A drilling apparatus of the type comprising: a rotatable drilling shaft connectable with a drilling string a housing for rotatably supporting a length of the drilling shaft for rotation therein; a drilling bit connected to a distal end of the drilling shaft which extends from a distal end of the housing; a first seal; a second seal; a fluid chamber defined by an interior of the housing between the first seal and the second seal, the fluid chamber containing a lubricating fluid having a fluid chamber pressure; and a pressure compensation system for compensating for the effects of an ambient pressure exerted on an exterior of the apparatus, wherein the pressure compensation system comprises: (a) a pressure port in the housing so that the ambient pressure can be communicated to the fluid chamber; and (b) a supplementary pressure source for exerting a supplementary pressure on the lubricating fluid contained in the fluid chamber so that the fluid chamber pressure is maintained higher than the ambient pressure; and characterized in that: the rotatable drilling shaft is deflectable by bending to alter the direction of its longitudinal axis relative to a longitudinal axis of the drilling string; the pressure compensation system is further comprised of a lubricating fluid regulating system for regulating the fluid chamber pressure, wherein the lubricating fluid regulating system is comprised of a charging valve mounted within the housing and a relief valve mounted within the housing and connected with the fluid chamber for permitting the discharge of lubricating fluid from the fluid chamber out of the housing when the fluid chamber pressure exceeds a relief valve pressure value; and the first and second seals (282, 280) provide a flexible sealing arrangement or flexible connection between the housing and the drilling shaft in order to maintain the seal provided thereby, while accommodating any movement or deflection of the drilling shaft within the housing for the purpose of altering the direction of the drilling bit which is attached to the drilling shaft. a rotatable drilling shaft connectable with a drilling string a housing for rotatably supporting a length of the drilling shaft for rotation therein; a drilling bit connected to a distal end of the drilling shaft which extends from a distal end of the housing; a first seal; a second seal; a fluid chamber defined by an interior of the housing between the first seal and the second seal, the fluid chamber containing a lubricating fluid having a fluid chamber pressure; and a pressure compensation system for compensating for the effects of an ambient pressure exerted on an exterior of the apparatus, wherein the pressure compensation system comprises: (a) a pressure port in the housing so that the ambient pressure can be communicated to the fluid chamber; and (b) a supplementary pressure source for exerting a supplementary pressure on the lubricating fluid contained in the fluid chamber so that the fluid chamber pressure is maintained higher than the ambient pressure; (a) a pressure port in the housing so that the ambient pressure can be communicated to the fluid chamber; and (b) a supplementary pressure source for exerting a supplementary pressure on the lubricating fluid contained in the fluid chamber so that the fluid chamber pressure is maintained higher than the ambient pressure; the rotatable drilling shaft is deflectable by bending to alter the direction of its longitudinal axis relative to a longitudinal axis of the drilling string; the pressure compensation system is further comprised of a lubricating fluid regulating system for regulating the fluid chamber pressure, wherein the lubricating fluid regulating system is comprised of a charging valve mounted within the housing and a relief valve mounted within the housing and connected with the fluid chamber for permitting the discharge of lubricating fluid from the fluid chamber out of the housing when the fluid chamber pressure exceeds a relief valve pressure value; and the first and second seals (282, 280) provide a flexible sealing arrangement or flexible connection between the housing and the drilling shaft in order to maintain the seal provided thereby, while accommodating any movement or deflection of the drilling shaft within the housing for the purpose of altering the direction of the drilling bit which is attached to the drilling shaft.