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                                                                   EXHIBIT 10.28



                           BAREBOAT CHARTER AGREEMENT



       THIS Bareboat Charter Agreement (the "Charter") is made the 10th day of
December, 1996, by and between Hyde Offshore Limited Partnership, a California
limited partnership (the "OWNER") and Falcon Drilling Company, Inc., a Delaware
Corporation (the "CHARTERER").

                                R E C I T A L S

       WHEREAS, contemporaneously with the execution of this Charter, the OWNER
has purchased from K/S Deepsea Drillships ("Deepsea") the Bahamian flag
drilling vessel FALCON ICE (ex. DEEPSEA ICE), Official Number 710745, and its
appurtenant machinery and equipment, more fully described in Exhibit 1 hereto
and incorporated herein by reference (the "Vessel"); and

       WHEREAS, the OWNER and the CHARTERER desire for the OWNER to charter to
the CHARTERER the Rig to be used from time to time for oil or gas drilling,
completion, or reworking operations, and related services, by one or more third
party petroleum companies (an "Operator"), which shall contract with the
CHARTERER directly or through a sub-charter for the use of the Vessel.
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                               A G R E E M E N T

       NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the OWNER and the
CHARTERER agree as follows:

1.     (a)    Term.  Subject to the terms and conditions of this Charter, the
              OWNER hereby charters and demises to the CHARTERER, and the
              CHARTERER hereby hires from the OWNER, the Vessel.  Except as
              otherwise provided in this Charter, the term of this Charter (the
              "Charter Term") shall continue from the Date of Delivery (as
              defined in Section 2(a) herein) of the Vessel to the OWNER up to
              and through the date thirty-six (36) months following the Date of
              Delivery.  The CHARTERER may directly or through a sub-charter,
              for so long as the CHARTERER is not in default under the Charter
              and always subject, without limitation, to Section 4 herein, from
              time to time enter into an agreement with an Operator for
              utilization of the Vessel (a "Third Party Contract") which shall
              be subordinate to this Charter.

       (b)    Completion of Contracts.  The CHARTERER shall contract for work
              for the Vessel which terminates on or before the end of the
              Charter Term.  If, in the reasonable judgment of the CHARTERER,
              the work to be contracted for may exceed the Charter Term, then
              the CHARTERER





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              shall not enter into such Third Party Contract without the
              OWNER's prior written consent.  The OWNER will reasonably review
              the CHARTERER's request for such a consent and will either: (i)
              provide its consent with the stipulation that the Charter will be
              extended until the end of the Third Party Contract; or (ii) not
              consent to the Third Party Contract and allow the CHARTERER to
              terminate the Charter up to thirty (30) days prior to the end of
              the Charter Term.  Should a Third Party Contract terminate during
              the Charter Term, and the CHARTERER has not requested the OWNER's
              consent for further Third Party Contracts, then the CHARTERER may
              terminate the Charter up to thirty (30) days prior to the end of
              the Charter Term.

       (c)    Third Party Contract Extension.  In the event the Vessel is
              engaged in a Third Party Contract at the end of the Charter Term,
              notwithstanding Section l(b) herein, and expiration of this
              Charter would cause a breach or default in the performance of the
              Third Party Contract (an "Ongoing Third Party Contract"), this
              Charter shall be extended for such time on terms as are then in
              effect as is reasonably necessary to complete the Ongoing Third
              Party Contract and re-deliver the Vessel to the OWNER.

       (d)    Termination of Charter During Third Party Contract.  In the event
              the Charter is terminated by reason of an





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              Event of Default (as hereinafter defined) or by mutual agreement
              during the term of a Third Party Contract or any sub-charter, if
              the OWNER so elects in its sole discretion, the CHARTERER shall
              use its reasonable efforts to assign to the OWNER the interests
              of the CHARTERER in and to any such sub-charter and/or Third
              Party Contract.  The CHARTERER shall execute such documents as
              are reasonably necessary to effect any such assignments, and upon
              termination of the Charter shall take such actions as are
              reasonably requested by the OWNER and otherwise use its best
              efforts to cause a full transfer of the CHARTERER's interests in
              the sub-charter and Third Party Contract to the OWNER and if
              requested by the OWNER to effect a smooth transition in the
              operation of the Vessel to a nominee of the OWNER.

2.     (a)    Delivery.  The delivery of the Vessel by Deepsea to the OWNER, in
              such condition as the Vessel is accepted by and delivered to the
              OWNER, shall be deemed to be delivery of the Vessel by the OWNER
              to the CHARTERER and acceptance of the Vessel by the CHARTERER
              under this Charter (the date of such occurrence being the "Date
              of Delivery") and shall constitute full performance of the
              OWNER's obligations to deliver the Vessel to the CHARTERER.  The
              OWNER shall deliver to the CHARTERER with the Vessel all
              documentation





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              relating to the operation of the Vessel and its equipment that
              the OWNER receives from Deepsea, including technical and
              operating manuals, construction drawings, specifications, repair
              records and regulatory inspection records (collectively, the
              "Technical Documents").  During the Charter Term, the CHARTERER
              shall be entitled to possession of the Technical Documents;
              provided, however, that the OWNER and its designees shall be
              allowed reasonable access to and may make copies of the Technical
              Documents.  THE OWNER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL
              WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT
              LIMITED TO, THE DESIGN, CONDITION, MERCHANTABILITY, SEAWORTHINESS
              OF OR THE QUALITY OF THE MATERIAL, EQUIPMENT, OR WORKMANSHIP IN
              THE VESSEL, OR AS TO ITS FITNESS FOR A PARTICULAR PURPOSE OR ANY
              PARTICULAR TRADE, AND THE OWNER FURTHER DISCLAIMS ALL OTHER
              LIABILITIES (AT COMMON LAW OR IN CONTRACT OR TORT OR OTHERWISE,
              INCLUDING, WITHOUT LIMITATION, STRICT LIABILITY).  THE VESSEL IS
              DELIVERED BY THE OWNER TO THE CHARTERER "AS IS, WHERE IS" AND
              WITH ALL FAULTS.

       (b)    Re-Delivery.  The CHARTERER shall, at its expense, on the
              expiration date of the Charter Term or other termination of the
              Charter, re-deliver the Vessel to the OWNER at a safe location in
              the port of Singapore or offshore Singapore, or at such other
              safe port





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              as may be mutually agreed upon by the OWNER and the CHARTERER.
              The CHARTERER shall re-deliver all Technical Documents to the
              OWNER with the Vessel.  The CHARTERER shall provide the OWNER
              with 30/14/7 days approximate notice of the place and anticipated
              date of re-delivery of the Vessel and three (3) days definite
              notice of the actual date and place of re-delivery.

       (c)    Survey, Inventory and Inspection.  To establish a benchmark for
              the condition of the Vessel and the amount of inventory on the
              Vessel at the commencement of the Charter, a joint survey will be
              performed at the time of delivery of the Vessel (the "On-hire
              Survey") and a joint survey is to be held immediately prior to
              the redelivery of the Vessel (the "Off-hire Survey") as provided
              for in this Section 2(c).  The expenses for independent surveyors
              for such surveys shall be shared equally between the CHARTERER
              and the OWNER.  Such surveys will include, but not be limited to,
              an inventory of all consumables, stores, spare parts and
              equipment on board the Vessel and ashore; a monetary valuation of
              such inventory; a general condition survey of the Vessel
              including photographic or videotape records; an inspection of
              class records; and an inspection of maintenance records.  The
              CHARTERER and the OWNER each will mutually agree on the factual
              nature of such surveys and such agreement will not be





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              unreasonably withheld.  At the OWNER's option and expense, an
              underwater survey may be performed as a part of the On-hire
              Survey and Off-hire Survey.  The On-hire Survey report and the
              Off-hire Survey report produced pursuant to this Section 2(c),
              when agreed, shall be deemed to be incorporated into this Charter
              by reference.

       (d)    (i)    Re-delivery - Condition.  The CHARTERER shall re-deliver
                     the Vessel in the same good order, structure, state and
                     condition as it was when it was delivered, except for
                     ordinary wear and tear.  The Vessel when so re-delivered
                     (i) shall have installed thereon all spares required by
                     the American Bureau of Shipping ("ABS") and any other
                     regulatory authority having jurisdiction over the Vessel;
                     (ii) shall have a currently effective Certificate of the
                     highest classification and rating issued by the ABS for
                     drillships of its age and type, with continuous survey
                     cycles up to date; (iii) shall be in good order, condition
                     and repair required by all of the





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                     terms of Section 5 hereof, with no requirements,
                     recommendations or citations of the ABS, the United States
                     Coast Guard or any other governmental agency or department
                     having jurisdiction over the Vessel uncorrected as
                     evidenced by a special survey of the Vessel completed
                     within six (6) months of re-delivery; (iv) shall have all
                     national and international trading or other certificates
                     required for operation as a mobile offshore drilling unit
                     in the location of its most  recent  employment  prior to
                     redelivery; (v) the main diesel engines of the Vessel
                     shall at redelivery be returned to the OWNER with the same
                     time remaining, in aggregate, until their next major
                     overhauls (assuming 30,000 operating hours per engine
                     between major overhauls) as recorded in the On-hire
                     Survey; the CHARTERER will compensate the OWNER for any
                     deficiency in remaining time, at





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                     the CHARTERER'S then current cost for overhaul, pro-rated
                     for 30,000 hours and the OWNER will compensate the
                     CHARTERER for any surplus at the same rate; (vi) the
                     CHARTERER shall have fulfilled its obligations under any
                     Third Party Contract then currently in force as may be
                     required by the respective Operator; (vii) if the Vessel
                     is not in Singapore or Singapore waters, the CHARTERER
                     shall on behalf of the OWNER obtain valid and current
                     documentation for immediate export of the Vessel from its
                     location to Singapore to the extent such documentation is
                     required, such documentation to be provided at the
                     CHARTERER's expense; and (viii) the Vessel shall be in all
                     respects seaworthy.  The CHARTERER shall also deliver to
                     the OWNER with the Vessel, the Vessel's log books, all
                     plans and drawings in the possession of the CHARTERER, and
                     all classification





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                     society, inspection, modification and overhaul records
                     relating applicable to the Vessel.

              (ii)   Re-delivery - Standards.  The Vessel is to be re-delivered
                     (i) in the same (or better) condition as received by the
                     CHARTERER, ordinary wear and tear excepted, and (ii) with
                     equipment in compliance with published operating
                     specifications and the CHARTERER's maintenance practice
                     for similar equipment on similar drillships owned or
                     operated by the CHARTERER or its owners or affiliates.  If
                     the OWNER elects to perform an underwater survey, as
                     provided in Section 2(c) above, any damage affecting class
                     revealed by such survey shall be repaired by the
                     CHARTERER, at the CHARTERER's time and expense.  If the
                     OWNER requires the CHARTERER (pursuant to the preceding
                     sentence) to repair damage revealed pursuant to an
                     underwater survey, and the estimated cost of such repairs
                     exceeds USD 1,000,000, the Option granted to the CHARTERER
                     pursuant to Section 18 below shall be extended for a
                     period of fifteen (15) days from the date of such
                     underwater survey.

       (e)    Re-delivery Inventory.  The CHARTERER shall re-deliver the Vessel
              with the same amount of fuel oil, lubricating oil, unbroached
              provisions, paints, oils,





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              ropes, spare parts and equipment, including, but not limited, to
              the inventory determined as a part of the On-hire Survey, and
              other unused consumable stores as are on board and ashore at the
              commencement of the Charter Term.  In the event the quantity of
              fuel oil or lubricating oil is less than it was determined in the
              On-hire Survey, the CHARTERER shall compensate the OWNER for such
              discrepancy at the then current unit cost for the difference in
              value as appropriate.  In the event consumable stores are greater
              at re-delivery than at delivery, the CHARTERER may remove the
              excess.  In the event the amount of fuel oil or lubricating oil
              is greater at re-delivery than delivery, the OWNER will purchase
              the excess at the then current unit cost for the difference in
              value as appropriate.

3.     (a)    (i)    Basic Charter Hire.  The CHARTERER shall pay to the OWNER
                     charter hire ("Basic Charter Hire") for the Vessel during
                     the Charter Term as follows: (x) for months 1 through 12 -
                     USD 10,000 per day; (y) for months 13 through 24 - USD
                     11,000 per day and (z) for months 25 through 36 and for
                     any extended period pursuant to Sections 1(c) and 2(c)
                     above - USD 13,000 per day.  Basic Charter Hire for the
                     first and last calendar months for the Charter Term shall
                     be prorated if the Date of Delivery is other than the
                     first day of a calendar month.  The





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                     Charter Hire for the month in which the Date of Delivery
                     occurs shall be payable within ten (10) days after the
                     Date of Delivery.  Charter Hire payments for each
                     subsequent calendar month shall be made prior to the first
                     day of each such month.

              (ii)   Additional Hire.  All other amounts to be paid by the
                     CHARTERER to the OWNER under this Charter shall be deemed
                     "Additional Hire."

             (iii)   Charter Hire Payments.  Payments of Basic Charter Hire and
                     Additional Hire (collectively, "Charter Hire") shall be
                     paid in U.S. currency to such account and in such manner
                     as may be designated in writing by the OWNER from time to
                     time.

       (b)    Hell or High Water Charter Obligation.  Except as hereinafter
              provided, the CHARTERER's obligation to pay Charter Hire
              hereunder shall be absolute during the term of this Charter
              irrespective of any contingency whatsoever, including, but not
              limited to (i) any set-off, counterclaim, recoupment, defense or
              other right which either party hereto may have against the other;
              (ii) any temporary unavailability of the Vessel by reason of any
              damage to the Vessel; (iii) any failure or delay on the part of
              any party hereto, whether with or without fault on its part, in
              performing or complying with any of the terms or covenants
              hereunder; (iv) any insolvency, bankruptcy, reorganization,





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              arrangement, readjustment or debt, dissolution, liquidation or
              similar proceeding by or against the CHARTERER or any other
              person; and (v) any invalidity or unenforceability, or lack of
              due authorization of or defect in the execution, of this Charter.
              The CHARTERER shall not be obligated to pay Basic Charter Hire
              for any period during which the Vessel is not available for the
              CHARTERER's use due to defect in the OWNER's title or as a result
              of an act or omission of the OWNER.

       (c)    Withholding Deductions.  Notwithstanding anything herein to the
              contrary, the CHARTERER hereby covenants and agrees that it shall
              make all payments of Charter Hire under this Charter to the OWNER
              free and clear from, and without deduction by reason of, income,
              gross receipts, sales or use taxes or withholdings of any nature
              whatsoever imposed, assessed, levied or collected by or within
              any taxing jurisdiction; provided, however, that to the extent
              required by the laws of the United States or any jurisdiction
              where the OWNER is domiciled, the CHARTERER may make any
              deductions or withholdings in respect of payments hereunder.

       (d)    Audit and Inspection.  The CHARTERER will, upon request, permit
              the OWNER or its representatives at any reasonable time or times
              during normal business hours,





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              to inspect the Vessel; provided, however that any inspection of
              the Vessel shall be subject to the consent of the Operators under
              applicable drilling contracts and the consent of applicable
              governmental agencies; which consents the CHARTERER shall use its
              best efforts to obtain.

4.     (a)    Use; Operating Areas.  The CHARTERER may use the Vessel in
              connection with contract oil and gas drilling operations for
              Operators in any area, provided: (i) the CHARTERER shall only use
              the Vessel in the territorial waters of nations which recognize
              the rights of vessels documented under the flag of the Vessel;
              (ii) the Vessel shall be moved only to a location where the
              Vessel's operating specifications allow it to operate safely, and
              (iii) the Vessel shall be employed only in lawful activities
              under the laws of the United States and any other authority
              having jurisdiction over the Vessel, in connection with contract
              oil or gas drilling, completion, or re-working operations, and
              related services.  The CHARTERER further agrees that it shall
              always operate the Vessel in compliance with the effective
              contract between the CHARTERER or any sub-charterer and the
              Operator, but always within the Vessel's technical capacities and
              certification and within the limits of the Vessel's insurance
              coverage.





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       (b)    Limits on Third Party Contracts.

               (i)   Subject to the terms of this Charter, and in particular
                     Sections 4 and 7 herein, the CHARTERER shall have the
                     right to enter into Third Party Contracts with financially
                     responsible Operators, (which for operations in U.S.
                     territorial waters or the U.S. economic zone shall be as
                     defined by the U.S. Minerals Management Service, and for
                     any  operations in all other areas shall be as defined by
                     applicable governmental authorities for the area in which
                     the Vessel is operating) for oil or gas drilling,
                     completion, or re-working operations, and related
                     services.  As a condition precedent to entering into any
                     Third Party Contracts.  The CHARTERER shall use its best
                     efforts to have the Operator under such Third Party
                     Contracts indemnify and hold harmless the Vessel, the
                     CHARTERER, the Owner and any sub-charterer for any loss or
                     damage to any geological formation, strata, or oil or gas
                     reservoir beneath the surface of the earth, as well as for
                     pollution claims resulting from a kick, blowout, seepage
                     or other escape of pollutants from below the surface of
                     the water.

              (ii)   the CHARTERER shall comply with and satisfy all provisions
                     of any applicable law, convention,





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                     regulation, proclamation, rule or order concerning
                     financial responsibility for liabilities imposed on the
                     CHARTERER or the Vessel with respect to pollution by any
                     state or nation or political subdivision thereof and shall
                     maintain all certificates or other evidence of financial
                     responsibility as may be required by any such law,
                     convention, regulation, proclamation, rule or order with
                     respect to the operations in which the Vessel is from time
                     to time engaged.

       (c)    Marketing Efforts.   It is agreed that the CHARTERER shall market
              and contract the Vessel and shall keep the OWNER advised of such
              activities as well as general market conditions.  The CHARTERER
              shall also keep the OWNER advised on a monthly basis of the work
              and contract status of the Vessel and the day rates being
              obtained, and, upon request by the OWNER, forward copies of any
              Third Party Contracts to the OWNER.





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5. Maintenance and Operation.

       (a)    Charterer's Control and Expenses.  During the Charter Term, the
              CHARTERER shall have exclusive control of the Vessel and, subject
              to the terms of the Charter, will operate, navigate, man and
              victual the Vessel at its own expense.  The CHARTERER shall pay
              all charges and expenses of every kind and nature whatsoever
              incident to the use and operation of the Vessel under the
              Charter, and under any Third Party Contract, throughout the
              Charter Term.  Such costs and expenses shall include, but not be
              limited to, those relating to (i) customs duties, bonds, work
              permits, fees, licenses, clearances, pilotage fees, wharfage
              fees, canal fees and costs, or similar charges incurred in
              connection with the importation, exportation, operation or
              navigation of the Vessel by the CHARTERER, (ii) maintaining the
              Vessel's classification society status with unexpired
              classification certificates and its Bahamian registration,
              national, local, and international trading certificates and all
              other certificates required by the United States Coast Guard or
              other governmental agencies or regulatory authorities having
              jurisdiction over the Vessel (or the area where the Vessel is
              operating from time to time), (iii) maintaining the Vessel's
              machinery, appurtenances and spare parts, and drilling equipment,
              including, without limitation, downhole equipment, in a good
              state





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              of repair and in efficient operating condition in accordance with
              good offshore practices, the CHARTERER's practice for similar
              drillships and equipment owned or operated by the CHARTERER or
              its affiliates, and in compliance with manufacturers'
              recommendations, and (iv) supervision, management, victualing
              (including catering), supplies, parts service companies, port
              charges, dockage and wharfage, fueling and lubrication.

       (b)    Maintenance and Repairs.  During the Charter Term, the CHARTERER,
              at its own cost and expense, will perform work on the Vessel as
              necessary to keep the Vessel clean, painted and in good running
              order, repair and condition in accordance with good industry
              maintenance practice, the CHARTERER's practice for similar
              drillships owned or operated by the CHARTERER or its owners or
              affiliates, requirements set out in Third Party Contracts and as
              set forth in this Charter.  The CHARTERER additionally will
              maintain the Vessel's machinery and drilling equipment,
              including, without limitation, downhole equipment, in compliance
              with manufacturer's recommendations and specifications and the
              requirements of the classification societies and regulatory
              agencies having authority over the Vessel and its equipment.  The
              CHARTERER will notify the OWNER immediately of any accident
              involving the Vessel





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              estimated to require repairs the cost of which will exceed USD
              100,000.

       (c)    Inspections.  On reasonable prior notice, the OWNER or any
              persons designated by the OWNER shall have the right at any
              reasonable time, but will be under no obligation, to inspect the
              Vessel to ascertain its condition, to satisfy itself that the
              Vessel is being properly maintained and repaired, and to
              otherwise confirm that the CHARTERER is in compliance with the
              Charter; provided, that prior to any such inspection the persons
              inspecting the Vessel shall execute a release of the CHARTERER,
              releasing the CHARTERER from liability for any personal claims
              arising during such inspection of the Vessel.  The cost of such
              inspection shall be borne by the OWNER.

       (d)    Stacking.  The CHARTERER shall be responsible for stacking the
              Vessel in a safe and acceptable condition and location during
              such time as the Vessel is not employed under a Third Party
              Contract.  During any such stacking period, the CHARTERER shall
              ensure that the Vessel is adequately supervised and manned at all
              times, and that the Vessel is at all times kept in a condition
              which would permit reactivation and start-up of drilling
              operations on thirty (30) days notice, subject to the
              availability of necessary manning and materials.  The costs and
              expenses in any way related





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              to such stacking or reactivation shall be paid by the CHARTERER.

6.     Alterations.

       (a)    Structural Modifications.  The CHARTERER will not make any
              substantial structural or other changes in the Vessel without the
              prior written consent of the OWNER, which consent shall not be
              unreasonably withheld.

       (b)    Alterations and Restoration.  Subject to the re-delivery and
              maintenance provisions of this Charter, the CHARTERER may at any
              time alter or remove items of equipment, or may fit additional
              items of equipment required to render the Vessel available for an
              Operator's purpose, provided the CHARTERER absorbs the cost and
              time of such alterations and refitting and restoring the Vessel
              to original condition before redelivery of the Vessel.  Such
              changes shall not be made without the appropriate approval of the
              relevant classification and certifying authorities.

       (c)    Replacements.  The CHARTERER shall from time to time during this
              Charter, at its own cost and expense, replace such items of
              equipment as shall be so damaged or worn as to be unfit for use.
              All such items of equipment so replaced by the CHARTERER shall
              without further action become the property of the OWNER.

       (d)    Capital Expenditures.  The cost associated with any addition of
              capital equipment not on the Vessel or





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              replacement of functioning equipment with higher capability
              equipment shall be considered to be a "Capital Expenditure".  Any
              Capital Expenditure that requires a material structural
              modification of the Vessel shall be in all respects subject to
              the prior written approval of the OWNER which approval shall not
              be unreasonably withheld.  The CHARTERER shall have the right to
              pay for any Capital Expenditure if it so elects.  In the event
              that the CHARTERER does not elect to pay for a Capital
              Expenditure, and the OWNER elects to pay for such Capital
              Expenditure at the request of or with the agreement of the
              CHARTERER, all items, improvements, additions or replacement so
              made to the Vessel or its equipment shall become the property of
              the OWNER and the Charter Hire for the remainder of the Charter
              Term shall be increased by an amount equal to the Capital
              Expenditure multiplied by 0.00073 for each day in the applicable
              month (the collective amount of such increase in the Charter Hire
              paid by the CHARTERER to the OWNER at any given time is referred
              to as the "Capital Payments").  In the event the OWNER does not
              pay for a Capital Expenditure, any items, improvements and
              additions to the Vessel or its equipment so purchased or made by
              the CHARTERER shall become the property of the CHARTERER so long
              as the removal thereof from the Vessel upon its re-delivery to
              the





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              OWNER does not render the Vessel unfit for its intended use and
              provided the Vessel is restored to its original condition, normal
              wear and tear excepted, at the CHARTERER's time and expense prior
              to re-delivery.  To the extent any reimbursement or adjustment of
              compensation is made by an Operator with respect to any Capital
              Expenditure, such amounts will be the property of the party that
              paid for such Capital Expenditure. Capital Expenditures required
              by new applicable regulatory or classification requirements
              arising after the purchase of the Vessel by the OWNER shall be
              paid by the OWNER; provided, however, that the total amount of
              all such Capital Expenditures paid by the OWNER shall be added to
              the amount of the Purchase Price as defined in Section 18 below.

7.     (a)    Insurance-General.  The CHARTERER shall, at its own expense, keep
              the Vessel insured against such risks which should be covered by
              experienced, prudent and responsible companies engaged in the
              offshore contract drilling of hydrocarbons in places and under
              conditions comparable to those in which the Vessel is employed
              from time to time, and possessing financial and operating
              characteristics similar to the CHARTERER ("Similar Companies") in
              accordance with the practices of Similar Companies, with present
              underwriters or other insurers reasonably acceptable to the
              OWNER, in





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              conformance with good marine practice, including, without
              limiting the generality of the foregoing, insurance for damage to
              the Vessel, hull and machinery, trip/tow protection and
              indemnity, collision liability, employer's liability, pollution
              (excluding that emanating from the well bore), comprehensive
              general liability, property damage, fire, and theft.  All
              insurance coverage shall be placed through independent brokers of
              recognized standing and with the CHARTERER's current club or
              underwriters or with a club or first-class underwriters
              reasonably acceptable to the OWNER.  The limits specified below
              shall be minimum limits with respect to the Vessel, and shall in
              no way diminish the CHARTERER's insurance or indemnity
              obligations herein:

                     (i)    Marine full form hull and machinery and increased
                            value insurance extended to insure against all
                            risks of loss or damage, including, but not limited
                            to, the risk of blowout and cratering and against
                            such other risks as are typically insured against
                            by Similar Companies for the protection of the
                            interests of the OWNER and the CHARTERER for not
                            less than the Insured Value as set forth in Section
                            7(g) below.  The deductible or self-insured
                            retention under the policy shall





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                            not exceed USD 250,000 per occurrence;

                     (ii)   Marine full form protection and indemnity insurance
                            and comprehensive general lability insurance, under
                            forms typically maintained by Similar Companies.
                            Such insurance shall be maintained in the United
                            States or London markets, or other major insurance
                            market approved by the OWNER, and shall be in an
                            amount not less than that: (A) carried by Similar
                            Companies or (B) carried by the CHARTERER for any
                            other drillship owned or chartered by the CHARTERER
                            or its affiliates.  Said policy shall not include a
                            deductible or self-insured retention in excess of
                            USD 250,000 per occurrence;

                  (iii)     The CHARTERER shall, at all times during which the
                            Vessel is within the jurisdiction of the United
                            States of America, maintain insurance or post bond
                            or maintain evidence of financial responsibility
                            with respect to the Vessel to cover the actual cost
                            of removal of discharged oil for which the
                            CHARTERER or the Vessel may be held strictly liable
                            (or held liable due to the negligence of the
                            CHARTERER or any other person) under the Clean
                            Water Act of 1977, the Oil





                                      -24-
<PAGE>   25
                            Pollution Act of 1990 or the Outer Continental
                            Shelf Lands Act, or any subsequent enactment, or
                            under any other federal, state or local law, rule,
                            regulation or ordinance applicable where the Vessel
                            is located which may apply to the Vessel or to the
                            CHARTERER; and the CHARTERER shall maintain
                            insurance covering similar pollution risks or
                            liabilities incident thereto under any law, rule,
                            regulation or judicial decision of any foreign
                            jurisdiction or jurisdictions or political
                            subdivision thereof applicable to the CHARTERER,
                            the Vessel, or its operations;

                     (iv)   Such workers' compensation insurance, including,
                            without limitation, longshoremen's and harbor
                            workers' insurance, as shall be required by
                            applicable law, including endorsements for Outer
                            Continental Shelf operations, borrowed servant,
                            voluntary compensation, and in rem claims;

                     (v)    Insurance (with a minimum limit of USD 20,000,000
                            per occurrence or such greater amount as is carried
                            by the CHARTERER or its affiliates on their owned
                            or chartered rigs) naming the CHARTERER and the
                            OWNER as





                                      -25-
<PAGE>   26
                            assureds and loss payees, as their interests may
                            appear, against Contingent Operator's Extra Expense
                            ("C.O.E.E.") liability in  connection with
                            operations conducted by the Vessel under a Third
                            Party Contract with a financially responsible
                            Operator that indemnifies against such C.O.E.E.
                            arising out of blowout (above and below ground),
                            cratering, re-drilling/re-completion, cost of
                            control, clean-up, containment, seepage, pollution,
                            spillage or leakage in connection with operations
                            conducted by the Vessel, in form and substance
                            typically maintained by Similar Companies, and
                            third party liabilities that may be assumed by a
                            contract which is legally enforceable and in form
                            and substance typically maintained by Similar
                            Companies.  Deductibles or self-insured retention
                            shall not exceed USD 250,000 and shall be for the
                            account of the CHARTERER;

                     (vi)   If the Vessel is used outside the U.S. Gulf of
                            Mexico, war-risk and political-risk insurance
                            naming the CHARTERER and the OWNER as assureds and
                            loss payees, which shall be maintained in the
                            broadest forms generally available in the United
                            States market, and





                                      -26-
<PAGE>   27
                            shall include coverage for war risk hull and
                            machinery, confiscation, terrorist acts,
                            expropriation, nationalization, and deprivation.
                            Such insurance and deductibles shall be in amounts
                            equal to the corresponding policies described in
                            sub-paragraphs (i) and (ii) above; and

                 (vii)      The insurance set out in section 7(a)(i) above
                            shall be endorsed by the CHARTERER at its own
                            expense to include breach of warranty coverage for
                            the benefit of the OWNER.

       (b)    Form of Insurance.  All insurance required under Section 7(a)
              above shall be in such form and with such underwriters, companies
              or clubs as the OWNER shall reasonably approve.  The OWNER (and
              if applicable, the OWNER's bank as mortgagee of the Vessel) shall
              be named as named assureds as their interest may appear, but
              without liability for premiums, club calls, or assessments; and
              in respect of insurance pursuant to 7(a), shall be named as loss
              payee(s) up to the Insured Value.  All policies shall provide
              that the OWNER (and if applicable, the OWNER's bank as mortgagee
              of the Vessel) and the CHARTERER will be given at least thirty
              (30) days notice of cancellation, non-renewal or material
              alteration.  Any deductibles under such policies shall always be
              for the account of the





                                      -27-
<PAGE>   28
              CHARTERER.  Unless otherwise required by the OWNER, such coverage
              shall be in the same form as the CHARTERER or its affiliates
              maintains in force on the drillships owned or operated by them.

       (c)    Proof of Insurance.  The CHARTERER shall furnish the OWNER from
              time to time on request, and in any event at least annually, with
              copies of all insurance policies, cover notes or other documents
              evidencing the creation, renewal, amount and payment of the
              insurance maintained on the Vessel and for which period the
              insurance premiums are paid.

       (d)    Forced Insurance.  In the event the CHARTERER fails to procure
              and maintain insurance in accordance with this Section 7, the
              OWNER may, but shall not be obligated to, effect and maintain the
              insurance or entries in a protection and indemnity association or
              club as required herein and to pay the premiums therefore and,
              upon the OWNER's giving notice to the CHARTERER of the amounts of
              premiums and costs so incurred, the CHARTERER shall reimburse the
              OWNER for such amounts not later than fifteen (15) days after
              such notice.

       (e)    Insurance Indemnity.  Should the CHARTERER fail or neglect to
              fulfill any of the insurance requirements of a Third Party
              Contract, the CHARTERER hereby undertakes to indemnify and hold
              the OWNER harmless from and against any loss, claim, damage,
              expense or costs





                                      -28-
<PAGE>   29
              (including all legal fees and costs) incurred as a consequence of
              such failure or neglect.

       (f)    Termination Due To Loss.  This Charter shall be terminated due to
              a total or constructive total loss of the Vessel as determined by
              underwriters, and Charter Hire pursuant to Section 3 hereof shall
              be payable until the date of such total or constructive loss, as
              ultimately determined by the underwriters.

       (g)    Payments in Event of Total or Constructive Loss.  In the event of
              a total or constructive loss of the Vessel, the OWNER, in lieu of
              any and all other claims and damages, shall receive from the
              CHARTERER, and the CHARTERER shall pay to the OWNER, an amount
              equal to the sum of (i) any accrued and unpaid Charter Hire
              payable in accordance with Section 3 hereof calculated through
              the date of such loss, (ii) the value of the hull and machinery
              of the Vessel which is hereby agreed to be the Purchase Price (as
              defined in Section 18 hereof), determined as if the date of such
              total or constructive loss were the Effective Date (as defined in
              Section 18 hereof), plus one-hundred ten (110) percent of any
              Capital Expenditure paid for by the OWNER (the "Insured Value")
              and (iii) all other sums that may be due and payable by the
              CHARTERER on the date of such loss under this Charter, less (x)
              all insurance proceeds received directly by the OWNER





                                      -29-
<PAGE>   30
              attributable for such total or constructive loss (other than
              those relating to any insurance policies paid for by the OWNER),
              and (y) all payments of Charter Hire paid by the CHARTERER with
              respect to the period beginning upon the date of such total loss,
              together with interest calculated at an annual rate of ten (10)
              percent.  The CHARTERER's obligation to pay amounts set forth in
              (i), (ii) and (iii) above shall be absolute and shall be due to
              the OWNER upon the earlier of the CHARTERER's receipt of
              insurance proceeds and ninety (90) days following the date of the
              declaration of such total loss.  The OWNER may, at its own
              expense, place additional Total Loss Only coverage.  Any proceeds
              paid under such additional insurance shall be paid directly by
              insurers to the OWNER and shall not be included in the
              calculation set forth above.

       (h)    Limitation of Liability.  Nothing in this Charter shall be
              construed or held to deprive the OWNER, the CHARTERER or the
              Vessel of any right to claim limitation of liability against
              third parties provided by any applicable statute of any
              jurisdiction.

       (i)    Wreck Removal.  In the event the Vessel becomes a wreck or
              obstruction to navigation, the CHARTERER shall indemnify the
              OWNER against any sums whatsoever which the OWNER shall become
              liable to pay or shall pay in consequence of the Vessel becoming
              a wreck or





                                      -30-
<PAGE>   31
              obstruction to navigation.

8.     Liens.

       Neither the CHARTERER nor any of its employees shall have any right,
       power or authority to create,incur or permit to be imposed upon the
       Vessel any lien whatsoever during the Charter Term, except for crew's
       wages, general average and salvage.  The CHARTERER shall carry a copy of
       this Charter with the Vessel's papers, and on demand will exhibit the
       same to any person having business with the Vessel which might give rise
       to any lien thereon, other than liens for crew's wages, general average
       and salvage.  The CHARTERER will place and keep prominently displayed in
       the chart room and the captain's cabin on the Vessel in a conspicuous
       place, a notice, framed under glass, printed in plain type of such size
       that the paragraph of reading material shall cover a reasonable space
       acceptable to the OWNER reading as follows:

              "THIS VESSEL IS UNDER CHARTER TO FALCON DRILLING COMPANY, INC.
              UNDER THE TERMS OF SAID CHARTER, NEITHER THE CHARTERER, NOR ANY
              SUB-CHARTERER, NOR THE MASTER, NOR ANY OTHER PERSON HAS THE
              RIGHT, POWER OR AUTHORITY TO CREATE, INCUR OR PERMIT TO BE PLACED
              OR IMPOSED UPON THIS VESSEL ANY LIEN WHATSOEVER OTHER THAN LIENS
              FOR CREW'S WAGES, GENERAL AVERAGE AND SALVAGE."





                                      -31-
<PAGE>   32
9.     Mortgages; Financing.

       The CHARTERER hereby agrees that should the OWNER wish to mortgage the
       Vessel or assign this Charter in connection with any financing
       arrangements of the OWNER, the CHARTERER shall agree to post notices of
       the mortgage and the Charter as reasonably required, execute such
       documents acknowledging the terms and existence of the mortgage, and
       otherwise cooperate reasonably with the OWNER and any mortgagee in
       respect of such financing.  Any such mortgage shall provide that the
       CHARTERER shall have the right of quiet enjoyment so long as no Event of
       Default has occurred under this Charter and that the Option contained in
       Section 18 below shall not be adversely effected by the mortgage or the
       acts of the mortgagee.  Any reasonable costs and expenses associated
       with such activity will be borne by the OWNER.

10.    Sale of Vessel During Charter.

              (a)    OWNER shall have the right to sell the Vessel and assign
                     the Charter at any time during the Charter Term; provided,
                     however, that any such sale and assignment shall be
                     subject to the continued effectiveness of this Charter,
                     including, but not limited to the Option contained in
                     Section 18 below.  Upon such sale and assignment, if the
                     CHARTERER consents to such sale and assignment, which
                     consent shall not to be unreasonably withheld, the OWNER
                     shall be relieved of all of its obligations under the
                     Charter





                                      -32-
<PAGE>   33
                     except for the indemnities provided for in Section 16(b)
                     and Section 16(c)(ii) herein.

              (b)    If the OWNER shall decide to sell the Vessel or to market
                     the Vessel for possible sale, it shall give the CHARTERER
                     written notice of such decision.  The CHARTERER shall have
                     the right, notwithstanding the provisions of Section 18
                     below, within ten (10) days of receipt of such notice to
                     inform the OWNER in writing of its exercise of its Option
                     under Section 18 below.

              (c)    If the CHARTERER elects not to exercise its Option under
                     Section 18 below after receiving the OWNER'S notice
                     pursuant to Section 10(b) above, the CHARTERER shall have,
                     in addition to its rights under Section 18 below, a right
                     of first refusal as to any third party offer to purchase
                     the Vessel received by the OWNER.  The right of the
                     CHARTERER to purchase the Vessel shall be on the same
                     terms and conditions as contained in the third party offer
                     and the CHARTERER shall exercise such right by written
                     notice to the OWNER delivered within three (3) days of
                     being notified in writing of the third party offer and its
                     terms and conditions by the OWNER.

11.    Representations and Warranties.

              (a)    CHARTERER's Representations.  The CHARTERER represents,
                     warrants, covenants, and agrees to and with the OWNER
                     that: (i) the CHARTERER is a corporation duly





                                      -33-
<PAGE>   34
                     organized, validly existing, and in good standing under
                     the laws of the State of Delaware, has the corporate power
                     to own its property and assets, and is duly qualified in
                     each jurisdiction where the nature of its operations
                     requires such qualification; and (ii) the execution,
                     delivery, and performance of this Charter are within the
                     CHARTERER's power, have been duly authorized by all
                     necessary corporate action, do not contravene the
                     CHARTERER's articles or certificate of incorporation or
                     bylaws, or similar documents, and do not contravene any
                     law, any order of any court or other agency of government,
                     or any agreement or instrument or contractual restriction
                     binding on or affecting any of its property, or constitute
                     a default thereunder.

              (b)    OWNER's Representations.  The OWNER represents, warrants,
                     covenants, and agrees to and with the CHARTERER that (i)
                     the OWNER is a limited partnership duly organized, validly
                     existing, and in good standing under the laws of the State
                     of California, has the legal power to own its property and
                     assets, and is duly qualified in each jurisdiction where
                     the nature of its operations requires such qualification;
                     and (ii) the execution, delivery, and performance of this
                     Charter are within the OWNER's power, have been duly
                     authorized by all necessary partnership action, do not
                     contravene the OWNER's certificate of limited partnership,
                     and do





                                      -34-
<PAGE>   35
                     not contravene any law, any order of any court or other
                     agency of government, or any agreement or instrument or
                     contractual restriction binding or affecting any of its
                     property, or constitute a default thereunder.

12.    Assignment; Sub-charter.

              (a)    The CHARTERER does not have the right to, and shall not,
                     assign, pledge, or hypothecate this Charter (by operation
                     of law or otherwise), in whole or in part, or any interest
                     herein, or any right, duty or obligation hereunder, or to
                     sub-charter the Vessel (collectively, an "Assignment")
                     without the prior written consent of the OWNER, and any
                     purported Assignment without the OWNER's prior written
                     consent shall be void and unenforceable against the OWNER.
                     The CHARTERER shall remain primarily liable under this
                     Charter in the event of any permitted Assignment, which
                     will in no event be considered a novation of this Charter
                     unless the OWNER expressly agrees to the contrary in
                     writing.

              (b)    Notwithstanding the foregoing:

                            (i)    the CHARTERER may sub-charter the Vessel
                     without the necessity of obtaining the OWNER's consent
                     provided physical, financial and operational control of
                     the Vessel remains in the hands of the CHARTERER for the
                     duration of the





                                      -35-
<PAGE>   36
                     sub-charter, the sub-charter is subordinate to this
                     Charter, and the sub-charterer executes an acknowledgement
                     of the existence and priority of this Charter, in form and
                     substance reasonably satisfactory to the OWNER and;

                            (ii)   the CHARTERER may sub-charter the Vessel to
                     any entity wholly owned by the CHARTERER so long as the
                     CHARTERER remains primarily liabile under this Charter.

13.    Logo and Vessel Names.

       The OWNER agrees that the CHARTERER may display the CHARTERER's logo and
       the CHARTERER's designated name on the Vessel during the Charter Term.

14.    Notices.

       All notices and other communications required under this Charter shall
       be by personal delivery or facsimile, confirmed in writing by letter, to
       each party at its address as it may declare from time to time pursuant
       to this notice provision.  Any such notice or communication shall be
       deemed effective on the date of delivery, if by personal delivery, or on
       the next business day after transmission if by facsimile.



       OWNER:                                     CHARTERER:

Hyde Offshore Limited Partnership          Falcon Drilling Company, Inc.
One Market Plaza                           1900 West Loop South
Steuart Street Tower, Suite 800            Suite 1800
San Francisco, California  94105-1301      Houston, Texas  77027
Attn:  Legal Department                    Attn:  Steve A. Webster
Tel:  (415) 974-1399                       Tel:  (713) 623-8984

Fax:   (415) 882-0861                      Fax:  (713) 623-8103
Telex:  34430





                                      -36-
<PAGE>   37
15.    Defaults; Remedies.

       (a)    Events of Default.  Any one or more of the following is an Event
              of Default by the CHARTERER:

              (i)    the CHARTERER shall fail to pay the whole or part of any
                     Basic Charter Hire or Additional Hire specified in Section
                     3 hereof on the due date thereof, and the same shall
                     continue for three (3) business days following the due
                     date thereof;

              (ii)   the CHARTERER shall fail to pay when due the whole or any
                     part of the Insured Value of the Vessel when required by
                     this Charter, and the same shall have continued for three
                     (3) business days following the due date thereof;

             (iii)   the CHARTERER shall fail to carry and maintain insurance
                     on or with respect to the Vessel in accordance with the
                     provisions of Section 7 hereof;

              (iv)   the CHARTERER shall fail to perform or comply with any
                     other covenant, condition, or agreement to be performed or
                     observed by it hereunder and the CHARTERER shall fail to
                     cure such failure to perform or comply within ten (10)
                     business days





                                      -37-
<PAGE>   38
                     after the OWNER shall have demanded in writing the cure
                     thereof;

              (v)    Any representation or warranty made by the CHARTERER
                     herein shall prove to have been incorrect in any material
                     respect as of the date on which made, or any statement,
                     report, schedule, notice or other writing furnished by the
                     CHARTERER to the OWNER in connection herewith shall prove
                     to have been incorrect in any material respect as of the
                     date on which the facts set forth therein are stated or
                     certified, and the CHARTERER shall fail to cure such
                     defect within five (5) business days after the OWNER shall
                     have demanded in writing the cure thereof;

             (vi)    the CHARTERER or any sub-charterer shall become insolvent
                     or bankrupt or shall cease paying or providing for the
                     payment of its debts generally; the CHARTERER or any sub-
                     charterer shall be dissolved, shall be adjudged a bankrupt
                     by a court of competent jurisdiction, shall make a general
                     assignment for the benefit of its creditors, or shall lose
                     its charter by forfeiture or otherwise; or a petition for
                     an arrangement or for reorganization of the CHARTERER,
                     FALCON or any sub-charterer under the bankruptcy laws of
                     the relevant jurisdiction shall be filed by the





                                      -38-
<PAGE>   39
                     CHARTERER, FALCON or such sub-charterer, or such petition
                     shall be filed by creditors and the same shall be approved
                     by a court of competent jurisdiction; and

             (vii)   An arrangement or reorganization of the CHARTERER or any
                     sub-charterer under the bankruptcy laws of the relevant
                     jurisdiction shall be approved by a court, whether
                     proposed by a creditor, a stockholder or any other party
                     or person whatsoever; or a receiver or receivers of any
                     kind whatsoever, whether appointed in admiralty,
                     bankruptcy, common law or equity proceedings, shall be
                     appointed by a decree of a court of competent jurisdiction
                     with respect to the Vessel or all or substantially all of
                     the property of the CHARTERER or any sub-charterer.

       (b)    Remedies.  At any time that an Event of Default has occurred and
              is continuing, the OWNER, by written notice to the CHARTERER, may
              declare the CHARTERER in default hereunder, in which case the
              OWNER shall be entitled to pursue all remedies available at law
              or in equity, including, without limitation, the following
              remedies:

               (i)   By notice to the CHARTERER, the OWNER may terminate this
                     Charter, whereupon the CHARTERER will re-deliver the
                     Vessel to the OWNER with all





                                      -39-
<PAGE>   40
                     reasonable dispatch and in accordance with all of the
                     relevant provisions of Section 2;

              (ii)   The OWNER may, after notice to the CHARTERER, re-take the
                     Vessel wherever found, whether upon the high seas or at
                     any port, harbor or other place and irrespective of
                     whether the CHARTERER, any sub-charterer or any other
                     person is in possession of the Vessel, all without prior
                     demand and without legal process, the CHARTERER HEREBY
                     WAIVING ANY AND ALL RIGHTS TO PRIOR NOTICE AND A JUDICIAL
                     HEARING WITH RESPECT TO THE REPOSSESSION OF THE VESSEL BY
                     THE OWNER, and for that purpose the OWNER or its agent may
                     enter upon any dock, pier or other premises where the
                     Vessel is and may take possession thereof, without the
                     OWNER or its agent incurring any liability by reason of
                     such re-taking, whether for the restoration of damage to
                     property caused by such re-taking or for damages of any
                     kind for any reason to the CHARTERER or any person
                     claiming under the CHARTERER;

             (iii)   The OWNER may sell or otherwise dispose of the Vessel at
                     public auction or by private sale, without prior notice to
                     the CHARTERER, at such time or times and upon such terms
                     as the OWNER may determine, for cash or credit, at such
                     price as





                                      -40-
<PAGE>   41
                     the OWNER shall deem fair, with the Vessel in its then
                     condition or following any commercially reasonable
                     preparation, or otherwise dispose of, hold, use, operate,
                     charter to others the Vessel, in a commercially reasonable
                     manner, all free and clear of any rights of the CHARTER,
                     including any right of redemption, and without any duty to
                     account to the CHARTERER with respect to such action or
                     inaction or for any proceeds with respect hereto; any
                     disposition or holding of the Vessel shall not be deemed a
                     retention by the OWNER in satisfaction of the CHARTERER's
                     obligations under this Charter; and

              (iv)   The OWNER may proceed by appropriate action for collection
                     from the CHARTERER of all costs and expenses, including
                     attorneys' fees, court costs, and other expenses, incurred
                     by the OWNER in connection with the enforcement of this
                     Charter and the exercise of remedies hereunder.  Further,
                     in addition to any other amounts to which the OWNER may be
                     entitled, the CHARTERER shall be liable for all costs and
                     expenses incurred by the OWNER, which shall include all
                     insurance premiums, all demurrage, dockage, and anchorage
                     charges, all legal fees, and all other costs and expenses
                     whatsoever incurred by the OWNER by reason of the





                                      -41-
<PAGE>   42
                     occurrence of an Event of Default or by reason of the
                     exercise by the OWNER of any remedy hereunder, including,
                     without limitation, any cost or expense incurred by the
                     OWNER in connection with any re-taking of the Vessel.  No
                     remedy referred to in this Section 15(b) is intended to be
                     exclusive, but each remedy shall be cumulative and in
                     addition to, and may exercised concurrently with, any
                     other remedy which is referred to herein or which may
                     otherwise be available to the OWNER at law, in equity or
                     in admiralty.

16.    (a)    CHARTERER's Indemnification of the OWNER.  The CHARTERER hereby
              assumes liability for, and shall defend, indemnify and hold
              harmless the OWNER, its owners and affiliates and any mortgagee
              of the Vessel, and each of their respective successors and
              assigns, and the directors, officers, employees, representatives,
              agents and servants of any of the foregoing (collectively, the
              "Indemnified Parties") from and against any and all Claims (as
              hereinafter defined) which may be imposed on, incurred by or
              asserted against any of the Indemnified Parties or the Vessel
              (whether or not also indemnified against pursuant to any other
              agreement or by any other person), regardless of when asserted
              (whether before, after or during the Charter Term), in any way
              relating





                                      -42-
<PAGE>   43
              to or arising out of any of the following occurring during the
              Charter Term: the construction, documentation, registry,
              delivery, possession, ownership (as owner pro hac vice), use,
              operation, chartering, sub-chartering, condition, maintenance,
              repair, and return of the Vessel.  Notwithstanding the foregoing,
              the CHARTERER shall not be obligated to indemnify the OWNER in
              respect of any act or omission constituting gross negligence or
              willful misconduct by the OWNER or its agents or representatives.
              The CHARTERER agrees to further indemnify, defend and hold
              harmless the OWNER and the Vessel from and against all liens
              created and imposed on the Vessel as a result of the CHARTERER's
              manning and operating the Vessel, and in the event of the seizure
              of the Vessel under legal process to enforce such lien or
              asserted lien, the CHARTERER shall secure the prompt release of
              the Vessel by payment of same or otherwise as may be appropriate.
              The OWNER's right to compensation provided for in Section 3
              herein for the operation of the Vessel shall not be suspended
              during any time when the Vessel is under seizure by legal process
              as a result of such liens or asserted liens.  As used herein,
              "Claims" shall mean any and all liabilities, obligations, losses,
              damages, penalties, claims, actions, suits, costs, expenses,
              fines, penalties and disbursements





                                      -43-
<PAGE>   44
              (including, without limitation, reasonable attorneys' fees, and
              investigatory fees and disbursements) of whatsoever kind and
              nature, including, without limitation, (i) claims or penalties
              arising from any violation of the laws or regulations of any
              authority or country or political subdivision thereof, (ii)
              claims as the result of latent, patent or other defects, whether
              or not discoverable by the OWNER or the CHARTERER, and (iii) tort
              claims of any kind, including, without limitation, claims for
              injury or damage caused by leakage, discharge or spillage of oil
              or cargo or refuse.

       (b)    OWNER's Indemnification of the CHARTERER.  The OWNER agrees to
              indemnify, defend, and hold harmless the CHARTERER from all
              damages or costs arising as a result of the gross negligence,
              violation of any law or regulation (the performance of which
              rests solely with the OWNER rather than the performance of the
              CHARTERER under the terms of this Charter), or willful misconduct
              of the OWNER, except to the extent such damages or costs are
              contributed to or caused by the CHARTERER.

       (c)    Tax Indemnification.

              (i)    The CHARTERER agrees to pay, and shall indemnify, protect,
                     defend and hold harmless the OWNER from all sales taxes,
                     use taxes, ad valorem taxes, governmental fees, duties,
                     and dues of whatever





                                      -44-
<PAGE>   45
                     nature, imposed, assessed, or levied on the Vessel during
                     the Charter Term, and shall also be responsible for and
                     pay any employment, payroll and other similar taxes
                     arising from employment of its employees.  Ad valorem
                     taxes for any period that is not fully within the Charter
                     Term shall be prorated and the OWNER shall be responsible
                     for the portion thereof not allocable to the Charter Term.

              (ii)   The OWNER shall be responsible for any customs duties
                     levied on the Vessel or income taxes or similar charges on
                     the net income of the OWNER levied against the OWNER or
                     the Vessel by the United States or by the OWNER's country
                     of registration, domicile or place of business or the
                     country of registry of the Vessel.

       (d)    The obligations of the OWNER and the CHARTERER under this Section
              16 shall survive the expiration or earlier termination of this
              Charter in perpetuity and are expressly made for the benefit of,
              and shall be enforceable by, the party to which the obligations
              are owed, and its successors and assigns.

       (e)    Except as otherwise limited herein, it is the intent of the
              parties hereto that all indemnity obligations or liabilities
              assumed by such parties under this Charter be without limit and
              without regard to the cause or





                                      -45-
<PAGE>   46
              causes thereof (including preexisting conditions), the
              unseaworthiness of any vessel, strict liability or the negligence
              of any party or parties, whether such negligence be sole, joint
              or concurrent, active or passive.

       (f)    Consequential Damages.  Neither party hereto shall be liable to
              the other party for any economic losses, or incidental,
              consequential or special damages, arising out of, resulting from
              or relating in any way to this Charter, irrespective of the
              negligence or fault of any party.

17.    Arbitration.  If any dispute arises between the parties with respect to
       this Charter which cannot be settled amicably by mutual agreement, such
       dispute shall be settled exclusively by arbitration in accordance with
       the rules of the Society of Maritime Arbitrators, Inc. (the "Rules") and
       this Section 17.  In the event of such dispute, either party may serve
       notice of arbitration ("Notice of Arbitration") on the other party.
       Notwithstanding anything in Section 14 hereof to the contrary, a Notice
       of Arbitration shall only be sent by facsimile, confirmed by registered
       letter, postage prepaid, and shall be effective on receipt of or
       facsimile by the party to whom it is addressed.  Proof of receipt of a
       facsimile shall be the answer back of the party to whom it is addressed
       on the facsimile confirmation page.  The Notice of Arbitration shall be
       dated, shall name the arbitrator





                                      -46-
<PAGE>   47
       selected by such party and, without prejudice to any right under the
       Rules permitting subsequent modifications, shall specify the claims or
       issues which are to be subjected to arbitration.  Within thirty (30)
       days of the effective date of the Notice of Arbitration, the other party
       shall appoint an arbitrator and notify the first party of the arbitrator
       so appointed.  If such other party fails to appoint an arbitrator (who
       accepts such appointment) and notify the first party thereof within such
       thirty (30) day period, then the arbitrator appointed by the first party
       shall sit as a sole arbitrator and decide the matter with all the powers
       of the arbitration tribunal, and the party who fails to appoint an
       arbitrator shall cooperate fully with such arbitration, the award
       rendered or any subsequent enforcement thereof on the basis of the
       arbitration being conducted by and the award being rendered by a sole
       arbitrator.  If the party receiving the Notice of Arbitration appoints
       an arbitrator (who accepts such appointment) within the foregoing thirty
       (30) day period, then within sixty (60) days of the effective date of
       the Notice of Arbitration the two arbitrators thus appointed shall
       appoint a third arbitrator, who shall serve as chairman of the
       arbitration panel.  If the two arbitrators are unable to agree on the
       appointment of a third arbitrator within such period, such appointment
       shall be made by the President of the Society of Maritime Arbitrators,
       Inc. upon application by either party.  The arbitration panel shall
       decide the matter





                                      -47-
<PAGE>   48
       as expeditiously as possible; however, no time limits shall be imposed.
       The arbitration shall be conducted in the English language in New York,
       New York, or at such other place or places as the parties may agree
       upon.  Decisions of the arbitration panel shall be by majority vote.
       The costs and expenses of the arbitration panel, including, but not
       limited to, the costs and expenses of administration of the arbitration
       proceeding, shall be borne by the parties as determined by the
       arbitration panel or, failing such determination, shall be shared
       equally by the parties.  The arbitration award shall be final, binding
       and not subject to appeal and shall be enforceable in any court of
       competent jurisdiction in any country.

18.    Purchase Option.  (a)  The CHARTERER shall have the option (the
       "Option") to purchase the Vessel at any time during the Charter Term for
       the Purchase Price (as hereinafter defined) provided that (i) no Event
       of Default under Section 15 (a)(i) or (ii) of this Charter shall have
       occurred and be continuing, (ii) the CHARTERER shall have given the
       OWNER no less than sixty (60) days written notice (the "Option Notice")
       of its election to exercise the Option and (iii) the Purchase Price
       shall be increased by any amounts paid by the OWNER for Capital
       Expenditures pursuant to Section 6(d) above, as reduced by any Capital
       Payments paid by the CHARTERER to the OWNER pursuant to Section 6(d).
       The Option Notice shall specify the date on which the CHARTERER intends





                                      -48-
<PAGE>   49
       to purchase the Vessel pursuant to its exercise of the Option, which
       date shall be no less than thirty (30) days nor more than ninety (90)
       days after the Option Notice is received by the OWNER (the "Effective
       Date").  Notwithstanding the foregoing, the CHARTERER may revoke any
       Option Notice at any time prior to ten (10) days prior to the Effective
       Date without affecting the CHARTERER's rights hereunder to exercise the
       Option.  The sale of the Vessel pursuant to the Option shall be on an
       "AS IS, WHERE IS" basis and substantially in the form of the Memorandum
       of Agreement attached hereto as Exhibit 2 and incorporated herein by
       reference.  As used herein, and subject to an increase in amount based
       on any Capital Expenditure pursuant to Section 6(d) hereof, the
       "Purchase Price" shall mean the following:

      (i)     USD 21,500,000, if the Effective Date is within the first twelve
              (12) months of the Charter Term;

     (ii)     USD 22,500,000, if the Effective Date is within the second twelve
              (12) months of the Charter Term; or

    (iii)     USD 23,000,000, if the Effective Date is within the third twelve
              (12) months of the Charter Term or the Option is exercised
              pursuant to any extension under Section 2(d)(ii) above.

       (b)    Upon any sale of the Vessel by the OWNER to the CHARTERER at any
time during the Charter Term, the OWNER shall refund to the CHARTERER any Basic
Charter Hire paid by the CHARTERER to the OWNER attributable to the period
after the date





                                      -49-
<PAGE>   50
of such sale.

19.    Governing Law.  This Charter will be governed by and interpreted in
       accordance with the general maritime laws of the United States of
       America and, to the extent they are not applicable, the internal laws of
       the State of New York.

20.    Waiver.  No waiver by either party of any breach by the other of any
       obligation, agreement or covenant hereunder shall be deemed to be a
       waiver of that or any subsequent breach of the same or any other
       covenant, agreement or obligation nor shall any forbearance by any party
       to seek a remedy for any breach by the other party may deemed a waiver
       by such party of its rights or remedies with respect to such breach,
       unless such waiver is in each case in writing duly executed by such
       party.

21.    Entire Agreement; Amendment.  This Charter and its exhibits constitute
       the entire agreement between the parties hereto relating to the subject
       matter hereof and supersedes all prior agreements and undertakings of
       the parties hereto, whether oral or written, in connection herewith.  No
       amendment of this Charter shall be valid unless made in writing and
       signed by each of the parties hereto.

22.    Counterparts.  This Charter may be executed in counterparts, in which
       event all executed counterparts will be treated as an original hereof.

23.    Severability.  The OWNER and the CHARTERER agree that with respect to
       any specific provision of this Charter that is





                                      -50-
<PAGE>   51
       held by any court or other constituted legal authority to be void or
       otherwise unenforceable in any particular manner, the parties hereto
       consider and permit this Charter to be amended in such manner as may be
       required in order to cause said provision and all other terms of this
       Charter to remain binding and enforceable against the OWNER and the
       CHARTERER.

24.    Captions.  The captions in this Charter are for convenience and
       reference only and shall not define or limit any of the terms or
       provisions, or otherwise affect the construction, hereof.

25.    Binding Effect.  Subject to Section 12 hereof, this Charter shall be
       binding upon, inure to the benefit of, and be enforceable by the parties
       hereto and their respective successors and assigns.

       IN WITNESS WHEREOF, the parties have executed this Charter as of the
date first written above.


                                      OWNER

                                      HYDE OFFSHORE LIMITED PARTNERSHIP

                                      By:Hyde Offshore, Inc.,
                                      Its General Partner

                                      By: /s/ ROBERT A. CAREY                  
                                         ---------------------------------------
                                      Name:   Robert A. Carey
                                           -------------------------------------
                                      Title:  Vice President
                                            ------------------------------------


                                      CHARTERER

                                      FALCON DRILLING COMPANY, INC.


                                      By: /s/ LEIGHTON E. MOSS                  
                                         ---------------------------------------
                                      Name:   Leighton E. Moss
                                            ------------------------------------
                                      Title:  Vice President
                                             -----------------------------------





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