (519.4)     (426.3)
                                                    ---------   ---------
    Net property and equipment                        3,030.6     1,583.0
                                                    ---------   ---------
 GOODWILL, NET OF ACCUMULATED AMORTIZATION               70.6          -
                                                    ---------   ---------
 DEFERRED CHARGES AND OTHER ASSETS                       74.0        29.2
                                                    ---------   ---------
 NET ASSETS OF BUSINESS HELD FOR SALE                     7.0          -
                                                    ---------   ---------
 TOTAL ASSETS                                       $ 3,709.3   $ 1,933.0
                                                    =========   =========

 LIABILITIES AND STOCKHOLDERS' EQUITY
 ------------------------------------
 CURRENT LIABILITIES:
   Short-term obligations                           $   123.4   $      -
   Long-term obligations due within one year              6.3       135.2
   Accounts payable - trade                              83.1        54.4
   Accrued liabilities                                  139.0       146.4
                                                    ---------   ---------
    Total current liabilities                           351.8       336.0

 LONG-TERM OBLIGATIONS                                1,866.2       692.2
 OTHER NONCURRENT LIABILITIES                            35.9        38.6
 DEFERRED INCOME TAXES                                  142.4        76.8
 NET LIABILITIES OF BUSINESS HELD FOR SALE                 -          5.8
                                                    ---------   ---------
    Total liabilities                                 2,396.3     1,149.4
                                                    ---------   ---------
 COMMITMENTS AND CONTINGENCIES
 MINORITY INTEREST                                       62.8        55.6
                                                    ---------   ---------
 STOCKHOLDERS' EQUITY: 
  Common stock, $.01 par value, 550,000,000 shares
    authorized, 193,399,910 shares and 164,312,224
    shares issued and outstanding  at December 31,
    1998 and 1997,  respectively                          1.9         1.6
  Capital in excess of par value                      1,061.5       631.4
  Retained earnings                                     199.1        96.3
  Other                                                 (12.3)       (1.3)
                                                    ---------   ---------
     Total stockholders' equity                       1,250.2       728.0
                                                    ---------   ---------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $ 3,709.3   $ 1,933.0
                                                    =========   =========

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


                        R&B FALCON CORPORAITON
                          AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF OPERATIONS
               (in millions except per share amounts)

                                                Years Ended December 31,
                                             -------------------------------
                                                1998       1997       1996
                                             ---------    -------    -------
OPERATING REVENUES:
  Deepwater                                  $   392.5    $ 349.3    $ 211.2
  Shallow water                                  382.9      333.2      224.9
  Inland water                                   244.3      249.9      172.9
  Engineering services and land operations        12.5         -          -
  Development                                       .4         .6         .6
                                             ---------    -------    -------
     Total operating revenues                  1,032.6      933.0      609.6
                                             ---------    -------    -------
COSTS AND EXPENSES:
  Deepwater                                      184.4      140.2       90.1
  Shallow water                                  161.5      158.7      128.3
  Inland water                                   169.1      136.7      110.2
  Engineering services and land operations        10.5         -          -
  Development                                     22.0      130.2        2.9
  Cancellation of conversion projects            118.3         -          -
  Depreciation and amortization                   97.6       84.7       62.3
  General and administrative                      61.4       55.7       37.0
  Merger expenses                                 (8.0)      66.4         -
                                             ---------    -------    -------
     Total costs and expenses                    816.8      772.6      430.8
                                             ---------    -------    -------
OPERATING INCOME                                 215.8      160.4      178.8
                                             ---------    -------    -------
OTHER INCOME (EXPENSE):
  Interest expense,
     net of interest capitalized                 (63.9)     (41.6)     (40.8)
  Interest income                                  9.6        6.1        3.4
  Other, net                                       (.3)      (1.0)      (1.0)
                                             ---------    -------    -------
     Total other income (expense)                (54.6)     (36.5)     (38.4)
                                             ---------    -------    -------
INCOME FROM CONTINUING OPERATIONS BEFORE
 INCOME TAX EXPENSE,  MINORITY  INTEREST
 AND  EXTRAORDINARY  LOSS                        161.2      123.9      140.4
                                             ---------    -------    -------
INCOME TAX EXPENSE:
  Current                                         38.5       39.3        6.3
  Deferred                                        20.4       45.4       20.7
                                             ---------    -------    -------
     Total income tax expense                     58.9       84.7       27.0
                                             ---------    -------    -------
MINORITY INTEREST                                (11.3)      (9.4)      (6.7)
                                             ---------    -------    -------
INCOME FROM CONTINUING OPERATIONS
   BEFORE EXTRAORDINARY LOSS                      91.0       29.8      106.7
INCOME (LOSS) FROM DISCONTINUED OPERATIONS        36.0      (36.0)        -
EXTRAORDINARY LOSS, NET OF TAX BENEFIT           (24.2)        -          -
                                             ---------    -------    -------
NET INCOME (LOSS)                                102.8       (6.2)     106.7
DIVIDENDS ON PREFERRED STOCK                        -          -         3.6
                                             ---------    -------    -------
NET INCOME (LOSS) APPLICABLE TO COMMON
 STOCKHOLDERS                                $   102.8    $  (6.2)   $ 103.1
                                             =========    =======    =======
NET INCOME (LOSS) PER COMMON SHARE:
  Basic:
     Continuing operations                   $     .54    $   .18    $   .70
     Discontinued operations                       .21       (.22)       -
     Extraordinary loss                           (.14)       -          -
                                             ---------    -------    -------
       Net income (loss)                     $     .61    $  (.04)   $   .70
                                             =========    =======    =======
  Diluted:
     Continuing operations                   $     .54    $   .18    $   .67
     Discontinued operations                       .21       (.22)       -
     Extraordinary loss                           (.14)       -          -
                                             ---------    -------    -------
       Net income (loss)                     $     .61    $  (.04)   $   .67
                                             =========    =======    =======
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
  Basic                                          167.5      164.1      147.4
                                             =========    =======    =======
  Diluted                                        168.8      166.2      157.7
                                             =========    =======    =======

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


                          R&B FALCON CORPORAITON
                             AND SUBSIDIARIES
                   CONSOLIDATED STATEMENT OF CASH FLOWS
                             (in millions)
                                
                                                 Years Ended December 31,
                                             -------------------------------
                                                1998        1997       1996
                                             ---------    -------    -------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                          $   102.8    $  (6.2)   $ 106.7
  Adjustments to reconcile
   net income (loss) to net cash
   provided by operating activities:
    Depreciation and amortization                 97.6       84.7       62.3
    Gain on dispositions of property
      and equipment                               (3.3)      (6.9)      (3.7)
    Cancellation of conversion projects          118.3         -          -
    Deferred income taxes                         20.4       47.4       15.9
    Recognition of deferred expenses              12.2        7.1        8.0
    Deferred compensation                          1.1       17.8        3.2
    Minority interest in income
      of consolidated subsidiaries                11.3        9.4        6.7
    Dryhole and exploration expenses
      relating to oil and gas properties          11.9      114.9         -
    Loss (income) from discontinued operations   (36.0)      36.0         -
    Extraordinary loss from
      extinguishment of debt                      24.2         -          -
    Changes in assets and liabilities:
      Accounts  receivable, net                  (21.1)     (42.6)     (56.1)
      Materials and supplies inventory            (9.9)       (.8)      (2.3)
      Drilling contracts in progress              (6.2)        -          -
      Deferred charges and other assets          (47.2)     (19.9)      (8.2)
      Accounts payable - trade                   (18.0)       8.4        9.2
      Accrued interest                            (5.9)       7.1        6.2
      Accrued liabilities                        (24.2)      77.4       13.5
      Other, net                                  (2.0)      (2.4)       6.2
                                             ---------    -------    -------
        Net cash provided
           by operating activities               226.0      331.4      167.6
                                             ---------    -------    -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Dispositions of property and equipment           5.4       10.4        3.9
  Purchases of property and equipment,
    exclusive of noncash items                (1,131.0)    (592.2)    (352.3)
  Purchase of Cliffs Drilling Company,
    net of cash acquired                          28.0         -          -
  Sale (purchase) of short-term investments       45.4      (29.1)     (15.5)
  Other                                             -          -        (1.2)
                                             ---------    -------    -------
    Net cash used in investing activities     (1,052.2)    (610.9)    (365.1)
                                             ---------    -------    -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from short-term obligations           123.4         -          -
  Net proceeds from (payments on)
    revolving credit facilities                 (332.0)     316.0      141.0
  Proceeds from long-term obligations          1,494.0       38.0      120.0
  Principal payments on long-term obligations   (323.2)     (49.6)     (45.8)
  Premium paid on debt extinguishment            (23.9)        -          -
  Dividends paid on preferred stock                 -          -        (3.6)
  Distribution to minority shareholders
    of consolidated subsidiaries                  (4.0)        -        (5.1)
  Issuance of common stock, net                    1.3        2.7      110.7
  Other                                             -        (5.9)       2.4
                                             ---------    -------    ------- 
    Net cash provided by financing activities    935.6      301.2      319.6
                                             ---------    -------    -------
CASH PROVIDED BY (USED IN)
  BUSINESS HELD FOR SALE                          12.5      (94.0)     (39.5)
                                             ---------    -------    -------
NET INCREASE (DECREASE) IN
  CASH AND CASH EQUIVALENTS                      121.9      (72.3)      82.6

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR    55.5      127.8       45.2
                                             ---------    -------    -------
CASH AND CASH EQUIVALENTS AT END OF YEAR     $   177.4    $  55.5    $ 127.8
                                             =========    =======    =======

Supplemental Cash Flow Disclosures:
  Interest paid, net of capitalized interest $   105.6    $  36.5    $  35.2
  Income taxes paid                          $    36.5    $  13.9    $   5.7
  Noncash investing activities:
   Purchase of Cliffs Drilling
     Company in exchange for equity          $   391.5    $    -     $    -
   Other purchases of property and equipment
     in exchange for equity or debt          $    35.5    $   8.0    $  30.9

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


                         R&B FALCON CORPORATION
                            AND SUBSIDIARIES
                                    
             CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

               For the Three Years Ended December 31, 1998
                              (in millions)

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

Balances at December 31, 1995   143.5    $ 1.4    $  477.8    $  (.6)  $ (9.0)
                                                                 
Net income                                                     106.7      
Dividends paid on                                                
  preferred stock                                               (3.6)     
Conversion of preferred stock    10.2       .1         2.9
Purchase of assets                 .8                 15.0
Activity in Company stock plans   1.9                 13.0                 .1
Restricted stock grant             .6                 13.8              (10.6)
Issuance of common stock          6.4       .1       108.4
Additional minimum liability                                              1.2
Other                                                  (.1)                .1
                                -----    -----    --------    ------    ----- 

Balances at December 31, 1996   163.4      1.6       630.8     102.5    (18.2)
                                                                 
Net loss                                                        (6.2)     
Activity in Company stock plans   1.2                  8.9
Restricted stock grant                                  .9                6.8
Acceleration of stock grants      (.3)                (9.3)              10.1
Other                                                   .1              
                                -----    -----    --------    ------    -----

Balances at December 31, 1997   164.3      1.6       631.4      96.3     (1.3)
                                                                 
Net income                                                     102.8      
Purchase of assets               27.9       .3       416.4
Activity in Company stock plans    .2                  1.3
Restricted stock grant             .9                 12.3              (11.0)
Other                              .1                   .1
                                -----    -----    --------    ------    -----

Balances at December 31, 1998   193.4    $ 1.9    $1,061.5    $199.1   $(12.3)
                                =====    =====    ========    ======   ======
____________________
(1) Amounts less than one-tenth of a million are not shown.



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


                       R&B FALCON CORPORAITON
                          AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(A)  INDUSTRY CONDITIONS, LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES

   CONSOLIDATION  -  The  consolidated financial statements  include  the
accounts  of  R&B Falcon Corporation ("R&B Falcon") and its  subsidiaries
(collectively,  the  "Company"), including R&B  Falcon  (International  &
Deepwater) Inc., formerly Reading & Bates Corporation ("R&B"); R&B Falcon
Holdings, Inc., formerly Falcon Drilling Company, Inc. ("Falcon"); Cliffs
Drilling Company ("Cliffs Drilling") effective December 1, 1998  and  its
majority-owned  (approximately  74.4%)  subsidiary  Arcade  Drilling   AS
("Arcade").   Investments in unconsolidated investees are  accounted  for
using  the  equity  method.   All significant intercompany  accounts  and
transactions have been eliminated.
   
   INDUSTRY  CONDITIONS/LIQUIDITY - The Company is currently constructing
or  significantly upgrading seven wholly owned deepwater  drilling  rigs.
The  Company  estimates the gross capital expenditures on these  projects
will  be  approximately $1.8 billion, of which approximately $1.0 billion
remains  to be funded by the Company.  Since May 1998, there has  been  a
downturn in demand for marine drilling rigs resulting in a decline in rig
utilization and dayrates.  The decline has been particularly dramatic  in
the  domestic barge and jack-up rig markets where the Company is  one  of
the  largest contractors.  As a result, although the Company's  operating
revenues  increased by $99.6 million from 1997 to 1998,  on  a  quarterly
basis during 1998 the Company experienced a decline in operating revenues
from  $279.4 million for the first quarter of 1998 to $228.7 million  for
the  fourth quarter of 1998.  As a result, the Company's cash  flow  from
operations,  cash on hand, and funds available under its existing  credit
facilities will not be sufficient to satisfy the Company's short-term and
long-term   working   capital   needs,   planned   investments,   capital
expenditures, debt, lease and other payment obligations, without  selling
certain assets or terminating construction contracts.
   
   On  March  26,  1999, the Company issued three series of senior  notes
with  an  aggregate principal amount of $1.0 billion.  The  senior  notes
consisted of $400.0 million of 11% senior secured notes due 2006,  $400.0
million  of  11.375% senior secured notes due 2009 and $200.0 million  of
12.25%  senior  notes  due 2006 (collectively, the "Senior  Notes").  The
$800.0  million senior secured notes are collateralized  by  ten  of  the
Company's  drilling rigs. As a result, the Company received net  proceeds
of  approximately  $971.5  million  after  deducting  estimated  offering
related  expenses.  The  Company  used the  proceeds  to  repay  existing
indebtedness  of approximately $556.0 million and the remainder  will  be
used  to  acquire, construct, repair and improve drilling  rigs  and  for
general corporate purposes.
   
   Proceeds from the Senior Notes met a portion of the Company's  capital
requirements.   However, it will also be necessary  for  the  Company  to
obtain  additional capital through debt and/or equity financings to  meet
its  currently projected obligations. The Company is currently evaluating
two  project  financings  to  meet a portion of  its  additional  capital
requirements.  The first is an approximately $270.0 million financing  in
the  form  of  a  synthetic  lease that would be  collateralized  by  the
drillship  Deepwater Frontier and drilling contract  revenues  from  such
drillship.   Proceeds of such financing, if obtained, would  be  used  in
part  to  refinance  the interim financing facility, under  which  $135.0
million  ($81.0  million  represents  the  Company's  portion)  had  been
borrowed  at March 15, 1999 and was repaid with a portion of the proceeds
from  the  Senior Notes.  The foregoing interim loan has been made  to  a
limited  liability company which will operate the Deepwater Frontier  and
which  is  owned 60% by the Company and 40% by Conoco.  The  Company  has
guaranteed  repayment of 60% of this interim loan. The  second  financing
being  contemplated is an approximately $250.0 million project  financing
that  would be collateralized by the semisubmersible RBS8M (formerly  the
RBS6), as well as the drilling contract revenues from such rig.
   
   The  Company  currently  believes it will be able  to  consummate  the
proposed  project  financings.  However, there can be no  assurance  that
these or any other additional financings can be obtained, or if obtained,
that  they  will be on terms favorable to the Company or for the  amounts
needed.  Further,  the Company has limited ability  under  its  indenture
covenants  to incur additional recourse indebtedness and to  secure  that
debt.   In  the event that the Company is unable to obtain its  requisite
financing,  the Company may have to sell assets or terminate  or  suspend
one  or  more  construction projects.  Termination  or  suspension  of  a
project may subject the Company to claims for penalties or damages  under
the  construction contracts or drilling contracts for rigs that are being
constructed.   In  addition, asset sales made  under  duress  in  today's
drilling market may not yield attractive sales prices.  Accordingly,  the
inability  of  the  Company  to complete such  financings  would  have  a
material  adverse  effect on the Company's financial  condition  and  its
ability to repay its outstanding indebtedness.
   
   Three  of the Company's outstanding credit facilities were repaid  and
terminated in March 1999 from proceeds from the Senior Notes.  To  assist
the Company's liquidity position, the Company may seek to establish a new
revolving  bank  credit facility of up to $180.0 million,  and  may  sell
certain  assets.  There can be no assurance, however, that such  facility
will be obtained or sales completed.
   
   The  liquidity of the Company should also be considered  in  light  of
the  significant  fluctuations  in demand  that  may  be  experienced  by
drilling  contractors  as changes in oil and gas producers'  expectations
and  budgets occur, primarily in response to declines in prices  for  oil
and  gas.   These fluctuations can rapidly impact the Company's liquidity
as  supply  and demand factors directly affect utilization and  dayrates,
which  are  the  primary  determinants of cash flow  from  the  Company's
operations.  The decline in oil and gas prices since 1997 has  negatively
impacted  the  Company's performance, particularly in the  shallow  water
U.S.  Gulf  market, by adversely affecting the Company's rig  utilization
and  dayrates.  Utilization of the Company's domestic jack-up  fleet  has
declined from approximately 100% in January 1998 to approximately 57%  in
January 1999, and dayrates on new contracts have declined from a range of
$35,000  to  $40,000 in January 1998 to a range of $10,000 to $13,000  at
present.   Dayrates for the Company's domestic barge drilling  rig  fleet
have  not declined materially, but utilization of the fleet declined from
approximately  96% in January 1998 to approximately 30% in January  1999.
The  Company's  international jack-up fleet has experienced  declines  in
utilization and dayrates since January 1998, but such declines  have  not
been as dramatic as those experienced in the domestic jack-up fleet.  The
Company believes a continued depression in oil and gas prices will have a
material  adverse effect on the Company's financial position and  results
from operations.
     
   The  Company's  construction and upgrade projects are subject  to  the
risks  of  delay  and  cost overruns inherent in any  large  construction
project,   including  shortages  of  equipment,  unforeseen   engineering
problems,  work  stoppages,  weather  interference,  unanticipated   cost
increases and shortages of materials or skilled labor.  Significant  cost
overruns  or  delays  would  adversely affect  the  Company's  liquidity,
financial condition and results of operations.  Delays could also  result
in  penalties under, or the termination of, the long-term contracts under
which the Company plans to operate these rigs.
     
   The  Company has based its estimates regarding its financing needs  on
the  assumption that conditions in the marine contract drilling  industry
will  remain approximately the same as currently exist through  1999  and
will  improve  in  2000.  If conditions during  these  periods  are  less
favorable  than the Company has assumed, the Company may be  required  to
seek  additional financing.  Any additional financing, if obtained, would
be subject to the risks and contingencies described above.
          
   CASH  AND  CASH EQUIVALENTS - The Company considers all highly  liquid
investments purchased with an original maturity of three months  or  less
to  be  cash  equivalents. Arcade's cash and cash equivalents balance  as
well  as  the  short-term investments discussed below, are  available  to
Arcade  for  all  purposes subject to restrictions under  the  Standstill
Agreement  dated as of August 31, 1991 among Arcade, Transocean  Offshore
Inc. and R&B which restrictions preclude R&B from borrowing any cash from
Arcade  unless (i) Transocean is offered a pro-rata loan (based on  stock
ownership in Arcade) on similar terms and (ii) any such loan(s) otherwise
comply  with applicable laws. At December 31, 1998, $99.4 million of  the
cash  and  cash  equivalents balance related to Arcade.  Arcade  declared
distributions  of  approximately $82.2 million in the  first  quarter  of
1999,   of  which  the  Company  received  approximately  $61.2  million,
approximately $15.8 million in the first quarter of 1998,  of  which  the
Company  received  approximately $11.8 million  and  approximately  $14.3
million  in  the  first  quarter of 1996, of which the  Company  received
approximately $10.6 million.
   
   SHORT-TERM  INVESTMENTS - Short-term investments consist of  interest-
bearing deposits with a commercial bank with an original maturity greater
than three months but less than one year from the date of the investment.
At  December  31,  1997,  all of the short-term investments  balance  was
related  to  Arcade and was subject to restrictions (see  CASH  AND  CASH
EQUIVALENTS above).
   
   MATERIALS  AND SUPPLIES INVENTORY - Materials and supplies are  stated
at the lower of average cost or market.
   
   PROPERTY  AND EQUIPMENT - Property and equipment are stated  at  cost.
Drilling  units and marine equipment are depreciated under the  straight-
line  method. Gain (loss) on disposal of properties is credited (charged)
to  income. Estimated useful lives range from three to twenty-five years.
In  the  first quarter of 1998, the Company had an independent  appraiser
evaluate the expected useful lives of its marine units and, based on such
appraisal,  the  Company extended the useful lives of  its  marine  units
effective  January  1,  1998.  Such change in  estimate  resulted  in  an
approximate $20.7 million reduction in depreciation expense for the  year
ended December 31, 1998.
   
   Costs  incurred  for construction and significant upgrades  of  marine
equipment   are   accumulated  in  construction  in  progress   with   no
depreciation  being  recorded on such amounts until the  construction  or
upgrade  is  completed  and the equipment is placed  into  service.   The
amount  of  construction in progress included in  drilling  equipment  at
December  31,  1998  and  1997  was $921.4 million  and  $255.0  million,
respectively.   Certain marine equipment is being held  in  non-operating
status  pending  modification  and decisions  regarding  its  deployment.
Management believes its market value exceeds its net book value of  $65.7
million at December 31, 1998.
   
   GOODWILL - Goodwill from the purchase of Cliffs Drilling (see Note  B)
is  amortized  on  a  straight-line basis over  40  years.   Amortization
charged  to  expense  during the year ended December  31,  1998  was  $.1
million.    The  Company's  management  periodically  evaluates  recorded
goodwill balances, net of accumulated amortization, for impairment  based
on  the undiscounted cash flows associated with the asset compared to the
carrying amount of that asset.  Management believes that there have  been
no events or circumstances which warrant revision to the remaining useful
life or affect the recoverability of its recorded goodwill.
   
   DEFERRED CHARGES AND OTHER ASSETS - Deferred charges and other  assets
includes  investments in unconsolidated subsidiaries, deferred  financing
costs and deferred rig mobilization and preparation costs.  These amounts
are  stated  net of accumulated amortization costs and at net  realizable
value.
   
   INCOME  TAXES - Deferred income taxes are recognized for revenues  and
expenses reported in different years for financial statement purposes and
income tax purposes.
   
   REVENUE  RECOGNITION  - Revenues are recognized as  they  are  earned.
Proceeds associated with the early termination of a contract are recorded
as deferred income and recognized as contract revenues over the remaining
term  of  the  contract  or until such time as the mobile  offshore  unit
begins  a  new  contract.   There  were  no  such  amounts  deferred   at
December  31,  1998  or  1997.  In addition, when a  unit's  mobilization
revenue exceeds the cost of the mobilization by a significant amount, the
Company  recognizes  the excess as contract revenue during  the  contract
preparation  and  mobilization period on a dayrate basis.   If  there  is
revenue that has not been recognized by the time the unit has arrived  on
location, the remaining amount is recognized over the primary term of the
contract.
   
   Revenues  and  expenses  related  to turnkey  drilling  contracts  are
recognized  when  all  terms and conditions of  the  contract  have  been
fulfilled.   Consequently,  the  costs  related  to  in-progress  turnkey
drilling  contracts are deferred as drilling contracts in progress  until
the  contract  is  completed  and revenue is  realized.   The  amount  of
drilling  contracts in progress is dependent on the volume of  contracts,
the  duration of the contract at the end of the reporting period and  the
contract  amount.  Provision for losses on incomplete contracts  is  made
when such losses are probable and estimable.

   CAPITALIZED INTEREST - The Company capitalizes interest applicable  to
the  construction and significant upgrades of its marine equipment  as  a
cost  of  such assets.  Interest capitalized for the years ended December
31,  1998,  1997  and  1996 was $39.1 million,  $13.7  million  and  $7.6
million,  respectively  and  is shown net  of  interest  expense  in  the
Consolidated Statement of Operations.
        
   FOREIGN  CURRENCY  TRANSACTIONS - The net gains and  losses  resulting
from  foreign  currency transactions included in determining  net  income
amounted to a net gain of $.2 million in 1998, a net loss of $.4  million
in  1997  and a net gain of $.8 million in 1996.  The Company  may  enter
into  forward  exchange  contracts  to  hedge  specific  commitments  and
anticipated transactions but not for speculative or trading purposes.  In
the  third quarter of 1996, the Company entered into a short-term foreign
exchange  forward  contract to hedge a firm commitment  relating  to  the
purchase  of  equipment.  This contract was intended to  reduce  currency
risk  from exchange rate movements.  Insignificant gains and losses  were
deferred and accounted for as part of the underlying transaction.  During
1998  and  1997  the  Company  did not enter into  any  forward  exchange
contracts.   At  December  31,  1998,  the  Company  did  not  have   any
outstanding forward exchange contracts.
   
   MINORITY  INTEREST  -  Minority  interest  relates  primarily  to  the
results of Arcade, which owns the drilling units Henry Goodrich and  Paul
B.  Loyd,  Jr.   The  ownership  percentage  of  Arcade  attributable  to
stockholders  other  than the Company was 25.6% for  each  of  the  years
ending December 31, 1998, 1997 and 1996.  Arcade reported income in 1998,
1997  and  1996  of  $44.2  million, $36.9  million  and  $26.3  million,
respectively.
   
   EXTRAORDINARY  LOSS  -  In the second quarter  of  1998,  the  Company
incurred  an extraordinary loss of $22.0 million, after a tax benefit  of
$11.9 million, due to the early extinguishment of debt obligations.  Such
loss  consisted  of premium payments and the expense of related  deferred
debt issuance costs.  In the fourth quarter of 1998, the Company incurred
an  extraordinary  loss  of $2.2 million, after a  tax  benefit  of  $1.1
million,  due to the early extinguishment of debt obligations. Such  loss
consisted  of  the expense of related deferred debt issuance  costs.  See
Note D.
   
   COMPREHENSIVE INCOME - In 1998 and 1997, the Company did not have  any
non-owner  changes  in  equity.   In  1996,  the  Company  recorded,   in
stockholders'  equity,  $1.2  million  of  additional  minimum  liability
related  to its pension plans. Therefore, comprehensive income  for  1996
was  $105.7 million as a result of adjusting net income for 1996 by  $1.0
million of additional minimum liability, net of income taxes.
   
   CONCENTRATION  OF CREDIT RISK -  The Company maintains  cash  balances
and  short-term investments with commercial banks throughout  the  world.
The  Company's  cash  equivalents  and short-term  investments  generally
consist  of  commercial paper, money-market mutual  funds  and  interest-
bearing   deposits  with  strong  credit  rated  financial  institutions,
therefore,  bearing  minimal risk. No losses were incurred  during  1998,
1997 and 1996.
   
   The  Company's  revenues were generated primarily  from  its  drilling
rigs.   Revenues  can  be  generated from a relatively  small  number  of
customers, which are primarily major and independent foreign and domestic
oil  and  gas  companies,  as well as foreign  state-owned  oil  and  gas
companies.   The  Company  performs ongoing  credit  evaluations  of  its
customers' financial conditions and generally requires no collateral from
its  customers.   The  Company's  allowance  for  doubtful  accounts   at
December   31,  1998  and  1997  was  $11.9  million  and  $7.4  million,
respectively.
   
   NEWLY  ISSUED  ACCOUNTING STANDARDS - In February 1997,  Statement  of
Financial  Accounting Standards No. 128, Earnings per Share ("SFAS  128")
was  issued.   SFAS 128 establishes revised standards for  computing  and
presenting  earnings  per share.  The Company adopted  SFAS  128  in  the
fourth  quarter of 1997 and restated all prior period earnings per  share
data presented.
   
   In  June  1997, Statement of Financial Accounting Standards  No.  130,
Reporting  Comprehensive  Income  ("SFAS  130")  was  issued.   SFAS  130
establishes  standards for reporting and display of comprehensive  income
and its components in a full set of general purpose financial statements.
Comprehensive  income is the total of net income and all  other  nonowner
changes in equity.  The Company adopted SFAS 130 in the first quarter  of
fiscal 1998. See COMPREHENSIVE INCOME above.
   
   In  June  1997, Statement of Financial Accounting Standards  No.  131,
Disclosures  about  Segments  of an Enterprise  and  Related  Information
("SFAS  131")  was  issued.   SFAS  131 requires  that  companies  report
financial  and  descriptive information about their reportable  operating
segments.  Segment information to be reported is to be based upon the way
management  organizes  the segments for making  operating  decisions  and
assessing performance. The Company adopted SFAS 131 in the fourth quarter
of 1998 and has made the appropriate disclosures.  See Note L.

   In  February  1998,  Statement of Financial Accounting  Standards  No.
132,  Employers'  Disclosures  about Pensions  and  Other  Postretirement
Benefits  ("SFAS  132")  was issued.  SFAS 132 revises  and  standardizes
employers'  disclosures  about pension and other  postretirement  benefit
plans.    The Company adopted SFAS 132 in the fourth quarter of 1998  and
has made the appropriate disclosures.  See Note J.
   
   In  June  1998, Statement of Financial Accounting Standards  No.  133,
Accounting for Derivative Instruments and Hedging Activities ("SFAS 133")
was  issued.  SFAS  133  establishes accounting and  reporting  standards
requiring that every derivative instrument be measured at its fair value,
recorded  in the balance sheet as either an asset or liability  and  that
changes  in  the  derivative's  fair value  be  recognized  currently  in
earnings. SFAS 133 is effective for fiscal years beginning after June 15,
1999. The Company has not yet quantified the impacts of adopting SFAS 133
on  its  financial  statements nor has it determined the  timing  of  its
adoption.
   
   ESTIMATES  -  The  preparation of financial statements  in  conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets  and
liabilities  and disclosure of contingent assets and liabilities  at  the
date of the financial statements and the reported amounts of revenues and
expenses  during the reporting period.  Actual results could differ  from
those estimates.
   
   RECLASSIFICATION  - Certain prior period amounts in  the  consolidated
financial  statements  have been reclassified for  comparative  purposes.
Such  reclassifications had no effect on the net  income  (loss)  or  the
overall financial condition of the Company.
   
(B)  BUSINESS COMBINATIONS

   On  December 31, 1997, R&B and Falcon completed a business combination
(merger)  whereby each outstanding share of common stock  of  Falcon  was
converted  into one share of R&B Falcon common stock and each outstanding
share of common stock of R&B was converted into 1.18 shares of R&B Falcon
common  stock. The merger qualified as a tax-free exchange and  has  been
accounted   for   as  a  pooling  of  interests  and,  accordingly,   the
consolidated  financial statements for the periods  presented  have  been
restated to include the accounts of R&B and Falcon.
   
   There  was one transaction between R&B and Falcon prior to the  merger
which  resulted  in an adjustment to the consolidated restated  financial
statements  of R&B Falcon.  In 1996, R&B sold the drilling  unit,  Falrig
83,  (formerly the D. K. McIntosh) to Falcon.  The resulting gain of $3.8
million  recorded  by  R&B  has  been eliminated  from  the  accompanying
financial statements.
   
   The  results of operations for the separate companies and the combined
amounts presented in the consolidated financial statements for the  years
ended December 31, 1997 and 1996 are as follows (in millions):
     
                                     1997      1996
                                    ------    ------
        Operating revenues
          R&B                       $424.2    $290.3
          Falcon                     508.8     319.3
                                    ------    ------
             Combined               $933.0    $609.6
                                    ======    ======
        Net income (loss)
          R&B                       $(73.5)   $ 74.1
          Falcon                      67.3      32.6
                                    ------    ------
             Combined               $ (6.2)   $106.7
                                    ======    ======

   In  connection with the merger, the Company recorded $66.4 million  of
expenses  in the fourth quarter of 1997.  Such expenses consist primarily
of  employment  contract termination fees associated with  executives  of
R&B,  the  acceleration of unearned compensation of certain stock  grants
previously awarded to certain R&B employees, fees for investment bankers,
attorneys,  and  accountants, and printing and other related  costs.   In
1998, the Company reversed $8.0 million of merger expenses primarily  due
to  an  Internal  Revenue Service ruling received relating  to  taxes  on
executive termination fees.
   
   On  December 1, 1998, R&B Falcon acquired all of the outstanding stock
of  Cliffs Drilling. Cliffs Drilling is a provider of daywork and turnkey
drilling  services, mobile offshore production units and well engineering
and  management services. Cliffs Drilling's fleet consists of 16  jack-up
rigs, three self-contained platform rigs, four mobile offshore production
units  and  11  land rigs. The acquisition was effected  pursuant  to  an
Agreement and Plan of Merger dated August 21, 1998, whereby each share of
Cliffs  Drilling's  common stock was converted into  1.7  shares  of  R&B
Falcon  common  stock  and  cash  in lieu  of  fractional  shares.  Total
consideration for Cliffs Drilling was approximately $405.1  million.  The
Company  issued  approximately 27.1 million shares of  its  common  stock
valued at approximately $385.3 million.  This valuation was based upon  a
price  of  $14.2125 per share of R&B Falcon common stock, which  was  the
average  closing price per share of R&B Falcon's common stock during  the
period  in which the principal terms of the merger were agreed  upon  and
the  merger  was  announced.  In addition,  the  Company  assumed  Cliffs
Drilling's outstanding stock options valued at approximately $6.2 million
and  the  Company paid approximately $13.6 million in acquisition  costs.
The acquisition of Cliffs Drilling was recorded using the purchase method
of  accounting,  accordingly Cliffs Drilling's results of operations  are
included  with the Company's results of operations since the  acquisition
date.  The excess of the purchase price over the estimated fair value  of
net  assets acquired amounted to approximately $70.7 million,  which  has
been accounted for as goodwill and is being amortized over 40 years using
the straight-line method.
   
   Pro  forma  consolidated operating results of the Company  and  Cliffs
Drilling  for  the  year ended December 31, 1998 and 1997,  assuming  the
Cliffs  Drilling transaction occurred at the beginning of the  respective
periods, are as follows:
   
                                                Years Ended December 31,
                                                ------------------------
                                                  1998           1997
                                                ---------      ---------
                                                     (unaudited)
                                       (in millions except per share amounts)
                                              
  Operating revenues                            $ 1,349.0      $ 1,218.2
  Income from continuing operations
    before extraordinary loss                       138.9           71.4
  Net income                                        150.7           35.4
  Net income per common share:
    Basic                                             .78            .19
    Diluted                                           .78            .18


(C) SHORT-TERM OBLIGATIONS

   In  1998,  the  Company entered into a short-term credit facility  for
the construction of the Deepwater Millennium. The facility bears interest
at  the London Interbank Offered Rate ("LIBOR") plus 1.25% and is due  on
June  30,  1999.  At December 31, 1998, $1.6 million was available  under
this  facility.  In March 1999, this credit facility which had been fully
drawn was terminated and repaid from proceeds from the Senior Notes  (see
Note A).

(D)  LONG-TERM OBLIGATIONS

   Long-term obligations at December 31, 1998 and 1997 consisted  of  the
following (in millions):

                                                         1998      1997
                                                       --------  --------
  Revolving credit facilities (1)                      $  150.0  $  482.0
  6.5% Senior Notes, due April 2003 (2)                   249.2        -
  6.75% Senior Notes, due April 2005 (2)                  348.1        -
  6.95% Senior Notes, due April 2008 (2)                  249.2        -
  7.375% Senior Notes, due April 2018 (2)                 248.0        -
  9.125% Senior Notes, due December 2003
   ("9.125% Notes") (3)                                   100.0        -
  9.5% Senior Notes, due December 2008("9.5% Notes")(3)   300.0        -
  8% Senior Subordinated Convertible Debentures, due
     December 1998 ("8% Debentures") (4)                     -       15.6
  8.875% Senior Notes, due March 2003
   ("8.875% Notes") (5)(13)                                  .4     120.0
  9.75% Senior Notes, due January 2001
   ("9.75% Notes") (6)(13)                                  5.2     110.0
  10.25% Senior Notes, due May 2003("10.25% Notes")(7)    202.9        -
  12.5% Subordinated Notes, due March
   2005 ("12.5% Notes") (8)(13)                              -       50.0
  Floating Rate Notes (9) (13)                               -       10.0
  NIC (10)                                                 18.7      25.3
  Deferred payment obligation (11)                           .5       7.5
  Secured promissory note (12)                               -        6.4
  Other debt obligations                                     .3        .6
                                                       --------  --------
  Total                                                 1,872.5     827.4
  Less long-term obligations due within one year           (6.3)   (135.2)
                                                       --------  --------
  Long-term obligations                                $1,866.2  $  692.2
                                                       ========  ========
  __________________________

  (1) At  December  31,  1998,  the  Company  had  two  revolving  credit
      facilities outstanding.

      The  first  is a $350.0 million revolving credit facility  expiring
      on  January  24,  2002.   This facility was  previously  at  $500.0
      million  however, as a result of issuing the 9.125% Notes  and  the
      9.5%   Notes  it  was  amended  and  reduced  to  $350.0   million.
      Commencing  March 31, 2001, the facility will be reduced  by  $15.0
      million each calendar quarter.  At December 31, 1998, interest  was
      accruing  under this revolving credit facility at LIBOR  plus  .75%
      for  borrowings up to $100.0 million and at LIBOR plus  1.375%  for
      borrowings  in excess of $100.0 million.  In addition, a commitment
      fee  of .35% per annum is paid on the total amount of the facility.
      The  first $100.0 million of borrowing under this revolving  credit
      facility  is  secured  by  a pledge of the  stock  of  one  of  the
      Company's   three  major  operating  subsidiaries.   The   facility
      contains  covenants (with which the Company was  in  compliance  at
      December  31,  1998)  which require the  Company  to  meet  certain
      ratios  and in many respects limit or prohibit, among other things,
      the  ability  of  the  Company  to incur  additional  indebtedness,
      create  liens  and  sell  assets.  At  December  31,  1998,  $200.0
      million  was  available under this facility.  In March  1999,  this
      credit  facility  which  had been fully drawn  was  terminated  and
      repaid from proceeds from the Senior Notes (see Note A).
   
      The  second  is a $35.0 million revolving credit facility  expiring
      on  May 31, 2000. Interest accrues under this facility at .25% plus
      the  greater  of the prevailing Federal Funds Rate plus  .5%  or  a
      referenced  average prime; or at the adjusted LIBOR rate  plus  2%.
      In  addition, a fee of 2% per annum is paid on outstanding  letters
      of  credit  and a commitment fee of .5% per annum is  paid  on  the
      unused  portion  of  the  facility. This  facility  is  secured  by
      accounts  receivable, certain rig inventory and equipment,  certain
      oil  and  gas  properties and the stock of certain subsidiaries  of
      Cliffs  Drilling. At December 31, 1998, $.4 million in  letters  of
      credit  were  outstanding, thereby leaving $34.6 million  available
      under this facility.
   
      At  December  31,  1997,  the  Company  had  two  revolving  credit
      facilities  outstanding which during 1998 were both terminated  and
      repaid in full from proceeds from a senior note offering (see  Note
      (2) below).
   
      The  first  was a $400.0 million revolving credit facility  with  a
      syndicate  of  banks. This facility would have been  reduced/repaid
      by  five  semi-annual installments of $37.0 million  commencing  in
      May  1999  and one final reduction/repayment of $215.0  million  in
      November  2001 and bore interest at LIBOR plus .85%.  In  addition,
      a  commitment fee of .35% per annum was paid on the unused  portion
      of  the  facility. The facility contained covenants which  required
      R&B  to meet certain ratios and working capital conditions, and was
      collateralized  by  vessel mortgages on fourteen  of  the  drilling
      units  owned  by the Company, related assignments of insurance  and
      earnings, and a pledge of the Company's shares of stock of Arcade.
   
      The  second was a $215.0 million revolving credit facility  with  a
      syndicate  of  banks.   This  facility consisted  of  (i)  a  $25.0
      million  tranche  secured  by  accounts  receivable,  maturing   in
      November  1999,  (ii) a $60.0 million tranche  secured  by  certain
      drilling rigs and receivables, maturing in November 1998 and  (iii)
      a  $130.0  million tranche that was unsecured, maturing in  October
      1998.  The  facility required Falcon to meet certain tests  related
      to  its net worth, interest coverage ratio, and current ratio,  and
      placed  restrictions on dividends and investments by  Falcon.   The
      facility  provided generally for interest at LIBOR plus 1%  on  the
      $25.0  million  tranche, at LIBOR plus 1.5% on  the  $60.0  million
      tranche,  and  at  LIBOR plus 1.75% on the $130.0 million  tranche.
      The  interest rate on the $130.0 million tranche increased by  .50%
      during  each calendar quarter commencing in the second  quarter  of
      1998.  The  Company paid a commitment fee equal to  (i)  .375%  per
      annum  of the unused portion of the $25.0 million and $60.0 million
      tranches,  and .20% per annum on the unused portion of  the  $130.0
      million tranche.
   
  (2) In  April 1998, the Company issued four series of senior notes with
      an  aggregate  principal amount of $1.1 billion. As a  result,  the
      Company  received  net proceeds of approximately  $1,082.9  million
      after  deducting estimated offering related expenses.  Interest  on
      these  notes  is payable semiannually on April 15 and  October  15.
      These notes are unsecured obligations of the Company, ranking  pari
      passu  in  right  of  payment with all other  existing  and  future
      senior unsecured indebtedness of the Company. The Company used  the
      proceeds to repay existing indebtedness of $874.4 million  and  the
      remainder  was  used  for  planned  capital  expenditures,  working
      capital  and other general corporate purposes. As a result  of  the
      repayment  of  existing  indebtedness,  the  Company  incurred   an
      extraordinary  loss  of $22.0 million, net of tax,  in  the  second
      quarter  of  1998.  These  notes  were  issued  at  a  discount  of
      approximately  $6.0  million which is being amortized  as  interest
      expense  over  the  term  of the notes. The amount  of  unamortized
      discount  at  December 31, 1998 was approximately $5.5 million  and
      the  amount of  amortized discount for the year ended December  31,
      1998 was approximately $.5 million.
   
  (3) In  December  1998, the Company issued two series of  senior  notes
      with  an aggregate principal amount of $400.0 million. As a result,
      the  Company received net proceeds of approximately $392.3  million
      after  deducting estimated offering related expenses.  Interest  on
      these  notes  is payable semiannually on June 15 and  December  15.
      These notes are unsecured obligations of the Company, ranking  pari
      passu  in  right  of  payment with all other  existing  and  future
      senior  indebtedness of the Company. The Company used the  proceeds
      to  reduce  borrowings under an existing revolving credit facility.
      As   a   result   of  such  reduction,  the  Company  incurred   an
      extraordinary  loss  of $2.2 million, net of  tax,  in  the  fourth
      quarter of 1998.

  (4) In  December  1998,  the 8% Debentures were repaid in full.  The 8%
      Debentures  were  convertible  into  the  Company's common stock at
      $31.386  per  share.   Accrued  interest  associated  with  the  8%
      Debentures at December 31, 1997 was $11.9 million.  The face amount
      of  the  8%  Debentures  and  the  related  unamortized discount at
      December  31,  1997  totaled  $18.6  million   and  $3.0   million,
      respectively.
   
  (5) The  8.875%  Notes were issued by Falcon pursuant to an offering in
      March  1996,  resulting  in  net  proceeds  of approximately $116.0
      million  to  the Company after deducting offering related expenses.
      The 8.875% Notes consisted of $120.0 million principal  amount  and
      interest is payable semiannually  on March 15 and September 15. The
      8.875%  Notes  are  unsecured  obligations  of Falcon, ranking pari
      passu in right of  payment  with  all  other senior indebtedness of
      Falcon.  The 8.875%  Notes  are  not  guaranteed by any of Falcon's
      subsidiaries, and thus are structurally   subordinated to the 9.75%
      Notes (described below) and other indebtedness of the subsidiaries.
      Further, they are effectively subordinated to any secured indebted-
      ness of Falcon to  the  extent  of  the  collateral  securing  such
      secured indebtedness. See Note (13) below.
   
  (6) The  9.75%  Notes  were issued by Falcon pursuant to an offering in
      January 1994. The 9.75% Notes consisted of $110.0 million principal
      amount  and interest is payable semiannually on January 15 and July
      15.  The  9.75%  Notes  are  guaranteed by certain of the Company's
      subsidiaries.  The 9.75% Notes are unsecured obligations of Falcon,
      ranking  pari  passu  in  right  of  payment  with all other senior
      indebtedness of Falcon, but are  effectively  subordinated  to  any
      secured  indebtedness of Falcon to the  extent  of  the  collateral
      securing such secured indebtedness. See Note (13) below.

  (7) The  10.25%  Notes  were  issued by  Cliffs  Drilling  pursuant  to
      offerings  in  1996 and 1997.  The 10.25% Notes consist  of  $200.0
      million  principal amount and interest is payable  semiannually  on
      May   15   and  November  15.  These  notes  are  senior  unsecured
      obligations  of  Cliffs Drilling, ranking pari passu  in  right  of
      payment  with  all  other senior indebtedness  and  senior  to  all
      subordinated   indebtedness.   These  notes   are   unconditionally
      guaranteed  on a senior unsecured basis by certain subsidiaries  of
      Cliffs  Drilling  (the  "Cliffs Drilling  Subsidiary  Guarantors"),
      which  guarantees  rank pari passu in right  of  payment  with  all
      senior  indebtedness  of the Cliffs Drilling Subsidiary  Guarantors
      and  senior to all subordinated indebtedness of the Cliffs Drilling
      Subsidiary  Guarantors. The 10.25% Notes are  publicly  traded  and
      are  not  guaranteed by R&B Falcon or any other subsidiary  of  the
      parent,  accordingly,  separate  financial  statements  of   Cliffs
      Drilling  Subsidiary Guarantors are not required to be included  in
      these financial statements.

      On  or  after May 15, 2000, the 10.25% Notes are redeemable at  the
      option of Cliffs Drilling, in whole or in part, at a price of  105%
      of  principal  if redeemed during the twelve months  beginning  May
      15,  2000, at a price of 102.5% of principal if redeemed during the
      twelve  months  beginning May 15, 2001, or at a price  of  100%  of
      principal  if  redeemed after May 15, 2002, in each  case  together
      with interest accrued to the redemption date.
      
      The  indenture  under  which the 10.25% Notes  are  issued  imposes
      significant   operating  and  financial  restrictions   on   Cliffs
      Drilling.  Such restrictions affect, and in many respects limit  or
      prohibit,  among  other things, the ability of Cliffs  Drilling  to
      incur  additional  indebtedness, make capital expenditures,  create
      liens and sell assets.
      
      As  a  result  of  the  Company acquiring Cliffs  Drilling,  Cliffs
      Drilling  was  required to offer to purchase for cash  all  of  the
      outstanding 10.25% Notes at a purchase price equal to 101%  of  the
      principal  amount  of  each senior note, plus  accrued  and  unpaid
      interest,  to the change of control payment date.  On  January  28,
      1999,   Cliffs  Drilling  repurchased  approximately  $.3   million
      principal  amount  of the 10.25% Notes that were tendered  pursuant
      to this offer.
   
  (8) The  12.5%  Notes  were issued by Falcon pursuant to an offering in
      March  1995.  The  12.5% Notes consisted of $50.0 million principal
      amount  and  interest  was  payable  semiannually  on  March 15 and
      September  15.  The  12.5%  Notes  were  subordinated  to all other
      indebtedness  of the Company  except  indebtedness  that  expressly
      provides it shall not be senior in  right  of  payment to the 12.5%
      Notes. See Note (13) below.
   
  (9) On  February 23, 1994, Falcon issued $10.0 million of Floating Rate
      Notes which bore interest at LIBOR plus 3.5%.  In 1998,the Floating
      Rate  Notes  were  repaid  in  full.  The  principal amounts of the
      Floating  Rate  Notes  were  due  in payments of $1.0 million, $2.0
      million  and  $2.0  million  on  January 24 of 1998, 1999 and 2000,
      respectively,  with the  balance due January 24, 2001. The Floating
      Rate Notes were guaranteed by certain of the Company's subsidiaries.
      The Floating  Rate Notes  were  unsecured  obligations  of  Falcon,
      ranking  pari  passu  in  right  of  payment with all  other senior
      indebtedness  of  Falcon,  but were effectively subordinated to any
      secured  indebtedness  of  Falcon to  the  extent of the collateral
      securing such secured indebtedness.

 (10) In  April  1997,  a  wholly owned subsidiary of the Company entered
      into a five year $38.0  million  loan  agreement  with  Nissho Iwai
      Europe PLC ("NIC"). The loan is collateralized by a vessel mortgage
      on the Seillean without recourse to the Company and bears  interest
      at LIBOR plus 2%. Principal repayments  are  monthly  based  on the
      greater of the excess cash flow of the  Seillean or the outstanding
      principal balance divided by  the remaining  monthly periods of the
      loan.  In addition, NIC has the option to purchase up to 10% of the
      ownership in the Seillean, any time prior to   April 25, 2000, at a
      minimum price of $4.2 million.
 
 (11) In  September  1995,  the  Company  entered  into  a  $10.0 million
      deferred payment  obligation in connection with the purchase of the
      support  vessel  Iolair.  The  deferred  payment  obligation  bears
      interest at a  fixed rate  of 8%.   Principal  repayments  of  $2.5
      million and $7.0  million were paid in September 1996 and September
      1998, respectively,  and a final payment of  $.5  million is due in
      September  2000.   The  obligation  is  collateralized by a  vessel
      mortgage on the support vessel Iolair.

 (12) In  January  1997,  the  Company  issued  a  $6.4  million  secured
      promissory   note,  payable  to  Coastal  Capital  Corporation,  in
      connection with the purchase of the Peregrine VI. In June 1998, the
      note was repaid in full.  The  note  bore interest at 7.5%, payable
      monthly, and matured in  January 1999.  The note was collateralized
      by a vessel mortgage on the Peregrine VI.

 (13) The indentures  pursuant to which the 8.875%  Notes,  9.75%  Notes,
      and  the 12.5% Notes were issued (i) provide that Falcon may redeem
      such  obligations at a premium at certain times prior to  maturity,
      (ii)  require  Falcon  to offer to redeem  such  obligations  at  a
      premium if there is a change of control of Falcon (see below),  and
      (iii)  impose restrictions on certain actions by Falcon,  including
      payment of dividends, incurrence of debt, pledging of assets,  sale
      of assets, and making investments.
   
      As  a  result  of  the  merger between R&B and Falcon,  Falcon  was
      required  to  offer to purchase for cash all of the  8.875%  Notes,
      9.75% Notes and 12.5% Notes (collectively the "Old Notes") and  the
      Floating    Rate    Notes   representing   outstanding    principal
      indebtedness  of $290.0 million at December 31, 1997.   On  January
      28,  1998,  Falcon made a purchase offer to each note holder  at  a
      price  equal  to 101% of the aggregate principal amount outstanding
      or  approximately  $293.0 million, plus  accrued  interest.   As  a
      result, none of the notes were tendered for redemption.
   
      On  March  23, 1998, the Company offered to redeem the  Old  Notes.
      The  aggregate  principal amount of the outstanding Old  Notes  was
      $280.0  million and on April 20, 1998, $274.4 million in  principal
      amount  of Old Notes was repaid from proceeds from the sale of  the
      $1.1 billion senior notes (see Note (2) above).
   
   As  of December 31, 1998, the Company estimates the fair value of  its
debt  obligations  to be $1.7 billion compared to a book  value  of  $1.9
billion.
   
   Aggregate  annual maturities of long-term obligations, (including  the
current  portion) for the next five years and thereafter are  as  follows
(in millions):
        
          1999                                         $    6.3
          2000                                              6.6
          2001                                             11.3
          2002                                            150.5
          2003                                            553.3
          Thereafter                                    1,150.0
                                                       --------
                                                        1,878.0
          Less the unamortized discount
            on the senior notes                            (5.5)
                                                       --------
          Total long-term obligations and long-
            term obligations due within one year
            at December 31, 1998                       $1,872.5
                                                       ========

(E)  COMMITMENTS AND CONTINGENCIES

   GENERAL  -  In  1992,  in connection with the acquisition  of  certain
barge  drilling  rig  operations,  the Company  entered  into  contingent
profits  interest  agreements  with the  former  rig  owners  and  former
mortgage  holder.  The periods for determination of these payments  began
in 1993 and continued through 1998.
   
   Pursuant  to  certain  of the Company's long-term drilling  contracts,
the  operator may purchase three of the Company's barge drilling rigs for
specified  prices which decrease each year through 1999.   Management  of
the  Company estimates that the aggregate option price for the three rigs
will be below the aggregate carrying value for such rigs by approximately
$4.0 million in 1999.  Management does not expect the purchase option  to
be  exercised and will continue to evaluate the net book value  of  these
rigs for possible future impairment.
   
   CAPITAL EXPENDITURES - In 1999 and 2000, the Company expects to  spend
approximately $1.1 billion to expand and upgrade its operating rig fleet,
primarily its deepwater rig fleet.
          
   The  Peregrine  IV,  Peregrine VII, and Falcon 100 will  be  completed
later  than the required commencement dates under the drilling  contracts
for such rigs and at costs significantly in excess of original estimates.
The  customer for the Peregrine VII has indicated that they  will  cancel
the  drilling  contract due to construction delays. The Company  believes
that  it  will  be  able to find work for the Peregrine VII  at  dayrates
similar to its previously contracted levels. However, the Company expects
that  any  new  contracts will likely be short-term or on a  well-to-well
basis. Also, the Company will be subject to late delivery penalties under
the  applicable drilling contracts for the Peregrine IV and  Falcon  100,
(approximately  $41,500 per day, up to a maximum of  approximately  $38.6
million, for the Peregrine IV, and approximately $26,500 per day, up to a
maximum  of  approximately $14.7 million, for the  Falcon  100).  If  the
Peregrine  IV and Falcon 100 are not delivered within 240 and  180  days,
respectively,  of  the  commencement  date  of  the  applicable  drilling
contract, the customer may cancel its contract.
   
   EMPLOYMENT  CONTRACTS  -  The  Company  has  entered  into  employment
contracts  with  16 employees. Such employment contracts include  certain
provisions which call for termination payments to the employee  upon  the
occurrence  of  certain  events including change  of  control,  which  if
incurred  at  December  31,  1998  would have  been  approximately  $40.0
million.
   
   OPERATING LEASES - The Company has operating leases covering  premises
and equipment.  Certain operating leases contain renewal options and have
options  to  purchase the asset at fair market value at the  end  of  the
lease term. Lease expense amounted to $47.8 million (1998), $40.2 million
(1997) and $22.7 million (1996).  As of December 31, 1998, future minimum
rental  payments  relating  to  operating  leases  were  as  follows  (in
millions):

                   1999    2000    2001    2002    2003  Thereafter
                  ------  ------  ------  ------  ------ ----------
  Drilling units  $ 20.9  $ 13.8  $ 13.0  $ 13.0  $ 13.0   $ 24.9
  Other              4.3     2.4     1.3     1.0      .3       .2
                  ------  ------  ------  ------  ------   ------
  Total           $ 25.2  $ 16.2  $ 14.3  $ 14.0  $ 13.3   $ 25.1
                  ======  ======  ======  ======  ======   ======

   In  November 1995, the Company entered into a sale/lease-back  of  the
M.  G.  Hulme, Jr. and agreed to lease the drilling unit for  ten  years.
The lease-back is accounted for as an operating lease and a deferred gain
of  $7.4 million was recorded and is being amortized over the life of the
lease (see Note F).
   
   LITIGATION  -  In  November 1988, a lawsuit  was  filed  in  the  U.S.
District Court for the Southern District of West Virginia against Reading
&  Bates  Coal  Co.,  a wholly owned subsidiary of the  Company,  by  SCW
Associates, Inc. claiming breach of an alleged agreement to purchase  the
stock of Belva Coal Company, a wholly owned subsidiary of Reading & Bates
Coal  Co.  with  coal  properties  in West  Virginia.   When  those  coal
properties  were  sold  in July 1989 as part of the  disposition  of  the
Company's  coal  operations,  the purchasing  joint  venture  indemnified
Reading & Bates Coal Co. and the Company against any liability Reading  &
Bates  Coal Co. might incur as the result of this litigation. A  judgment
for  the plaintiff of $32,000 entered in February 1991 was satisfied  and
Reading & Bates Coal Co. was indemnified by the purchasing joint venture.
On  October  31, 1990, SCW Associates, Inc., the plaintiff in the  above-
referenced  action,  filed a separate ancillary  action  in  the  Circuit
Court,  Kanawha County, West Virginia against the Company,  Caymen  Coal,
Inc.  (former  owner of the Company's West Virginia coal properties),  as
well  as  the  joint venture, Mr. William B. Sturgill personally  (former
President  of Reading & Bates Coal Co.), three other companies  in  which
the Company believes Mr. Sturgill holds an equity interest, two employees
of  the  joint venture, First National Bank of Chicago and First  Capital
Corporation.  The lawsuit seeks to recover compensatory damages of  $50.0
million  and  punitive  damages  of $50.0 million  for  alleged  tortious
interference with the contractual rights of the plaintiff and to impose a
constructive trust on the proceeds of the use and/or sale of  the  assets
of  Caymen  Coal, Inc. as they existed on October 15, 1988.  The  Company
intends  to  defend  its interests vigorously and  believes  the  damages
alleged by the plaintiff in this action are highly exaggerated.   In  any
event,  the Company believes that it has valid defenses and that it  will
prevail in this litigation.
   
   The  Company is involved in various other legal actions arising in the
normal course of business.  A substantial number of these actions involve
claims  arising out of injuries to employees of the Company who  work  on
the  Company's  rigs and power vessels.  After taking into  consideration
the  evaluation  of  such  actions by counsel for  the  Company  and  the
Company's  insurance  coverage, management is of  the  opinion  that  the
outcome of all known and potential claims and litigation will not have  a
material  adverse  effect  on  the  Company's  business  or  consolidated
financial position or results of operations.
   
   SELF  INSURANCE  -  The  Company is self-insured  for  the  deductible
portion  of  its  insurance  coverage.  In  the  opinion  of  management,
adequate  accruals have been made based on known and estimated  exposures
up  to  the  deductible  portion  of the Company's  insurance  coverages.
Management believes that future claims and liabilities in excess  of  the
amounts accrued are fully insured.
   
   LETTERS  OF CREDIT - At December 31, 1998, the Company had letters  of
credit  outstanding and unused totalling $6.6 million and $38.4  million,
respectively (see Note D).
   
   
(F) ACCRUED LIABILITIES AND OTHER NONCURRENT LIABILITIES

   The  components of "Accrued liabilities" at December 31, 1998 and 1997
were as follows (in millions):
   
                                             1998        1997
                                           -------     -------
     Accrued expenses - general            $  64.7     $  72.1
     Accrued income and sales tax             23.9        28.7
     Accrued interest expense                 20.3        28.6
     Accrued worker compensation claims       16.2         7.9
     Accrued payroll                           9.5         4.2
     Accrued employee benefits                 2.7         2.8
     Other                                     1.7         2.1
                                           -------     -------
     Total                                 $ 139.0     $ 146.4
                                           =======     =======
   
   The  components of "OTHER NONCURRENT LIABILITIES" at December 31, 1998
and 1997 were as follows (in millions):

                                             1998        1997
                                            ------      ------
     Postretirement benefit obligations     $ 14.9      $ 14.9
     Foreign income taxes                      6.1         6.1
     Pension obligations                       3.5         3.5
     Deferred gain on sale of drilling
       unit (see Note E)                       2.0         5.6
     Other                                     9.4         8.5
                                            ------      ------
     Total                                  $ 35.9      $ 38.6
                                            ======      ======
          
(G)  CANCELLATION OF CONVERSION PROJECTS

   In  the third quarter of 1998, the Company cancelled the Peregrine  VI
and  the  Peregrine VIII drillship conversion projects due to  continuing
uncertainty  as to final cost and expected delivery dates. As  a  result,
the  drilling contract on the Peregrine VIII was terminated on  September
24, 1998, and the drilling contract on the Peregrine VI was terminated on
January  1, 1999. Both terminations were without prejudice to the  rights
of  the oil companies. The Company believes that, based on provisions  of
the contracts that preclude recovery of indirect or consequential damages
and  projected  rig availability in the offshore drilling  industry,  the
Company  will  not  have  any  material liability  under  these  drilling
contracts as a result of the termination thereof. The contracts with  the
shipyard  for conversion of the Peregrine VI and the Peregrine VIII  have
been  cancelled. In addition, in the fourth quarter of 1998, the  Company
cancelled two additional drillship conversion projects that were  in  the
preliminary  phases.   As  a  result of the  termination  of  these  four
drillship  conversion projects, the Company expensed  $118.3  million  in
related costs in 1998.

   In connection with the Peregrine VI and Peregrine VIII projects and  a
third  drillship project, the Company purchased or committed to  purchase
drilling  equipment  with  an  aggregate  cost  of  approximately  $285.0
million.   This  equipment  constitutes  all  of  the  material  drilling
equipment  necessary  to  outfit  two deepwater  drillships  (although  a
substantial  portion  of  such equipment can be used  on  semisubmersible
rigs).  The  Company  expects  to  use this  equipment  to  outfit  other
deepwater projects and as inventory.
   
(H)  INCOME TAXES

   Income  tax  expense for the years ended December 31, 1998,  1997  and
1996 consisted of the following (in millions):
                         
                                 1998       1997       1996
                                ------     ------     ------
          Current:
           Foreign              $ 28.1     $  9.4     $  5.8
           Federal                 3.3       26.9         .4
           State                   7.1        3.0         .1
                                ------     ------     ------
          Total current           38.5       39.3        6.3
                                ------     ------     ------
          Deferred:
           Foreign                 4.9       17.9        4.0
           Federal                13.7       26.6       15.0
           State                   1.8         .9        1.7
                                ------     ------     ------
          Total deferred          20.4       45.4       20.7
                                ------     ------     ------
          Total                 $ 58.9     $ 84.7     $ 27.0
                                ======     ======     ======

   The   domestic  and  foreign  components  of  income  from  continuing
operations before income tax expense, minority interest and extraordinary
loss for the years ended December 31, 1998, 1997 and 1996 were as follows
(in millions):
                          
                                1998        1997        1996
                              -------     -------     -------
           Domestic           $ (26.2)    $ (95.0)    $   4.9
           Foreign              187.4       218.9       135.5
                              -------     -------     -------
           Total              $ 161.2     $ 123.9     $ 140.4
                              =======     =======     =======
          
   The  effective  tax  rate,  as  computed  on  income  from  continuing
operations before income tax expense, minority interest and extraordinary
loss  differs from the statutory U.S. income tax rate for the years ended
December 31, 1998, 1997 and 1996 due to the following:

                                                1998    1997    1996
                                                ----    ----    ----
 Statutory tax rate                              35%     35%     35%
 Use of previously reserved tax benefits          -       -     (11)
 Limitation on recognition of tax benefits        2      10       -
 Foreign tax expense (net of federal benefit)    (3)      2      (6)
 State tax expense (net of federal benefit)       3       2       1
 Non-deductible merger expenses                  (2)     17       -
 Other                                            2       2       -
                                                ----    ----    ----
 Effective tax rate                              37%     68%     19%
                                                ====    ====    ====
   
   Deferred  income  taxes  result from those transactions  which  affect
financial  and  taxable income in different years. The  nature  of  these
transactions (all of which were long-term) and the income tax  effect  of
each as of December 31, 1998 and 1997 were as follows (in millions):

                                             1998        1997
                                           -------     -------
     Deferred tax liabilities:
         Depreciation                      $ 214.4     $ 208.0
         Undistributed earnings                7.4         8.3
                                           -------     -------
     Total deferred tax liabilities          221.8       216.3
                                           -------     -------
     Deferred tax assets:
         Postretirement benefits              (5.4)       (5.4)
         Tax benefit carryforwards          (139.4)     (169.8)
         Discontinued operations, net         (2.2)      (22.3)
         Accrued expenses                     (5.7)       (3.5)
         Valuation allowance                  75.7        63.5
         Other                                (2.4)       (2.0)
                                           -------     -------
     Total deferred tax assets               (79.4)     (139.5)
                                           -------     -------
     Net deferred tax liability            $ 142.4     $  76.8
                                           =======     =======

   Valuation  allowance reflects the possible expiration of tax  benefits
(primarily net operating loss carryforwards) prior to their utilization.
   
   Recapitalizations  of  R&B  in 1989 and  1991  resulted  in  ownership
changes  for federal income tax purposes.  As a result of these ownership
changes, the amount of tax benefit carryforwards generated prior  to  the
ownership changes which may be utilized to offset federal taxable  income
is  limited  by the Internal Revenue Code to approximately  $3.8  million
annually plus certain built-in gains that existed as of the date of  such
changes.  Net tax operating losses of approximately $25.4 million arising
since the 1991 ownership change are not subject to this limitation.

(I)  CAPITAL SHARES

   RIGHTS  -  On  December 31, 1997, the effective  date  of  the  merger
between  R&B and Falcon (see Note B), each share of the Company's  common
stock  received  one preferred share purchase right  (a  "Right").   Each
Right entitles the registered holder to purchase from the Company one one-
hundredth  of  a share of Series A Junior Participating Preferred  Stock,
(the  "Preferred Shares") of the Company at a price of $150,  subject  to
adjustment.  The Rights will not become exercisable until 10 days after a
public  announcement that a person or group has acquired 15% or  more  of
the  Company's common stock (thereby becoming an "Acquiring  Person")  or
the commencement of a tender or exchange offer upon consummation of which
such  person or group would own 15% or more of the Company's common stock
(the  earlier of such dates being called the "Distribution Date").  Until
the  Distribution Date, the Rights will be evidenced by the  certificates
representing  the  Company's common stock and will be  transferable  only
with  the  Company's common stock. In the event that any person or  group
becomes  an  Acquiring Person, each Right, other than Rights beneficially
owned  by  the  Acquiring Person (which will thereafter  be  void),  will
thereafter entitle its holder to purchase shares of the Company's  common
stock having a market value of two times the exercise price of the Right.
If after a person or group has become an Acquiring Person, the Company is
acquired in a merger or other business combination transaction or 50%  or
more of its assets or earning power are sold, each Right will entitle its
holder  to  purchase,  at the Right's then current exercise  price,  that
number  of shares of common stock of the acquiring company which  at  the
time  of  such  transaction will have a market value  of  two  times  the
exercise  price of the Right.  The board of directors of the Company  may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
at  any  time  prior to ten business days following a public announcement
that a person or group becomes an Acquiring Person.  The Rights expire on
November  1,  2007.  Preferred Shares purchasable upon  exercise  of  the
Rights will not be redeemable. Each Preferred Share will be entitled to a
preferential quarterly dividend payment equal to the greater  of  $1  per
share  or  100 times the dividend declared per common share.  Liquidation
preference  will be equal to 100 times the par value per  share  plus  an
amount  equal  to accrued and unpaid dividends and distributions  to  the
date  of such payment.  Each Preferred Share will have 100 votes,  voting
together with the common stock, and certain rights to elect two directors
during  certain  periods of default in the payment of  dividends  on  the
Preferred Shares.
   
   PREFERRED  STOCK  -  In July 1993, R&B effected a public  offering  of
approximately  3.0 million shares of $1.625 Convertible Preferred  Stock,
par  value  $1.00 per share.  On August 5, 1996, R&B announced  it  would
redeem all of the outstanding shares of such preferred stock on September
30,  1996.  However, the majority of such preferred stock outstanding was
converted into approximately 10.2 million shares of R&B's common stock on
or before September 30, 1996.
   
   COMMON   STOCK   -   On   December  9,  1996,  Falcon,   participating
stockholders  and  a  group  of underwriters entered  into  an  agreement
resulting  in  the public sale of 6.4 million shares of common  stock  by
Falcon  and  the  sale of 9.4 million shares of common stock  by  selling
shareholders.   The  public  offering closed on  December  13,  1996  and
resulted  in  net  proceeds to Falcon of $108.5 million  after  deducting
offering related expenses of $5.5 million.
   
   In  June 1997, Falcon declared a two-for-one stock split effective  on
July  15, 1997.  Accordingly, all share amounts for all periods presented
have been restated to reflect this stock split.
   
   During   1998  in  a  series  of  transactions,  the  Company   issued
approximately 763,680 shares of its common stock in partial consideration
for  the acquisition of 25 tugs, five ocean going barges and six workover
rigs.
   
   On  December  1, 1998, the Company issued approximately  27.1  million
shares  of  its common stock for the acquisition of Cliffs Drilling  (see
Note B).
   
   As  of  December  31, 1998, 11,066,958 shares of authorized,  unissued
shares  of  common stock were reserved for issuance under  the  Company's
stock  plans  (net  of  forfeitures) and 282,192  shares  of  authorized,
unissued shares of common stock were reserved for issuance for contingent
obligations relating to asset purchases.
   
(J)  EMPLOYEE BENEFIT PLANS

   PENSION   AND  POSTRETIREMENT  BENEFITS  -  The  Company   has   three
noncontributory  pension plans. Substantially all of  the  R&B  employees
paid  from  a  U.S. payroll are covered by one or more  of  these  plans.
Effective January 1, 1998, substantially all of the Falcon employees paid
from a U.S. payroll began accruing benefit service although they were not
eligible  to  participate  in  the plans until  January  1,  1999.   Plan
benefits are primarily based on years of service and average high thirty-
six month compensation.
   
   The  Reading  & Bates Pension Plan (the "Domestic Plan") is  qualified
under  the  Employee Retirement Income Security Act (ERISA).  It  is  the
Company's policy to fund this plan not less than the minimum required  by
ERISA.   It is the Company's policy to contribute to the Reading &  Bates
Offshore Pension Plan (the "Offshore Plan") an amount equal to the normal
cost  plus  amounts sufficient to amortize the initial unfunded actuarial
liability  and subsequent unfunded liability caused by plan or assumption
changes over thirty years.  The unfunded liability arising from actuarial
gains  and losses is funded over fifteen years.  The Offshore Plan  is  a
nonqualified plan and is not subject to ERISA funding requirements.   The
Domestic and Offshore Plans invest in cash equivalents, fixed income  and
equity securities.
   
   The   Reading  &  Bates  Retirement  Benefit  Replacement  Plan   (the
"Replacement Plan") is a self-administered unfunded excess benefit  plan.
All  members of the Domestic Plan or the Reading & Bates Savings Plan are
potential participants in the Replacement Plan.
   
   In  addition  to  providing  pension benefits,  R&B  provides  certain
health  care  and  life  insurance benefits for  its  retired  employees.
Employees may become eligible for these benefits if they reach normal  or
early  retirement age while working for R&B and if they have  accumulated
25  years  of  service (15 years prior to January 1, 1996).  Health  care
costs are paid as they are incurred. Life insurance benefits are provided
through  an  insurance company whose premiums are based on benefits  paid
during the year.
   
   The  following  table  includes the aggregate of the  Company's  three
pension plans and the Company's postretirement benefits plan.  All  three
pension  plans  have  projected  benefit  obligations  in  excess of plan
assets.  Only the  Replacement Plan has an accumulated benefit obligation
in excess  of  plan  assets,  and such accumulated benefit obligation was
$3.8  million  and  $3.3   million  as  of  December  31,  1998 and 1997,
respectively.  There  are no assets held in the Replacement Plan.
   
                                             Pension        Postretirement
                                         --------------     --------------
                                          1998    1997       1998    1997
                                         ------  ------     ------  ------
                                               (dollars in millions)
Change in projected benefit obligation:
 Projected benefit obligation at
    beginning of year                    $ 77.5  $ 67.9     $ 10.5  $ 10.3
 Service cost                               2.0     1.8         .1      .1
 Interest cost                              5.5     4.9         .8      .7
 Participant contributions                  -       -           .1      .1
 Plan amendments                           (2.1)    -          -       -
 Actuarial (gain) loss                     13.3     7.4        1.8     (.1)
 Benefits paid                             (4.7)   (4.5)       (.8)    (.6)
                                         ------  ------     ------  ------
 Projected benefit obligation at
    end of year                            91.5    77.5       12.5    10.5
                                         ------  ------     ------  ------
Change in plan assets:
 Plan assets at fair value at
    beginning of year                      69.8    59.1        -       -
 Actual return on plan assets               8.6    10.2        -       -
 Employer contributions                     6.1     5.0         .7      .5
 Participant contributions                  -       -           .1      .1
 Benefits paid                             (4.7)   (4.5)       (.8)    (.6)
                                         ------  ------     ------  ------
 Plan assets at fair value at
    end of year                            79.8    69.8        -        -
                                         ------  ------     ------  ------

Funded status of plan                     (11.7)   (7.7)     (12.5)  (10.5)
 Unrecognized net (gain) loss              22.2    10.9       (1.6)   (3.5)
 Unrecognized prior service cost           (3.8)   (2.0)      (1.3)   (1.7)
 Unrecognized net transition
   obligation                                .9      .7        -        .2
                                         ------  ------     ------  ------
 Prepaid (accrued) pension cost          $  7.6  $  1.9     $(15.4) $(15.5)
                                         ======  ======     ======  ======
Weighted-average assumptions:
 Discount rate                            6.75%   7.40%      6.75%   7.40%
 Long-term rate of return                10.00%  10.00%       -       -
 Salary scale                             6.90%   6.90%      4.50%   4.50%

    Net benefit costs for the years ended December 31, 1998, 1997 and 1996
included the following (in millions):

                                            Pension         Postretirement
                                     -------------------  -------------------
                                      1998   1997   1996   1998   1997   1996
                                     -----  -----  -----  -----  -----  -----
Service cost                         $ 1.9  $ 1.6  $ 1.8  $  .2  $  .1  $  .1
Interest cost                          5.5    4.9    4.6     .8     .7     .8
Expected return on plan assets        (6.9) (10.2)  (5.2)    -      -      -
Amortization of:
 Unrecognized transition obligation    (.1)   (.1)   (.1)    -      -      -
 Unrecognized prior service cost       (.3)   (.3)   (.3)   (.4) (1.0)   (1.0)
 Unrecognized actuarial (gain)/loss     .4     .1     .2    (.1)  (.1)    (.1)
Loss due to change in attribution
   period                               -      -      -      .2     .2     .2
Deferral of asset gain                  -     4.4     -      -      -      -
                                     -----  -----  -----  -----  -----  -----
Net benefit costs                    $  .5  $  .4  $ 1.0  $  .7  $ (.1) $  -
                                     =====  =====  =====  =====  =====  =====

    The health care cost trend rates used to measure the expected cost in
1999  for  medical, dental and vision benefits were 8%,  5.5%  and  5.5%,
respectively, each graded down to an ultimate trend rate of 5%, 4.5%  and
4.5%, respectively, to be achieved in the year 2021.

   A  one-percentage-point change in assumed health care cost trend rates
would have the following effects (in millions):

                                      1-Percentage-     1-Percentage-
                                      Point Increase    Point Decrease
                                      --------------    --------------
    Effect on total of service and
       interest cost components            $ .1             $ (.1)
    Effect on postretirement
       benefit obligation                  $1.4             $(1.1)
   
   SAVINGS  PLANS  - The Company has three savings plans which  allow  an
employee to contribute up to 16% of their base salary (subject to certain
limitations)  and  the  Company may make matching  contributions  at  its
discretion.  Employees may direct the investment of  their  contributions
and the contributions of the Company in various plan investment options.
   
   The  Company's  matching contributions vest within five  years  of  an
employee's service with the Company.  Compensation costs under the  plans
amounted  to $4.6 million in 1998, $2.7 million in 1997 and $1.6  million
in 1996.
   
   STOCK  PLANS  - The Company has 14 stock plans which are  intended  to
provide an incentive that will allow the Company to retain persons of the
training,  experience  and  ability necessary  for  the  development  and
financial success of the Company. Such plans provide for grants of  stock
options,  stock appreciation rights, stock awards and cash awards,  which
may  be  granted singly, in combination or in tandem. All  stock  options
awarded under these plans expire ten years from the date of their  grant.
Four  of these plans were originally adopted by Falcon, five by R&B,  two
by Cliffs Drilling and three by the Company.  As a result of the business
combination  between R&B and Falcon, and R&B Falcon and Cliffs  Drilling,
all  of  the  R&B, Falcon and Cliffs Drilling plans were assumed  by  the
Company, and the options outstanding thereunder were converted to options
to  acquire  common stock of R&B Falcon (with appropriate adjustments  to
reflect the exchange ratios).
   
   The  Company's  Reading  & Bates Corporation 1990  Stock  Option  Plan
authorized  options with respect to approximately 2.3 million  shares  of
common  stock  to be granted to certain employees of R&B at  an  adjusted
option  price of $6.25 per share.  In 1991, options with respect  to  all
2.3 million shares were granted and vested over a four-year period.  Such
grant's option price was less than the market price on the date of  grant
and  the  difference  was  recorded as compensation  expense  during  the
vesting period.
   
   The  Company's  Reading & Bates Corporation 1992  Long-Term  Incentive
Plan  (the  "1992 Incentive Plan") authorized 1,180,000 shares of  common
stock to be available for awards.  In 1992, restricted stock awards  with
respect to 354,000 shares were granted to certain officers of R&B.   Such
shares awarded were restricted as to transfer until vested pursuant to  a
schedule whereby 1/24th of the total number of shares vested per calendar
quarter  from  June 30, 1992 through March 31, 1998 (subject  to  certain
conditions).   The market value at the date of grant of the common  stock
granted  was  recorded  as unearned compensation  and  was  amortized  to
expense  over the periods during which the restrictions lapse  or  shares
vest.   In  1995,  stock  options with respect to the  remaining  826,000
shares  were granted to certain officers and employees of R&B at adjusted
option prices ranging from $7.627 to $11.759 per share (the market  price
on  the  date of grants).  Such options become exercisable either over  a
one  or four year period from the date of grant.  All stock awards  under
the  1992 Incentive Plan vested on December 31, 1997 as a result  of  the
merger of R&B and Falcon (see Note B).
   
   The  Company's Reading & Bates Corporation 1995 Director Stock  Option
Plan authorized 236,000 shares of common stock to be available for awards
of  stock options to non-employee members of the board of directors at an
adjusted  option  price of $6.25 per share. In 1995, R&B granted  141,600
options. The market value of R&B's common stock at the date of grant  was
less than the option price, and no compensation expense was recorded.
   
   The  Company's  Reading & Bates Corporation 1995  Long-Term  Incentive
Plan  ("1995 Incentive Plan") authorized 2,950,000 shares of common stock
to  be  available  for  awards. In 1995, stock options  with  respect  to
708,000  shares  were granted to an officer of R&B at an adjusted  option
price of $11.759 per share (the market price on the date of grant).  Such
options became exercisable one year from the date of grant. Also in 1995,
restricted  stock awards with respect to 642,156 shares were  granted  to
certain  employees  of R&B.  Such shares awarded were  restricted  as  to
transfer  until  fully vested three years from the date  of  grant.   The
market  value  at  the  date  of grant of the common  stock  granted  was
recorded  as unearned compensation and was amortized to expense over  the
period during which the shares vest.  In 1996, stock options with respect
to 177,000 shares were granted to an officer of R&B at an adjusted option
price  of $23.729 per share (the market price on the date of the  grant).
Such options became exercisable over a three-year period from the date of
grant.   Also  in 1996, restricted stock awards with respect  to  489,228
shares  were  granted to certain employees of R&B.  Such  shares  awarded
were  restricted as to transfer until fully vested three years  from  the
date of grant.  The market value at the date of grant of the common stock
granted  was  recorded  as unearned compensation  and  was  amortized  to
expense  over  the period during which the shares vest.  In  1997,  stock
options with respect to 902,582 shares were granted to officers of R&B at
an  adjusted  option price of $20.127 per share and in  August  1997  R&B
rescinded  such  option  grants.  Under the 1995  Incentive  Plan,  stock
options and restricted stock awards with respect to 868,700 shares vested
on  December  31, 1997 as a result of the merger of R&B and  Falcon  (See
Note B).
   
   The  Company's  Reading & Bates Corporation 1997  Long-Term  Incentive
Plan  (the  "1997 Incentive Plan") authorized 2,950,000 shares of  common
stock to be available for awards.  In 1997, restricted stock awards  with
respect to 33,866 shares were granted to certain employees of R&B.   Such
shares  awarded were restricted as to transfer until fully  vested  three
years  from the date of grant.  The market value at the date of grant  of
the  common stock granted was recorded as unearned compensation  and  was
amortized to expense over the period during which the shares vest.   Also
in  1997, stock options with respect to 6,018 shares were granted  to  an
officer  of R&B at an adjusted option price of $20.127 per share  and  in
August  1997 R&B rescinded such option grants.  Under the 1997  Incentive
Plan,  restricted  stock awards with respect to 33,866 shares  vested  on
December  31, 1997 as a result of the merger of R&B and Falcon (see  Note
B).
   
   The  Company's  Falcon Drilling Company, Inc. 1992 Stock  Option  Plan
authorized options with respect to 1.0 million shares of common stock  to
be granted to certain employees and directors of Falcon. In 1992, options
with  respect  to all 1.0 million shares were granted at adjusted  option
prices ranging from $1.665 to $1.85 per share and vested immediately.  No
compensation expense was recorded as a result of the option  price  being
the estimated market price of Falcon's common stock on the date of grant.
   
   The  Company's  Falcon Drilling Company, Inc. 1994 Stock  Option  Plan
authorized options with respect to 570,000 shares of common stock  to  be
granted  to certain employees and directors of Falcon.  In 1994,  options
with  respect  to  all 570,000 shares were granted at an adjusted  option
price  of  $5.00  per  share,  vesting  ratably  over  three  years.   No
compensation expense was recorded as a result of the option  price  being
the estimated market price of Falcon's common stock on the date of grant.
   
   The  Company's  Falcon Drilling Company, Inc. 1995 Stock  Option  Plan
authorized options with respect to 1.0 million shares of common stock  to
be granted to certain employees and directors of Falcon. In 1995, options
with  respect to 250,000 shares were granted at an adjusted option  price
of  $5.00 per share, vesting ratably over three years.  In 1996,  options
with  respect to 280,000 shares were granted at an adjusted option  price
of  $6.065 per share, vesting over two years and options with respect  to
150,000  shares  were granted at an adjusted option price  of  $9.72  per
share,  vesting ratably over five years.  In February 1997, options  with
respect  to  258,000 shares were granted at an adjusted option  price  of
$12.50  per  share  and  in November 1997 Falcon  rescinded  such  option
grants.   No compensation expense was recorded as a result of the  option
price  being the estimated market price of Falcon's common stock  on  the
date of grant.
   
   The  Company's  Falcon Drilling Company, Inc. 1997 Stock  Option  Plan
authorized options with respect to 1.2 million shares of common stock  to
be  granted  to certain employees and directors of Falcon. In July  1997,
options  with respect to 3,000 shares were granted at an option price  of
$12.50  per  share  and  in November 1997 Falcon  rescinded  such  option
grants.   In  July  1997, options for 40,000 shares were  granted  at  an
option  price of $29.00 per share, vesting ratably over three  years.  No
compensation expense was recorded as a result of the option  price  being
the estimated market price of Falcon's common stock on the date of grant.
   
   The  Company's Cliffs Drilling Company 1988 Incentive Equity Plan  and
Cliffs  Drilling Company 1998 Incentive Equity Plan were both assumed  by
the  Company  on December 1, 1998 as a result of the purchase  of  Cliffs
Drilling (see Note B). Under these plans, the Company assumed outstanding
options  to purchase 1,052,300 shares of common stock at adjusted  option
prices  ranging  from  $3.79 to $40.89 per share and  expiring  at  dates
ranging  from 2000 to 2008.  All such options vested on December 1,  1998
as a result of the Company's purchase of Cliffs Drilling.
   
   The  Company's  1998 Employee Long-Term Incentive Plan authorized  3.2
million shares of common stock to be available for awards. In 1998, stock
options with respect to 100,000 shares were granted to an employee of the
Company at an option price of $22.375 per share (the market price on  the
date  of  grant) and stock options with respect to 1,832,500 shares  were
granted  to  certain  employees of the Company  at  an  option  price  of
$12.9375 per share (the market price on the date of grant). Such  options
become  exercisable over a three year period.  Also in  1998,  restricted
stock  awards  with  respect to 941,500 shares were  granted  to  certain
employees  of  the  Company.  Such shares awarded are  restricted  as  to
transfer  until  fully vested three years from the  date  of  grant.  The
market  value  at  the  date  of grant of the common  stock  granted  was
recorded  as unearned compensation and will be amortized to expense  over
the period during which the shares vest.
   
   The  Company's  1998  Director  Long-Term  Incentive  Plan  authorized
250,000 shares of common stock to be available for awards to non-employee
members  of the board of directors.  As of December 31, 1998,  no  awards
have been made under this plan.
   
   The  Company's  1998 Acquisition Option Plan authorized  options  with
respect  to  1.0 million shares of common stock to be granted to  certain
employees  of Cliffs Drilling. On December 1, 1998, options with  respect
to  all 1.0 million shares were granted at an option price of $9.125  per
share (the market price on the date of grant) and vest over a three  year
period.
   
   Unearned  compensation  relating  to the  Company's  restricted  stock
awards  is  shown  as a reduction of stockholders' equity.   Compensation
recognized for the years ending December 31, 1998, 1997 and 1996  totaled
approximately $1.1 million, $17.8 million and $3.2 million, respectively.
   
   Stock option transactions under the plans were as follows:

                            1998              1997              1996
                     ------------------ ----------------- -------------------
                               Weighted           Weighted           Weighted
                       Number   Average   Number   Average   Number   Average
                     of Options  Price  of Options  Price  of Options  Price
                     ----------  -----  ----------  -----  ----------  -----
Outstanding at
 beginning of year   2,794,101  $ 9.83  3,836,159  $ 8.20  5,009,071  $ 6.52
   Granted           2,930,500   11.96     40,000   29.00    607,000   12.12
   Assumed from
    Cliffs Drilling  1,052,300   20.41       -        -         -        -
   Exercised          (226,547)   6.03 (1,073,562)   4.75 (1,771,888)   4.79
   Forfeited              -        -       (8,496)   7.63     (8,024)   7.22
                     ---------  ------  ---------  ------  ---------  ------
Outstanding at
 end of year         6,550,354   12.61  2,794,101    9.83  3,836,159    8.20
                     =========          =========          =========
Exercisable at
 end of year         3,503,187   12.69  2,377,433    9.98  2,776,413    7.84
Available for grant
 at end of year      4,516,604     -    5,415,772     -    1,338,694     -

   The  fair  value of each grant since January 1, 1995 was estimated  as
of  the  date of the grant using the Black-Scholes option pricing  model.
The  following  weighted-average assumptions were used  for  the  options
granted  pursuant to the 1998 Employee Long-Term Incentive Plan  and  the
1998  Acquisition  Option  Plan:  risk-free interest  rate  of  4.9%,  an
expected  life  of  10  years  and expected  volatility  of  68.2%.   The
resulting fair value of such options granted was $9.32.
   
   The  Company accounts for these plans under APB Opinion No. 25,  under
which  no  compensation cost has been recognized.  Had compensation  cost
for  these  plans been determined consistent with SFAS 123, the Company's
net  income  and  earnings  per share would  have  been  reduced  to  the
following pro forma amounts (in millions except per share amounts):

                                  1998       1997       1996
                                -------    -------    -------
  Net income (loss) applicable
    to common stockholders:
      As reported               $ 102.8    $  (6.2)   $ 103.1
      Pro forma                 $ 101.3    $ (10.0)   $  98.4
  Basic EPS:
      As reported               $   .61    $  (.04)   $   .70
      Pro forma                 $   .60    $  (.06)   $   .67
  Diluted EPS:
      As reported               $   .61    $  (.04)   $   .67
      Pro forma                 $   .60    $  (.06)   $   .64
   
   Because  the  SFAS 123 method of accounting has not  been  applied  to
options  granted  prior  to  January 1, 1995,  the  resulting  pro  forma
compensation  cost may not be representative of that to  be  expected  in
future years.
          
(K)  RELATED PARTY TRANSACTIONS

   Arcade  had  rig management agreements with Transocean  Offshore  Inc.
(as  successor  to Sonat Offshore Drilling Inc.), a major shareholder  of
Arcade,  for  the operation and marketing of both of its drilling  units.
The  management agreement for one of Arcade's drilling units  expired  in
December 1995 and the other expired in October 1996, and a subsidiary  of
the  Company  now  manages  both drilling units.   For  the  year  ending
December  31, 1996, Arcade paid to Transocean Offshore Inc. approximately
$1.2  million for such management services.  Additionally, for  the  year
ended  December 31, 1996, Arcade received from Transocean  Offshore  Inc.
approximately $15.1 million pursuant to a bareboat charter  agreement  on
one of the rigs.
   
   The  former owners of a company acquired by the Company in  1992,  who
are  also officers of Falcon, lease crewboats, tugboats and supply barges
and other vessels to Falcon at a contracted bareboat rate of $100 per day
for crewboats and tugboats and $60 per day for other vessels, with Falcon
responsible  for  drydocking, painting and  repairs.  The  former  owners
received revenues of $.9 million for each of the years ended December 31,
1998, 1997 and 1996.
   
   A  director and stockholder of the Company is a partner in a law  firm
which  provided  legal  services  to  the  Company  and  certain  of  its
affiliated entities. Fees paid by the Company to this law firm  were  $.1
million,  $.2  million and $.6 million for the years ended  December  31,
1998, 1997, and 1996, respectively.
   
   A  director  of  the Company who provided consulting services  to  the
Company received $.4 million in the year ended December 31, 1998.
   
   In  June 1994, the Company entered into an agreement with Eilert-Olsen
Investments, Inc. (Eilert-Olsen), to buy the equity interest  of  Eilert-
Olsen  for a nominal purchase price.  In June 1994, Eilert-Olsen acquired
three  barge  drilling  rigs  for a cost of  approximately  $2.8  million
consisting  of  cash of approximately $.9 million and the  assumption  of
debt  of  approximately $1.9 million secured by the three barge  drilling
rigs.  The Company advanced $.9 million to Eilert-Olsen in June 1994  and
has  subsequently advanced approximately $.5 million to pay principal and
interest due on this debt for each of the years ended December 31,  1998,
1997  and 1996.  Due to the Company's affiliation with Eilert-Olsen,  the
financial  statements of Eilert-Olsen and the option to purchase  Eilert-
Olsen from inception have been consolidated with the financial statements
of  the  Company and, accordingly, the accounts and transactions  between
the Company and Eilert-Olsen have been eliminated in consolidation.

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

   The  Company's  revenues  are  generated  primarily  from  its  marine
drilling  rigs.   The Company's management has organized  these  rigs  by
general equipment types based on water depth capability.  Any rig capable
of  drilling  in  water  depths  greater  than  400  feet  is  considered
deepwater.  In addition, as a result of the purchase of Cliffs  Drilling,
the   Company  provides  turnkey  drilling  services  and  land  drilling
operations  both  of which are included in the engineering  services  and
land  operations  segment.  The Company's development  segment  primarily
consists of the Company's oil and gas activities that are currently being
held for sale (see Note N).

   Operating  income  by segment for the years ended December  31,  1998,
1997 and 1996 is as follows (in millions):
   
                                           1998       1997       1996
                                         -------    -------    -------
Deepwater:
  Revenues                               $ 392.5    $ 349.3    $ 211.2
  Operating expenses                      (184.4)    (140.2)     (90.1)
  Cancellation of conversion projects     (118.3)        -          -
  Depreciation                             (45.7)     (38.6)     (22.4)
                                         -------    -------    -------
       Operating income                     44.1      170.5       98.7
                                         -------    -------    -------
Shallow water:
  Revenues                                 382.9      333.2      224.9
  Operating expenses                      (161.5)    (158.7)    (128.3)
  Depreciation                             (27.0)     (29.0)     (26.8)
                                         -------    -------    -------
       Operating income                    194.4      145.5       69.8
                                         -------    -------    -------
Inland water:
  Revenues                                 244.3      249.9      172.9
  Operating expenses                      (169.1)    (136.7)    (110.2)
  Depreciation                             (23.5)     (16.7)     (12.7)
                                         -------    -------    -------
       Operating income                     51.7       96.5       50.0
                                         -------    -------    -------
Engineering services and land operations:
  Revenues                                  12.5         -          -
  Operating expenses                       (10.5)        -          -
  Depreciation                               (.5)        -          -
                                         -------    -------    -------
       Operating income                      1.5         -          -
                                         -------    -------    -------
Development:
  Revenues                                    .4         .6         .6
  Operating expenses                       (22.0)    (130.2)      (2.9)
  Depreciation                               (.1)       (.1)        -
                                         -------    -------    -------
       Operating income                    (21.7)    (129.7)      (2.3)
                                         -------    -------    -------
  
Unallocated depreciation and
    amortization                             (.8)       (.3)       (.4)
Unallocated general and
    administrative                         (61.4)     (55.7)     (37.0)
Unallocated merger expenses                  8.0      (66.4)        -
                                         -------    -------    -------
  Operating income                       $ 215.8    $ 160.4    $ 178.8
                                         =======    =======    =======
    
   Total  assets by segment at December 31, 1998, 1997 and 1996  were  as
follows (in millions):
   
                                          1998        1997        1996
                                       ---------   ---------   --------- 
   Deepwater                           $ 2,078.6   $ 1,222.1   $   574.6
   Shallow water                         1,038.5       445.2       681.3
   Inland water                            251.2       228.0       106.9
   Engineering services and
     land operations                       156.9          -           -
   Development                              10.5          .5        51.0
   Corporate                               173.6        37.2        42.0
                                       ---------   ---------   ---------
        Total                          $ 3,709.3   $ 1,933.0   $ 1,455.8
                                       =========   =========   =========
   
   Geographic  information about the Company's operations for  the  three
years ended December 31, 1998 is as follows (in millions):

                                        1998         1997         1996
                                     ---------    ---------    ---------
   Operating revenues: (1)
     United States                   $   453.0    $   451.2    $   276.7
     Europe                              251.9        247.3        146.9
     West Africa                         126.5         69.9         25.5
     Southeast Asia                       83.4         82.4         59.0
     South America                        75.2         50.9         52.2
     Australia                            26.2         23.4         39.6
     Mediterranean-
         Middle East                      16.4          7.9          8.7
     Other Foreign                          -             -          1.0
     Corporate                              -             -           -
                                     ---------    ---------    ---------
       Total                         $ 1,032.6    $   933.0    $   609.6
                                     =========    =========    =========
   Identifiable assets:
     United States                   $ 1,112.4     $  828.4    $   458.5
     Europe                              922.4        535.2        402.2
     Southeast Asia                      659.3         92.7        133.4
     South America                       499.1        175.1        234.6
     West Africa                         242.2        190.3         47.0
     Mediterranean-
        Middle East                       76.3         52.2         14.0
     Australia                            24.0         21.9         47.9
     Other Foreign                          -            -          76.2
     Corporate                           173.6         37.2         42.0
                                     ---------    ---------    ---------
        Total                        $ 3,709.3    $ 1,933.0    $ 1,455.8
                                     =========    =========    =========

   (1) Revenues  are shown by countries in which the Company's marine and
       drilling units operated.
     
   For  the  year ended December 31, 1998, revenues from one customer  of
$116.1 million, reported in the deepwater segment, accounted for 11.2% of
the  Company's total operating revenues.  For the year ended December 31,
1997,  there were no customers that individually accounted for  10.0%  or
more  of  the  Company's total operating revenues.  For  the  year  ended
December  31,  1996, revenues from one customer of $70.6  million,  $52.4
million reported in the deepwater segment, $15.0 million reported in  the
shallow  water  segment and $3.2 million reported  in  the  inland  water
segment, accounted for 11.6% of the Company's total operating revenues.
   
(M)  EARNINGS PER SHARE

   Basic  net income per common share is computed by dividing net income,
after  deducting  the preferred stock dividend, by the  weighted  average
number of common shares outstanding during the period. Diluted net income
per  common  share  is  the  same as basic and assumes  the  exercise  of
outstanding  stock  options and the issuance  of  restricted  stock  both
computed  using the treasury stock method and the conversion of preferred
stock if dilutive.
   
   The  following table reconciles the numerators and denominators of the
basic  and  diluted  per  common  share  computations  for  income   from
continuing operations before extraordinary loss for the three years ended
December 31, 1998, 1997 and 1996 as follows (in millions except per share
amounts):
   
                                              1998      1997      1996
                                            -------   -------   -------
   Numerator:
   Income from continuing operations
     before extraordinary loss              $  91.0   $  29.8   $ 106.7
   Dividends on preferred stock                  -         -       (3.6)
                                            -------   -------   -------
   Income from continuing operations
     before extraordinary loss - basic         91.0      29.8     103.1
   
   Effect of dilutive securities:
      Dividends on preferred stock               -         -        3.6
                                            -------   -------   -------
   Income from continuing operations
      before extraordinary loss - diluted   $  91.0   $  29.8   $ 106.7
                                            =======   =======   =======
   Denominator:
   Weighted average common shares
     outstanding - basic                      167.5     164.1     147.4
   Outstanding stock options and
     restricted stock                           1.3       2.1       2.7
   Convertible preferred stock                   -         -        7.6
                                            -------   -------   -------
   Weighted average common shares
     outstanding - diluted                    168.8     166.2     157.7
                                            =======   =======   =======
   Earnings per share:
   Income from continuing operations
     before extraordinary loss:
          Basic                             $   .54   $   .18   $   .70
          Diluted                           $   .54   $   .18   $   .67


(N)  DISCONTINUED OPERATIONS

   The  Company, primarily through its wholly owned subsidiary Reading  &
Bates  Development Co. ("Devco") and, to an insignificant extent  through
its wholly owned subsidiary Raptor Exploration Company, Inc., engages  in
oil  and  gas  exploration activities.  Devco engages  primarily  in  the
acquisition  of  working  interests in offshore oil  and  gas  properties
pursuant to which it shares in reservoir and oil and gas price risks  and
thus profits and losses from such properties.  In March 1998, the Company
decided  to  divest  its  oil  and  gas segment,  and  in  the  financial
statements  for the three years ended December 31, 1997, 1996  and  1995,
the  segment was accounted for as a discontinued operation.  As of  March
1999,  the Company has not been able to divest this segment on  terms  it
found  acceptable  and in accordance with generally  accepted  accounting
principles  the Company has reclassified its financial statements  as  if
this  segment had not been discontinued.  The Company does not intend  to
engage  in  any material activities in this segment and still intends  to
divest this segment.

   In  1998,  Devco incurred dryhole  costs  of $11.7  million and  asset
impairment  charges of $11.3 million.  In  1997, Devco  incurred  dryhole
costs of $65.1 million and asset impairment charges of $42.8 million.  At
December 31, 1998, none of the Company's oil and gas properties contained
proved reserves and all such properties had been written off.
   
   Oil  and gas assets held for sale at December 31, 1998 which consisted
primarily of a receivable for the sale of an interest in an oil  and  gas
property were $11.7 million and related liabilities totaled $4.7  million
which consisted primarily of a payable for an interest in an oil and  gas
property.   Oil and gas assets held for sale at December 31,  1997  which
consisted primarily of oil and gas properties and receivables were  $38.4
million and related liabilities totaled $44.2 million, including a  $36.0
million  reserve  for  estimated losses from operations  until  disposal.
Such  $36.0 million reserve was reversed in 1998 in accordance  with  the
Company  reclassifying the oil and gas segment as  if  it  had  not  been
discontinued.   There were no revenues from the business  held  for  sale
during the years ended December 31, 1998, 1997, and 1996.

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

(O)  QUARTER FINANCIAL DATA (unaudited)

   The  following  summarized quarterly financial data has been  adjusted
to reflect the recontinuance of the Company's oil and gas operations (see
Note  N).  Summarized quarterly financial data for the  two  years  ended
December  31,  1998,  are as follows (in millions except  for  per  share
amounts):
                                                   Quarter
                                --------------------------------------------
                                 First    Second   Third   Fourth    Total
                                -------  -------  -------  -------  --------
1998:
----
Operating revenues              $ 279.4  $ 281.0  $ 243.5  $ 228.7  $ 1,032.6
Gross income (1)                $ 130.1  $ 126.3  $  77.3  $  53.7  $   387.4
Income (loss) from continuing
  operations before
  extraordinary loss (2)        $  61.5  $  59.9  $ (28.2) $  (2.2) $    91.0
Income from discontinued
  operations                    $   8.3  $    .5  $   7.7  $  19.5  $    36.0
Extraordinary loss (3)          $    -   $ (22.0) $    -   $  (2.2) $   (24.2)
Net income (loss)               $  69.8  $  38.4  $ (20.5) $  15.1  $   102.8
Net income (loss) per
  common share:
  Basic:
     Continuing operations      $   .37  $   .37  $  (.17) $  (.01) $     .54
     Discontinued operations        .05      -        .05      .11        .21
     Extraordinary loss             -       (.13)     -       (.01)      (.14)
                                -------  -------  -------  -------  ---------
          Net income (loss)     $   .42  $   .24  $  (.12) $   .09  $     .61
                                =======  =======  =======  =======  =========
  Diluted:
     Continuing operations      $   .37  $   .37  $  (.17) $  (.01) $     .54
     Discontinued operations        .05      -        .05      .11        .21
     Extraordinary loss             -       (.13)     -       (.01)      (.14)
                                -------  -------  -------  -------  ---------
          Net income (loss)     $   .42  $   .24  $  (.12) $   .09  $     .61
                                =======  =======  =======  =======  =========
1997:
----
Operating revenues              $ 203.2  $ 218.4  $ 244.7  $ 266.7  $   933.0
Gross income (1)                $  76.9  $  82.3  $  73.5  $  48.8  $   281.5
Income (loss) from
  continuing operations (4)     $  38.9  $  44.0  $  35.0  $ (88.1) $    29.8
Loss from discontinued
  operations                    $    -   $    -   $    -   $ (36.0) $   (36.0)
Net income (loss)               $  38.9  $  44.0  $  35.0  $(124.1) $    (6.2)
Net income (loss) per
  common share:
  Basic:
     Continuing operations      $   .24  $   .27  $   .21  $  (.54) $     .18
     Discontinued operations        -        -        -       (.21)      (.22)
                                -------  -------  -------  -------  ---------
           Net income (loss)    $   .24  $   .27  $   .21  $  (.75) $    (.04)
                                =======  =======  =======  =======  =========
  Diluted:
     Continuing operations      $   .24  $   .27  $   .21  $  (.54) $     .18
     Discontinued operations        -        -        -       (.21)      (.22)
                                -------  -------  -------  -------  ---------
           Net income (loss)    $   .24  $   .27  $   .21  $  (.75) $    (.04)
                                =======  =======  =======  =======  =========
___________________

 (1) Gross  income  represents operating revenues less operating  expenses,
     depreciation and amortization, and other, net.
 (2) The  third  quarter  of 1998 and the fourth quarter  of  1998  include
     cancellation of conversion project expense of $85.8 million and  $32.5
     million, respectively.
 (3) The  extraordinary losses incurred in the second and  fourth  quarters
     of 1998  are  shown  net  of  a  tax benefit of $11.9 million and $1.1
     million, respectively.
 (4) The fourth quarter of 1997 includes merger expenses of $66.4 million.


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

     Not applicable.
     
                            PART III

The  information  called for by Part III of Form 10-K is incorporated  by
reference  from the Registrant's Proxy Statement relating to  its  annual
meeting  of Stockholders to be held May 19, 1999, which will be filed  by
the  Registrant with the Securities and Exchange Commission no later than
120 days after the close of the fiscal year.

                            PART IV

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

  (a)Financial Statements and Exhibits

    1.Financial Statements:

      Report of Independent Public Accountants
      Consolidated Balance Sheet as of December 31, 1998 and 1997
      Consolidated  Statement of Operations for the years ended  December
         31, 1998, 1997 and 1996
      Consolidated  Statement of Cash Flows for the years ended  December
         31, 1998, 1997 and 1996
      Consolidated Statement of Stockholders' Equity for the years  ended
         December 31, 1998, 1997 and 1996
      Notes to Consolidated Financial Statements

    2.   Exhibits:
      
  2.1    -  Agreement  and Plan of Merger, dated July 10, 1997, among  R&B
            Falcon,  FDC  Acquisition Corp., Reading & Bates  Acquisition
            Corp.,  Falcon  and  R&B.   (Filed  as  Exhibit  2.1  to  R&B
            Falcon's  Registration Statement on Form S-4  dated  November
            20, 1997 and incorporated herein by reference.)
  
  2.2    -  Agreement  and Plan of Merger, dated August 21,  1998  by  and
            among  Cliffs  Drilling Company, R&B Falcon  Corporation  and
            RBF  Cliffs Drilling Acquisition Corp.  (Filed as  Exhibit  2
            to  R&B Falcon's Registration Statement No. 333-63471 on Form
            S-4  dated  September  15, 1998 and  incorporated  herein  by
            reference.)
  
  3.1    -  Amended  and  Restated  Certificate of  Incorporation  of  R&B
            Falcon.  (Filed as Exhibit 3.1 to R&B Falcon's Annual  Report
            on Form 10-K for 1997 and incorporated herein by reference.)

  3.2    -  Amended   and  Restated  Bylaws  of  R&B  Falcon.  (Filed   as
            Exhibit  3.2 to R&B Falcon's Annual Report on Form  10-K  for
            1997 and incorporated herein by reference.)

  4.1    -  Form  of  R&B  Falcon's Common Stock Certificate.   (Filed  as
            Exhibit  4.1 to R&B Falcon's Annual Report on Form  10-K  for
            1997 and incorporated herein by reference.)

  4.2    -  Rights  Agreement  dated as of December 23, 1997  between  R&B
            Falcon   and  American  Stock  Transfer  and  Trust  Company.
            (Filed  as  Exhibit  4.2  to R&B Falcon's  Annual  Report  on
            Form 10-K for 1997 and incorporated herein by reference.)

  4.3    -  Registration  Rights  Agreement dated January  1,  1998  among
            the   Company  and  the  Stockholders  of  BSI  Workover  and
            Drilling,  Inc.   (Filed  as  Exhibit  4.1  to  R&B  Falcon's
            Quarterly Report on Form 10-Q for the First Quarter  of  1998
            and incorporated herein by reference.)

  4.4    -  Registration  Rights  Agreement dated  as  of  April  8,  1998
            among  R&B Falcon Corporation and Credit Suisse First Boston,
            Chase   Securities,  Inc.,  Donaldson,  Lufkin   &   Jenrette
            Securities  Corporation  and  Morgan  Stanley  Dean   Witter.
            (Filed  as Exhibit 4.2 to R&B Falcon's Registration Statement
            No.   333-56821  on  Form  S-4  dated  June  15,   1998   and
            incorporated herein by reference.)

  4.5    -  Registration  Rights  Agreement dated  July  1,  1998  by  and
            between  R&B  Falcon Corporation, Kenneth  Stage,  T.  George
            Delsa,  Vial  J. LeBlanc and Dr. William T. Barfield.  (Filed
            as  Exhibit 4 to R&B Falcon's Quarterly Report on  Form  10-Q
            for  the  Third  Quarter of 1998 and incorporated  herein  by
            reference.)

  4.6    -  Registration  Rights Agreement dated December 17,  1998  among
            R&B   Falcon   Corporation,  Credit   Suisse   First   Boston
            Corporation,  Nations  Banc Montgomery  Securities  LLC,  and
            Paribas Corporation.

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

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

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

  4.10   -  First  Supplemental  Indenture dated as of December  23,  1997
            among  the  Company,  R&B  and  IBJ  Schroder  Bank  &  Trust
            Company. (Filed as Exhibit 4.6 to R&B Falcon's Annual  Report
            on Form 10-K for 1997 and incorporated herein by reference.)

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

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

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

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

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

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

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

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

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

  4.20   -  Indenture  dated  as  of April 14, 1998,  between  R&B  Falcon
            Corporation,  as  Issuer, and Chase Bank of  Texas,  National
            Association, as Trustee, with respect to Series A and  Series
            B  of  each  of  $250,000,000 6.5%  Senior  Notes  due  2003,
            $350,000,000 6.75%  Senior Notes due 2005, $250,000,000 6.95%
            Senior  Notes due 2008, and $250,000,000 7 3/8% Senior  Notes
            due  2018. (Filed as Exhibit 4.1 to R&B Falcon's Registration
            Statement No. 333-56821 on Form S-4 dated June 15,  1998  and
            incorporated herein by reference.)

  4.21   -  Indenture  dated as of December 22, 1998, between  R&B  Falcon
            Corporation,  as  Issuer and Chase Bank  of  Texas,  National
            Association, as Trustee, with respect to $400,000,000  Series
            A  and  Series  B  9 1/8%  Senior  notes due 2003, and 9 1/2%
            Senior Notes due 2008.

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

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

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

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

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

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

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

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

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

  10.5*  -  1996  Director Restricted Stock Award Plan of Reading &  Bates
            Corporation. (Filed as Exhibit 99.B to R&B's Proxy  Statement
            dated March 28, 1997 and incorporated herein by reference.)

  10.6*  -  1997   Long-Term   Incentive   Plan   of   Reading   &   Bates
            Corporation.  (Filed  as  Exhibit  99.A  to  R  &  B's  Proxy
            Statement  dated  March 18, 1997 and incorporated  herein  by
            reference.)

  10.7*  -  1992  Stock  Option Plan of Falcon. (Filed as  an  exhibit  to
            Falcon's  Registration Statement on Form S-4, filed on  April
            29,  1994, Registration No. 33-78369 and incorporated  herein
            by reference.)

  10.8*  -  1994  Stock  Option Plan of Falcon. (Filed as  an  exhibit  to
            Falcon's  Annual  Report  on form 10-K  for  the  year  ended
            December 31, 1994 and incorporated herein by reference.)

  10.9*  -  1995  Stock  Option Plan of Falcon. (Filed as  an  exhibit  to
            Falcon's  Annual  Report  on form 10-K  for  the  year  ended
            December 31, 1994 and incorporated herein by reference.)

  10.10* -  1998   Employee  Long-Term  Incentive  Plan  of   R&B   Falcon
            Corporation.  (Filed as Exhibit 99.A to the  Company's  Proxy
            Statement   dated   April   23,1998   and   incorporated   by
            reference.)

  10.11* -  1998   Director  Long-Term  Incentive  Plan  of   R&B   Falcon
            Corporation.  (Filed as Exhibit 99.B to the  Company's  Proxy
            Statement   dated   April   23,1998   and   incorporated   by
            reference.)

  10.12* -  Cliffs  Drilling Company 1988 Incentive Equity  Plan.   (Filed
            as  Exhibit 10.8 to Cliffs Drilling Registration Statement on
            Form  S-1, Registration No. 33-23508 and incorporated  herein
            by reference.)

  10.13* -  Amendment  No.  1  dated May 17, 1990 to the  Cliffs  Drilling
            Company  1988 Incentive Equity Plan (Filed as Exhibit  10.7.1
            to  Cliffs Drilling Annual Report on Form 10-K for  1993  and
            incorporated herein by reference.)

  10.14* -  Amendment  No.  2  dated May 20, 1993 to the  Cliffs  Drilling
            Company  1988 Incentive Equity Plan (Filed as Exhibit  10.7.2
            to  Cliffs Drilling Annual Report on Form 10-K for  1993  and
            incorporated herein by reference.)

  10.15* -  Amendment  No.  3  dated May 22, 1996 to the  Cliffs  Drilling
            Company  1988 Incentive Equity Plan (Filed as Exhibit  10.7.3
            to  Cliffs Drilling Annual Report on Form 10-K for  1996  and
            incorporated herein by reference.)

  10.16* -  Cliffs  Drilling  Company 1998 Incentive Equity  Plan.  (Filed
            under  Cliffs  Drilling Proxy Statement dated April  8,  1998
            and incorporated herein by reference.)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  10.31* -  Employment   Agreement  dated  March  25,  1998  between   the
            Company  and  Tim W. Nagle.  (Filed as Exhibit  10.9  to  R&B
            Falcon's Quarterly Report on Form 10-Q for the First  Quarter
            of 1998 and incorporated herein by reference.)

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

  10.33* -  Amendment  No.  1,  dated  as  of  October  1,  1993,  to  the
            Employment  Agreement dated as of November  1,  1991  between
            R&B  and C. R. Ofner. (Filed as Exhibit 10.24 to R&B's Annual
            Report  on  Form  10-K  for 1993 and incorporated  herein  by
            reference.)

  10.34* -  Employment   Agreement  dated  March  25,  1998  between   the
            Company  and  Charles R. Ofner.  (Filed as Exhibit  10.12  to
            R&B  Falcon's  Quarterly Report on Form 10-Q  for  the  First
            Quarter of 1998 and incorporated herein by reference.)

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

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

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

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

  10.39* -  Employment   Agreement  dated  March  25,  1998  between   the
            Company and Wayne K. Hillin.  (Filed as Exhibit 10.10 to  R&B
            Falcon's Quarterly Report on Form 10-Q for the First  Quarter
            of 1998 and incorporated herein by reference.)

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

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

  10.42* -  Employment   Agreement  dated  March  25,  1998  between   the
            Company and Paul B. Loyd, Jr.  (Filed as Exhibit 10.4 to  R&B
            Falcon's Quarterly Report on Form 10-Q for the First  Quarter
            of 1998 and incorporated herein by reference.)

  10.43* -  Employment   Agreement  dated  March  25,  1998  between   the
            Company and Steve A. Webster.  (Filed as Exhibit 10.5 to  R&B
            Falcon's Quarterly Report on Form 10-Q for the First  Quarter
            of 1998 and incorporated herein by reference.)

  10.44* -  Employment   Agreement  dated  March  25,  1998  between   the
            Company  and Andrew Bakonyi.  (Filed as Exhibit 10.6  to  R&B
            Falcon's Quarterly Report on Form 10-Q for the First  Quarter
            of 1998 and incorporated herein by reference.)

  10.45* -  Employment   Agreement  dated  March  25,  1998  between   the
            Company  and Bernie Stewart.  (Filed as Exhibit 10.7  to  R&B
            Falcon's Quarterly Report on Form 10-Q for the First  Quarter
            of 1998 and incorporated herein by reference.)

  10.46* -  Employment   Agreement  dated  March  25,  1998  between   the
            Company and Robert F. Fulton.  (Filed as Exhibit 10.8 to  R&B
            Falcon's Quarterly Report on Form 10-Q for the First  Quarter
            of 1998 and incorporated herein by reference.)

  10.47* -  Employment   Agreement  dated  March  25,  1998  between   the
            Company and Leighton E. Moss. (Filed as Exhibit 10.11 to  R&B
            Falcon's Quarterly Report on Form 10-Q for the First  Quarter
            of 1998 and incorporated herein by reference.)

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

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

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

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

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

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

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

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

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

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

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

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

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

  10.61* -  Stock  Option  Agreement dated as of April  24,  1997  between
            R&B  and  P.B. Loyd, Jr. under R&B's 1995 Long-Term Incentive
            Plan.  (Filed as Exhibit 10.53 to R&B Falcon's Annual  Report
            on Form 10-K for 1997 and incorporated herein by reference.)

  10.62* -  Stock  Option  Agreement dated as of April  24,  1997  between
            R&B  and  T.  W.  Nagle under R&B's 1995 Long-Term  Incentive
            Plan.  (Filed as Exhibit 10.54 to R&B Falcon's Annual  Report
            on Form 10-K for 1997 and incorporated herein by reference.)

  10.63* -  Stock  Option  Agreement dated as of April  24,  1997  between
            R&B  and  C.  R.  Ofner under R&B's 1995 Long-Term  Incentive
            Plan.  (Filed as Exhibit 10.55 to R&B Falcon's Annual  Report
            on Form 10-K for 1997 and incorporated herein by reference.)

  10.64* -  Stock  Option  Agreement dated as of April  24,  1997  between
            R&B  and  D.L. McIntire under R&B's 1995 Long-Term  Incentive
            Plan.  (Filed as Exhibit 10.56 to R&B Falcon's Annual  Report
            on Form 10-K for 1997 and incorporated herein by reference.)

  10.65* -  Stock  Option  Agreement dated as of April  24,  1997  between
            R&B  and  W.  K. Hillin under R&B's 1995 Long-Term  Incentive
            Plan.  (Filed as Exhibit 10.57 to R&B Falcon's Annual  Report
            on Form 10-K for 1997 and incorporated herein by reference.)

  10.66* -  Stock  Option  Agreement dated as of April  24,  1997  between
            R&B  and  W.K.  Hillin  under R&B's 1997 Long-Term  Incentive
            Plan.  (Filed as Exhibit 10.58 to R&B Falcon's Annual  Report
            on Form 10-K for 1997 and incorporated herein by reference.)

  10.67* -  Amended  and  Restated  Stock Option  Agreement  dated  as  of
            February  16,  1995  between Falcon  and  Robert  F.  Fulton.
            (Filed  as  Exhibit 10.59 to R&B Falcon's  Annual  Report  on
            Form 10-K for 1997 and incorporated herein by reference.)

  10.68* -  Amended  and  Restated  Stock Option  Agreement  dated  as  of
            January  23,  1996  between Falcon  and  Steven  A.  Webster.
            (Filed  as  Exhibit 10.60 to R&B Falcon's  Annual  Report  on
            Form 10-K for 1997 and incorporated herein by reference.)

  10.69* -  Stock  Option  Agreement dated as of April  15,  1996  between
            Falcon and Bernie W. Stewart. (Filed as Exhibit 10.61 to  R&B
            Falcon's   Annual   Report  on  Form  10-K   for   1997   and
            incorporated herein by reference.)

  10.70* -  Rescission  Agreement  dated August 5, 1997  between  R&B  and
            P.B.  Loyd,  Jr.  (Filed  as Exhibit 10.62  to  R&B  Falcon's
            Annual  Report on Form 10-K for 1997 and incorporated  herein
            by reference.)

  10.71* -  Rescission Agreement dated August 5, 1997 between R&B  and  T.
            W.  Nagle.  (Filed  as Exhibit 10.63 to R&B  Falcon's  Annual
            Report  on  Form  10-K  for 1997 and incorporated  herein  by
            reference.)

  10.72* -  Rescission Agreement dated August 5, 1997 between R&B  and  C.
            R.  Ofner.  (Filed  as Exhibit 10.64 to R&B  Falcon's  Annual
            Report  on  Form  10-K  for 1997 and incorporated  herein  by
            reference.)

  10.73* -  Rescission Agreement dated August 5, 1997 between R&B  and  D.
            L.  McIntire. (Filed as Exhibit 10.65 to R&B Falcon's  Annual
            Report  on  Form  10-K  for 1997 and incorporated  herein  by
            reference.)

  10.74* -  Rescission Agreement dated August 5, 1997 between R&B  and  W.
            K.  Hillin.  (Filed as Exhibit 10.66 to R&B  Falcon's  Annual
            Report  on  Form  10-K  for 1997 and incorporated  herein  by
            reference.)

  10.75* -  Stock  Option  Agreement dated February 11, 1999  between  R&B
            Falcon  Corporation and Paul B. Loyd, Jr.  under  R&B  Falcon
            Corporation 1998 Employee Long-Term Incentive Plan.

  10.76* -  Stock  Option  Agreement dated February 11, 1999  between  R&B
            Falcon  Corporation and Steven A. Webster  under  R&B  Falcon
            Corporation 1998 Employee Long-Term Incentive Plan.

  10.77* -  Stock  Option  Agreement dated February 11, 1999  between  R&B
            Falcon   Corporation  and  T.  W.  Nagle  under  R&B   Falcon
            Corporation 1998 Employee Long-Term Incentive Plan.

  10.78* -  Stock  Option  Agreement dated February 11, 1999  between  R&B
            Falcon  Corporation  and Robert F. Fulton  under  R&B  Falcon
            Corporation 1998 Employee Long-Term Incentive Plan.

  10.79* -  Stock  Option  Agreement dated February 11, 1999  between  R&B
            Falcon  Corporation  and  Andrew  Bakonyi  under  R&B  Falcon
            Corporation 1998 Employee Long-Term Incentive Plan.

  10.80* -  Stock  Option  Agreement dated February 11, 1999  between  R&B
            Falcon  Corporation  and  Bernie  Stewart  under  R&B  Falcon
            Corporation 1998 Employee Long-Term Incentive Plan.

  10.81* -  Stock  Option  Agreement dated February 11, 1999  between  R&B
            Falcon   Corporation  and  W.  K.  Hillin  under  R&B  Falcon
            Corporation 1998 Employee Long-Term Incentive Plan.

  10.82* -  Stock  Option  Agreement dated February 11, 1999  between  R&B
            Falcon   Corporation  and  L.  E.  Moss  under   R&B   Falcon
            Corporation 1998 Employee Long-Term Incentive Plan.

  10.83* -  Stock  Option  Agreement dated February 11, 1999  between  R&B
            Falcon   Corporation  and  C.  R.  Ofner  under  R&B   Falcon
            Corporation 1998 Employee Long-Term Incentive Plan.

  10.84* -  Affiliate  Agreement effective December 31, 1997  between  R&B
            and  P.  B. Loyd, Jr. (Filed as Exhibit 10.67 to R&B Falcon's
            Annual  Report on Form 10-K for 1997 and incorporated  herein
            by reference.)

  10.85* -  Affiliate  Agreement effective December 31, 1997  between  R&B
            and  A.  L. Chavkin. (Filed as Exhibit 10.68 to R&B  Falcon's
            Annual  Report on Form 10-K for 1997 and incorporated  herein
            by reference.)

  10.86* -  Affiliate  Agreement effective December 31, 1997  between  R&B
            and  C.  A.  Donabedian.  (Filed  as  Exhibit  10.69  to  R&B
            Falcon's   Annual   Report  on  Form  10-K   for   1997   and
            incorporated herein by reference.)

  10.87* -  Affiliate  Agreement effective December 31, 1997  between  R&B
            and  M.  A.  E.  Laqueur.  (Filed as  Exhibit  10.70  to  R&B
            Falcon's   Annual   Report  on  Form  10-K   for   1997   and
            incorporated herein by reference.)

  10.88* -  Affiliate  Agreement effective December 31, 1997  between  R&B
            and  R. L. Sandmeyer. (Filed as Exhibit 10.71 to R&B Falcon's
            Annual  Report on Form 10-K for 1997 and incorporated  herein
            by reference.)

  10.89* -  Affiliate  Agreement effective December 31, 1997  between  R&B
            and  T.  W.  Nagle. (Filed as Exhibit 10.72 to  R&B  Falcon's
            Annual  Report on Form 10-K for 1997 and incorporated  herein
            by reference.)

  10.90* -  Affiliate  Agreement effective December 31, 1997  between  R&B
            and  C.  R.  Ofner. (Filed as Exhibit 10.73 to  R&B  Falcon's
            Annual  Report on Form 10-K for 1997 and incorporated  herein
            by reference.)

  10.91* -  Affiliate  Agreement effective December 31, 1997  between  R&B
            and  D.  L. McIntire. (Filed as Exhibit 10.74 to R&B Falcon's
            Annual  Report on Form 10-K for 1997 and incorporated  herein
            by reference.)

  10.92* -  Affiliate  Agreement effective December 31, 1997  between  R&B
            and  W.  K.  Hillin. (Filed as Exhibit 10.75 to R&B  Falcon's
            Annual  Report on Form 10-K for 1997 and incorporated  herein
            by reference.)

  10.93* -  Affiliate  Agreement  effective  December  31,  1997   between
            Falcon and Steven A. Webster. (Filed as Exhibit 10.76 to  R&B
            Falcon's   Annual   Report  on  Form  10-K   for   1997   and
            incorporated herein by reference.)

  10.94* -  Affiliate  Agreement  effective  December  31,  1997   between
            Falcon and Bernie W. Stewart. (Filed as Exhibit 10.77 to  R&B
            Falcon's   Annual   Report  on  Form  10-K   for   1997   and
            incorporated herein by reference.)

  10.95* -  Affiliate  Agreement  effective  December  31,  1997   between
            Falcon  and Robert F. Fulton. (Filed as Exhibit 10.78 to  R&B
            Falcon's   Annual   Report  on  Form  10-K   for   1997   and
            incorporated herein by reference.)

  10.96* -  Affiliate  Agreement  effective  December  31,  1997   between
            Falcon  and Leighton E. Moss. (Filed as Exhibit 10.79 to  R&B
            Falcon's   Annual   Report  on  Form  10-K   for   1997   and
            incorporated herein by reference.)

  10.97* -  Affiliate  Agreement  effective  December  31,  1997   between
            Falcon    and   Rodney   W.   Meisetschlaeger.   (Filed    as
            Exhibit 10.80 to R&B Falcon's Annual Report on Form 10-K  for
            1997 and incorporated herein by reference.)

  10.98* -  Affiliate  Agreement  effective  December  31,  1997   between
            Falcon  and Steven R. Meheen. (Filed as Exhibit 10.81 to  R&B
            Falcon's   Annual   Report  on  Form  10-K   for   1997   and
            incorporated herein by reference.)

  10.99* -  Affiliate  Agreement  effective  December  31,  1997   between
            Falcon and Douglas A.P. Hamilton. (Filed as Exhibit 10.82  to
            R&B  Falcon's  Annual  Report  on  Form  10-K  for  1997  and
            incorporated herein by reference.)

  10.100*-  Affiliate  Agreement  effective  December  31,  1997   between
            Falcon  and  Michael Porter. (Filed as Exhibit 10.83  to  R&B
            Falcon's   Annual   Report  on  Form  10-K   for   1997   and
            incorporated herein by reference.)

  10.101*-  Affiliate  Agreement  effective  December  31,  1997   between
            Falcon  and  William R. Ziegler. (Filed as Exhibit  10.84  to
            R&B  Falcon's  Annual  Report  on  Form  10-K  for  1997  and
            incorporated herein by reference.)

  10.102*-  Affiliate  Agreement  effective  December  31,  1997   between
            Falcon  and  Don P. Rodney. (Filed as Exhibit  10.85  to  R&B
            Falcon's   Annual   Report  on  Form  10-K   for   1997   and
            incorporated herein by reference.)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  10.167 -  Amended  and  Restated Credit Agreement dated as  of  November
            13,  1996  and amended and restated as of July 3, 1997  among
            R&B,   Reading   &   Bates  Drilling  Co.,  certain   lending
            institutions  named  therein, Credit  Agricole  Indosuez,  as
            documentation  agent, Credit Lyonnais  New  York  Branch,  as
            documentation agent, and Christiana Bank og Kreditkasse,  New
            York  Branch, as administrative agent, arranger and  security
            trustee.  (Filed  as  Exhibit 10.150 to R&B  Falcon's  Annual
            Report  on  Form  10-K  for 1997 and incorporated  herein  by
            reference.)

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

  10.169 -  First  Amendment  to Letter of Credit Agreement,  dated  April
            24,  1998, among R&B Falcon Corporation, R&B Falcon  Drilling
            (International  & Deepwater) Inc., Reading &  Bates  Drilling
            Co.  and  Christiania Bank OG Kreditkasse, New  York  Branch,
            amending Letter of Credit Agreement dated December 30,  1996.
            (Filed  as  Exhibit 10.3 to R&B Falcon's Quarterly Report  on
            Form  10-Q  for  the Second Quarter of 1998 and  incorporated
            herein by reference.)

  10.170 -  Second   Amendment  to  Letter  of  Credit  Agreement,   dated
            October  22, 1998, among R&B Falcon Corporation,  R&B  Falcon
            Drilling  (International & Deepwater) Inc., Reading  &  Bates
            Drilling  Co. and Christiania Bank OG Kreditkasse,  New  York
            Branch,  amending Letter of Credit Agreement  dated  December
            30, 1996.

  10.171 -  Third  Amendment to Letter of Credit Agreement, dated  October
            22,  1998, among R&B Falcon Corporation, R&B Falcon  Drilling
            (International  & Deepwater) Inc., Reading &  Bates  Drilling
            Co.  and  Christiania Bank OG Kreditkasse, New  York  Branch,
            amending Letter of Credit Agreement dated December 30, 1996.

  10.172 -  Fourth   Amendment  to  Letter  of  Credit  Agreement,   dated
            January  21, 1999, among R&B Falcon Corporation,  R&B  Falcon
            Drilling  (International & Deepwater) Inc., Reading  &  Bates
            Drilling  Co. and Christiania Bank OG Kreditkasse,  New  York
            Branch,  amending Letter of Credit Agreement  dated  December
            30, 1996.
  
  10.173 -  Fifth   Amendment   to  Letter  of  Credit  Agreement,   dated
            February  22, 1999, among R&B Falcon Corporation, R&B  Falcon
            Drilling  (International & Deepwater) Inc., Reading  &  Bates
            Drilling  Co. and Christiania Bank OG Kreditkasse,  New  York
            Branch,  amending Letter of Credit Agreement  dated  December
            30, 1996.
  
  10.174 -  Memorandum  of  Agreement  dated  November  28,  1995  between
            Reading  and Bates, Inc., a subsidiary of R&B, and  Deep  Sea
            Investors, L.L.C.   (Filed as Exhibit 10.110 to R&B's  Annual
            Report  on  Form  10-K  for 1995 and incorporated  herein  by
            reference.)

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

  10.176 -  Amended  and Restated Bareboat Charter dated July 23, 1997  to
            Bareboat  Charter  M. G. Hulme, Jr. dated November  28,  1995
            between  Deep  Sea  Investors, L.L.C.  and  Reading  &  Bates
            Drilling Co., a subsidiary of R&B.

  10.177 -  Amended  and Restated Bareboat Charter dated July 1,  1998  to
            Bareboat  Charter  M. G. Hulme, Jr. dated November  28,  1995
            between  Deep  Sea  Investors, L.L.C.  and  Reading  &  Bates
            Drilling Co., a subsidiary of R&B.

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

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

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

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

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

  10.183 -  Amendment  No.  1 dated February 7, 1997 to Limited  Liability
            Company  Agreement  dated  October 28,  1996  between  Conoco
            Development Company and RB Deepwater Exploration Inc.

  10.184 -  Amendment  No.  2  dated April 30, 1997 to  Limited  Liability
            Company  Agreement  dated  October 28,  1996  between  Conoco
            Development Company and RB Deepwater Exploration Inc.

  10.185 -  Amendment  No.  3  dated April 24, 1998 to  Limited  Liability
            Company  Agreement  dated  October 28,  1996  between  Conoco
            Development Company and RB Deepwater Exploration Inc.

  10.186 -  Amendment  No.  4  dated August 7, 1998 to  Limited  Liability
            Company  Agreement  dated  October 28,  1996  between  Conoco
            Development Company and RB Deepwater Exploration Inc.

  10.187 -  Limited  Liability  Company Agreement  dated  April  30,  1997
            between   Conoco  Development  II  Inc.  and   RB   Deepwater
            Exploration II Inc. (Filed as Exhibit 10.159 to R&B  Falcon's
            Annual  Report on Form 10-K for 1997 and incorporated  herein
            by reference.)

  10.188 -  Amendment  No.  1  dated April 24, 1998 to  Limited  Liability
            Company  Agreement  dated  April  30,  1997  between   Conoco
            Development II Inc. and RB Deepwater Exploration II Inc.
  
  10.189 -  Joint  Venture  Agreement  dated  February  22,  1996  between
            INTEC  Engineering, Inc. and Reading & Bates Development  Co.
            (Filed as Exhibit 10.163 to R&B's Annual Report on Form  10-K
            for 1996 and incorporated herein by reference.)

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

  10.191 -  First  Amendment dated April 21, 1997 to Loan Agreement  dated
            as  of  December  14,  1996  among TRB  Holding  Corporation,
            Reading & Bates (U.K.) Limited and Nissho Iwai Europe PLC.

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

  10.193 -  First  Amendment dated April 21, 1997 to First Naval  Mortgage
            on  the  Seillean dated December 14, 1996 between TRB Holding
            Corporation in favor of Nissho Iwai Europe PLC.

  10.194 -  Second   Amendment  dated  April  25,  1997  to  First   Naval
            Mortgage on the Seillean dated December 14, 1996 between  TRB
            Holding Corporation in favor of Nissho Iwai Europe PLC.

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

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

  10.197 -  Contract  dated  November 14, 1997 for Construction  and  Sale
            of  Vessel  (Hull No. HRBS6) between Hyundai Heavy Industries
            Co.,  Ltd., Hyundai Corporation and RB Exploration Co. (Filed
            as  Exhibit 10.165 to R&B Falcon's Annual Report on Form 10-K
            for 1997 and incorporated herein by reference.)

  10.198 -  Contract  dated  December 16, 1998 for Construction  and  Sale
            of  Vessel (Hull No. HRB8-D) between Hyundai Heavy Industries
            Co., Ltd., Hyundai Corporation and R&B Falcon Drilling Co.

  10.199 -  Contract  dated  September 5, 1997 for Construction  and  Sale
            of  a  103,000 Metric Tons Displacement Drillship  (Hull  No.
            1255)  between  Samsung Heavy Industries Co.,  Ltd.,  Samsung
            Corporation  and  Reading  & Bates  Drilling  Co.  (Filed  as
            Exhibit  10.166 to R&B Falcon's Annual Report  on  Form  10-K
            for 1997 and incorporated herein by reference.)

  10.200 -  Contract  dated October 14, 1998 for Construction and Sale  of
            a  98,000  Metric  Tons Displacement Drillship (Hull No. 1300)
            between  Samsung  Heavy Industries Co., Ltd. and  R&B   Falcon
            Drilling Co.

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

  10.202 -  First  Amendment to Credit Agreement, dated October  3,  1997,
            among   Falcon,   Bank  Paribas,  Arab  Banking   Corporation
            (B.S.C.),  and  ING  (U.S.)  Capital  Corporation,   amending
            Credit  Agreement dated November 12, 1996 relating to  a  $40
            million  facility, increasing such facility to  $60  million.
            (Filed  as  Exhibit 10.178 to R&B Falcon's Annual  Report  on
            Form 10-K for 1997 and incorporated herein by reference.)

  10.203 -  Credit  Agreement dated as of October 3, 1997,  among  Falcon,
            Banque  Paribas, Arab Banking Corporation (B.S.C.),  and  ING
            (U.S.)   Capital  Corporation  relating  to  an  $80  million
            facility.  (Filed  as Exhibit 10.179 to R&B  Falcon's  Annual
            Report  on  Form  10-K  for 1997 and incorporated  herein  by
            reference.)
  
  10.204 -  First  Amendment  to  Credit  Agreement,  dated  December  22,
            1997,  among  Falcon, Bank Paribas, Arab Banking  Corporation
            (B.S.C.),  and  ING  (U.S.)  Capital  Corporation,   amending
            Credit  Agreement dated October 3, 1997 relating  to  an  $80
            million  facility, increasing such facility to $130  million.
            (Filed  as  Exhibit 10.180 to R&B Falcon's Annual  Report  on
            Form 10-K for 1997 and incorporated herein by reference.)

  10.205 -  Participation  Agreement  made  effective  August  28,   1997,
            between  Reading  & Bates Development Co.,  a  subsidiary  of
            R&B,   British-Borneo  Petroleum,  Inc.  and   British-Borneo
            Exploration,  Inc. (Filed as Exhibit 10.182 to  R&B  Falcon's
            Annual  Report on Form 10-K for 1997 and incorporated  herein
            by reference.)

  10.206 -  Purchase   and  Sale  and  Acreage  Exchange  Agreement   made
            effective August 28, 1997 between Enserch Exploration,  Inc.,
            and  Reading  & Bates Development Co., a subsidiary  of  R&B.
            (Filed  as  Exhibit 10.183 to R&B Falcon's Annual  Report  on
            Form 10-K for 1997 and incorporated herein by reference.)

  10.207 -  Dealer  Manager and Solicitation Agent Agreement  dated  March
            23,  1998 between the Company and Credit Suisse First  Boston
            Corporation.   (Filed  as  Exhibit  10.1  to   R&B   Falcon's
            Quarterly Report on Form 10-Q for the First Quarter  of  1998
            and incorporated herein by reference.)

  10.208 -  Credit   Agreement  dated  as  of  November  10,  1997   among
            Deepwater Drilling II L.L.C., Bank of America National  Trust
            and  Savings  Association, as Administrative Agent,  National
            Westminster  Bank  Plc,  New York  Branch,  as  Documentation
            Agent  and  other financial institutions. (Filed  as  Exhibit
            10.13  to R&B Falcon's Quarterly Report on Form 10-Q for  the
            First Quarter of 1998 and incorporated herein by reference.)

  10.209 -  Guaranty  Agreement dated November 10,1997 by Reading &  Bates
            Corporation,  Reading & Bates Drilling Co., Reading  &  Bates
            Exploration  Co., Reading & Bates (A) Pty.  Ltd.,  Reading  &
            Bates  Borneo  Drilling Co., Ltd., Reading & Bates  Offshore,
            Limited  and RB Rig Corporation in favor of Bank  of  America
            National  Trust  and Savings Association. (Filed  as  Exhibit
            10.14  to R&B Falcon's Quarterly Report on Form 10-Q for  the
            First Quarter of 1998 and incorporated herein by reference.)

  10.210 -  First  Amendment and Release of Guaranty dated April 24,  1998
            to  Credit  Agreement  dated as of November  10,  1997  among
            Deepwater Drilling II L.L.C., Bank of America National  Trust
            and  Savings Association, National Westminster Bank Plc,  and
            other financial institutions. (Filed as Exhibit 10.15 to  R&B
            Falcon's Quarterly Report on Form 10-Q for the First  Quarter
            of 1998 and incorporated herein by reference.)

  10.211 -  Guaranty  Agreement  dated  April  24,  1998  by  R&B   Falcon
            Corporation  in favor of Bank of America National  Trust  and
            Savings  Association. (Filed as Exhibit 10.16 to R&B Falcon's
            Quarterly Report on Form 10-Q for the First Quarter  of  1998
            and incorporated herein by reference.)

  10.212 -  Second  Amendment to Credit Agreement and Release of  Guaranty
            dated  November  9,  1998 to Credit  Agreement  dated  as  of
            November  10,  1997 among Deepwater Drilling II L.L.C.,  Bank
            of  America National Trust and Savings Association,  National
            Westminster Bank Plc, and other financial institutions.

  10.213 -  Assignment  and Acceptance Agreement dated as of  November  9,
            1998 between Great-West & Annuity Life Insurance Company  and
            Bank of America National Trust and Savings Association.

  10.214 -  Third  Amendment  dated January 29, 1999 to  Credit  Agreement
            dated  as  of  November 10, 1997 among Deepwater Drilling  II
            L.L.C.,   Bank   of  America  National  Trust   and   Savings
            Association,  National  Westminster  Bank  Plc,   and   other
            financial institutions.

  10.215 -  Credit  Agreement, dated February 24, 1998,  among  Reading  &
            Bates  Corporation,  Reading & Bates  Drilling  Co.,  various
            subsidiaries  of Reading & Bates Drilling Co.,  RB  Deepwater
            Exploration  III, Inc., various lending institutions,  Credit
            Lyonnais   New   York   Branch  and   Christiania   Bank   OG
            Kreditkasse, New York Branch. (Filed as Exhibit 10.1  to  R&B
            Falcon's  Quarterly  Report  on  Form  10-Q  for  the  Second
            Quarter of 1998 and incorporated herein by reference.)

  10.216 -  First  Amendment  to Credit Agreement, dated April  24,  1998,
            among   R&B   Falcon   Corporation,   R&B   Falcon   Drilling
            (International  & Deepwater) Inc., Reading &  Bates  Drilling
            Co.,  RB Deepwater Exploration III, Credit Lyonnais New  York
            Branch  and Christiania Bank OG Kreditkasse, New York Branch,
            amending  Credit Agreement dated February 24,  1998  relating
            to  a  $150 million facility. (Filed as Exhibit 10.2  to  R&B
            Falcon's  Quarterly  Report  on  Form  10-Q  for  the  Second
            Quarter of 1998 and incorporated herein by reference.)

  10.217 -  Second  Amendment to Credit Agreement dated October  22,  1998
            to  Credit Agreement dated February 24, 1998 among R&B Falcon
            Corporation,  RBF  Deepwater  Exploration  III  Inc.,  Credit
            Lyonnais  New  York Branch, Christiania Bank OG  Kreditkasse,
            New York Branch and various other lending institutions.

  10.218 -  Third  Amendment  to Credit Agreement dated December  9,  1998
            to  Credit Agreement dated February 24, 1998 among R&B Falcon
            Corporation,  RBF  Deepwater  Exploration  III  Inc.,  Credit
            Lyonnais  New  York Branch, Christiania Bank OG  Kreditkasse,
            New York Branch and various other lending institutions.

  10.219 -  Fourth   Consent  and  Amendment  to  Credit  Agreement  dated
            December  18,  1998  to Credit Agreement dated  February  24,
            1998  among R&B Falcon Corporation, RBF Deepwater Exploration
            III  Inc., Credit Lyonnais New York Branch, Christiania  Bank
            OG  Kreditkasse,  New York Branch and various  other  lending
            institutions.

  10.220 -  Fifth  Amendment  to Credit Agreement dated January  21,  1999
            to  Credit Agreement dated February 24, 1998 among R&B Falcon
            Corporation,  RBF  Deepwater  Exploration  III  Inc.,  Credit
            Lyonnais  New  York Branch, Christiania Bank OG  Kreditkasse,
            New York Branch and various other lending institutions.

  10.221 -  Sixth  Amendment to Credit Agreement dated February  22,  1999
            to  Credit Agreement dated February 24, 1998 among R&B Falcon
            Corporation,  RBF  Deepwater  Exploration  III  Inc.,  Credit
            Lyonnais  New  York Branch, Christiania Bank OG  Kreditkasse,
            New York Branch and various other lending institutions.

  10.222 -  Guaranty,  dated  as of July 30, 1998, made by  Registrant  in
            favor  of  the Deepwater Investment Trust 1998-A,  Wilmington
            Trust  FSB,  not in its individual capacity,  but  solely  as
            Investment  Trustee,  Wilmington Trust Company,  not  in  its
            individual  capacity, except as specified herein, but  solely
            as  Charter  Trustee,  BA Leasing & Capital  Corporation,  as
            Documentation  Agent, ABN Amro Bank N.V.,  as  Administrative
            Agent,  The  Bank  of Nova Scotia, as Syndication  Agent,  BA
            Leasing  &  Capital  Corporation, ABN Amro  Bank  N.V.,  Bank
            Austria Aktiengesellschaft New York Branch, The Bank of  Nova
            Scotia,   Bayerische   Vereinsbank  AG   New   York   Branch,
            Commerzbank   Aktiengesellschaft,  Atlanta   Agency,   Credit
            Lyonnais  New  York  Branch,  Great-West  Life  and   Annuity
            Insurance   Company,   Mees  Pierson   Capital   Corporation,
            Westdeutsche  Landesbank Girozentrale, New York  Branch,   as
            Certificate  Purchasers, and ABN Amro  Bank,  N.V.,  Bank  of
            America  National Trust and Savings Association and The  Bank
            of  Nova Scotia, New York Branch, as Swap Counterparties, and
            the  other parties named therein. (Filed as Exhibit  10.1  to
            R&B  Falcon's  Quarterly Report on Form 10-Q  for  the  Third
            Quarter of 1998 and incorporated herein by reference.)

  10.223 -  Letter  agreement  dated  as of August  7,  1998  between  RBF
            Deepwater  Exploration Inc., an indirect  subsidiary  of  the
            Registrant,    and    Conoco    Development    Company    and
            Acknowledgment by Conoco Inc. and the Registrant.  (Filed  as
            Exhibit  10.2 to R&B Falcon's Quarterly Report on  Form  10-Q
            for  the  Third  Quarter of 1998 and incorporated  herein  by
            reference.)

  10.224 -  Letter  agreement  dated  as of August  7,  1998  between  RBF
            Deepwater  Exploration Inc., an indirect  subsidiary  of  the
            Registrant,    and    Conoco    Development    Company    and
            Acknowledgment by Conoco Inc. and the Registrant.  (Filed  as
            Exhibit  10.3 to R&B Falcon's Quarterly Report on  Form  10-Q
            for  the  Third  Quarter of 1998 and incorporated  herein  by
            reference.)

  10.225 -  Purchase  Agreement  dated  April 8,  1998  among  R&B  Falcon
            Corporation,  Credit Suisse First Boston  Corporation,  Chase
            Securities  Inc.,  Donaldson, Lufkin  &  Jenrette  Securities
            Corporation, and Morgan Stanley & Co., Incorporated.   (Filed
            as  Exhibit  10.1 to R&B Falcon's Registration Statement  No.
            333-56821  on  Form S-4 dated June 15, 1998 and  incorporated
            herein by reference.)

  10.226 -  $500,000,000  Credit  Agreement dated as  of  April  24,  1998
            among  R&B  Falcon  Corporation, the lender parties  thereto,
            and  The  Chase  Manhattan  Bank,  as  Administrative  Agent.
            (Filed   as   Exhibit  10.2  to  R&B  Falcon's   Registration
            Statement No. 333-56821 on Form S-4 dated June 15,  1998  and
            incorporated herein by reference.)

  10.227 -  First   Amendment  to  $500,000,000  Credit  Agreement,  dated
            November 13, 1998.

  10.228 -  Second  Amendment to $500,000,000 Credit Agreement,  dated  as
            of the Second Amendment Effective Date.

  10.229 -  Third   Amendment  to  $500,000,000  Credit  Agreement,  dated
            January 19, 1999.

  21     -  Schedule of Subsidiaries of the Company

  23     -  Consent of Arthur Andersen LLP

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

  99     -  Annual  Report  on Form 11-K with respect to R&B  Falcon  U.S.
            Savings  Plan.   (To  be  filed by amendment  to  the  Annual
            Report on Form 10-K.)

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

  * Management  contract or compensatory plan or arrangement  required to
    be filed as an exhibit pursuant to the requirements of Item  14(c) of
    Form 10-K.
  
  (b)Reports on Form 8-K

  R&B  Falcon  filed  five Current Reports on Form 8-K during  the  three
  months  ended  December  31, 1998: (1) Report filed  October  16,  1998
  announcing  the  cancellation of the conversion projects  Peregrine  VI
  and  Peregrine VIII, the construction of a new drillship Deepwater  IV,
  the  receipt of a letter of intent from Vastar Resources,  Inc.  for  a
  three  year  drilling  contract  and  the  Company  entering  into   an
  agreement  to  purchase  an  approximate 38%  of  Navis  ASA  which  is
  constructing  the drillship Navis Explorer I; (2) Report filed  October
  16,  1998  announcing the Company's intent to issue up to $300  million
  of  trust  preferred securities;  (3) Report filed  December  10,  1998
  announcing  that  the  customer which has  contracted  the  Jack  Bates
  through  December 2000 has alleged that the Company  is  in  breach  of
  certain  performance  related provisions of its  contract;  (4)  Report
  filed  December  15,  1998 announcing the purchase of  Cliffs  Drilling
  Company;  (5)  Report  filed  December 21,  1998  announcing  that  the
  Company  had  received notice from Mobil North Sea  Limited  that  they
  were  terminating  the  drilling contract on  the  Jack  Bates  due  to
  certain  performance  breaches  relating  to  equipment  and  personnel
  deficiencies.


                               SIGNATURES


      Pursuant  to  the  requirements of  Section  13  or  15(d)  of  the
Securities  Exchange  Act of 1934, the Registrant has  duly  caused  this
report  to  be  signed on its behalf by the undersigned,  thereunto  duly
authorized on March 30, 1999.


                         R&B FALCON CORPORATION


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

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this  report has been signed below by the following persons on behalf  of
the Registrant in the capacities indicated on March 30, 1999.


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


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


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


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


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


By /s/Douglas A. P. Hamilton       By /s/Douglas E. Swanson
  --------------------------         -------------------------
   Douglas A. P. Hamilton             Douglas E. Swanson
   Director                           Director


                                   By /s/William R. Ziegler
                                     -------------------------
                                      William R. Ziegler
                                      Director