NOBLE DRILLING CORP, S-3, 1996-04-29

NOBLE DRILLING CORP
S-3, 1996-04-29
DRILLING OIL & GAS WELLS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1996

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
---------------------
NOBLE DRILLING CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 73-0374541
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>

10370 RICHMOND AVENUE, SUITE 400
HOUSTON, TEXAS 77042
(713) 974-3131
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------------
JAMES C. DAY
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
NOBLE DRILLING CORPORATION
10370 RICHMOND AVENUE, SUITE 400
HOUSTON, TEXAS 77042
(713) 974-3131
(Address, including zip code, and telephone number, including
area code, of agent for service)
---------------------

<TABLE>
<S> <C>
Copies to:
ROBERT D. CAMPBELL JAMES M. PRINCE
THOMPSON & KNIGHT, P.C. ANDREWS & KURTH L.L.P.
1700 PACIFIC AVENUE 4200 TEXAS COMMERCE TOWER
SUITE 3300 600 TRAVIS STREET
DALLAS, TEXAS 75201 HOUSTON, TEXAS 77002
(214) 969-1700 (713) 220-4200
</TABLE>

---------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE

<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------
% Senior Notes due 2006.................... $125,000,000 $43,103
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee and
exclusive of accrued interest, if any.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

********************************************************************************
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR *
* SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH *
* OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR *
* QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. *
********************************************************************************

SUBJECT TO COMPLETION DATED APRIL 29, 1996
PROSPECTUS [NOBLE LOGO]
$125,000,000

NOBLE DRILLING CORPORATION
% SENIOR NOTES DUE 2006
---------------------

The % Senior Notes due 2006 (the "Senior Notes") are being offered (the
"Debt Offering") by Noble Drilling Corporation (the "Company"). The Senior Notes
will mature on , 2006. Interest on the Senior Notes is payable
semiannually on and of each year, commencing
, 1996. The Senior Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after , 2001 at
redemption prices set forth herein, together with accrued interest to the
redemption date. See "Description of Senior Notes -- Optional Redemption."

Concurrently with the Debt Offering, the Company is offering 16,500,000
shares (18,975,000 shares if the underwriters' over-allotment options are
exercised in full) of Common Stock pursuant to separate prospectuses in the
United States and Canada (the "U.S. Offering") and outside the United States and
Canada (the "International Offering," and together with the U.S. Offering, the
"Equity Offerings"). The Company will use $300,000,000 of the aggregate net
proceeds from the Debt Offering and the Equity Offerings (the "Offerings"), plus
5,000,000 shares of Common Stock, for the acquisition (the "Acquisition") from
Royal Nedlloyd N.V. ("Nedlloyd") of the assets, including $25,000,000 in net
working capital, of Nedlloyd's offshore drilling division, Neddrill
("Neddrill"). See "Use of Proceeds" and "The Acquisition." The closing of each
Offering is conditioned upon the simultaneous closing of the other Offerings and
the simultaneous closing of the Acquisition.

The Senior Notes will be unsecured obligations of the Company ranking pari
passu in right of payment with all other senior unsecured indebtedness of the
Company, including the Company's $125,000,000 9 1/4% Senior Notes Due 2003, and
will be senior in right of payment to all existing and future subordinated
indebtedness of the Company. The Senior Notes will be effectively subordinated
to any secured indebtedness of the Company to the extent of the value of the
assets securing such indebtedness and will be effectively subordinated to all
obligations of the Company's subsidiaries. At March 31, 1996, after giving
effect to the use of proceeds from the Offerings as described in "Use of
Proceeds," the Company would have had no indebtedness for borrowed money secured
by the Company's assets. In addition, subsidiaries of the Company would have had
liabilities (including trade payables) aggregating approximately $84,595,000
(including $1,546,000 of indebtedness) and would have had approximately
$24,724,000 available for borrowing or to support the issuance of letters of
credit as of that date under lines of credit and a letter of credit facility.
See "Risk Factors -- Ranking of the Senior Notes."

Upon a Change of Control (as defined herein), the Company will be required
to offer to purchase all the outstanding Senior Notes at a purchase price equal
to 101% of their principal amount plus accrued and unpaid interest, if any. In
addition, the Company will be required to make an offer to purchase the Senior
Notes, at a purchase price equal to 100% of their principal amount, plus accrued
interest, if any, from the Net Available Proceeds (as defined herein) of Asset
Sales (as defined herein) to the extent described herein. See "Description of
Senior Notes -- Certain Covenants."

Application has been made to list the Senior Notes on the New York Stock
Exchange. The Common Stock of the Company is listed on the New York Stock
Exchange under the symbol "NE."

SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE SENIOR NOTES OFFERED HEREBY.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- ------------------------------------------------------------------------------------------------------
Per Senior Note...................... % % %
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Total................................ $ $ $
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>

(1) Plus accrued interest, if any, from , 1996 to the date of delivery.

(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."

(3) Before deducting expenses payable by the Company estimated at $350,000.

---------------------
The Senior Notes are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them, subject to approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Global Certificate will be made through the book-entry
facilities of the Depositary on or about , 1996.

---------------------
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
SIMMONS & COMPANY
INTERNATIONAL
---------------------
The date of this Prospectus is , 1996.
<PAGE> 3

[Photographs to come]

IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OR
THE SENIOR NOTES OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus or in documents and financial statements incorporated in this
Prospectus by reference. Unless otherwise indicated, the information in this
Prospectus assumes that the underwriters' over-allotment options in connection
with the Equity Offerings will not be exercised. As used in this Prospectus,
unless otherwise required by the context, the term "Noble Drilling" refers to
Noble Drilling Corporation and the term "Company" refers to Noble Drilling
Corporation and its consolidated subsidiaries.

THE COMPANY

The Company is a leading provider of diversified services for the oil and
gas industry worldwide. The Company's activities include offshore and land
drilling services, turnkey drilling services and engineering and production
management services. The Company's drilling fleet is broadly diversified,
allowing it to work in a variety of operating conditions. Noble Drilling and its
predecessors have been engaged in the contract drilling of oil and gas wells for
others domestically since 1921 and internationally during various periods since
1939.

BUSINESS STRATEGY. The Company's business strategy has been to actively
expand its international and offshore drilling capabilities through acquisitions
and rig upgrades and modifications, and by redeploying assets in important
geological areas. In recent years the Company has included within its strategic
objectives a focus on increasing the number of rigs in its fleet capable of
drilling in deeper water depths.

Acquisitions

Since 1988, the Company has completed a series of strategic acquisitions
including: the purchases in 1996 and late 1995 of four independent leg
cantilevered jackup rigs; the 1994 merger with Chiles Offshore Corporation
("Chiles"), which added 13 jackup rigs to the Company's fleet; and the 1993
purchase of nine jackup rigs from The Western Company of North America
("Western").

THE NEDDRILL ACQUISITION

On April 25, 1996, the Company entered into an agreement of sale and
purchase with Nedlloyd and its wholly owned subsidiary, Neddrill Holding B.V.,
to acquire Neddrill's offshore contract drilling, accommodation and other oil
and gas exploration and production related service businesses, including the
acquisition of $25,000,000 in net working capital and the transfer of personnel.
The purchase price is $300,000,000 in cash plus 5,000,000 shares of Common
Stock.

The Acquisition promotes the Company's historic and long-term strategic
goals of expanding its international presence and enhancing its deepwater
drilling capabilities. The Acquisition adds deepwater and harsh environment
capabilities to the Company's fleet, diversifies the fleet to include drillships
and a semisubmersible and increases the Company's geographic diversification by
providing entry into the Brazilian offshore market and expanding its presence in
the North Sea.

Neddrill's operations are managed from its headquarters in Rotterdam, The
Netherlands. Its fleet includes two dynamically positioned drillships (one of
which is currently operating offshore West Africa, the second offshore Brazil);
one second generation semisubmersible rig operating in the North Sea; and six
harsh environment jackup drilling rigs (five operating in the North Sea and one
offshore Argentina). Neddrill expects to acquire through a joint venture
arrangement a 41 percent interest in, and to operate, a third dynamically
positioned drillship upon the owner's receipt of final consent from the Russian
authorities. In addition, Neddrill operates under a bareboat charter a seventh
harsh environment jackup rig as a hotel accommodation unit in the North Sea.
Neddrill's semisubmersible and jackup rigs are all currently under contract,
with commitments extending through August 1996 to 2001, depending on the rig.
All three drillships are committed under five to six year contracts to work for
Petroleo Brasileiro S.A. ("Petrobras") offshore Brazil. In addition to the one
drillship already on location, the other two are scheduled to arrive in late
1996 or early 1997.

3
<PAGE> 5

Modifications and Upgrades

The Company continues to pursue an extensive rig modification,
refurbishment and upgrade program. Two of the Company's independent leg rigs,
the Eddie Paul and John Sandifer, completed refurbishment projects in 1995. The
Eddie Paul was converted to an Extended Reach Cantilever (ERC) rig to enable
this unit to drill over larger platforms. The rig's legs were extended from 467
feet to 500 feet to increase its water depth capability to approximately 390
feet. A top drive drilling system and cascading mud system were also installed
on this rig. The modifications make the Eddie Paul the largest rig in the Gulf
of Mexico in terms of cantilever reach and one of the largest in terms of water
depth capability. The John Sandifer was converted to a cantilever rig with a top
drive system and cascading mud system to make the rig more versatile. The total
cost of these two projects was approximately $35,100,000. Both rigs were
contracted for work prior to completion of shipyard work and have been under
contract since departure from the shipyard. In addition, three of the Company's
independent leg cantilevered rigs, the George McLeod, Percy Johns and Charles
Copeland, were refurbished and upgraded in 1995.

During the first three months of 1996, the Company incurred capital
expenditures of approximately $42,200,000 relating primarily to the purchase of
a 300-foot independent leg cantilevered rig, the Gus Androes (formerly the Odin
Explorer), and a 250-foot independent leg cantilevered rig, the Dana, and the
upgrade of a 300-foot independent leg cantilevered rig, the Azteca. At March 31,
1996, the Company had planned capital expenditures for the remainder of 1996 of
approximately $54,000,000 related to upgrades of the Azteca (to be renamed the
Gene Rosser), a second 300-foot independent leg cantilevered rig, the Roy
Butler, the Dana and the Gus Androes, as well as replacements of equipment and
drill pipe. Neddrill has planned capital expenditures of approximately
$77,000,000 in 1996 (approximately $70,000,000 of which is expected to be spent
after the consummation of the Acquisition), including upgrades to the Neddrill 2
drillship, the Neddrill Trigon, a 360-foot harsh environment jackup rig, and the
Neddrill Muravlenko drillship, totaling approximately $58,000,000. The Company
continues to evaluate additional upgrade projects and is considering major
upgrades to the Nimitz and Coral Sea, including conversion of the Nimitz to ERC
design. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

Redeployments

From time to time, the Company has strategically redeployed certain of its
offshore drilling rigs, primarily from the Gulf of Mexico to other drilling
markets worldwide, in order to position assets in important geological areas.
During 1995 and 1994, the Company transferred two jackup rigs from the U.S. Gulf
of Mexico to the west coast of Africa, a jackup rig from the Mexican Gulf of
Mexico to Qatar and two jackup rigs from the U.S. Gulf of Mexico to Lake
Maracaibo, Venezuela. In addition, the Company in the past has moved other
drilling units from the U.S. Gulf of Mexico to India and the west coast of
Africa and has moved certain of its rigs between the U.S. and Mexican Gulf
markets.

OFFSHORE CONTRACT DRILLING OPERATIONS. The Company's offshore contract
drilling operations, which accounted for approximately 55 percent of operating
revenues in 1995, are conducted worldwide. Giving effect to the Acquisition, the
Company's offshore drilling fleet will consist of 55 units, composed of 42
jackup rigs, two drillships, one semisubmersible rig, eight submersible rigs and
two posted barges. In addition, the Company expects to acquire through a joint
venture arrangement a 41 percent interest in, and to operate, a third
dynamically positioned drillship upon the owner's receipt of final consent from
the Russian authorities. The Company will also acquire Neddrill's rights under a
bareboat charter a harsh environment jackup rig as a hotel accommodation unit in
the North Sea. After the Acquisition, the Company's principal regions of
offshore contract drilling operations will include the North Sea, the Gulf of
Mexico, West Africa, Brazil, Venezuela, the Middle East and, to a lesser extent,
India.

4
<PAGE> 6

The following table sets forth the composition of the Company's and
Neddrill's offshore drilling fleets as of March 31, 1996.

<TABLE>
<CAPTION>
COMPANY NEDDRILL COMBINED
------- -------- --------
<S> <C> <C> <C>
Jackups
Total rigs................................................... 36 6(A) 42
Rigs under contract.......................................... 27 6 33
Drillships
Total rigs................................................... -- 2(B) 2
Rigs under contract.......................................... -- 2 2
Semisubmersible
Total rigs................................................... -- 1 1
Rigs under contract.......................................... -- 1 1
Submersibles
Total rigs................................................... 8 -- 8
Rigs under contract.......................................... 4 -- 4
Posted Barges
Total rigs................................................... 2 -- 2
Rigs under contract.......................................... 2 -- 2
Total Rigs..................................................... 46 9 55
Total Rigs under Contract...................................... 33 9 42
</TABLE>

- ---------------

(A) Excludes the Neddrill Kolskaya harsh environment jackup rig currently
operating as a hotel accommodation unit in the North Sea under a bareboat
charter.

(B) Excludes the Neddrill Muravlenko drillship in which Neddrill expects to
acquire a 41 percent interest.

TURNKEY DRILLING AND ENGINEERING SERVICES. Through the Company's wholly
owned subsidiary, Triton Engineering Services Company ("Triton"), the Company
provides turnkey drilling, drilling project management, drilling and completion
planning and design, specialized drilling tools and services, and contract
engineering and consulting manpower. The Company also provides engineering
services relating primarily to the design of drilling equipment for offshore
development and production services and to the recertification of oilfield
equipment.

LABOR CONTRACTS. The Company's offshore operations also included at March
31, 1996 labor contracts for drilling and workover activities covering 13
offshore rigs, which are not owned or leased by the Company, operating in the
U.K. North Sea. Under these labor contracts, the Company provides its customers
with field personnel and manages the drilling operations. The Company has also
contracted to staff and manage two rigs offshore Newfoundland commencing in the
second half of 1997.

LAND DRILLING OPERATIONS. The Company's land drilling operations are
conducted in Canada, Texas and Louisiana. At March 31, 1996, 19 of the Company's
46 land rigs were available for active bidding. Thirteen of the 19 rigs were
under contract at that date. The Company's land drilling operations have become
less significant as the Company has emphasized its offshore and international
operations. Giving effect to the Acquisition, the Company's land drilling
operations would have comprised approximately six percent of the Company's
revenues in 1995.

The Company's principal executive offices are located at 10370 Richmond
Avenue, Suite 400, Houston, Texas 77042, and its telephone number is (713)
974-3131.

5
<PAGE> 7

THE DEBT OFFERING(1)

Securities................. $125,000,000 principal amount of % Senior Notes
due 2006.

Maturity Date.............. , 2006.

Interest Payment Dates..... Interest on the Senior Notes will be payable
semiannually in arrears on and
of each year, commencing
, 1996.

Optional Redemption........ The Senior Notes will be redeemable at the option of
the Company, in whole or in part, at any time on or
after , 2001, at redemption prices set
forth herein, together with accrued and unpaid
interest, if any, to the redemption date. See
"Description of Senior Notes -- Optional
Redemption."

Certain Covenants.......... The Indenture will also contain covenants
restricting, among other things, the ability of the
Company to (a) create or incur debt or create
certain types of preferred stock; (b) pay dividends
and other distributions and make certain
investments; (c) create liens on its assets; (d)
enter into or permit certain sale and lease-back
transactions; (e) dispose of assets; (f) engage in
certain transactions with affiliates; and (g) merge
or consolidate with or into, or sell, lease or
otherwise transfer all or substantially all its
assets to, another entity. During any time the
ratings assigned to the Senior Notes are no less
than BBB- and Baa3, the covenants described under
(a), (b) and (e) above will be suspended. In
addition, the Indenture will require the Company to
make an offer to purchase Senior Notes, at a
purchase price equal to 100 percent of principal
amount, plus accrued and unpaid interest, if any,
from the Net Available Proceeds (as defined under
"Description of Senior Notes") of certain assets
sales. See "Description of Senior Notes -- Certain
Covenants."

Change of Control.......... Upon a Change of Control, the Company will be
required to offer to purchase all the outstanding
Senior Notes at a purchase price equal to 101
percent of principal amount, plus accrued and unpaid
interest, if any, to the date of purchase, in
accordance with the procedures set forth in the
Indenture. See "Description of Senior Notes --
Change of Control."

Ranking.................... The Senior Notes will be unsecured obligations of
the Company ranking pari passu in right of payment
with all other senior unsecured indebtedness of the
Company, including the 9 1/4% Senior Notes Due 2003
of the Company ("9 1/4% Notes"), and will be senior
in right of payment to all existing and future
subordinated indebtedness of the Company. The Senior
Notes will be effectively subordinated to any
secured indebtedness of the Company to the extent of
the value of the assets securing such indebtedness
and will be effectively subordinated to all
obligations of the Company's subsidiaries. At March
31, 1996, after giving effect to the use of proceeds
from the Offerings as described in "Use of
Proceeds," the Company would have had no
indebtedness for borrowed money secured by the
Company's assets. In addition, subsidiaries of the
Company would have had liabilities (including trade
payables) aggregating approximately $84,595,000
(including $1,546,000 of indebtedness) and would
have had approximately $24,724,000 available for
borrowing or to support the issuance of letters of
credit as of that date under lines of credit and a
letter of credit facility. See "Risk Factors --
Ranking of the Senior Notes."

- ---------------

(1) All capitalized terms used herein with respect to the Debt Offering and not
otherwise defined herein have the meanings assigned thereto under
"Description of Senior Notes -- Certain Definitions."

6
<PAGE> 8

Use of Proceeds............ The Company will use the net proceeds from the sale
of the Senior Notes offered hereby of approximately
$122,150,000, together with the estimated net
proceeds to the Company from the Equity Offerings of
approximately $244,300,000, to fund the $300,000,000
cash portion of the purchase price of the
Acquisition and for general corporate purposes. See
"Use of Proceeds."

Listing.................... Application will be made to list the Senior Notes on
the New York Stock Exchange.

RISK FACTORS

See "Risk Factors" for a discussion of certain considerations relevant to
an investment in the Senior Notes offered hereby.

7
<PAGE> 9

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31,
--------------------------------- ---------------------------------------------
PRO FORMA PRO FORMA
1996(1) 1996 1995 1995(1) 1995 1994 1993
--------- -------- -------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(2):
Operating revenues.................. $146,193 $104,757 $ 85,096 $449,493 $327,968 $351,988 $264,531
Operating costs(3).................. $ 92,809 $ 69,664 $ 63,751 $311,121 $240,102 $243,208 $178,684
Depreciation and amortization(4).... $ 14,247 $ 8,930 $ 8,834 $ 57,759 $ 36,492 $ 39,519 $ 28,886
Operating income.................... $ 25,202 $ 14,097 $ 2,013 $ 29,112 $ 11,449 $ 18,163 $ 28,909
Interest expense.................... $ (5,986) $ (3,176) $ (3,024) $(23,379) $(12,156) $(12,351) $ (8,038)
Interest income..................... $ 830 $ 825 $ 1,492 $ 5,501 $ 5,323 $ 5,640 $ 2,497
Net income (loss)................... $ 17,815 $ 10,726 $ (661) $ 5,491 $ 1,594 $ 21,523 $ 22,852
Preferred stock dividends........... $ (1,511) $ (1,511) $ (2,670) $ (7,199) $ (7,199) $(12,764) $ (7,936)
Net income (loss) applicable to
common shares..................... $ 16,304 $ 9,215 $ (3,331) $ (1,708) $ (5,605) $ 8,759 $ 14,916
Net income (loss) applicable to
common shares per share(5)(6)..... $ 0.14 $ 0.10 $ (0.06) $ (0.03) $ (0.08) $ 0.11 $ 0.22
Weighted average common shares
outstanding....................... 117,282 95,782 80,066 111,236 89,736 77,576 66,923
OTHER FINANCIAL DATA(2):
Capital expenditures................ $ 45,442 $ 42,171 $ 16,082 $162,964 $ 87,428 $ 55,834 $173,501(7)
EBITDA(8)........................... $ 39,449 $ 23,027 $ 10,847 $ 86,871 $ 47,941 $ 57,682 $ 57,795
Ratio of earnings to fixed
charges(9)........................ 4.48x 4.85x 1.35x 1.46x 1.40x 3.20x 4.04x
Ratio of EBITDA to interest
expense........................... 6.59x 7.25x 3.59x 3.72x 3.94x 4.67x 7.19x
Ratio of long-term debt to EBITDA... N/A N/A N/A 2.93x 2.71x 2.19x 2.20x
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
------------------------- -------------------------
PRO FORMA(1) ACTUAL PRO FORMA(1) ACTUAL
------------ -------- ------------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA(2):
Working capital.............................................. $ 214,631 $123,190 $ 161,466 $101,623
Property and equipment, net.................................. $ 850,742 $525,742 $ 867,978 $542,978
Total assets................................................. $1,177,244 $757,953 $1,129,085 $741,392
Long-term debt............................................... $ 251,048 $126,048 $ 254,923 $129,923
Total debt(10)............................................... $ 263,658 $138,658 $ 267,133 $142,133
Shareholders' equity......................................... $ 825,722 $531,431 $ 786,186 $523,493
</TABLE>

- ---------------

(1) Such data give effect to (i) the completion of the Acquisition and (ii) the
completion of the Offerings and the application of estimated net proceeds
as described in "Use of Proceeds," as if they had occurred, in the case of
the statement of operations data, as of January 1, 1996 and 1995, as the
case may be, and in the case of the balance sheet data, on March 31, 1996
or December 31, 1995, as the case may be. The closing of each Offering is
conditioned upon the simultaneous closing of the other Offerings and the
simultaneous closing of the Acquisition. The pro forma financial data do
not purport to be indicative of the Company's financial condition or
results of operations had the transactions to which such data give effect
been completed on the dates assumed, nor do such data purport to project
the Company's financial condition or results of operations at any future
date or for any future period. For additional information concerning pro
forma adjustments, see the unaudited pro forma condensed consolidated
financial statements included elsewhere in this Prospectus.

(2) The Summary Historical and Pro Forma Financial Information presents the
restatement of the Company's historical financial statements for 1994 and
prior periods to reflect the 1994 merger acquisition of Chiles, which was
accounted for as a pooling of interests. The Summary Historical and Pro
Forma Financial Information also includes the acquisition of Triton in
April 1994 and the October 1993 acquisition of nine jackup rigs from
Western, both of which were accounted for under the purchase method.

8
<PAGE> 10

(3) Consists of operating costs and expenses other than depreciation and
amortization, selling, general and administrative, minority interest and
restructuring charges.

(4) Effective January 1, 1995, the Company revised its estimates of salvage
values and remaining depreciable lives of certain rigs. The effect of this
change was a reduction to depreciation and amortization of $6,160,000, or
$0.07 per common share, for the year ended December 31, 1995.

(5) Net income applicable to common shares per share before extraordinary item
was $0.20 for the year ended December 31, 1993.

(6) Includes the $0.02 per share effect of the March 1995 preferred conversion
payment of $1,524,000 related to the conversion of 923,862 shares of the
Company's $2.25 Convertible Exchangeable Preferred Stock. This payment was
accounted for in the first quarter of 1995 as a reduction of net earnings
applicable to common shares when calculating the net loss applicable to
common shares per share.

(7) Includes the acquisition by the Company of nine jackup rigs from Western
for $150,000,000 in cash.

(8) EBITDA (defined to mean operating income (loss) plus depreciation and
amortization for purposes of this table) is a supplemental financial
measure used by the Company in evaluating its business and should be read
in conjunction with all of the information in the Summary Historical and
Pro Forma Financial Information, as well as the Consolidated Financial
Statements (including the Notes thereto) prepared in accordance with
generally accepted accounting principles and the Unaudited Pro Forma
Consolidated Financial Statements appearing elsewhere in this Prospectus.
EBITDA should not be considered as an alternative to operating income
(loss) or cash flow from operations or as an indication of the Company's
performance or as a measure of liquidity. See the definition of "EBITDA" in
"Description of Senior Notes" for the meaning of such term under the
Indenture governing the Senior Notes.

(9) For the purposes of computing the ratio, "earnings" represents income
(loss) from continuing operations before income taxes plus fixed charges
exclusive of capitalized interest, and "fixed charges" consists of
interest, whether expensed or capitalized, amortization of debt expense and
an estimated portion of rentals representing interest costs.

(10) Consists of short-term debt and current installments of long-term debt, and
long-term debt.

9
<PAGE> 11

SUMMARY COMPANY OPERATING INFORMATION(A)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------------- ------------------------------------
PRO FORMA PRO FORMA
1996 1996 1995 1995(B) 1995 1994 1993
--------- ---- ---- --------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Sources of Operating Revenues:
Offshore drilling
International................... 49% 29% 28% 49% 30% 30% 30%
Domestic........................ 16 22 25 18 25 33 45
--- --- --- --- --- --- ---
65 51 53 67 55 63 75
--- --- --- --- --- --- ---
Land drilling
International................... 2 3 8 3 4 5 7
Domestic........................ 2 3 3 3 4 3 3
--- --- --- --- --- --- ---
4 6 11 6 8 8 10
--- --- --- --- --- --- ---
Labor contract drilling services... 6 8 12 8 11 10 13
Turnkey drilling services.......... 23 32 20 16 22 16 --
Engineering and consulting......... 1 2 2 2 3 1 1
Other revenue...................... 1 1 2 1 1 2 1
--- --- --- --- --- --- ---
100% 100% 100% 100% 100% 100% 100%
=== === === === === === ===
Total International Operating
Revenues........................... 59% 42% 52% 63% 49% 48% 53%
Total Domestic Operating Revenues.... 41 58 48 37 51 52 47
--- --- --- --- --- --- ---
100% 100% 100% 100% 100% 100% 100%
=== === === === === === ===
Rig Fleet (at end of period):
Offshore
International owned............. 27 18 15 27 18 15 15
Domestic owned.................. 28 28 29 28 28 29 32
--- --- --- --- --- --- ---
55 46 44 55(C) 46 44 47
=== === === === === === ===
Land
International owned............. 9 9 9 9 9 9 10
Domestic owned.................. 37 37 37 37 37 37 39
--- --- --- --- --- --- ---
46 46 46 46 46 46 51
=== === === === === === ===
Labor Contracts (at end of period):
Offshore international............. 13 13 15 14 14 17 15
=== === === === === === ===
Average Offshore Rig Utilization Rate(D):
International...................... 95%(E) 92% 80% 81%(E) 75% 82% 73%
Domestic........................... 96% 96% 81% 84% 84% 82% 89%
</TABLE>

- ---------------

(A) Operating information has been restated for 1994 and prior periods to
reflect the 1994 merger with Chiles. Operating information includes the
acquisition of Triton in April 1994 and the October 1993 acquisition of
nine jackup rigs from Western from the respective dates of acquisition.

(B) Such information gives effect to the completion of the Acquisition as if it
had occurred as of January 1, 1995.

(C) Does not include one drillship operated by Neddrill in which Neddrill
expects to acquire a 41 percent interest through a joint venture
arrangement and one harsh environment jackup drilling rig operated by
Neddrill under a bareboat charter as a hotel accommodation unit.

(D) Information reflects the policy of the Company to report utilization rates
based on the number of actively marketed rigs owned in the fleet. During
the periods presented, the Company purchased and sold certain drilling
rigs. Utilization rates for the periods prior to sales and purchases of
such rigs have not been adjusted.

(E) Neddrill's offshore rig utilization rate for the three months ended March
31, 1996 and year ended December 31, 1995 was 100 percent and 94 percent,
respectively.

10
<PAGE> 12

RISK FACTORS

Prospective purchasers of the Senior Notes offered hereby should carefully
consider the following matters, as well as the information contained elsewhere
in this Prospectus and incorporated herein by reference.

EFFECTS OF LEVERAGE

Upon the consummation of the Offerings, the Company will have outstanding
indebtedness of approximately $263,658,000. The Company's level of indebtedness
will have several important effects on its future operations, including (i) a
substantial portion of the Company's cash flow from operations must be dedicated
to the payment of interest on its indebtedness and will not be available for
other purposes, (ii) the covenants contained in the indentures related to the
Senior Notes and the 9 1/4% Notes will limit the Company's ability to borrow
additional funds or to dispose of assets and may affect the Company's
flexibility in planning for, and reacting to, changes in its business, including
possible acquisition activities, and (iii) the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, general corporate purposes or other purposes may be impaired. The
Company's ability to meet its debt service obligations and to reduce its total
indebtedness will be dependent upon the Company's future performance, which will
be subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control. There can be no assurance that the Company's future performance will
not be adversely affected by such economic conditions and financial, business
and other factors. See "Capitalization" and "Description of Senior
Notes -- Certain Covenants."

INTENSE COMPETITION; INDUSTRY CONDITIONS

The contract drilling industry is a highly competitive and cyclical
business characterized by high capital and maintenance costs. Although
conditions in recent years in the oil and gas industry have precipitated
consolidation of offshore drilling industry participants, the Company believes
the competition for drilling contracts will continue to be intense for the
foreseeable future because of the worldwide oversupply of drilling equipment and
contractors' ability to move rigs from areas of low activity and dayrates to
areas of greater activity and relatively higher dayrates. In addition, there are
inactive non-marketed rigs that could be reactivated to meet an increase in
demand for drilling rigs in any given market. Such movement or reactivation or a
decrease in drilling activity in any major market could depress dayrates and
could adversely affect utilization of the Company's rigs. Certain competitors of
the Company may have access to greater financial resources than the Company.

The Company's operations are materially dependent upon the levels of
activity in offshore world oil and U.S. natural gas exploration, development and
production. Such activity levels are affected both by short-term and long-term
trends in oil and natural gas prices. In recent years, oil and natural gas
prices, the expenditures by oil and gas companies for exploration and production
and the availability of drilling rigs and therefore the level of offshore
drilling and exploration activity, have been extremely volatile. For a number of
years, depressed oil and natural gas prices and an oversupply of rigs have
adversely affected the offshore drilling market, particularly in the Gulf of
Mexico, where the prolonged weakness and uncertainty in the demand for and price
of natural gas resulted in a significant decline in exploration and production
activities. Demand for drilling services outside the United States, excluding
the North Sea, has been less volatile in recent years, but remains dependent on
a variety of political and economic factors beyond the Company's control,
including worldwide demand for oil and natural gas, the ability of the
Organization of Petroleum Exporting Countries ("OPEC") to set and maintain
production levels and pricing, the level of production of non-OPEC countries and
the policies of the various governments regarding exploration and development of
their oil and natural gas reserves.

If the price of natural gas decreases, the Company's dayrates and
utilization rates in the U.S. Gulf could be adversely affected. Similarly, if
the price of natural gas decreases in the southern and central basin North Sea
market, where Neddrill's jackup rigs principally compete, its rates there could
be adversely affected. The

11
<PAGE> 13

Company can predict neither the future level of demand for its drilling services
nor the future conditions in the offshore contract drilling industry.

SUBSTANTIAL INTERNATIONAL OPERATIONS; NIGERIA AND VENEZUELA

A major portion of the Company's revenues has been attributable to
international operations. International sources accounted for approximately 42
percent and 49 percent of the Company's operating revenues for the three months
ended March 31, 1996 and the year ended December 31, 1995, respectively (58
percent and 63 percent, respectively, giving pro forma effect to the
Acquisition). In addition to the risks inherent in the drilling business (see
"-- Operational Risks and Insurance"), the Company's international operations
are subject to certain political, economic and other uncertainties including,
among others, risks of war and civil disturbances, expropriation,
nationalization, renegotiation or modification of existing contracts, taxation
policies, foreign exchange restrictions, international monetary fluctuations,
and other hazards arising out of foreign governmental sovereignty over certain
areas in which the Company conducts operations.

Drilling activities in Nigeria accounted for approximately 14 percent of
the Company's operating revenues in both the three months ended March 31, 1996
and the year ended December 31, 1995, respectively (10 percent in each period,
giving pro forma effect to the Acquisition). During those periods, Nigeria
experienced labor strikes, high inflation and political turmoil, none of which
have materially affected the Company's operations; however, in the future,
labor, economic and political conditions in Nigeria could adversely affect the
Company's operations there.

Drilling activities in Venezuela accounted for approximately eight percent
and 10 percent of the Company's operating revenues in the three months ended
March 31, 1996 and the year ended December 31, 1995, respectively (six percent
and seven percent, respectively, giving pro forma effect to the Acquisition).
The Company currently has three rigs under contract with Lagoven, a subsidiary
of the government-owned oil company of Venezuela. Two of these rigs are under
long-term contracts terminating in the year 2000 and the third is operating on a
well-to-well basis. A fourth rig is under a long-term contract with Shell
Venezuela S.A. through June 1997. In recent periods, the Venezuelan economy has
experienced high inflation and a shortage of foreign currency. In 1994, the
Venezuelan government imposed a program of currency exchange controls and taxes
on certain financial transactions that temporarily limited the ability of the
government-owned oil companies and their affiliates to make payment in U.S.
dollars or other hard currencies to oilfield service contractors. During this
period, the Company's operations were not materially affected, and the Company
received timely payment for its services in U.S. dollars. During April 1996, the
Venezuelan government announced increases in gas prices, interest rates and the
value-added tax rate. In addition, the government eased exchange controls and
granted pay raises to public sector employees. It is unknown what impact, if
any, these events will have on the Company's operations in Venezuela.

CONCENTRATION OF OPERATIONS IN U.S. GULF

A significant portion of the Company's revenues has been attributable to
operations in the U.S. Gulf of Mexico. Operations in the U.S. Gulf accounted for
approximately 54 percent and 40 percent, respectively (39 percent and 29
percent, respectively, giving pro forma effect to the Acquisition), of the
Company's operating revenues for the three months ended March 31, 1996 and year
ended December 31, 1995. Currently, 28 of the Company's 46 mobile offshore
drilling rigs are located in the U.S. Gulf. Twenty of these rigs, of which 12
are mat supported rigs and eight are submersible rigs, are best suited for that
market. Consequently, given the concentration of such drilling rigs in that
market, a decrease in the demand for offshore drilling rigs there could have a
material adverse effect on the financial performance of the Company.

TURNKEY CONTRACTS; EARLY TERMINATION CONTRACT PROVISIONS

The Company through Triton engages in drilling services pursuant to turnkey
drilling contracts under which the Company agrees to drill a well to a specified
depth for a fixed price. Generally, the Company is not entitled to payment
unless the well is drilled to the specified depth. The Company must bear the
costs of performing drilling services until the well has been drilled, and
accordingly, turnkey projects may require

12
<PAGE> 14

significant cash commitments by the Company. In addition, profitability under
the contract is dependent upon keeping expenses within the estimates used by the
Company in determining the contract price. In performing a turnkey project, the
Company employs a drilling unit from its own fleet or from another drilling
contractor under a dayrate contract. Drilling a well under a turnkey contract
offers the possibility of financial gains and losses that are substantially
greater than those that would ordinarily result from drilling the well under a
conventional dayrate contract, since the Company retains any excess of the fixed
price over its expenses (including the drilling unit dayrate) but must pay any
excess of expenses over such price. The financial results of a turnkey contract
depend upon the performance of the drilling unit, drilling conditions and other
factors. See "The Company -- Turnkey Drilling and Engineering Services." For a
discussion of the contribution of turnkey projects to the Company's results, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations."

Other than turnkey contracts, offshore drilling contracts typically extend
over a period of time covering either the drilling of a single well or the
drilling of a group of wells for a stated term. These contracts generally permit
an operator to terminate the contract without further obligation upon prior
notice (in many cases, 30 days). Most of the Company's and Neddrill's contracts
contain such termination provisions. Each of Neddrill's contracts with Petroleo
Brasileiro S.A. ("Petrobras") permit Petrobras to terminate the contract without
further obligation under certain circumstances, including the failure of
Neddrill to perform obligations under the contract.

OPERATIONAL RISKS AND INSURANCE

The Company's operations are subject to hazards inherent in the drilling of
oil and gas wells such as blowouts, reservoir damage, loss of production, loss
of well control, cratering or fires, the occurrence of which could result in the
suspension of drilling operations, injury to or death of rig and other personnel
and damage to or destruction of the Company's, the Company's customer's or a
third party's property or equipment. Damage to the environment could also result
from the Company's operations, particularly through oil spillage or uncontrolled
fires. In addition, offshore drilling operations are subject to perils peculiar
to marine operations, including capsizing, grounding, collision and loss or
damage from severe weather. Although the Company maintains insurance against
many of these hazards, such insurance is subject to substantial deductibles and
provides for premium adjustments based on claims. It also excludes certain
matters from coverage, such as loss of earnings on certain rigs. The Company
expects to have in effect substantially similar coverage for Neddrill's
operations upon closing of the Acquisition. Also, while the Company generally
obtains indemnification from its customers for environmental damage with respect
to offshore drilling, such indemnification is generally only in excess of a
specified amount, which usually ranges from $100,000 to $250,000.

In the case of turnkey drilling operations, the Company maintains insurance
against pollution and environmental damage in amounts ranging from $5,000,000 to
$50,000,000 depending on location, subject to self-insured retentions of $25,000
to $1,000,000. Under turnkey drilling contracts, Triton generally assumes the
risk of pollution and environmental damage, but on occasion receives
indemnification from the customer for environmental and pollution liabilities in
excess of Triton's pollution insurance coverage. Further, Triton is not insured
against certain drilling risks that could result in delays or nonperformance of
a turnkey contract, although it generally maintains insurance against delays
related to loss of well control. Triton typically obtains contractual
indemnification from the drilling contractors that provide the rigs for Triton's
turnkey drilling operations for pollution arising from certain acts of such
contractors.

Notwithstanding the insurance coverage carried by and indemnity coverage
provided to the Company, the occurrence of a significant event not fully insured
or indemnified against or the failure of a customer to meet its indemnification
obligations could materially and adversely affect the Company's operations and
financial condition. Moreover, no assurance can be given that the Company will
be able to maintain adequate insurance in the future at rates it considers
reasonable or that particular types of coverage will be available.

13
<PAGE> 15

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 regulations that may relate directly or indirectly to the contract
drilling industry. The regulations applicable to the Company's operations
include certain regulations that control the discharge of materials into the
environment or require remediation of contamination, under certain
circumstances. For example, the Company may be liable for damages and costs
incurred in connection with oil spills for which it is held responsible. Usually
these environmental laws and regulations impose "strict liability," rendering a
person liable without regard to negligence or fault on the part of such person.
Such environmental 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 U.S. Oil Pollution Act of 1990 ("OPA '90") and the regulations
promulgated pursuant thereto impose certain additional operational requirements
on the Company's domestic offshore rigs and govern liability for leaks, spills
and blowouts. Regulations under OPA '90 may increase the level of financial
assurance required of owners and operators of rigs in the waters of the United
States. The Company has monitored these regulations and does not believe that
they are likely to have a material adverse effect on the Company's financial
condition or results of operations.

The Company has made and will continue to make expenditures in its efforts
to comply with environmental requirements. The Company does not believe that it
has to date expended material amounts in connection with such activities or that
compliance with such requirements will have a material adverse effect upon its
capital expenditures, results of operations or competitive position. Although
such requirements do have a substantial impact upon the energy and energy
services industries, generally they do not appear to affect the Company any
differently or to any greater or lesser extent than other companies in the
energy services industry.

The modification of existing laws or regulations or the adoption of new
laws or regulations curtailing exploratory or development drilling for oil and
gas for economic, environmental or other reasons could materially and adversely
affect the Company's operations by limiting drilling opportunities.

LOSSES FROM OPERATIONS

The historical financial data for the Company reflect a net loss applicable
to common shares of $5,605,000 for the year ended December 31, 1995. The Company
had net income applicable to common shares of $9,215,000, $8,759,000 and
$14,916,000 for the three months ended March 31, 1996 and the years ended
December 31, 1994 and 1993, respectively. The profitability of the Company is
materially dependent upon the utilization of and rates for its drilling rigs. No
assurance can be given that utilization levels or dayrates will remain at
current levels or that they will not decrease in the future.

RANKING OF THE SENIOR NOTES

The Senior Notes will be unsecured obligations of the Company ranking pari
passu in right of payment with all other senior unsecured indebtedness of the
Company, including $125,000,000 outstanding principal amount of 9 1/4% Notes,
and will be senior in right of payment to all existing and future subordinated
indebtedness of the Company. In the event of the dissolution, liquidation or
reorganization of, or similar proceeding relating to, the Company, secured
lenders would be entitled to receive payment at least equal to the value of
their collateral, which could exceed the amount recoverable by unsecured
creditors, including the holders of the Senior Notes. At March 31, 1996, after
giving effect to the use or proceeds from the Offerings as described in "Use of
Proceeds," the Company would have had no indebtedness for borrowed money secured
by the Company's assets. In addition, the Senior Notes will be effectively
subordinated to creditors of the Company's subsidiaries in that the right of the
Company to participate as a stockholder in the distribution of the assets of any
subsidiary upon any such proceeding would be subject to the prior claims of the
creditors of such subsidiary. At December 31, 1995, after giving effect to the
use of proceeds from the Offerings, various subsidiaries of the Company would
have had liabilities (including trade payables) aggregating approximately

14
<PAGE> 16

$84,595,000 (including $1,546,000 of indebtedness) and would have had
approximately $24,724,000 available for borrowing or to support the issuance of
letters of credit as of that date under lines of credit and a letter of credit
facility. See "Use of Proceeds," "Capitalization" and "Description of Senior
Notes -- Certain Covenants."

ABSENCE OF A PUBLIC MARKET FOR THE SENIOR NOTES

There is no existing market for the Senior Notes and there can be no
assurance as to the liquidity of any markets that may develop for the Senior
Notes, the ability of holders of the Senior Notes to sell their Senior Notes or
the price at which holders would be able to sell their Senior Notes. Future
trading prices of the Senior Notes will depend on many factors, including, among
other things, prevailing interest rates, the Company's operating results and the
market for similar securities. The Company has been advised by the Underwriters
that, subject to applicable laws and regulations, the Underwriters currently
intend to make a market in the Senior Notes after the consummation of the Debt
Offering, although they are not obligated to do so and may discontinue any
market-making activities with respect to the Senior Notes at any time without
notice. The Company intends to apply for listing of the Senior Notes on the New
York Stock Exchange. See "Underwriting."

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). All statements other than statements of historical facts
included in this Prospectus, including without limitation, statements under
"Risk Factors -- Intense Competition; Industry Conditions," "The
Company -- Offshore Contract Drilling Operations -- Offshore Drilling Rigs" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Outlook" and "-- Liquidity and Capital Resources," regarding the
Company's financial position, business strategy, plans and objectives of
management of the Company for future operations and indebtedness covenant
compliance, are forward-looking statements. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from the
Company's expectations ("Cautionary Statements") are disclosed under "Risk
Factors" and elsewhere in this Prospectus, including without limitation in
conjunction with the forward-looking statements included in this Prospectus. All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements.

15
<PAGE> 17

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Senior Notes offered
in the Debt Offering will be approximately $122,150,000 after deducting the
underwriting discount and estimated expenses of the Debt Offering payable by the
Company.

The net proceeds from the sale of the shares of Common Stock offered in the
Equity Offerings being made concurrently herewith will be approximately
$244,300,000, assuming a price to public of $15.50 per share ($280,900,000 if
the underwriters' over-allotment options are exercised in full), after deducting
the underwriting discount and estimated expenses of the Equity Offerings payable
by the Company. The closing of each Offering is conditioned upon the
simultaneous closing of the other Offerings and upon the simultaneous closing of
the Acquisition.

Of the net proceeds from the Offerings, $300,000,000 will be used to fund
the cash portion of the purchase price of the Acquisition (see "The
Acquisition"). The net proceeds from the Offerings remaining after payment of
the purchase price of the Acquisition of approximately $66,450,000 will be added
to the Company's working capital and will be available for general corporate
purposes. Such general corporate purposes are expected to include planned
upgrade and refurbishment capital expenditures for several of the Company's and
Neddrill's drilling rigs. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital
Resources -- Capital Expenditures and Commitments."

16
<PAGE> 18

CAPITALIZATION

The following table sets forth the consolidated (i) cash and cash
equivalents and investment in marketable debt securities, (ii) short-term debt
and current installments of long-term debt and (iii) the capitalization of the
Company at March 31, 1996, and as adjusted to reflect (a) the consummation of
the Offerings (assuming the underwriters' over-allotment options in connection
with the Equity Offerings are not exercised), (b) the application of the
estimated net proceeds therefrom to pay the $300,000,000 cash portion of the
purchase price of the Acquisition and (c) the issuance of 5,000,000 shares of
Common Stock as the balance of the purchase price of the Acquisition. See "Use
of Proceeds."

<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------
AS
ACTUAL ADJUSTED
-------- ----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents and investment in marketable debt
securities.................................................... $ 41,775 $ 108,198
======== ==========
Short-term debt and current installments of long-term debt...... $ 12,610 $ 12,610
======== ==========
Long-term debt(1)
U.S. Government Guaranteed Ship Financing Sinking Fund
Bonds...................................................... $ 1,546 $ 1,546
9 1/4% Senior Notes Due 2003.................................. 125,000 125,000
Insurance financing/other..................................... 12,112 12,112
Senior Notes.................................................. -- 125,000
Current installments.......................................... (12,610) (12,610)
-------- ----------
Long-term debt........................................ 126,048 251,048
-------- ----------
Shareholders' equity(2)
Preferred Stock(3)............................................ 4,025 4,025
Common Stock(4)............................................... 9,478 11,628
Capital in excess of par value................................ 590,255 882,396
Unrealized losses on marketable securities.................... (131) (131)
Minimum pension liability..................................... (3,403) (3,403)
Cumulative translation adjustment............................. (2,343) (2,343)
Accumulated deficit........................................... (64,587) (64,587)
Treasury stock, at cost....................................... (1,863) (1,863)
-------- ----------
Total shareholders' equity............................ 531,431 825,722
-------- ----------
Total capitalization............................................ $657,479 $1,076,770
======== ==========
</TABLE>

- ---------------

(1) At March 31, 1996, the Company had lines of credit totaling $26,000,000 and
letter of credit facilities totaling $5,000,000, subject to the Company's
maintenance of certain levels of collateral. Based on levels of collateral
at March 31, 1996, the Company had $24,724,000 available under these lines
of credit. A total of $895,000 was available at that date to support the
issuance of letters of credit.

(2) Excludes, as of March 31, 1996, shares reserved for issuance as follows: (i)
2,538,686 shares of Common Stock issuable upon exercise of options
outstanding under the Company's employee stock option plans, (ii) 118,500
shares of Common Stock issuable upon exercise of options outstanding under
the Company's non-employee director stock option plan, (iii) 160,000 shares
of Common Stock under certain nonemployee director stock option agreements,
and (iv) 9,839,515 shares of Common Stock upon conversion of the $1.50
Convertible Preferred Stock. In addition, the Company has reserved for
issuance shares of Common Stock for contingent obligations relating to the
Triton acquisition and for Company matching fund obligations under employee
retirement plans.

(3) The $1.50 Convertible Preferred Stock has an aggregate liquidation
preference of $100,625,000 and cannot be called for redemption prior to
March 31, 1996.

(4) Concurrently with the Debt Offering, the Company is offering Common Stock
for sale to the public through underwriters for whom the Underwriters of
the Debt Offerings or their affiliates are acting as representatives.

(5) Based on $15.50 per share, less underwriting discount and expenses, for the
16,500,000 shares to be issued upon consummation of the Equity Offerings
and $10.00 per share for the 5,000,000 shares of Common Stock to be issued
as the balance of the purchase price of the Acquisition.

17
<PAGE> 19

THE COMPANY

GENERAL

Noble Drilling was organized as a Delaware corporation in 1939. Noble
Drilling and its predecessors have been engaged in the contract drilling of oil
and gas wells for others domestically since 1921 and internationally during
various periods since 1939.

BUSINESS STRATEGY

The Company's business strategy since becoming a publicly held corporation
in 1985 has been to actively expand its international and offshore drilling
capabilities through acquisitions and rig upgrades and modifications, and by
redeploying assets in important geological areas. In recent years the Company
has included within its strategic objectives a focus on increasing the number of
rigs in its fleet capable of drilling in deeper water depths.

Acquisitions

Since 1988, the Company has completed a series of strategic acquisitions:
(i) the purchases in 1996 and late 1995 of four independent leg cantilevered
jackup rigs; (ii) the 1994 merger with Chiles Offshore Corporation ("Chiles"),
which added 13 jackup rigs to the Company's fleet; (iii) the 1994 acquisition of
Triton Engineering Company ("Triton"), which expanded the Company's turnkey
drilling operations; (iv) the 1993 purchase of two submersible rigs from Portal
Rig Corporation; (v) the 1993 purchase of nine jackup rigs from The Western
Company of North America ("Western"); (vi) the 1991 purchase of five jackup and
seven submersible rigs from Transworld Drilling Company, a subsidiary of
Kerr-McGee Corporation; (vii) the 1988 purchase of Peter Bawden Drilling Ltd.
and its subsidiaries, with operations in the U.K. North Sea, Canada, the Far
East and Africa; and (viii) the 1988 purchase of six offshore rigs from General
Electric Capital Corporation.

The Company will use $300,000,000 of the aggregate net proceeds from the
Offerings, plus 5,000,000 shares of Common Stock, to acquire the assets of
Neddrill, including $25,000,000 in net working capital and the transfer of
personnel employed by Neddrill. The Acquisition will add deepwater and harsh
environment capabilities to the Company's fleet and further diversify its
contract drilling operations by providing entry into the North Sea and offshore
Brazil. See "The Acquisition." Giving effect to the Acquisition, the Company
will have one of the world's largest mobile offshore drilling fleets.

Modifications and Upgrades

18
<PAGE> 20

Dana, and the upgrade of the Azteca. At March 31, 1996, the Company had planned
capital expenditures for the remainder of 1996 of approximately $54,000,000
related to upgrades of the Azteca (to be renamed the Gene Rosser), Roy Butler,
Dana, and Gus Androes, and replacements of equipment and drill pipe. Neddrill
has planned capital expenditures of approximately $77,000,000 in 1996
(approximately $70,000,000 of which is expected to be spent after the
consummation of the Acquisition), including upgrades to the Neddrill 2, Neddrill
Trigon and Neddrill Muravlenko, totaling approximately $58,000,000. The Company
continues to evaluate additional upgrade projects and is considering major
upgrades to the Nimitz and Coral Sea, including conversion of the Nimitz to ERC
design.

Redeployments

OFFSHORE CONTRACT DRILLING OPERATIONS

The Company's offshore contract drilling operations, which accounted for
approximately 51 percent and 55 percent of operating revenues in the three
months ended March 31, 1996 and the year ended December 31, 1995, respectively,
are conducted worldwide. Giving effect to the Acquisition, the Company's
offshore drilling fleet will consist of 55 rigs, composed of 42 jackup rigs, two
drillships, one semisubmersible rig, eight submersible rigs and two posted
barges. In addition, the Company expects to acquire through a joint venture
arrangement a 41 percent interest in, and to operate, a third dynamically
positioned drillship upon the owner's receipt of final consent from the Russian
authorities. The Company will also acquire Neddrill's rights to operate under a
bareboat charter a harsh environment jackup rig as a hotel accommodation unit in
the North Sea. After the Acquisition, the Company's principal regions of
offshore contract drilling operations will include the North Sea, the Gulf of
Mexico, West Africa, Brazil, Venezuela, the Middle East and, to a lesser extent,
India. See "The Acquisition."

International Contract Drilling

The Company's international offshore contract drilling operations are
conducted in Nigeria, Venezuela, Qatar, Zaire, Mexico and India. At March 31,
1996, the Company's international offshore contract drilling fleet consisted of
18 rigs, of which 16 were working under contract, one was available for bidding,
and one was in the shipyard.

In 1995, approximately 55 percent of the Company's international offshore
contract drilling revenues was derived from contracts with major oil and gas
companies, 37 percent from government-owned companies and the balance from
contracts with independent operators. In 1995, one of the Company's customers,
Lagoven, a subsidiary of the government-owned oil company of Venezuela,
accounted for approximately 11 percent of the Company's total operating
revenues.

The Company has seven jackup rigs and two posted barges located along the
west coast of Africa. Six of the jackup rigs are under long-term contracts
extending through dates ranging from December 1996 to June 1998, with major oil
companies. The seventh jackup rig is available for work. The two posted barges
are under contract through June 1996.

The Company has four jackup rigs located in Venezuela. Three of these rigs
are under long-term contracts extending through dates ranging from July 1997 to
June 2000. The fourth is working under a well-to-well contract.

19
<PAGE> 21

The Company has three jackup rigs located in the Persian Gulf. One rig is
in Qatar under a long-term contract extending through October 1998. A second
rig, which was acquired in March 1996, is scheduled for refurbishment upon
completion of its current well in Qatar prior to commencement of a long-term
contract extending through June 1999. The third rig, currently undergoing
refurbishment in the United Arab Emirates, is scheduled to be available for work
in the third quarter of 1996.

The Company has a jackup rig working in India under a long-term bareboat
charter agreement that expires in September 1996 and a jackup rig working in
Mexico under a long-term contract that expires in November 1996.

Domestic Contract Drilling

The Company's domestic offshore contract drilling fleet consisted of 28
rigs at March 31, 1996, of which 17 were working under contract, three were
being upgraded, modified and/or refurbished, seven were being held in various
stages of readiness to enter the marketplace and one was under evaluation
following damages sustained in transportation. The Company continually evaluates
the economics of re-entering the market with these rigs and expects to do so
when conditions warrant.

In 1995, approximately 55 percent of the Company's domestic offshore
contract drilling revenues was derived from contracts with major oil and gas
companies and the remaining 45 percent was derived from contracts with
independent operators.

Offshore Drilling Rigs

The Company's offshore drilling rig fleet consisted of 36 jackup rigs,
eight submersible rigs and two posted barges at March 31, 1996. Each type of rig
is described further below. There are several factors that determine the type of
rig most suitable for a particular job, the more significant of which include
the water depth and bottom conditions at the proposed drilling location, whether
the drilling is being done over a platform or other structure, and the intended
well depth.

Seventeen of the Company's 46 offshore rigs have a top drive unit, and the
Company has three additional top drive units which have not been installed on
rigs. A top drive unit is a technologically-advanced drilling tool used in many
drilling applications both offshore and on land. Twenty-eight of the Company's
46 offshore rigs are equipped with cascading solids control systems. A cascading
solids control system is a highly efficient method for controlling the solids in
drilling mud, the use of which enhances removal of well bore cuttings and
results in better bit performance and reduced mud conditioning costs to the
operator. In addition, ten of the Company's 46 offshore rigs are equipped with
zero discharge capability.

Jackup Rigs. The Company had 36 jackup rigs in the fleet at March 31, 1996.
Jackup 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. 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 operate independently or have a mat attached to the bottom of them
in order to provide a more stable foundation in soft bottom areas. Twenty-three
of the Company's jackup rigs are independent leg rigs and 13 are mat supported
rigs. Moving a rig to the drill site involves jacking up its legs until the hull
is floating on the surface of the water. The hull is then towed to the drill
site by tugs and the legs are jacked down to the ocean floor. The jacking
operation continues until the hull is raised out of the water and drilling
operations are conducted with the hull in its raised position. A cantilevered
jackup has a feature that permits the drilling platform to be extended out from
the hull, allowing it to perform drilling or workover operations over
pre-existing platforms or structures. Slot type jackup rigs are configured for
the drilling operations to take place through a slot in the hull. The Company's
jackup rigs are capable of drilling to a maximum depth of 25,000 feet in water
depths of up to 390 feet, depending on the jackup rig.

Submersible Rigs. The Company had eight submersibles in the fleet at March
31, 1996. Submersible rigs are mobile drilling platforms which are towed to the
drill site and submerged to drilling position by flooding the lower hull until
it rests on the sea floor, with the upper deck above the water surface. The
Company's

20
<PAGE> 22

submersible rigs are capable of drilling to a maximum depth of 30,000 feet in
water depths of up to 100 feet, depending on the submersible rig.

The Company has conducted a preliminary engineering feasibility study of
converting submersible rigs to semisubmersible rigs capable of conducting
drilling operations in deeper water. The Company has targeted five of its eight
submersible rigs as possible candidates for conversion to semisubmersible rigs.
See "The Acquisition -- Semisubmersible Rigs." The Company has held preliminary
discussions with certain offshore operators regarding this project. Because any
such conversion would require substantial capital expenditures, such a project
would not likely be undertaken except in connection with entering into a
long-term drilling contract with an operator. The Company cannot currently
predict whether any conversion projects will be undertaken.

Posted Barges. The two posted barges in the Company's fleet at March 31,
1996 are not a part of the Company's long-term strategic objectives and have
been reclassified as assets held for sale. See "The Company -- Recent
Developments" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Results of Operations."

The following table sets forth certain information concerning the Company's
offshore drilling rig fleet at March 31, 1996. The table does not include 13
offshore rigs owned by operators for which the Company had labor contracts as of
March 31, 1996. Unless otherwise indicated, the Company owns and operates the
rigs included in the table.

OFFSHORE DRILLING RIGS

YEAR WATER MAXIMUM
BUILT OR DEPTH DRILLING
NAME MAKE TYPE(1) REBUILT(2) RATING DEPTH LOCATION STATUS(3)
- -------------------- --------------------- ------- ---------- ------ ------- ------------ ----------
(FEET) (FEET)
<S> <C> <C> <C> <C> <C> <C> <C>
JACKUP RIGS -- 36
Eddie Paul(4) MLT 84-ERC IC 1995 R 390 25,000 U.S. Gulf Active
Coral Sea MLT 53-S IS 1972 320 25,000 U.S. Gulf Stacked
Nimitz MLT 84-S IS 1975 300 25,000 U.S. Gulf Stacked
Carl Norberg MLT 82-C IC 1976 250 20,000 Venezuela Active
Dana(5) MLT 82-C IC 1976 250 20,000 Qatar Active
Charles Copeland(4) MLT 82-SD-C IC 1995 R 250 20,000 Venezuela Active
Earl Frederickson MLT 82-SD-C IC 1979 250 20,000 Venezuela Active
Ed Noble(4) MLT 82-SD-C IC 1990 R 250 20,000 Nigeria Active
Lloyd Noble(4) MLT 82-SD-C IC 1990 R 250 20,000 Nigeria Active
Tom Jobe(4) MLT 82-SD-C IC 1982 250 25,000 U.S. Gulf Active
Azteca(6) Levingston 111-C IC 1996 R 300 20,000 U.S. Gulf Shipyard
Ed Holt(7) Levingston 111-C IC 1994 R 300 25,000 India Active
John Sandifer(4) Levingston 111-C IC 1995 R 300 25,000 U.S. Gulf Active
Maya(8) Levingston 111-C IC 1976 300 20,000 U.S. Gulf Shipyard
Gus Androes(9) Levingston 111-C IC 1996 R 300 25,000 U.A.E. Shipyard
Sam Noble(4) Levingston 111-C IC 1982 300 25,000 Mexican Gulf Active
George McLeod(4) F&G L-780 MOD II IC 1995 R 300 25,000 Qatar Active
Percy Johns(4) F&G L-780 MOD II IC 1995 R 300 25,000 Nigeria Active
Roy Butler(4)(10) F&G L-780 MOD II IC 1982 300 25,000 Zaire Active
Tommy Craighead(4) F&G L-780 MOD II IC 1990 R 300 25,000 Nigeria Active
Johnnie Hoffman(4) Baker Marine BMC 300 IC 1993 R 300 25,000 U.S. Gulf Active
Dick Favor Baker Marine BMC 150 IC 1993 R 150 20,000 Venezuela Active
Don Walker(4) Baker Marine BMC 150 IC 1982 150 20,000 Nigeria Active
Marvin Winters Bethlehem JU-250 MC 1982 250 20,000 U.S. Gulf Active
Duke Hinds Bethlehem JU-200 MC 1990 R 200 25,000 U.S. Gulf Active
Frank Lamaison Bethlehem JU-200 MC 1982 200 20,000 U.S. Gulf Active
Mac McCoy Bethlehem JU-200 MC 1982 200 20,000 U.S. Gulf Active
Red McCarty Bethlehem JU-200 MC 1982 200 25,000 U.S. Gulf Active
W.T. Johnson Bethlehem JU-200 MC 1982 200 20,000 U.S. Gulf Active
</TABLE>

21
<PAGE> 23

- ---------------

(1) Type codes are defined as follows:

<TABLE>
<S> <C>
IC......... Independent Leg Cantilevered jackup rig
IS......... Independent Leg Slot jackup rig
MC......... Mat Supported Cantilevered jackup rig
MS......... Mat Supported Slot jackup rig
</TABLE>

(2) Rigs designated with an "R" were modified, refurbished or otherwise upgraded
in such year by capital expenditures in an amount material to the net book
value of such rig.

(3) Rigs listed as "active" were operating under contract and rigs listed as
"available" were available for bidding as of March 31, 1996. Rigs listed as
"stacked" were not operating under contract and were either in need of
expenditures to reactivate or not being actively marketed at such date.
Rigs listed as "shipyard" are undergoing upgrade, modification or
refurbishment. The rigs listed as "stacked" were protected at the time of
deactivation, utilizing procedures recommended by the original equipment
manufacturer. A rig that has undergone this deactivation procedure
generally takes less cost and lead time in order to be returned to active
service than a rig that has not undergone such procedure.

(4) Equipped with a top drive unit.

(5) Planned to be upgraded and refurbished in the third quarter of 1996.

(6) Currently being converted to a cantilever rig and upgraded and refurbished.
To be renamed the Gene Rosser.

(7) Bareboat chartered to a third party under which the Company maintains
operating control of the rig.

(8) Planned to be converted to a cantilever rig and upgraded and refurbished as
market conditions warrant.

(9) Currently being upgraded and refurbished. Formerly named the Odin Explorer.

(10) Although the rig is designed to drill in a maximum water depth of 300 feet,
the rig is currently equipped with legs adequate to drill in approximately
125 feet of water. The Company has fabricated and is currently installing
an additional 120 feet of legs.

(11) Owned by NN-1 Limited Partnership, of which Noble Drilling is the general
partner and in which it has a majority interest. The rig is mortgaged under
a first preferred ship mortgage in favor of the United States government to
secure repayment of the U.S. Government Guaranteed Ship Financing Sinking
Fund Bonds issued in 1978 by the predecessor of the partnership in
connection with the construction and purchase of the rig.

22
<PAGE> 24

TURNKEY DRILLING AND ENGINEERING SERVICES

Through Triton, the Company provides turnkey drilling, drilling project
management, drilling and completion planning and design, specialized drilling
tools and services, and contract engineering and consulting manpower. Turnkey
drilling, Triton's major service, involves the coordination of all equipment,
materials, services and management to drill a well to a specified depth for a
fixed price. Under turnkey drilling contracts, Triton bears the financial risk
of delays in the completion of the well. In providing its services, Triton can
use drilling rigs owned either by the Company or by a third party, depending on
availability. The drilling of a turnkey well is generally completed within 30 to
50 days. Twenty-seven wells were completed by Triton in 1995 compared to 35
wells for 1994. Seven of the 35 wells were completed prior to the Company's
acquisition of Triton in April 1994. Revenues from turnkey drilling services
represented 22 percent and 16 percent of consolidated operating revenues in 1995
and 1994, respectively. The revenue percentage for 1994 consists of Triton's
revenues from the time of the acquisition in April 1994 through year end 1994.
Triton completed eight turnkey wells during the three months ended March 31,
1996. Revenues from turnkey drilling services represented 32 percent of
consolidated operating revenues for the quarter.

The Company provides engineering services relating primarily to the design
of drilling equipment for offshore development and production services and to
the recertification of oilfield equipment. The Company works, on a contract
basis, with operators and prime construction contractors of drilling and
production platforms in the design of drilling equipment configurations aimed at
optimizing the operational efficiency of developmental drilling by maximizing
platform space utilization and load capability.

Through its operations in Venezuela, the Company provides engineering
services in the form of an alliance program with Lagoven. The Company utilizes
its own drilling rigs and employs Triton personnel for the engineering and
operating expertise.

LABOR CONTRACTS

The Company's offshore operations also included at March 31, 1996 labor
contracts for drilling and workover activities covering 13 rigs operating in the
U.K. North Sea. These rigs are not owned or leased by the Company. Under its
labor contracts, the Company provides the personnel necessary to manage and
perform the drilling operations from drilling platforms owned by the operator.
The contracts are generally renewable no more frequently than on an annual
basis. After drilling operations are completed, workover operations usually
become an important element of each platform's activity. Thus, drilling
contractor crews usually remain on the platform until a field is depleted by
production.

The Company was awarded a contract in 1994 by Hibernia Management and
Development Company Ltd. for offshore production drilling and related services.
The contract calls for the Company to commission, operate and maintain two
state-of-the-art platform rigs to be installed on the concrete gravity-based
structure that will be used to develop the Hibernia field off the coast of
Newfoundland. The Company established an office in St. Johns, Newfoundland in
late 1994. A team of six experienced personnel are employed in St. Johns and are
presently participating in the preparation of operating, equipment maintenance
and procedures manuals, and the procurement of equipment. Commissioning of the
drilling and related equipment is scheduled to commence in May 1996 through
November 1996. The gravity-based structure is scheduled for tow out to location
in May 1997, with commencement of the first well scheduled to occur in early
September 1997. The Company has a five-year contract with Hibernia with an
option for a five-year extension. It is anticipated that the Company will have
approximately 120 employees assigned to this project at its peak in 1997.

LAND DRILLING OPERATIONS

The Company's land drilling operations are conducted in Canada, Texas and
Louisiana. At March 31, 1996, 19 of the Company's 46 land rigs were available
for active bidding by the Company. Of these 19 rigs, 10 were located in the
United States and nine were located in Canada. Thirteen of the 19
actively-marketed rigs were operating under contract and six were available for
bidding at that date. Twenty-seven rigs were stacked and not being actively
marketed. The remaining net book value of these stacked rigs is not material.

23
<PAGE> 25

The Company's land drilling operations have become less significant as the
Company has emphasized its offshore and international operations.

RECENT DEVELOPMENTS

Asset Rationalization Program

Consistent with the Company's business strategy, the Company has sold two
of its posted barges (the Gus Androes and Gene Rosser) and has reclassified its
two remaining posted barges as assets held for sale. The Company plans to use
the net proceeds from these sales, together with working capital if needed, to
enhance the deepwater capability of its fleet. On February 26, 1996, the Company
purchased the Odin Explorer, renamed the Gus Androes, a 300-foot independent leg
cantilevered jackup rig located in the United Arab Emirates. The rig is
currently undergoing refurbishment and is scheduled to be available for work in
the third quarter of 1996. In addition, on March 20, 1996, the Company purchased
the Dana, a 250-foot independent leg cantilevered jackup rig located offshore
Qatar.

THE ACQUISITION

On April 25, 1996, the Company entered into an Agreement of Sale and
Purchase (the "Acquisition Agreement") with Nedlloyd and Neddrill Holding B.V.
to acquire the assets of Neddrill utilized in its offshore contract drilling,
accommodation and other oil and gas exploration and production related service
businesses, $25,000,000 in net working capital and the personnel employed by
Neddrill. The purchase price is $300,000,000 in cash plus 5,000,000 shares of
Common Stock.

Neddrill's operations are managed from its headquarters in Rotterdam, The
Netherlands. Its fleet includes two dynamically positioned drillships (one of
which is currently operating offshore West Africa, the second offshore Brazil);
one second generation semisubmersible rig operating in the North Sea; and six
harsh environment jackup drilling rigs (five operating in the North Sea and one
offshore Argentina). Neddrill expects to acquire through a joint venture
arrangement a 41 percent interest in, and to operate, a third dynamically
positioned drillship upon the owner's receipt of final consent from the Russian
authorities. In addition, Neddrill operates under a bareboat charter a seventh
harsh environment jackup rig as a hotel accommodation unit in the North Sea.
Neddrill's semisubmersible and jackup rigs are all currently under contract,
with commitments extending through August 1996 to 2001, depending on the rig.
All three drillships are committed under five to six year contracts to work for
Petrobras offshore Brazil. In addition to the one drillship already on location,
the other two are scheduled to arrive in late 1996 or early 1997.

Neddrill currently employs approximately 615 personnel in offshore/field
positions and 60 employees in shorebase and administrative positions. Depending
on location, some employees are covered by a labor agreement or are represented
by labor unions. Neddrill's employees will initially receive the same pay rates
and benefits package as they received prior to closing of the Acquisition,
although the Acquisition Agreement does not bind the Company to continue to
provide pay or benefits except as required by applicable law and existing
employment agreements. Neddrill maintains shorebase facilities in Argentina,
Brazil, Denmark, the United Kingdom and The Netherlands.

The Acquisition will expand the types of rigs comprising the Company's
offshore fleet to include drillships and a semisubmersible. Each of these types
of rigs is described further below.

Drillships. Drillships are ships that are equipped for drilling and are
typically self-propelled and move from one location to another under their own
power. Drillships are positioned over the well through use of either an
anchoring system or a computer controlled thruster system (dynamic positioning).
Neddrill's two

24
<PAGE> 26

wholly owned drillships are capable of drilling in water depths of up to 4,500
feet. Upon completion of a scheduled substantial upgrade, the Neddrill
Muravlenko will be capable of drilling in water depths of up to 4,000 feet.
Drillships are typically more expensive to construct and operate than jackup
rigs.

Semisubmersible Rigs. Semisubmersible rigs are floating platforms which, by
means of a water ballasting system, can be submerged to a predetermined depth so
that a substantial portion of the hull is below the water surface during
drilling operations. Neddrill's semisubmersible rig maintains its position over
the well through the use of dynamic positioning. Neddrill's semisubmersible rig
is designed to work in water depths of up to 1,500 feet and can drill in many
areas where the Company's jackup rigs can also drill. However, semisubmersible
rigs normally require water depth of at least 200 feet in order to conduct
operations. Semisubmersible rigs are typically more expensive to construct and
operate than jackup rigs.

The following table sets forth certain information concerning Neddrill's
owned and operated offshore drilling fleet at March 31, 1996. Unless otherwise
indicated, Neddrill wholly owns and operates the units listed in the table.

NEDDRILL OFFSHORE DRILLING RIGS

YEAR WATER MAXIMUM
BUILT OR DEPTH DRILLING
NAME MAKE TYPE(1) REBUILT(2) RATING DEPTH LOCATION STATUS(3)
- -------------------------- ------------------------ ------- ---------- ------ ------- ------------ ---------
(FEET) (FEET)
<S> <C> <C> <C> <C> <C> <C> <C>
DYNAMICALLY POSITIONED
DRILLSHIPS-3
Neddrill 1................ Gusto Engineering 1995R 4,500 20,000 West Africa Active
Pelican Class (enhanced)
Neddrill Muravlenko (4)... Gusto Engineering 1982 984 21,000 Norway Docked
Pelican Class
Neddrill 2 (5)............ Neddrill 1977 4,500 25,000 Brazil Active

SEMISUBMERSIBLE-1
Neddrill 6 (6)(7)......... Offshore Co. SCP III 1991R 1,500 25,000 U.K. Active

JACKUP RIGS-7
Neddrill Trigon (6)(7)(8) CFEM T-2005C IC 1982 360 25,000 Argentina Active
Neddrill 10 (6)(7)........ CFEM T-2005C IC 1982 300 25,000 Denmark Active
Neddrill 3 (6)(7)......... Marine Structure CJ-46 IC 1982 250 20,000 Netherlands Active
Neddrill 9 (6)(7)......... Marine Structure CJ-46 IC 1982 230 20,000 France Active
Neddrill 7 (6)(7)......... Marine Structure CJ-46 IC 1981 205 25,000 U.K. Active
Neddrill 4 (6)(7)......... Neddrill IC 1982 250 20,000 Netherlands Active
Neddrill Kolskaya (6)(9).. Gusto Engineering IC 1983 330 N/A Denmark Active

</TABLE>

- ---------------

(1) Type code is defined as follows:

IC . . . . Independent Leg Cantilevered jackup rig

(2) Rigs designated with an "R" were modified, refurbished or otherwise upgraded
in such year by capital expenditures in an amount material to the net book
value of the rig.

(3) Rigs listed as active were operating under contract as of March 31, 1996.

(4) Neddrill expects to acquire a 41 percent interest in the drillship through a
joint venture arrangement upon the owner's receipt of final consent from the
Russian authorities. The drillship is scheduled to be upgraded in Gibraltar
in the second half of 1996 to increase water depth rating to 4,000 feet at a
projected total cost of $36,000,000 (one-half to be paid by Neddrill). See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

(5) Scheduled to be upgraded in the second half of 1996 to increase water depth
rating to 6,000 feet at a projected cost of $26,000,000. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

25
<PAGE> 27

(6) Harsh environment capability.

(7) Equipped with a top drive unit.

(8) Scheduled to be returned to the North Sea in the second half of 1996 and
upgraded to increase leg holding capacity, repair spudcans and extend
cantilever reach at a projected cost of approximately $14,000,000. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

(9) Neddrill operates this unit, which is presently used in offshore hotel
accommodation mode (at a capacity of 250 bunks) instead of drilling mode,
under a bareboat charter terminating in August 1996, with an option to
extend through April 1997.

The Neddrill 2 is currently operating under contract for Petrobras offshore
Brazil. The Neddrill 1, which is currently operating under contract offshore
West Africa, was upgraded in 1995 from moored-only positioning to a rated water
depth of 4,500 with dynamic positioning. The Neddrill 1 is scheduled during the
second half of 1996 for mobilization to Brazil to substitute for the Neddrill 2
while it undergoes a scheduled upgrade during the fourth quarter of 1996 to a
rated water depth of 6,000 feet, after which the Neddrill 2 is scheduled to
continue in a renewed long-term contract with Petrobras. Upon the return
offshore Brazil of the Neddrill 2, the Neddrill 1 is scheduled for certain
refurbishments upon conclusion of which it also is scheduled to commence a
long-term contract with Petrobras. Each of the contracts with Petrobras contains
provisions that permit Petrobras to terminate the contract without further
obligation under certain circumstances, including the failure of Neddrill to
perform its obligations under the contract. Generally, Neddrill's other drilling
contracts permit the operator to terminate the contracts without further
obligation upon relatively short prior notice (in one contract, 10 days) to
Neddrill. Such provisions are common in oil and gas offshore drilling contracts.

The closing of the Acquisition is contingent upon the simultaneous closing
of the Equity Offerings and the Debt Offering. The closing of the Acquisition is
also subject to certain other conditions, including a condition to the
obligation of the Company to proceed with the closing that no actual,
constructive, arranged or compromised total loss of the Neddrill 1, Neddrill 2
or Neddrill 6 or of two or more of Neddrill's other rigs shall have occurred or
that there not have been the cancellation, termination or rescission by
Petrobras of either of the current drilling contracts with Petrobras regarding
the Neddrill 1 or Neddrill 2. If an actual, constructive, arranged or
compromised total loss of only one of the rigs not specified occurs, there will
be a reduction to the purchase price based on an amount scheduled for each
drilling unit in the Acquisition Agreement. There can be no assurance that such
other conditions will be satisfied or that the Acquisition will be completed.

The closing of the Equity Offerings and the Debt Offering is contingent
upon the simultaneous closing of the Acquisition. If the Acquisition is not
completed for any reason, the Offerings will not be consummated.

26
<PAGE> 28

SELECTED FINANCIAL DATA

The following sets forth certain historical consolidated financial data
relating to the Company. The selected financial data for each of the years in
the five-year period ended December 31, 1995 are derived from the audited
consolidated financial statements of the Company. This information should be
read in conjunction with the consolidated financial statements and the
information set forth herein under "Management's Discussion and Analysis of
Results of Operations and Financial Condition."

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------- ---------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA(1)
Operating revenues.......... $104,757 $ 85,096 $327,968 $351,988 $264,531 $184,166 $230,151
Operating costs(2).......... 69,664 63,751 240,102 243,208 178,684 135,252 179,490
Depreciation and
amortization(3)........... 8,930 8,834 36,492 39,519 28,886 27,248 30,052
Selling, general and
administrative............ 12,025 10,556 40,139 47,606 28,284 30,716 32,684
Impairments, net of gains on
asset sales and
write-downs/ restructuring
charges(4)................ 73 -- -- 3,661 -- 21,120 11,134
Minority interests.......... (32) (58) (214) (169) (232) 89 78
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)..... 14,097 2,013 11,449 18,163 28,909 (30,259) (23,287)
Interest expense............ (3,176) (3,024) (12,156) (12,351) (8,038) (13,274) (20,411)
Interest income............. 825 1,492 5,323 5,640 2,497 3,276 2,155
Other income, net........... 483 578 250 15,743 1,047 3,675 4,786
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes and
extraordinary item........ 12,229 1,059 4,866 27,195 24,415 (36,582) (36,757)
Income tax provision........ (1,503) (1,720) (3,272) (5,672) (3,333) (3,396) (2,417)
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
continuing
operations................ 10,726 (661) 1,594 21,523 21,082 (39,978) (39,174)
Discontinued operations..... -- -- -- -- -- (3,372) (1,815)
Extraordinary item(5)....... -- -- -- -- 1,770 -- 4,978
-------- -------- -------- -------- -------- -------- --------
Net income (loss)........... 10,726 (661) 1,594 21,523 22,852 (43,350) (36,011)
Preferred stock dividends... (1,511) (2,670) (7,199) (12,764) (7,936) (6,728) (721)
-------- -------- -------- -------- -------- -------- --------
Net income (loss) applicable
to common shares.......... $ 9,215 $ (3,331) $ (5,605) $ 8,759 $ 14,916 $(50,078) $(36,732)
======== ======== ======== ======== ======== ======== ========
Net income (loss) applicable
to common shares per
share(6)(7)............... $ 0.10 $ (0.06) $ (0.08) $ 0.11 $ 0.22 $ (1.05) $ (0.81)
Weighted average common
shares outstanding........ 95,782 80,066 89,736 77,576 66,923 47,762 45,554
BALANCE SHEET DATA (AT END
OF PERIOD)(1)
Working capital
(deficit)(8).............. $123,190 $101,623 $101,623 $157,885 $150,535 $ 42,993 $ (3,239)
Property and equipment,
net....................... $525,742 $542,978 $542,978 $493,322 $482,029 $338,382 $384,182
Total assets................ $757,953 $741,392 $741,392 $739,889 $696,553 $456,529 $560,987
Long-term debt.............. $126,048 $129,923 $129,923 $126,546 $127,144 $ 87,280 $ 73,145
Total debt(9)............... $138,658 $142,133 $142,133 $132,790 $127,690 $114,477 $182,784
Shareholders' equity........ $531,431 $523,493 $523,493 $527,611 $516,770 $301,634 $324,367
OTHER DATA(1)
Capital expenditures........ $ 42,171 $ 16,082 $ 87,428 $ 55,834 $173,501(10) $ 5,997 $129,986(11)
Ratio of earnings to fixed
charges(12)............... 4.85x 1.35x 1.40x 3.20x 4.04x N.M. N.M.
</TABLE>

(Table continued on following page)

27
<PAGE> 29

- ---------------

N.M. -- Not Meaningful.

(1) The Selected Financial Data present the restatement of the Company's
historical financial statements for 1994 and prior periods to reflect the
1994 merger of Chiles into a wholly owned subsidiary of the Company, which
was accounted for as a pooling of interests. The Selected Financial Data
also include the acquisition of Triton in April 1994 and the October 1993
acquisition of nine jackup rigs from Western, both of which were accounted
for under the purchase method.

(2) Consists of operating costs and expenses other than depreciation and
amortization, selling, general and administrative, minority interest,
impairments, net of gains on asset sales, and write-downs and restructuring
charges.

(3) Effective January 1, 1995, the Company revised its estimates of salvage
values and remaining depreciable lives of certain rigs. The effect of this
change was a reduction to depreciation and amortization of $6,160,000, or
$0.07 per common share, for the year ended December 31, 1995.

(4) Consists of gains on the sale of assets and provisions resulting from
write-downs of certain assets, facility consolidation costs and, to a
lesser extent, severance costs.

(5) Consists of a gain on extinguishment of debt in 1993 and a gain on an
insurance settlement in 1991.

(6) Net (loss) income applicable to common shares per share before
extraordinary item was $0.20 and $(0.92) for the years ended December 31,
1993 and 1991, respectively. Loss applicable to common shares per share
from discontinued operations was $(0.07) and $(0.04) for the years ended
December 31, 1992 and 1991, respectively.

(7) Includes the $0.02 per share effect of the March 1995 preferred conversion
payment related to the conversion of 923,862 shares of the Company's $2.25
Convertible Exchangeable Preferred Stock. The payment of $1,524,000 was
accounted for as a reduction of net earnings applicable to common shares
when calculating the net loss applicable to common shares per share.

(8) Chiles reclassified $50,500,000 of its outstanding indebtedness from
long-term to current liabilities in 1991. This reclassification was made
because as of December 31, 1991, Chiles anticipated not being able to
remain in compliance, and subsequently was not able to remain in
compliance, with all of the terms of its debt agreements.

(9) Consists of short-term debt and current installments of long-term debt, and
long-term debt.

(10) Includes the acquisition by the Company of nine jackup rigs from Western
for $150,000,000 in cash.

(11) Includes the acquisition of five jackup rigs and seven submersible rigs
from Transworld Drilling Company for $5,000,000 in cash and a $70,000,000
promissory note.

(12) For the purposes of computing the ratio, "earnings" represents income
(loss) from continuing operations before income taxes plus fixed charges
exclusive of capitalized interest, and "fixed charges" consists of
interest, whether expensed or capitalized, amortization of debt expense and
an estimated portion of rentals representing interest costs. As a result of
the losses incurred in the years ended December 31, 1992 and 1991, earnings
did not cover fixed charges by $36,582 and $37,811, respectively.

28
<PAGE> 30

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OUTLOOK

The Company's operating strategy has been to pursue drilling opportunities
in the U.S. and various international markets. Worldwide drilling conditions
vary substantially from region to region; however, the Company operates in many
markets where there is a demand for offshore rigs. During late 1992, U.S.
natural gas prices improved, resulting in greater demand and higher dayrates for
drilling rigs. Increasing U.S. natural gas prices resulted in significant
improvements in the U.S. Gulf of Mexico rig demand and dayrates during the
second half of 1993. Declining world oil prices during this period reduced rig
demand outside the U.S. Gulf. As a result of declining international rig demand
and improved market conditions in the U.S. Gulf, many contractors mobilized rigs
from international markets to the U.S. Gulf in late 1993 and early 1994. The
increased supply of drilling rigs in the U.S. Gulf more than offset the
increased level of U.S. Gulf rig demand during 1994 and the first half of 1995,
causing increased pressure on dayrates. By mid-year 1995, rig demand in the
international arena began to strengthen. Improved political stability and
strengthened world oil prices caused more favorable market conditions which
enabled the Company to further its strategy of mobilizing its rigs out of the
U.S. Gulf of Mexico to international markets. Simultaneously, the U.S. Gulf of
Mexico market strengthened due to improved gas prices, subsalt drilling, and
deepwater drilling.

The Company anticipates that the domestic offshore market will experience
significant activity levels in the first two quarters of 1996. However, the
Company is cautious and does not predict these robust levels to continue all
year. The international market is anticipated to remain strong, assuming oil
prices remain at current levels and the political environment remains stable. If
the price of natural gas decreases in the near future, the Company's dayrates
and utilization rates in the U.S. Gulf could be adversely affected. The Company
can predict neither the future level of demand for its drilling services nor the
future conditions in the offshore contract drilling industry.

The Company had seven offshore drilling rigs under contract and one
offshore drilling rig available for bidding in Nigeria at March 31, 1996. The
contracts under which the seven rigs are operating each contain provisions
permitting the operator to suspend operations in the event of force majeure and
to terminate the contract if the force majeure continues; however, no operator
has elected to suspend operations pursuant to these provisions. The Company
maintains war and political risk insurance (covering physical damage or loss up
to the insured value of each rig), subject, in the case of certain coverages, to
immediate termination upon certain events or upon termination by the underwriter
on seven days' notice. In recent periods, the Nigerian economy has experienced
high inflation. During these periods, the Company's operations were not
materially affected, and the Company received timely payment for its services in
U.S. dollars. Revenues from drilling activities in Nigeria accounted for
approximately 15 percent, 14 percent and 13 percent, respectively, of the
Company's operating revenues in the three months ended March 31, 1996 and the
years ended December 31, 1995 and 1994.

The Company began to operate in Venezuela in late 1993 and currently has
four rigs located in that country. Three jackup rigs were under contract with
Lagoven, a subsidiary of the government-owned oil company of Venezuela, and one
jackup rig was under contract with Shell Venezuela S.A. as of February 26, 1996.
In recent periods, the Venezuelan economy has experienced high inflation and a
shortage of foreign currency. During a banking crisis in July 1994, the
Venezuelan government imposed a program of currency exchange controls and taxes
on certain financial transactions that temporarily limited the ability of the
government-owned oil companies and their affiliates to make payment in U.S.
dollars or other hard currencies to oilfield service contractors. During this
period, the Company's operations were not materially affected, and the Company
received timely payment for its services in U.S. dollars. Although timely U.S.
dollar payments are currently being made to the Company, future exchange control
actions of the Venezuelan government could adversely affect the Company's
operations in Venezuela. Revenues from drilling activities in Venezuela
accounted for approximately eight percent, 10 percent and 10 percent,
respectively, of the Company's operating revenues in the three months ended
March 31, 1996 and the years ended December 31, 1994.

29
<PAGE> 31

On April 25, 1996, the Company entered into an agreement of sale and
purchase to acquire Neddrill for the purchase price of $300,000,000 in cash plus
5,000,000 shares of Common Stock. The Acquisition adds deepwater and harsh
environment capabilities to the Company's fleet, diversifies the fleet to
include drillships and a semisubmersible and increases the Company's geographic
diversification by providing entry into the Brazilian offshore market and
expanding its presence in the North Sea. See "The Acquisition."

LIQUIDITY AND CAPITAL RESOURCES

Capital Expenditures and Commitments

The Company had working capital of $123,190,000, $101,623,000 and
$157,885,000 as of March 31, 1996 and December 31, 1995 and 1994, respectively.
The increase in working capital was primarily due to the reclassification in the
1996 first quarter of the Company's two remaining barges as assets held for
sale. The decrease in working capital from December 31, 1994 to December 31,
1995 of $56,262,000 was primarily due to 1995 capital expenditures of
$87,428,000 offset by cash provided by operating activities. In addition, the
Company had long-term debt related to the financing of the Company's insurance
package, of which the short-term portion was $11,690,000 at December 31, 1995.
Long-term debt as a percentage of long-term debt plus shareholders' equity was
20 percent and 19 percent at December 31, 1995 and 1994, respectively.

The Company continues to have cash requirements for debt interest and
principal payments, and for preferred dividends, when and if declared. In 1996,
debt interest (exclusive of any interest on the Senior Notes) and principal
payments are estimated to be approximately $23,900,000. Cumulative dividends on
the 4,025,000 outstanding shares of Noble Drilling's $1.50 Convertible Preferred
Stock are estimated to be approximately $6,038,000 for 1996. The Company expects
to fund these 1996 obligations of $29,938,000 out of cash and short-term
investments as well as cash expected to be provided by operations.

During the first three months of 1996, the Company incurred capital
expenditures of approximately $42,200,000 relating primarily to the purchase of
the Gus Androes (formerly the Odin Explorer) and the Dana and the upgrade of the
Azteca. At March 31, 1996, the Company had planned capital expenditures for the
remainder of 1996 of approximately $54,000,000 related to upgrades of the Azteca
(to be renamed the Gene Rosser), Roy Butler, Dana and Gus Androes, and
replacements of equipment and drill pipe. Neddrill has planned capital
expenditures of $77,000,000 in 1996 (approximately $70,000,000 of which is
expected to be spent after consummation of the Acquisition), including upgrades
to the Neddrill 2, Neddrill Trigon and Neddrill Muravlenko totaling
approximately $58,000,000. The Company expects to fund these improvements to its
assets, including those it acquires in the Acquisition, if consummated, out of
cash provided by operations, to the extent available, and/or existing cash
balances, including the proceeds generated prior to the date of this Prospectus
by the sale of two barge rigs. Factors that could cause actual capital
expenditures to exceed materially the planned capital expenditures include
delays and cost overruns in shipyards, shortages of equipment, latent damage or
deterioration to hull, equipment and machinery in excess of engineering
estimates and assumptions, and changes in design criteria or specifications
during repair or construction.

Credit Facilities and Long-term Debt

On a pro forma basis as of March 31, 1996, the Company's total indebtedness
upon consummation of the Offerings and the use of proceeds as described herein
would be $263,658,000, as compared to total shareholders' equity of
$825,722,000. Substantially all of this indebtedness will consist of the
$125,000,000 aggregate principal amount of Senior Notes offered in the Debt
Offering and the $125,000,000 aggregate principal amount of 9 1/4% Notes
currently outstanding.

The amount of interest accruing each year on the Senior Notes will be
approximately $10,940,000. The Senior Notes will not require any payments of
principal prior to maturity in 2006. The terms of the Senior Notes will contain
covenants that limit, among other things, the Company's ability to create or
incur debt, pay dividends and other distributions and make certain investments,
create liens on its assets, dispose of assets, merge or consolidate or sell
substantially all of its assets. See "Description of Senior Notes."

30
<PAGE> 32

On November 3, 1995, the Company entered into a financing agreement with
Transamerica Insurance Finance for a period of 18 months related to the renewal
of its Marine Package, Protection and Indemnity, and Excess Liability insurance
policies. The amount financed totaled $16,561,000 at a fixed interest rate of
6.23 percent per annum, repayable in 18 equal installments.

On June 16, 1994, the Company entered into a credit agreement with First
Interstate Bank of Texas, N.A. for a $25,000,000 revolving credit facility and a
$5,000,000 letter of credit facility (see Note 5 of Notes to Consolidated
Financial Statements of the Company included elsewhere herein). At March 31,
1996, the Company had lines of credit totaling $26,000,000, of which $3,000,000
was available for letters of credit, and letter of credit facilities aggregating
$5,000,000, subject to the Company's maintenance of certain levels of
collateral. At March 31, 1996, the Company had $24,724,000 available under the
lines of credit. No amounts were outstanding under the lines of credit at March
31, 1996.

In 1993, the Company issued $125,000,000 aggregate principal amount of
9 1/4% Notes, which will mature on October 1, 2003. Interest on the 9 1/4% Notes
is payable semiannually on April 1 and October 1 of each year. The 9 1/4% Notes
are redeemable at the option of the Company, in whole or in part, on or after
October 1, 1998 at 103.47 percent of principal amount, declining ratably to par
on or after October 1, 2001, plus accrued interest. Mandatory sinking fund
payments of 25 percent of the original principal amount of the 9 1/4% Notes at
par plus accrued interest will be required on October 1, 2001 and October 1,
2002. The indenture governing the 9 1/4% Notes contains certain restrictive
covenants, including limitations on additional indebtedness and the ability to
secure such indebtedness, restrictions on dividends and certain investments, and
limitations on sales of assets, sales and leasebacks, transactions with
affiliates, and mergers or consolidations.

In connection with the initial construction of the NN-1, the predecessor of
NN-1 Limited Partnership issued its U.S. Government Guaranteed Ship Financing
Sinking Fund Bonds, of which $1,546,000 was outstanding at March 31, 1996. The
bonds are secured by the vessel, and the applicable security agreement contains
certain restrictions, including restrictions on distributions to partners,
dispositions of assets and services to related parties. In addition, there are
minimum working capital, net worth and long-term debt to net worth requirements
applicable to NN-1 Limited Partnership. The Company's sharing percentage in NN-1
Limited Partnership's distributions from operations is generally 90 percent.

Minimum principal payments on the long-term debt as described above are
$12,210,000 in 1996, $4,417,000 in 1997, $506,000 in 1998, $125,000,000 in 2003
and, assuming consummation of the Debt Offering $125,000,000 in 2006.

EVENTS SUBSEQUENT TO DECEMBER 31, 1995

In March 1995, Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of, was issued. This statement requires that long-lived assets and
certain identifiable intangibles held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company adopted this
standard effective January 1, 1996. The Company recorded a non-cash charge to
net income of approximately $7,600,000 in the first quarter of 1996.

Subsequent to December 31, 1995, the Company sold for cash two posted
barges, one located in the U.S. Gulf of Mexico and the other offshore Nigeria.
The Company recorded gains on the sales of these assets totaling approximately
$7,527,000 in the first quarter of 1996.

31
<PAGE> 33

RESULTS OF OPERATIONS

The following table sets forth selected consolidated financial information
of the Company expressed as a percentage of total operating revenues for the
periods indicated.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Operating revenues
Contract drilling services
International offshore................................. 29.9% 29.7% 29.8%
Domestic offshore...................................... 24.7 33.0 44.6
International land..................................... 4.2 5.6 7.3
Domestic land.......................................... 3.8 2.7 2.8
----- ----- -----
Total contract drilling services.................. 62.6 71.0 84.5
Labor contract drilling services.......................... 10.7 10.3 12.9
Turnkey drilling services................................. 21.7 16.0 --
Engineering and consulting services....................... 3.4 1.1 0.9
Other revenue............................................. 1.6 1.6 1.7
----- ----- -----
100.0 100.0 100.0
Operating costs
Contract drilling services................................ (42.2) (45.5) (55.2)
Labor contract drilling services.......................... (8.1) (8.1) (10.5)
Turnkey drilling services................................. (19.7) (13.3) --
Engineering and consulting services....................... (2.2) (0.8) (0.8)
Other expense............................................. (1.0) (1.4) (1.1)
Depreciation and amortization............................... (11.1) (11.2) (10.9)
Selling, general and administrative......................... (12.2) (13.5) (10.7)
Other income (expense), net(1).............................. 0.1 (1.0) 0.1
----- ----- -----
Operating income............................................ 3.6 5.2 10.9
Interest expense............................................ (3.7) (3.5) (3.0)
Interest income............................................. 1.6 1.6 0.9
Other income, net........................................... 0.1 4.5 0.4
----- ----- -----
Income from continuing operations before income tax and
extraordinary item........................................ 1.6 7.8 9.2
Income tax provisions....................................... (1.0) (1.6) (1.3)
----- ----- -----
Income from continuing operations before extraordinary
item...................................................... 0.6 6.2 7.9
Extraordinary item.......................................... -- -- 0.7
----- ----- -----
Net income.................................................. 0.6 6.2 8.6
Preferred stock dividends................................... (2.2) (3.6) (3.0)
----- ----- -----
Net (loss) income applicable to common shares............... (1.6)% 2.6% 5.6%
===== ===== =====
</TABLE>

- ---------------

(1) Consists of minority interest in 1995 and 1993 and minority interest and
restructuring charges in 1994.

1995 Compared With 1994

Operating Revenues. During 1995, the Company generated operating revenues
of $327,968,000 compared to operating revenues of $351,988,000 in 1994. This
decrease of $24,020,000 was due primarily to reduced contract drilling services
revenue caused by a softening of market conditions in the U.S. Gulf of Mexico
and Canada. This decrease was partially offset by increased turnkey drilling and
engineering and consulting services revenues.

32
<PAGE> 34

The Company's contract drilling fleet statistics are shown below.

<TABLE>
<CAPTION>
OPERATING DAYS AVERAGE DAYRATE
----------------- -------------------
1995 1994 1995 1994
------ ------ ------- -------
<S> <C> <C> <C> <C>
Contract Drilling Services
Offshore.................................... 10,127 11,013 $17,698 $20,024
Land........................................ 4,453 4,332 $ 5,811 $ 6,763
</TABLE>

Labor contract drilling services revenue decreased by $1,067,000 due to the
decrease in labor contracts and fewer operating days in the U.K.

Turnkey drilling services revenues were $71,273,000 in 1995, compared to
$56,380,000 earned in 1994 subsequent to the Company's acquisition of Triton, an
increase of $14,893,000. Twenty-seven wells were completed in 1995, compared to
28 in 1994. The increase in revenues was due to completion of turnkey wells of
longer duration in 1995. In 1995, the average turnkey well was drilled in 50
days compared to the 1994 average of 30 days. Triton's turnkey success ratio
deteriorated in 1995, primarily because of significant operational problems on
two domestic wells which resulted in losses of $7,293,000 on such wells.

Engineering and consulting revenues increased from $3,796,000 in 1994 to
$11,264,000 in 1995. The increase of $7,468,000 is mainly attributable to bonus
revenues generated from the alliance program between the Company and Lagoven, a
subsidiary of the government-owned oil company in Venezuela.

Operating Costs. Operating costs ("Operating Costs") consist of operating
costs and expenses other than depreciation and amortization, selling, general
and administrative costs, minority interest and restructuring charges. Operating
Costs were $240,102,000, or 73 percent of operating revenues, during 1995
compared to $243,208,000, or 69 percent of operating revenues, in 1994. Contract
drilling services costs in 1995 decreased $21,769,000 from 1994 primarily as a
result of reduced offshore activity levels, primarily in the U.S. Gulf of Mexico
and the Bay of Campeche, Mexico.

Labor contract drilling services costs in 1995 decreased $1,815,000 as
compared to 1994. This decrease was due to a reduced number of operating days in
1995 compared to 1994.

Turnkey drilling services costs increased $17,585,000 during 1995. As noted
above, Triton's average turnkey well drilling time increased in 1995, partially
due to operational issues on certain domestic wells. These operational issues
were also the primary cause of the decline in turnkey profit margins to 10
percent in 1995 compared to 17 percent in 1994.

Engineering and consulting services costs in 1995 increased $4,353,000 from
1994. This increase was due primarily to the inclusion in 1994 costs only of
amounts incurred after the date the Company acquired Triton, as well as the
start-up in 1995 of the Company's operational alliance with Lagoven in
Venezuela.

Depreciation and Amortization Expense. Depreciation and amortization
expenses were $36,492,000 in 1995 compared to $39,519,000 in 1994. The decrease
of $3,027,000 was primarily due to a change in accounting estimates offset by
the effects of 1995 capital spending. Effective January 1, 1995, the estimated
salvage values and remaining depreciable lives of certain rigs were adjusted to
better reflect their economic lives and to be consistent with other similar
assets owned by the Company. The effect of this change in estimate was a
decrease in depreciation and amortization of $6,160,000, or $0.07 per share.

Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses were $40,139,000 during 1995 as compared to
$47,606,000 in 1994, a decrease of $7,467,000. SG&A expenses decreased from 1994
due in part to reductions in overhead achieved as a result of restructuring and
consolidation efforts. The 1994 SG&A expenses included approximately $5,300,000
in pooling expenses related to the Chiles merger.

Restructuring Charges. A restructuring charge of $3,661,000 related to the
Chiles merger was recorded in 1994 as a result of facility consolidation,
including the write-down of certain of the Company's owned properties and, to a
lesser extent, severance costs.

33
<PAGE> 35

Other, Net. Other, net was $250,000 during 1995 compared to $15,743,000
during 1994. This decrease was principally due to the 1994 gain of $8,000,000 on
the sale of a drilling rig, net unrealized gains of $4,162,000 on marketable
equity investments, and gain of $1,530,000 on the recovery of a previously
written-off note receivable, offset by realized losses on marketable debt
securities of $2,199,000.

The Linn Richardson sustained damages in December 1995 while under tow to
West Africa. The rig has been returned to the U.S. Gulf of Mexico for a complete
damage assessment pursuant to a plan developed jointly by the Company and its
insurance underwriters. A charge of $1,778,000 related to the cost of mobilizing
the rig to West Africa was accrued in the fourth quarter of 1995. This amount
represents management's best estimate of the total loss. Management does not
believe this incident will have any other material adverse effect on the
Company's financial condition or results of operations.

Income Tax Provision. Provisions for income taxes of $3,272,000 and
$5,672,000 were recorded in 1995 and 1994, respectively. This decrease was
primarily due to a $2,100,000 U.S. separate return year loss carryback benefit
recorded by Triton.

At December 31, 1995, the Company had approximately $6,000,000 in
withholding tax receivables related to withholding taxes in Nigeria. Management
believes that this amount will be realized by obtaining the required tax
certificates from the related operators.

1994 Compared With 1993

Operating Revenues. During 1994, the Company generated operating revenues
of $351,988,000 compared to operating revenues of $264,531,000 in 1993. This
increase of $87,457,000 was due primarily to the acquisition of Triton and to
recording a full year's revenue from the assets purchased from Western in
October 1993. The Company's contract drilling fleet statistics are shown below.

<TABLE>
<CAPTION>
OPERATING DAYS AVERAGE DAYRATE
---------------- -------------------
1994 1993 1994 1993
------ ----- ------- -------
<S> <C> <C> <C> <C>
Contract Drilling Services
Offshore..................................... 11,013 9,137 $20,024 $21,105
Land......................................... 4,332 3,464 $ 6,763 $ 7,449
</TABLE>

Labor contract drilling services revenue increased by $1,729,000 in 1994
due to the increased number of labor contracts compared to 1993.

Turnkey drilling services revenues were $56,380,000 in 1994, which
represents revenue from the date of the acquisition of Triton. Twenty-eight
wells were completed in 1994, subsequent to the acquisition of Triton, for
average revenues per completed well of approximately $2,000,000.

The 1994 increases in engineering and consulting services revenues and
other revenue of $1,504,000 and $1,345,000, respectively, were primarily due to
the Triton acquisition.

Operating Costs. Operating Costs were $243,208,000, or 69 percent of
operating revenues, during 1994, compared to $178,684,000, or 68 percent of
operating revenues, in 1993. The increase in Operating Costs is due to the
increase in turnkey drilling services expense and the increase in operating days
as discussed above.

Depreciation and Amortization Expense. Depreciation and amortization
expenses were $39,519,000 in 1994, as compared to $28,886,000 in 1993. The
increase of $10,633,000 was principally due to a full year's depreciation on the
assets purchased from Western in October 1993 and the increase of approximately
$35,000,000 in capital expenditures compared to 1993.

Selling, General and Administrative Expenses. SG&A expenses were
$47,606,000 during 1994, as compared to $28,284,000 in 1993, an increase of
$19,322,000. SG&A expenses increased from 1993 due to the Triton acquisition
($7,800,000), pooling expenses related to the Chiles merger ($5,300,000), and a
full year of administrative expense from the Venezuela and Zaire operations
($2,800,000), with the balance due to an increased level of corporate personnel.

34
<PAGE> 36

Interest Expense, Net of Interest Income. Interest expense, net of interest
income, was $6,711,000 in 1994, as compared to net interest expense of
$5,541,000 in 1993. This increase in net interest expense was due to increased
interest expense of $4,313,000 related to the issuance of the 9 1/4% Notes in
October 1993, partially offset by additional interest income of $3,143,000. The
increase in interest income is attributable to the cash proceeds from Chiles'
preferred stock offering in October 1993 (see Note 6 of Notes to Consolidated
Financial Statements of the Company included elsewhere herein).

Other, Net. Other, net was $15,743,000 during 1994, compared to $1,047,000
in 1993. This increase was principally due to a gain of $8,000,000 on the sale
of a drilling rig, net unrealized gains of $4,162,000 on marketable equity
investments, and a gain of $1,530,000 on the recovery of a previously
written-off note receivable, offset by realized losses on marketable debt
securities of $2,199,000.

Income Tax Provision. Provisions for income taxes of $5,672,000 and
$3,333,000 were recorded in 1994 and 1993, respectively. This increase was due
to the foreign deferred tax provision of $3,073,000 in 1994, related to the book
and tax depreciation differences for the assets deployed in Venezuela and
Mexico.

March 31, 1996 Compared With March 31, 1995

During the three months ended March 31, 1996 (the "Current Quarter"), the
Company generated operating revenues of $104,757,000 compared to $85,096,000
during the three months ended March 31, 1995 (the "Comparable Quarter"). The
increase in operating revenues was primarily due to increased offshore contract
and turnkey drilling activity combined with improved dayrates during the Current
Quarter. Domestic offshore contract drilling benefited in the Current Quarter
from a 15 percent improvement in average dayrates compared to the Comparable
Quarter.

Revenues in the Current Quarter for international offshore contract
drilling operations increased primarily due to the strategic relocation of the
Percy Johns and Lloyd Noble from the U.S. Gulf to Nigeria during the third
quarter of 1995. These rigs were replaced in the U.S. Gulf by the redeployment
of the John Sandifer and the Eddie Paul, which completed extensive refurbishment
programs in the third and fourth quarters of 1995, respectively.

Turnkey drilling services revenue increased $15,877,000 in the Current
Quarter due to the completion of wells under contracts of longer durations and
at increased prices caused by growing demand for equipment and services in the
U.S. Gulf.

The utilization rate for the Company's domestic offshore rig fleet
increased to 96 percent in the Current Quarter compared to 81 percent in the
Comparable Quarter. The Company's international offshore rig utilization rate
increased to 92 percent during the Current Quarter from 80 percent in the
Comparable Quarter. At March 31, 1996, the Company had labor contracts on 13
operator-owned rigs in its international operations compared to 15 rigs at the
end of the Comparable Quarter.

Gross margins from contract drilling operations were $21,714,000, or 36
percent of contract drilling revenues, in the Current Quarter as compared to
$17,813,000, or 33 percent of drilling revenues, in the Comparable Quarter. The
increase in gross margins was principally due to higher average dayrates from
the domestic contract drilling operations. Labor contract gross margins were
$2,069,000, or 26 percent of labor contract revenues, in the Current Quarter
compared to $2,480,000, or 23 percent of labor contract revenues, in the
Comparable Quarter. Turnkey drilling operations gross margins were $9,849,000,
or 30 percent of turnkey drilling revenues, in the Current Quarter compared to
gross margins of $801,000, or five percent of turnkey drilling revenues, in the
Comparable Quarter. Eight turnkey wells were completed in the Current Quarter
compared to nine turnkey wells in the Comparable Quarter. The increase in
turnkey drilling operations gross margins was due to an improved success rate on
turnkey wells.

The Company is planning to sell its two remaining posted barges located in
Nigeria. The Company recorded $7,600,000 in asset impairments related to the
implementation of SFAS No. 121 during the Current Quarter. This charge was
offset by gains on the sales of two posted barge units totaling $7,527,000.

35
<PAGE> 37

MANAGEMENT

The following table sets forth certain information as of April 26, 1996
with respect to the executive officers and directors of Noble Drilling.

<TABLE>
<CAPTION>
NAME AGE POSITION
-------------------------------------- --- --------------------------------------
<S> <C> <C>
James C. Day.......................... 53 Chairman, President and Chief
Executive Officer and Director
Byron L. Welliver..................... 51 Senior Vice President -- Finance,
Treasurer and Controller
Julie J. Robertson.................... 40 Vice President -- Administration and
Corporate Secretary
Michael A. Cawley(1).................. 49 Director
Lawrence J. Chazen(1)................. 55 Director
Tommy C. Craighead(2)(3).............. 67 Director
James L. Fishel(1).................... 64 Director
Johnnie W. Hoffman(2)................. 69 Director
Marc E. Leland(2)(3).................. 58 Director
Bill M. Thompson(2)(3)................ 63 Director
</TABLE>

- ---------------

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

(3) Member of the Stock Option Committee.

James C. Day has served as Chairman of Noble Drilling since October 22,
1992, and as President and Chief Executive Officer since January 1, 1984. From
January 1983, until his election as President and Chief Executive Officer, Mr.
Day served as Vice President of Noble Drilling. Prior to 1983, Mr. Day served as
Vice President and Assistant Secretary of Noble Affiliates, Inc. He has been a
director of Noble Drilling since 1984. Mr. Day is also a director of Global
Industries Limited, Inc., and the YMCA of Greater Houston.

Byron L. Welliver has served as Senior Vice President -- Finance of Noble
Drilling since April 1989, as Treasurer of Noble Drilling since July 1986, and
as Controller of Noble Drilling since September 1994. Mr. Welliver had served as
Controller form April 1989 to April 1991. From July 1986 to April 1989, he also
served as Vice President -- Finance for Noble Drilling. He joined Noble Drilling
in October 1985, as Controller. Prior to joining Noble Drilling, Mr. Welliver
served consecutively as Tax Manager, Controller and Treasurer of Noble
Affiliates, Inc. beginning in March 1981.

Julie J. Robertson has served as Corporate Secretary of Noble Drilling
since December 1993, and as Vice President -- Administration of Noble Drilling
Services Inc. since September 1994. From January 1989 to September 1994, Ms.
Robertson served consecutively as Manager of Benefits and Director of Human
Resources. Prior to 1989, she served in the capacities of Risk and Benefits
Manager and Marketing Services Coordinator for Bawden Drilling Inc. Ms.
Robertson joined Bawden Drilling Inc. in 1979.

Michael A. Cawley has served as President and Chief Executive Officer of
The Samuel Roberts Noble Foundation, Inc. (the "Foundation") since February 1,
1992, after serving as Executive Vice President of the Foundation since January
1, 1991. For more than five years prior to 1991, Mr. Cawley was the President of
Thompson & Cawley, a professional corporation, attorneys at law; and Mr. Cawley
currently serves as of counsel to the law firm of Thompson, Cawley, Veazey &
Burns, a professional corporation. Mr. Cawley has served as a trustee of the
Foundation since 1988 and is also a director of Noble Affiliates, Inc. and
Panhandle Royalty Company. He has been a director since 1985.

Lawrence J. Chazen has served as Chief Executive Officer of Lawrence J.
Chazen, Inc., a California registered investment advisor, since 1977. He has
provided financial advisory services to Gordon P. Getty, the Gordon P. Getty
Family Trust, and other clients since 1977. Mr. Chazen serves as President and a
director of P.A.J.W. Corporation. He has been a director since 1994.

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<PAGE> 38

Tommy C. Craighead is the President and owner of T. C. Craighead & Company
(which is the general partner of The Joy Partners, Ltd.) and Astro Oil, Inc.,
all based in Ardmore, Oklahoma. He is also Vice-President of Tom-Sam, Inc. He
has been an oil and gas lease broker and independent operator since 1962. He has
been a director since 1988.

James L. Fishel retired as Vice President and Manager of Corporate Credit
Operations of General Electric Capital Corporation in 1994, after serving with
GECC in various positions since 1974. He is also a director of American Health
Properties, Inc., which is a real estate investment company. He has been a
director since 1989.

Johnnie W. Hoffman conducts his own ranching operations. He retired as Vice
President and Division Manager -- Offshore of the Company in 1986, after serving
the Company in various positions for 39 years. He has been a director since
1983.

Marc E. Leland has served since 1984 as President of Marc E. Leland &
Associates, Inc., a company engaged in the business of providing financial
advisory services. He has been a director since 1994.

Bill M. Thompson retired from Phillips Petroleum Company in December 1992,
after 38 years of service. From October 1988 to December 1991, Mr. Thompson
served as Executive Vice President of Phillips Petroleum Company. In 1992, Mr.
Thompson served as Chairman of the Board, President and Chief Executive Officer
of GPM Gas Corporation, a wholly owned subsidiary of Phillips Petroleum Company,
prior to his retirement. Mr. Thompson serves as a director of MCN Corporation.
He has been a director since 1993.

37
<PAGE> 39

DESCRIPTION OF SENIOR NOTES

The Senior Notes will be issued under an Indenture, dated as of
, 1996 (the "Indenture"), between the Company and Texas Commerce Bank National
Association, as trustee under the Indenture (the "Trustee"). For purposes of
this description of the Senior Notes, the term "Company" refers to Noble
Drilling Corporation and does not include its subsidiaries except for purposes
of financial data determined on a consolidated basis.

The terms of the Senior Notes include those stated in the Indenture and
those made a part of the Indenture by reference to the Trust Indenture Act of
1939 as in effect on the date of the Indenture (the "Trust Indenture Act"). The
Senior Notes are subject to all such terms, and Holders of the Senior Notes are
referred to the Indenture and the Trust Indenture Act for a statement of those
terms. The statements and definitions of terms under this caption relating to
the Senior Notes and the Indenture are summaries and do not purport to be
complete. Such summaries make use of certain terms defined in the Indenture and
are qualified in their entirety by express reference to the Indenture. A copy of
the Indenture, substantially in the form in which it is to be executed, has been
filed with the Securities and Exchange Commission as an exhibit to the
Registration Statement of which this Prospectus is a part. Certain terms used
herein are defined below under "-- Certain Definitions."

GENERAL

The Senior Notes will be senior unsecured obligations of the Company,
ranking pari passu in right of payment with all other senior unsecured
indebtedness of the Company including the Company's $125,000,000 outstanding
principal amount of 9 1/4% Senior Notes Due 2003 (the "9 1/4% Notes"), and will
be senior in right of payment to all existing and future subordinated
indebtedness of the Company. The Senior Notes will be effectively subordinated
to any secured indebtedness of the Company to the extent of the value of the
assets securing such indebtedness and will be effectively subordinated to all
obligations of the Company's subsidiaries. At March 31, 1996, after giving
effect to the use of proceeds from the Offerings as described in "Use of
Proceeds," the Company would have had (i) approximately $250,000,000 of
unsecured indebtedness for borrowed money (the 9 1/4% Notes and the Senior
Notes) and (ii) no indebtedness for borrowed money secured by the Company's
assets. In addition, subsidiaries of the Company would have had liabilities
(including trade payables) aggregating approximately $84,595,000 (including
$1,546,000 of indebtedness) and would have had approximately $24,724,000
available for borrowing or to support the issuance of letters of credit as of
that date under lines of credit and a letter of credit facility.

The Senior Notes will mature on , 2006 and will bear
interest from , 1996, at the rate per annum of percent.
Interest on the Senior Notes will be payable semiannually in arrears on
and of each year, commencing ,
1996, to the persons who are registered holders thereof at the close of business
on the or , as the case may be, immediately preceding
such interest payment date.

Interest on the Senior Notes will be computed on the basis of a 360-day
year of twelve 30-day months. Principal and interest will be payable at the
office of the Paying Agent but, at the option of the Company, interest may be
paid by check mailed to the registered Holders at their registered addresses.
The Senior Notes will be issued without coupons and in fully registered form
only, in denominations of $1,000 and integral multiples thereof.

38
<PAGE> 40

OPTIONAL REDEMPTION

The Senior Notes will not be redeemable at the option of the Company prior
to , 2001. On or after , 2001, the Senior Notes will be
redeemable at the option of the Company, in whole at any time or in part from
time to time, at the following prices (expressed in percentages of the principal
amount), if redeemed during the 12 months beginning of the years
indicated below, in each case together with interest accrued to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date):

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001...................................................... %
2002...................................................... %
2003...................................................... %
2004 and thereafter....................................... 100%
</TABLE>

CHANGE OF CONTROL

Upon the occurrence of a Change of Control, each Holder will have the right
to require the Company to repurchase all of such Holder's Senior Notes in whole
or in part (the "Change of Control Offer") at a purchase price (the "Repurchase
Price") in cash equal to 101 percent of the aggregate principal amount thereof
plus accrued and unpaid interest thereon, if any, to the Change of Control
Payment Date (as defined below).

Within 30 days following any Change of Control, the Company will mail a
notice to each Holder and to the Trustee stating, among other things, (i) that a
Change of Control has occurred and a Change of Control Offer is being made as
described in this provision, and that, although Holders are not required to
tender their Senior Notes, all Senior Notes that are timely tendered will be
accepted for payment; (ii) the Repurchase Price and the repurchase date, which
will be no earlier than 30 days and no later than 60 days after the date such
notice is mailed (the "Change of Control Payment Date"); (iii) that any Senior
Note accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest after the Change of Control Payment Date; and (iv) the
instructions and any other information necessary to enable Holders to tender
their Senior Notes and have such Senior Notes purchased pursuant to this
covenant. The Company will comply with any applicable tender offer rules
(including, without limitation, any applicable requirements of Rule 14e-1 under
the Exchange Act) in the event that the Change of Control Offer is triggered
under the circumstances described herein.

The provisions of the Indenture requiring the Company to repurchase Senior
Notes upon a Change of Control or from the proceeds of Asset Sales may not
afford holders of the Senior Notes protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving the Company or a Subsidiary that may adversely affect Holders of the
Senior Notes, if such transaction is not a transaction defined as a "Change of
Control" or an "Asset Sale," or, if such transaction is an "Asset Sale," the Net
Available Proceeds from such transaction (i) are otherwise used to purchase
Replacement Assets or repay certain Indebtedness as permitted under the
Indenture or (ii) together with the Net Available Proceeds from all other Asset
Sales which are not so used, do not exceed $15,000,000. See "-- Certain
Definitions" for the definitions of "Change of Control" and "Asset Sale" and
"-- Certain Covenants -- Limitation on Asset Sales" for the restrictions on the
ability of the Company and the Subsidiaries to engage in Asset Sales and the
terms of the Company's obligation to repurchase Senior Notes in the event of an
Asset Sale.

Notwithstanding that a transaction of the type described in the preceding
paragraph does not trigger the repurchase obligations of the Company under the
Indenture, the provisions of the Indenture will restrict the ability of the
Company or the Subsidiaries to incur additional Indebtedness or engage in the
transaction if it is a transaction involving an Affiliate of the Company or a
transaction involving a merger or consolidation of the Company or a disposition
of all or substantially all of the assets of the Company and the Subsidiaries,
taken as a whole. See "-- Certain Covenants -- Transactions with Affiliates,"
"-- Certain Covenants -- Limitation on Indebtedness," "-- Certain
Covenants -- Limitation on Subsidiary Indebtedness and Preferred Stock" and

39
<PAGE> 41

"-- Consolidation, Merger, Conveyance, Lease or Transfer" for a description of
such restrictions. Such restrictions, however, may be eliminated or modified
with the consent of, and a Default in respect thereof may be waived by, the
holders of not less than a majority in principal amount of the Outstanding
Senior Notes. See "-- Events of Default" and "-- Amendment, Supplement and
Waiver."

One of the events that constitutes a Change of Control under the Indenture
is a sale, conveyance, transfer or lease of all or substantially all of the
property of the Company and the Subsidiaries, taken as a whole. The Indenture
will be governed by New York law, and there is no established quantitative
definition under New York law of "substantially all" of the assets of a
corporation. Accordingly, if the Company were to engage in a transaction in
which it disposed of less than all of its assets, a question of interpretation
could arise as to whether such disposition was of "substantially all" of its
assets and whether the Company was required to make a Change of Control Offer.

CERTAIN COVENANTS

The Indenture will provide that the covenants set forth herein will be
applicable to the Company, except that during any period of time that (i) the
ratings assigned to the Senior Notes by both Standard & Poor's Ratings Group
("S&P") and Moody's Investors Service, Inc.("Moody's and, together with "S&P,"
the "Rating Agencies") are equal to or higher than BBB- and Baa3, or the
equivalents thereof, respectively (the "Investment Grade Ratings"), and (ii) no
Default has occurred and is continuing, the Company and its Subsidiaries will
not be subject to the provisions of the Indenture described under "Limitation on
Indebtedness," "-- Limitation on Asset Sales," "-- Limitation on Restricted
Payments," and clauses (iii) and (iv) of "-- Consolidation, Merger, Conveyance,
Lease or Transfer" (collectively, the "Suspended Covenants"). In the event that
the Company is not subject to the Suspended Covenants for any period of time as
a result of the preceding sentence and, subsequently, one or both Rating
Agencies withdraws its ratings or downgrades the ratings assigned to the Senior
Notes below the required Investment Grade Ratings, then the Company and its
Subsidiaries will again be subject to the Suspended Covenants and compliance
with the Suspended Covenants with respect to Restricted Payments made after the
time of such withdrawal or downgrade will be calculated in accordance with the
terms of the "Limitation on Restricted Payments" covenant as if such covenant
had been in effect during the entire period of time from the date of the
Indenture.

Set forth below are certain covenants contained in the Indenture:

Transactions with Affiliates. The Indenture provides that, subsequent to
the Issue Date, the Company will not, and will not permit any Subsidiary to,
directly or indirectly, enter into or permit to exist any transaction or series
of related transactions (including, but not limited to, the purchase, sale or
exchange of Property, the making of any Investment, the giving of any Guarantee
or the rendering of any service) with any Affiliate of the Company (other than
the Company or a Wholly Owned Subsidiary (except a Non-Recourse Subsidiary))
unless (i) such transaction or series of related transactions is on terms no
less favorable to the Company or such Subsidiary than those that could be
obtained in a comparable arm's length transaction with a Person that is not such
an Affiliate and (ii)(a) with respect to a transaction or series of related
transactions that has a Fair Market Value in excess of $2,000,000 but less than
$5,000,000, the Company delivers an Officers' Certificate to the Trustee
certifying that such transaction or series of related transactions complies with
clause (i) above and (b) with respect to a transaction or series of related
transactions that has a Fair Market Value equal to, or in excess of, $5,000,000,
the transaction or series of related transactions is approved by a majority of
the Board of Directors (including a majority of the disinterested directors),
which approval is set forth in a resolution certifying that such transaction or
series of transactions complies with clause (i) above.

Limitation on Restricted Payments. The Company will not, and will not
permit any Subsidiary (other than a Non-Recourse Subsidiary) to make any
Restricted Payment, unless at the time of and after giving effect to the
proposed Restricted Payment (the value of any such payment, if other than cash,
to be determined by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board resolution), (a) no Default shall have
occurred and be continuing (or would result therefrom), (b) the Company could
incur at least $1.00 of additional Indebtedness under paragraph (a) of
"-- Certain

40
<PAGE> 42

Covenants -- Limitation on Indebtedness" and (c) the aggregate amount of all
Restricted Payments declared or made on or after the Issue Date by the Company
or any Subsidiary (other than a Non-Recourse Subsidiary) shall not exceed the
sum of (i) 50 percent of the aggregate Consolidated Net Income of the Company
(or if such Consolidated Net Income shall be a deficit, minus 100 percent of
such deficit) accrued during the period beginning on October 1, 1993 and ending
on the last day of the fiscal quarter ending immediately prior to the date of
such proposed Restricted Payment, (ii) an amount equal to (A) the aggregate net
cash proceeds received by the Company, subsequent to October 1, 1993, from the
issuance or sale (other than to a Subsidiary), subsequent to October 1, 1993, of
shares of its Capital Stock (excluding Redeemable Stock, but including Capital
Stock issued upon the exercise of options, warrants or rights to purchase
Capital Stock (other than Redeemable Stock) of the Company and including the
Equity Offerings) and (B) the liability (expressed as a positive number) in
accordance with GAAP in respect of any Indebtedness of the Company or carrying
value of Redeemable Stock or the Preferred Stock, which has been converted into,
exchanged for or satisfied by the issuance of shares of Capital Stock (other
than Redeemable Stock) of the Company, subsequent to October 1, 1993, (iii) in
the case of the disposition or repayment of any Investment constituting a
Restricted Payment made after the Issue Date in compliance with the provisions
of the Indenture, an amount equal to the lesser of the return of capital with
respect to such Investment and the initial amount of such Investment, in either
case, less the cost of the disposition of such Investment and (iv) $10,000,000;
provided, however, that the foregoing provisions will not prevent (A) the
payment of any dividend on Capital Stock of any class within 60 days after the
date of its declaration if at the date of declaration such payment would be
permitted by the Indenture, (B) the payment of regular dividends on the
Preferred Stock, (C) any repurchase or redemption of Capital Stock or
Subordinated Indebtedness of the Company out of the net cash proceeds from the
substantially concurrent issuance or sale (other than to a Subsidiary (except a
Non-Recourse Subsidiary)) of Capital Stock of the Company (other than Redeemable
Stock); provided that the net cash proceeds from such sale are excluded from
computations under clause (c)(ii) above to the extent such proceeds are applied
to purchase or redeem such Capital Stock or Subordinated Indebtedness or (D) any
repurchase or redemption of Subordinated Indebtedness of the Company solely in
exchange for, or out of the net cash proceeds from the substantially concurrent
sale of, new Subordinated Indebtedness of the Company, so long as such
Subordinated Indebtedness (x) is subordinated to the Senior Notes at least to
the same extent as the Subordinated Indebtedness so exchanged, purchased or
redeemed, (y) has a stated maturity equal to or later than the stated maturity
of the Subordinated Indebtedness so exchanged, purchased or redeemed and (z) has
an Average Life at the time incurred that is greater than the remaining Average
Life of the Indebtedness so exchanged, purchased or redeemed. Restricted
Payments permitted to be made as described in the proviso to the preceding
sentence will be excluded in calculating the amount of Restricted Payments
thereafter, except such Restricted Payments made as described in clause (A),
which will be included in calculating the amount of Restricted Payments
thereafter.

Limitation on Indebtedness. (a) The Company will not, and will not permit
any Subsidiary (other than a Non-Recourse Subsidiary) to, directly or
indirectly, create, incur, assume, suffer to exist, Guarantee or otherwise
become liable with respect to the payment of (collectively, "incur"), any
Indebtedness unless immediately after the date of such transaction and after
giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds thereof as if such Indebtedness had been incurred
and the proceeds thereof applied on the first day of the Determination Period,
the Consolidated Interest Coverage Ratio of the Company at such date is at least
2.50 to 1.0. See "Prospectus Summary -- Summary Historical and Pro Forma
Financial Information."

(b) Notwithstanding the foregoing paragraph (a), the Company or any
Subsidiary may incur Permitted Indebtedness.

41
<PAGE> 43

Limitation on Subsidiary Indebtedness and Preferred Stock. The Company
will not permit any Subsidiary to, directly or indirectly, create, incur,
assume, Guarantee or otherwise become liable with respect to the payment of
(collectively, "incur"), any Indebtedness or to issue or suffer to exist any
preferred stock, other than:

(i) Indebtedness described in clauses (b), (c), (d), (e), (f), (h),
(i), (k), (l), (m) and (n) of the definition of "Permitted Indebtedness";

(ii) Indebtedness of a Subsidiary which represents the assumption by
such Subsidiary of Indebtedness (other than Non-Recourse Indebtedness) of
another Subsidiary in connection with a merger of such Subsidiaries;
provided that no Subsidiary or any successor (by way of merger) thereto
existing on the Issue Date shall assume or otherwise incur any Indebtedness
of an entity which is not a Subsidiary on the Issue Date, except to the
extent that such Subsidiary would be permitted to incur such Indebtedness
under the Indenture;

(iii) Indebtedness or preferred stock of any Person existing at the
time such Person becomes a Subsidiary; provided that such Indebtedness was
not incurred in anticipation of such corporation becoming a Subsidiary and
would otherwise be permitted under paragraph (a) of "-- Certain Covenants
-- Limitation on Indebtedness";

(iv) Indebtedness or preferred stock issued to and held by the Company
or a Wholly Owned Subsidiary other than a Non-Recourse Subsidiary, so long
as the transfer of such Indebtedness or preferred stock to a Person other
than the Company or any Wholly Owned Subsidiary would be deemed to
constitute the issuance of such Indebtedness or preferred stock by the
issuer thereof;

(v) Indebtedness or preferred stock issued in exchange for, or the
proceeds of which are used to refinance, repurchase or redeem, Indebtedness
or preferred stock described in clause (iii) above or in clause (b) of the
definition of "Permitted Liens" (the "Retired Indebtedness or Stock");
provided that the Indebtedness or the preferred stock so issued has (A) a
principal amount or liquidation value, as the case may be, not in excess of
the principal amount or liquidation value of the Retired Indebtedness or
Stock, (B) a final redemption date later than the stated maturity or final
redemption date (if any) of the Retired Indebtedness or Stock and (C) an
Average Life at the time of issuance of such Indebtedness or preferred
stock that is greater than the Average Life of the Retired Indebtedness or
Stock; or

(vi) Indebtedness or preferred stock of a Subsidiary, which, when
combined with (A) the aggregate amount of all other outstanding
Indebtedness of the Subsidiaries plus the aggregate liquidation value of
all preferred stock of any Subsidiary, in either case excluding any
Non-Recourse Subsidiary (other than Indebtedness secured by Liens described
under clauses (c), (j), (o) and (s) of the definition of "Permitted
Liens"), plus (B) the aggregate amount of all Indebtedness of the Company
secured by Liens (other than such Indebtedness secured by Liens described
under clauses (b), (c), (j), (o) and (s) of the definition of "Permitted
Liens"), plus (C) the aggregate amount of all Capital Lease Obligations of
the Company and the Subsidiaries, shall not exceed 10 percent of the
Company's Consolidated Net Tangible Assets.

Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any Subsidiary (other
than a Non-Recourse Subsidiary) to, directly or indirectly, create, enter into
any agreement with any Person or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind which by its
terms restricts the ability of any Subsidiary (other than a Non-Recourse
Subsidiary) to (a) pay dividends, in cash or otherwise, or make any other
distributions on its Capital Stock, (b) pay any Indebtedness owed to the Company
or any Subsidiary (other than a Non-Recourse Subsidiary), (c) make loans or
advances to the Company or any Subsidiary or

42
<PAGE> 44

(d) transfer any of its Property or assets to the Company or any Subsidiary
(other than a Non-Recourse Subsidiary) except any encumbrance or restriction
contained in any agreement or instrument:

(i) existing on the Issue Date;

(ii) relating to any Property acquired after the date of the
Indenture, so long as such encumbrance or restriction relates only to the
Property so acquired;

(iii) relating to any Indebtedness of any Subsidiary at the date on
which such Subsidiary was acquired by the Company or any Subsidiary (other
than Indebtedness incurred in anticipation of such acquisition);

(iv) effecting a refinancing of Indebtedness issued pursuant to an
agreement referred to in the foregoing clauses (i) through (iii), so long
as the encumbrances and restrictions contained in any such refinancing
agreement are no more restrictive than the encumbrances and restrictions
contained in such agreements;

(v) which constitute customary provisions restricting subletting or
assignment of any lease of the Company or any Subsidiary or provisions in
agreements that restrict the assignment of such agreement or any rights
thereunder; and

(vi) which constitute restrictions on the sale or other disposition of
any Property securing Indebtedness as a result of a Permitted Lien on such
Property.

Limitation on Asset Sales. The Company will not engage in, and will not
permit any Subsidiary (other than a Non-Recourse Subsidiary) to engage in, any
Asset Sale unless (a) except in the case of an Asset Sale resulting from the
requisition of title to, seizure or forfeiture of any Property or assets or any
actual or constructive total loss or an agreed or compromised total loss, the
Company or such Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the Fair Market Value of the Property
and (b) at least 75 percent of such consideration consists of Cash Proceeds (or
the assumption of Indebtedness of the Company or such Subsidiary relating to the
Capital Stock or Property that was the subject of such Asset Sale and the
release of the Company or such Subsidiary from such Indebtedness). The Company
or such Subsidiary, as the case may be, may apply the Net Available Proceeds
from each Asset Sale to (i) the acquisition of one or more Replacement Assets,
provided, however, that such acquisitions shall be made within 365 days after
the consummation of the relevant Asset Sale, (ii) repay Indebtedness described
under clause (b) of the definition of "Permitted Indebtedness" (but only if the
related commitments or amounts available to be reborrowed thereunder are
permanently reduced by the amount of such payment) or (iii) purchase and retire,
or otherwise repay, in whole or in part, the 9 1/4% Notes.

Any Net Available Proceeds from any Asset Sale that are not used to
purchase Replacement Assets within 365 days after consummation of the relevant
Asset Sale or applied to repay, or repurchase and retire, Indebtedness as
provided in the preceding sentence constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15,000,000, the Company shall make
a pro rata offer (an "Asset Sale Offer") to purchase from all holders of Senior
Notes and any then outstanding Indebtedness of the Company that is pari passu in
right of payment to the Senior Notes ("Pari Passu Indebtedness") required to be
repurchased or repaid on a permanent basis in connection with an Asset Sale, an
aggregate principal amount of Senior Notes and any such Pari Passu Indebtedness
equal to the Excess Proceeds as follows:

(i)(A) The Company shall make an offer to purchase (a "Net Proceeds
Offer") from all holders of the Senior Notes in accordance with the
procedures set forth in the Indenture the maximum principal amount
(expressed as a multiple of $1,000) of Senior Notes that may be purchased
out of an amount (the "Payment Amount") equal to the product of such Excess
Proceeds multiplied by a fraction, the numerator of which is the
outstanding principal amount of the Senior Notes and the denominator of
which is the sum of the outstanding principal amount of the Senior Notes
and such Pari Passu Indebtedness, if any (subject to proration in the event
the Payment Amount is less than the aggregate Offered Price (as defined in
clause (ii) below) of all Senior Notes tendered) and (B) to the extent
required by any such Pari Passu Indebtedness and provided there is a
permanent reduction in the

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principal amount of such Pari Passu Indebtedness, the Company shall make an
offer to purchase such Pari Passu Indebtedness (a "Pari Passu Offer") in an
amount (the "Pari Passu Indebtedness Amount") equal to the excess of the
Excess Proceeds over the Payment Amount.

(ii) The offer price for the Senior Notes shall be payable in cash in
an amount equal to 100 percent of the principal amount of the Senior Notes
tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid
interest, if any, to the date such Net Proceeds Offer is consummated (the
"Offered Price"), in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate Offered Price of the Senior
Notes tendered pursuant to a Net Proceeds Offer is less than the Payment
Amount relating thereto or the aggregate amount of the Pari Passu
Indebtedness that is purchased or repaid pursuant to the Pari Passu Offer
is less than the Pari Passu Indebtedness Amount (such shortfall
constituting a "Net Proceeds Deficiency"), the Company may use such Net
Proceeds Deficiency, or a portion thereof, for general corporate purposes,
subject to the provisions of the Indenture described under "-- Limitation
on Restricted Payments" and the amount of Excess Proceeds shall be reset to
zero.

(iii) If the aggregate Offered Price of Senior Notes validly tendered
and not withdrawn by holders thereof exceeds the Payment Amount, Senior
Notes to be purchased will be selected on a pro rata basis. Upon completion
of such Net Proceeds Offer and Pari Passu Offer, the amount of Excess
Proceeds shall be reset to zero.

The Company will comply with any applicable tender offer rules (including,
without limitation, any applicable requirements of Rule 14e-1 under the Exchange
Act) in the event that an Asset Sale Offer is required under the circumstances
described herein. See "-- Change of Control" for a discussion of the protection
afforded the Holders of the Senior Notes under the provisions of the Indenture
requiring the Company to make a Change of Control Offer or Asset Sale Offer in
the event of a highly leveraged transaction, reorganization, restructuring,
merger or similar transaction.

Limitation on Sale and Lease-Back Transactions. The Company will not, and
will not permit any Subsidiary (other than a Non-Recourse Subsidiary) to,
directly or indirectly, enter into, assume, Guarantee or otherwise become liable
with respect to any Sale and Lease-Back Transaction if the lease obligations of
the Company or any such Subsidiary created or incurred in connection with such
Sale and Lease-Back Transaction constitute Capital Lease Obligations, unless the
Company or such Subsidiary would have been permitted to enter into such
transaction under paragraph (a) of "-- Certain Covenants -- Limitation on
Indebtedness," clause (vi) of "-- Certain Covenants -- Limitation on Subsidiary
Indebtedness and Preferred Stock" and "-- Certain Covenants -- Limitation on
Liens." Any Sale and Lease-Back Transaction that the Company or any Subsidiary
enters into and does not result in the creation or incurrence of any Capital
Lease Obligation of the Company or any Subsidiary, shall be deemed to constitute
an Asset Sale.

Limitation on Liens. The Company will not, and will not permit any
Subsidiary to, directly or indirectly, create, affirm, incur, assume or suffer
to exist any Liens on or with respect to any Property of the Company or such
Subsidiary or any interest therein or any income or profits therefrom, whether
owned at the date of the Indenture or thereafter acquired, without effectively
providing that the Senior Notes shall be secured equally and ratably with (or
prior to) the Indebtedness so secured, other than Permitted Liens.

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<PAGE> 46

CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER

The Company will not, in any transaction or series of transactions,
consolidate with or merge into any other Person (other than a merger of a
Subsidiary into the Company in which the Company is the continuing corporation),
or sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of the Property and assets of the Company and the
Subsidiaries, taken as a whole, to any Person, unless:

(i) either (a) the Company shall be the continuing corporation or (b)
the corporation (if other than the Company) formed by such consolidation or
into which the Company is merged, or the Person which acquires, by sale,
assignment, conveyance, transfer, lease or disposition, all or
substantially all of the Property and assets of the Company and the
Subsidiaries, taken as a whole (such corporation or Person, the "Surviving
Entity"), shall be a corporation organized and validly existing under the
laws of the United States of America, any political subdivision thereof or
any state thereof or the District of Columbia, and shall expressly assume,
by a supplemental indenture, the due and punctual payment of the principal
of (and premium, if any) and interest on all the Senior Notes and the
performance of the Company's covenants and obligations under the Indenture;

(ii) immediately before and after giving effect to such transaction or
series of transactions on a pro forma basis (including, without limitation,
any Indebtedness incurred or anticipated to be incurred in connection with
or in respect of such transaction or series of transactions), no Event of
Default or Default shall have occurred and be continuing or would result
therefrom;

(iii) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or
in respect of such transaction or series of transactions), the Company (or
the Surviving Entity if the Company is not continuing) shall have a
Consolidated Net Worth equal to or greater than the Consolidated Net Worth
of the Company immediately prior to such transaction; and

(iv) immediately after giving effect to any such transaction or series
of transactions on a pro forma basis as if such transaction or series of
transactions had occurred on the first day of the Determination Period, the
Company (or the Surviving Entity if the Company is not continuing) would be
permitted to incur $1.00 of additional Indebtedness pursuant to paragraph
(a) of "-- Certain Covenants -- Limitation on Indebtedness."

EVENTS OF DEFAULT

Each of the following is an "Event of Default" under the Indenture:

(a) default in the payment of any installment of interest upon any
Senior Note when it becomes due and payable, and the continuance of such
default for a period of 30 days;

(b) default in the payment of the principal of (or premium, if any,
on) any Senior Note at its Maturity, upon repurchase, acceleration,
redemption or otherwise;

(c) the Company fails to comply with any of its covenants or
agreements contained in "-- Change of Control" or "-- Consolidation,
Merger, Conveyance, Lease or Transfer" or fails to make an Asset Sale Offer
in accordance with "-- Certain Covenants -- Limitation on Asset Sales" and
such failure continues for a period of five days;

(d) default in the performance, or breach, of any covenant or warranty
of the Company in the Indenture (other than a covenant or warranty a
default in whose performance or whose breach is specifically dealt with)
and continuance of such default or breach for a period of 30 days after
written notice thereof has been mailed, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the Holders
of at least 25 percent of the outstanding aggregate principal amount of
Senior Notes;

(e) Indebtedness (other than Non-Recourse Indebtedness) of the Company
or any Subsidiary is not paid when due within the applicable grace period
or is accelerated by the holders thereof and, in

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<PAGE> 47

either case, the principal amount of such due and unpaid or accelerated
Indebtedness exceeds $10,000,000 for any Indebtedness individually or in
the aggregate;

(f) the entry by a court of competent jurisdiction of one or more
judgments or orders against the Company or any Subsidiary in an uninsured
or unindemnified aggregate amount in excess of $10,000,000 which remain
undischarged or unsatisfied for a period of 60 consecutive days after the
right to appeal them has expired;

(g) the entry of a decree or order for relief in respect of the
Company or any Material Subsidiary by a court of competent jurisdiction in
an involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other Federal or State bankruptcy, insolvency or other
similar law, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Company or any
Material Subsidiary or of any substantial part of the Property of the
Company or any Material Subsidiary, or ordering the winding up or
liquidation of the affairs of the Company or any Material Subsidiary, and
the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days; or

(h) (i) the commencement by the Company or any Material Subsidiary of
a voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or State bankruptcy,
insolvency or other similar law, or (ii) the consent by the Company or any
Material Subsidiary to the entry of an order for relief in an involuntary
case under any such law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of
the Company or any Material Subsidiary or of any substantial part of the
Property of the Company or any Material Subsidiary, or the making by the
Company or any Material Subsidiary of an assignment for the benefit of
creditors, or the admission by the Company or any Material Subsidiary in
writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Company or any Material Subsidiary in
furtherance of any such action.

If an Event of Default (other than an Event of Default specified in clauses
(g) and (h) above) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25 percent of the outstanding aggregate
principal amount of Senior Notes may declare the unpaid principal of (and
premium, if any) and accrued and unpaid interest on all Senior Notes then
Outstanding to be immediately due and payable, by a notice in writing to the
Company (and to the Trustee if given by Holders), and, upon any such
declaration, such principal amount (and premium, if any) and accrued interest
will become and be immediately due and payable. If an Event of Default specified
in clause (g) or (h) above occurs, all unpaid principal of (and premium, if any)
and accrued interest on the Senior Notes then Outstanding shall become
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. Under certain circumstances, the Holders of a
majority in principal amount of the Outstanding Senior Notes by notice to the
Company and the Trustee may rescind an acceleration and its consequences.

AMENDMENT, SUPPLEMENT AND WAIVER

The Company and the Trustee may, at any time and from time to time, without
notice to or consent of any Holder, enter into one or more indentures
supplemental to the Indenture (1) to evidence the succession of another Person
to the Company and the assumption by such successor of the covenants of the
Company under the Indenture and contained in the Senior Notes, (2) to add to the
covenants of the Company, for the benefit of the Holders, or to surrender any
right or power conferred upon the Company by the Indenture, (3) to add any
additional Events of Default, (4) to provide for uncertificated Senior Notes in
addition to or in place of certificated Senior Notes, (5) to change or eliminate
any of the provisions of the Indenture; provided that any such change or
elimination will become effective only when there is not outstanding any Senior
Note created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision, (6) to evidence and provide for the
acceptance of appointment under the Indenture by a successor Trustee, (7) to
secure the Senior Notes, (8) to cure any ambiguity, to correct or supplement any
provision in the Indenture which may be inconsistent with any other provision
therein or to add any other provisions with respect to matters or questions
arising under the Indenture; provided such actions will not adversely affect the
interests of

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<PAGE> 48

the Holders in any material respect, or (9) to comply with the requirements of
the Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.

With the consent of the Holders of a majority in principal amount of the
Outstanding Senior Notes, the Company and the Trustee may enter into one or more
indentures supplemental to the Indenture for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the Holders; provided,
however, that no such supplemental indenture will, without the consent of the
Holder of each Outstanding Senior Note, (1) change the Stated Maturity of the
principal of, or any installment of interest on, any Senior Note, or reduce the
principal amount thereof (or premium, if any), or the interest thereon that
would be due and payable upon Maturity thereof, or change the place of payment
where, or the coin or currency in which, any Senior Note or the interest thereon
is payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof, (2) reduce the percentage
in principal amount of the Outstanding Senior Notes, the consent of whose
Holders is necessary for any such supplemental indenture or required for any
waiver of compliance with certain provisions of the Indenture or certain
Defaults thereunder, (3) modify the obligations of the Company to make offers to
purchase Senior Notes upon a Change of Control or from the proceeds of Asset
Sales, (4) subordinate in right of payment, or otherwise subordinate, the Senior
Notes to any other Indebtedness or (5) modify any of the provisions of this
paragraph (except to increase any percentage set forth herein).

The Holders of a majority in principal amount of the Outstanding Senior
Notes may on behalf of the Holders of all the Senior Notes waive any past
Default under the Indenture and its consequences, except a Default (1) in the
payment of the principal of (or premium, if any) or interest on any Senior Note
or (2) in respect of a covenant or provision hereof which under the proviso to
the prior paragraph cannot be modified or amended without the consent of the
Holder of each Outstanding Senior Note affected.

DEFEASANCE

The Company, at its option, either (a) will be discharged from any and all
obligations with respect to the Senior Notes (except for certain obligations to
register the transfer or exchange of Senior Notes, replace stolen, lost or
mutilated Senior Notes or maintain paying agencies and hold moneys for payment
in trust) or (b) will cease to be under any obligation to comply with certain
restrictive covenants of the Indenture, and certain Events of Default will no
longer constitute Events of Default with respect to any Senior Notes upon the
deposit with the Trustee, in trust, of money or the equivalent in U.S.
Government Obligations, or a combination thereof, which through the payment of
interest thereon and principal thereof in accordance with their terms will
provide money in an amount sufficient to pay all the principal and interest on
such Senior Notes on the dates such payments are due in accordance with the
terms of the Senior Notes. To exercise any such option, among other things, no
Event of Default specified under "Events of Default" with respect to such Senior
Notes shall have occurred and be continuing. The Company is required to deliver
to the applicable Trustee an Opinion of Counsel (i) to the effect that the
deposit and related defeasance would not cause the Holders of the Senior Notes
to recognize income, gain or loss for Federal income tax purposes and, in the
case of a discharge pursuant to clause (a), accompanied by a ruling to such
effect from the United States Internal Revenue Service and (ii) with respect to
certain other matters.

THE TRUSTEE

Texas Commerce Bank National Association, the Trustee under the Indenture,
from time to time may extend credit to the Company in the ordinary course of
business. The Trustee's current address is 600 Travis Street, 8th Floor,
Houston, Texas 77002.

CERTAIN DEFINITIONS

Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any capitalized terms used herein for which no definition
is provided.

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<PAGE> 49

"Appraised Value" means (i) with respect to property, equipment, or other
Consolidated Tangible Assets consisting of investments or other tangible
financial assets (excluding cash, cash equivalents and investments in marketable
securities) without a readily determinable market value, the Fair Value of such
Properties as determined within 60 days of the date of the transaction giving
rise of the need to calculate Appraised Value by means of a written appraisal or
valuation report by a nationally recognized investment banking firm, independent
appraisal firm or marine surveyor, in each case, (a) specializing in, or having
a specialty in, valuing and appraising Property of the Company and the
Subsidiaries of the type to be appraised or valued and (b) that is not an
Affiliate of the Company, (ii) with respect to marketable securities of the
Company and the Subsidiaries with a readily determinable market value, the
market value of such assets, as determined within five trading days of the date
of the transaction giving rise to the need to calculate Appraised Value, and as
determined by reference to a published or otherwise readily accessible market
data source selected in good faith by the Company, (iii) with respect to cash
and cash equivalents of the Company and the Subsidiaries, the carrying value
thereof reflected in the accounting records of the Company and (iv) with respect
to all other Consolidated Tangible Assets of the Company and the Subsidiaries,
the Fair Value of such assets, as determined in good faith by the board of
directors of the Company; provided, however, that written appraisals or
valuation report shall not be required in respect of any Consolidated Tangible
Assets of the Company and the Subsidiaries described in clause (i) of this
definition to the extent that the Company determines in good faith the Fair
Value of such unappraised or unvalued assets and the aggregate Fair Value of
such assets does not exceed $25,000,000.

"Asset Sale" means any direct or indirect sale, conveyance, transfer, lease
or other disposition (including, without limitation, by means of a Sale and
Lease-Back Transaction (other than a Sale and Lease-Back Transaction that
results in the creation or incurrence of a Capital Lease Obligation of the
Company or any Subsidiary) or by way of merger or consolidation) (collectively,
for purposes of this definition, a "transfer") by the Company or any Subsidiary
to any Person other than the Company or a Subsidiary, in one transaction, or a
series of related transactions, of (i) any Capital Stock of any Subsidiary, or
(ii) any other Property or assets of the Company or any Subsidiary, other than
(A) sales of inventory in the ordinary course of business of the Company and the
Subsidiaries and consistent with past practices, (B) sales of obsolete or worn
out equipment in the ordinary course of business, (C) sales of directors'
qualifying shares in a Subsidiary, (D) any charter (bareboat or otherwise) or
other lease of Property entered into by the Company or any Subsidiary in the
ordinary course of business, other than any charter or lease that provides for
acquisition of such Property by the charterer or lessee during or at the end of
the term thereof, (E) the issuance by the Company of its Capital Stock, (F)
sales in the ordinary course of business of drill pipe and associated equipment
utilized in connection with a drilling contract for the employment of a drilling
rig, (G) a Restricted Payment permitted under "-- Certain
Covenants -- Limitation on Restricted Payments," (H) a Change of Control, (I)
any transfer in a transaction or series of related transactions of Properties
(other than a transfer specifically permitted under clause (A) through (H), (J)
or (K) of this definition) having an aggregate Fair Value of less than $500,000,
(J) any sale or sales of land drilling rigs or barge drilling rigs of the
Company or any Subsidiary owned as of the Issue Date (or any subsequent
disposition of any non-cash consideration received by the Company or any
Subsidiary in any such sale or sales), (K) any trade or exchange by the Company
or any Subsidiary of one or more drilling rigs and related equipment for one or
more other drilling rigs and related equipment owned or held by another Person
that is not an Affiliate of the Company but only to the extent that the Fair
Value of the Property traded or exchanged by the Company or a Subsidiary (other
than cash or cash equivalents) is reasonably equivalent to the Fair Value of the
Properties (together with cash or cash equivalents not to exceed 15 percent of
such Fair Value) to be received by the Company or such Subsidiary as determined
in good faith by the Board of Directors of the Company, provided that if cash
and cash equivalents to be received by the Company or such Subsidiary is greater
than 15 percent of the Fair Value of the Properties to be received, the trade or
exchange shall be treated as an Asset Sale only to the extent that such cash and
cash equivalents exceed the 15 percent amount and (L) the disposition of shares
of Capital Stock of Offshore Logistics, Inc. and of Century Drilling Limited
owned by the Company or any Subsidiary on the Issue Date. An Asset Sale shall
include the requisition of title to, seizure of or forfeiture of any Property or
assets, or any actual or constructive total loss or an agreed or compromised
total loss of any Property or assets, other than as provided for in clause
(ii)(F) of the preceding sentence of this definition.

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<PAGE> 50

"Average Life" means, as of any date, with respect to any debt security,
the quotient obtained by dividing (i) the sum of the products of (x) the number
of years from such date to the dates of each scheduled principal payment
(including any sinking fund or mandatory redemption payment requirements) of
such debt security multiplied in each case by (y) the amount of such principal
payment by (ii) the sum of all such principal payments.

"Capital Lease Obligation" means, at any time as to any Person with respect
to any Property leased by such Person as lessee, the amount of the liability
with respect to such lease that would be required at such time to be capitalized
and accounted for as a capital lease on the balance sheet of such Person
prepared in accordance with GAAP.

"Capital Stock" in any Person means any and all shares, interests,
participations or other equivalents in the equity interest (however designated)
in such Person and any rights (other than debt securities convertible into an
equity interest), warrants or options to acquire an equity interest in such
Person.

"Cash Proceeds" means, with respect to any Asset Sale by any Person, the
aggregate consideration received for such Asset Sale by such Person in the form
of cash or cash equivalents (including any amounts of insurance or other
proceeds received in connection with an Asset Sale of the type described in the
last sentence of the definition thereof), including payments in respect of
deferred payment obligations when received in the form of cash or cash
equivalents (except to the extent that such obligations are financed or sold
with recourse to such Person or any subsidiary thereof). For purposes of this
definition, "cash or cash equivalents" shall be deemed to include, for a period
not to exceed 12 months from the related Asset Sale, noncash consideration
received with respect to an Asset Sale to the extent that such noncash
consideration consists of (i) publicly traded debt securities of a Person, which
securities are rated as "BBB-" or higher by S&P and "Baa3" or higher by Moody's
or having a comparable rating from the successors of each such rating agency, or
(ii) other Indebtedness or publicly traded Capital Stock of a Person if (x) the
lowest rated long-term, unsecured debt obligation issued by such Person is rated
"BBB-" or higher by S&P and "Baa3" or higher by Moody's or having a comparable
rating from the successors of each such rating agency or (y) in the case of
other Indebtedness, the payment of such other Indebtedness is secured by an
irrevocable letter of credit issued by a commercial bank having capital and
surplus in excess of $100,000,000 and long-term unsecured debt obligations rated
at least "A-" by S&P and "A3" by Moody's or having a comparable rating from the
successors of each such rating agency.

"Change of Control" means (i) a determination by the Company that any
person or group (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act)
has become the direct or indirect beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of more than 50 percent of the Voting Stock of the
Company; (ii) the Company is merged with or into or consolidated with another
corporation and, immediately after giving effect to the merger or consolidation,
less than 50 percent of the outstanding voting securities entitled to vote
generally in the election of directors or persons who serve similar functions of
the surviving or resulting entity are then beneficially owned (within the
meaning of Rule 13d-3 under the Exchange Act) in the aggregate by (x) the
stockholders of the Company immediately prior to such merger or consolidation,
or (y) if a record date has been set to determine the stockholders of the
Company entitled to vote on such merger or consolidation, the stockholders of
the Company as of such record date; (iii) the Company, either individually or in
conjunction with one or more Subsidiaries, sells, conveys, transfers or leases,
or the Subsidiaries sell, convey, transfer or lease, all or substantially all of
the property of the Company and the Subsidiaries, taken as a whole (either in
one transaction or a series of related transactions), including Capital Stock of
the Subsidiaries, to any Person (other than a Wholly Owned Subsidiary); (iv) the
liquidation or dissolution of the Company; or (v) the first day on which a
majority of the individuals who constitute the Board of Directors are not
Continuing Directors.

"Consolidated Asset Coverage Ratio" means as of the date of the transaction
giving rise to the need to calculate the Consolidated Asset Coverage Ratio (the
"Measurement Date") and after giving pro forma effect to the incurrence of any
Project Finance Indebtedness on the Measurement Date, the ratio of (i) the
aggregate Appraised Value of the Consolidated Tangible Assets of the Company
(other than accounts receivable, inventory, and the Properties of the Company
and its Subsidiaries described in clause (s) of the

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<PAGE> 51

definition of Permitted Liens as of the Measurement Date) that are not, and will
not be, subject to any Lien (other than Permitted Liens of the type described in
clauses (g), (h) and (i) of the definition of Permitted Liens) to (ii) the
aggregate principal amount of the Senior Notes plus the amount of unsecured
Indebtedness of the Company and its Subsidiaries for borrowed money that is pari
passu in right of payment to the Senior Notes of the Company and its
Subsidiaries outstanding as of the Measurement Date.

"Consolidated Current Liabilities" of any Person means, as of any date, the
total liabilities (including tax and other proper accruals) of such Person and
its subsidiaries on a consolidated basis at such date which may properly be
classified as current liabilities in accordance with GAAP.

"Consolidated Interest Coverage Ratio" means as of the date of the
transaction giving rise to the need to calculate the Consolidated Interest
Coverage Ratio (the "Transaction Date"), the ratio of (i) the sum of (a) the
aggregate amount of EBITDA of the Company and its consolidated Subsidiaries for
the four fiscal quarters for which financial information in respect thereof is
available immediately prior to the applicable Transaction Date (the
"Determination Period") and (b) with respect to any fiscal quarter ending prior
to April 1, 1996, and the period from April 1, 1996, to the Issue Date included
in the calculation set forth in clause (a) above, the EBITDA for any such
quarter or period attributable to the Neddrill Assets to (ii) the aggregate
Consolidated Interest Expense of the Company and its consolidated Subsidiaries
that is anticipated to accrue during a period consisting of the fiscal quarter
in which the Transaction Date occurs and the three fiscal quarters immediately
subsequent thereto (based upon the pro forma amount and maturity of, and
interest payments in respect of, Indebtedness of the Company and its
consolidated Subsidiaries expected by the Company to be outstanding on the
Transaction Date and reasonably anticipated by the Company to be outstanding
from time to time during such period), assuming for the purposes of this
measurement the continuation of market interest rates prevailing on the
Transaction Date and base interest rates in respect of floating interest rate
obligations equal to the base interest rates on such obligations in effect as of
the Transaction Date; provided that if the Company or any of its consolidated
Subsidiaries is a party to any Interest Swap Obligation which would have the
effect of changing the interest rate on any Indebtedness of the Company or any
of its consolidated Subsidiaries for such four quarter period (or a portion
thereof), the resulting rate shall be used for such four quarter period or
portion thereof; provided, further, that any Consolidated Interest Expense with
respect to Indebtedness incurred or retired by the Company or any of its
Subsidiaries during the fiscal quarter in which the Transaction Date occurs
shall be calculated as if such debt was so incurred or retired on the first day
of the fiscal quarter in which the Transaction Date occurs; provided, further,
that if the transaction giving rise to the need to calculate the Consolidated
Interest Coverage Ratio would have the effect of increasing or decreasing EBITDA
in the future and if such increase or decrease is readily quantifiable and is
directly attributable to such transaction, EBITDA shall be calculated on a pro
forma basis as if such transaction had occurred on the first day of the four
fiscal quarters referred to in clause (i) of this definition, and if, during the
same four fiscal quarters, (x) the Company or any of its consolidated
Subsidiaries shall have engaged in any Asset Sale, EBITDA for such period shall
be reduced by an amount equal to the EBITDA (if positive), or increased by an
amount equal to the EBITDA (if negative), directly attributable to the assets
which are the subject of such Asset Sale for such period calculated on a pro
forma basis as if such Asset Sale and any related retirement of Indebtedness had
occurred on the first day of such period or (y) after the Issue Date, the
Company or any of its consolidated Subsidiaries shall have acquired any material
assets out of the ordinary course of business, EBITDA and Consolidated Interest
Expense (if Indebtedness is incurred or assumed in connection with such
acquisition) shall be calculated on a pro forma basis as if such asset
acquisition and related financing had occurred on the first day of such period.

"Consolidated Interest Expense" means, with respect to any Person for any
period, without duplication (a) the sum of (i) the aggregate amount of cash and
non-cash interest expense (including capitalized interest) of such Person and
its subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP in respect of Indebtedness (including, without limitation,
(v) any amortization of debt discount, (w) net costs associated with Interest
Swap Obligations (including any amortization of discounts), (x) the interest
portion of any deferred payment obligation, (y) all accrued interest and (z) all
commissions, discounts and other fees and charges owed with respect to letters
of credit, bankers' acceptances or similar facilities) paid or accrued, or
scheduled to be paid or accrued, during such period; (ii) dividends on

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preferred stock (other than dividends on the Preferred Stock) of such Person
(and of its subsidiaries if paid to a Person other than such Person or its
subsidiaries) declared and payable in cash; (iii) the portion of any rental
obligation of such Person or its subsidiaries in respect of any Capital Lease
Obligation allocable to interest expense in accordance with GAAP; (iv) the
portion of any rental obligation of such Person or its subsidiaries in respect
of any Sale and Lease-Back Transaction allocable to interest expense (determined
as if such were treated as a Capital Lease Obligation); (v) to the extent any
debt of any other Person is Guaranteed by such Person or any of its
subsidiaries, the aggregate amount of interest paid, accrued or scheduled to be
paid or accrued, by such other Person during such period attributable to any
such debt, less (b) to the extent included in (a) above, amortization or
write-off of deferred financing costs of such Person and its subsidiaries during
such period and any charge related to any premium or penalty paid in connection
with redeeming or retiring any Indebtedness of such Person and its subsidiaries
prior to its stated maturity; in the case of both (a) and (b) above, after
elimination of intercompany accounts among such Person and its subsidiaries and
as determined in accordance with GAAP; and (vi) with respect to any fiscal
quarter ending prior to April 1, 1996, an amount equal to quarterly interest
expense accrued in respect of the Senior Notes had such Senior Notes been
outstanding in the amount issued on the Issue Date during the entirety of such
fiscal quarter.

"Consolidated Net Income" of any Person means, for any period, the
aggregate net income (or net loss, as the case may be) of such Person and its
subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom, without duplication,
(i) gains and losses from Asset Sales or reserves relating thereto, (ii) items
classified as extraordinary (other than the tax benefit of the utilization of
net operating loss carryforwards and alternative minimum tax credits), (iii)
except to the extent of the amount of cash dividends or other cash distributions
in respect of Capital Stock actually paid to such specified Person or a
subsidiary thereof by any other Person during such period, the net income (or
loss) of such other Person other than a subsidiary of such specified Person,
(iv) the net income of any Person acquired by such specified Person or any of
its subsidiaries in a pooling-of-interests transaction for any period prior to
the date of such acquisition, (v) any gain or loss, net of taxes, realized on
the termination of any employee pension benefit plan, (vi) the effect of the
adoption of Statement of Financial Accounting Standards No. 106 to the extent
expenses recognized pursuant to such adoption exceed the amount with respect to
such expenses which would have been recognized during such period using the "pay
as you go" accounting method, (vii) any charge against income for impairment or
write-down of long-lived assets of the Company or any Subsidiary made in
accordance with Statement of Financial Accounting Standards No. 121, and (viii)
the net income of any subsidiary of such specified Person to the extent that the
transfer to that Person of that income is not at the time permitted, directly or
indirectly, by any means (including by dividend, distribution, advance or loan
or otherwise), by operation of the terms of its charter or any agreement with a
Person other than with such specified Person or any Affiliate thereof,
instrument held by a Person other than by such specified Person or any Affiliate
thereof, judgment, decree, order, statute, law, rule or governmental regulations
applicable to such subsidiary or its stockholders, except for any dividends or
distributions actually paid by such subsidiary to such Person.

"Consolidated Net Tangible Assets" of any Person means, as of any date,
Consolidated Tangible Assets of such Person at such date, after deducting
therefrom (without duplication of deductions) all Consolidated Current
Liabilities of such Person at such date.

"Consolidated Net Worth" of any Person means, as of any date, the sum of
the Capital Stock and additional paid-in capital plus retained earnings (or
minus accumulated deficit) of such Person and its subsidiaries on a consolidated
basis at such date, each item determined in accordance with GAAP, less amounts
attributable to Redeemable Stock of such Person or any of its subsidiaries.

"Consolidated Tangible Assets" means, as of any date, the sum of the
Property of the Company and its Subsidiaries on a consolidated basis at such
date, after eliminating intercompany items, and after deducting from such total
(i) all Property that would be classified as intangibles under GAAP (including,
without limitation, goodwill, organizational expenses, trademarks, trade names,
copyrights, patents, licenses and any rights in any thereof) and (ii) any
prepaid expenses, deferred charges and unamortized debt discount and expense,
each such item determined in accordance with GAAP.

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"Continuing Director" means an individual who (i) is a member of the Board
of Directors and (ii) either (A) was a member of the Board of Directors on the
Issue Date or (B) whose nomination for election or election to the Board of
Directors was approved by a vote of at least 66 2/3 percent of the Continuing
Directors who were members of the Board of Directors at the time of such
nomination or election.

"Currency Hedge Obligations" means, at any time as to any Person, the
obligations of such Person at such time which were incurred in the ordinary
course of business pursuant to any foreign currency exchange agreement, option
or future contract or other similar agreement or arrangement designed to protect
against or manage such Person's or any of its subsidiaries' exposure to
fluctuations in foreign currency exchange rates.

"Default" means any event, act or condition the occurrence of which is, or
after notice or the passage of time or both would be, an Event of Default.

"Determination Period" has the meaning specified under clause (i)(a) of the
definition of "Consolidated Interest Coverage Ratio."

"drilling rig" means any drillship, drilling ship, semisubmersible drilling
unit, jackup or self-elevating drilling unit, submersible drilling unit,
drilling barge or posted barge, platform drilling unit or land drilling rig or
any other similar equipment used in oil, gas or other mineral or thermal well
drilling or workover operations.

"EBITDA" means, with respect to any Person for any period, the Consolidated
Net Income of such Person and its subsidiaries for such period, plus to the
extent reflected in the income statement of such Person for such period from
which Consolidated Net Income is determined, without duplication, (i) the
Consolidated Interest Expense of such Person for such period, (ii) income tax
expense, (iii) depreciation expense, (iv) amortization expense and (v) any
charge related to any premium or penalty paid in connection with redeeming or
retiring any Indebtedness prior to its stated maturity.

"Fair Market Value" means, with respect to the total consideration received
pursuant to any Asset Sale or by any Person as contemplated by Section 10.07 of
the Indenture or any noncash consideration received by any Person, the fair
market value of such consideration as determined in good faith by the Board of
Directors.

"Fair Value" means, with respect to any asset or Property, the price which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction.

"GAAP" means, at any date, United States generally accepted accounting
principles, consistently applied, as set forth in the opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants
("AICPA") and statements of the Financial Accounting Standards Board, or in such
other statements by such other entity as may be designated by the AICPA, that
are applicable to the circumstances as of the date of determination; provided,
however, that all calculations made for purposes of determining compliance with
the provisions set forth in "Consolidation, Merger, Conveyance, Lease or
Transfer" and with the terms of the covenants set forth in "Certain Covenants"
shall utilize GAAP in effect at the Issue Date.

"Guarantee" means any direct or indirect obligation, contingent or
otherwise, of a Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person in any manner.

"Indebtedness" as applied to any Person means, at any time, without
duplication, (i) any obligation of such Person, contingent or otherwise, for
borrowed money; (ii) any obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments; (iii) any obligation of such
Person for all or any part of the purchase price of Property or for the cost of
Property constructed or of improvements thereto (including any obligation under
or in connection with any letter of credit related thereto), other than accounts
payable included in current liabilities incurred in respect of Property and
services purchased in the ordinary course of business; (iv) any obligation of
such Person upon which interest charges are customarily paid (other than
accounts payable incurred in the ordinary course of business); (v) any
obligation of such Person under conditional sale or other title retention
agreements relating to purchased Property; (vi) any obligation of such Person
issued or assumed as the deferred purchase price of Property (other than
accounts payable incurred in the ordinary course of business); (vii) any Capital
Lease Obligation or any obligation pursuant to any Sale and Lease-Back
Transaction of such Person; (viii) any obligation of any other Person secured by
(or for which the

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obligee thereof has an existing right, contingent or otherwise, to be secured
by) any Lien on Property owned or acquired, whether or not any obligation
secured thereby has been assumed, by such Person; (ix) any obligation of such
Person in respect of any letter of credit supporting any obligation of any other
Person; (x) the maximum fixed repurchase price of any Redeemable Stock of such
Person (or if such Person is a subsidiary, any preferred stock of such Person);
(xi) any Interest Swap Obligation or Currency Hedge Obligation of such Person;
and (xii) any obligation which is in economic effect a Guarantee, regardless of
its characterization, with respect to any Indebtedness of another Person, to the
extent guaranteed. For purposes of the preceding sentence, the maximum fixed
repurchase price of any Redeemable Stock or subsidiary preferred stock that does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Redeemable Stock or subsidiary preferred stock as if such
Redeemable Stock or subsidiary preferred stock were repurchased on any date on
which Indebtedness shall be required to be determined pursuant to the Indenture;
provided, however, that if such Redeemable Stock or subsidiary preferred stock
is not then permitted to be repurchased, the repurchase price shall be the book
value of such Redeemable Stock or subsidiary preferred stock. The amount of
Indebtedness of any Person at any date shall be (x) the outstanding book value
at such date of all unconditional obligations as described above and (y) the
maximum liability of any such contingent obligation at such date.

"Interest Swap Obligations" means, with respect to any Person, the
obligations of such Person pursuant to any interest rate swap agreement,
interest rate cap, collar or floor agreement or other similar agreement or
arrangement designed to protect against or manage such Person's or any of its
subsidiaries' exposure to fluctuations in interest rates.

"Investment" means any direct or indirect loan, advance, guarantee or other
extension of credit or capital contribution to (by means of transfers of cash or
other Property to others or payments for Property or services for the account or
use of others, or otherwise), or purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any other Person. The amount of any Investment shall be the original cost of
such Investment, plus the cost of all additions thereto, and minus the amount of
any portion of such Investment repaid to such Person in cash as a repayment of
principal or a return of capital, as the case may be, but without any other
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment. In determining the amount of any
investment involving a transfer of any Property other than cash, such Property
shall be valued at its Fair Value at the time of such transfer, as determined in
good faith by the board of directors (or comparable body) of the Person making
such transfer.

"Issue Date" means the date on which the Senior Notes are first
authenticated and delivered under the Indenture.

"Lien" means any mortgage, pledge, hypothecation, charge, assignment,
deposit arrangement, encumbrance, security interest, lien (statutory or other),
or preference, priority or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
agreement to give or grant a Lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).

"Material Subsidiary" means a Subsidiary that (a) has assets with an
aggregate book value in an amount greater than 5 percent of the Consolidated Net
Tangible Assets of the Company as of any date of determination as shown on a
separate balance sheet of such Subsidiary, (b) had operating revenues in excess
of 5 percent of the operating revenues of the Company and the Subsidiaries as
determined on a consolidated basis in accordance with GAAP for the four calendar
quarters immediately preceding the calendar quarter that includes the
determination date or (c) owns one or more offshore drilling rigs.

"Maturity" means the date on which the principal of a Senior Note becomes
due and payable as provided therein or in the Indenture, whether at the Stated
Maturity or by declaration of acceleration or otherwise.

"Neddrill Agreement" means the Agreement of Sale and Purchase dated as of
April 25, 1996, between the Company and Royal Nedlloyd N.V. and Neddrill Holding
B.V.

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"Neddrill Assets" means the Assets (as defined in the Neddrill Agreement)
being acquired by the Company and the Subsidiaries pursuant to the Neddrill
Agreement.

"Neddrill Joint Ventures" means (i) the drillship joint venture described
in the Acquisition Agreement relating to the Neddrill Muravlenko and (ii) the
proposed drillship joint venture relating to the Valentin Shashin pursuant to
which Neddrill or an Affiliate of Neddrill would acquire an indirect ownership
interest in such drillship.

"Net Available Proceeds" means, as to any Asset Sale, the Cash Proceeds
therefrom, (a) net of all reasonable legal and title expenses, commissions and
other reasonable fees and expenses incurred, and all Federal, state, provincial,
foreign, recording and local taxes payable as a consequence of such Asset Sale,
and net of all payments made to any Person other than the Company or a
Subsidiary on any Indebtedness which is secured by such assets, in accordance
with the terms of any Lien upon or with respect to such assets, or which must by
its terms, or in order to obtain a necessary consent to such Asset Sale, or by
applicable law, be repaid out of the proceeds from such Asset Sale, and (b) in
the case of an Asset Sale by a Subsidiary, multiplied by the percentage of the
Voting Stock of such Subsidiary directly or indirectly owned by the Company.

"Non-Recourse Indebtedness" means any Indebtedness of a Non-Recourse
Subsidiary (a) in respect of which neither the Company nor any of its
Subsidiaries (other than a Non-Recourse Subsidiary) is liable or obligated in
any manner including, without limitation, liabilities or obligations
constituting Indebtedness of the Company or any of its Subsidiaries (other than
a Non-Recourse Subsidiary) and (b) the occurrence of any event or the existence
of any condition under any agreement or instrument relating to which shall not
at any time have the effect of accelerating, or permitting the acceleration of,
the maturity of any Indebtedness of the Company or any of its Subsidiaries
(other than a Non-Recourse Subsidiary) or otherwise permitting any such
Indebtedness to be declared to be due and payable, or to be required to be
prepaid, purchased or redeemed, prior to the stated maturity thereof.

"Non-Recourse Subsidiary" means a Subsidiary that (a) owns only Property
acquired by such Subsidiary after the Issue Date and (b) has no Indebtedness
other than Non-Recourse Indebtedness.

"Permitted Indebtedness" means (a) Indebtedness of the Company under the
Senior Notes; (b) Indebtedness of the Company and the Subsidiaries under one or
more bank credit facilities; provided that at the date such Indebtedness is
incurred and after giving effect to the incurrence of such Indebtedness and any
substantially concurrent repayment of Indebtedness permitted under this clause
(b) or under any bank credit facility permitted pursuant to clause (e), the
aggregate amount of all Indebtedness outstanding at such time under this clause
(b) and under any bank credit facility permitted in clause (e) hereof shall not
exceed $100,000,000; (c) Indebtedness of the Company or any Subsidiary under
Interest Swap Obligations; provided that (i) such Interest Swap Obligations are
related to payment obligations on Indebtedness otherwise permitted under the
covenants described in " -- Certain Covenants -- Limitation on Indebtedness" and
(ii) the notional principal amount of such Interest Swap Obligations does not
exceed the principal amount of the Indebtedness to which such Interest Swap
Obligations relate; (d) Indebtedness of the Company or any Subsidiary under
Currency Hedge Obligations; provided that (i) such Currency Hedge Obligations
are related to payment obligations on Indebtedness otherwise permitted under the
covenants described in " -- Certain Covenants -- Limitation on Indebtedness" or
to the foreign currency cash flows reasonably expected to be generated by the
Company and the Subsidiaries and (ii) the notional principal amount of such
Currency Hedge Obligations does not exceed the principal amount of the
Indebtedness and the amount of the foreign currency cash flows to which such
Currency Hedge Obligations relate; (e) Indebtedness of the Company or any
Subsidiary outstanding on the Issue Date; (f) Indebtedness of the Company or any
Subsidiary in respect of performance bonds, surety bonds, appeal bonds and
letters of credit issued for the account of the Company or any Subsidiary, in
each case in the ordinary course of business and not in connection with the
borrowing of money; (g) Indebtedness of the Company to any Wholly Owned
Subsidiary (but only so long as it remains a Wholly Owned Subsidiary); (h)
Indebtedness of any Subsidiary to the Company or any Wholly Owned Subsidiary
(but only so long as it remains a Wholly Owned Subsidiary); (i) Non-Recourse
Indebtedness of any Non-Recourse Subsidiary; (j) Indebtedness of the Company in
connection with a purchase of the Senior Notes pursuant to a Change of Control
Offer, provided that the aggregate principal amount of such

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<PAGE> 56

Indebtedness does not exceed 101 percent of the aggregate principal amount of
the Senior Notes purchased pursuant to such Change of Control Offer plus the
amount of expenses incurred in connection therewith, provided, further, that
such Indebtedness (i) has an Average Life equal to or greater than the remaining
Average Life of the Senior Notes and (ii) does not mature prior to one year
following the Stated Maturity of the Senior Notes; (k) other Indebtedness of the
Company or any Subsidiary, provided that at the date such Indebtedness is
incurred and after giving effect to the incurrence of such Indebtedness, the
aggregate amount of all Indebtedness outstanding at such time under this clause
(k) shall not exceed $30,000,000; (l) Permitted Refinancing Indebtedness; (m)
Indebtedness of a Subsidiary, if any, in respect of the Safe Harbor Leases, the
Letter of Credit Agreement and the Mortgage, as such terms are defined in, and
as contemplated by, the Assets Purchase Agreement dated August 20, 1993 between
the Company and Portal Rig Corporation; and (n) Project Finance Indebtedness,
provided that at the date such Indebtedness is incurred and after giving effect
to the incurrence of such Indebtedness, the aggregate principal amount of all
Indebtedness outstanding at such time under this clause (n) shall not exceed
$75,000,000. So as to avoid duplication in determining the amount of Permitted
Indebtedness under any clause of this definition, Guarantees of, or obligations
in respect of letters of credit supporting, Indebtedness otherwise included in
the determination of such amount shall not also be included.

"Permitted Investments" means (a) certificates of deposit, bankers'
acceptances, time deposits, Eurocurrency deposits and similar types of
investments routinely offered by commercial banks with final maturities of one
year or less issued by commercial banks having capital and surplus in excess of
$100,000,000; (b) commercial paper issued by any corporation, if such commercial
paper has credit ratings of at least "A-1" by S&P and at least "P-1" by Moody's;
(c) U.S. Government Obligations with a maturity of four years or less; (d)
repurchase obligations for instruments of the type described in clause (c); (e)
shares of money market mutual or similar funds having assets in excess of
$100,000,000; (f) payroll advances in the ordinary course of business; (g) other
advances and loans to officers and employees of the Company or any Subsidiary,
so long as the aggregate principal amount of such advances and loans does not
exceed $500,000 at any one time outstanding; (h) Investments represented by that
portion of the proceeds from Asset Sales (i) that is not Cash Proceeds or (ii)
that is deemed to be Cash Proceeds pursuant to the second sentence of the
definition of "Cash Proceeds"; (i) Investments in the NN-1 Limited Partnership,
a Texas limited partnership, pursuant to the Agreement of Limited Partnership of
the NN-1 Limited Partnership in an aggregate amount not to exceed the amount of
U.S. Government Guaranteed Ship Financing Sinking Fund Bonds outstanding on the
Issue Date; and (j) Investments in respect of the interest being acquired by the
Company or any Subsidiary in the Neddrill Joint Ventures.

"Permitted Liens" means (a) Liens in existence on the Issue Date; (b) Liens
created for the benefit of the Senior Notes; (c) Liens covering (i) accounts
receivable and inventory of the Company and the Subsidiaries and (ii) other
assets of the Company and the Subsidiaries with a Fair Value (as determined in
good faith by the Board of Directors) not to exceed $100,000,000, in each case
securing Indebtedness that may be incurred under clause (b) of the definition of
"Permitted Indebtedness," provided that if at the time Liens are proposed to be
granted or created in reliance on the clause (ii), Liens have been granted to
secure Project Finance Indebtedness as permitted by the proviso of clause (l) of
this definition and the aggregate principal amount of such secured Project
Finance Indebtedness exceeds $75,000,000, then the Fair Value of assets on which
Liens may be granted or created under this clause (ii) shall be limited to the
greater of (x) $100,000,000 less the amount by which the outstanding aggregate
principal of Project Finance Indebtedness exceeds $75,000,000, (y) an amount
that would permit the Company, after the grant or creation of proposed Liens
pursuant to this clause (ii), to incur at least $1.00 of additional secured
Project Finance Indebtedness under the proviso to clause (l) of the definition
of "Permitted Liens" and (z) an amount such that the Consolidated Assets
Coverage Ratio would have been at least 2.50 to 1 at the time of the incurrence
of Liens in reliance on the proviso of clause (l) of this definition had the
Liens proposed to be granted or created under this clause (ii) been granted or
created immediately prior to the Measurement Date of such Consolidated Asset
Coverage Ratio; (d) Liens on Property of a Person existing at the time such
Person is merged or consolidated with or into the Company or a Subsidiary (and
not incurred as a result of, or in anticipation of, such transaction); provided
that such Lien relates solely to the Property subject thereto; (e) Liens on
Property existing at the time of the acquisition thereof (and not incurred as a
result of, or in anticipation of, such

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<PAGE> 57

transaction); provided that such Lien relates solely to the Property subject
thereto; (f) Liens incurred or pledges and deposits in connection with worker's
compensation, unemployment insurance and other social security benefits,
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature (and obligations with respect to any letters of
credit issued in favor of the Company or a Subsidiary and in order to secure or
obtain any of the foregoing) in each case incurred in the ordinary course of
business and not in connection with the borrowing of money; (g) Liens imposed by
law or arising by operation of law, including, without limitation, landlords',
mechanics', carriers', warehousemen's, materialmen's, suppliers' and vendors'
Liens and Liens for master's and crew's wages and other similar maritime Liens,
and incurred in the ordinary course of business; (h) zoning restrictions,
easements, licenses, covenants, reservations, restrictions on the use of real
property and defects, irregularities and deficiencies in title to real property
that do not, individually or in the aggregate, materially affect the ability of
the Company or any Subsidiary to conduct its business as presently conducted;
(i) Liens for taxes or assessments or other governmental charges or levies not
yet due and payable, or the validity of which is being contested by the Company
or a Subsidiary in good faith by appropriate proceedings upon stay of execution
or the enforcement thereof and for which adequate reserves in accordance with
GAAP or other appropriate provision has been made; (j) Liens to secure the
payment of all or a part of the purchase price or construction cost of Property
acquired or constructed after the Issue Date; provided that (i) the principal
amount of Indebtedness secured by such Liens shall not exceed the lesser of cost
or Fair Market Value of the assets or Property so acquired or constructed and
(ii) such Liens shall not encumber any other assets or Property of the Company
or any Subsidiary and shall attach to such Property within 120 days of the
construction or acquisition of such assets or Property; (k) Liens securing
Capital Lease Obligations; provided, that such Liens secure Capital Lease
Obligations which, when combined with (i) the outstanding secured Indebtedness
of the Company (other than Indebtedness secured by Liens described under clauses
(b), (c), (j) and (s) hereof), (ii) all Indebtedness and the aggregate
liquidation value of all preferred stock of any Subsidiary (other than a
Non-Recourse Subsidiary) incurred and outstanding in accordance with the
covenants described in "-- Certain Covenants -- Limitation on Subsidiary
Indebtedness and Preferred Stock" (other than of the type described in clauses
(c), (j), (o), (s) hereof), and (iii) the aggregate amount of all other Capital
Lease Obligations of the Company and the Subsidiaries, does not exceed 10
percent of the Company's Consolidated Net Tangible Assets; (l) Liens securing
Indebtedness incurred under clause (n) of the definition of Permitted
Indebtedness, provided that if, at the date such Project Finance Indebtedness is
incurred and after giving effect to the incurrence of such Indebtedness, the
Consolidated Asset Coverage Ratio shall equal or exceed 2.50 to 1.0 and such
additional Indebtedness can be incurred under paragraph (a) of "-- Limitation on
Indebtedness," then, notwithstanding the $75,000,000 limitation set forth in
clause (n) of the definition of Permitted Indebtedness, the aggregate principal
amount of Project Finance Indebtedness that may be secured under this clause (l)
shall not exceed (i) $250,000,000, if the Consolidated Interest Coverage Ratio
(after giving pro forma effect to the incurrence of such Project Finance
Indebtedness) shall be equal to or greater than 3.00 to 1 but less than 4.00 to
1 or (ii) $400,000,000, if the Consolidated Interest Coverage Ratio (after
giving pro forma effect to the incurrence of such Project Finance Indebtedness)
shall be equal to or greater than 4.00 to 1; (m) Liens securing Indebtedness of
the Company or any Subsidiary; provided that such Liens secure Indebtedness
which, when combined with (i) outstanding secured Indebtedness of the Company
(other than Indebtedness secured by Liens described under clauses (b), (c), (j)
and (s) hereof), (ii) all Indebtedness and the aggregate liquidation value of
all preferred stock of any Subsidiary (other than a Non-Recourse Subsidiary)
incurred and outstanding in accordance with the covenants described in
"-- Certain Covenants -- Limitation on Subsidiary Indebtedness and Preferred
Stock" (other than of the type described in clauses (c), (j), (o) and (s)
hereof) and (iii) the aggregate amount of all Capital Lease Obligations of the
Company and the Subsidiaries, does not exceed 10 percent of the Company's
Consolidated Net Tangible Assets; (n) Liens to secure any extension, renewal,
refinancing or refunding (or successive extensions, renewals, refinancings or
refundings), in whole in or in part, of any Indebtedness secured by Liens
referred to in the foregoing clauses (a), (b), (d) and (e); provided that such
Lien does not extend to any other Property of the Company or any Subsidiary and
the principal amount of the Indebtedness secured by such Lien is not increased;
(o) Liens granted by a Non-Recourse Subsidiary securing Non-Recourse
Indebtedness of such Non-Recourse Subsidiary and Liens on the Capital Stock of a
Non-Recourse Subsidiary securing Non-Recourse Indebtedness of such Non-Recourse
Subsidiary; (p) any charter or lease that would not constitute an Asset Sale
pursuant to clause (ii)(D) of the definition of "Asset Sale"; (q) leases or

56
<PAGE> 58

subleases of real property to other Persons; (r) Liens under the Safe Harbor
Leases, the Letter of Credit Agreement and the Mortgage, as such terms are
defined in, and as contemplated by, the Assets Purchase Agreement dated August
20, 1993 between the Company and Portal Rig Corporation, relating to the
Property being acquired pursuant to such Assets Purchase Agreement; (s) Liens on
(i) up to eight submersible drilling rigs, owned by the Company or any
Subsidiaries as of the Issue Date including any improvements on such rigs
provided, that the Company may from time to time designate one or more of such
rigs as Property that is not, and will not be, subject to this clause (s) by
delivery of written notice of such designation to the trustee under the
Indenture, whereupon such designated rig or rigs shall cease to be covered by
this clause (s) and, if unencumbered by any Lien (other than Permitted Liens
described in clauses (g), (h) and (i) of this definition), the Appraised Value
of such designated rig or rigs as of any Measurement Date shall be included in
any determination of "Consolidated Asset Coverage Ratio" or (ii) the Property
described in clause (ii)(L) of the definition of "Asset Sale" and (t) Liens
resulting from the deposit of funds or evidences of Indebtedness in trust for
the purpose of defeasing Indebtedness of the Company or any of the Subsidiaries.

"Permitted Refinancing Indebtedness" means Indebtedness of the Company or a
Subsidiary, incurred in exchange for, or the proceeds of which are used to
renew, extend, refinance, refund or repurchase outstanding Indebtedness of the
Company or any Subsidiary which outstanding Indebtedness was incurred in
accordance with, or is otherwise permitted by, the terms of the Indenture, other
than any such Indebtedness permitted pursuant to clause (k) of the definition of
"Permitted Indebtedness"; provided that (i) if the Indebtedness being renewed,
extended, refinanced, refunded or repurchased is pari passu with or subordinated
in right of payment to the Senior Notes, then such new Indebtedness is pari
passu with or subordinated in right of payment to, as the case may be, the
Senior Notes at least to the same extent as the Indebtedness being renewed,
extended, refinanced, refunded or repurchased, (ii) such new Indebtedness is
scheduled to mature later than the Indebtedness being renewed, extended,
refinanced, refunded or repurchased, (iii) such new Indebtedness has an Average
Life at the time such Indebtedness is incurred that is greater than the Average
Life of the Indebtedness being renewed, extended, refinanced, refunded or
repurchased and (iv) such new Indebtedness is in an aggregate principal amount
(or, if such Indebtedness provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration of the maturity
thereof, the original issue price of such Indebtedness is) not in excess of the
aggregate principal amount then outstanding of the Indebtedness being renewed,
extended, refinanced, refunded or repurchased (or if the Indebtedness being
renewed, extended, refinanced, refunded or repurchased provides for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the maturity thereof, the original issue price of such
Indebtedness plus any accreted value attributable thereto since the original
issuance of such Indebtedness) plus the amount of any premium required to be
paid in connection therewith pursuant to the terms of such Indebtedness or the
amount of any premium reasonably determined by the Company or the Subsidiary, as
applicable, as necessary to accomplish the foregoing by means of a tender or
exchange offer or privately negotiated purchase, plus the amount of fees and
expenses in connection therewith; provided, further, that Permitted Refinancing
Indebtedness shall not include (a) Indebtedness of a Subsidiary that is incurred
to renew, extend, refinance, refund or repurchase Indebtedness of the Company
and (b) Indebtedness (other than Non-Recourse Indebtedness of the related
Non-Recourse Subsidiary) that is incurred to renew, extend, refinance, refund or
repurchase Non-Recourse Indebtedness of such Non-Recourse Subsidiary.

"Preferred Stock" means the Company's $1.50 Convertible Preferred Stock.

"Project Finance Indebtedness" of a Person means any Indebtedness the
proceeds of which will be used solely to make capital expenditures to repair,
refurbish, upgrade or improve one or more drilling rigs owned or acquired (or to
be owned or acquired) by such Person or Affiliate thereof.

"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, excluding Capital Stock in any other Person.

"Redeemable Stock" means, with respect to any Person, any equity security
that by its terms or otherwise is required to be redeemed, or is redeemable at
the option of the holder thereof, at any time prior to one year

57
<PAGE> 59

following the Stated Maturity of the Senior Notes or is exchangeable into
Indebtedness of such Person or any of its subsidiaries.

"Replacement Asset" means, with respect to any Asset Sale, a Property or
asset that, as determined by the Board of Directors as evidenced by a Board
Resolution, is used or is useful in a line of business of the Company or any
Subsidiary existing on the Issue Date.

"Restricted Payment" means to (i) declare or pay any dividend on, or make
any distribution in respect of, or purchase, redeem, retire or otherwise acquire
for value any Capital Stock of the Company or any Affiliate of the Company, or
warrants, rights or options to acquire such Capital Stock, other than (x)
dividends payable solely in the Capital Stock (other than Redeemable Stock) of
the Company or such Affiliate, as the case may be, or in warrants, rights or
options to acquire such Capital Stock and (y) dividends or distributions by a
Subsidiary to the Company or to a Wholly Owned Subsidiary (except a Non-Recourse
Subsidiary); (ii) make any principal payment on, or redeem, repurchase, defease
or otherwise acquire or retire for value, prior to any scheduled principal
payment, scheduled sinking fund payment or other stated maturity, Indebtedness
of the Company or any Subsidiary which is subordinated in right of payment to
the Senior Notes; or (iii) make any Investment (other than Permitted Investments
and Investments made by the Company in its Wholly Owned Subsidiaries (or any
Person that will be a Wholly Owned Subsidiary as a result of such Investment)
except Non-Recourse Subsidiaries or by a Subsidiary in the Company or one or
more Wholly Owned Subsidiaries (or any Person that will be a Wholly Owned
Subsidiary as a result of such Investment) except Non-Recourse Subsidiaries) in
any Person.

"Sale and Lease-Back Transaction" means, with respect to any Person, any
direct or indirect arrangement pursuant to which Property is sold or transferred
by such Person or a subsidiary of such Person and is thereafter leased back from
the purchaser or transferee thereof by such Person or one of its subsidiaries.

"Stated Maturity", when used with respect to a Senior Note or any
installment of interest thereon, means the date specified in such Senior Note as
the fixed date on which the principal of such Senior Note or such installment of
interest is due and payable.

"Subordinated Indebtedness" means any Indebtedness of the Company that is
subordinated in right of payment to the Senior Notes and does not mature prior
to one year following the Stated Maturity of the Senior Notes.

"subsidiary" means, with respect to any Person, (i) any corporation more
than 50 percent of the outstanding Voting Stock of which is owned, directly or
indirectly, by such Person, or by one or more other subsidiaries of such Person,
or by such Person and one or more other subsidiaries of such Person, (ii) any
general partnership, joint venture or similar entity, more than 50 percent of
the outstanding partnership or similar interests of which is owned, directly or
indirectly, by such Person, or by one or more other subsidiaries of such Person,
or by such Person and one or more other subsidiaries of such Person and (iii)
any limited partnership of which such Person or any subsidiary of such Person is
a general partner.

"Subsidiary" means a subsidiary of the Company.

"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged; (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) above, are not callable or redeemable at the option of the
issuer thereof or (iii) depository receipts issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligations or a specific
payment of interest on or principal of any such U.S. Government Obligation held
by such custodian for the account of the holder of a depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of interest on or principal of the
U.S. Government Obligation evidenced by such depository receipt.

58
<PAGE> 60

"Voting Stock" means, with respect to any Person, securities of any class
or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or at the times that such class of Capital Stock has
voting power by reason of the happening of any contingency) to vote in the
election of members of the board of directors or comparable body of such Person.

"Wholly Owned Subsidiary" means any Subsidiary of which 100 percent of the
total Voting Stock (other than directors' qualifying shares) is at the time
owned by the Company, either directly or indirectly through ownership of one or
more Subsidiaries.

BOOK-ENTRY DELIVERY AND FORM

The Senior Notes will be issued in the form of a fully registered Global
Certificate. The Global Certificate will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York (the "Depositary") and registered
in the name of the Depositary's nominee.

Except as set forth below, the Global Certificate may be transferred, in
whole and not in part, only to another nominee of the Depositary or to a
successor of the Depositary or its nominee.

The Depositary has advised the Company and the Underwriters as follows: It
is a limited-purpose trust company which was created to hold securities for its
participating organizations (the "Participants") and to facilitate the clearance
and settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. Participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations. Access
to the Depositary's book-entry system is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("indirect participants"). Persons who are not Participants may beneficially own
securities held by the Depositary only through Participants or indirect
participants.

The Depositary has also advised that pursuant to procedures established by
it (i) upon the issuance by the Company of the Senior Notes, the Depositary will
credit the accounts of Participants designated by the Underwriters with the
principal amount of the Senior Notes purchased by the Underwriters, and (ii)
ownership of beneficial interests in the Global Certificate will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the Depositary (with respect to Participants' interests), the
Participants and the indirect participants. The laws of some states require that
certain persons take physical delivery in definitive form of securities which
they own. Consequently, the ability to transfer beneficial interests in the
Global Certificate is limited to such extent.

So long as a nominee of the Depositary is the registered owner of the
Global Certificate, such nominee will be considered the sole owner or holder of
the Senior Notes for all purposes under the Indenture. Except as provided below,
owners of beneficial interests in the Global Certificate will not be entitled to
have Senior Notes registered in their names, will not receive or be entitled to
receive physical delivery of Senior Notes in definitive form and will not be
considered the owners or holders thereof under the Indenture.

Neither the Company, the Trustee, the paying agent nor the Senior Notes
registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Certificate, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.

Principal and interest payments on the Global Certificate registered in the
name of the Depositary's nominee will be made by the Company, either directly or
through a paying agent, to the Depositary's nominee as the registered owner of
the Global Certificate. Under the terms of the Indenture, the Company and the
Trustee will treat the persons in whose names the Senior Notes are registered as
the owners of such Senior Notes for the purpose of receiving payments of
principal and interest on such Senior Notes and for all other purposes
whatsoever. Therefore, neither the Company, the Trustee nor any paying agent has
any direct responsibility or liability for the payment of principal or interest
on the Senior Notes to owners of beneficial interests in the Global Certificate.
The Depositary has advised the Company and the Trustee that its present practice
is, upon receipt of any payment of principal or interest to credit immediately
the accounts of the

59
<PAGE> 61

Participants with payment in amounts proportionate to their respective holdings
in principal amount of beneficial interests in the Global Certificate as shown
on the records of the Depositary. Payments by Participants and indirect
participants to owners of beneficial interests in the Global Certificate will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name" and will be the responsibility of such Participants or indirect
participants.

As long as the Senior Notes are represented by a Global Certificate, the
Depositary's nominee will be the holder of the Senior Notes and therefore will
be the only entity that can exercise a right to repayment or repurchase of the
Senior Notes. See "-- Change of Control" and "-- Certain Covenants -- Limitation
on Asset Sales." Notice by Participants or indirect participants or by owners of
beneficial interests in a Global Certificate held through such Participants or
indirect participants of the exercise of the option to elect repayment of
beneficial interests in Senior Notes represented by a Global Certificate must be
transmitted to the Depositary in accordance with its procedures on a form
required by the Depositary and provided to Participants. In order to ensure that
the Depositary's nominee will timely exercise a right to repayment with respect
to a particular Senior Note, the beneficial owner of such Senior Note must
instruct the broker or other Participant or indirect participant through which
it holds an interest in such Senior Note to notify the Depositary of its desire
to exercise a right to repayment. Different firms have cut-off times for
accepting instructions from their customers, and accordingly, each beneficial
owner should consult the broker or other Participant or indirect participant
through which it holds an interest in a Senior Note in order to ascertain the
cut-off time by which such an instruction must be given in order for timely
notice to be delivered to the Depositary. The Company will not be liable for any
delay in delivery of notices of the exercise of the option to elect repayment.

The Company will issue Senior Notes in definitive form in exchange for the
Global Certificate if, and only if, either (1) the Depositary is at any time
unwilling or unable to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, or (2) an Event of Default has occurred
and is continuing and the Senior Notes registrar has received a request from the
Depositary to issue Senior Notes in definitive form in lieu of all or a portion
of the Global Certificate. In either instance, an owner of a beneficial interest
in the Global Certificate will be entitled to have Senior Notes equal in
principal amount to such beneficial interest registered in its name and will be
entitled to physical delivery of such Senior Notes in definitive form. Senior
Notes so issued in definitive form will be issued in denominations of $1,000 and
integral multiples thereof and will be issued in registered form only, without
coupons.

60
<PAGE> 62

UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement") among the Company and the underwriters named below (the
"Underwriters"), the Company has agreed to sell to the Underwriters, and the
Underwriters have severally agreed to purchase from the Company, the respective
principal amounts of the Senior Notes set forth after their names below. The
Purchase Agreement provides that the obligations of the Underwriters are subject
to certain conditions precedent and that the Underwriters will be obligated to
purchase all of the Senior Notes if any are purchased.

<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITERS AMOUNT
------------ ------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................................... $
Salomon Brothers Inc...........................................................
Simmons & Company International................................................
------------
Total.............................................................. $125,000,000
</TABLE>

The Underwriters have advised the Company that they propose initially to
offer the Senior Notes to the public at the public offering price set forth on
the cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of % of the principal amount of the Senior Notes.
The Underwriter may allow, and such dealers may reallow, a discount not in
excess of % of the principal amount of the Senior Notes to certain other
dealers. After the initial public offering of the Senior Notes, the public
offering price, concession and discount may be changed.

The Senior Notes are a new issue of securities for which there is currently
no public market. The Company does not intend to apply for listing of the Senior
Notes on any securities exchange. The Company has been advised by the
Underwriters that, subject to applicable laws and regulations, each of the
Underwriters presently intend to make a market in the Senior Notes after
consummation of the offering, although the Underwriters are under no obligation
to do so and may discontinue any market-making activities with respect to the
Senior Notes at any time without notice. No assurance, however, can be given as
to the liquidity of the trading market for the Senior Notes or that an active
trading market for the Senior Notes will develop. If an active public market
does not develop, the market price and liquidity of the Senior Notes may be
adversely affected.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make in respect thereof.

The Underwriters are serving as the representatives of the underwriters for
the Equity Offerings and will receive customary compensation for such services
consisting of underwriting discounts.

From time to time, Salomon Brothers Inc ("Salomon") and Simmons & Company
International ("Simmons & Company") have been engaged by the Company to provide
advisory and investment banking services. Pursuant to the terms of a Standby
Agreement entered into in connection with the June 1995 redemption of the
Company's $2.25 Convertible Exchangeable Preferred Stock, par value $1.00 per
share (the "$2.25 Preferred Stock"), Salomon agreed to purchase all shares of
the $2.25 Preferred Stock properly tendered and to convert all such shares so
purchased or otherwise acquired by Salomon into Common Stock. Salomon received
customary compensation pursuant to the Standby Agreement. Simmons & Company, in
return for a customary fee, has provided the Company with financial advisory
services in connection with the Acquisition.

61
<PAGE> 63

LEGAL OPINIONS

The legality of the Senior Notes offered hereby will be passed upon for the
Company by Thompson & Knight, P.C., Dallas, Texas. Certain legal matters in
connection with the Senior Notes offered hereby will be passed upon for the
Underwriters by Andrews & Kurth L.L.P., Houston, Texas.

EXPERTS

The consolidated financial statements of the Company as of December 31,
1995 and 1994, and for each of the two years in the period ended December 31,
1995 included in this Prospectus have been so included in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

The 1993 consolidated financial statements of the Company included in this
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
in this Prospectus in reliance upon the authority of said firm as experts in
giving said report.

The consolidated financial statements of Neddrill as of December 31, 1995
and 1994, and for each of the three years in the period ended December 31, 1995
have been so included in reliance on the report of KPMG Accountants N.V.,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements, and other information
with the Securities and Exchange Commission (the "Commission"). These reports,
proxy and information statements, and other information concerning the Company
can be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; and at
the Commission's regional offices at Suite 1400, Northwestern Atrium Center, 500
West Madison Avenue, Chicago, Illinois 60661-2551 and at Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can also
be obtained from the Commission at prescribed rates through its Public Reference
Section at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, the
Common Stock is listed on the New York Stock Exchange, 20 Broad Street, New
York, New York 10005, where such material may also be inspected and copied.

The Company has filed with the Commission a Registration Statement on Form
S-3 (No. 333- ) under the Securities Act with respect to the Senior Notes
offered hereby (including all amendments and supplements thereto, the
"Registration Statement"). This Prospectus, which forms a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. Statements contained herein
concerning the provisions of certain documents are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference. The
Registration Statement and the exhibits thereto can be inspected and copied at
the public reference facilities and regional offices referred to above.

62
<PAGE> 64

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following document, which has been filed by the Company with the
Commission (File No. 0-13857) pursuant to the Exchange Act, is incorporated
herein by reference and made a part of this Prospectus: (i) the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 and (ii) the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock covered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document or information incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document that also is, or is deemed to be, incorporated
herein by reference, modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.

THE COMPANY UNDERTAKES TO PROVIDE, WITHOUT CHARGE, TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED,
UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY AND ALL OF THE
DOCUMENTS OR INFORMATION REFERRED TO ABOVE THAT HAS BEEN OR MAY BE INCORPORATED
BY REFERENCE IN THIS PROSPECTUS (EXCLUDING EXHIBITS TO SUCH DOCUMENTS UNLESS
SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE). REQUESTS SHOULD BE
DIRECTED TO BYRON L. WELLIVER, SENIOR VICE PRESIDENT -- FINANCE, TREASURER AND
CONTROLLER, NOBLE DRILLING CORPORATION, 10370 RICHMOND AVENUE, SUITE 400,
HOUSTON, TEXAS 77042 (THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY), TELEPHONE
(713) 974-3131.

63
<PAGE> 65

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
NOBLE DRILLING CORPORATION AND SUBSIDIARIES:
Annual Financial Statements:
Report of Independent Accountants................................................... F-2
Report of Independent Public Accountants............................................ F-3
Consolidated Balance Sheets at December 31, 1995 and 1994........................... F-4
Consolidated Statements of Operations for the three years in the period ended
December 31, 1995................................................................ F-5
Consolidated Statements of Cash Flows for the three years in the period ended
December 31, 1995................................................................ F-6
Consolidated Statements of Shareholders' Equity for the three years in the period
ended December 31, 1995.......................................................... F-7
Notes to Consolidated Financial Statements.......................................... F-9
Interim Financial Statements (Unaudited):
Consolidated Balance Sheets at March 31, 1996 and
December 31, 1995................................................................ F-27
Consolidated Statements of Operations for the three months ended
March 31, 1996 and 1995.......................................................... F-28
Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and
1995............................................................................. F-29
Notes to Consolidated Interim Financial Statements.................................. F-30
NEDDRILL HOLDING B.V.:
Annual Financial Statements:
Independent Auditor's Report........................................................ F-33
Consolidated Balance Sheets at December 31, 1995 and 1994........................... F-34
Consolidated Statements of Operations for the three years in the period ended
December 31, 1995................................................................ F-35
Consolidated Statements of Cash Flows for the three years in the period ended
December 31, 1995................................................................ F-36
Consolidated Statements of Shareholders' Deficit for the three years in the period
ended December 31, 1995.......................................................... F-37
Notes to Consolidated Financial Statements.......................................... F-38
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS:
Unaudited Pro Forma Consolidated Balance Sheet at March 31, 1996.................... F-53
Unaudited Pro Forma Consolidated Statement of Operations for the three months ended
March 31, 1996................................................................... F-54
Unaudited Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1995................................................................ F-55
</TABLE>

F-1
<PAGE> 66

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Noble Drilling Corporation

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of cash flows and of changes in
shareholders' equity present fairly, in all material respects, the financial
position of Noble Drilling Corporation and its subsidiaries (the "Company") at
December 31, 1995 and 1994, and the results of their operations and their cash
flows for the two years ended December 31, 1995, in conformity with generally
accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Houston, Texas
January 31, 1996, except as to Note 16, which is as of March 13, 1996

F-2
<PAGE> 67

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of Noble Drilling Corporation:

We have audited the accompanying consolidated statements of operations,
cash flows and shareholders' equity of Noble Drilling Corporation (a Delaware
corporation) and subsidiaries for the year ended December 31, 1993. These
financial statements reflect a restatement of the Company's previously reported
amounts for the merger with Chiles Offshore Corporation ("Chiles"), see Note 2.
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 audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Noble
Drilling Corporation and subsidiaries (including Chiles) for year ended December
31, 1993, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Houston, Texas
September 15, 1994

F-3
<PAGE> 68

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.................................................... $ 41,307 $ 95,163
Restricted cash.............................................................. -- 898
Investment in marketable equity securities................................... 6,131 9,489
Investment in marketable debt securities..................................... 17,031 39,673
Accounts receivable (net allowance of $1,280 and $691)....................... 60,251 61,563
Costs of uncompleted contracts in excess of billings......................... 6,646 841
Inventories.................................................................. 19,795 14,008
Other current assets......................................................... 36,851 18,584
--------- ---------
Total current assets.................................................. 188,012 240,219
--------- ---------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities............................................ 871,539 804,445
Other........................................................................ 23,891 20,461
--------- ---------
895,430 824,906
--------- ---------
Accumulated depreciation..................................................... (352,452) (331,584)
--------- ---------
542,978 493,322
--------- ---------
OTHER ASSETS................................................................... 10,402 6,348
--------- ---------
$ 741,392 $ 739,889
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt and current installments of long-term debt................... $ 12,210 $ 6,244
Accounts payable............................................................. 30,782 34,662
Accrued payroll and related costs............................................ 13,674 14,888
Taxes payable................................................................ 12,953 12,972
Interest payable............................................................. 2,860 2,853
Other current liabilities.................................................... 13,910 10,715
--------- ---------
Total current liabilities............................................. 86,389 82,334
LONG-TERM DEBT................................................................. 129,923 126,546
OTHER LIABILITIES.............................................................. 1,338 2,767
MINORITY INTEREST.............................................................. 249 631
--------- ---------
217,899 212,278
--------- ---------
SHAREHOLDERS' EQUITY
$2.25 Preferred stock -- par value $1; all shares converted or redeemed as of
December 31, 1995; 15,000 shares authorized; 2,989 issued and outstanding
as of December 31, 1994.................................................... -- 2,989
$1.50 Preferred stock -- par value $1; convertible; cumulative; redeemable at
the option of the Company; aggregate liquidation preference of $100,625;
15,000 shares authorized; 4,025 issued and outstanding..................... 4,025 4,025
Common stock -- par value $.10; 200,000 shares authorized; 94,548 issued and
94,483 outstanding in 1995; 78,076 issued and 77,826 outstanding in 1994... 9,455 7,808
Capital in excess of par value............................................... 589,866 590,733
Unrealized losses on marketable securities................................... (115) (1,847)
Minimum pension liability.................................................... (3,403) (3,825)
Cumulative translation adjustment............................................ (2,081) (2,325)
Accumulated deficit.......................................................... (73,802) (68,197)
Treasury stock, at cost...................................................... (452) (1,750)
--------- ---------
523,493 527,611
--------- ---------
COMMITMENTS AND CONTINGENCIES.................................................. -- --
--------- ---------
$ 741,392 $ 739,889
========= =========
</TABLE>

See accompanying notes to the consolidated financial statements.

F-4
<PAGE> 69

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
OPERATING REVENUES
Contract drilling services............................... $205,110 $249,820 $223,321
Labor contract drilling services......................... 35,136 36,203 34,474
Turnkey drilling services................................ 71,273 56,380 --
Engineering and consulting services...................... 11,264 3,796 2,292
Other revenue............................................ 5,185 5,789 4,444
-------- -------- --------
327,968 351,988 264,531
-------- -------- --------
OPERATING COSTS AND EXPENSES
Contract drilling services............................... 138,340 160,109 146,008
Labor contract drilling services......................... 26,540 28,355 27,857
Turnkey drilling services................................ 64,471 46,886 --
Engineering and consulting services...................... 7,311 2,958 2,083
Other expense............................................ 3,440 4,900 2,736
Depreciation and amortization............................ 36,492 39,519 28,886
Selling, general and administrative...................... 40,139 47,606 28,284
Restructuring charges.................................... -- 3,661 --
Minority interest........................................ (214) (169) (232)
-------- -------- --------
316,519 333,825 235,622
-------- -------- --------
OPERATING INCOME........................................... 11,449 18,163 28,909
OTHER INCOME (EXPENSE)
Interest expense......................................... (12,156) (12,351) (8,038)
Interest income.......................................... 5,323 5,640 2,497
Other, net............................................... 250 15,743 1,047
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM....................................... 4,866 27,195 24,415
INCOME TAX PROVISION....................................... (3,272) (5,672) (3,333)
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY
ITEM..................................................... 1,594 21,523 21,082
-------- -------- --------
EXTRAORDINARY ITEM......................................... -- -- 1,770
-------- -------- --------
NET INCOME................................................. 1,594 21,523 22,852
PREFERRED STOCK DIVIDENDS.................................. (7,199) (12,764) (7,936)
-------- -------- --------
NET (LOSS) INCOME APPLICABLE TO COMMON
SHARES................................................ $ (5,605) $ 8,759 $ 14,916
======== ======== ========
NET (LOSS) INCOME APPLICABLE TO COMMON SHARES PER SHARE:
Before extraordinary item................................ $ (0.08) $ 0.11 $ 0.20
Extraordinary item....................................... -- -- 0.02
-------- -------- --------
NET (LOSS) INCOME APPLICABLE TO COMMON SHARES PER SHARE.... $ (0.08) $ 0.11 $ 0.22
======== ======== ========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING.............................................. 89,736 77,576 66,923
</TABLE>

See accompanying notes to the consolidated financial statements.

F-5
<PAGE> 70

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
-------- -------- ---------
<S> <C> <C> <C>
CASH PROVIDED BY OPERATING ACTIVITIES
Net income.......................................................... $ 1,594 $ 21,523 $ 22,852
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization..................................... 36,492 39,519 28,886
Gain on sale of assets............................................ (829) (9,546) (785)
(Gain) loss on foreign exchange................................... (206) 76 (79)
Deferred income tax (benefit) provision........................... (449) 3,433 --
Restructuring charges............................................. -- 3,661 --
Extraordinary item................................................ -- -- (1,770)
Other............................................................. 132 (6,009) 227
Changes in current assets and liabilities:
Accounts receivable............................................. (8,480) 20,208 (18,694)
Proceeds from sale of marketable equity securities, net......... 3,398 -- --
Other assets.................................................... (17,361) 20,791 (11,508)
Accounts payable................................................ 11,356 (2,635) 7,863
Other liabilities............................................... 3,836 (12,365) 7,806
-------- -------- ---------
29,483 78,656 34,798
-------- -------- ---------
CASH (USED IN) INVESTING ACTIVITIES
Purchase of property and equipment.................................. (91,202) (55,834) (20,259)
Acquisition of Western rigs and related assets...................... -- -- (150,000)
Proceeds from Triton acquisition, net of negative noncash working
capital of $3,532 acquired........................................ -- 13,600 --
Proceeds from sale of property and equipment........................ 1,879 13,792 1,712
Proceeds from sale of (investment in) marketable debt securities.... 24,374 (2,069) (15,100)
Investment in unconsolidated affiliate.............................. -- (342) (983)
Payments to minority interest holders, net.......................... -- (4,478) --
-------- -------- ---------
(64,949) (35,331) (184,630)
-------- -------- ---------
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
Preferred stock conversion costs.................................... (2,406) -- --
Proceeds from long-term debt........................................ -- -- 125,000
Payment of long-term debt........................................... (520) (598) (109,592)
Dividends paid on preferred stock................................... (8,881) (12,764) (7,936)
Proceeds from issuance of common stock, net......................... 356 2,604 97,451
Proceeds from issuance of preferred stock, net...................... -- -- 96,500
Payment of short-term debt.......................................... (6,698) (7,500) (2,449)
Other............................................................... 898 1,211 (820)
-------- -------- ---------
(17,251) (17,047) 198,154
-------- -------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH............................... (1,139) (292) 645
-------- -------- ---------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS...................... (53,856) 25,986 48,967
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD........................ 95,163 69,177 20,210
-------- -------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD.............................. $ 41,307 $ 95,163 $ 69,177
======== ======== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest.......................................................... $ 11,738 $ 11,947 $ 7,033
Income taxes...................................................... $ 3,946 $ 6,254 $ 2,123
Noncash investing and financing activities:
Insurance financing agreement..................................... $ 14,838 -- --
Triton acquisition with common stock.............................. -- $ 5,169 --
Triton acquisition with notes payable............................. -- $ 4,000 --
Triton acquisition, minority interest assumed..................... -- $ 5,392 --
Rig purchase with common stock.................................... -- -- $ 5,725
</TABLE>

See accompanying notes to the consolidated financial statements.

F-6
<PAGE> 71

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)

<TABLE>
<CAPTION>
$2.25 PREFERRED $1.50 PREFERRED
STOCK STOCK COMMON STOCK
----------------- ---------------- ----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------ ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1993........................... 2,990 $ 2,990 -- -- 63,088 $6,308
Net income................................ -- -- -- -- -- --
Issuance of stock:
Sale of common stock.................... -- -- -- -- 12,041 1,204
Sale of preferred stock................. -- -- 4,025 $4,025 -- --
Purchase of Portal rigs................. -- -- -- -- 626 63
Exercise of stock options............... -- -- -- -- 486 49
Contribution to benefit plans........... -- -- -- -- 130 13
Stock options granted at discount......... -- -- -- -- -- --
Dividends on preferred stock.............. -- -- -- -- -- --
Translation adjustment.................... -- -- -- -- -- --
------ ------- ----- ------ ------ ------
DECEMBER 31, 1993......................... 2,990 2,990 4,025 4,025 76,371 7,637
Net income................................ -- -- -- -- -- --
Issuance of stock:
Purchase of Triton...................... -- -- -- -- 752 75
Exercise of stock options............... -- -- -- -- 197 20
Contribution to benefit plans........... -- -- -- -- 271 27
Exchange of Chiles options.............. -- -- -- -- 480 48
Stock options granted at discount......... -- -- -- -- -- --
Conversion of preferred stock............. (1) (1) -- -- 5 1
Dividends on preferred stock.............. -- -- -- -- -- --
Net unrealized losses on marketable
securities.............................. -- -- -- -- -- --
Minimum pension liability................. -- -- -- -- -- --
Translation adjustment.................... -- -- -- -- -- --
------ ------- ----- ------ ------ ------
DECEMBER 31, 1994......................... 2,989 2,989 4,025 4,025 78,076 7,808
Net income................................ -- -- -- -- -- --
Conversion/redemption of preferred
stock................................... (2,989) (2,989) -- -- 16,199 1,620
Preferred stock conversion costs.......... -- -- -- -- -- --
Net unrealized losses on marketable
securities.............................. -- -- -- -- -- --
Minimum pension liability................. -- -- -- -- -- --
Translation adjustment.................... -- -- -- -- -- --
Dividends on preferred stock.............. -- -- -- -- -- --
Issuance of stock:
Exercise of stock options............... -- -- -- -- 109 11
Contribution to benefit plans........... -- -- -- -- 164 16
Contribution of treasury stock to
restricted stock plan................ -- -- -- -- -- --
Restricted stock plan shares returned to
treasury............................. -- -- -- -- -- --
------ ------- ----- ------ ------ ------
DECEMBER 31, 1995......................... -- $ -- 4,025 $4,025 94,548 $9,455
====== ======= ===== ====== ====== ======
</TABLE>

See accompanying notes to the consolidated financial statements.

F-7
<PAGE> 72

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY -- (CONTINUED)
(In thousands)

<TABLE>
<CAPTION>
UNREALIZED
CAPITAL LOSSES ON MINIMUM CUMULATIVE
IN EXCESS OF MARKETABLE PENSION TRANSLATION ACCUMULATED TREASURY
PAR VALUE SECURITIES LIABILITY ADJUSTMENT DEFICIT SHARES AMOUNT
------------ ---------- ------- ----------- ----------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1993.................. $388,453 -- -- $(2,495) $(91,872) 250 $(1,750)
Net income....................... -- -- -- -- 22,852 -- --
Issuance of stock:
Sale of common stock........... 93,705 -- -- -- -- -- --
Sale of preferred stock........ 92,475 -- -- -- -- -- --
Purchase of Portal rigs........ 5,662 -- -- -- -- -- --
Exercise of stock options...... 2,047 -- -- -- -- -- --
Contribution to benefit
plans........................ 560 -- -- -- -- -- --
Stock options granted at
discount....................... 208 -- -- -- -- -- --
Dividends on preferred stock..... -- -- -- -- (7,936) -- --
Translation adjustment........... -- -- -- 209 -- -- --
-------- ------- ------- ------- -------- ---- --------
DECEMBER 31, 1993................ 583,110 -- -- (2,286) (76,956) 250 (1,750)
Net income....................... -- -- -- -- 21,523 -- --
Issuance of stock:
Purchase of Triton............. 5,094 -- -- -- -- -- --
Exercise of stock options...... 1,208 -- -- -- -- -- --
Contribution to benefit
plans........................ 1,781 -- -- -- -- -- --
Exchange of Chiles options..... (480) -- -- -- -- -- --
Stock options granted at
discount....................... 20 -- -- -- -- -- --
Conversion of preferred stock.... -- -- -- -- (12,764) -- --
Dividends on preferred stock..... -- -- -- -- -- -- --
Net unrealized losses on
marketable securities.......... -- $(1,847) -- -- -- -- --
Minimum pension liability........ -- -- $(3,825) -- -- -- --
Translation adjustment........... -- -- -- (39) -- -- --
-------- ------- ------- ------- -------- ---- --------
DECEMBER 31, 1994................ 590,733 (1,847) (3,825) (2,325) (68,197) 250 (1,750)
Net income....................... -- -- -- -- 1,594 -- --
Conversion/redemption of
preferred stock................ 1,369 -- -- -- -- -- --
Preferred stock conversion
costs.......................... (2,406) -- -- -- -- -- --
Net unrealized losses on
marketable securities.......... -- 1,732 -- -- -- -- --
Minimum pension liability........ -- -- 422 -- -- -- --
Translation adjustment........... -- -- -- 244 -- -- --
Dividends on preferred stock..... -- -- -- -- (7,199) -- --
Issuance of stock:
Exercise of stock options...... 345 -- -- -- -- -- --
Contribution to benefit
plans........................ 1,123 -- -- -- -- -- --
Contribution of treasury stock
to restricted stock plan..... (1,480) -- -- -- -- (211) 1,480
Restricted stock plan shares
returned to treasury......... 182 -- -- -- -- 26 (182)
-------- ------- ------- ------- -------- ---- --------
DECEMBER 31, 1995................ $589,866 $ (115) $(3,403) $(2,081) $(73,802) 65 $ (452)
======== ======= ======= ======= ======== ==== ========
</TABLE>

See accompanying notes to the consolidated financial statements.

F-8
<PAGE> 73

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Business

Noble Drilling Corporation ("Noble Drilling" or, together with its
consolidated subsidiaries, unless the context requires otherwise, the "Company")
is primarily engaged in domestic and international contract oil and gas drilling
and workover operations. The Company's international operations are conducted in
the United Kingdom, Nigeria, Zaire, India, Venezuela, Mexico, Canada, and Qatar.
On September 15, 1994, Chiles Offshore Corporation ("Chiles") merged with Noble
Offshore Corporation ("NOC"), a wholly owned subsidiary of Noble Drilling (the
"Chiles Merger"). See Note 2.

The contract drilling industry is a highly competitive and cyclical
business characterized by high capital and maintenance costs. Although
conditions in recent years in the oil and gas industry have precipitated
consolidation of industry participants, there remains an oversupply of drilling
equipment. As a consequence, there has been intense competition for available
drilling contracts resulting in equipment being idle for long periods of time
and at generally unfavorable terms and prices for contract drilling.

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, such as drill pipe, have occurred from time to
time in the past and such shortages could occur again.

The Company's operations are subject to the many hazards inherent in the
drilling business, including blowouts, cratering, fires and collisions or
groundlings of offshore equipment, which could cause substantial damage to the
environment. In addition, the Company's operations are subject to damage or loss
from adverse weather and seas. These hazards could cause personal injury and
loss of life, suspend drilling operations or seriously damage or destroy the
property and equipment involved and, in addition to the environmental damage,
could cause substantial damage to producing formations and surrounding areas.
Although the Company maintains insurance against many of these hazards, such
insurance is subject to substantial deductibles and provides for premium
adjustments based on claims. It also excludes certain matters from coverage,
such as loss of earnings on certain rigs.

Under turnkey drilling contracts, Triton Engineering Services Company
("Triton") generally assumes the risk of pollution and environmental damage, but
on occasion receives indemnification from the customer for environmental and
pollution liabilities in excess of Triton's pollution insurance coverage.
Further, Triton is not insured against certain drilling risks that could result
in delays or nonperformance of a turnkey drilling contract, although it
generally maintains insurance against delays related to loss of well control.

The Company's international operations are also subject to certain
political, economic and other uncertainties including, among others, risks of
war and civil disturbances, expropriation, nationalization, renegotiation or
modification of existing contracts, taxation policies, foreign exchange
restrictions, international monetary fluctuations and other hazards arising out
of foreign governmental sovereignty over certain areas in which the Company
conducts operations. The Company has insurance covering expropriation and other
political risks to the extent available to the Company at rates it considers
prudent to pay.

Consolidation

The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiaries, and the Company's share of the assets,
liabilities and operations of Perforadora Faja de Oro, S.A. de C.V. ("Faja Joint
Venture") and NN-1 Limited Partnership, of which the Company is the general
partner. The minority interest in Faja Joint Venture (10 percent) and NN-1
Limited Partnership (approximately 10

F-9
<PAGE> 74

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

percent) is included in the balance sheets and the statements of operations as
minority interest. In 1994, the Company made distributions of $4,500,000 to its
partner in Faja Joint Venture. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Certain reclassifications have been made in the 1994 and 1993 consolidated
financial statements to conform to the classifications used in the 1995
consolidated financial statements. These reclassifications have no impact on net
income or loss.

Foreign Currency Translation

The Company follows a translation policy in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 52, Foreign Currency Translation.
The U.S. dollar has been designated as the functional currency where
appropriate, based on an evaluation of such factors as the markets in which the
subsidiary operates, generation of cash flow, financing activities and
intercompany arrangements. For the Company's subsidiaries in the United Kingdom
and Canada, the local currency is the functional currency. Assets and
liabilities are translated at the rates of exchange on the balance sheet date.
Income and expense items are translated at average rates of exchange. The
resulting gains or losses arising from the translation of accounts from the
functional currency to the U.S. dollar are included as a separate component of
shareholders' equity designated as cumulative translation adjustment.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits with banks
and all highly liquid investments with original maturities of three months or
less.

In accordance with SFAS No. 95, Statement of Cash Flows, cash flows from
the Company's operations in the United Kingdom and Canada are calculated based
on their functional currency. As a result, amounts related to assets and
liabilities reported on the Consolidated Statements of Cash Flows will not
necessarily agree with changes in the corresponding balances on the Consolidated
Balance Sheets. The effect of exchange rate changes on cash balances held in
foreign currencies is reported on a separate line below cash (used in) provided
by financing activities.

The restricted cash balance of $898,000 at December 31, 1994, was
restricted as a result of collateral requirements imposed by a lender of the
Company. This restriction was lifted in 1995.

Investment in Marketable Securities

Pursuant to the cash management policy implemented in 1992, the Company
invests in marketable debt securities. Effective January 1, 1994, the Company
adopted SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities. The Company classifies its investments in marketable debt securities
as available for sale and its investments in marketable equity securities as
trading. See Note 3.

Investment in Unconsolidated Affiliates

The Company uses the equity method to account for affiliates in which it
does not have voting control.

Inventories

Inventories of spare parts, material and supplies held for consumption are
stated principally at average cost.

F-10
<PAGE> 75

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

Property and Equipment

Property and equipment is stated at cost, reduced by provisions to
recognize economic impairment in value when management determines that such
impairment has occurred. Drilling equipment and facilities are depreciated using
the straight-line method over estimated remaining useful lives ranging from
three to twenty-five years from the date of construction or major refurbishment.
All other property and equipment is depreciated using the straight-line method
over useful lives ranging from three to twenty years.

Effective January 1, 1995, the Company revised its estimates of salvage
values and remaining depreciable lives of certain rigs to better reflect their
economic lives and to be consistent with other similar assets owned by the
Company. The effect of this change in estimates was a reduction in the net loss
applicable to common shares of $6,160,000, or $0.07 per common share, for the
year ended December 31, 1995.

Maintenance and repairs on drilling equipment are charged to expense as
incurred. Total maintenance and repair expenses for the years ended December 31,
1995, 1994, and 1993, were approximately $26,189,000, $33,700,000, and
$25,900,000, respectively. When assets are sold, retired or otherwise disposed
of, the cost and related accumulated depreciation are eliminated from the
accounts and the gain or loss is recognized.

In March 1995, SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, was issued. This statement
requires that long-lived assets and certain identifiable intangibles held and
used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company adopted this standard effective January 1, 1996. The
Company expects the adoption of this standard to require a charge to net income
of approximately $7,000,000 in the first quarter of 1996.

Other Assets

In 1995, other assets primarily included deferred debt issuance costs in
connection with the October 7, 1993, issuance of debt securities (see Note 4),
the long-term portion of prepaid insurance costs and goodwill related to the
Triton acquisition. The deferred debt issuance costs in connection with the
October 7, 1993 issuance of debt securities (see Note 4) totaled $4,015,000 and
are being amortized over the life of the debt securities. The accumulated
amortization at December 31, 1995 and 1994, was $864,000 and $540,000,
respectively. The prepaid insurance costs totaled $3,230,000 at December 31,
1995, and are being amortized over the term of the insurance policy. The
goodwill related to Triton totaled $1,775,000 at December 31, 1995, and is being
amortized over seventeen years.

Revenue Recognition

Revenues generated from the Company's dayrate-basis drilling contracts are
recognized as services are performed. The Company's turnkey drilling contracts
are of a short-term, fixed fee nature, and accordingly, revenues and expenses
are recognized using the completed contract method. When estimates of projected
revenues and costs indicate a loss, the total estimated loss is accrued.

Concentration of Credit Risk

The primary market for the Company's services is the offshore oil and gas
industry, and the Company's customers consist primarily of major oil companies,
independent oil and gas producers and government-owned oil companies. The
Company performs ongoing credit evaluations of its customers and generally does
not require material collateral. The Company provides allowances for potential
credit losses when necessary.

F-11
<PAGE> 76

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

Net (Loss) Income Applicable to Common Shares Per Share

Net (loss) income applicable to common shares per share has been computed
on the basis of the weighted average number of common shares and, where
dilutive, common share equivalents, outstanding during the indicated periods.
Each outstanding share of the $2.25 Preferred Stock and $1.50 Convertible
Preferred Stock ("$1.50 Preferred Stock") was assumed to be converted, at
January 1, 1995, into 5.41946 and 2.4446 shares of common stock, respectively,
for purposes of calculating fully diluted earnings per share. The calculation of
net (loss) income applicable to common shares per share assuming full dilution
was antidilutive; therefore, fully diluted amounts are not presented. The
Preferred Conversion Payment of approximately $1,524,000 in March 1995 (see Note
6) was accounted for as a reduction of net earnings applicable to common shares
for purposes of calculating the net loss per common share. This accounting
treatment increased the net loss applicable to common shares per share from
$0.06 to $0.08 for the year ended December 31, 1995. See Note 13.

Certain Significant 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 amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

NOTE 2 -- ACQUISITIONS AND MERGERS

The Chiles Merger was consummated on September 15, 1994 through the
exchange of 28,598,777 shares of Noble Drilling common stock for all the
outstanding common stock of Chiles and the exchange of 4,025,000 shares of Noble
Drilling $1.50 convertible preferred stock ("$1.50 Preferred Stock")
(liquidation preference $25.00 per share), par value $1.00 per share, for all
the outstanding shares of Chiles $1.50 convertible preferred stock. The Chiles
Merger was accounted for as a pooling of interests and all financial information
for the year of the transaction and prior periods has been restated to reflect
this merger. In addition, Noble Drilling issued an additional 480,000 shares of
its common stock in exchange for the cancellation of outstanding Chiles stock
options.

On April 22, 1994, the Company acquired all of the issued and outstanding
shares of common stock (the "Shares") of Triton pursuant to the terms of the
Stock Purchase Agreement dated April 22, 1994. In consideration for the Shares,
the Company paid approximately $4,085,000 in cash, issued promissory notes in
the aggregate amount of $4,000,000, and issued 751,864 shares of Noble Drilling
common stock valued at $5,169,000. The promissory notes were paid on October 21,
1994. In addition, the Company has a contingent obligation to pay additional
consideration on April 22, 1996, including issuance of up to 254,551 shares of
Noble Drilling common stock, if certain financial conditions are achieved. The
acquisition of Triton has been accounted for under the purchase method, and
accordingly, Triton's operating results have been included in the consolidated
operating results since the date of acquisition.

The Company acquired nine mobile offshore jackup drilling rigs and
associated assets (the "Western Acquisition") from The Western Company of North
America ("Western") for $150,000,000 in cash on October 7, 1993. The Western
Acquisition has been accounted for under the purchase method, and accordingly,
the operating results have been included in the consolidated operating results
since the date of acquisition.

F-12
<PAGE> 77

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

Bb>The following table summarizes certain unaudited pro forma condensed
consolidated results of operations data that give effect to the acquisition of
Triton as if it had occurred on January 1, 1994 and January 1, 1993 and the
acquisition of Western as if it had occurred on January 1, 1993.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------
1994 1993
-------- --------
(UNAUDITED)
<S> <C> <C>
Operating revenues............................................. $378,123 $428,284
Net income applicable to common shares......................... $ 8,853 $ 9,256
Net income applicable to common shares per share............... $ 0.11 $ 0.12
</TABLE>

On September 16, 1994, the Company exchanged its interest in Grasso
Corporation for 645,656 shares of common stock of Offshore Logistics, Inc. This
investment is classified as a marketable equity security. See Note 3.

NOTE 3 -- MARKETABLE SECURITIES

Effective January 1, 1994, the Company adopted SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities. Under the provisions of SFAS
No. 115, investments in debt and equity securities are required to be classified
into one of three categories: held to maturity, available for sale or trading
securities. At each reporting date, the appropriateness of such classification
is required to be reassessed. Realized gains and losses on sales of investments
are included in income on a specific identification basis.

As of December 31, 1995, the Company classified all of its debt securities
with original maturities of more than three months as available for sale. These
investments are classified as marketable securities within current assets on the
accompanying consolidated balance sheets. The following table highlights
information applicable to the Company's investments classified as available for
sale as of December 31, 1995 and December 31, 1994:

<TABLE>
<CAPTION>
DECEMBER 31, 1995
---------------------------------------
AMORTIZED UNREALIZED
DEBT SECURITY/MATURITY COST FAIR VALUE LOSSES
---------------------- --------- ---------- ----------
<S> <C> <C> <C>
Corporate Obligations
Mature within 1 year.............................. $ 1,520 $ 1,520 --
Mature after 1 year through 5 years............... 7,258 7,214 $ (44)
------- ------- -----
8,778 8,734 (44)
------- ------- -----
U.S. Government Obligations
Mature after 1 year through 5 years............... 8,368 8,297 (71)
------- ------- -----
Total............................................... $17,146 $ 17,031 $ (115)
======= ======= =====
</TABLE>

F-13
<PAGE> 78

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

<TABLE>
<CAPTION>
DECEMBER 31, 1994
---------------------------------------
AMORTIZED UNREALIZED
DEBT SECURITY/MATURITY COST FAIR VALUE LOSSES
---------------------------------------------------- --------- ---------- ----------
<S> <C> <C> <C>
Corporate Obligations
Mature within 1 year.............................. $11,526 $11,447 $ (79)
Mature after 1 year through 5 years............... 4,485 4,412 (73)
------- ------- ---------
16,011 15,859 (152)
------- ------- ---------
U.S. Government Obligations
Mature within 1 year.............................. $ 5,156 $ 5,010 $ (146)
Mature after 1 year through 5 years............... 20,353 18,804 (1,549)
------- ------- ---------
25,509 23,814 (1,695)
------- ------- ---------
Total............................................... $41,520 $39,673 $ (1,847)
======= ======= ========
</TABLE>

The unrealized loss on debt securities of $115,000 and $1,847,000 as of
December 31, 1995 and 1994, respectively, is included as a reduction of
shareholders' equity in accordance with SFAS No. 115. Total realized losses
related to short-term investments for the twelve months ended December 31, 1995
and 1994, were $15,000 and $2,199,000, respectively.

The Company categorizes its investments in marketable equity securities as
trading securities. These investments are classified as current assets and were
recorded at a fair value of $6,131,000 at December 31, 1995. Total proceeds from
the sale of these securities were $3,670,000 and $0 for the years ended December
31, 1995 and 1994, respectively. Total realized gains on these equity
investments for the years ended December 31, 1995 and 1994 were $371,000 and $0,
respectively. Total net unrealized (losses) and gains related to these equity
investments for the years ended December 31, 1995 and 1994, were $(56,000) and
$4,162,000, respectively.

NOTE 4 -- DEBT

On November 3, 1995, the Company entered into a financing agreement with
Transamerica Insurance Finance for a period of eighteen months related to the
renewal of its Marine Package, Protection and Indemnity, and Excess Liability
insurance policies. The amount financed totaled $16,561,000 at a fixed interest
rate of 6.23 percent per annum.

On October 14, 1993, the Company prepaid a promissory note with proceeds
from the Public Offerings (as defined below). The terms of the note provided
that interest did not accrue from September 1, 1991 through December 31, 1992,
after which date interest on the unpaid principal amount accrued at a fixed rate
of 7.5 percent per annum. The Company had accrued interest on the note at 4.9
percent for all periods, which was the imputed rate based on the revised note
terms. An extraordinary gain of $1,770,000 for extinguishment of debt was
recognized in 1993 (see Note 10) from the prepayment of the note, representing
excess accrued interest.

On October 7, 1993, in connection with the Western Acquisition and the
issuance of 12,041,000 shares of Noble Drilling common stock in an underwritten
public offering (the "Stock Offering") (see Note 6), the Company issued
$125,000,000 principal amount of 9 1/4% Senior Notes Due 2003 (the "9 1/4%
Notes") (the Stock Offering and the issuance of the 9 1/4% Notes are
collectively referred to as the "Public Offerings"). The 9 1/4% Senior Notes
will mature on October 1, 2003. Interest on the 9 1/4% Notes is payable
semi-annually on April 1 and October 1 of each year. The 9 1/4% Notes are
redeemable at the option of the Company, in whole or in part, on or after
October 1, 1998 at 103.47 percent of principal amount, declining ratably to par
on or after October 1, 2001, plus accrued interest. Mandatory sinking fund
payments of 25 percent of the original

F-14
<PAGE> 79

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

principal amount of the 9 1/4% Notes at par plus accrued interest will be
required on October 1, 2001 and October 1, 2002. The indenture governing the
9 1/4% Notes contains certain restrictive covenants, including limitations on
additional indebtedness and the ability to secure such indebtedness,
restrictions on dividends and certain investments and limitations on sales of
assets, sales and leaseback, transactions with affiliates, and mergers or
consolidations.

In connection with the initial construction of the NN-1, the predecessor of
NN-1 Limited Partnership issued U.S. Government Guaranteed Ship Financing
Sinking Fund Bonds, of which $1,546,000 principal amount was outstanding at
December 31, 1995. The bonds mature in 1998, and bear interest at the rate of
8.95 percent per annum, payable semi-annually on June 15 and December 15. The
bonds are secured by the vessel, and the applicable security agreement contains
certain restrictions, among others, on distributions to partners, dispositions
of assets and services to related parties. In addition, there are minimum
working capital, net worth and long-term debt to net worth requirements
applicable to NN-1 Limited Partnership. The net book value of the vessel at
December 31, 1995, was $12,131,000. The Company's sharing percentage in NN-1
Limited Partnership's distribution from operations is generally 90 percent. The
NN-1 has not been under contract since March of 1993.

The Company and its wholly owned subsidiary, Noble Drilling (West Africa)
Inc. ("NDWA"), were parties to a secured loan agreement (the "Project Loan
Agreement") with US WEST Financial Services, Inc. dated as of October 31, 1990,
as amended, pursuant to which NDWA borrowed $52,500,000 for the purpose of
financing, in part, the equipping, refurbishment and mobilization to Nigeria of
four offshore drilling rigs: the NN-1, Gene Rosser, Lewis Dugger and Chuck
Syring. On July 2, 1993, the final installment of $6,562,000 plus accrued
interest was paid in accordance with the terms of the Project Loan Agreement.
Interest was charged under the Project Loan Agreement at the fixed rate of 11.12
percent per annum.

Annual maturities of long-term debt are $12,210,000 in 1996, $4,417,000 in
1997, $506,000 in 1998, and $125,000,000 due in 2003.

The following table summarizes the Company's long-term debt:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
9 1/4% Senior Notes Due 2003................................... $125,000 $125,000
U.S. Government Guaranteed Ship Financing Sinking Fund Bonds... 1,546 2,066
Insurance financing............................................ 15,587 --
-------- --------
142,133 127,066
Current installments........................................... (12,210) (520)
-------- --------
$129,923 $126,546
======== ========
</TABLE>

The fair value of the Company's long-term debt at December 31, 1995,
estimated based on the quoted market prices for similar issues or on the current
rates offered to the Company for debt of similar remaining maturities, was
approximately $130,300,000.

NOTE 5 -- CREDIT FACILITIES

At December 31, 1995, the Company had available credit facilities
aggregating $31,000,000, as described below, of which $26,000,000, subject to
certain limitations, is related to lines of credit and $5,000,000 is related to
letter of credit facilities. Based on the level of the borrowing base at
December 31, 1995, the Company had $26,000,000 available under the credit lines
and $895,000 available to support issuance of letters of credit at that date.

F-15
<PAGE> 80

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

The Company has an unsecured credit agreement with First Interstate Bank of
Texas, N.A., which provided for a $25,000,000 revolving credit line facility and
$5,000,000 letter of credit facility at December 31, 1995. The Company pays a
quarterly commitment fee on the unused portion of the facility. The agreement
contains certain restrictive and financial covenants, including those related to
indebtedness, net worth and fixed charges, and provides for guarantees of the
indebtedness by certain subsidiaries of Noble Drilling.

NOTE 6 -- SHAREHOLDERS' EQUITY

On October 25, 1993, the Company issued 626,410 shares of common stock to
purchase two rigs from Portal as discussed in Note 12. The shares were issued to
Portal pursuant to a private placement, and the Company does not have an
obligation to register the resale of the shares under the Securities Act of
1933, as amended.

Chiles completed a public offering of $1.50 convertible preferred stock on
October 21, 1993 with the sale and issuance to the public of 4,025,000 shares by
Chiles at $25.00 per share. Net proceeds to Chiles were approximately
$96,500,000 after underwriting discounts and issuance costs. Chiles utilized
approximately $45,200,000 of these proceeds to retire all of Chiles' outstanding
long-term indebtedness, including principal and interest, during the fourth
quarter of 1993. In the Chiles Merger, this series of preferred stock was
converted into and exchanged for an equivalent number of shares of $1.50
Preferred Stock having substantially the same rights, privileges, preferences
and voting power as the Chiles preferred stock. Holders of the $1.50 Preferred
Stock are entitled to receive cumulative cash dividends at an annual rate of
$1.50 per share, when, as and if declared by the board of directors of Noble
Drilling, payable quarterly. Each share of $1.50 Preferred Stock is convertible,
at the option of the holder, into 2.4446 shares of common stock (subject to
adjustment in certain circumstances). The $1.50 Preferred Stock is not
redeemable prior to December 31, 1996. On or after such date, the $1.50
Preferred Stock is redeemable at the option of the Company, in whole or part, at
$26.05 per share if redeemed prior to December 31, 1997, and at prices
decreasing in increments of $0.15 per year to $25.00 per share on and after
December 31, 2003, plus accrued and unpaid dividends to the redemption date.

On October 7, 1993, the Company issued and sold 12,041,000 shares of common
stock in the Stock Offering (see Note 4) at an initial offering price of $8.375
per share. This resulted in net proceeds of $94,900,000, after deducting
underwriting discounts, commissions and other related costs. The net proceeds of
the Public Offerings (see Note 4) were used to purchase the nine jackup rigs and
related assets discussed previously in Note 2, and to prepay a promissory note
discussed in Note 4, with the balance of the proceeds, approximately
$26,000,000, used for general corporate purposes.

In 1991, the Company issued and sold 2,990,000 shares of a new series of
$2.25 Convertible Exchangeable Preferred Stock ("$2.25 Preferred Stock"), par
value $1.00 per share. Holders of the $2.25 Preferred Stock received a cash
dividend at an annual rate of $2.25 per share. In March 1995, an aggregate of
923,862 shares of $2.25 Preferred Stock were converted into 5,006,830 shares of
Noble Drilling common stock. The Company paid an aggregate of approximately
$1,524,000 in cash ("Preferred Conversion Payment") in the first quarter in
connection with this conversion. In the second quarter of 1995, the Company
called for the redemption of all remaining outstanding shares of the $2.25
Preferred Stock. Of the 2,065,238 shares then outstanding, 2,062,537 were
surrendered for conversion and 2,701 were redeemed by the Company, resulting in
the Company's issuance of 11,192,359 shares of common stock (including 14,637
shares sold to a standby underwriter).

NOTE 7 -- STOCK OPTIONS

1991 Stock Option Plan

The Company's 1991 Stock Option and Restricted Stock Plan (the "1991 Plan")
was amended and restated ("Amended 1991 Plan") in September 1994. The Amended
1991 Plan was adopted by the board of

F-16
<PAGE> 81

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

directors of Noble Drilling in July 1994 and approved by stockholders on
September 15, 1994. The Company's two other employee stock option plans, adopted
in 1985 and 1987, were amended in connection with the adoption of the 1991 Plan
to provide that no further grants would be made under those plans after April
25, 1991; however, all options outstanding at that date ("Pre-1991 Options")
remained in effect in accordance with their respective terms.

Under the Amended 1991 Plan, a maximum of 5,200,000 shares of the Company's
common stock may be subject to grants of options or awards of restricted stock
to participants, who are selected from regular salaried officers or other
employees of the Company. Options may be either incentive options or
nonqualified options, and may be with or without stock appreciation rights
("SARs"). The option price under the Amended 1991 Plan may not be less than 100
percent of the fair market value of the common stock at the time of grant, in
the case of an incentive option, and may not be less than 50 percent of the fair
market value of the common stock at the time of grant, in the case of a
nonqualified option. The Amended 1991 Plan also limits to 1,500,000 the total
number of shares of common stock that may be made subject to grants of options
or stock appreciation rights or awards of restricted stock to any one person
during any five-year period. All Pre-1991 Options were granted at an option
price of at least 100 percent of the fair market value of the common stock at
the time of grant. The exercise of either the tandem SAR or the option serves to
cancel the other. At December 31, 1995, 2,571,767 shares were available for
grant under the Amended 1991 Plan.

As of January 1, 1995, there were 250,000 shares of common stock held by
the Company as treasury shares. During February 1995, 211,500 treasury shares
were issued to certain employees pursuant to the terms of the Amended 1991 Plan
and the applicable restricted stock agreements. The issued shares of restricted
stock have been placed in escrow subject to satisfaction of various performance
criteria during a three-year period. In June 1995, 26,000 of these shares were
returned to treasury stock following the resignation of one employee. As of
December 31, 1995, 64,500 shares were held as treasury stock. Subsequent to
December 31, 1995, 250,000 shares of common stock were purchased by the Company
and returned to treasury stock, increasing the balance of treasury stock to
314,500 shares. In January 1996, 108,750 shares of treasury stock were issued to
certain employees as restricted stock under the Amended 1991 Plan and have been
placed in escrow under the aforementioned terms.

The following is a summary of option transactions under the plans:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
Outstanding, beginning of the year............................ 1,810,472 1,312,617
Granted....................................................... 1,240,400 728,000
Canceled...................................................... (141,975) (58,875)
Exercised (at share prices ranging from $1.72 to $7.69)....... (109,150) (171,270)
--------- ---------
Outstanding at end of year (at share prices ranging from $1.72
to $7.69 in 1995)........................................... 2,799,747 1,810,472
========= =========
Exercisable at end of year (at share prices ranging from $1.72
to $7.69 in 1995)........................................... 1,273,505 855,672
========= =========
</TABLE>

Options granted in 1995 under the Amended 1991 Plan become exercisable on
certain dates that range from February 2, 1996, through February 2, 1998, at a
price $5.188 per share.

Other Stock Options

During 1987, in addition to the options described above, options to
purchase a total of 300,000 shares of Noble Drilling's common stock at $2.50 per
share were granted to certain non-employee directors of the

F-17
<PAGE> 82

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

Company pursuant to stock option agreements which were approved by stockholders
at the 1988 annual meeting. Options to purchase 160,000 shares were outstanding
and exercisable at December 31, 1995.

In 1993, the stockholders approved the 1992 Nonqualified Stock Option Plan
for Non-Employee Directors (the "1992 Option Plan"). Under the 1992 Option Plan,
non-employee directors received a one-time grant of an option to purchase 10,000
shares of common stock, and thereafter, after each annual meeting of
shareholders of the Company, receive an annual grant of an option to purchase
3,500 shares of common stock. The options are granted at fair market value on
the grant date and are exercisable from time to time over a period commencing
one year from the grant date and ending on the expiration of ten years from the
grant date, unless terminated sooner as described in the 1992 Option Plan.
Options to purchase 77,500 shares were outstanding and exercisable at December
31, 1995.

SFAS No. 123 -- Accounting for Stock-Based Compensation

In October 1995, SFAS No. 123, Accounting for Stock-Based Compensation, was
issued. This statement establishes financial accounting and reporting standards
for stock-based employee compensation plans. Those plans include all
arrangements by which employees receive shares of stock or other equity
instruments of the employer or the employer incurs liabilities to employees in
amounts based on the price of the employer's stock. The Company adopted this
standard effective January 1, 1996. As provided in the statement, the Company
elected to continue to measure compensation cost using the guidelines of APB
Opinion No. 25 and to include disclosures of net income and earnings per share
as if the fair value based method of accounting were utilized.

Stockholder Rights Plan

The Company adopted a stockholder rights plan on June 28, 1995, designed to
assure that the Company's stockholders receive fair and equal treatment in the
event of any proposed takeover of the Company and to guard against partial
tender offers and other abusive takeover tactics to gain control of the Company
without paying all stockholders a fair price. The rights plan was not adopted in
response to any specific takeover proposal. Under the rights plan, the Company
declared a dividend of one right ("Right") on each share of Noble Drilling
common stock. Each Right will entitle the holder to purchase one one-hundredth
of a share of a new Series A Junior Participating Preferred Stock, par value
$1.00 per share, at an exercise price of $35.00. The Rights are not currently
exercisable and will become exercisable only in the event a person or group
acquires beneficial ownership of 15 percent or more of Noble Drilling common
stock. The dividend distribution was made on July 10, 1995 to stockholders of
record at the close of business on that date. The Rights will expire on July 10,
2005.

NOTE 8 -- INCOME TAXES

The Company follows SFAS No. 109, Accounting for Income Taxes, which
requires the use of the liability method of accounting for deferred income
taxes. Under SFAS No. 109, deferred tax assets and liabilities are recognized
based upon differences between the financial statement and tax bases of assets
and liabilities using presently enacted tax rates. If it is more likely than not
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.

F-18
<PAGE> 83

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

Amounts of deferred tax assets and liabilities are as follows at:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
Deferred tax asset, net of valuation allowance of $22,243 in
1995 and $21,329 in 1994..................................... $ 57,443 $ 47,696
Deferred tax liability......................................... (59,919) (51,089)
-------- --------
Net, total..................................................... $ (2,476) $ (3,393)
======== ========
</TABLE>

The components of and changes in the net deferred taxes were as follows:

<TABLE>
<CAPTION>
DEFERRED
DECEMBER 31, EXPENSE DECEMBER 31,
1994 (CREDIT) 1995
------------ -------- ------------
<S> <C> <C> <C>
Deferred tax assets:
Domestic
Net operating loss carryforwards............. $ 63,117 $ 11,663 $ 74,780
Investment tax credit carryforward........... 1,457 -- 1,457
Other........................................ 149 -- 149
International
Net operating loss carryforwards............. 3,055 (404) 2,651
Tax basis of assets in excess of book
basis...................................... 1,247 (598) 649
-------- -------- --------
Total............................................. 69,025 10,661 79,686
Valuation allowance............................... (21,329) (914) (22,243)
-------- -------- --------
Net deferred tax assets........................... $ 47,696 $ 9,747 $ 57,443
======== ======== ========
Deferred tax liabilities:
Domestic
Excess of net book basis over remaining tax
basis...................................... $(45,884) $(10,910) $(56,794)
International
Excess of net book basis over remaining tax
basis...................................... (5,205) 2,080 (3,125)
-------- -------- --------
Deferred tax liabilities.......................... $(51,089) $ (8,830) $(59,919)
======== ======== ========
</TABLE>

Income (loss) from continuing operations before income taxes and
extraordinary items consisted of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Domestic................................................ $(9,578) $ 7,024 $16,948
International........................................... 14,444 20,171 7,467
------- ------- -------
Total................................................... $ 4,866 $27,195 $24,415
======= ======= =======
</TABLE>

F-19
<PAGE> 84

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

The income tax provision consisted of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Current -- domestic..................................... $(2,093) -- $ 205
Current -- international................................ 6,282 $ 2,599 3,128
Deferred -- international............................... (917) 3,073 --
------- ------- -------
Total................................................... $ 3,272 $ 5,672 $ 3,333
======= ======= =======
</TABLE>

Included in the current domestic tax benefit for the year ended December
31, 1995, is $2,100,000 related to a separate return year loss carryback benefit
recorded by Triton.

A reconciliation of Federal statutory and effective income tax rates is
shown below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1995 1994 1993
----- ---- -----
<S> <C> <C> <C>
Statutory rate............................................. 35.0% 35.0% 35.0%
Effect of:
U.S. operating loss generating no current tax benefit.... 68.9 -- --
U.S. operating loss carryforward/carryback benefit....... (43.1) (9.0) (23.6)
Canadian operating loss carryforward benefit............. -- -- (2.2)
International tax rates which are different than the U.S.
rate.................................................. 6.4 (5.8) 3.7
Other.................................................... -- .7 .8
----- ---- -----
Effective rate............................................. 67.2% 20.9% 13.7%
===== ==== =====
</TABLE>

The Company had available at December 31, 1995, unused investment tax
credits, which may be used to offset future U.S. taxes payable, of $1,457,000
expiring in various years from 1998 to 2001. In addition, Noble Drilling had net
operating loss carryforwards ("NOLs") for tax purposes of approximately
$145,902,000 at December 31, 1995, which expire in the years 2000 through 2010,
and NOC has NOLs for tax purposes of approximately $67,756,000 which expire in
the years 2004 through 2009.

The Chiles Merger qualifies as a tax-free reorganization. NOC, as the
surviving entity, inherited all of Chiles' tax attributes, including NOL
carryforwards. In accordance with the "Separate Return Limitation Year" rules of
the Internal Revenue Code of 1986, as amended (the "Code"), Chiles' NOL
carryforwards may only be used to reduce Noble Drilling's future taxable income
to the extent of NOC's taxable income.

If a corporation undergoes an "ownership change" within the meaning of
Section 382 of the Code, the corporation's right to use its then existing NOLs
(and certain other tax attributes) is limited during each future year to a
percentage of the fair market value of such corporation's stock immediately
before the ownership change (the "Section 382 Limitation"). In general, there is
an "ownership change" under Section 382 if over a three-year period certain
shareholders increase their percentage ownership of a corporation by more than
50 percent. To the extent the amount of the NOLs existing at the time of an
ownership change that are used in any subsequent year is less than the annual
Section 382 Limitation, the otherwise available Section 382 Limitation is
correspondingly increased for future years. An ownership change for purposes of
Section 382 took place on September 15, 1994, as a result of the Chiles Merger.
The cumulative Section 382 Limitation attributable to the Noble Drilling
pre-merger carryforwards is $47,231,000. The cumulative Section 382 Limitation
attributable to NOC is $22,185,000.

Applicable U.S. income and foreign withholding taxes have not been provided
on undistributed earnings of the Company's international subsidiaries.
Management does not intend to repatriate such undistributed

F-20
<PAGE> 85

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

earnings for the foreseeable future except for distributions upon which
incremental income taxes would not be material.

NOTE 9 -- ADDITIONAL BALANCE SHEET AND STATEMENT OF OPERATIONS
INFORMATION

Other current assets consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1994
------- -------
<S> <C> <C>
Prepaid expenses................................................. $15,364 $ 9,287
Withholding tax receivable....................................... 8,886 5,223
Operating costs and mobilization................................. 7,907 26
Other............................................................ 4,694 4,048
------- -------
$36,851 $18,584
======= =======
</TABLE>

Other current liabilities consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1994
------- -------
<S> <C> <C>
Deferred revenue................................................. $ 4,290 $ 1,421
Accrued dividends................................................ 1,510 3,191
Accrued restructuring costs...................................... 817 844
Other............................................................ 7,293 5,259
------- -------
$13,910 $10,715
======= =======
</TABLE>

Rent expense was $1,918,000, $1,200,000, and $1,297,000 for 1995, 1994, and
1993, respectively.

Withholding tax receivables include approximately $6,000,000 related to
withholding taxes in Nigeria. To recognize these receivables, the Company must
receive tax certificates from the applicable operators. Management believes that
the full amount of these receivables will be realized.

Operating costs and mobilization for the year ended December 31, 1995
consists of costs incurred in mobilizing rigs from the U.S. Gulf of Mexico to
various international locations. Such costs are amortized over the term of the
related contract.

Other income -- other, net consisted of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1995 1994 1993
------- ------- ------
<S> <C> <C> <C>
Gain on sale of property and equipment................. $ 829 $ 8,858 $ 737
Unrealized (loss) gain on marketable equity
investments.......................................... (56) 4,162 --
Realized gain (loss) on marketable investments......... 356 (2,199) 272
Recovery of written-off notes receivable............... -- 1,530 --
Linn Richardson mobilization costs..................... (1,778) -- --
Adjustment related to Triton acquisition............... 1,078 -- --
Other.................................................. (179) 3,392 38
------- ------ ------
$ 250 $15,743 $1,047
======= ====== ======
</TABLE>

On December 15, 1995, the Linn Richardson, a 250-foot mat slot rig, lost
overboard approximately 200 feet of leg while under tow to perform a contract
offshore Senegal, Africa. On the following day, the rig lost overboard
approximately 240 feet of a second leg which also caused damage to equipment and
facilities on the

F-21
<PAGE> 86

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

deck of the rig. Pursuant to a preliminary assessment plan developed jointly by
the Company and its insurance underwriters, the third leg of the rig has been
removed and the rig has been towed to the U.S. Gulf of Mexico where a complete
evaluation will take place. A charge of $1,778,000 related to the cost of
mobilizing the rig to Senegal was accrued in the fourth quarter of 1995. This
amount represents management's best estimate of the total loss. Management does
not believe this incident will have any other material adverse effect on its
financial condition or results of operations.

A restructuring charge of $3,661,000 related to the Chiles Merger was
recorded in 1994 as a result of facility consolidation, including the write-down
of certain of the Company's owned properties, and to a lesser extent severance
costs. This restructuring plan was developed in the fourth quarter of 1994 and
approved by the board of directors of Noble Drilling.

NOTE 10 -- EXTRAORDINARY ITEM

The Company prepaid a promissory note in the fourth quarter of 1993 with
proceeds from the Public Offerings (see Notes 4 and 6). This prepayment resulted
in an extraordinary gain from extinguishment of debt of $1,770,000 ($0.02 per
common share), representing excess accrued interest.

NOTE 11 -- EMPLOYEE BENEFIT PLANS

The Company has a noncontributory defined benefit plan which covers
substantially all salaried employees and a noncontributory defined benefit
pension plan which covers certain field employees. The benefits from these plans
are based primarily on years of service and employees' compensation near
retirement. The Company's funding policy is consistent with funding requirements
of applicable laws and regulations. The assets of these plans consist of
corporate equity securities, municipal and government bonds, and cash
equivalents. The Company, when required, makes contributions to the domestic
plan in the form of Noble Drilling common stock. As of September 30, 1995, the
domestic plan assets included $2,067,000 of Noble Drilling's common stock valued
at fair value at that date. The Company changed the measurement date of the plan
to September 30 beginning in 1995. This change did not have a material impact to
the financial results of the Company.

Noble Drilling (U.K.) Limited, a wholly owned subsidiary of Noble Drilling,
maintains a pension plan which covers all of its salaried, nonunion employees.
Benefits are based on credited service and the average of the highest three
years of qualified salary within the past ten years of participation.

Pension cost includes the following components:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1995 1994 1993
-------------------- -------------------- --------------------
INTER- INTER- INTER-
NATIONAL DOMESTIC NATIONAL DOMESTIC NATIONAL DOMESTIC
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Service costs (benefits
earned during the year).... $ 581 $ 1,201 $ 544 $ 758 $ 563 $ 535
Interest cost on projected
benefit obligation......... 702 1,890 607 1,698 549 1,534
Actual return on assets...... (870) (2,439) (787) 1,806 (597) (2,506)
Amortization of net (gain)
loss at January 1.......... (44) 757 (77) (3,758) 12 563
------- -------- ------- -------- ------- --------
Net pension (credit)
expense.................... $ 369 $ 1,409 $ 287 $ 504 $ 527 $ 126
====== ======== ====== ======== ====== ========
</TABLE>

F-22
<PAGE> 87

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

The funded status of the plans is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------
1995 1994
-------------------- --------------------
INTER- INTER-
NATIONAL DOMESTIC NATIONAL DOMESTIC
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations Vested benefits................ $ (7,449) $(21,359) $ (6,578) $(18,513)
Nonvested benefits......................... -- (780) -- (373)
-------- -------- -------- --------
Accumulated benefits....................... (7,449) (22,139) (6,578) (18,886)
Effect of projected future compensation
levels.................................. (1,114) (3,982) (1,223) (1,895)
-------- -------- -------- --------
Projected benefits........................... (8,563) (26,121) (7,801) (20,781)
Plan assets at fair value.................... 9,725 21,274 8,625 19,192
-------- -------- -------- --------
Plan assets in excess (shortfall) of
projected benefit obligations.............. 1,162 (4,847) 824 (1,589)
Unrecognized net (loss) gain................. (1,831) 9,708 (1,595) 8,327
Unrecognized prior service cost.............. -- (69) -- (79)
Unrecognized transition obligation (asset)... 107 (1,509) 120 (1,966)
Additional liability......................... -- (3,403) -- (3,825)
-------- -------- -------- --------
(Accrued liability) prepaid asset............ $ (562) $ (120) $ (651) $ 868
======== ======== ======== ========
</TABLE>

In accordance with SFAS No. 87, Employers' Accounting for Pensions, the
Company recorded an additional minimum liability of $3,403,000 and $3,825,000 at
December 31, 1995 and 1994, respectively. This liability represents the excess
of the accumulated benefit obligations over the fair value of plan assets and
accrued pension liabilities of the domestic salaried pension plan. This
additional minimum pension liability is reported as a separate reduction of
shareholders' equity.

The projected benefit obligations for the international and domestic plans
were determined using an assumed discount rate of 8.5 percent and 7.5 percent,
respectively, in 1995, 9.0 percent and 8.5 percent, respectively, in 1994 and
8.0 percent and 7.25 percent, respectively, in 1993. Assumed long-term rate of
return on international plan assets was 9.25 percent, 9.75 percent and 8.75
percent in 1995, 1994 and 1993, respectively. Assumed long-term rate of return
on domestic plan assets was 9.0 percent in each of the years presented. The
projected benefit obligations for the international plan assume a compensation
increase of 6.25 percent, 6.75 percent and 5.75 percent in 1995, 1994 and 1993,
respectively, and 6.0 percent per annum for the domestic plan in each of the
years presented.

The Company presently sponsors medical and other plans for the benefit of
its employees. The cost of maintaining these plans aggregated $6,628,000,
$5,500,000, and $3,793,000 in 1995, 1994, and 1993, respectively.

The Company does not provide post-retirement benefits (other than pensions)
or any post-employment benefits to its employees.

NOTE 12 -- COMMITMENTS, CONTINGENCIES AND OBLIGATIONS

On October 25, 1993, the Company purchased two submersible offshore
drilling rigs from Portal Rig Corporation ("Portal") for 626,410 shares of Noble
Drilling common stock. The Company acquired the rigs subject to certain federal
income tax "safe harbor leases" and a related preferred ship mortgage relating
to a

F-23
<PAGE> 88

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

tax benefit transaction entered into in 1982 by a predecessor of Portal. Portal
has agreed to indemnify the Company for any potential liabilities as a result of
this earlier tax benefit transaction.

During 1993, Chiles entered into severance agreements with its officers and
certain managerial employees, including Chiles' rig management personnel. These
agreements provide for severance payments equal to between six months and two
years of such person's annual salary in the event a person's employment is
terminated otherwise than for cause within one year following the occurrence of
a change in control of Chiles or in the event that a person voluntarily
terminates his employment within one year of a change in control of Chiles for
"good reason," as defined in the agreement.

The Company is a defendant in certain other claims and litigation arising
out of operations in the normal course of business. In the opinion of
management, uninsured losses, if any, will not be material to the Company's
financial position or results of operations.

In connection with the damage sustained on the Linn Richardson, the Company
has recorded an estimated loss of $1,778,000 related to mobilization costs. See
Note 9.

At December 31, 1995, the Company had certain noncancellable long-term
operating leases, principally for office space and facilities, with various
expiration dates. Future minimum rentals under sub-leases aggregate $1,630,000
for 1996, $1,292,000 for 1997, $1,169,000 for 1998, $1,148,000 for 1999,
$866,000 for 2000, and $2,923,000 thereafter.

NOTE 13 -- SUPPLEMENTAL LOSS PER SHARE DISCLOSURE

Assuming that all shares of $2.25 Preferred Stock had been converted on
January 1, 1995 the supplemental primary net loss applicable to common shares
per share for the year ended December 31, 1995 would have changed from $0.08 to
$0.06. Supplemental fully diluted net loss applicable to common shares per share
for the year ended December 31, 1995 is the same as supplemental primary net
loss applicable to common shares per share since the effect of the conversion is
anti-dilutive.

NOTE 14 -- UNAUDITED INTERIM FINANCIAL DATA

Unaudited interim financial information for the years ended December 31,
1995 and 1994 is as follows:

<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31
-------- ------- -------- -------
<S> <C> <C> <C> <C>
1995
Operating revenues............................ $85,096 $73,985 $ 84,652 $84,235
Operating income(3)........................... $ 2,013 $(2,303) $ 3,240 $ 8,499
Net (loss) income applicable to common
shares(1)................................... $(3,331) $(5,847) $ 806 $ 2,767
Net (loss) income applicable to common shares
per share(1)(2)(3).......................... $ (0.06) $ (0.07) $ 0.01 $ 0.03
1994
Operating revenues............................ $78,921 $87,595 $ 98,060 $87,412
Operating income.............................. $10,362 $ 5,309 $ 2,216 $ 276
Net income (loss) applicable to common
shares...................................... $ 4,930 $ 9,206 $ (695) $(4,682)
Net income (loss) applicable to common shares
per share................................... $ 0.06 $ 0.12 $ (0.01) $ (0.06)
</TABLE>

- ---------------

(1) Included in the quarters ended September 30, 1995 and December 31, 1995 were
$800,000 ($0.01 per share) and $1,300,000 ($0.01 per share), respectively,
of separate return year loss carryback benefit related to Triton. See Note
8.

F-24
<PAGE> 89

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

Included in the quarter ended December 31, 1995 is a credit of $1,078,000
($0.01 per share) related to the adjustment of the Triton acquisition
contingency.

Included in the quarter ended December 31, 1995 is a charge of $1,778,000
($0.02 per share) related to the mobilization costs of the Linn Richardson
to the West Coast of Africa. See Note 9.

(2) Included in the quarter ended March 31, 1995 results is the $0.02 per share
impact of the $1,524,000 Preferred Conversion Payment made in conjunction
with the conversion of 923,862 shares of $2.25 Preferred Stock into common
stock. See Note 6.

(3) Included in the quarters ended March 31, June 30, September 30 and December
31, 1995 were $1,116,000 ($0.01 per share), $1,116,000 ($0.01 per share),
$1,116,000 ($0.01 per share) and $2,812,000 ($0.03 per share), respectively,
related to the effect of change in estimates of salvage values and remaining
depreciable lives. See Note 1.

NOTE 15 -- GEOGRAPHICAL INFORMATION

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Operating revenues
Domestic................................................... $165,391 $181,950 $125,505
International
Canada.................................................. 13,929 20,059 19,141
India................................................... 3,771 2,041 4,093
Mexico.................................................. 9,398 21,269 10,503
Nigeria................................................. 45,860 44,195 58,630
Qatar................................................... 2,452 -- --
United Kingdom.......................................... 37,891 39,939 40,036
Venezuela............................................... 40,223 34,155 3,736
Zaire................................................... 8,860 7,781 1,763
Other................................................... 193 599 1,124
-------- -------- --------
Total.............................................. $327,968 $351,988 $264,531
======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Operating income (loss)
Domestic................................................... $ (6,068) $ (3,852) $ 20,057
International
Canada.................................................. 2,521 4,549 363
India................................................... 283 (676) (116)
Mexico.................................................. 94 5,434 5,316
Nigeria................................................. 3,597 1,727 734
Qatar................................................... (2,455) -- --
United Kingdom.......................................... 4,766 3,505 1,486
Venezuela............................................... 7,178 6,289 832
Zaire................................................... 2,139 1,613 400
Other................................................... (606) (426) (163)
-------- -------- --------
Total.............................................. $ 11,449 $ 18,163 $ 28,909
======== ======== ========
</TABLE>

F-25
<PAGE> 90

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands, except
per share amounts)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Identifiable assets
Domestic................................................... $312,099 $404,010 $393,525
International
Canada.................................................. 13,206 12,421 8,416
India................................................... 21,104 20,912 16,422
Mexico.................................................. 32,328 51,167 36,999
Nigeria................................................. 179,934 138,716 140,542
Qatar................................................... 37,506 -- --
United Kingdom.......................................... 15,051 14,147 13,394
Venezuela............................................... 84,042 73,977 64,025
Zaire................................................... 25,023 22,833 21,602
Other................................................... 21,099 1,706 1,628
-------- -------- --------
Total.............................................. $741,392 $739,889 $696,553
======== ======== ========
</TABLE>

Customer A accounted for approximately 11 percent of the Company's
consolidated operating revenues during 1995. Customer B accounted for
approximately 11 percent and 17 percent of the Company's consolidated operating
revenues during 1994 and 1993, respectively. Customer C accounted for
approximately 13 percent of the Company's consolidated operating revenues during
1993.

NOTE 16 -- SUBSEQUENT EVENTS

Subsequent to December 31, 1995, the Company sold for cash a posted barge
rig located in the U.S. Gulf of Mexico. The Company will record a gain on the
sale of this asset of approximately $4,815,000 in the first quarter of 1996.

On March 13, 1996, the Company entered into a letter of intent with Royal
Nedlloyd N.V. and its wholly owned subsidiary, Neddrill Holding B.V. and its
subsidiaries (collectively, "Neddrill"), to acquire the assets, including
$25,000,000 in net working capital, and the personnel used by Neddrill in its
offshore contract drilling, accommodation and other oil and gas exploration and
production related service businesses. The purchase price would be $300,000,000
in cash plus 5,000,000 shares of Noble Drilling common stock. The Company
currently plans to access the public securities markets to finance the cash
portion of the purchase price.

Consummation of the acquisition is subject to customary due diligence,
execution and delivery of an agreement of sale and purchase, financing being
obtained by the Company, and satisfaction of customary closing conditions
expected to be contained in the agreement of sale and purchase.

F-26
<PAGE> 91

NOBLE DRILLING CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)

MARCH 31, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents....................................... $ 26,338 $ 41,307
Investment in marketable equity securities...................... 6,416 6,131
Investment in marketable debt securities........................ 15,417 17,031
Accounts receivable (net of allowance of $1,307 and $1,280)..... 73,184 60,251
Costs of uncompleted contracts in excess of billings............ 3,717 6,646
Inventories..................................................... 22,825 19,795
Assets held for sale (See Note 6)............................... 31,968 --
Other current assets............................................ 41,811 36,851
-------- --------
Total current assets.................................... 221,676 188,012
-------- --------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities............................... 843,965 871,539
Other........................................................... 24,523 23,891
-------- --------
868,488 895,430
Accumulated depreciation........................................ (342,746) (352,452)
-------- --------
525,742 542,978
-------- --------
OTHER ASSETS...................................................... 10,535 10,402
-------- --------
$757,953 $741,392
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt and current installments of long-term debt...... $ 12,610 $ 12,210
Accounts payable................................................ 35,476 30,782
Accrued payroll and related costs............................... 17,821 13,674
Taxes payable................................................... 13,977 12,953
Interest payable................................................ 5,785 2,860
Other current liabilities....................................... 12,817 13,910
-------- --------
Total current liabilities............................... 98,486 86,389
LONG-TERM DEBT.................................................... 126,048 129,923
OTHER LIABILITIES................................................. 1,015 1,338
MINORITY INTEREST................................................. 973 249
-------- --------
226,522 217,899
-------- --------
SHAREHOLDERS' EQUITY
$1.50 Preferred stock........................................... 4,025 4,025
Common stock.................................................... 9,478 9,455
Capital in excess of par value.................................. 590,255 589,866
Unrealized losses on marketable securities...................... (131) (115)
Minimum pension liability....................................... (3,403) (3,403)
Cumulative translation adjustment............................... (2,343) (2,081)
Accumulated deficit............................................. (64,587) (73,802)
Treasury stock, at cost......................................... (1,863) (452)
-------- --------
531,431 523,493
-------- --------
COMMITMENTS AND CONTINGENCIES..................................... -- --
-------- --------
$757,953 $741,392
======== ========
</TABLE>

See accompanying notes to the interim financial statements.

F-27
<PAGE> 92

NOBLE DRILLING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1996 1995
-------- -------
<S> <C> <C>
OPERATING REVENUES
Contract drilling services........................................... $ 60,250 $53,932
Labor contract drilling services..................................... 7,994 10,590
Turnkey drilling services............................................ 33,055 17,178
Engineering and consulting services.................................. 1,762 1,567
Other revenue........................................................ 1,696 1,829
-------- -------
104,757 85,096
-------- -------
OPERATING COSTS AND EXPENSES
Contract drilling services........................................... 38,536 36,119
Labor contract drilling services..................................... 5,925 8,110
Turnkey drilling services............................................ 23,206 16,377
Engineering and consulting services.................................. 1,097 1,457
Other expense........................................................ 900 1,688
Depreciation and amortization........................................ 8,930 8,834
Selling, general and administrative.................................. 12,025 10,556
Impairments, net of gains on asset sales (See Notes 4 and 6)......... 73 --
Minority interest.................................................... (32) (58)
-------- -------
90,660 83,083
-------- -------
OPERATING INCOME....................................................... 14,097 2,013
OTHER INCOME (EXPENSE)
Interest expense..................................................... (3,176) (3,024)
Interest income...................................................... 825 1,492
Other, net........................................................... 483 578
-------- -------
INCOME BEFORE INCOME TAXES............................................. 12,229 1,059
INCOME TAX PROVISION................................................... (1,503) (1,720)
-------- -------
NET INCOME (LOSS)...................................................... 10,726 (661)
PREFERRED STOCK DIVIDENDS.............................................. (1,511) (2,670)
-------- -------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES.......................... $ 9,215 $(3,331)
======== =======
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES PER SHARE (SEE NOTE 3)... $ 0.10 $ (0.06)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING............................. 95,782 80,066
</TABLE>

See accompanying notes to the interim financial statements.

F-28
<PAGE> 93

NOBLE DRILLING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1996 1995
-------- --------
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income (loss)................................................... $ 10,726 $ (661)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization.................................... 8,930 8,834
(Gain) loss on sale of assets.................................... (7,716) 206
Loss (gain) on foreign exchange.................................. 215 (494)
Deferred income tax benefit...................................... -- (682)
Asset impairments................................................ 7,600
Other............................................................ 439 144
Changes in current assets and liabilities:
Accounts receivable............................................ (13,294) (994)
Other assets................................................... (1,612) (2,612)
Accounts payable............................................... 3,669 2,472
Other liabilities.............................................. 9,079 (2,736)
-------- --------
18,036 3,477
-------- --------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Purchase of property and equipment.................................. (42,171) (16,082)
Proceeds from sale of property and equipment........................ 14,52 170
Proceeds from sale of (investment in) marketable debt securities.... 1,596 (3,274)
-------- --------
(26,054) (19,286)
-------- --------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Payment of long-term debt........................................... (3,875) --
Dividends paid on preferred stock................................... (1,509) (2,670)
Issuance of common stock............................................ 456 557
Purchase of shares returned to treasury............................. (2,052) --
Preferred stock conversion payment (See Note 2)..................... -- (1,524)
Proceeds from (payment of) short-term debt.......................... 400 (2,544)
Other............................................................... -- 139
-------- --------
(6,580) (6,042)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH............................... (371) 230
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS................................. (14,969) (21,621)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD........................ 41,307 95,163
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.............................. $ 26,338 $ 73,542
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest......................................................... $ 177 $ --
Income taxes..................................................... $ -- $ 1,494
Noncash investing and financing activities:
Triton acquisition with common stock............................. $ -- $ 1,500
</TABLE>

See accompanying notes to the interim financial statements.

F-29
<PAGE> 94

NOBLE DRILLING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Dollar amounts in tables are in thousands, except per share amounts)
(unaudited)
NOTE 1 -- BASIS OF ACCOUNTING

The Consolidated Balance Sheet as of March 31, 1996, of Noble Drilling
Corporation ("Noble Drilling") or, together with its consolidated subsidiaries,
unless the context requires otherwise, the "Company"), the related Consolidated
Statements of Operations and Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 and 1995, respectively, are unaudited. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such financial statements have
been included. These interim financial statements and notes are presented in
condensed form as permitted by Form 10-Q.

Certain reclassifications have been made in the 1995 consolidated financial
statements to conform to the classifications used in the 1996 consolidated
financial statements. These reclassifications have no impact on net income or
loss.

NOTE 2 -- CONVERSION OF $2.25 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK

In March 1995, an aggregate of 923,862 shares of Noble Drilling's $2.25
Convertible Exchangeable Preferred Stock were converted into 5,006,830 shares of
Noble Drilling common stock. The Company paid an aggregate of approximately
$1,524,000 in cash ("Preferred Conversion Payment") in the first quarter of 1995
in connection with this conversion.

NOTE 3 -- NET INCOME (LOSS) APPLICABLE TO COMMON SHARES PER SHARE

Net income (loss) applicable to common shares per share has been computed
on the basis of the weighted average number of common shares and, where
dilutive, common share equivalents outstanding during the indicated periods. The
calculation of net income (loss) applicable to common shares per share assuming
full dilution was antidilutive; therefore, fully diluted amounts are not
presented. The Preferred Conversion Payment of approximately $1,524,000 in March
1995 was accounted for as a reduction of net earnings applicable to common
shares for purposes of calculating the net loss per common share. This
accounting treatment increased the net loss applicable to common shares per
share from $0.04 to $0.06 for the three months ended March 31, 1995.

NOTE 4 -- ACQUISITION AND SALE OF ASSETS

Consistent with its business strategy, the Company sold two of its posted
barge units during the first quarter of 1996. The Gus Androes, located in the
U.S. Gulf of Mexico ("U.S. Gulf"), was sold for $6,000,000 on January 5, 1996. A
second posted barge unit, the Gene Rosser, located offshore Nigeria was sold for
$13,000,000; payments of $2,000,000 and $8,000,000 were received in the fourth
quarter of 1995 and the first quarter of 1996, respectively. The remaining
proceeds will be received in the second quarter of 1996 ($2,000,000) and the
first quarter of 1997 ($1,000,000). The Company recorded gains of $4,815,000 and
$2,712,000, respectively, related to the sales of these posted barge units in
the first quarter of 1996. The Company's remaining two posted barges are located
offshore Nigeria and are being held for sale (See Note 6).

On February 26, 1996, the Company purchased the Odin Explorer, renamed the
Gus Androes, a 300-foot Levingston III-C independent leg cantilevered unit. The
rig is presently located offshore Sharjah, U.A.E. undergoing refurbishment and
is scheduled to be available for work in the third quarter of 1996. The Company
submitted a tender to an international oil and gas company for a drilling
contract to commence in the third quarter, following refurbishment, for a term
of one year plus two one-year options.

The Company also purchased the Dana, a 250-foot Marathon LeTourneau 82-C
independent leg cantilevered rig, on March 20, 1996. Currently the rig is
employed under a contract with Qatar General Petroleum Corporation (QGPC). Rig
enhancements are scheduled for the latter part of the third quarter

F-30
<PAGE> 95

NOBLE DRILLING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(Dollar amounts in tables are in thousands, except per share amounts)
(unaudited)

upon completion of the current contract. The rig will commence a three-year
contract for QGPC after the scheduled refurbishment is complete.

NOTE 5 -- MARKETABLE SECURITIES

The Company accounts for its investments in debt and equity securities in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Under the
provisions of SFAS No. 115, investments in debt and equity securities are
required to be classified into one of three categories: held to maturity,
available for sale or trading securities. At each reporting date, the
appropriateness of such classification is required to be reassessed. Realized
gains and losses on sales of investments are included in income on a specific
identification basis.

As of March 31, 1996, the Company classified all of its debt securities
with original maturities of more than three months as available for sale. These
investments are classified as current assets on the accompanying consolidated
balance sheets. The following table highlights information applicable to the
Company's investments classified as available for sale as of March 31, 1996 and
December 31, 1995:

<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------------------
NET
AMORTIZED FAIR UNREALIZED
DEBT SECURITY/MATURITY COST VALUE LOSSES
- ------------------------------------------------------------ ------- ------- -------
<S> <C> <C> <C>
Corporate Obligations:
Mature within 1 year...................................... $ 2,113 $ 2,107 $ (6)
Mature after 1 year through 5 years....................... -- -- --
------- ------- -------
2,113 2,107 (6)
------- ------- -------
U.S. Government Obligations:
Mature within 1 year...................................... 8,206 8,134 (72)
Mature after 1 year through 3 years....................... 5,229 5,176 (53)
------- ------- -------
13,435 13,310 (125)
------- ------- -------
Total............................................. $15,548 $15,417 $ (131)
======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1995
---------------------------------
NET
AMORTIZED FAIR UNREALIZED
DEBT SECURITY/MATURITY COST VALUE LOSSES
- ------------------------------------------------------------ ------- ------- -------
<S> <C> <C> <C>
Corporate Obligations:
Mature within 1 year...................................... $ 1,520 $ 1,520 --
Mature after 1 year through 5 years....................... 7,258 7,214 $ (44)
------- ------- -------
8,778 8,734 (44)
------- ------- -------
U.S. Government Obligations:
Mature after 1 year through 5 years....................... 8,368 8,297 (71)
------- ------- -------
Total............................................. $17,146 $17,031 $ (115)
======= ======= =======
</TABLE>

An allowance for unrealized losses has been included as a reduction of
shareholders' equity. Total realized losses related to short-term investments
amounted to $16,000 and $22,000, for the three months ended March 31, 1996 and
1995, respectively.

F-31
<PAGE> 96

NOBLE DRILLING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(Dollar amounts in tables are in thousands, except per share amounts)
(unaudited)

The Company categorizes its investments in marketable equity securities of
$6,416,000 as trading securities and such investments are classified as current
assets and are recorded at fair value at March 31, 1996. Total net unrealized
gains related to these equity investments at March 31, 1996 were $286,000
compared to net unrealized losses of $202,000 at March 31, 1995.

NOTE 6 -- PROPERTY AND EQUIPMENT

In March 1995, SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, was issued. This statement
requires that long-lived assets and certain identifiable intangibles held and
used by an entitybe reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company adopted this standard effective January 1, 1996. In
accordance with SFAS No. 121, the Company recorded an impairment loss of
$7,600,000 in the first quarter of 1996.

The Company is planning to sell its remaining two barges, Lewis Dugger and
Chuck Syring, and these assets have been reduced to their estimated net
realizable value and are classified as assets held for sale at March 31, 1996.
The Company expects the sale of these assets to occur during 1996. These rigs
are currently under contract and contributed gross margins of $1,495,000 during
the first quarter of 1996.

NOTE 7 -- STOCK REPURCHASE

In January 1996, 250,000 shares of common stock were repurchased by the
Company and returned to treasury stock. Subsequent to the repurchase, 108,750
shares of treasury stock were issued to certain employees as restricted stock
under the Company's 1991 Stock Option and Restricted Stock Plan and have been
placed in escrow subject to satisfaction of various performance criteria during
a three-year period.

NOTE 8 -- SUBSEQUENT EVENT

On April 25, 1996, the Company entered into an agreement of sale and
purchase with Royal Nedlloyd N.V. ("Nedlloyd") and its wholly owned subsidiary,
Neddrill Holding B.V., to acquire the offshore contract drilling, accommodation
and other oil and gas exploration and production related service businesses of
Nedlloyd's offshore drilling division ("Neddrill"), including the acquisition of
$25,000,000 in net working capital and the transfer of personnel. The purchase
price is $300,000,000 in cash plus 5,000,000 shares of Noble Drilling common
stock. Consummation of the acquisition is subject to financing being obtained by
the Company and satisfaction of customary closing conditions contained in the
acquisition agreement.

The following table reflects unaudited pro forma consolidated statement of
operations data for the three months ended March 31, 1996 and for the year ended
December 31, 1995 as if the acquisition had occurred at the beginning of these
periods.

THREE MONTHS YEAR
ENDED ENDED
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
(UNAUDITED)
Operating revenues............................................ $146,193 $449,493
Net income (loss) applicable to common shares................. $ 16,304 $ (1,708)
Net income (loss) applicable to common shares per share....... $ 0.14 $ (0.03)
</TABLE>

F-32
<PAGE> 97

INDEPENDENT AUDITOR'S REPORT

To the Shareholder of Neddrill Holding B.V.

We have audited the consolidated financial statements of Neddrill Holding B.V.
and subsidiaries ("Neddrill") as of December 31, 1995 and 1994 and for each of
the years in the three-year period ended December 31, 1995 as listed in the
accompanying Index to Financial Statements under the heading "Neddrill Holding
B.V." These consolidated financial statements are the responsibility of
Neddrill's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. 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 overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Neddrill as of
December 31, 1995 and 1994, and the results of their operations and their cash
flows for each of the years in the three-year period ended December 31, 1995, in
conformity with generally accepted accounting principles in the United States of
America.

Rotterdam, The Netherlands KPMG ACCOUNTANTS N.V.
February 15, 1996

F-33
<PAGE> 98

NEDDRILL HOLDING B.V.
CONSOLIDATED BALANCE SHEETS
(in thousands of United States dollars (USD) or Netherlands guilders (NLG))

NOTES DECEMBER 31
----- -------------------------------
1995 1995 1994
------- -------- --------
(USD) (NLG) (NLG)
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash................................................. 3 3,055 4,909 6,437
Receivables.......................................... 4 26,205 42,091 31,851
Inventories.......................................... 5 1,571 2,524 2,698
Prepaid expenses and other assets.................... 6 13,403 21,538 7,800
------- -------- --------
Total current assets................................... 44,234 71,062 48,789
Drilling units and equipment......................... 7 166,750 267,959 183,329
Investments in nonconsolidated companies............. 8 416 669 7,197
Deferred tax assets.................................. 16 10,188 16,390 18,528
------- -------- --------
Total Assets........................................... 221,588 356,080 257,840
======= ======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Accounts payable..................................... 9 11,562 18,5779 10,904
Accrued expenses..................................... 12,904 20,737 17,735
Other current liabilities............................ 10 10,292 16,539 23,490
------- -------- --------
Total current liabilities.............................. 34,758 55,855 52,129
Long-term debt......................................... 11 27,014 43,410 57,779
Other long-term liabilities............................ 12 1,328 2,134 1,515
Deferred income........................................ 13 1,636 2,629 4,468
Long-term loans with shareholder....................... 14 238,949 383,978 270,261
Shareholders' Deficit
Common stock, 100,000 shares, nominal value NLG
1,000, authorized and 20,000 shares issued and
outstanding....................................... 12,446 20,000 20,000
Accumulated deficit.................................... (91,326) (146,756) (143,531)
Foreign exchange translation........................... (3,217) (5,170) (4,781)
------- -------- --------
Total shareholders' deficit............................ (82,097) (131,926) (128,312)
------- -------- --------
Total liabilities and shareholders' deficit............ 221,588 356,080 257,840
======= ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-34
<PAGE> 99

NEDDRILL HOLDING B.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of United States dollars (USD) or Netherlands guilders (NLG))

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
NOTES 1995 1995 1994 1993
----- ------- ------- ------- -------
(USD) (NLG) (NLG) (NLG)
<S> <C> <C> <C> <C> <C>
Net revenue..................................... 2, 4 121,525 195,283 156,622 226,189
Operating expenses
Salaries, wages and related expenses.......... 19 31,890 51,246 42,543 46,402
Depreciation.................................. 1 18,791 30,196 38,508 49,190
Other operating and administrative expenses... 20 50,889 81,776 82,439 78,358
------- ------- ------- -------
Total operating expenses.............. 101,570 163,218 163,490 173,950
------- ------- ------- -------
Operating income................................ 2 19,955 32,065 (6,868) 52,239
Gain on sale of assets.......................... 184 296 205 74
Equity in (loss) income of unconsolidated
companies..................................... 8 (716) (1,151) 4,165 (3,647)
Interest income................................. 21 178 286 757 3,114
Interest expense shareholder's loans............ 22 (19,100) (30,693) (19,846) (29,635)
Interest expense other.......................... 22 (2,320) (3,729) (4,799) (3,040)
Other financial income and expense.............. 23 3,141 5,048 5,959 808
------- ------- ------- -------
Income (loss) before taxation................... 1,322 2,122 (20,427) 19,913
Taxation on income.............................. 16 (3,327) (5,347) (421) (14,713)
------- ------- ------- -------
Net income (loss)............................... (2,005) (3,225) (20,848) 5,200
======= ======= ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-35
<PAGE> 100

NEDDRILL HOLDING B.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of United States dollars (USD) or Netherlands guilders (NLG))

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1995 1995 1994 1993
------- -------- -------- -------
(USD) (NLG) (NLG) (NLG)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income (loss)..................................... (2,005) (3,225) (20,848) 5,200
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation........................................ 18,791 30,196 38,508 49,190
Amortisation of investment premiums................. (950) (1,839) (2,401) (2,921)
Equity in results of unconsolidated companies....... 716 1,151 (4,165) 3,647
Gain on sale of assets.............................. (184) (296) (205) (74)
Deferred tax provision.............................. 1,330 2,138 4,582 4,591
Change in operating assets and liabilities:
Receivables......................................... (6,372) (10,240) (3,406) 28,057
Inventories......................................... 108 174 (242) (201)
Current liabilities................................. 2,318 3,726 (4,408) 9,900
Other............................................... 1,047 (6,675) 8,963 (331)
------- -------- ------- -------
Net cash provided by operating activities............. 14,799 15,110 16,378 97,058
Cash flows from investing activities
Drilling units and equipment:
Additions........................................... (75,536) (121,382) (7,227) (56,461)
Proceeds from disposal of assets.................... 254 408 227 158
Dividend received from (investments in) unconsolidated
companies........................................... 3,346 5,377 560 (5,050)
------- -------- ------- -------
Net cash (used in) provided by investing activities... (71,936) (115,597) (6,440) (61,353)
Cash flows from financing activities
Net change in long-term loans with shareholder........ 70,766 113,717 2,869 (68,637)
Increase (Repayment) of long-term debt................ (14,579) (14,758) (20,791) 33,093
------- -------- ------- -------
Net cash (used in) provided by financing activities... 56,187 98,959 (17,922) (35,544)
------- -------- ------- -------
Net change in cash.................................... (950) (1,528) (7,984) 161
======= ======== ======= =======
Cash at beginning of period........................... 4,005 6,437 14,421 14,260
======= ======== ======= =======
Cash at end of period................................. 3,055 4,909 6,437 14,421
======= ======== ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-36
<PAGE> 101

NEDDRILL HOLDING B.V.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
(in thousands of Netherlands guilders, unless otherwise stated)

<TABLE>
<CAPTION>
FOREIGN
EXCHANGE TOTAL
COMMON ACCUMULATED TRANSLATION SHAREHOLDER'S
STOCK DEFICIT ADJUSTMENT EQUITY
------ ----------- ---------- -------------
<S> <C> <C> <C> <C>
Balance at January 1, 1993....................... 20,000 (127,883) 102 (107,781)
Net income....................................... -- 5,200 -- 5,200
Foreign exchange translation
adjustments.................................... -- -- (659) (659)
------ -------- ------ -------
Balance at December 31, 1993..................... 20,000 (122,683) (557) (103,240)
Net loss......................................... -- (20,848) -- (20,848)
Foreign exchange translation
adjustments.................................... -- -- (4,224) (4,224)
------ -------- ------ -------
Balance at December 31, 1994..................... 20,000 (143,531) (4,781) (128,312)
Net income....................................... -- (3,225) -- (3,225)
Foreign exchange translation
adjustments.................................... -- -- (389) (389)
------ -------- ------ -------
Balance at December 31, 1995..................... 20,000 (146,756) (5,170) (131,926)
====== ======== ====== =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-37
<PAGE> 102

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Basis of presentation

Neddrill Holding B.V. and subsidiaries (Neddrill), a wholly-owned
subsidiary of Royal Nedlloyd N.V., is a drilling contractor engaged in offshore
and onshore exploration drilling and production operations on an international
basis, providing drilling and production services to oil companies world-wide.
Neddrill was established in 1974 under the laws of The Netherlands.

The preparation of financial statements inherently requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

The reporting currency of Neddrill is the Netherlands guilder. Certain
financial statements for the year ended December 31, 1995 have also been
translated into US-dollars solely for convenience at the noon buying rate of the
Federal Reserve Bank of New York on December 31, 1995 of USD 0.6223 per NLG 1.

Principles of consolidation

The consolidated financial statements include the accounts of Neddrill
Holding B.V. and the companies which Neddrill Holding B.V. directly and/or
indirectly controls. Investments in which Neddrill can exercise significant
influence are accounted for by the equity method.

Foreign currencies

Receivables and payables in foreign currency are translated into guilders
at the rates prevailing on the balance sheet date, unless in specific cases the
foreign currency position has been hedged by forward transactions. In that case,
the short-term receivables and payables are valued at the relevant forward
rates. Exchange differences resulting from these short-term receivables and
payables in foreign currency are recorded in the operating result in the period
in which they arise.

The balance sheets of foreign subsidiaries are translated at the year-end
exchange rate. The statements of operations have been translated at the average
exchange rate for the year. Exchange differences in respect of foreign
subsidiaries and long-term financing to or from those subsidiaries are credited
or charged directly to shareholders' equity.

Drilling units and equipment

Drilling units and equipment are stated at historical cost less
straight-line depreciation based on the assets estimated useful life, calculated
from the date of commissioning, and less other devaluations, which are
considered to be permanent. In 1995 Neddrill undertook a review of the useful
lives of its drilling units. Neddrill determined that as a result of
preventative maintenance programs it has had in place, the actual lives of its
drilling units were generally longer than the useful lives for depreciation
purposes. Therefore, Neddrill extended the estimated useful lives of its
drilling units, effective January 1, 1995, from 15 years to 20 years. The effect
of this change in accounting estimate reduced depreciation expense for the year
ended December 31, 1995 by NLG 17 million and increased net income by NLG 13
million.

F-38
<PAGE> 103

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The applicable terms of depreciation are as follows:

<TABLE>
<S> <C>
Drilling units........................... 20 years
Accommodation unit....................... dependent on use, on a daily basis
Dockings................................. 3-5 years
Technical equipment a.o. drillstring..... 4-15 years, dependent on use
Upgrades................................. remaining lifetime rig
Client modifications as from 1995........ remaining lifetime rig
Client modifications before 1995......... term of the project
Spare equipment.......................... no depreciation.
</TABLE>

The depreciation methods are applied taking into account residual values of
drilling units ranging from NLG 3.9 million to NLG 10 million depending on the
size and the expected proceeds at the end of the useful lifetimes. The total
estimated residual value of the fleet at December 31, 1995 amounts to NLG 59.2
million. Tangible fixed assets under construction are included at the amounts
invoiced.

At the date of purchase of a drilling unit, initial spare parts on board
are capitalised as a component of the purchase price. All subsequent spare parts
purchased are expensed as repair and maintenance.

Other tangible fixed assets

This category of assets is stated at historical cost less straight-line
depreciation calculated from the date of commissioning.

The following depreciation periods are applied:

<TABLE>
<S> <C>
Automation (hard and software)........... 5 years
Office equipment and others.............. 2-5 years
Motor vehicles........................... 3 years
</TABLE>

Investments in non-consolidated companies

These financial fixed assets are valued at the corresponding part of the
shareholders' equity according to the balance sheet of the joint-venture,
converted into NLG at the exchange rate prevailing on the balance sheet date;
currency differences are taken into equity.

Current assets

Current assets are valued as follows:

Inventory is stated at the lower of cost or net realisable value, taking
in account a provision for obsolescence, when necessary;

Receivables are stated at face value, less a provision for doubtful
accounts, when appropriate; and

Cash and bank balances are stated at face value. Cash represents amounts
with a maturity of 3 months or less at origination.

Liabilities

Liabilities and provisions are stated at face value.

Deferred income

Amounts received or offset against tax payable in respect of drilling units
under the Investment Account Act and the Investment Premium Scheme for the
maritime shipping industry are amortised over the whole or

F-39
<PAGE> 104

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

remaining estimated life of the asset, with a maximum of fifteen years
commencing on the date of commissioning or date of settlement, by means of a
degressive method.

The premium received or offset against tax payable for the other fixed
assets is credited to the operating result on a straight line method over their
(remaining) useful life with a maximum of five years.

Revenue recognition

Substantially all of Neddrill's revenues are earned under contracts, which
provide daily charter rates. Revenue is recognised on a daily basis in
accordance with the terms of Neddrill's contracts.

Operating costs on contracts in progress at year-end are allocated to the
respective years on a proportional basis.

Taxation

Provisions for income taxes include deferred taxes resulting from temporary
differences in income for financial and tax purposes, using the liability
method. Such temporary differences result primarily from differences in the
carrying value of assets and liabilities.

Although Neddrill is for Dutch tax purposes included in a fiscal unity with
the Royal Nedlloyd N.V. the provision for income taxes is stated in the
financial statements as if Neddrill is a stand-alone taxable entity.

Accounting standards issued not yet adopted

During 1995 the Financial Accounting Standards Board in the United States
issued Statement of Financial Standards No. 121, "Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121").
Neddrill is required to adopt SFAS 121 in 1996. Neddrill does not presently
envisage any financial statement impact as a consequence of adoption of such
statement.

2 GEOGRAPHIC DATA

Geographic data

The information presented below concerning net sales, operating income and
identifiable assets of the consolidated companies illustrates the geographic
pattern of Neddrill's operations.

<TABLE>
<CAPTION>
NET SALES BY ORIGIN
-------------------------------
1995 1994 1993
------- ------- -------
(IN NLG 1,000)
<S> <C> <C> <C>
European Community countries.......................... 137,920 93,264 142,370
Other European countries.............................. -- 16,758 49,887
The Americas.......................................... 48,053 25,629 29,718
Asia Pacific and Africa............................... 9,310 20,971 4,214
------- ------- -------
Total................................................. 195,283 156,622 226,189
======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
OPERATING INCOME BY REGION
--------------------------------
1995 1994 1993
------- -------- -------
(IN NLG 1,000)
<S> <C> <C> <C>
European Community countries......................... 30,092 (15,588) 36,682
Other European countries............................. -- 2,506 6,732
The Americas......................................... 5,213 9,688 8,825
Asia Pacific and Africa.............................. (3,240) (3,474) --
------- -------- -------
Total................................................ 32,065 (6,868) 52,239
======= ======== =======
</TABLE>

F-40
<PAGE> 105

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
IDENTIFIABLE ASSETS
--------------------------------
1995 1994 1993
------- -------- -------
(IN NLG 1,000)
<S> <C> <C> <C>
European Community countries......................... 227,069 178,523 223,375
Other European countries............................. -- 659 8,633
The Americas......................................... 51,521 21,082 17,087
Asia Pacific and Africa.............................. 76,821 50,379 52,586
------- -------- -------
355,411 250,643 301,681
Non-consolidated companies........................... 669 7,197 3,592
------- -------- -------
Total................................................ 356,080 257,840 305,273
======= ======== =======
</TABLE>

3 CASH AND BANK BALANCES

<TABLE>
<CAPTION>
DECEMBER 31
---------------
1995 1994
----- -----
(IN NLG 1,000)
<S> <C> <C>
Cash, bank, giro and money on call................................... 4,909 6,437
===== =====
</TABLE>

The balance as at December 31, 1995 and 1994, includes a retention account
of USD 700,000 and USD 1,270,000, respectively, and a survey account of USD
240,000 and USD 1,350,000, respectively.

The retention account is a collection account maintained throughout the
term of the loan agreement with banks to secure repayment of the loan and
interest due. As the related loan matures on April 1, of each year such
retention account has been classified as cash. Under the survey account money
may only be drawn for the payment of costs of periodical survey and/or
drydocking and the costs of the repairs necessary to meet the recommendations
(if any) as a result of such surveys.

4 RECEIVABLES

<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1995 1994
------ ------
(IN NLG 1,000)
<S> <C> <C>
Trade.............................................................. 42,054 26,592
Related parties.................................................... 37 5,259
------ ------
Total.............................................................. 42,091 31,851
====== ======
</TABLE>

The trade receivables balance is net of an allowance for doubtful amounts
of NLG 361,000 and NLG 151,000 as of December 31, 1995 and 1994, respectively.

Significant customers

Neddrill conducts a significant portion of its business with customers,
which individually represent more than 10% of Neddrill's revenues.

For the year ended December 31, 1995 revenues aggregating 65.8% were earned
from five such customers (17.7%, 13.1%, 12.1%, 11.7% and 11.2%, individually).
For the year ended December 31, 1994 two such customers represented 36.1% (18.5%
and 17.6%, individually) and for the year ended December 31, 1993 five such
customers represented 87.4% (27.9%, 20.9%, 14,9%, 13.0% and 10.7%, individually)
of Neddrill's revenues.

F-41
<PAGE> 106

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In addition, at December 31, 1995 and 1994 such significant customers
represented, in the aggregate, 60.4% and 44.9% respectively, of trade accounts
receivable.

Contract termination

In August 1993 the long-term drilling contract related to the Neddrill-4
was terminated. The contract termination was initiated by the operator due to
the fact that the day rates as specified by the 15 years contract were
significantly above market day rates. Neddrill agreed to the termination on the
condition that the operator pays Neddrill a lump-sum amount of approximately NLG
38.3 million. This payment was received by Neddrill in 1993 and recognised as
net revenue in the statement of operations for the period ended December 31,
1993. Immediately following the contract termination, Neddrill re-contracted the
rig to another party at current market rates.

Related party transactions

Related party receivables consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31
--------------
1995 1994
---- -----
(IN NLG 1,000)
<S> <C> <C>
Related parties........................................................ 37 27
Current income taxes................................................... -- 5,232
-- -----
37 5,259
== =====
</TABLE>

Interest is not charged on the receivables from related parties due to
their short-term nature.

For the current income taxes, reference is made to note 9 accounts payable.

5 INVENTORIES

<TABLE>
<CAPTION>
DECEMBER 31
---------------
1995 1994
----- -----
(IN NLG 1,000)
<S> <C> <C>
Goods held for resale................................................ 830 830
On-shore spare parts and other inventories........................... 1,694 1,868
----- -----
Total................................................................ 2,524 2,698
===== =====
</TABLE>

Inventories consist principally of wellhead equipment, fuel, lubricants and
on-shore spare parts.

6 PREPAID EXPENSES AND OTHER CURRENT ASSETS

These items include in 1995 an UK-VAT claim of NLG 2.9 million (1994: NLG
2.4 million) and a claim of NLG 13.3 million (1994: nil) from an insurance
company. The latter relates to the loss of the "Neddrill 1" B.O.P.-stack during
operations offshore West Africa in June 1995 and includes direct damage costs
paid and salvage fees. Neddrill's total claim against the insurance company,
including the to be replaced (in 1996) lost and damaged riser equipment, is
estimated at approx. USD 13.5 million and is presently under review by and
discussed with the insurance agencies. Management of Neddrill believes such
insurance claim is fully recoverable and has not received any indications that
the insurance company will dispute their claim.

F-42
<PAGE> 107

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7 DRILLING UNITS AND EQUIPMENT

<TABLE>
<CAPTION>
MACHINERY,
EQUIPMENT CONSTRUCTION
DRILLING UNITS AND OTHER IN PROGRESS TOTAL
-------------- --------- ------------ --------
(IN NLG 1,000)
<S> <C> <C> <C> <C>
At December 31, 1995
Cost............................................ 936,296 24,271 1,173 961,740
Accumulated depreciation........................ (673,306) (20,475) -- (693,781)
-------- ------- ----- --------
Book value...................................... 262,990 3,796 1,173 267,959
======== ======= ===== ========
At December 31, 1994
Cost............................................ 848,972 23,736 -- 872,708
Accumulated depreciation........................ (669,759) (19,620) -- (689,379)
-------- ------- ----- --------
Book value...................................... 179,213 4,116 -- 183,329
======== ======= ===== ========
</TABLE>

8 INVESTMENTS IN NON-CONSOLIDATED COMPANIES

These represent Neddrill's 33 1/3% participation in a joint venture with
Cliffs Drilling International Inc. and Perforada Central S.A.

The movements are:

<TABLE>
<CAPTION>
1995 1994
------ -----
(IN NLG 1,000)
<S> <C> <C>
Opening balance............................................................. 7,197 3,592
Dividends received.......................................................... (4,800) --
Share results............................................................... (1,151) 4,165
Translation adjustments..................................................... (577) (560)
------ -----
Closing balance............................................................. 669 7,197
====== =====
</TABLE>

The loss of NLG 1,151,000 shown is Neddrill Holding's share in the net
result, calculated after deduction of taxation on profit.

This joint venture performs turnkey projects in Mexico, which includes
eight well programs as from the end of 1992 until September 1995.

9 ACCOUNTS PAYABLE

<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1995 1994
------ ------
(IN NLG 1,000)
<S> <C> <C>
Trade...................................................................... 13,175 9,913
Related parties............................................................ 2,098 991
Current income taxes....................................................... 3,306 --
------ ------
18,579 10,904
====== ======
</TABLE>

Related party transactions

The Royal Nedlloyd group companies provide various administrative services
on behalf of Neddrill. These services primarily consist of crewing and sea
freight services, technical support, treasury and financial management and
administrative functions.

F-43
<PAGE> 108

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Royal Nedlloyd group policy is that such inter-company transactions
should be on third-party terms. In the opinion of management of Neddrill, such
charges are representative of the cost of services Neddrill would incur if it
were operating as a stand-alone entity or as an affiliate of another entity.
Accordingly, the Royal Nedlloyd companies charged Neddrill NLG 1.0 million, NLG
1.0 million and NLG 1.5 million for the years ended December 31, 1995, 1994 and
1993, respectively, related to these services. These charges have been included
as other operating and administrative expenses in the consolidated statements of
operations.

For a contract carried out in Argentina in 1995 Neddrill has been operating
via a French legal entity (subsidiary) of Royal Nedlloyd N.V. Revenues of NLG
1.8 million and the result of NLG 0.1 million is accounted for as part of the
operating result of Neddrill. The outstanding balance related to this entity
amounts NLG 0.4 million.

Interest is not charged on the outstanding balances due to their short-term
nature.

As described in note 1, Neddrill is in a fiscal unity with the Royal
Nedlloyd N.V. The current income tax payable (1994: receivable) is due from
Royal Nedlloyd N.V. and represents Neddrill's share of the fiscal unity's
current income tax benefit. Interest is charged on these balances at current
market interest rates as determined by Royal Nedlloyd N.V.

10 OTHER CURRENT LIABILITIES

<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1995 1994
------ ------
(IN NLG 1,000)
<S> <C> <C>
Taxation and social security....................................... 1,210 802
Current instalments long-term debt................................. 10,496 12,167
Current portion of other long-term liabilities..................... 1,992 6,630
Other.............................................................. 2,841 3,891
------ ------
16,539 23,490
====== ======
</TABLE>

11 LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1995 1994
------- -------
(IN NLG 1,000)
<S> <C> <C>
Bank loans....................................................... 45,264 60,639
Other loans...................................................... 4,374 5,510
------- -------
49,638 66,149
Less: Current instalments........................................ (10,496) (12,167)
------- -------
39,142 53,982
Related party loan............................................... 4,268 3,797
------- -------
43,410 57,779
======= =======
</TABLE>

The bank loans are denominated in US dollars and are secured by mortgages
on the "Neddrill Trigon" and "Neddrill 1". Additionally both Trigon Inc. and
Neddrill Workship Inc. granted the following securities to the lenders:

First preferred assignment of earnings

First preferred assignment of relevant insurance policies

F-44
<PAGE> 109

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Pledge of any reserve held in retention accounts

Pledge of earnings and retention accounts.

Such bank loans contain covenants (some in conjunction with Neddrill):

Assets Protection Claus of 130%.

No dividends or intercompany loans to be paid to the shareholders of
Trigon Inc., respectively, Neddrill Workship Inc. without prior
written consent of the banks.

Commercial and technical management of the rig by a company controlled
by Neddrill Holding B.V. on terms acceptable to the banks.

Change in shareholders only in consent with the banks.

Requirement to keep the rig in class and free of recommendations.

Minimum Neddrill Holding's working capital of USD 6.5 million.

In conjunction with the bank loans, Neddrill has entered into an interest
rate swap agreement with the same financial institution issuing the bank loans,
to exchange the variable interest due under the bank loans for a fixed amount of
interest. The notional amount of the swap agreement is the same as the balance
of the underlying bank loans. Accordingly, the rate of interest for the bank
loans in 1995 and 1994 averaged approximately 6%.

The aggregate maturity of the bank loans as of December 31, 1995 is as
follows:

<TABLE>
<CAPTION>
(IN NLG 1,000)
--------------
<S> <C>
Year ending December 31:
1996............................................................ 10,496
1997............................................................ 10,496
1998............................................................ 15,456
1999............................................................ 4,416
2000............................................................ 4,400
Thereafter........................................................... --
-------
45,264
=======
</TABLE>

The other loans are denominated in US dollars and relate to the drilling
vessel "Neddrill 1".

A part of the loan -- USD 2,333,333 -- has a repayment schedule of seven
yearly equal instalments of USD 333,333 on December 31, of each year.

Another part of the loan -- USD 400,567 -- has a repayment schedule, which
is depending on the day rate of the "Neddrill 1". The first repayment is due in
January 1997.

The rate of interest for both loan amounts are day-rate dependent with a
maximum of 7%.

The long-term loan granted by a related party (Faxion B.V.) amounts to NOK
16,829,658 (equivalent NLG 4,268,000) and has no agreed redemption scheme.

The rate of interest at December 31, 1995 amounts to 10%.

F-45
<PAGE> 110

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12 OTHER LONG-TERM LIABILITIES

<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1995 1994
------ ------
(IN NLG 1,000)
<S> <C> <C>
Provisions for:
Repair and survey costs............................................ 3,992 8,065
Early retirement schemes........................................... 134 80
------ ------
4,126 8,145
Less: Balance classified as current................................ (1,992) (6,630)
------ ------
Balance classified as long-term.................................... 2,134 1,515
====== ======
</TABLE>

The provision for repair and survey costs is intended to amortise
periodically recurring repair and survey costs over the years to which they
relate and is calculated on a proportional basis.

The movements in the provision for repair and survey costs can be specified
as follows:

<TABLE>
<CAPTION>
1995 1994
------- ------
(IN NLG 1,000)
<S> <C> <C>
Opening balance................................................... 8,065 5,273
Additions......................................................... 6,313 9,500
Payments.......................................................... (10,386) (6,708)
------- ------
Closing balance................................................... 3,992 8,065
======= ======
</TABLE>

13 DEFERRED INCOME

Investment premiums not yet credited to the operating result are included
under this heading. Movements during the year:

<TABLE>
<CAPTION>
1995 1994
------ ------
(IN NLG 1,000)
<S> <C> <C>
Opening balance.................................................... 4,468 6,869
Amortisation....................................................... (1,839) (2,401)
------ ------
Closing balance.................................................... 2,629 4,468
====== ======
</TABLE>

F-46
<PAGE> 111

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14 LONG-TERM LOANS WITH SHAREHOLDER

The composition of long-term loans with shareholder is as follows:

<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1995 1994
------- -------
(IN NLG 1,000)
<S> <C> <C>
Subordinated debt, interest determined by shareholder annually
(8.75% and 7.5% in 1995 and 1994, respectively), no fixed
repayment date................................................. 228,751 228,751
Subordinated debt of USD 24,675,000, interest at Libor + 1.25%
(9.25% in 1995), with a redemption scheme of eleven annual
instalments of USD 2,000,000 for the first time due on December
31, 1996 and a final repayment of USD 2,675,000................ 39,480 --
Long-term debt of USD 24,675,000, interest at Libor + 0.75%
(8.75% in 1995) with a similar redemption scheme............... 39,480 --
Long-term debt, interest at AIBOR + 0.75% (average rate of 5.53%
and 7.76% in 1995 and 1994, respectively), maturing in
semi-annual instalments of NLG 3.1 million with a final payment
due on June 30, 1997........................................... 9,300 15,500
Long-term loan, interest determined by shareholder annually
(7.26% and 7.76% in 1995 and 1994, respectively), no fixed
repayment date................................................. 66,967 26,010
------- -------
383,978 270,261
======= =======
</TABLE>

The aggregate maturity of this debt as of December 31, 1995 is as follows:

<TABLE>
<CAPTION>
(IN NLG 1,000)
--------------
<S> <C>
Year ending December 31:
1996................................................................... 12,600
1997................................................................... 9,500
1998................................................................... 6,400
1999................................................................... 6,400
2000................................................................... 6,400
Thereafter............................................................. 46,960
No fixed repayment date................................................ 295,718
-------
383,978
=======
</TABLE>

Interest expense related to the long-term loans due to the shareholder
amounted to NLG 30.69 million, NLG 19.85 million and NLG 29.63 million for the
years ended December 31, 1995, 1994 and 1993, respectively.

F-47
<PAGE> 112

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15 COMMITMENTS AND CONTINGENT LIABILITIES

Lease commitments

Obligations under long-term non-cancellable operating leases for each of
the next five years and thereafter are as follows:

Rental expense charged to operations for the years ended December 31, 1995,
1994 and 1993 were NLG 8,076,000, NLG 11,540,000 and NLG 14,513,000,
respectively.

<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1995 1994
------- -------
(IN NLG 1,000)
<S> <C> <C>
Capital expenditure commitments.................................. 27,442 94,687
Guarantees....................................................... 800 10,569
</TABLE>

Litigation

In Norway, Neddrill is currently in litigation against a tax claim of USD
3.8 million, which has been levied against the operations of the "Neddrill
Trigon" in 1989 and 1990. On February 5, 1996 the Norwegian High Court has given
a judgement, which may lead to a total tax claim for both years of USD 600,000.

In Denmark, Neddrill is in discussions with the Danish tax authorities
regarding the treatment of approximately USD 1.6 million in revenues relating to
the operation of the "Neddrill Trigon" in 1987 through 1989. Neddrill and its
Danish tax advisers believe that Trigon Contracting AG is not taxable in Denmark
during the years in question, and that only the agency fee of Neddrill Nederland
B.V. (which sustained a small loss during this period) should be taxable.

Management believes there is no other pending material litigation and is
confident, that the outcome of these procedures will be favourable and within
the amounts provided for in the financial statements.

Neddrill has not had any material environmental incidents with any of its
drilling units. Management believes Neddrill is in compliance with all relevant
environmental regulations.

16 TAXATION ON INCOME

Pre-tax income (loss) is analysed over its component parts as follows:

<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(IN NLG 1,000)
<S> <C> <C> <C>
The Netherlands....................................... 18,161 (411) 36,223
Foreign............................................... (16,039) (20,016) (16,310)
------- ------- -------
2,122 (20,427) 19,913
======= ======= =======
</TABLE>

F-48
<PAGE> 113

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Taxation expense (benefit) is allocated between current and deferred as
follows:

<TABLE>
<CAPTION>
1995 1994 1993
----- ------ ------
(IN NLG 1,000)
<S> <C> <C> <C>
The Netherlands
Current tax............................................. 3,750 (4,839) 10,071
Deferred tax............................................ 2,138 4,582 4,591
----- ------ ------
Foreign................................................... 5,888 (257) 14,662
Current................................................. (541) 678 51
----- ------ ------
5,347 421 14,713
===== ====== ======
</TABLE>

The amounts of deferred taxes stated in the consolidated balance sheets
relate to:

<TABLE>
<CAPTION>
1995 1994
------- -------
(IN NLG 1,000)
<S> <C> <C>
Deferred tax assets
Net operating loss carryforwards................................. 12,660 12,400
Depreciation..................................................... 16,389 18,528
------- -------
29,049 30,928
Less: Valuation allowance........................................ (12,660) (12,400)
------- -------
Net deferred tax assets.......................................... 16,390 18,528
======= =======
</TABLE>

At December 31, 1995 Neddrill had net operating loss carryforwards, which
are available to offset future taxable income if any, in the United Kingdom of
NLG 38.0 million. Such net operating loss carry forwards have no expiration
date.

Neddrill's valuation allowance for deferred tax assets as of December 31,
1995 and 1994, which relates entirely to Neddrill's net operating loss carry
forward in the United Kingdom, was NLG 12.7 million and NLG 12.4 million,
respectively. The net increase in the total valuation allowance for the years
ended December 31, 1995, 1994 and 1993 was (including the effects of foreign
currency translations) NLG 260,000, NLG 7.2 million and NLG 4.6 million,
respectively. The ultimate realisation of Neddrill's net operating loss carry
forwards in the United Kingdom is dependent upon the generation of future
taxable income in such jurisdiction. As Neddrill has not generated taxable
income in the United Kingdom since inception of its operations there, Management
believes it more likely than not that in the near future Neddrill will not
realise the benefit of such net operating loss carry forwards. Accordingly,
Neddrill has recorded a 100% valuation allowance against its United Kingdom net
operating loss carry forwards at December 31, 1995, 1994 and 1993.

The table below reconciles the expected corporate income taxation in The
Netherlands to the effective consolidated income taxation expense:

<TABLE>
<CAPTION>
1995 1994 1993
----- ------ ------
(IN NLG 1,000)
<S> <C> <C> <C>
Expected corporate taxation expense in The Netherlands.... 743 (7,149) 6,970
Foreign tax rate differential............................. 3,261 909 1,998
Increase in valuation allowance........................... 1,410 8,231 2,485
Non-deductible expenses................................... 55 57 3,326
Non-taxable investment grant income....................... (464) (608) (742)
Results from non-consolidated companies................... 402 (1,458) 1,276
Other..................................................... (60) 439 (600)
----- ------ ------
5,347 421 14,713
===== ====== ======
</TABLE>

F-49
<PAGE> 114

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17 DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash, receivables and current liabilities
approximate fair value because of the short maturity of those investments. The
fair value of Neddrill's long-term debt does not materially differ from the
carrying value.

18 SUPPLEMENTAL CASH FLOW DISCLOSURES

<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(IN NLG 1,000)
<S> <C> <C> <C>
Cash paid (received) during the year for:
Interest on shareholder's loans........................ 30,693 19,846 29,635
Other interest expense................................. 3,729 4,799 3,040
Income taxes paid...................................... 3,552 8,547 1,003
</TABLE>

19 SALARIES, WAGES AND RELATED EXPENSES

The composition is as follows:

<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(IN NLG 1,000)
<S> <C> <C> <C>
Salaries and wages....................................... 47,487 39,687 43,129
Pension costs............................................ 1,002 967 1,008
Social security costs.................................... 2,757 1,889 2,265
------ ------ ------
51,246 42,543 46,402
====== ====== ======
</TABLE>

Neddrill's domestic on-shore employees participate in the Royal Nedlloyd
N.V. defined benefit pension plan. Separate actuarial valuations for Neddrill's
participation in this plan are not available. There were no contributions
required to be made by Nedlloyd to the pension plan for the years ended December
31, 1995, 1994 and 1993, as such Neddrill was also not charged for their
participation in the plan for these years.

Neddrill's offshore employees principally participate in a third-party
sponsored defined benefit scheme. Due to the nature of this pension plan under
which (coming) backservice is not applicable, Neddrill's liability under such
scheme is not material to the financial position of Neddrill. During the years
ended December 31, 1995, 1994 and 1993 Neddrill was charged NLG 1,002,000, NLG
967,000 and NLG 1,008,000 by the third-party for its participation in the plan.

F-50
<PAGE> 115

NEDDRILL HOLDING B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

20 OTHER OPERATING EXPENSES

<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(IN NLG 1,000)
<S> <C> <C> <C>
Labour costs third parties............................... 14,590 12,324 12,396
Lease and rental equipment............................... 3,654 5,127 7,043
Bareboat charter hire.................................... 4,422 6,413 7,470
Insurance costs.......................................... 7,175 7,098 6,740
Repair and maintenance................................... 26,591 24,618 19,866
Crewchange expenses...................................... 5,448 3,890 2,499
Catering expenses........................................ 7,511 7,685 7,930
Corporate restructuring costs............................ -- -- 9,414
Salvage fee.............................................. (4,102) -- --
Other operating costs.................................... 18,602 18,042 8,379
------ ------ ------
83,891 85,197 81,737
Amortization of investment premiums...................... (2,115) (2,758) (3,379)
------ ------ ------
81,776 82,439 78,358
====== ====== ======
</TABLE>

21 INTEREST INCOME

The composition is as follows:

<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(IN NLG 1,000)
<S> <C> <C> <C>
Royal Nedlloyd N.V....................................... -- 487 2,745
Third parties............................................ 286 270 369
--- --- -----
286 757 3,114
=== === =====
</TABLE>

22 INTEREST EXPENSES

The composition is as follows:

<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(IN NLG 1,000)
<S> <C> <C> <C>
Royal Nedlloyd N.V....................................... 30,693 19,846 29,635
Other Nedlloyd companies................................. 387 301 --
Third parties............................................ 3,342 4,498 3,040
------ ------ ------
34,422 24,645 32,675
====== ====== ======
</TABLE>

23 OTHER FINANCIAL INCOME AND EXPENSE

<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(IN NLG 1,000)
<S> <C> <C> <C>
Hedging result........................................... 6,507 6,140 --
Currency exchange difference............................. (1,459) (181) 808
------ ----- ---
5,048 5,959 808
====== ===== ===
</TABLE>

Under an agreement with the Royal Nedlloyd N.V., Neddrill hedged its
estimated 1995 and 1994 surplus USD cash flow against a rate of exchange of USD
1 equalling NLG 1.75 (1994 at USD 1 equalling NLG 2.00). Such agreements are
closed out before the end of each year.

F-51
<PAGE> 116

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following financial statements provide unaudited pro forma consolidated
balance sheet data as of March 31, 1996 and unaudited pro forma consolidated
statement of operations data for the three months ended March 31, 1996 and for
the year ended December 31, 1995. These unaudited pro forma consolidated
financial data give effect to (i) the completion of the Acquisition, and (ii)
the completion of the Equity Offerings and the Debt Offering and the application
of the estimated net proceeds therefrom as described elsewhere in this
Prospectus, as if each had occurred, in the case of the balance sheet data, on
March 31, 1996, and in the case of the operations statement data, on January 1,
1995. Pursuant to the Acquisition, the Company will acquire Neddrill's assets
including $25,000,000 in net working capital, and the personnel it employs.

The following unaudited pro forma consolidated financial data may not be
indicative of what the financial condition or results of operations of the
Company would have been, had the transactions to which such data give effect
been completed on the dates assumed, nor are such data necessarily indicative of
the financial condition or results of operations of the Company that may exist
in the future. The following unaudited pro forma consolidated information should
be read in conjunction with the historical financial statements and notes
thereto appearing elsewhere in this Prospectus.

F-52
<PAGE> 117

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(In thousands)

<TABLE>
<CAPTION>
ADJUSTMENTS
-------------------------------------
THE THE EQUITY THE DEBT PRO FORMA
COMPANY ACQUISITION OFFERINGS OFFERING COMBINED
-------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............................. $ 26,338 $(300,000)A $244,291B $122,150C $ 92,779
Investment in marketable equity securities............ 6,416 6,416
Investment in marketable debt securities.............. 15,417 15,417
Accounts receivable................................... 73,184 25,000A 98,184
Costs of uncompleted contracts in excess of
billings............................................ 3,717 3,717
Inventories........................................... 22,825 22,825
Assets held for sale.................................. 31,968 31,968
Other current assets.................................. 41,811 41,811
-------- ----------- ---------- -------- ----------
Total current assets............................ 221,676 (275,000) 244,291 122,150 313,117
-------- ----------- ---------- -------- ----------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities..................... 843,965 325,000A 1,168,965
Other................................................. 24,523 24,523
-------- ----------- ---------- -------- ----------
868,488 325,000 -- -- 1,193,488
Accumulated depreciation.............................. (342,746) (342,746)
-------- ----------- ---------- -------- ----------
525,742 325,000 -- -- 850,742
-------- ----------- ---------- -------- ----------
OTHER ASSETS............................................ 10,535 -- -- 2,850 C 13,385
-------- ----------- ---------- -------- ----------
$757,953 50,000 244,291 125,000 1,177,244
======== ========== ========== ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt and current installments of long-term
debt................................................ $ 12,610 $ 12,610
Accounts payable...................................... 35,476 35,476
Accrued payroll and related costs..................... 17,821 17,821
Taxes payable......................................... 13,977 13,977
Interest payable...................................... 5,785 5,785
Other current liabilities............................. 12,817 12,817
-------- ----------- ---------- -------- ----------
Total current liabilities....................... 98,486 -- -- -- 98,486
LONG-TERM DEBT.......................................... 126,048 $125,000C 251,048
OTHER LIABILITIES....................................... 1,015 1,015
MINORITY INTEREST....................................... 973 973
-------- ----------- ---------- -------- ----------
226,522 -- -- 125,000 351,522
-------- ----------- ---------- -------- ----------
SHAREHOLDERS' EQUITY
Preferred stock....................................... 4,025 4,025
Common stock.......................................... 9,478 $ 500A 1,650B 11,628
Capital in excess of par value........................ 590,255 49,500A 242,641B 882,396
Unrealized losses on marketable securities............ (131) (131)
Minimum pension liability............................. (3,403) (3,403)
Cumulative translation adjustment..................... (2,343) (2,343)
Accumulated deficit................................... (64,587) (64,587)
Treasury stock, at cost............................... (1,863) (1,863)
-------- ----------- ---------- -------- ----------
531,431 50,000 244,291 -- 825,722
-------- ----------- ---------- -------- ----------
$757,953 $ 50,000 $244,291 $125,000 $1,177,244
======== ========== ========== ======== ==========
</TABLE>

- ---------------

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

A -- To record the purchase of nine offshore drilling units, related drilling
assets and $25,000,000 of net working capital pursuant to the Acquisition
for a purchase price of $300,000,000 in cash plus 5,000,000 shares of
Common Stock based on an issue price of $10.00 per share. The net working
capital has been classified as accounts receivable, although the actual
allocation of working capital will not be determined until after closing of
the Acquisition.

B -- To record the issuance of Common Stock pursuant to the Equity Offerings and
the application of assumed net proceeds of $244,291,000 (16,500,000 shares
at $15.50 per share less underwriting discount and expenses estimated at
$11,459,000) to partially fund the Acquisition.

C -- To record the assumed net proceeds from the issuance of $125,000,000
aggregate principal amount of Senior Notes (net of underwriting discount
and expenses estimated at $2,850,000).

F-53
<PAGE> 118

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(In thousands, except per share amounts)

<TABLE>
<CAPTION>
ADJUSTMENTS
---------------------------------------
THE THE EQUITY THE DEBT PRO FORMA
COMPANY NEDDRILL(A) ACQUISITION OFFERINGS OFFERING COMBINED
-------- ----------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Contract drilling services........... $ 60,250 $ 38,952 $ 99,202
Labor contract drilling services..... 7,994 7,994
Turnkey drilling services............ 33,055 -- 33,055
Engineering and consulting
services........................... 1,762 -- 1,762
Other revenue........................ 1,696 2,484 4,180
-------- -------- ------- ------- -------- --------
104,757 41,436 -- -- -- 146,193
-------- -------- ------- ------- -------- --------
OPERATING COSTS AND EXPENSES
Contract drilling services........... 38,536 21,692 $ (150)B,C 60,078
Labor contract drilling services..... 5,925 5,925
Turnkey drilling services............ 23,206 -- 23,206
Engineering and consulting
services........................... 1,097 -- 1,097
Other expense........................ 900 1,613 2,513
Depreciation and amortization........ 8,930 4,858 459D 14,247
Selling, general and
administrative..................... 12,025 1,857 13,882
Asset sales and writedowns........... 73 2 75
Minority interest.................... (32) -- (32)
-------- -------- ------- ------- -------- --------
90,660 30,022 309 -- -- 120,991
-------- -------- ------- ------- -------- --------
OPERATING INCOME (LOSS)................ 14,097 11,414 (309) -- -- 25,202
-------- -------- ------- ------- -------- --------
OTHER INCOME (EXPENSE)
Interest expense..................... (3,176) (4,702) 4,697E $(2,805)F,G (5,986)
Interest income...................... 825 5 830
Equity income (loss) of
unconsolidated affiliate........... -- 27 (27)H --
Other, net........................... 483 (1,719) 2,050I 814
-------- -------- ------- ------- -------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES.................. 12,229 5,025 6,411 -- (2,805) 20,860
INCOME TAX BENEFIT (PROVISION)......... (1,503) (1,542) -- (3,045)
-------- -------- ------- ------- -------- --------
NET INCOME (LOSS)...................... 10,726 3,483 6,411 -- (2,805) 17,815
PREFERRED STOCK DIVIDENDS.............. (1,511) -- (1,511)
-------- -------- ------- ------- -------- --------
NET INCOME APPLICABLE TO COMMON
SHARES............................... $ 9,215 $ 3,483 $ 6,411 $ -- $(2,805) $ 16,304
======== ======== ======= ======= ======== ========
NET INCOME PER SHARE................... $ 0.10 $ 0.14
======== ========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING.......................... 95,782 5,000J 16,500J 117,282
</TABLE>

- ---------------

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<S> <C>
A -- Historical financial information for Neddrill Holding B.V. for the three months ended March 31, 1996 was
derived from unaudited financial statements furnished by Neddrill Holding B.V.
B -- To record anticipated consolidation savings in connection with the expected inclusion of the Neddrill assets
and operations under the Company's existing insurance program after closing of the Acquisition estimated at
$375,000.
C -- To eliminate $225,000 of Dutch investment tax credits not applicable to the Acquisition.
D -- To record the estimated additional depreciation expense resulting from the allocation of the purchase price
of the Acquisition to the drilling equipment and associated assets.
Assumes 15 year remaining life for six jackup rigs (salvage value -- $500,000 per rig), one semisubmersible
(salvage value -- $1,000,000 per drilling unit) and two drillships (salvage value -- $1,000,000 per
drillship).
As the Company completes its detailed assessment of rig components, there may be resulting allocation
adjustments. As a result of this additional evaluation and the upgrades to be undertaken after the completion
of the Acquisition, management of the Company anticipates that remaining useful lives may be adjusted.
E -- To eliminate interest on loans not assumed in connection with the Acquisition.
F -- To record estimated interest expense on the Senior Notes.
G -- To record amortization of $71,000 of the estimated deferred costs relating to the Senior Notes.
H -- To eliminate profit of $27,000 from non-consolidated subsidiaries not assumed as part of the Acquisition.
I -- To eliminate the losses on the foreign exchange hedge transactions of $2,050,000 not applicable to the
Acquisition.
J -- To record the issuance of Common Stock pursuant to the Equity Offerings and the non-cash part of the purchase
price of the Acquisition.
</TABLE>

F-54
<PAGE> 119

NOBLE DRILLING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(In thousands, except per share amounts)

<TABLE>
<CAPTION>
ADJUSTMENTS
---------------------------------------
THE THE EQUITY THE DEBT PRO FORMA
COMPANY NEDDRILL ACQUISITION OFFERINGS OFFERING COMBINED
-------- -------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Contract drilling services.............. $205,110 $111,806 $316,916
Labor contract drilling services........ 35,136 35,136
Turnkey drilling services............... 71,273 71,273
Engineering and consulting services..... 11,264 11,264
Other revenue........................... 5,185 9,719 14,904
-------- -------- ------- ------- -------- --------
327,968 121,525 449,493
-------- -------- ------- ------- -------- --------
OPERATING COSTS AND EXPENSES
Contract drilling services.............. 138,340 69,229 $ (184)A,B 207,385
Labor contract drilling services........ 26,540 26,540
Turnkey drilling services............... 64,471 64,471
Engineering and consulting services..... 7,311 7,311
Other expense........................... 3,440 7,155 10,595
Depreciation and amortization........... 36,492 18,791 2,476C 57,759
Selling, general and administrative..... 40,139 6,395 46,534
Minority interest....................... (214) (214 )
-------- -------- ------- ------- -------- --------
316,519 101,570 2,292 420,381
-------- -------- ------- ------- -------- --------
OPERATING INCOME (LOSS)................... 11,449 19,955 (2,292) 29,112
-------- -------- ------- ------- -------- --------
OTHER INCOME (EXPENSE)
Interest expense........................ (12,156) (21,420) 21,420D $(11,223)E,F (23,379 )
Interest income......................... 5,323 178 5,501
Equity (loss) income of unconsolidated
affiliate............................. (716) 716G
Other, net.............................. 250 3,325 (4,049)H (474 )
-------- -------- ------- ------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND EXTRAORDINARY
ITEM.................................... 4,866 1,322 15,795 (11,223 ) 10,760
INCOME TAX BENEFIT (PROVISION)............ (3,272) (3,327) 1,330I (5,269 )
-------- -------- ------- ------- -------- --------
NET INCOME (LOSS)......................... 1,594 (2,005) 17,125 (11,223 ) 5,491
PREFERRED STOCK DIVIDENDS................. (7,199) (7,199 )
-------- -------- ------- ------- -------- --------
NET (LOSS) INCOME APPLICABLE TO COMMON
SHARES................................ $ (5,605) $ (2,005) $17,125 $ $(11,223) $ (1,708 )
======== ======== ======= ======= ======== ========
NET (LOSS) PER SHARE...................... $ (0.08) $ (0.03 )
======== ========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING............................. 89,736 5,000J 16,500J 111,236
</TABLE>

- ---------------

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<S> <C>
A -- To record anticipated consolidation savings in connection with the expected inclusion of the Neddrill assets
and operations under the Company's existing insurance program after closing of the Acquisition estimated at
$1,500,000.
B -- To eliminate $1,316,000 of Dutch investment tax credits not applicable to the Acquisition.
C -- To record the estimated additional depreciation expense resulting from the allocation of the purchase price
of the Acquisition to the drilling equipment and associated assets.
Assumes 15 year remaining life for six jackup rigs (salvage value -- $500,000 per rig), one semisubmersible
(salvage value -- $1,000,000 per drilling unit) and two drillships (salvage value -- $1,000,000 per
drillship).
As the Company completes its detailed assessment of rig components, there may be resulting allocation
adjustments. As a result of this additional evaluation and the upgrades to be undertaken after the completion
of the Acquisition, management of the Company anticipates that remaining useful lives may be adjusted.
D -- To eliminate interest on loans not assumed in connection with the Acquisition.
E -- To record estimated interest expense on the Senior Notes.
F -- To record amortization of $285,000 of the estimated deferred costs relating to the Senior Notes.
G -- To eliminate loss of $716,000 from non-consolidated subsidiaries not assumed as part of the Acquisition.
H -- To eliminate gains on the foreign exchange hedge transactions in an amount of $4,049,000 not applicable to
the Acquisition.
I -- To eliminate the deferred income tax charge of $1,330,000 not applicable to the Acquisition.
J -- To record the issuance of Common Stock pursuant to the Equity Offerings and the non-cash part of the purchase
price of the Acquisition.
</TABLE>

F-55
<PAGE> 120

------------------------------------------------------------
------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SENIOR NOTES IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE SUCH DATE.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................... 3
Risk Factors............................... 11
Disclosure Regarding Forward-Looking
Statements............................... 15
Use of Proceeds............................ 16
Capitalization............................. 17
The Company................................ 18
The Acquisition............................ 24
Selected Financial Data.................... 27
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 29
Management................................. 36
Description of Senior Notes................ 38
Underwriting............................... 61
Legal Opinions............................. 62
Experts.................................... 62
Available Information...................... 62
Incorporation of Certain Documents by
Reference................................ 63
Index to Financial Statements.............. F-1
</TABLE>

------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
$125,000,000

LOGO

NOBLE DRILLING
CORPORATION

% SENIOR NOTES DUE 2006
------------------------

PROSPECTUS
------------------------
MERRILL LYNCH & CO.

SALOMON BROTHERS INC

SIMMONS & COMPANY
INTERNATIONAL

, 1996
------------------------------------------------------------
------------------------------------------------------------
<PAGE> 121

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Except for the SEC registration fee and the NASD filing fee, all expenses
are estimated. All such expenses will be paid by the Registrant.

<TABLE>
<S> <C>
SEC registration fee.............................................. $ 43,103
NASD filing fee................................................... 13,000
Accounting fees and expenses...................................... 57,500
Legal fees and expenses........................................... 75,000
Printing and engraving expenses................................... 110,000
Blue sky fees and expenses (including legal fees)................. 13,000
Miscellaneous..................................................... 38,397
--------
Total................................................... $350,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Registrant is a Delaware corporation. Under Section 145 of the General
Corporation Law of the State of Delaware, the Registrant has the power to
indemnify its directors and officers, subject to certain limitations.

Reference is made to Article VI of the Bylaws of the Registrant, which
Article is filed as part of Exhibit 3.12 hereto and provides for indemnification
of directors and officers of the Registrant under certain circumstances.

Reference is made to Section 6 of the form of the Purchase Agreement filed
as Exhibit 1.1 hereto for provisions relating to the indemnification of
directors, officers and controlling persons of the Registrant against certain
liabilities, including liabilities under the Securities Act of 1933.

Pursuant to the General Corporation Law of the State of Delaware, the
Certificate of Incorporation of the Registrant, filed as Exhibits 3.1 through
3.11 hereto, limits the personal liability of the directors of the Registrant to
the Registrant or its stockholders for monetary damages for breach of fiduciary
duty under certain circumstances.

The Registrant also maintains insurance to protect itself and its
directors, officers, employees and agents against expenses, liabilities and
losses incurred by such persons in connection with their service in the
foregoing capacities.

The foregoing summaries are necessarily subject to the complete text of the
statute, bylaw, agreement, certificate of incorporation and insurance policy
referred to above and are qualified in their entirety by reference thereto.

II-1
<PAGE> 122

ITEM 16. EXHIBITS.

The following exhibits are filed as part of this Registration Statement:

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
1.1* -- Form of Purchase Agreement.
2.1 -- Agreement of Sale and Purchase dated as of April 25, 1996, between
the Registrant, and Royal Nedlloyd N.V. and Neddrill Holding B.V.
(filed as Exhibit 2.1 to the Registrant's Registration Statement on
Form S-3 (No. 333- ) and incorporated herein by reference.)
3.1 -- Restated Certificate of Incorporation of the Registrant dated August
29, 1985 (filed as Exhibit 3.7 to the Registrant's Registration
Statement on Form 10 (No. 9-13857) and incorporated herein by
reference).
3.2 -- Certificate of Amendment of Restated Certificate of Incorporation of
the Registrant dated May 5, 1987 (filed as Exhibit 4.2 to the
Registrant's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
3.3 -- Certificate of Amendment of Restated Certificate of Incorporation of
the Registrant dated June 1, 1987 (filed as Exhibit 4.3 to the
Registrant's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
3.4 -- Certificate of Amendment of Restated Certificate of Incorporation of
the Registrant dated April 28, 1988 (filed as Exhibit 3.12 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1988 and incorporated herein by reference).
3.5 -- Certificate of Amendment of Restated Certificate of Incorporation of
the Registrant dated April 27, 1989 (filed as Exhibit 3.13 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1989, as amended, and incorporated herein by reference).
3.6 -- Certificate of Amendment of Certificate of Incorporation of the
Registrant dated August 1, 1991 (filed as Exhibit 3.16 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1991 and incorporated herein by reference).
3.7 -- Certificate of Designations of $1.50 Convertible Preferred Stock, par
value of $1.00 per share, of the Registrant, dated as of September
15, 1994 (filed as Exhibit 3.8 to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference).
3.8 -- Certificate of Amendment of Certificate of Incorporation of the
Registrant dated September 15, 1994 (filed as Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the three-month period
ended March 31, 1995 and incorporated herein by reference).
3.10 -- Certificate of Elimination of shares of $2.25 Convertible
Exchangeable Preferred Stock of the Registrant dated June 8, 1995
(filed as Exhibit 3.1 to the Registrant's Quarterly Report on Form
10-Q for the three-month period ended June 30, 1995 and incorporated
herein by reference).
3.11 -- Certificate of Designations of Series A Junior Participating
Preferred Stock, par value $1.00 per share, of the Registrant dated
as of June 29, 1995 (filed as Exhibit 3.2 to the Registrant's
Quarterly Report on Form 10-Q for the three-month period ended June
30, 1995 and incorporated herein by reference).
3.12 -- Composite copy of the Bylaws of the Registrant as currently in effect
(filed as Exhibit 3.4 to the Registrant's Quarterly Report on Form
10-Q for the three-month period ended June 30, 1995 and incorporated
herein by reference).
</TABLE>

II-2
<PAGE> 123

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
4.1* -- Form of Indenture governing the % Senior Notes due 2006.
5.1* -- Opinion of Thompson & Knight, P.C.
12.1 -- Statement re Computation of Ratios of Earnings to Fixed Charges.
23.1 -- Consent of Price Waterhouse LLP.
23.2 -- Consent of Arthur Andersen LLP.
23.3 -- Consent of KPMG Accountants N.V.
23.4* -- Consent of Thompson & Knight, P.C. (contained in its opinion filed as
Exhibit 5.1).
24.1 -- Powers of Attorney (included on signature page).
</TABLE>

- ---------------

* To be filed by amendment.

ITEM 17. UNDERTAKINGS.

(b) Filings incorporating subsequent Exchange Act documents by reference.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(h) Acceleration of effectiveness.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(i) Rule 430A.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 124

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on the 26th day of April,
1996.

NOBLE DRILLING CORPORATION

By /s/ JAMES C. DAY
-------------------------------
James C. Day
Chairman, President and Chief
Executive Officer

Each person whose signature appears below constitutes and appoints James C.
Day and Byron L. Welliver, and each of them (with full power to each of them to
act alone), his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign on his behalf individually and in each capacity
stated below any amendment, (including post-effective amendments) to this
Registration Statement and any Registration Statement (including any amendment
thereto) for this offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ ----------------
<C> <S> <C>
/s/ JAMES C. DAY Chairman, President and Chief April 26, 1996
- --------------------------------------------- Executive Officer and
James C. Day Director (Principal
Executive Officer)

/s/ BYRON L. WELLIVER Senior Vice April 26, 1996
- --------------------------------------------- President -- Finance,
Byron L. Welliver Treasurer and Controller
(Principal Financial and
Accounting Officer)

/s/ MICHAEL A. CAWLEY Director April 26, 1996
- ---------------------------------------------
Michael A. Cawley

/s/ LAWRENCE J. CHAZEN Director April 26, 1996
- ---------------------------------------------
Lawrence J. Chazen

/s/ TOMMY C. CRAIGHEAD Director April 26, 1996
- ---------------------------------------------
Tommy C. Craighead
</TABLE>

II-4
<PAGE> 125

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ ----------------
<C> <S> <C>
/s/ JAMES L. FISHEL Director April 26, 1996
- ---------------------------------------------
James L. Fishel

/s/ JOHNNIE W. HOFFMAN Director April 26, 1996
- ---------------------------------------------
Johnnie W. Hoffman

/s/ MARC E. LELAND Director April 26, 1996
- ---------------------------------------------
Marc E. Leland

/s/ BILL M. THOMPSON Director April 26, 1996
- ---------------------------------------------
Bill M. Thompson
</TABLE>

II-5
<PAGE> 126

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
1.1* -- Form of Purchase Agreement.
2.1 -- Agreement of Sale and Purchase dated as of April 25, 1996, between
the Registrant, and Royal Nedlloyd N.V. and Neddrill Holding B.V.
(filed as Exhibit 2.1 to to the Registrant's Registration Statement
on Form S-3 (No. 333- ) and incorporated herein by reference.)
3.1 -- Restated Certificate of Incorporation of the Registrant dated August
29, 1985 (filed as Exhibit 3.7 to the Registrant's Registration
Statement on Form 10 (No. 9-13857) and incorporated herein by
reference).
3.2 -- Certificate of Amendment of Restated Certificate of Incorporation of
the Registrant dated May 5, 1987 (filed as Exhibit 4.2 to the
Registrant's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
3.3 -- Certificate of Amendment of Restated Certificate of Incorporation of
the Registrant dated June 1, 1987 (filed as Exhibit 4.3 to the
Registrant's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
3.4 -- Certificate of Amendment of Restated Certificate of Incorporation of
the Registrant dated April 28, 1988 (filed as Exhibit 3.12 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1988 and incorporated herein by reference).
3.5 -- Certificate of Amendment of Restated Certificate of Incorporation of
the Registrant dated April 27, 1989 (filed as Exhibit 3.13 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1989, as amended, and incorporated herein by reference).
3.6 -- Certificate of Amendment of Certificate of Incorporation of the
Registrant dated August 1, 1991 (filed as Exhibit 3.16 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1991 and incorporated herein by reference).
3.7 -- Certificate of Designations of $1.50 Convertible Preferred Stock, par
value of $1.00 per share, of the Registrant, dated as of September
15, 1994 (filed as Exhibit 3.8 to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference).
3.8 -- Certificate of Amendment of Certificate of Incorporation of the
Registrant dated September 15, 1994 (filed as Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the three-month period
ended March 31, 1995 and incorporated herein by reference).
3.10 -- Certificate of Elimination of shares of $2.25 Convertible
Exchangeable Preferred Stock of the Registrant dated June 8, 1995
(filed as Exhibit 3.1 to the Registrant's Quarterly Report on Form
10-Q for the three-month period ended June 30, 1995 and incorporated
herein by reference).
3.11 -- Certificate of Designations of Series A Junior Participating
Preferred Stock, par value $1.00 per share, of the Registrant dated
as of June 29, 1995 (filed as Exhibit 3.2 to the Registrant's
Quarterly Report on Form 10-Q for the three-month period ended June
30, 1995 and incorporated herein by reference).
3.12 -- Composite copy of the Bylaws of the Registrant as currently in effect
(filed as Exhibit 3.4 to the Registrant's Quarterly Report on Form
10-Q for the three-month period ended June 30, 1995 and incorporated
herein by reference).
4.1* -- Form of Indenture governing the % Senior Notes due 2006.
5.1* -- Opinion of Thompson & Knight, P.C.
12.1 -- Statement re Computation of Ratios of Earnings to Fixed Charges.
23.1 -- Consent of Price Waterhouse LLP.
23.2 -- Consent of Arthur Andersen
23.3 -- Consent of KPMG Accountants N.V.
23.4* -- Consent of Thompson & Knight, P.C. (contained in its opinion filed as
Exhibit 5.1).
24.1 -- Powers of Attorney (included on signature page)
</TABLE>

- ---------------

* To be filed by amendment.

<PAGE> 1
================================================================================

EXHIBIT 2.1

AGREEMENT OF SALE AND PURCHASE

by and between

NOBLE DRILLING CORPORATION

and

ROYAL NEDLLOYD N.V. and
NEDDRILL HOLDING B.V.

April 25, 1996

================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I -- CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II -- PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Assets to be Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Limitation of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Limitation on Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Delivery of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE III -- PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE IV -- THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Deliveries by Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Organization; Existence and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Articles of Association and Bylaws of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 14
5.4 Authority; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.5 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 Purchased Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.7 Ownership of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.8 Vessel Classifications and Certifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.9 Seller's Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.10 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.11 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 Governmental Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.14 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.15 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.16 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.17 Employees Engaged in the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.18 Financial Requirements Regarding Purchased Subsidiaries . . . . . . . . . . . . . . . . . . . . . 21
5.19 Bank Accounts and Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.20 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.21 Illegal Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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5.22 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.23 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.24 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.25 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.26 Performance Bonds; Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.27 Certain Property on Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.28 No Business in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.29 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.30 Venture Involving Neddrill Muravlenko . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.31 Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

ARTICLE VI -- REPRESENTATIONS AND WARRANTIES OF PARENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Organization and Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Authority; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.5 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.6 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

ARTICLE VII -- REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.1 Organization and Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Authority; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.3 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.5 Governmental Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.7 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.8 Charter and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.9 Buyer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.10 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE VIII -- CONDITIONS TO THE OBLIGATIONS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.1 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Covenants and Agreements Performed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.4 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE IX -- CONDITIONS TO THE OBLIGATIONS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.1 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.2 Covenants and Agreements Performed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.4 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.5 Financing by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.6 Diminution in Value of the Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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ARTICLE X -- COVENANTS AND AGREEMENTS OF THE PARTIES BEFORE,
RELATING TO AND SUBSEQUENT TO THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.1 Net Working Capital Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.2 Action of Buyer Regarding Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.3 Lock-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.4 Restrictions on Certain Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.5 Restrictions on Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.6 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.7 Conduct of Business and Preservation of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.8 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.10 Certain Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.11 Certain Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.12 Actions with Respect to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.13 Public Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.14 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.15 Vessel Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.16 Use of Neddrill Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.17 Continued Effectiveness of Representations and Warranties . . . . . . . . . . . . . . . . . . . . 42
10.18 Import Duties; Performance Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.19 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.20 Removal of Outstanding Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.21 Maintenance of Inventory Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.22 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.23 Conduct of Business Pending the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.24 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.25 Post-Closing Collection, Payment and Administrative Procedures . . . . . . . . . . . . . . . . . . 43
10.26 Removal of Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.27 Settling of Intercompany Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

ARTICLE XI -- PARENT GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

ARTICLE XII -- EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.1 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.2 Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.3 No Solicitation of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.4 Preexisting Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.5 Employee Pension Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.6 Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

ARTICLE XIII -- TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.3 Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

ARTICLE XIV -- INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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14.1 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
14.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.3 Limitation of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.4 Applicability of Indemnification Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

ARTICLE XV -- EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15.1 General Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

ARTICLE XVI -- MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
16.3 Amendments and Waiver; Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
16.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
16.5 Binding Effect; Assignment; Third Party Benefit . . . . . . . . . . . . . . . . . . . . . . . . . 57
16.6 No Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
16.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
16.8 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
16.9 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
16.10 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
16.11 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
16.12 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>

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INDEX TO SCHEDULES AND EXHIBITS

<TABLE>
<CAPTION>
Schedule Number Description
- --------------- ------------------------------------------------------------------------
<S> <C>
1(a) Vessels
1(a)(i) Excluded Equipment
1(b) Shore-Based Inventory
1(d)(iii) Intellectual Property
1(d)(iv) Permits
1(e) Chartered Vessel Contracts
1(f)(i) Drilling Contracts
1(f)(ii) Other Contracts
1(g) Parent's Intellectual Property Registrations
2.2 Certain Excluded Assets
2.6(a) Engineering Drawings, etc.
5.2 Seller and Subsidiaries Qualifications
5.5 Seller's Breaches
5.6 Purchased Subsidiaries
5.8(b) Vessel Class Recommendations
5.9 Seller's Insurance
5.11 Seller's Defaults
5.12(a) Seller's Litigation
5.12(b) Seller's Governmental Notifications
5.14(a) Seller's Compliance With Laws
5.14(b) Seller's Violations of Applicable Environmental Laws
5.15 Seller's Employee Matters
5.16(a) Seller's Collective Bargaining Arrangements
5.17(a) Purchased Subsidiaries' Directors, Officers and Employees
5.18 Purchased Subsidiaries' Financial Requirements
5.19 Purchased Subsidiaries' Bank Relations
5.22 Seller's Tax Matters
5.23(c) Purchased Subsidiaries' Undisclosed Liabilities
5.26 Seller's Performance Bonds; Letters of Credit
5.30 Neddrill Muravlenko Contracts, Arrangements or Other Commitments
5.31 Contracts, Arrangements or Other Commitments Relating to Joint Ventures
6.3 Parent's Breaches
7.3 Buyer's Breaches
7.5 Buyer's Governmental Approvals
10.15(a) Purchase Price Adjustments
10.26 Removed Encumbrances
12.5(b) Pension Insurance Heads of Agreement
12.5(c) Assumptions Used by Parent's Actuaries
</TABLE>

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<TABLE>
<CAPTION>
Exhibit Number
- --------------
<S> <C>
2.5(a) Form of Agreement Regarding Nonassigned Contracts
4.3(a) Form of General Assignment
8.3 Form of Buyer's Officer's Certificate
8.4 Buyer's Opinion of Counsel
9.3(a) Form of Parent's Officer's Certificate
9.3(b) Form of Seller's Officer's Certificate
9.4 Seller's Opinion of Counsel
10.2(d) Form of Registration Rights Agreement
10.7 1996 Capital Expenditure Plan
</TABLE>

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AGREEMENT OF SALE AND PURCHASE

This AGREEMENT OF SALE AND PURCHASE (this "Agreement") is dated as of
April 25, 1996, by and between NOBLE DRILLING CORPORATION, a Delaware
corporation ("Buyer"), and ROYAL NEDLLOYD N.V., a Netherlands corporation
("Parent"), and NEDDRILL HOLDING B.V., a Netherlands corporation and a wholly
owned direct subsidiary of Parent ("Seller");

W I T N E S S E T H:

WHEREAS, Buyer desires to purchase the Assets (as hereinafter defined)
from Seller and its Subsidiaries (as hereinafter defined); and

WHEREAS, Seller desires to sell, and to cause its Subsidiaries to
sell, the Assets to Buyer in consideration for the payment by Buyer of the Cash
Purchase Price (as hereinafter defined) the issuance by Buyer of the Buyer
Shares (as hereinafter defined) and the assumption by Buyer of the Assumed
Liabilities (as hereinafter defined); and

WHEREAS, Parent desires to take such actions as are necessary or
appropriate to cause Seller to effect the transactions above described in this
preamble and, in connection therewith, to guarantee the agreements and
obligations of Seller in and under this Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual terms,
covenants and conditions herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

As used in this Agreement, the following terms have the following
respective meanings:

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

"Agreement" has the meaning specified in the preamble.

"Applicable Environmental Laws" has the meaning specified in Section
5.14(b).

"Applicable Laws" has the meaning specified in Section 5.14(a).

"Arbiter" has the meanings specified in Section 10.1(e)(iv)(B).
<PAGE> 9
"Assets" means, collectively, all the property, assets and rights,
tangible and intangible (other than the Excluded Assets), used by Seller and
its Subsidiaries in the Business and to be acquired by Buyer pursuant to this
Agreement, which consist of the following:

(a) the following two drillships, six jackup rigs and one
semi-submersible rig:

Neddrill 1 Drillship (Gusto Eng. Pelican Class)
Neddrill 2 Drillship (Neddrill)

Neddrill 3 Jackup (MSC CJ-46)
Neddrill 4 Jackup (Neddrill)
Neddrill Trigon Jackup (CFEM T-2005)
Neddrill 7 Jackup (MSC CJ-46)
Neddrill 9 Jackup (MSC CJ-46)
Neddrill 10 Jackup (CFEM T-2005)

Neddrill 6 Semi-submersible (2G Offshore Co. SCP III Mk 2),

together with all their respective drilling machinery and equipment (including
without limitation, floor tools and blow- out preventers), engines, machinery,
dynamic positioning systems and equipment, mooring systems and equipment, riser
tensioner systems and equipment, boats, covers, anchors, chains, cables,
tackle, rigging, apparel, furniture, computers and computer equipment, computer
software, fittings and equipment, pumps and pumping equipment, spare components
and parts, drill pipe, drill collars, bunkers and lubricating oils, racking,
supporting inventory and stores (collectively, "Vessel Inventory"), living
quarters located thereon and all other appurtenances thereto appertaining or
belonging, including without limitation that set forth in Schedule 1(a);
excluding, however, equipment described in Schedule 1(a)(i), equipment and
stores owned by third-party suppliers (such as catering consumables, cement
units or logging equipment) and equipment for which rental agreements are
listed on Schedule 1(f)(ii) (collectively, the "Vessels");

(b) the shore-based stocks owned by Seller or any of its
Subsidiaries of all drilling machinery and equipment (including, without
limitation, floor tools and blow-out preventers), engines, machinery, dynamic
positioning systems and equipment, mooring systems and equipment, riser
tensioner systems and equipment, boats, covers, anchors, chains, cables,
tackle, rigging, apparel, furniture, computers, computer equipment and computer
software, fittings and equipment, pumps and pumping equipment, spare components
and parts, drill pipe, drill collars, racking, supporting inventory and stores
(i) that are used or maintained in connection with the Business or (ii) to the
extent not described in the preceding clause, that are required to be
maintained by Seller or any of its Subsidiaries under a Chartered Vessel
Contract (as hereinafter defined), Drilling Contract (as hereinafter defined)
or Other Contract (as hereinafter defined), including without limitation that
set forth on Schedule 1(b) (collectively, "Shore-Based Inventory"), as such
Inventory may be reduced through consumption thereof, or increased through
replacement thereof or addition thereto, in the ordinary course of the
maintenance and operation of the Vessels through the Closing Date;

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<PAGE> 10
(c) (i) all the outstanding equity interest in each of the
following Subsidiaries of Seller:

Neddrill Nederland B.V.
Neddrill do Brasil Limitada
Nedstaff Europe Limited
Nedstaff Limited

(collectively, the "Purchased Subsidiaries"), it being understood that the term
"Assets" as used in this Agreement includes the Purchased Subsidiaries Assets
(as hereinafter defined) to be acquired by Buyer pursuant to this Agreement
indirectly through the acquisition of the outstanding equity interest in the
Purchased Subsidiaries;

(ii) all the equity interest of Seller or any of its
Subsidiaries in the following:

Arktik Drilling Limited Inc.
Anchorsafe C.V.
DESDEC V.o.f.
Kenting V.o.f.; and

(iii) to the extent not repaid or otherwise discharged in
accordance with Section 10.27, all, right, title and interest to receive
repayment of outstanding indebtedness of a Purchased Subsidiary to Seller or
Parent or any of their Affiliates other than another Purchased Subsidiary, if
any, whether or not represented by a promissory note or other instrument in
writing ("Intercompany Debt");

(d) the following tangible and intangible assets used or held for
use in connection with the Business, to the extent assignable by law and Seller
or its Subsidiaries have the right to assign and transfer such assets:

(i) all records to be delivered to Buyer pursuant to
Section 2.6;

(ii) Seller's and its Subsidiaries' computer inventory and
maintenance programs and computer models used in connection with the
maintenance and operation of the Vessels;

(iii) all Intellectual Property (as hereinafter defined)
relating to, or used in connection with the operation of, the
Business, including without limitation the Intellectual Property
described on Schedule 1(d)(iii), and all rights to recover for
infringement thereon; and

(iv) the certificates, licenses, permits, consents,
operating authorities, orders, exemptions, franchises, approvals,
registrations and other authorizations and applications therefor
specifically associated with the maintenance and operation of a Vessel
and listed on Schedule 1(d)(iv) ("Permits");

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<PAGE> 11
(e) the benefit and burden, subsequent to the Closing Date, of all
right, title and interest of Seller or any of its Subsidiaries under the
charters or other contracts or arrangements and any amendments thereto (the
"Chartered Vessel Contracts") for the Neddrill Kolskaya (the "Chartered
Vessel") existing on the Closing Date, including without limitation the
Chartered Vessel Contracts identified on Schedule 1(e) existing on the Closing
Date; and

(f) the benefit and burden, subsequent to the Closing Date, of all
right, title and interest of Seller or any of its Subsidiaries under:

(i) all drilling contracts or other charters or
arrangements and any amendments thereto for the employment of the
Vessels (the "Drilling Contracts") existing on the Closing Date,
including without limitation the Drilling Contracts identified on
Schedule 1(f)(i) existing on the Closing Date; and

(ii) all other contracts to which Seller or any of its
Subsidiaries is a party relating to the Vessels or the Business (the
"Other Contracts") existing on the Closing Date, including without
limitation the Other Contracts identified on Schedule 1(f)(ii)
existing on the Closing Date.

"Assumed Liabilities" has the meaning specified in Section 2.3.

"Benefit Plan" has the meaning specified in Section 5.15.

"Best Efforts" means a party's best efforts in accordance with
reasonable commercial practice and without the incurrence of unreasonable
expense.

"Business" means the offshore/onshore contract drilling, accommodation
and other oil and gas exploration and production related service businesses
engaged in by Seller or any of its Subsidiaries as conducted on the date of
this Agreement and through the Closing Date.

"Business Day" means a day on which national banks are generally open
for the transaction of business in New York, New York.

"Buyer" has the meaning specified in the preamble.

"Buyer Basket" has the meaning specified in Section 14.2(a).

"Buyer Common Stock" has the meaning specified in Section 3.1.

"Buyer Designee" has the meaning specified in Section 16.5(a).

"Buyer Pension Fund I" and "Buyer Pension Fund II" have the respective
meanings specified in Section 12.5(b).

"Buyer SEC Filings" has the meaning specified in Section 7.10.

"Buyer Shares" has the meaning specified in Section 3.1.

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<PAGE> 12
"Buyer Termination Event" has the meaning specified in Section
10.15(a).

"Capital Expenditure Payments" has the meaning specified in Section
10.7(b).

"Cash Purchase Price" has the meaning specified in Section 3.1.

"Category I Employees" and "Category II Employees" have the respective
meanings specified in Section 12.1.

"Change of Control" has the meaning specified in Section 10.4(c).

"Change of Control Consent Required Contract" has the meaning
specified in Section 2.5(b).

"Chartered Vessel Contracts" has the meaning specified in paragraph
(e) of the definition of Assets.

"Chartered Vessel" has the meaning specified in paragraph (e) of the
definition of Assets.

"Claims" has the meaning specified in Section 14.1(a).

"Closing" means the consummation of the transactions contemplated by
Article II of this Agreement in accordance with the terms and upon the
conditions set forth in Article II.

"Closing Date" has the meaning specified in Section 4.1.

"Closing Net Working Capital" has the meaning specified in Section
10.1(b).

"Consent Required Contract" has the meaning specified in Section
2.5(a).

"Contractually Assumed Liabilities" has the meaning specified in
Section 2.3.

"Convertible Preferred Stock" has the meaning specified in Section
7.4.

"Drilling Contracts" has the meaning specified in paragraph (f)(i) of
the definition of Assets.

"Employees" means the employees employed by Seller or any of its
Subsidiaries, or by Parent or any of its Subsidiaries and seconded to Seller or
any of its Subsidiaries for employment, in the Business, including those
employees (i) on temporary leave of absence, including military leave, and (ii)
on temporary disability or sick leave.

"Encumbrances" means liens (including without limitation maritime
liens), charges, pledges, options, mortgages, security interests, claims and
other encumbrances of every type and description, whether imposed by law,
agreement, understanding or otherwise.

"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.

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<PAGE> 13
"Excluded Assets" has the meaning specified in Section 2.2.

"Excluded Capital Expenditures" has the meaning specified in Section
10.7(b).

"Financial Statements" has the meaning specified in Section 5.23(a).

"Financing Closing Date" has the meaning specified in Section 10.2(a).

"General Assignment" has the meaning specified in Section 4.3(a).

"Governmental Entity" means any court or tribunal in any jurisdiction
or any public, governmental, or regulatory body, agency, department,
commission, board, bureau, or other authority or instrumentality.

"Intellectual Property" means patents, trademarks, service marks,
trade names, service names, brand names, copyrights, trade secrets, know-how,
inventions, computer software (including documentation and object and source
codes) and similar rights, including without limitation all right, title and
interest of Seller and its Affiliates in and to the name "Neddrill," and any
derivative thereof, together with any goodwill associated with such name, and
all registrations, applications, licenses and rights with respect to any of the
foregoing, specifically excluding, however, the logo of Parent commonly
described as resembling a "knot", having the registrations set forth on
Schedule 1(g).

"Intercompany Debt" has the meaning specified in paragraph (c)(ii) of
the definition of Assets.

"Inventory" means the Vessel Inventory and Shore-Based Inventory.

"Nonassigned Contract" has the meaning specified in Section 2.5(a).

"Offshore Plan" has the meaning specified in Section 12.5(a).

"Other Contracts" has the meaning specified in paragraph (f)(ii) of
the definition of Assets.

"Parent Pension Fund" has the meaning specified in Section 12.5(a).

"Permits" has the meaning specified in paragraph (d)(iv) of the
definition of Assets.

"Permitted Encumbrances" means (i) Encumbrances for taxes, assessments
and governmental charges not yet due and payable or the validity of which are
being diligently contested in good faith by appropriate proceedings; (ii)
statutory and maritime liens arising in the ordinary course of business
relating to obligations as to which there is no default on the part of Seller
or any of its Subsidiaries, excluding any mortgage; (iii) the Drilling
Contracts; (iv) the Chartered Vessel Contracts; (v) the Other Contracts; and
(vi) any other Encumbrances, title defects or imperfections or irregularities
in title which in the aggregate do not exceed $500,000; provided, however, that
at the Closing "Permitted Encumbrances" shall not include any

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<PAGE> 14
Encumbrances for taxes, assessments or governmental charges filed of record
against the Assets, or statutory or maritime liens filed of record against the
Assets, unless any such Encumbrances are being diligently contested in good
faith by appropriate proceedings.

"Plan" has the meaning specified in Section 10.7(b).

"Prime Rate" has the meaning specified in Section 10.1(e)(i).

"Purchased Subsidiaries" has the meaning specified in paragraph (c) of
the definition of Assets.

"Purchased Subsidiaries Assets" means, collectively, all the property,
assets and rights, tangible and intangible, owned by the Purchased
Subsidiaries.

"Purchased Subsidiaries Financial Statements" has the meaning
specified in Section 5.23(c).

"Purchased Subsidiaries Liabilities" has the meaning specified in
Section 2.3.

"Sale" has the meaning specified in Section 10.4(a).

"SEC" means the United States Securities and Exchange Commission.

"Securities Act" means the United States Securities Act of 1933, as
amended.

"Seller" has the meaning specified in the preamble.

"Seller Basket" has the meaning specified in Section 14.1(a).

"Shore-Based Inventory" has the meaning specified in paragraph (b) of
the definition of Assets.

"Subsidiary" means, with respect to any person, (i) any corporation 50
percent or more of whose outstanding stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such person
directly or indirectly through its Subsidiaries, (ii) any general partnership,
joint venture, association, limited liability company or other entity in which
such person, directly or indirectly through its Subsidiaries, has a 50 percent
or more equity interest at the time and (iii) any limited partnership of which
such person or any of its Subsidiaries is a general partner. In addition, with
respect to Parent and Seller, "Subsidiary" shall also mean Trigon Inc. and
Trigon Contracting A.G.

"Taxes" means any income taxes or similar assessments, any social
security premiums or any sales, excise, occupation, use, ad valorem, property,
production, severance, transportation, employment, payroll, franchise, value
added or other tax imposed by any taxing authority, including any interest,
penalties or additions attributable thereto.

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<PAGE> 15
"Tax Return" means any return or report with respect to Taxes.

"Transaction Taxes" has the meaning specified in Section 10.11.

"Vessel Inventory" has the meaning specified in paragraph (a) of the
definition of Assets.

"Vessels" has the meaning specified in paragraph (a) of the definition
of Assets and "Vessel" means any one of the Vessels.

"Voting Securities" means the shares of Buyer Common Stock and any
other securities of Buyer entitled to vote generally for the election of
directors or any other securities (including, without limitation, rights,
warrants and options) convertible or exchangeable into, or exercisable for, any
of the foregoing (whether or not presently exercisable, convertible or
exchangeable).

"W/C Balance Sheet" has the meaning specified in Section 10.1(a).

"W/C Current Assets" has the meaning specified in Section 10.1(a)(i).

"W/C Current Liabilities" has the meaning specified in Section
10.1(a)(ii).

"W/C Receivables" has the meaning specified in Section 10.1(e)(iii).

ARTICLE II

PURCHASE AND SALE OF ASSETS

2.1 Assets to be Purchased. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Seller and certain of
its Subsidiaries shall sell, assign, transfer, deliver and convey to Buyer, and
Buyer shall purchase, acquire, accept and pay for, as hereinafter provided, the
Assets, free and clear of any Encumbrances other than Permitted Encumbrances.

2.2 Excluded Assets. The Assets shall not include (i) claims
(including claims for refunds) and rights under contracts to the extent, but
only to the extent, that such claims and rights (a) are not Purchased
Subsidiaries Assets and (b) do not relate to the conduct of the Business after
the close of business on the Closing Date or (ii) any of the matters set forth
on Schedule 2.2 (collectively, the "Excluded Assets").

2.3 Assumed Liabilities. As of and after the Closing, subject to
Section 2.5, Buyer shall assume and thereafter perform all obligations under
the Chartered Vessel Contracts, the Drilling Contracts and the Other Contracts
being assumed by Buyer to the extent, but only to the extent, that such
obligations relate to the conduct of the Business after the close of business
on the Closing Date (the "Contractually Assumed Liabilities"). Buyer and its
Affiliates shall not assume or otherwise be obligated for any liabilities or
obligations of Seller or its Subsidiaries except for (i) all liabilities and
obligations of the Purchased Subsidiaries (the "Purchased Subsidiaries
Liabilities"), but subject to the right to indemnification with respect to
pre-closing

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<PAGE> 16
matters and certain post-closing matters as provided in Article XIV and Section
12.7, and (ii) to the extent not described in the preceding clause (i), the
Contractually Assumed Liabilities. The Contractually Assumed Liabilities and
the Purchased Subsidiaries Liabilities are herein referred to collectively as
the "Assumed Liabilities."

2.4 Limitation of Liabilities. Buyer shall not assume or in any
way be liable or responsible for any liabilities or obligations of Seller or
any of its Subsidiaries except as specifically provided herein, it being
expressly acknowledged that it is the intention of the parties hereto that all
liabilities that Seller or its Subsidiaries has or may have in the future,
whether fixed or contingent, and whether known or unknown, not expressly
described in the definition of Assumed Liabilities shall be and remain the
liabilities of Seller and its Subsidiaries. Without limiting the generality of
the foregoing, except to the extent specifically provided in Section 2.3, Buyer
shall not assume or take title to the Assets subject to (a) any liability or
obligation of Seller or any of its Subsidiaries under any note, bond or other
instrument secured by the Assets, (b) any liability or obligation of Seller or
any of its Subsidiaries in respect of any express or implied representation,
warranty, agreement or guaranty made (or claimed to have been made) by Seller
or any of its Subsidiaries or imposed or asserted to be imposed by operation of
law (except obligations or liabilities imposed on Buyer or any of its
Subsidiaries by operation of law after the Closing) or (c) any account payable
to any Affiliate of Seller.

2.5 Limitation on Assignments.

(a) Notwithstanding any other provision hereof, this Agreement
shall not constitute nor require an assignment to Buyer of any Chartered Vessel
Contract, Drilling Contract, Other Contract, Permit, license or other right if
an attempted assignment of the same without the consent of any party would
constitute a breach thereof or a violation of any law or any judgment, decree,
order, writ, injunction, rule or regulation of any Governmental Entity unless
and until such consent shall have been obtained. In the case of any such
Chartered Vessel Contract, Drilling Contract, Other Contract, Permit, license
or other right that cannot be effectively transferred to Buyer without such
consent (a "Consent Required Contract"), Seller agrees that between the date
hereof and the Closing Date it will use its Best Efforts to obtain or cause to
be obtained the necessary consents to the transfer of any Consent Required
Contract. In this connection, Buyer agrees to cooperate with Seller and
Seller's Subsidiaries in obtaining such consents and to enter into such
arrangement of assumption as may be reasonably requested by Seller, a
Subsidiary of Seller or the other contracting party under a Consent Required
Contract. In the event that Seller or Seller's Subsidiaries shall have failed
prior to the Closing Date to obtain consents to the transfer of any Consent
Required Contract, the terms of this Section 2.5(a) shall govern the transfer
of the benefits of each such contract. Seller and Buyer shall use their Best
Efforts after the Closing Date to obtain any required consent to the assignment
to, and assumption by, Buyer of each Consent Required Contract that is not
transferred to Buyer at the Closing (a "Nonassigned Contract"). Seller or a
Subsidiary of Seller, as the case may be, and Buyer, or any Buyer Designee,
shall enter into an agreement substantially in the form of that attached hereto
as Exhibit 2.5(a) on the Closing Date with respect to each Nonassigned Contract
providing that until the rights and obligations of Seller or Seller's
Subsidiary thereunder are transferred to or assumed by Buyer, or, if earlier,
until termination of such Nonassigned Contract, Seller shall continue to
perform its obligations thereunder and Buyer shall provide such assistance, at
the sole expense of Buyer, as Seller may

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<PAGE> 17
reasonably request for such purpose, including without limitation the use of
personnel and assets (by lease or otherwise) of Buyer and its Affiliates of the
type and quantity that Seller or Seller's Subsidiary would have used to perform
such Nonassigned Contract had the transactions contemplated by this Agreement
not been consummated. Such agreement shall also provide that in consideration
of the provision of such assistance, Seller shall, promptly after payment of
any amounts to Seller by the other party to a Nonassigned Contract, pay such
amounts to Buyer after subtracting therefrom the reasonable direct costs and
expenses actually incurred by Seller as a result of its performance of the
Nonassigned Contract.

(b) If any Chartered Vessel Contract, Drilling Contract, Other
Contract, Permit or license to which a Purchased Subsidiary is a party or which
is issued in the name of a Purchased Subsidiary provides that the sale of
equity interest in such Purchased Subsidiary may not be undertaken without the
prior consent of any other party (a "Change of Control Consent Required
Contract"), then Seller agrees that between the date hereof and the Closing
Date it will obtain or cause to be obtained the necessary consents to the
transfer of the equity interest of such Purchased Subsidiary to Buyer. In this
connection, Buyer agrees to cooperate with Seller and Seller's Subsidiaries in
obtaining such consents and to enter into such arrangement as may be reasonably
requested by Seller, a Subsidiary of Seller or the other party to the Change of
Control Consent Required Contract.

2.6 Delivery of Records.

(a) Subject to Section 2.6(b), Buyer shall be entitled to all
books, records, papers and instruments of Seller and its Subsidiaries of
whatever nature and wherever located that relate to the Assets or the operation
of the Business, including without limitation all financial and accounting
records, the company books of the Purchased Subsidiaries, all records
physically located on the Vessels on the Closing Date and all books and records
relating to Employees, the purchase of materials, supplies and services,
research and development, engineering drawings, designs, schematics,
blueprints, instruction manuals, flowsheets, models, maintenance schedules and
similar technical records, including without limitation the technical records
described in Schedule 2.6(a), and dealings with customers, vendors and
suppliers of the Business, and including computerized books and records and
other computerized storage media and the software (including documentation and
object and source codes) used in connection therewith, provided that Seller
shall be entitled to retain copies at its expense of any such books and records
that are necessary for its tax, accounting or legal purposes.

(b) Seller shall be entitled to retain all originals of its
corporate, financial, accounting, legal, tax and auditing records. Each of
Seller's Subsidiaries (other than the Purchased Subsidiaries) shall be entitled
to retain all originals of its corporate, financial, accounting, legal, tax and
auditing records. Each of the Purchased Subsidiaries, the ownership of which
shall be transferred to Buyer at the Closing, shall be entitled to retain all
originals of its corporate, financial, accounting, legal, tax and auditing
records, and all business registration documents or other licenses required
under applicable law.

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ARTICLE III

PURCHASE PRICE

The aggregate consideration for the Assets shall consist of (a) cash
in the amount of $300,000,000 (subject to adjustment as provided in Section
10.15) (the "Cash Purchase Price"), (b) 5,000,000 shares of common stock, par
value $.10 per share ("Buyer Common Stock"), of Buyer (the "Buyer Shares"), and
(c) the assumption by Buyer of the Contractually Assumed Liabilities.

ARTICLE IV

THE CLOSING

4.1 Time and Place of Closing. The Closing shall take place at
the offices of Thompson & Knight, P.C., 1700 Pacific Avenue, Suite 3300,
Dallas, Texas 75201, at 9:00 a.m., local time, or at such other place or time
as the parties may agree in writing, on the Financing Closing Date. The date
on which the Closing is required to take place is herein referred to as the
"Closing Date."

4.2 Deliveries by Parent. At the Closing, Parent shall deliver to
Buyer the following:

(a) the certificate and opinion of counsel contemplated by
Sections 9.3(a) and 9.4, respectively; and

(b) such other certificates, instruments and documents as may be
reasonably requested by Buyer prior to the Closing Date to carry out the intent
and purposes of this Agreement.

4.3 Deliveries by Seller. At the Closing, Seller shall deliver or
cause its Subsidiaries to deliver the following to Buyer:

(a) a duly executed General Conveyance, Assignment and Bill of
Sale and Transfer and Assumption of Liabilities (the "General Assignment") in
the form of Exhibit 4.3(a), together with such other bills of sale, assignments
and other instruments of transfer, assignment and conveyance, including without
limitation individual instruments of transfer for each of the Vessels, as Buyer
shall reasonably request to vest in Buyer or any Buyer Designee good and
marketable title to the Assets;

(b)(i) a duly executed irrevocable proxy for the execution of a
notarial deed of transfer or other duly executed form of transfer or bought and
sold note for the registered shares in a Purchased Subsidiary, and/or (ii)
stock certificates representing the outstanding shares of a Purchased
Subsidiary duly endorsed in blank, or accompanied by stock powers duly executed
in blank, and otherwise in form acceptable to Buyer for the effective and
lawful transfer of the appropriate Purchased Subsidiary, and (iii) all
promissory notes and other instruments of indebtedness evidencing Intercompany
Debt, if any, duly endorsed in blank and such other

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instruments of transfer as may be required for the effective and lawful
transfer of the Intercompany Debt to Buyer or any Buyer Designee;

(c) the minute books, registers of directors and secretaries,
business registration certificate, stock records and corporate seal, if any, of
each of the Purchased Subsidiaries, certified as complete and correct as of the
Closing Date by the secretary or an assistant secretary of such Purchased
Subsidiary;

(d) all the Purchased Subsidiaries' books and records, including
without limitation deed or certificate of incorporation, memorandum and
articles of association currently in force, corporate charter, bylaws, bank
account records, accounting records, computer records and all contracts with
third parties;

(e) the written resignations of such individuals who possess
management authority, whether by appointment or election or by proxy, with
respect to the Purchased Subsidiaries (including without limitation any
director or the company secretary), and the appointment of such persons in
their place, as Buyer shall, at least five Business Days prior to the Closing
Date, specify in writing to the Seller, such resignations to be effective
concurrently with the Closing;

(f) the written resignation of the auditors of Nedstaff Europe
Limited containing a negative statement under Section 394(1) of the Companies
Act 1985 of the United Kingdom and an acknowledgement that such auditors have
no claim against Nedstaff Europe Limited for compensation for loss of office or
for professional fees or otherwise;

(g) the written resignation of the auditors of Nedstaff Limited
containing a negative statement under Section 140A(2) of the Companies
Ordinance (Chapter 32) of the laws of Hong Kong and an acknowledgement that
such auditors have no claim against Nedstaff Limited for compensation for loss
of office or for professional fees or otherwise;

(h) copies of any consents obtained as contemplated by Section
2.5;

(i) the certificate and opinion of counsel contemplated by
Sections 9.3(b) and 9.4, respectively; and

(j) such other certificates, instruments and documents as may be
reasonably requested by Buyer prior to the Closing Date to carry out the intent
and purposes of this Agreement.

4.4 Deliveries by Buyer. At the Closing, Buyer shall deliver the
following to Seller:

(a) the Cash Purchase Price by the wire transfer of immediately
available funds to a bank account designated by Seller in any bank in the
continental United States;

(b) a certificate or certificates representing the Buyer Shares
registered in the name of Parent;

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(c) a duly executed General Assignment and such other instruments
of transfer and assumption as Seller shall reasonably request in order to cause
an effective assignment to and assumption by Buyer of the Contractually Assumed
Liabilities;

(d) the certificate and opinion of counsel contemplated by
Sections 8.3 and 8.4, respectively;

(e) a duly executed irrevocable proxy for the execution of a
notarial deed of transfer or other form of transfer and bought and sold note
(in relation to Nedstaff Limited) for the registered shares in a Purchased
Subsidiary; and

(f) such other certificates, instruments and documents as may be
reasonably requested by Parent or Seller prior to the Closing Date to carry out
the intent and purposes of this Agreement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer as follows:

5.1 Organization; Existence and Registration.

(a) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the Netherlands, with all necessary
corporate power and authority to own and lease the assets it currently owns and
leases and to carry on its business as such business is currently conducted.
Seller and its enterprise are registered under number 130160 with the Trade
Register held by the Chamber of Commerce of Rotterdam.

(b) Neither Seller nor any of its Subsidiaries

(i) has been dissolved, and no resolution to dissolve
such company has been adopted and there is no action or request
pending to accomplish such a dissolution;

(ii) is a party to a merger as described in article 2.309
Dutch Civil Code or similar applicable law, which has not become
effective;

(iii) has been declared bankrupt, and no action or request
is pending to declare such company bankrupt; or

(iv) has filed for or been granted an official moratorium,

and no equivalent (by whatever name called) has occurred in any other
jurisdiction.

5.2 Qualification. Seller and each of its Subsidiaries set forth
on Schedule 5.2 is duly qualified or licensed to transact business as a foreign
corporation and is in good standing in each

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<PAGE> 21
of the jurisdictions set forth opposite its name in Schedule 5.2, which are all
the jurisdictions in which the character of the assets currently owned or
leased by it or the nature of the business currently conducted by it requires
it so to be qualified or licensed, unless the failure so to qualify or be
licensed would not reasonably be expected to have a material adverse effect on
the Business taken as a whole or create an Encumbrance on any of the Assets.

5.3 Articles of Association and Bylaws of Subsidiaries. Seller
has made available to Buyer accurate and complete copies of (i) the memorandum
and articles of association and/or bylaws of Seller and each of its
Subsidiaries identified on Schedule 5.2 (certified by an appropriate official
of such entity's jurisdiction of incorporation) as currently in effect, (ii)
the stock records or register of members of Seller and each of such
Subsidiaries and (iii) the minutes of all meetings of the respective Boards of
Directors of Seller and such Subsidiaries, any committees of such Boards, and
the stockholders of Seller and such Subsidiaries (and all consents in lieu of
such meetings). Such records, minutes, and consents accurately reflect the
stock ownership of Seller and its Subsidiaries identified on Schedule 5.2 and
all actions taken by such Boards of Directors, committees, and stockholders.
Neither Seller nor any of its Subsidiaries is in violation of any provision of
its memorandum and articles of association or bylaws, other than violations
which, individually or in the aggregate, do not and will not have a material
adverse effect on the business, assets, results of operations, condition
(financial or otherwise), or prospects of the Seller or any such Subsidiary of
Seller, considered independently.

5.4 Authority; Etc. Seller and each Subsidiary of Seller has all
necessary corporate power and authority to execute and deliver this Agreement
and all agreements, instruments and documents to be executed and delivered
hereunder by it, to consummate the transactions contemplated hereby and to
perform all terms and conditions hereof to be performed by it. The execution
and delivery of this Agreement by Seller and the execution and delivery by
Seller and each Subsidiary of Seller of all agreements, instruments and
documents to be executed and delivered by each of them hereunder, the
performance by Seller and each Subsidiary of Seller of all the terms and
conditions hereof and thereof to be performed by it and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action, including without limitation by all necessary
action of the Boards of Directors of Seller and any such Subsidiary, and no
other corporate proceedings are necessary with respect thereto. All persons
who have executed and delivered this Agreement, and all persons who will
execute and deliver the other agreements, documents and instruments to be
executed and delivered hereunder by Seller and each Subsidiary of Seller have
been duly authorized to do so by all necessary actions on the part of Seller
and any such Subsidiary. This Agreement constitutes, and each other agreement
or instrument to be executed hereunder by Seller and any Subsidiary of Seller,
when executed and delivered by Seller and/or any such Subsidiary, will
constitute, the legal, valid and binding obligation of Seller and/or any such
Subsidiary, as the case may be, enforceable against Seller and/or any such
Subsidiary in accordance with its terms, except to the extent the
enforceability hereof and thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws relating to or affecting creditors'
rights generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

5.5 No Violations. Except as set forth on Schedule 5.5, the
execution and delivery of this Agreement by Seller, the fulfillment of and
compliance by it with the terms and

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<PAGE> 22
conditions hereof and the consummation by Seller and/or any Subsidiary of
Seller of the transactions contemplated hereby will not:

(a) violate any of the terms of the deed of incorporation,
memorandum of association, bylaws or deeds of amendment to, or special
resolutions amending, the articles of association of Seller or any Subsidiary
of Seller;

(b) (i) result in a breach of or constitute a default under
(whether with notice or the lapse of time or both) any note, bond, mortgage,
loan agreement, indenture or other instrument evidencing borrowed money to
which Seller or any Subsidiary of Seller is a party or by which Seller or any
Subsidiary of Seller is bound or to which any of the Assets is subject, which
breach or default would reasonably be expected to have a material adverse
effect on the ownership or operation of the Assets, or (ii) result in the
creation of any Encumbrance on any of the Assets, or otherwise give any person
the right to terminate any Chartered Vessel Contract, Drilling Contract, Permit
or Other Contract; or

(c) to Seller's knowledge, violate any national or local law,
statute, rule or administrative regulation or any judgment, order, injunction
or decree of any Governmental Entity applicable to or binding upon Seller or
any Subsidiary of Seller, or the assets of Seller or any Subsidiary of Seller,
which violation would reasonably be expected to have a material adverse effect
on the ownership or operation of the Assets.

5.6 Purchased Subsidiaries.

(a) Schedule 5.6 lists each Purchased Subsidiary, the jurisdiction
of incorporation of each Purchased Subsidiary, the Trade Register (or other
equivalent) registration number of each Purchased Subsidiary and the Chamber of
Commerce (or Companies Registry or other equivalent organization) holding such
registration of the authorized and outstanding capital stock of each Purchased
Subsidiary and the owner of such capital stock. Each Purchased Subsidiary is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease, and operate its properties and to carry on
its business as now being conducted. No actions or proceedings to liquidate or
dissolve (or take equivalent or similar action against) any Purchased
Subsidiary are pending.

(b) Except as otherwise indicated on Schedule 5.6, all of the
outstanding shares of capital stock of each Purchased Subsidiary are legally
and beneficially owned directly by the Seller or another Subsidiary of Seller,
free and clear of all Encumbrances. Such shares of the Purchased Subsidiaries
are free and clear of usufruct or pledges. All outstanding shares of capital
stock of each Purchased Subsidiary have been validly issued and are fully paid
and nonassessable. No shares of capital stock of any Purchased Subsidiary are
subject to, nor have any been issued in violation of, preemptive or similar
rights.

(c) Except as set forth on Schedule 5.6, there are (and as of the
Closing Date there will be) outstanding (i) no shares of capital stock or other
voting securities or Intercompany Debt of any Purchased Subsidiary, (ii) no
securities of Seller or any Subsidiary of Seller convertible into or
exchangeable for shares of capital stock or other voting securities of any
Purchased

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<PAGE> 23
Subsidiary, (iii) no options or other rights to acquire from Seller or any
Subsidiary of Seller, and no obligation of the Seller or any Subsidiary of
Seller to issue or sell, any shares of capital stock or other voting securities
of any Purchased Subsidiary or any securities convertible into or exchangeable
for such capital stock or voting securities and (iv) no equity equivalents,
interests in the ownership or earnings or other similar rights of or with
respect to any Purchased Subsidiary. There are (and as of the Closing Date
there will be) no outstanding obligations of Seller or any Purchased Subsidiary
to repurchase, redeem, or otherwise acquire any of the foregoing shares,
securities, options, equity equivalents, interests, or rights.

(d) Seller and any Subsidiary of Seller that is the owner of
shares of capital stock of the Purchased Subsidiaries has acquired title to
such shares by deeds of transfer or other valid forms of transfer, validly
signed and recognized, in which it is stated that the purchase price had been
paid for such shares, and neither the transfer nor the title underlying the
transfer can be dissolved, annulled or declared null and void.

(e) No depository receipts have been issued for the shares of
capital stock of the Purchased Subsidiaries with the cooperation of Seller or
any of its Subsidiaries.

(f) Future distributions which may become payable in respect to
the shares of capital stock of the Purchased Subsidiaries have not been
disposed of.

5.7 Ownership of Assets.

(a) As of the date of this Agreement, Seller and its Subsidiaries
collectively own good and marketable title to the Assets, free and clear of all
Encumbrances except for Encumbrances described on Schedule 10.26, which shall
be removed and terminated prior to the date of the preliminary closing
contemplated by Section 10.2(b), and Permitted Encumbrances. At the Closing,
Seller and its Subsidiaries will collectively own, and upon Seller's and the
appropriate Subsidiaries' execution and delivery of the General Assignment and
appropriate bills of sale and of the stock powers, transfer forms and
certificates representing the outstanding equity interests in the Purchased
Subsidiaries, Buyer will own, good and marketable title to the Assets, free and
clear of all Encumbrances except for Permitted Encumbrances.

(b) As of the date of this Agreement, each of the Purchased
Subsidiaries owns (and at the Closing will own) good and marketable title to
the Assets owned by it, free and clear of all Encumbrances except for Permitted
Encumbrances.

5.8 Vessel Classifications and Certifications.

(a) The classification of each Vessel and the flag, if any, under
which it is documented is set forth on Schedule 1(a) or Schedule 1(d)(iv).

(b) Set forth on Schedule 5.8(b), Schedule 1(a) or Schedule
1(d)(iv) is a summary of the recommendation to class for each of the Vessels
based on the most recent survey received by Seller or its Subsidiaries for such
Vessel as of the date of this Agreement, as well as a listing of (i) required
certifications (including without limitation Det Norske Veritas, American
Bureau of Shipping, United States Coast Guard, Bureau Veritas and Lloyds
Register of Shipping

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<PAGE> 24
certifications) and the expiration date for each such certification and (ii)
outstanding safety case recommendations. Each of the Vessels has in full force
and effect all required certifications necessary for its present operations
(with the exception of any thereof that may be affected by any loss or damage
referred to in Section 10.15). Except as disclosed by Seller to Buyer in
writing at or prior to the Closing, none of the Vessels has suffered any
material damage to its condition (excepting normal wear and tear) since March
18, 1996, the date of completion of Buyer's inspection of the Vessels.

5.9 Seller's Insurance. Seller and its Subsidiaries maintain with
sound and reputable insurers, and there are currently in full force and effect,
policies of insurance with respect to the Assets and Business against such
casualties and contingencies of such types and in such amounts as are customary
for offshore drilling contractors of similar size engaged in similar
operations. All premiums due and payable with respect to such policies have
been timely paid. No notice of cancellation of, or indication of an intention
not to renew, any such policy has been received by Seller or any of its
Subsidiaries. Set forth on Schedule 5.9 is a summary description of the
insurance maintained by Seller and its Subsidiaries covering each of the
Vessels and its ownership and operation.

5.10 Inventory.

(a) On the date of this Agreement, Seller and its Subsidiaries
own, and upon Closing and Seller's and its Subsidiaries' execution and delivery
of the General Assignment, Buyer and the Purchased Subsidiaries will own, good
and marketable title to the Inventory, as such Inventory may be reduced through
the consumption thereof, or increased through replacement thereof or additions
thereto, in the ordinary course of the maintenance and operation of the Vessels
through the Closing Date, free and clear of all Encumbrances except for
Permitted Encumbrances and Encumbrances, if any, created or permitted to be
imposed by Buyer.

(b) On the date of this Agreement, Seller maintained Inventory
with respect to each Vessel and Chartered Vessel necessary to comply with any
applicable Drilling Contract, Chartered Vessel Contract or Other Contract and
in accordance with past practice.

5.11 Contracts. Seller has made available to Buyer for review
complete and correct copies of all the Chartered Vessel Contracts, Drilling
Contracts and Other Contracts. Except as separately identified on Schedule
1(f)(i) or 1(f)(ii), each of the Chartered Vessel Contracts, Drilling Contracts
and Other Contracts, or the capital stock of a Purchased Subsidiary that is a
party to any such contract, may be transferred to Buyer without the consent of
any person. Each of the Chartered Drilling Contracts, Drilling Contracts and
Other Contracts is valid, binding and in full force and effect against Seller
or a Subsidiary of Seller, as the case may be, and, to Seller's knowledge, is
valid, binding and in full force and effect against the other party thereto.
Except as set forth on Schedule 5.11, neither Seller nor any of its
Subsidiaries is in default in any material respect, and no notice of alleged
default has been received by Seller or any of its Subsidiaries, under any of
the Chartered Vessel Contracts, Drilling Contracts or Other Contracts, no other
party thereto is, to the knowledge of Seller or its Subsidiaries, in default
thereunder in any material respect, and, to the knowledge of Seller or its
Subsidiaries, there exists no condition or event which, with or without notice
or lapse of time or both, would (i) constitute a material default under any of
the Chartered Vessel Contracts, Drilling Contracts or

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<PAGE> 25
Other Contracts by Seller, any of its Subsidiaries or any other parties thereto
or (ii) would otherwise give any other party to such a contract the right to
charge penalties to Seller or any of its Subsidiaries or reduce the rates that
would otherwise be payable to Seller or any of its Subsidiaries under such a
contract.

5.12 Litigation.

(a) Except for litigation described on Schedule 5.12(a), there is
no litigation and there are no arbitration proceedings or governmental
proceedings, suits or investigations pending, instituted or, to the knowledge
of Seller, overtly threatened against any of the Assets or against Seller or
any of its Subsidiaries and relating to the ownership and operation of the
Assets before any Governmental Entity applicable to or binding upon Seller, its
Subsidiaries or any of the Assets that (i) seeks permanent injunctive relief,
(ii) if adversely determined would delay or prevent the consummation of the
transactions contemplated by this Agreement or (iii) would reasonably be
expected to have a material adverse effect on Seller or the Business taken as a
whole or create an Encumbrance on, or otherwise affect the ownership or
operation of, any of the Assets.

(b) Except for matters described on Schedule 5.12(b), neither
Seller, any Subsidiary of Seller nor any of the properties or assets of Seller
or any Subsidiary of Seller is subject to any judicial or administrative
judgment, order, decree or restraint in a manner that is material and adverse
to Seller or the Business taken as a whole or that would create an Encumbrance
on, or otherwise affect the ownership or operation of, any of the Assets.
Except as referred to on Schedule 5.12(b), neither Seller nor any Subsidiary of
Seller has received any notifications or charges in writing from any
Governmental Entity involving alleged violations of or alleged obligations to
remediate under occupational safety and health or water quality or other
environmental matters that materially and adversely affect the conduct by
Seller or any Subsidiary of Seller of its operations or that have not been
finally dismissed or otherwise disposed of.

5.13 Governmental Approval. No consent, approval, waiver, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made in connection with the execution and
delivery of this Agreement by Seller or the consummation by Seller and its
Subsidiaries of the transactions contemplated hereby, other than (i)
notification of the Social Economic Council in The Netherlands, which has been
duly given, (ii) filing of an application for approval by the Rotterdam
District Court for deletion of the Neddrill 2, Neddrill 3, Neddrill 4, Neddrill
6 and Neddrill 7 from The Netherlands Shipping Register and approval by such
court of such application, or if the aforementioned vessels and rigs will be
registered at The Netherlands Shipping Register subsequent to Closing, filing
of a notarial deed of transfer for each of such vessels and rigs at the
Netherlands Shipping Register and (iii) the filing of a Request for the
Issuance of Certificates of Permission for Sale for the Purpose of
Re-registration or Deletion (whichever may be required by Buyer) for the
Neddrill 1, Neddrill Trigon, Neddrill 9 and Neddrill 10 with the Chief of
Vessel Registration/Document Division of the Office of the Deputy Commissioner
Maritime Affairs, Republic of Liberia.

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5.14 Compliance With Laws.

(a) Except as set forth on Schedule 5.14(a), neither Seller nor
any Subsidiary of Seller is to Seller's knowledge in violation of or in default
under any applicable law, rule, regulation, code, governmental determination,
order, governmental certification requirement or other public limitation
(collectively, "Applicable Laws") relating to the ownership or operation of the
Assets, including, without limitation, any applicable maritime law relating to
the Vessels, which violation or default materially and adversely affects
Seller's or its Subsidiaries' ownership or operation (as presently conducted)
of the Assets, and no claim is pending or, to Seller's knowledge, overtly
threatened with respect to any such matters which if determined adversely to
Seller or its Subsidiaries would have such effect.

(b) Without limiting Section 5.14(a) and except as set forth on
Schedule 5.14(b), Seller and its Subsidiaries have conducted the Business in
accordance with Applicable Laws pertaining to health, safety or the environment
(collectively, "Applicable Environmental Laws") and neither Seller nor any of
its Subsidiaries is subject to any pending or, to Seller's knowledge, overtly
threatened investigation or inquiry by any Governmental Entity, or to any
remedial obligations, under any Applicable Environmental Laws.

5.15 Employee Benefits. Set forth on Schedule 5.15 is a list
identifying each employee benefit plan, policy, agreement or arrangement,
including without limitation, pension, stock option, share saving, profit
sharing, incentive and bonus arrangements, whether legally enforceable or not
which (i) is, has been or is proposed to be entered into, administered,
maintained or contributed to by or on behalf of Seller or any of its
Subsidiaries or (ii) covers any employee or former employee of Seller or any
Subsidiary of Seller or under which Seller or any Subsidiary of Seller has any
liability (each, a "Benefit Plan"). Each Benefit Plan has been maintained and
contributed to in compliance with the requirements of Applicable Law; and to
Seller's knowledge, Seller and its Subsidiaries have paid and discharged when
due all obligations and liabilities arising under such plans and Applicable Law
of a character which, if not paid or discharged, are likely to result in the
imposition of an Encumbrance or the assertion of a liability enforceable
against the Assets or the Purchased Subsidiaries.

5.16 Labor Relations.

(a) Except as disclosed on Schedule 5.16(a), (i) there are no
collective bargaining agreements or other similar agreements, arrangements, or
understandings, written or oral, with Employees as a group to or by which
Seller or any Subsidiary of Seller is a party or is bound; (ii) no Employees of
any Seller or Subsidiary of Seller are represented by any labor organization,
collective bargaining representative or group of employees; (iii) no labor
organization, collective bargaining representative or group of employees claims
to represent a majority of the Employees of Seller or any Subsidiary of Seller
in an appropriate unit of Seller or any such Subsidiary; (iv) neither Seller
nor any Subsidiary of Seller has been involved with any representational
campaign by any union or other organization or group seeking to become the
collective bargaining representative of any of its Employees or been subject to
or, to the knowledge of Seller, threatened with any strike or other concerted
labor activity or dispute; and (v) neither Seller nor any Subsidiary of Seller
is obligated to bargain collectively with respect

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<PAGE> 27
to wages, hours and other terms and conditions of employment with any
recognized or certified labor organization, collective bargaining
representative or group of Employees.

(b) Each of Seller and its Subsidiaries is in compliance with all
Applicable Laws pertaining to employment and employment practices and wages,
hours, and other terms and conditions of employment in respect of their
respective employees and are not engaged in any unfair labor practices or
unlawful employment practices. There is no pending or, to the knowledge of
Seller, threatened action, claim, investigation or inquiry by or before, and
neither Seller nor any Subsidiary of Seller is subject to any judgment, order,
writ, injunction or decree of or inquiry from, any Governmental Entity in
connection with any current, former or prospective employee of Seller or any
Subsidiary of Seller.

5.17 Employees Engaged in the Business.

(a) Set forth on Schedule 5.17(a) is a list of:

(i) all directors and officers of the Purchased
Subsidiaries; and

(ii) the name, social insurance number (or the
equivalent), and dates of employment by any Subsidiary of Seller of
each Employee, together with the total amounts of salary, bonuses and
other compensation paid or payable by any Subsidiary of Seller to each
such person for the current fiscal year and the immediately preceding
fiscal year.

(b) No Employee has given or received notice terminating his
employment. Neither Seller nor any Subsidiary of Seller has given notice of
any redundancies to any Employee or government department or started
consultations with any trade union or workers' compensation pursuant to any
statute or regulation in relation to any of the Employees, except that Parent
and Seller have consulted with the Central Works Council and Trade Unions in
the Netherlands with respect to the transactions contemplated by this
Agreement.

(c) Seller and its Subsidiaries have maintained adequate and
suitable records regarding each Employee and Seller has made the employee
records of Seller's Subsidiaries available to Buyer.

(d) Except as set forth on Schedule 5.12(a), there are no
outstanding claims by any person who is an Employee or any dispute with any
material number or class of the Employees.

(e) Upon Closing there will be no pension benefits, commitments or
obligations regarding the Employees, including but not limited to backservice
liabilities, which are not completely funded on a projected benefit obligation
(as defined under U.S. SFAS No. 87, Employers' Accounting for Pensions) basis
by (i) insurance contracts owned by or issued to a Purchased Subsidiary or (ii)
the transfer of funds by Parent or the Parent Pension Fund to or as directed by
Buyer in accordance with Section 12.5(b).

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(f) The consummation of the transactions contemplated by this
Agreement will not result in the incurrence of any severance pay obligation or
long service payment obligation to any person employed by Seller or its
Subsidiaries.

5.18 Financial Requirements Regarding Purchased Subsidiaries. Set
forth on Schedule 5.18 is a list and brief description of all bonds, deposits,
financial assurance requirements and insurance coverage required to be
submitted to Governmental Entities for the continued ownership and operation of
the business and assets of the Purchased Subsidiaries.

5.19 Bank Accounts and Powers of Attorney. Set forth on Schedule
5.19 are (i) the name and address of each bank or other financial institution
in which any Purchased Subsidiary has an account or a safe deposit box, the
account and safe deposit box numbers thereof and the names of all persons
authorized to draw thereon or to have access thereto, (ii) the names of all
persons authorized to borrow funds on behalf of any Purchased Subsidiary and
the names of all entities from which they are authorized to borrow funds and
(iii) the names of all persons, if any, holding powers of attorney from any
Purchased Subsidiary.

5.20 Books and Records. All the books and records of the Purchased
Subsidiaries, including all personnel files, employee data and other materials
relating to employees, are substantially complete and correct, have been
maintained in accordance with good business practice and all Applicable Laws,
and, in the case of the books of account, have been prepared and maintained in
accordance with generally accepted accounting principles consistently applied.
Such books and records accurately and fairly reflect, in reasonable detail, all
material transactions, assets and liabilities of the Purchased Subsidiaries.

5.21 Illegal Payments. To the knowledge of Seller, none of Seller
or any Purchased Subsidiary or any director, officer, employee, or agent of
Seller or any Purchased Subsidiary has, directly or indirectly, paid or
delivered any fee, commission, or other sum of money or item of property
however characterized to any broker, finder, agent, government official or
other person, in the United States or any other country, in any manner related
to the business or operations of any Purchased Subsidiary, which Seller or any
Purchased Subsidiary or any such director, officer, employee or agent knows to
have been or has reason to believe was illegal under any Applicable Law.

5.22 Tax Matters. Except as disclosed on Schedule 5.22:

(a) Seller and each Subsidiary of Seller has (and as of
the Closing Date will have) duly filed all federal, state, local and
foreign Tax Returns required to be filed by or with respect to them
with the applicable taxing authority, and no extensions with respect
to such Tax Returns have (or as of the Closing Date will have) been
requested or granted;

(b) Seller and each Subsidiary of Seller has (and as of
the Closing Date will have) paid all Taxes due, or claimed by any
taxing authority to be due, from or with respect to it, except Taxes
that are being contested in good faith by appropriate legal
proceedings;

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(c) Since January 1, 1989, there has been no issue raised
or adjustment proposed (and none is pending) by any taxing authority
in connection with any of the Tax Returns;

(d) Seller and each Subsidiary of Seller have (and as of
the Closing Date will have) made all deposits required with respect to
Taxes;

(e) The income Tax Returns of Seller and its Subsidiaries
have been duly audited by the appropriate Dutch or other taxing
authority through the taxable year ended December 31, 1988 and the
audit proceedings have been closed and all adjustments settled through
the taxable year ended December 31, 1988; and

(g) Seller has not made any special arrangements with any
taxing authority.

5.23 Financial Statements.

(a) Seller has delivered to Buyer accurate and complete
copies of Seller's audited consolidated balance sheet as of December
31, 1994 and 1995, and the related audited consolidated Seller's
statements of income, stockholders' equity, and cash flows/changes in
financial position for the years then ended and the year ended
December 31, 1993, and the notes and schedules thereto, together with
the unqualified report thereon of KPMG Accountants N.V., independent
public accountants (the "Financial Statements"). The Financial
Statements (i) represent actual bona fide transactions, (ii) have been
prepared from the books and records of Seller and its consolidated
Subsidiaries in conformity with each of United States and Dutch
generally accepted accounting principles applied on a basis consistent
with preceding years throughout the periods involved and (iii)
accurately, completely and fairly present Seller's consolidated
financial position as of the respective dates thereof and its
consolidated results of operations and cash flows/changes in financial
position for each of the periods then ended.

(b) Seller has delivered to Buyer accurate and complete
copies of audited balance sheets as of December 31, 1995 and the
related statements of income, stockholder's equity and cash
flow/changes in financial position for the year then ended for each of
the Purchased Subsidiaries (the "Purchased Subsidiaries Financial
Statements"). Each of the Purchased Subsidiaries Financial Statements
(i) represent actual bona fide transactions, (ii) have been prepared
from the books and records of the Purchased Subsidiaries, in
conformity with each of United States and Dutch generally accepted
accounting principles applied on a basis consistent with preceding
years throughout the periods involved and (iii) accurately, completely
and fairly present each of the Purchased Subsidiaries financial
position as of the date thereof and, where applicable, its
consolidated results of operations and cash flows/changes in financial
position for the period then ended.

(c) No Purchased Subsidiary has any liability or
obligation (whether accrued, absolute, contingent, unliquidated, or
otherwise, whether or not known to Seller or any Subsidiary of Seller,
and whether due or to become due), except (i) liabilities reflected

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on the balance sheet included in the Purchased Subsidiaries Financial
Statements, (ii) liabilities described in the notes accompanying the
Purchased Subsidiaries Financial Statements, (iii) liabilities which
have arisen since the date of the balance sheet included in the
Purchased Subsidiaries Financial Statements in the ordinary course of
business (none of which is a material liability for breach of
contract, breach of warranty, tort or infringement), (iv) liabilities
arising under executory contracts entered into in the ordinary course
of business (none of which is a material liability for breach of
contract), (v) liabilities specifically set forth on Schedule 5.23(c)
and (vi) other liabilities which are not material to any Purchased
Subsidiary.

5.24 No Brokers. Seller has not employed or authorized anyone to
represent it as a broker or finder in connection with the transactions
contemplated by this Agreement, and no broker or other person is entitled to
any commission or finder's fee from Seller in connection with such
transactions. Seller agrees to indemnify and hold harmless Buyer from and
against any and all losses, claims, demands, damages, costs and expenses,
including, without limitation, reasonable attorneys' fees and expenses, Buyer
may sustain or incur as a result of any claim for a commission or fee by a
broker or finder acting on behalf of Seller.

5.25 Disclosure. No representations or warranty made by Seller in
this Agreement and no statement of Seller or its representatives contained in
any document, certificate or other writing furnished or to be furnished by
Seller pursuant hereto or in connection herewith, contains or will contain, at
the time of delivery, any untrue statement of a material fact or omits or will
omit, at the time of delivery, to state any material fact (other than those
facts generally recognized to be industry risks normally associated with the
contract drilling business) necessary in order to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading.

5.26 Performance Bonds; Letters of Credit. Set forth on Schedule
5.26 is a listing of all performance and similar bonds and letters of credit
currently posted by, or any certificate of financial responsibility or similar
evidence of financial accountability obtained or procured by, Seller or any
Subsidiary of Seller for the purpose of owning or operating the Vessels or
otherwise conducting the Business.

5.27 Certain Property on Vessels. Since March 18, 1996, the date
of completion of Buyer's inspection of the Vessels, subject to normal wear and
tear and consumption in the ordinary course of business, neither Seller nor any
of Seller's Subsidiaries has removed or permitted to be removed any tangible
property from any Vessel which tangible property has in the aggregate a value
equal to or greater than $250,000 in the aggregate for all the Vessels, except
for any such tangible property relocated from one Vessel to another Vessel or
transferred to Inventory.

5.28 No Business in the United States. The transactions
contemplated hereby are exempt from the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder because (i) the Assets (excluding the voting securities
of the Purchased Subsidiaries) are assets located outside the United States to
which no sales in or into the United States are attributable and (ii) none of
the

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<PAGE> 31
Purchased Subsidiaries made aggregate sales in or into the United States of $25
million or more in 1995, the most recent fiscal year of each of the Purchased
Subsidiaries.

5.29 Intellectual Property. Except for the Intellectual Property
set forth on Schedule 1(d)(iii), Seller and Seller's Subsidiaries do not own,
hold, use or have pending any material Intellectual Property in connection with
the operation of the Assets or the Business. Seller and Seller's Subsidiaries
own or have rights to use all Intellectual Property, free from burdensome
restrictions, that are necessary for the operation of the Assets and the
Business as presently operated. Seller and Seller's Subsidiaries are not
currently infringing upon the Intellectual Property of any third party and have
not received any written notice or claim of any infringement, violation, misuse
or misappropriation by Seller or any of its Subsidiaries in connection with the
operation of the Assets or the Business of any Intellectual Property owned or
purported to be owned by any other person.

5.30 Venture Involving Neddrill Muravlenko. Seller has heretofore
delivered to Buyer a true and correct copy of (i) the Joint Venture Agreement
dated March 5, 1996 among State Company Arktikmorneftegazrazvedka, Kvaerner
Moss Technology A.S. and Neddrill Nederland B.V. relating to the Neddrill
Muravlenko, which agreement has been approved by the State Committee
Controlling the State Property of Murmansk Region, and (ii) the Protocol of the
meeting held March 5/6, 1996 between such parties. There are no contracts,
arrangements or other commitments relating to the Neddrill Muravlenko other
than those identified on Schedule 5.30.

5.31 Joint Ventures. Seller has heretofore delivered to Buyer a
true and correct copy of (i) the Joint Venture Agreement for Kenting V.o.f.
dated April 15, 1995, between Neddrill Onshore B.V. and Kenting Drilling B.V.,
(ii) the Joint Venture Agreement for Anchorsafe C.V. between Stevlos B.V. and
Neddrill Anchorsafe B.V. and (iii) the Joint Venture Agreement for DESDEC
V.o.f. between Neddrill Nederland B.V. and Marine Structure Consultants (MSC)
B.V. There are no contracts or arrangements between the parties to such
agreements, or commitments of Seller or any Subsidiary of Seller in connection
with such agreements, other than as set forth in such agreements or as
described on Schedule 5.31.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PARENT

Parent hereby represents and warrants to Buyer as follows:

6.1 Organization and Existence. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
Netherlands, with all necessary corporate power and authority to own and lease
the assets it currently owns and leases and to carry on its business as such
business is currently conducted. Parent and its enterprise are registered
under number 129791 with the Trade Register held by the Chamber of Commerce of
Rotterdam. Parent is duly qualified or licensed to transact business as a
foreign corporation and is in good standing in all jurisdictions in which the
character of the assets currently owned or leased by it or the nature of the
business currently conducted by it requires it so to be qualified or licensed,

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<PAGE> 32
unless the failure so to qualify or be licensed would not reasonably be
expected to have a material adverse effect on the Business taken as a whole or
create an Encumbrance on any of the Assets.

6.2 Authority; Etc. Parent has all necessary corporate power and
authority to execute and deliver this Agreement and all agreements, instruments
and documents to be executed and delivered hereunder by Parent, to consummate
the transactions contemplated hereby and to perform all terms and conditions
hereof to be performed by it. The execution and delivery of this Agreement by
Parent and all agreements, instruments and documents to be executed and
delivered by Parent hereunder, the performance by Parent of all the terms and
conditions hereof to be performed by it and the consummation of the
transactions contemplated hereby have been duly authorized and approved by the
Board of Directors of Parent, and no other corporate proceedings of Parent are
necessary with respect thereto. All persons who have executed and delivered
this Agreement, and all persons who will execute and deliver the other
agreements, documents and instruments to be executed and delivered by Parent
hereunder, have been duly authorized to do so by all necessary actions on the
part of Parent. This Agreement constitutes, and each other agreement or
instrument to be executed by Parent hereunder, when executed and delivered by
Parent, will constitute, the legal, valid and binding obligation of Parent,
enforceable against it in accordance with its terms, except to the extent the
enforceability hereof and thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws relating to or affecting creditors'
rights generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

6.3 No Violations. Except as set forth on Schedule 6.3, the
execution and delivery of this Agreement by Parent, the fulfillment of and
compliance by it with the terms and conditions hereof and the consummation by
it of the transactions contemplated hereby will not:

(a) violate any of the terms of the deed of incorporation or deeds
of amendment to the articles of association of Parent;

(b) (i) result in a breach of or constitute a default under
(whether with notice or the lapse of time or both) any note, bond, mortgage,
loan agreement, indenture or other instrument evidencing borrowed money to
which Parent is a party or by which Parent is bound or to which any of the
Assets is subject which breach or default would reasonably be expected to have
a material adverse effect on the ownership or operation of the Assets, or (ii)
result in the creation of any Encumbrance on any of the Assets, or otherwise
give any person the right to terminate any Chartered Vessel Contract, Drilling
Contract, Permit or Other Contract assumed by Buyer; or

(c) to Parent's knowledge, violate any national or local law,
statute, rule or administrative regulation or any judgment, order, injunction
or decree of any Governmental Entity applicable to or binding upon Parent, or
its assets, which violation would reasonably be expected to have a material
adverse effect on the ownership or operation of the Assets.

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<PAGE> 33
6.4 Investment Representations.

(a) In acquiring the Buyer Shares, Parent is not offering or
selling, and will not offer or sell, for Buyer in connection with any
distribution of the Buyer Shares and Parent does not have a participation and
will not participate in any such undertaking or in any underwriting of such an
undertaking except in compliance with applicable United States federal
securities laws.

(b) Parent acknowledges that it or its representatives have been
furnished with substantially the same kind of information regarding Buyer and
its business, assets, results of operations and financial condition as would be
contained in a registration statement prepared in connection with a public sale
of the Buyer Shares. Parent further represents that it has had an opportunity
to ask questions of and receive answers from Buyer regarding Buyer and its
business, assets, results of operations and financial condition and the terms
and conditions of the issuance of the Buyer Shares.

(c) Parent acknowledges that it is able to fend for itself, can
bear the economic risk of its investment in the Buyer Shares, and has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of an investment in the Buyer Shares.

(d) Parent understands that, subject to Section 10.2(d), the Buyer
Shares will be acquired by Parent in a transaction subject to Rule 145 under
the Securities Act, and that, as a result, the Buyer Shares cannot be sold or
otherwise disposed of except (i) in accordance with such Rule, (ii) pursuant to
an effective registration statement filed with the SEC under the Securities Act
or (iii) pursuant to an exemption from registration under the Securities Act.
In this connection, Parent represents that it is familiar with Rules 144 and
145 promulgated under the Securities Act, as currently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Stop transfer instructions may be issued to the transfer agent for the Buyer
Common Stock in connection with the Buyer Shares.

(e) It is agreed and understood by Parent that the certificate
representing the Buyer Shares shall conspicuously set forth on the face or back
thereof, in addition to any legends required by applicable law or other
agreement, legends in substantially the following form:

THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, APPLIED. SUCH SHARES MAY BE SOLD OR OTHERWISE TRANSFERRED
ONLY (1) IN ACCORDANCE WITH THE TERMS OF SUCH RULE OR (2) PURSUANT TO
A REGISTRATION STATEMENT FILED UNDER SUCH ACT, UNLESS THE CORPORATION
RECEIVES A WRITTEN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE
SATISFACTORY TO THE CORPORATION, THAT SUCH REGISTRATION IS NOT
REQUIRED.

THE RIGHT TO SELL, TRANSFER OR OTHERWISE DISPOSE OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET
FORTH IN AN AGREEMENT OF SALE AND PURCHASE DATED APRIL 25, 1996
BETWEEN NOBLE DRILLING CORPORATION (THE

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<PAGE> 34
"CORPORATION"), NEDDRILL HOLDING B.V. AND ROYAL NEDLLOYD N.V., A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF
THE CORPORATION.

Notwithstanding the foregoing, the first legend set forth above relating to
Rule 145 shall not be set forth on the certificate representing the Buyer
Shares in the event the Buyer Shares are not included in a registration
statement of Buyer filed with the SEC as contemplated by Section 10.2(a). It
is agreed and understood by Buyer that the first legend set forth above will be
removed upon the registration of the shares represented by such certificate
under the Securities Act or upon delivery to Buyer of a written opinion of
counsel, which opinion and counsel are reasonably satisfactory to Buyer, to the
effect that such legend is not required.

6.5 No Brokers. Except for Goldman, Sachs & Co. (whose fee in
respect of the transactions contemplated hereby shall be paid solely by Parent)
and Per-Egil Ramuz Evensen (whose fee due pursuant to his agreement with Parent
in respect of the transactions contemplated hereby shall be paid solely by
Parent), Parent has not employed or authorized any one to represent it as a
broker or finder in connection with the transaction contemplated by this
Agreement, and no broker or other person is entitled to any commission or
finder's fee from Parent in connection with such transactions. Parent agrees
to indemnify and hold harmless Buyer from and against any and all losses,
claims demands, damages, costs and expenses, including, without limitation,
reasonable attorneys' fees and expenses, Buyer may sustain or incur as a result
of any claim for a commission or fee by a broker or finder acting on behalf of
Parent.

6.6 Disclosure. No representations or warranty made by Parent in
this Agreement and no statement of Parent or its representatives contained in
any document, certificate or other writing furnished or to be furnished by
Parent pursuant hereto or in connection herewith, contains or will contain, at
the time of delivery, any untrue statement of a material fact or omits or will
omit, at the time of delivery, to state any material fact (other than those
facts generally recognized to be industry risks normally associated with the
contract drilling business) necessary in order to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller and Parent as follows:

7.1 Organization and Existence. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, with all necessary corporate power and authority to own and
lease the assets it currently owns and leases and to carry on its business as
such business is currently conducted. Buyer is duly qualified or licensed to
transact business as a foreign corporation and is in good standing in all
jurisdictions in which the character of the assets currently owned or leased by
it or the nature of the business currently conducted by it requires it so to be
qualified or licensed unless the failure so to qualify or be

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<PAGE> 35
licensed would not reasonably be expected to have a material adverse effect on
the business or financial condition of Buyer and its Subsidiaries taken as a
whole.

7.2 Authority; Etc. Buyer has all necessary corporate power and
authority to execute and deliver this Agreement and all agreements, instruments
and documents to be executed and delivered hereunder by Buyer, to consummate
the transactions contemplated hereby and to perform all terms and conditions
hereof to be performed by it. The execution and delivery of this Agreement by
Buyer and all agreements, instruments and documents to be executed and
delivered by Buyer hereunder, the performance by Buyer of all the terms and
conditions hereof to be performed by it and the consummation of the
transactions contemplated hereby have been duly authorized and approved by the
Board of Directors of Buyer, and no other corporate proceedings of Buyer are
necessary with respect thereto. All persons who have executed and delivered
this Agreement, and all persons who will execute and deliver the other
agreements, documents and instruments to be executed and delivered by Buyer
hereunder, have been duly authorized to do so by all necessary actions on the
part of Buyer. This Agreement constitutes, and each other agreement or
instrument to be executed by Buyer hereunder, when executed and delivered by
Buyer, will constitute, the legal, valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except to the extent the
enforceability hereof and thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws relating to or affecting creditors'
rights generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

7.3 No Violations. Except as set forth on Schedule 7.3, the
execution and delivery of this Agreement by Buyer, the fulfillment of and
compliance by it with the terms and conditions hereof and the consummation by
it of the transactions contemplated hereby (including the financing
contemplated by Section 10.2) will not:

(a) violate any of the terms of the certificate of incorporation
or bylaws of Buyer;

(b) result in a breach of or constitute a default under (whether
with notice or the lapse of time or both) any note, bond, mortgage, loan
agreement, indenture or other instrument evidencing borrowed money to which
Buyer is a party or by which Buyer is bound or to which any of its assets is
subject or result in the creation of any Encumbrance on any of its assets,
which breach or default would reasonably be expected to have a material adverse
effect on Buyer's business or financial condition or the results of its
operations or on its ability to perform its obligations hereunder; or

(c) to Buyer's knowledge, violate any federal or state law,
statute, rule or administrative regulation or any judgment, order, injunction
or decree of any Governmental Entity applicable to or binding upon Buyer or any
of its subsidiaries, except that no representation is made as to the
application of any United States antitrust law or regulation to the
transactions contemplated by this Agreement, which violation would reasonably
be expected to have a material adverse effect on Buyer's business or financial
condition or the results of its operations or on its ability to perform its
obligations hereunder.

7.4 Capitalization. The authorized capital stock of Buyer
consists of 200,000,000 shares of Buyer Common Stock of which 94,586,079 were
outstanding on April 8, 1996, and

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<PAGE> 36
15,000,000 shares of preferred stock, par value $1.00 per share, of which (i)
4,025,000 shares have been designated $1.50 Convertible Preferred Stock (the
"Convertible Preferred Stock") and were outstanding on April 8, 1996 and (ii)
1,100,000 shares have been designated Series A Junior Participating Preferred
Stock and zero shares were outstanding on April 8, 1996. Except for
non-employee director stock options, stock option and other employee benefit
plans of Buyer and the outstanding Convertible Preferred Stock, there are no
outstanding options, warrants or rights to purchase and there are no other
outstanding securities convertible into or exchangeable for any shares of Buyer
Common Stock on the date of this Agreement.

7.5 Governmental Approval. Except as set forth on Schedule 7.5,
no consent, approval, waiver, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made in connection with the execution and delivery of this Agreement by
Buyer or the consummation by Buyer of the transactions contemplated hereby.

7.6 Litigation. There is no litigation and there are no
arbitration proceedings or governmental proceedings, suits or investigations
pending, instituted or, to the knowledge of Buyer overtly threatened against
Buyer or its Subsidiaries that could reasonably be expected to have a material
adverse effect on the business or financial condition of Buyer and its
Subsidiaries taken as a whole or that, if adversely determined, would delay or
prevent the consummation of the transactions contemplated by this Agreement.

7.7 No Brokers. Except for Simmons & Company International (whose
fee in respect of the transactions contemplated hereby shall be paid solely by
Buyer) and Per-Egil Ramuz Evensen (whose fee due pursuant to his agreement with
Buyer in respect of the transactions contemplated hereby shall be paid solely
by Buyer), Buyer has not employed or authorized anyone to represent it as a
broker or finder in connection with the transactions contemplated by this
Agreement, and no broker or other person is entitled to any commission or
finder's fee from Buyer in connection with such transactions. Buyer agrees to
indemnify and hold harmless Seller and Parent from and against any and all
losses, claims, demands, damages, costs and expenses, including, without
limitation, reasonable attorneys' fees and expenses, Seller or Parent may
sustain or incur as a result of any claim for a commission or fee by a broker
or finder acting on behalf of Buyer.

7.8 Charter and Bylaws. Buyer has made available to Parent and
Seller or their representatives accurate and complete copies of the Certificate
of Incorporation and Bylaws of Buyer as currently in effect.

7.9 Buyer Shares. The Buyer Shares have been duly authorized for
issuance and, if and when issued and delivered by Buyer in accordance with the
provisions of this Agreement, will be validly issued, fully paid and
nonassessable. The issuance of the Buyer Shares under this Agreement is not
subject to any preemptive or similar rights.

7.10 SEC Filings. Buyer has heretofore delivered to Parent and
Seller accurate and complete copies of all reports, registration statements and
other filings filed by Buyer with the SEC since January 1, 1995 (the "Buyer SEC
Filings"). As of their respective dates, the Buyer SEC Filings did not contain
any untrue statement of a material fact or omit to state any material

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<PAGE> 37
fact required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements of Buyer included in the Buyer SEC
Filings present fairly, in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of Buyer as of the dates
thereof and its consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end audit adjustments in the case of
any unaudited interim financial statements).

7.11 Insurance. Buyer and its Subsidiaries maintain with sound and
reputable insurers, and there are currently in full force and effect, policies
of insurance with respect to their respective assets and operations, in amounts
and coverages as are customary in the oil and gas contract drilling industry.

7.12 Disclosure. No representations or warranty made by Buyer in
this Agreement and no statement of Buyer or its representatives contained in
any document, certificate or other writing furnished or to be furnished by
Buyer pursuant hereto or in connection herewith, contains or will contain, at
the time of delivery, any untrue statement of a material fact or omits or will
omit, at the time of delivery, to state any material fact (other than those
facts generally recognized to be industry risks normally associated with the
contract drilling business) necessary in order to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading.

ARTICLE VIII

CONDITIONS TO THE OBLIGATIONS OF SELLER

The obligations of Seller to proceed with the Closing contemplated by
this Agreement are subject to the satisfaction, on or before the Closing Date,
of all the following conditions, any one or more of which may be waived, in
whole or in part, by Seller and Parent:

8.1 Accuracy of Representations and Warranties. Each
representation and warranty of Buyer contained in this Agreement shall be true
and correct in all material respects as of the Closing Date with the same
effect as though made on the Closing Date, except as otherwise specifically
contemplated by this Agreement.

8.2 Covenants and Agreements Performed. Buyer shall have complied
on or before the Closing Date in all material respects with each of its
covenants or agreements contained in this Agreement to be performed on or
before the Closing Date.

8.3 Officer's Certificate. Seller shall have received a
certificate in the form of Exhibit 8.3 hereto, dated as of the Closing Date, of
the President or a Vice President of Buyer certifying as to the matters
specified in Sections 8.1 and 8.2.

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8.4 Legal Opinion. Seller shall have received from Thompson &
Knight, P.C., counsel for Buyer, an opinion dated the Closing Date,
substantially in the form of Exhibit 8.4 hereto.

ARTICLE IX

CONDITIONS TO THE OBLIGATIONS OF BUYER

The obligations of Buyer to proceed with the Closing contemplated by
this Agreement are subject to the satisfaction, on or before the Closing Date,
of all the following conditions, any one or more of which may be waived, in
whole or in part, by Buyer:

9.1 Accuracy of Representations and Warranties.

(a) Each representation and warranty of Parent contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though made on the Closing Date, except as
otherwise specifically contemplated by this Agreement.

(b) Each representation and warranty of Seller contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though made on the Closing Date, except as
otherwise specifically contemplated by this Agreement.

9.2 Covenants and Agreements Performed.

(a) Parent shall have complied on or before the Closing Date in
all material respects with each of its covenants or agreements contained in
this Agreement to be performed on or before the Closing Date.

(b) Seller shall have complied on or before the Closing Date in
all material respects with each of its covenants or agreements contained in
this Agreement to be performed on or before the Closing Date.

9.3 Officer's Certificate.

(a) Buyer shall have received a certificate in the form of Exhibit
9.3(a) hereto, dated as of the Closing Date, of the President or a Vice
President of Parent certifying as to the matters specified in Sections 9.1(a)
and 9.2(a).

(b) Buyer shall have received a certificate in the form of Exhibit
9.3(b) hereto, dated as of the Closing Date, of the President or a Vice
President of Seller certifying as to the matters specified in Sections 9.1(b)
and 9.2(b).

9.4 Legal Opinion. Buyer shall have received from Griggs &
Harrison, P. C. and Nauta Dutilh, counsel to Parent and Seller, an opinion
dated the Closing Date, substantially in the form of Exhibit 9.4 hereto.

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9.5 Financing by Buyer. Buyer shall have obtained net proceeds of
financing for the purchase of the Assets in an amount not less than the Cash
Purchase Price.

9.6 Diminution in Value of the Assets. Since the date of this
Agreement, there shall not have been (i) an actual, constructive, arranged or
compromised total loss (as determined by Seller's insurance underwriter's
marine surveyor) of either the Neddrill 1 Drillship, the Neddrill 2 Drillship
or the Neddrill 6 Semi-submersible or of two or more other Vessels or (ii) a
cancellation, termination or rescission by Petrobras of either of the currently
subsisting Drilling Contracts with Petrobras regarding the Neddrill 1 Drillship
and the Neddrill 2 Drillship.

ARTICLE X

COVENANTS AND AGREEMENTS OF THE PARTIES BEFORE,
RELATING TO AND SUBSEQUENT TO THE CLOSING

Parent, Seller and Buyer hereby covenant and agree as follows:

10.1 Net Working Capital Determination.

(a) Current Assets and Current Liabilities. Seller shall
prepare and deliver to Buyer, at the preliminary closing contemplated
by Section 10.2(b), a combined balance sheet as of such date for the
Purchased Subsidiaries prepared in accordance with United States
generally accepted accounting principles and on a basis consistent
with the Financial Statements (the "W/C Balance Sheet"), together with
sufficient detailed information necessary to identify items included
in account balances. For purposes of this Section 10.1:

(i) "W/C Current Assets" means those assets
identified on the W/C Balance Sheet as "current assets," less
any such assets that are rig-related assets, plus any cash
deposits posted as performance bonds, regardless of whether
such deposits are classified as "current assets"; and

(ii) "W/C Current Liabilities" means those
liabilities identified on the W/C Balance Sheet as "current
liabilities," less any such liabilities that constitute
Intercompany Debt.

(b) Net Working Capital. For the purposes of this
Agreement, the book net working capital of the Purchased Subsidiaries
on a combined basis at the time of Closing (the "Closing Net Working
Capital") shall be the dollar amount by which:

(i) the total value of the W/C Current Assets,

exceeds

(ii) the total value of the W/C Current
Liabilities.

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(c) Closing Net Working Capital Estimation. The parties
acknowledge that the Closing Net Working Capital will not be capable
of precise determination until some time following Closing.
Accordingly, Seller shall use its best reasonable estimate of the
Closing Net Working Capital from the financial records of the
Purchased Subsidiaries as they stood on the date of the preliminary
closing contemplated by Section 10.2(b) to prepare the W/C Balance
Sheet and determine an estimate of the Closing Net Working Capital at
the time of Closing and shall adjust for any variances in the manner
provided in Section 10.1(d).

(d) Net Working Capital Surpluses and Deficiencies.
Subject to any adjustment required pursuant to Section 10.7(b), the
amount of Closing Net Working Capital shall equal $25 million. To the
extent the amount of Closing Net Working Capital is more than $25
million in the Closing Net Working Capital estimation prepared in
accordance with Section 10.1(b), Seller may, prior to Closing,
withdraw from the Purchased Subsidiaries and retain cash in an amount
equal to such difference so that the amount of Closing Net Working
Capital equals $25 million. To the extent the amount of Closing Net
Working Capital is less than $25 million in the Closing Net Working
Capital estimation prepared in accordance with Section 10.1(b), Seller
shall contribute cash to the Purchased Subsidiaries in an amount equal
to such difference so that the amount of Closing Net Working Capital
equals $25 million.

(e) Post-Closing Adjustment Procedure.

(i) Buyer shall within 90 days after the Closing
Date provide Seller with a draft statement of adjustments in
respect of the calculation of the Closing Net Working Capital
reflecting all such new information in that respect as Buyer
shall have received between the Closing Date and the date of
preparation of the draft revised statement of adjustment.
Seller shall have a period of 10 Business Days from the date
of receipt of such draft revised statement of adjustment in
which to conduct, at its expense, an investigation of matters
relating thereto, including an audit of Buyer's financial
records in respect of the Purchased Subsidiaries if so
requested, and to advise Buyer of any errors or omissions in
the draft revised statement of adjustment. Seller and Buyer
shall thereupon have a further period of five Business Days in
which to resolve any disputes which they might have with
respect to any such items, and, except for any such items
which are the subject of a reasonable and bona fide dispute,
the statement of adjustments shall be finalized and the net
amount of any adjustment payment required to be made by one
party to the other on the basis thereof, together with
interest thereon, shall be paid in cash within five Business
Days. Interest on the amount of such adjustment shall accrue
from the Closing Date until the date of payment at a rate
equal to the Prime Rate in effect from time to time during
such period plus two percent. For the purposes of this
Section 10.1(e), "Prime Rate" means an annual rate of interest
equal to the floating annual rate of interest from time to
time set by Texas Commerce Bank National Association as the
prime base rate used by it to determine rates of interest
charged on U.S. dollar commercial loans to customers in the
United States, being the rate from time to time designated as
such by the said bank in Houston, Texas.

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(ii) Acknowledging that it is foreseeable that not
all adjustment items (such as the potential adjustment
contemplated by Section 10.1(e)(iii)) will have become
ascertainable by the time of preparation of the revised
statement of adjustments to be prepared pursuant to Section
10.1(e)(i), any such items which have not been ascertained at
such time shall thereafter be adjusted between Seller and
Buyer on an item-by-item basis as soon as ascertained;
provided, however, that neither Seller nor Buyer shall be
entitled to make any claim for any such adjustment item unless
written notice thereof has been given to the other party
within one year after the Closing Date, or unless such
adjustment item is raised as a counterclaim or set-off item in
response to any claim asserted by the other party at any time
after Closing. Any such adjustment shall be paid together
with interest thereon, which shall accrue at the Prime Rate
plus two percent from the Closing Date until paid.

(iii) If, on or prior to 120 days after the Closing
Date, Buyer has been unable to collect in full any accounts
receivable forming a part of the W/C Current Assets (the "W/C
Receivables"), Buyer shall have the option to sell and, upon
exercise of such option by Buyer, Seller shall have the
obligation to buy, such uncollected W/C Receivables, for cash,
at the aggregate face value thereof less any allowance for
doubtful accounts reflected on the W/C Balance Sheet with
respect to such W/C Receivables. Seller shall be obligated to
consummate such repurchase within ten days after written
notice from Buyer of Buyer's election to require such
repurchase. In the event that the repurchase of any W/C
Receivables is not consummated within the required period, the
amount to be paid by Seller for such W/C Receivables, or any
portion thereof remaining unpaid from time to time, shall bear
interest at a rate equal to the Prime Rate in effect from time
to time while such amount remains unpaid, plus two percent.
If Buyer does not elect to put the unrealized W/C Receivables
back to Seller in the manner provided in this Section
10.1(e)(iii), Buyer shall retain all rights to such W/C
Receivables, and there shall be no adjustment therefor.

(iv) Notwithstanding Section 16.4, in the event of
any dispute between Seller and Buyer with respect to the
propriety of an adjustment to be made under this Section
10.1(e), either party may have the matter submitted to
arbitration by providing the other party with a written notice
setting forth reasonable particulars of the matter in dispute
and requesting the arbitration of the matter.

(A) Such arbitration shall be conducted
in accordance with the Rules of the American
Arbitration Association.

(B) Within three Business Days after the
issuance of an arbitration notice, each of the
parties shall seek to agree on the selection of an
arbiter (the "Arbiter"). In the event that the
parties cannot agree on the selection of the Arbiter
within such time, each party shall select an arbiter,
which two arbiters shall in turn select a third
arbiter. These three arbiters shall hear and
determine the matter in dispute. In such case, all

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<PAGE> 42
references hereafter to the Arbiter shall be deemed
to apply to such three arbiters.

(C) Within three Business Days after the
selection of the Arbiter, each of Seller and Buyer
shall provide the Arbiter with a written submission
setting forth its position with respect to the matter
in dispute, and the Arbiter shall forthwith
thereafter proceed to hear and determine the matter
in dispute, with a view to rendering its decision
within 30 days.

(D) The decision of the Arbiter shall be
drawn up in writing and signed by the Arbiter and,
absent manifest error, shall be final and binding on
Parent, Seller and Buyer.

(E) Responsibility for the compensation
and expenses of the Arbiter shall be allocated
between the parties by the Arbiter as part of
Arbiter's decision.

10.2 Action of Buyer Regarding Financing.

(a) Buyer shall promptly after the date of this Agreement initiate
and diligently pursue action to obtain financing in an amount not less than the
Cash Purchase Price. In such connection, Buyer plans to file with the SEC one
or more registration statements under the Securities Act for the firm
commitment underwritten offer and sale of its securities. Buyer shall consult
with Parent and Seller, and Parent and Seller shall cooperate with and assist
Buyer, in preparing such registration statement, particularly with respect to
the information therein relating to Parent, Seller and Seller's Subsidiaries.
Buyer agrees to use its Best Efforts to cause any such registration statement
to become effective under the Securities Act as soon as practicable. The date
on which Buyer consummates one or more financings the net proceeds of which
aggregate at least the Cash Purchase Price is herein referred to as the
"Financing Closing Date."

(b) If Buyer obtains financing through an underwritten offering
and sale of its securities as contemplated by subsection (a) of this Section
10.2, Buyer, Parent and Seller agree that a preliminary closing of the
transactions contemplated hereby shall be held on or about two Business Days
prior to the date on which Buyer enters into one or more underwriting
agreements with its underwriters for the public offering of Buyer's securities.
At any such preliminary closing, the closing documents under this Agreement
shall be presented and examined by Buyer and Seller and all documents deemed
satisfactory shall be held in escrow until the Closing.

(c) Buyer shall keep Parent informed at all times with respect to
the status of the financing contemplated by subsection (a) of this Section 10.2
and in any event shall inform Parent (i) upon filing of, the receipt of
comments from the SEC as to and the response of Buyer to such comments, and the
effectiveness of, any registration statement filed by Buyer under the
Securities Act relating to such financing, (ii) upon pricing of the securities
under any such registration statement or (iii) upon receipt by Buyer of notice
from the SEC of the issuance of a stop order with respect to any such
registration statement.

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(d) Buyer agrees to use its Best Efforts to include the Buyer
Shares in a registration statement filed with the SEC as contemplated by
subsection (a) of this Section 10.2; provided, however, that if Buyer
reasonably concludes (after consultation with its counsel, its managing
underwriter(s) and its counsel, Parent and its U.S. counsel, and, in Buyer's
discretion, the Division of Corporation Finance Staff of the SEC) that the
Buyer Shares may only be included in such a registration statement if such a
registration statement is on a form other than Form S-3 or Form S-2, then
Buyer, at its option, may elect not to include the Buyer Shares in a
registration statement filed and effective with the SEC at the Closing Date.
If Buyer elects not to include the Buyer Shares in a registration statement
pursuant to the preceding sentence, then on the Closing Date Buyer and Parent
shall enter into an agreement relating to the registration of the resale of the
Buyer Shares by Parent substantially in the form of Exhibit 10.2(d) hereto.

10.3 Lock-Up. Parent agrees that it will not, directly or
indirectly, sell, assign, transfer, pledge, encumber or otherwise dispose of
(in this Section, "transfer") any of the Buyer Shares prior to the date that is
nine months after the Closing Date. Notwithstanding any provision of this
Agreement to the contrary, Parent agrees that it will not transfer any of the
Buyer Shares in violation of the Securities Act.

10.4 Restrictions on Certain Sales.

(a) Subject to subsection (b) below, prior to the second
anniversary of the Closing Date, Parent shall not sell or otherwise dispose of
2,500,000 or more shares of Buyer Common Stock held by Parent (or any of its
Subsidiaries) (including, without limitation, the Buyer Shares) in a single
transaction or series of related transactions (a "Sale") to a transferee
(including its Affiliates and any person or persons which are to Parent's
knowledge after due inquiry part of any group, within the meaning of Section
13(d) of the Exchange Act, which includes such transferee or any of its
Affiliates) which beneficially owns, or after giving effect to such Sale would
beneficially own, five percent or more of the then outstanding Voting
Securities.

(b) Notwithstanding the provisions of subsection (a) above,
Parent's obligation thereunder shall not be applicable to Sales of Voting
Securities

(i) After the date of a Change of Control of Buyer;

(ii) Pursuant to a tender offer or an exchange offer
approved by the Board of Directors of Buyer; or

(iii) As a result of or in connection with consummation of
a merger, consolidation or sale of all or substantially all the assets
of Buyer.

(i) A person or group (within the meaning of Section
13(d)(3) of the Exchange Act) shall attain the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of an equity interest representing at least 50

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<PAGE> 44
percent of the Voting Securities, unless such attainment has been
approved by the Board of Directors of Buyer; or

(ii) Buyer, directly or indirectly, consolidates or merges
with any other person or sells or leases its properties and assets
substantially as an entirety to any other person, unless approved by
the Board of Directors of Buyer.

10.5 Restrictions on Certain Actions. Parent hereby agrees
(subject to the occurrence of the Closing) that for a period of two years after
the Closing Date:

(a) Neither Parent nor any of its Affiliates shall, without the
prior written approval of the Board of Directors of Buyer, acquire, offer to
acquire or agree to acquire, directly or indirectly, by purchase or otherwise,
any Voting Securities, except by way of stock dividends or other distributions
or offerings made available to holders of Voting Securities generally.

(b) Neither Parent nor any of its Affiliates shall deposit any
Voting Securities into a voting trust or, except as provided in this Section,
subject any Voting Securities to any agreement, arrangement or understanding
with respect to the voting of such Voting Securities or any agreement having
similar effect.

(c) Neither Parent nor any of its Affiliates shall make or in any
way participate, directly or indirectly, in any "solicitation" of "proxies" (as
such terms are defined in Regulation 14A promulgated under the Exchange Act) to
vote or seek to advise or influence any person with respect to the voting of,
any Voting Securities.

(d) Neither Parent nor any of its Affiliates shall form, join, in
any way participate in, or encourage the formation of, a partnership, limited
partnership, syndicate or other group (within the meaning of Section 13(d)(3)
of the Exchange Act), or otherwise act in concert with any person, for the
purpose of acquiring, holding, voting or disposing of Voting Securities.

(e) Neither Parent nor any of its Affiliates shall act, alone or
in concert with others, to seek to affect or influence the control of
management or the Board of Directors of Buyer or the business, operations or
affairs of Buyer; provided, however, that actions taken solely by exercise of
the right to vote Voting Securities of which Parent or any of its Affiliates
are the beneficial owners (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) shall not violate this provision.

(f) Neither Seller nor any of its Affiliates shall take any action
inconsistent with the foregoing provisions of this Section.

10.6 Access. Until the Closing, Seller shall give the officers,
attorneys, accountants and other authorized representatives of Buyer full
access, during normal business hours upon Buyer's reasonable prior notice to
Seller, to all of the records, properties and personnel of Seller and its
Affiliates relating to the Assets. Seller will furnish the representatives of
Buyer during such period with all information as such representatives may
reasonably request regarding the Business and the Assets and shall use its Best
Efforts to cause the employees, accountants and attorneys of Seller to
cooperate fully with such representatives in connection with such review

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and examination and to make full disclosure to Buyer of all material facts
known to them regarding the Assets and the Business; provided, however, that
Buyer will hold in strict confidence and not use for purposes other than those
contemplated by this Agreement the documents and information furnished
concerning Seller or the Assets. Such confidence shall be maintained for at
least two years. If the transactions contemplated by this Agreement shall not
be consummated, all such documents and all copies thereof shall immediately
thereafter be returned to Seller. The confidentiality obligations set forth in
the preceding sentence shall not apply to information (i) in the public domain,
(ii) obtained by Buyer from a third party source with the right to disclose
such information or (iii) with respect to which disclosure is required by law
in the opinion of counsel reasonably acceptable to Seller and Parent.

10.7 Conduct of Business and Preservation of Assets.

(a) Until the Closing, Buyer and Seller agree to cooperate with
each other to effect an orderly transition of the ongoing operation of the
Assets (including jointly contacting customers of the Business and informing
them of this Agreement and the transfer to Buyer of the Business) and Seller
shall use its Best Efforts to preserve, maintain and protect the Assets, and to
maintain the relationships with Seller's existing employees, customers and
suppliers relating to the Assets. From and after the date of this Agreement
and until the Closing Date, without the prior express written consent of Buyer,
Seller will not, and Seller will not permit any of its Affiliates to, (i) make
any material change in the conduct of the ongoing operation of the Business,
(ii) enter into any new drilling contracts with respect to the Vessels, unless
in Seller's good faith opinion such contracts may reasonably be expected to
have a duration of 90 days or less, enter into any other contracts or
agreements with respect to the Vessels other than in the ordinary course of
business, or amend, in any respect adverse to Seller or Buyer, any Drilling
Contract, Chartered Vessel Contract or Other Contract, (iii) move any Vessel to
a different geographic region (unless required under a Drilling Contract in
effect on the date hereof), (iv) enter into or permit any of its Subsidiaries
to enter into any joint venture, partnership or the like, (v) merge or
consolidate with or into another person or entity, sell all or substantially
all of its assets, liquidate or dissolve or seek protection from creditors
under applicable bankruptcy law or (vi) commit itself to do any of the
foregoing. Buyer agrees to respond to any such request by Seller for consent
with respect to any of the foregoing matters within two Business Days after
receipt from Seller of Seller's request for consent, which request shall
describe the circumstances of the action with respect to which Seller seeks
such consent.

(b) Seller has provided to Buyer a 1996 Capital Expenditure Plan
(the "Plan"), which is attached hereto as Exhibit 10.7. Pursuant to the Plan,
Seller expects to incur $7.0 million of Capital Expenditure Payments with
respect to the Vessels during the first six months of calendar year 1996. For
purposes of this Section 10.7, "Capital Expenditure Payments" means capital
expenditures that are budgeted expenditures reflected in the Plan, exclusive of
(i) expenditures relating to the installation of a top drive unit on the
Neddrill 1 Drillship and the upgrade of the Neddrill 2 Drillship, (ii) capital
expenditures of Seller or any of its Subsidiaries with respect to the joint
venture involving the Neddrill Muravlenko and (iii) cost overruns on such
budgeted expenditures (collectively, "Excluded Capital Expenditures").

Seller and Buyer agree that the Closing Net Working Capital described
in Section 10.1(d) will be adjusted by the difference between (i) the product
of (A) $7.0 million and (B) the number

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<PAGE> 46
of days in the period from January 1, 1996 until the Closing Date divided by
182, less (ii) the actual amount of Capital Expenditure Payments incurred
during such period. If such difference is greater than zero, the Closing Net
Working Capital will be increased by the difference. If such difference is
less than zero, the Closing Net Working Capital will be decreased by the
difference.

(c) Between the date of this Agreement and Closing, Seller shall
not and shall not permit any of its Subsidiaries to make or commit to make any
capital expenditure or series of related capital expenditures that exceed in
the aggregate $200,000 unless such capital expenditure(s) constitute (i) a
Capital Expenditure Payment or (ii) an Excluded Capital Expenditure.

(d) Seller shall deliver to Buyer accurate and complete copies of
Seller's monthly reports.

10.8 Employees. Between the date of this Agreement and Closing (i)
other than as required under an employment agreement currently in effect, no
change will be made in the rate of remuneration or the emoluments or pension
benefits of any Employee or in the terms of engagement of any Employee without
the express written consent of Buyer; and (ii) neither Seller nor any
Subsidiary of Seller will hire or terminate any Employee except in the ordinary
course of business consistent with past practice or as required under a
Drilling Contract.

10.9 Litigation. Until the Closing, Seller will promptly notify
Buyer of any action, suit, proceeding, claim or investigation that is
threatened in writing or commenced against Parent, Seller or any of Seller's
Subsidiaries and which relates to or affects the Business, the Assets or this
Agreement or the transactions contemplated hereby, and Buyer will promptly
notify Seller and Parent of any action, suit, proceeding, claim or
investigation that is threatened or commenced against Buyer or any of its
Subsidiaries which relates to and materially and adversely affects Buyer and
its business taken as a whole or affects this Agreement or the transactions
contemplated hereby.

10.10 Certain Financial Statements. Seller agrees to prepare, or
cause the preparation of, and to deliver to Buyer as soon as practicable
following the date of this Agreement for inclusion in any registration
statement filed by Buyer with the SEC in connection with the financing
contemplated by Section 10.2 or in any Form 8-K or other form of Buyer relating
to the transactions contemplated hereby required to be filed with the SEC, such
financial statements relating to Seller and its Subsidiaries, the Business or
the Assets as Buyer may reasonably request in writing from Seller. Such
financial statements may consist of (i) such audited balance sheets and audited
statements of operations, cash flows and changes in equity together with the
notes thereon and the manually signed accountants' report of KPMG Accountants
N.V. covering such financial statements pursuant to Regulation S-X promulgated
by the SEC and (ii) such unaudited interim balance sheets and unaudited interim
statements of operations, cash flows and changes in equity, if any, in each
case as Buyer shall reasonably deem to be required by the form of registration
statement used by Buyer in connection with such financing, by Paragraph (a) of
Item 7 of Form 8-K or by such other required form. Seller shall pay the fees
of KPMG Accountants N.V. directly relating to the audit of such financial
statements and the participation, if any, of KPMG Accountants N.V. in the
preparation of the registration statement or statements

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to be filed by Buyer with the SEC in connection with the financing contemplated
by Section 10.2.

10.11 Certain Taxes. Seller and Buyer shall each be liable for and
shall pay one-half of all applicable sales, use, transfer, stamp, recording,
value added or similar taxes and assessments resulting from the consummation of
the transactions contemplated hereby, and Buyer and Seller agree to cooperate
to obtain all available exemptions from such taxes. All ad valorem taxes,
utility and other service charges and other taxes, fees and expenses relating
to the Assets (collectively, "Transaction Taxes") for all periods prior to the
Closing shall be the obligation of Seller, and for all periods following the
Closing shall be the obligation of Buyer. All Transaction Taxes relating to
periods prior to the Closing that have been assessed prior to Closing and that
are not then being diligently contested in good faith by appropriate
proceedings shall be paid by Seller, prior to the Closing. Seller shall
promptly pay from time to time the prorated share of all Transaction Taxes for
which Seller is responsible under this Section 10.11 to Buyer upon Buyer's
request accompanied by appropriate documentation that such Transaction Taxes
are due and payable. Buyer agrees to pay such amounts on behalf of Seller and
to indemnify Seller with respect to any Claims (as defined in Section 14.1) for
such Transaction Taxes if Seller shall have paid to Buyer the pro rata share of
such Transaction Taxes, if any. Seller and Buyer agree to cooperate with each
other in order to reduce the amount of taxes or other assessments imposed on or
charged to Seller or Buyer as a result of the consummation of the transactions
contemplated by this Agreement, including by postponing the date of transfer of
legal title to any Vessel until completion of the Drilling Contract under which
such a Vessel is operating on the Closing Date; provided, that neither Seller
nor Buyer shall be obligated to take any action that it determines in its sole
discretion may subject it to additional taxes, liabilities or expenses.

10.12 Actions with Respect to Closing. Seller will use its Best
Efforts to obtain, and will cause its Subsidiaries to use their respective Best
Efforts to obtain, the satisfaction of the conditions to Closing applicable to
Seller set forth in Article IX as soon as practicable. Buyer will use its Best
Efforts to obtain the satisfaction of the conditions to Closing applicable to
Buyer set forth in Article VIII as soon as practicable.

10.13 Public Statements. Prior to issuing any news release or
otherwise making any public announcement concerning this Agreement or the
transactions contemplated hereby, Buyer and Parent shall consult with each
other regarding the proposed contents thereof (but no approval thereof shall be
required).

10.14 Books and Records. Seller and Buyer shall have the right, at
their own expense, at any time or from time to time within the greater of five
years and the period required under applicable law after the Closing Date
during reasonable business hours upon reasonable notice to inspect, and make
copies of or extracts from, any of the books and records directly relating to
the ownership or operation of the Assets prior to the Closing Date in the
possession of Seller or Buyer or their respective Affiliates, as the case may
be. None of the books and records in the possession of Seller or Buyer, as the
case may be, shall be destroyed prior to December 31, 2001 or five years after
generated, whichever is earlier, without the consent of the other unless first
reproduced by microfilm or any other similar process. In the event that either
Seller or Buyer shall wish to destroy any of such books and records at any time
or from time to time after

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the Closing Date, such party shall give not less than 60 days' notice to the
other party and such other party shall have the right, at its own expense,
during reasonable business hours to remove such books and records and to keep
possession of the same.

10.15 Vessel Loss. Notwithstanding any other provision of this
Agreement, but subject to the last sentence of subsection (a) of this Section
10.15 and to Section 13.1(c)(ii):

(a) If any Vessel shall become an actual, constructive, arranged
or compromised total loss (as determined by Seller's insurance underwriter's
marine surveyor) prior to the Closing Date: (i) Buyer shall not be required to
purchase such Vessel, (ii) the Cash Purchase Price shall be reduced by the
amount allocated to such Vessel pursuant to Schedule 10.15(a), (iii) the term
"Assets" shall be deemed not to include such Vessel and (iv) the other
provisions of this Agreement shall continue to be in effect and the Closing
shall take place in the manner contemplated herein. The actual, constructive,
arranged or compromised total loss (as determined by Seller's insurance
underwriter's marine surveyor) of any of the Neddrill 1 Drillship, the Neddrill
2 Drillship or the Neddrill 6 Semi-submersible or of two or more other Vessels,
or the cancellation, termination or rescission by Petrobras of either of the
currently subsisting Drilling Contracts with Petrobras regarding the Neddrill 1
Drillship or the Neddrill 2 Drillship shall, however, constitute a "Buyer
Termination Event."

(b) Without limiting Seller's obligations under Section 10.7, if a
Vessel sustains damage in an amount exceeding $50,000 but not amounting to an
actual, constructive, arranged or compromised total loss prior to the Closing
Date, either (i) Seller shall repair or cause to be repaired the damage to the
Vessel at Seller's own expense or (ii) in the case of damage to a Vessel in
respect of which insurance proceeds are available, Buyer, at its option, may
require Seller to assign to Buyer at the Closing the rights of Seller to
receive insurance proceeds in respect of such loss or damage and pay to Buyer
the amount by which any such insurance proceeds otherwise payable to Buyer are
reduced by any deductible or deductibles under the terms of the relevant policy
or policies (offset by any amounts paid through the Closing Date by Seller for
such repair), and, in the case of either (i) or (ii) above, Buyer shall remain
obligated to purchase the Assets on the Closing Date and the Cash Purchase
Price shall not be reduced; provided, however, that if Buyer does not receive
sufficient insurance proceeds as may be reasonably necessary to restore the
damaged Vessel to its prior condition, Seller shall restore the Vessel to its
prior condition or pay to Buyer an amount reasonably necessary to allow Buyer
to restore the Vessel to its prior condition. Seller agrees to maintain
insurance on each of the Vessels of a type and in an amount not less than the
amount set forth on Schedule 5.9 through the Closing Date. If, pursuant to
this subsection (b), Buyer is to conduct or cause to be conducted repairs to a
damaged Vessel subsequent to Closing, then Seller and Buyer shall agree on a
plan for the manner of conduct and the scope of such repairs and to the extent
that the repairs deviate from such plan in a material respect, Seller shall not
be obligated to pay the additional costs resulting solely from such deviation.

10.16 Use of Neddrill Name. Buyer shall have the right but not the
obligation to conduct the Business acquired by it at the Closing under the name
"Neddrill." Seller shall have the concurrent right to use the name "Neddrill"
only for so long as reasonably necessary after the Closing for, and solely in
connection with, carrying out the winding down of Seller and its Subsidiaries
(other than the Purchased Subsidiaries).

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10.17 Continued Effectiveness of Representations and Warranties.
Each of Parent, Seller and Buyer shall use its Best Efforts to cause the
representations and warranties made by it herein to continue to be true and
correct on and as of the Closing Date as if made on and as of the Closing Date.
Parent, Seller and Buyer shall each advise the other promptly in writing of any
condition or circumstance occurring after the date hereof up to and including
the Closing Date that would cause the representations and warranties made by it
herein to become untrue in any material respect.

10.18 Import Duties; Performance Bonds. If Seller or any of its
Subsidiaries (other than any of the Purchased Subsidiaries) has posted a
performance or other similar bond or letter of credit or procured any
certificate of financial responsibility or similar evidence of financial
accountability in connection with Seller's or any of its Subsidiaries'
ownership or operation of any of the Vessels or the performance by any of
Seller's Subsidiaries under a Drilling Contract, Buyer and Seller shall
cooperate with each other in order (i) for Seller or any of its Subsidiaries
(other than the Purchased Subsidiaries) to obtain the release of any such bond,
letter of credit or certificate and (ii) to the extent required, for Buyer to
obtain a substitute bond, letter of credit or certificate or to assume the
existing bond, letter of credit or certificate of Seller or any of its
Subsidiaries (other than the Purchased Subsidiaries). Seller and Buyer agree
to cooperate with each other in order to reduce import duties assessed against
Seller or any of its Subsidiaries or Buyer as a result of the consummation of
the transactions contemplated by this Agreement, including by postponing the
date of transfer of legal title to any Vessel operating in foreign waters until
completion of the Drilling Contract under which such a Vessel is operating on
the Closing Date; provided, that neither Seller, any of its Subsidiaries nor
Buyer shall be obligated to take any action that it determines in its sole
discretion may subject it to additional import duties, liabilities or expenses.
Buyer shall reimburse Seller or any of its Subsidiaries (other than Purchased
Subsidiaries) for all out-of-pocket costs incurred by Seller or any such
Subsidiary as a result of their leaving a performance or similar bond, letter
of credit or certificate in place after the Closing Date in order to permit
Buyer to conduct the Business after the Closing Date.

10.19 Further Assurances. At and after the Closing Date, and
without further consideration, Seller shall execute and deliver any bills of
sale, assignments or assurances, and shall take and do any other actions and
things, to vest, perfect or confirm of record or otherwise in Buyer any and all
right, title and interest in, to and under any of the Assets as Buyer may
reasonably request, and Buyer shall execute any documents of assumption or
assurance, and shall take and do any other actions and things as Seller may
reasonably request, to perfect, confirm or otherwise assure Seller of the
assumption by Buyer of the Contractually Assumed Liabilities.

10.20 Removal of Outstanding Recommendations. Seller agrees to
remove or cause the removal at its expense of any outstanding recommendations
to class against any of the Vessels (including, without limitation, those
recommendations set forth on Schedules 1(a), 1(d)(iv) or 5.8(b)).

10.21 Maintenance of Inventory Levels. Without limiting Seller's
obligations under Section 10.7, Seller agrees that through the Closing Date, it
will maintain Inventory with respect to each Vessel and Chartered Vessel in
accordance with any applicable Drilling Contract, Chartered Vessel Contract or
Other Contract, and past practice at quantities that are comparable to
historical amounts.

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10.22 Expenses. Subject to the provisions of Sections 13.2 and
13.3, each of the parties hereto shall assume and bear all expenses, costs and
fees incurred or assumed by such party in the preparation and execution of this
Agreement and in compliance with and performance of the agreements and
covenants contained in this Agreement, regardless of whether the transactions
contemplated hereby are consummated.

10.23 Conduct of Business Pending the Closing. Buyer agrees that
from the date of this Agreement until the Closing Date, unless Seller and
Parent shall otherwise agree in writing or as otherwise expressly contemplated
by this Agreement, Buyer shall not, directly or indirectly, do any of the
following: (i) issue or sell, or permit any Subsidiary of Buyer to issue or
sell (except to another wholly owned Subsidiary of Buyer), any capital stock of
Buyer or any Subsidiary of Buyer, except (A) upon exercise of options or upon
conversion of any convertible securities of Buyer outstanding as of the date of
this Agreement, (B) pursuant to Buyer's existing non-employee director benefit
plans or existing employee benefit plans or (C) pursuant to any other currently
existing agreements of Buyer; (ii) amend or propose to amend the charter or
bylaws of Buyer; (iii) split, combine or reclassify any outstanding capital
stock, or declare, set aside or pay any dividend payable in cash, stock,
property or otherwise with respect to its capital stock, whether now or
hereafter outstanding, other than its regular quarterly dividends on preferred
stock outstanding as of the date of this Agreement, (iv) redeem, purchase or
acquire, or offer to acquire, any of its capital stock, or (v) except in the
ordinary course of business and consistent with past practice, enter into any
contract, agreement, commitment or arrangement with respect to any of the
foregoing.

10.24 Stock Exchange Listing. Buyer agrees to use all reasonable
efforts to cause the Buyer Shares to be approved for listing on the New York
Stock Exchange, subject to official notice of issuance, prior to the Closing
Date.

10.25 Post-Closing Collection, Payment and Administrative
Procedures.

(a) Subsequent to Closing, (i) Buyer agrees to deliver to Seller,
within three Business Days of Buyer's receipt of same, any and all (A) monies
paid to or received by Buyer in respect of amounts due Seller or its
Subsidiaries (other than the Purchased Subsidiaries), including, but not
limited to, payment of receivables, refunds, rebates, release of performance or
similar bonds or letters of credit, and (B) inquiries, correspondence or
documents received by Buyer related to such amounts; and (ii) Seller agrees to
deliver to Buyer, within three Business Days of Seller's receipt of same, any
and all (A) monies paid to or received by Seller in respect of amounts due
Buyer or any of Buyer's Affiliates (including without limitation the Purchased
Subsidiaries), including, but not limited to, payment of receivables, refunds,
rebates, release of performance or similar bonds or letters of credit, and (B)
inquiries, correspondence or documents received by Seller related to such
amounts.

(b) Subsequent to Closing, Buyer agrees to use its Best Efforts to
take or cause to be taken any action, and to do or cause to be done all things,
reasonably requested by Seller that are necessary, proper or advisable in order
to carry out and consummate and make effective the reorganization, "winding
down," dissolution and/or liquidation of Seller's Subsidiaries (other than the
Purchased Subsidiaries); provided, however, that Buyer and its Subsidiaries
shall not be required to take or cause to be taken any action, or do or cause
to be done any thing, that

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Buyer determines may subject Buyer to liability for the obligations of any of
such Subsidiaries of Seller. Seller shall pay on behalf of or reimburse Buyer
for all direct costs and expenses actually incurred by Buyer or any Subsidiary
of Buyer as a result of Buyer's performance of this Section 10.25(b).

10.26 Removal of Encumbrances. Seller shall cause the Encumbrances
referred to in Schedule 10.26 to be removed and terminated prior to the date of
the preliminary closing contemplated by Section 10.2(b) with respect to the
Purchased Subsidiaries and shall furnish to Buyer at Closing evidence of such
removal and termination reasonably satisfactory to Buyer.

10.27 Settling of Intercompany Obligations. Prior to the date of
the preliminary closing contemplated by Section 10.2(b), Seller shall (i) cause
all Intercompany Debt to be repaid or otherwise discharged and (ii) cause to be
repaid or otherwise discharged all amounts owing from any of Seller, or any of
its Subsidiaries, or Parent to any Purchased Subsidiary.

ARTICLE XI

PARENT GUARANTEE

Parent irrevocably and unconditionally guarantees as primary obligor
the due and punctual performance by Seller of the agreements and obligations of
Seller and its Subsidiaries, and the completeness and accuracy of the
representations and warranties made by Seller, under this Agreement and all
agreements and instruments to be executed by Seller or any of its Subsidiaries
hereunder, including, without limitation, Article XIV INDEMNIFICATION and
Section 12.7, and the instruments of conveyance referred to in Section 4.3(a).
This guaranty shall survive the Closing and any liquidation of Seller or any of
its Subsidiaries.

ARTICLE XII

EMPLOYEES

12.1 Employment. Buyer acknowledges that as a result of the
transactions contemplated by this Agreement, all Employees on the Closing Date
shall become employees of one or more Subsidiaries of Buyer, including by way
of (i) the acquisition by Buyer of all of the outstanding equity interest of
Neddrill Nederland B.V. ("Category I Employees") and (ii) the acquisition by
Buyer of all of the outstanding equity interest of Neddrill do Brasil Limitada,
Nedstaff Europe Limited and Nedstaff Limited (collectively, "Category II
Employees"). Employees who are employed by a Subsidiary of Buyer subsequent to
Closing will initially receive the same pay rates and benefits package as they
received prior to Closing from Seller or a Subsidiary of Seller; provided that
the foregoing does not in any way (i) guarantee the continued employment of any
such Employee for any period of time, (ii) prevent Buyer or its Subsidiaries
from discharging any Employee for any reason other than the consummation of the
transactions contemplated by this Agreement or (iii) obligate Buyer or its
Subsidiaries to continue such pay rates or benefits package on the same or
similar terms for any period of time, except as required under applicable law
and existing employment agreements with Employees.

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For purposes only of this Article XII, unless the context otherwise requires,
Employee means an Employee on the Closing Date.

Under Buyer's benefit programs (i) service by any Employee with Seller
and its Subsidiaries shall be counted for purposes of determining any period of
eligibility to participate or to vest in benefits, including vacation rights,
provided under such programs and (ii) any amounts previously expended by the
Employees for purposes of satisfying deductibles under any medical or dental
plans of Seller or its Subsidiaries for Seller's current plan year shall be
credited for purposes of satisfying any deductibles under Buyer's plans.
Seller shall be liable for any benefit program charges incurred by Employees
through the Closing Date, and Buyer shall be liable for any such charges
incurred by Employees after the Closing Date. For purposes of the next
preceding sentence, a charge will be deemed incurred, in the case of hospital,
medical or dental benefits, when the services that are the subject of the
charge are performed and, in the case of other benefits (such as disability or
life insurance), when an event has occurred or when a condition has been
diagnosed which entitles the employee to the benefit. For an Employee who is
ill or disabled, wholly or partially, on the Closing Date, Seller shall be
responsible for benefits, including death in service, sickness and disability
benefits, until the time such Employee is able to return to active employment
status; provided, that if such Employee is able to return to such status within
two years following the Closing Date, Buyer agrees to cause such Employee to be
employed on the terms described in the preceding paragraph applicable to such
Employee. Each of Seller and Parent agrees that Seller or Parent has made or
shall make prior to Closing and shall fulfill thereafter, at its expense, the
compensation arrangements with Employees relating to this Agreement or the
transactions contemplated hereby and described prior to the date of this
Agreement to Buyer or to any Employee.

12.2 Severance. Buyer and its Subsidiaries shall be responsible
for any and all termination or severance payments or settlements relating to
any Employees who become employees of Buyer or a Subsidiary of Buyer and whose
employment is terminated after Closing by Buyer or any such Subsidiary.

12.3 No Solicitation of Employees. Parent and Seller agree that,
for a period of two years after the Closing Date, neither Parent nor Seller nor
any of their Affiliates will, directly or indirectly, (i) solicit to employ or
arrange or assist in the employment (as an employee, consultant, independent
contractor or otherwise) of, any employee employed by Buyer or any of its
Subsidiaries in the Business or (ii) otherwise induce or attempt to persuade
any such employee to leave such employment.

12.4 Preexisting Conditions. Pursuant to Section 12.1, Buyer has
agreed to provide all Employees with certain benefits, subject to the
provisions of such Section 12.1. In the event Buyer's insurance carrier under
any life, medical or disability plan shall deny coverage of any claims by an
Employee (or their covered dependents) during the twelve-month period following
the Closing Date because of a possible preexisting condition exclusion, the
following shall apply:

(i) Buyer shall forward the claim to Seller's or
Purchased Subsidiary's insurance carrier for evaluation. Seller's or
Purchased Subsidiary's insurance carrier will make an analysis of the
claim based on prior claims, and Buyer's, Seller's and Purchased

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Subsidiary's insurance carriers will attempt to resolve whether the
claim is based on a preexisting condition.

(ii) If the insurance carriers determine that a
preexisting condition exclusion applies then Seller will be solely
responsible for the entire amount of such claims.

(iii) If such insurance carriers shall disagree as to
whether a preexisting condition applies, Seller and Buyer shall
mutually resolve the disagreement.

(iv) Claims occurring after twelve months following the
Closing Date shall be for the account of Buyer.

12.5 Employee Pension Benefit Plans.

(a) The Category I Employees participate in the pension plan with
the Stichting Pensioen Fonds Royal Nedlloyd Group (the "Parent Pension Fund").
Pursuant to the rules and regulations of the Parent Pension Fund, the Category
I Employees will after the Closing Date no longer be allowed to participate in
the Parent Pension Fund, due to the fact that Neddrill Nederland B.V. will no
longer be part of the Parent group. The Category II Employees participate in
pension schemes arranged by Seller or its Subsidiaries utilizing insurance
company contracts to cover pension obligations (the "Offshore Plan").

(b) Buyer or its Subsidiaries shall provide a separate pension
plan or plans for the Category I Employees (the "Buyer Pension Fund I") and
Category II Employees (the "Buyer Pension Fund II") to provide benefit
entitlements after the Closing Date. On the Closing Date, Parent will cause
Nationale-Nederlanden Levensverzakering Maatschappij N.V. ("NNLM") to enter
into an insurance agreement with Buyer regarding the benefit entitlements
relating to the period prior to the Closing (i) under the Parent Pension Fund
of the Category I Employees and other persons who at the time of the Closing
have accrued benefits arising as a result of employment by Neddrill Nederland
B.V. and (ii) under the Offshore Plan of the Category II Employees and other
persons who at the time of the Closing have accrued benefits arising as a
result of employment by any of Nedstaff Europe Limited, Nedstaff Limited and
Neddrill do Brasil Limitada. Parent shall cause such agreement with NNLM to
contain the terms and conditions described in the "Heads of Agreement" dated
April 25, 1996 set forth in Schedule 12.5(b) regarding the "contract covering
the period between the dates of entering service and closing date" and provide
the insurance coverages described therein. The costs of effecting such
insurance agreement and causing it to be continued indefinitely shall be paid
by Parent.

At Buyer's election made prior to the Closing Date, Parent will cause
NNLM to enter into an insurance agreement with Buyer regarding the benefit
entitlements relating to service after the Closing Date. Parent shall cause
such agreement with NNLM to contain the terms and conditions described in the
"Heads of Agreement" dated April 25, 1996 set forth in Schedule 12.5(b)
regarding the "optional contract regarding future service" and provide the
insurance coverages described therein. The cost of effecting such insurance
agreement and causing it to be continued shall be paid by Buyer.

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(c) The assumptions (including salary increase assumptions)
utilized by Parent's actuaries to calculate projected pension entitlements of
the Category I Employees and others and the Category II Employees and others
are set forth on Schedule 12.5(c). Seller, Parent and Buyer agree that the
liability for increased pension entitlements relating to the period between the
dates of entering service and the Closing Date resulting from a future increase
in salaries in excess of the salary increase assumptions set forth on Schedule
12.5(c) will not be covered by the insurance agreement to be effected between
Buyer and NNLM. At the Closing, Parent shall pay into a single trust or escrow
account acceptable to Parent and Buyer for the benefit of Parent and Buyer the
sum of NLG 3,500,000. On the fifth anniversary of the Closing Date, Buyer and
Parent shall examine the historical salary increases for the Category I
Employees and Category II Employees during the five-year period then ended. If
historical salary increases during such period exceeded the assumptions set
forth on Schedule 12.5(c), then the funds necessary to provide for the
aggregate liabilities of Buyer Pension Fund I and Buyer Pension Fund II that
are attributable to such salary increases in excess of the assumptions set
forth on Schedule 12.5(c) relating to the period between the dates of entering
service and the Closing Date, but in any event, not more than the amount
(including interest and/or earnings) then in the trust or escrow account, shall
be paid from the trust or escrow account to Buyer or, at Buyer's direction and
as permitted under applicable law, a designee of Buyer, the Buyer Pension Fund
I or the Buyer Pension Fund II. Any funds (including interest and/or earnings)
remaining in the trust account or escrow account after the payment, if any,
made to Buyer or at Buyer's direction after the end of the the five-year period
referred to in this Section 12.5(c) shall be paid to Parent.

12.6 Transition.

(a) Parent shall use its Best Efforts to ensure that all Employees
may continue, on the same terms and conditions as apply prior to the Closing
Date and on the same cost basis as applies to Parent's other employees, to be
covered by (to the extent such coverages were available immediately prior to
the Closing Date) (i) collective disability insurance, (ii) collective health
insurance (under the CZ and PPP packages), (iii) collective accidental death
insurance and (iv) collective life risk insurance, for a period of twelve
months after the Closing Date; provided that the contributions for the
aforementioned insurances shall be made by Buyer. However, during this
transition period, Buyer shall receive the benefit of any premium reduction or
holiday available to Parent and its Affiliates with respect to covering the
Employees of Neddrill Nederland B.V.

(b) After the Closing, Seller shall be responsible for, and shall
pay or cause to be paid to any Employee, any amounts required under applicable
law or an employment agreement to be paid to such Employee as sickness payments
or to supplement disability payments due to such Employee in respect of illness
or disability arising prior to Closing.

12.7 Indemnification. Seller shall indemnify and hold harmless
Buyer and its Affiliates and each Employee from and against any and all losses,
liabilities, claims, demands, damages, costs and expenses (including reasonable
attorneys' fees and disbursements) of every kind, nature and description
sustained after Closing by Buyer, any of its Affiliates or any Employee based
upon, arising out of or otherwise in respect of (i) the breach of any covenant
or agreement of Seller or Parent contained in this Article XII, (ii) the
failure of the insurance agreement with NNLM referred to in Section 12.5(b) to
contain the terms decribed in Schedule 12.5(b), unless

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Buyer agrees to different terms with NNLM, or (iii) the failure of the Offshore
Plan to be qualified under applicable tax law in such a manner that
contributions made or premiums paid by Seller or any of its Subsidiaries prior
to Closing on behalf of any Employee avoid being deemed taxable income or
compensation of such Employee by an appropriate taxing authority.

ARTICLE XIII

TERMINATION

13.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:

(a) by mutual written consent of Buyer, Parent and Seller;

(b) by either Buyer, Parent or Seller, if there shall be any
statute, rule or regulation that makes consummation of the transactions
contemplated hereby illegal or otherwise prohibited or a Governmental Entity
shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby, and such order, decree, ruling or other
action shall have become final and nonappealable;

(i) the Closing shall not have occurred by September 30,
1996 (provided that the right to terminate this Agreement under this
clause (i) shall not be available to Buyer if Buyer's failure to
fulfill any of its obligations under this Agreement or its
misrepresentation or breach of warranty hereunder has been the sole
cause thereof); or

(ii) a Buyer Termination Event shall have occurred; or

(iii) there has been a material breach by Parent or Seller
of any material covenant or agreement, or a material inaccuracy of any
material representation or warranty of Parent or Seller, contained in
this Agreement which has rendered the satisfaction of any condition to
the obligations of Buyer impossible and such breach or inaccuracy has
not been cured by Parent or Seller, as the case may be, within five
Business Days after receipt by Parent and Seller of notice thereof
from Buyer, or waived by Buyer; or

(d) by Seller and Parent, if

(i) the Closing shall not have occurred by September 30,
1996 (provided that the right to terminate this Agreement under this
clause (i) shall not be available to Seller or Parent if the failure
by Seller or Parent, as the case may be, to fulfill any of its
obligations under this Agreement or its misrepresentation or breach of
warranty hereunder has been the sole cause thereof); or

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(ii) there has been a material breach by Buyer of any
material covenant or agreement, or a material inaccuracy of any
material representation or warranty of Buyer, contained in this
Agreement which has rendered the satisfaction of any condition to the
obligations of Seller or Parent impossible and such breach or
inaccuracy has not been cured by Buyer within five Business Days after
Buyer's receipt of notice thereof from Seller and Parent, or waived by
Seller and Parent.

13.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 13.1 by Buyer, Parent or Seller, written
notice thereof shall forthwith be given to the other parties specifying the
provision hereof pursuant to which such termination is made, and this Agreement
shall become void and have no effect, except that the agreements contained in
this Section 13.2 and in Article XIV and Sections 5.24, 6.5, 7.7, 10.6, 10.13,
10.22 and 13.3 shall survive the termination hereof. Nothing contained in this
Section 13.2 shall relieve any party from liability for damages (excluding
consequential damages) actually incurred as a result of any breach of this
Agreement.

13.3 Liquidated Damages.

(a) Notwithstanding any other provision of this Agreement, if
Buyer has not satisfied the condition set forth in Section 9.5 and, as a result
thereof, this Agreement is terminated by Parent and Seller pursuant to Section
13.1(d)(i), then, unless Buyer is then entitled to terminate this Agreement
pursuant to Sections 13.1(c)(ii) or 13.1(c)(iii), Buyer shall pay to Parent on
or before two Business Days after Buyer receives notice from Parent or Seller
of such termination as liquidated damages and not as a penalty the sum of
$10,000,000 in immediately available funds. Upon payment of such liquidated
damages to Seller, Buyer shall have no other liability whatsoever to Seller
under this Agreement, except for liability based on the breach by Buyer of this
Agreement, which breach is unrelated to the inability of Buyer to obtain the
financing contemplated by Section 10.2.

(b) In the event that this Agreement is terminated by Buyer
pursuant to Section 13.1(c)(iii), Seller shall pay to Buyer liquidated damages
in the amount of $2,000,000 for all legal, accounting, consulting and
investment advisory fees and expenses incurred by Buyer in connection with the
execution and delivery of this Agreement.

(c) In the event that this Agreement is terminated by Seller
and/or Parent pursuant to Section 13.1(d)(ii), Buyer shall pay to Parent
liquidated damages in the amount of $2,000,000 for all legal, accounting,
consulting and investment advisory fees and expenses incurred by Parent and/or
Seller in connection with the execution and delivery of this Agreement.

(d) Nothing contained in this Section 13.3 shall relieve any party
from liability for damages (excluding consequential damages and damages
consisting of legal, accounting, consulting and investment advisory fees and
expenses) actually incurred as a result of any breach of this Agreement.

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ARTICLE XIV

INDEMNIFICATION

14.1 Indemnification by Buyer.

(a) Buyer agrees to indemnify, defend and hold Seller and its
Affiliates harmless from and against any and all losses, liabilities, claims,
demands, damages, costs and expenses (including reasonable attorneys' fees and
disbursements) of every kind, nature and description (collectively, "Claims")
sustained after Closing by Seller or any of its Affiliates based upon, arising
out of or otherwise in respect of (i) the inaccuracy of any representation or
warranty, or the breach of any covenant or agreement, of Buyer contained in
this Agreement or in any certificate, agreement, document or instrument
delivered pursuant to this Agreement, (ii) the Securities Act or any other
federal or state securities law, insofar as any such Claim is based upon,
arises out of or otherwise is in respect of the financing by Buyer contemplated
by Section 10.2, (iii) the ownership, management or use of the Assets after the
Closing, unless and to the extent that such Claim arises solely from any action
of Seller or any of its Affiliates after the Closing, or (iv) the failure by
Buyer after the Closing to pay, perform or satisfy, or cause to be paid,
performed or satisfied, any of the Assumed Liabilities; provided, however, that
Buyer shall have no liability pursuant to this Section 14.1(a) for the first
$250,000 of aggregate Claims in respect of the matters described in clauses
(i), (iii) or (iv) above incurred by Seller or its Affiliates (the "Seller
Basket") and Buyer shall be responsible only for such amounts of such Claims as
exceed the Seller Basket; provided further, however, that Buyer shall have no
liability pursuant to this Section 14.1(a) in respect of the matters described
in clause (ii) above to the extent that any such Claim is finally judicially
determined to have been based upon, arisen out of or otherwise been in respect
of information prepared or furnished in writing by Seller or its Affiliates
expressly for use in any registration statement or prospectus of Buyer in
connection with such financing. The foregoing indemnification is given solely
for the purpose of protecting Seller and its Affiliates and shall not be deemed
extended to, or interpreted in a manner to confer any benefit, right or cause
of action upon, any third party.

(b) Seller or Parent shall notify Buyer within 45 Business Days of
the assertion of any Claim or the discovery of any fact (which fact has been
brought to the attention of a responsible executive officer of Seller or
Parent) upon which Seller intends to base a claim for indemnification
hereunder; provided, however, that the failure of Seller or Parent so to notify
Buyer shall not relieve Buyer from any liability under this Agreement to Seller
with respect to such Claim unless Buyer is prejudiced or damaged by the failure
to receive timely notice. In the event of any Claims, Buyer, at its option,
may assume (with legal counsel reasonably acceptable to Seller) the defense of
any claim, demand, lawsuit or other proceeding brought against Seller or its
Affiliates, which claim, demand, lawsuit or other proceeding may give rise to
the indemnity obligation of Buyer under this Section 14.1, and may assert any
defense of Buyer or Seller; provided, however, that Seller shall have the right
at its own expense to participate jointly with Buyer in the defense of any
claim, demand, lawsuit or other proceeding in connection with which Seller
claims indemnification hereunder. Notwithstanding the right of Seller so to
participate, Buyer shall have the sole right to settle or otherwise dispose of
such claim, demand, lawsuit or other proceeding on such terms as Buyer, in its
sole discretion, shall deem appropriate with respect to any issue involved in
such claim, demand, lawsuit or other

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proceeding as to which (i) Buyer shall have acknowledged the obligation to
indemnify Seller hereunder or (ii) Seller shall have declined so to
participate; provided, however, that no such Claim shall be settled by Buyer in
any manner that could reasonably be expected to have a material adverse effect
on the business of Parent and Seller taken as a whole without the prior written
consent of Parent.

(c) Notwithstanding anything herein to the contrary, Buyer shall
not have any obligation to indemnify Seller, its Affiliates or Parent pursuant
to this Agreement, whether pursuant to the provisions of Sections 7.7 or 10.11,
Article XIV, or otherwise, and such obligation of Buyer to indemnify Seller,
its Affiliates or Parent shall expire and terminate, unless Buyer shall have
received written notice of such claim for indemnity prior to close of business
on the expiration of five (5) years after the Closing Date.

(d) Notwithstanding any provision herein to the contrary, the
indemnification obligations of Buyer hereunder shall be limited in the
aggregate to the amount of the Cash Purchase Price.

14.2 Indemnification by Seller.

(a) Seller agrees to indemnify, defend and hold Buyer and its
Affiliates harmless from and against any and all Claims sustained after Closing
by Buyer or any of its Affiliates based upon, arising out of or otherwise in
respect of (i) the inaccuracy of any representation or warranty, or the breach
of any covenant or agreement, of Seller contained in this Agreement or in any
certificate, agreement, document or instrument delivered pursuant to this
Agreement, (ii) the Securities Act or any other federal or state securities
law, insofar as any such Claim is based upon, arises out of or otherwise is in
respect of information prepared or furnished in writing by Seller or its
Affiliates expressly for use in any registration statement or prospectus of
Buyer in connection with the financing by Buyer contemplated by Section 10.2,
(iii) the ownership, management or use of the Assets prior to the Closing
unless and to the extent that such Claim shall have arisen solely from any
action of Buyer or any of its Affiliates prior to the Closing or (iv) the use
by Seller of the name "Neddrill" after the Closing; provided, however, that,
subject to Section 14.2(b), Seller shall have no liability pursuant to this
Section 14.2(a) for the first $250,000 of aggregate Claims in respect of the
matters described in clauses (i), (iii) or (iv) above incurred by Buyer or its
Affiliates (the "Buyer Basket") and Seller shall be responsible only for such
amounts of such Claims as exceed the Buyer Basket. The foregoing
indemnification is given solely for the purpose of protecting Buyer and its
Affiliates and shall not be deemed extended to, or interpreted in a manner to
confer any benefit, right or cause of action upon, any third party.

(b) Without limiting the generality of the indemnification
agreement of Seller set forth in subsection (a) of this Section 14.2, Seller
further agrees to indemnify, defend and hold Buyer harmless from and against
any and all Claims sustained by Buyer after Closing, irrespective of the amount
of such Claim (but subject to the Buyer Basket, except as otherwise provided in
(ii), (x), (xi) or (xii) below), based upon, arising out of or otherwise in
respect of any of the following:

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(i) Any default under or breach by Seller or any of its
Affiliates of the terms, conditions or provisions of any note, bond,
mortgage, loan agreement, indenture or other instrument evidencing
borrowed money to which Seller or any such Affiliate is a party or by
which Seller or any such Affiliate is bound or to which any of the
Assets is subject;

(ii) Any Encumbrance (including any Permitted Encumbrance,
other than Drilling Contracts, Chartered Vessel Contracts and Other
Contracts, and without regard to the Buyer Basket) affecting any Asset
arising from conditions existing before the Closing or resulting from
the conduct of Seller or any of its Affiliates after the Closing;

(iii) Any termination prior to Closing by any person of any
Chartered Vessel Contract, Drilling Contract, Other Contract or Permit
due to breach of the terms thereof by Seller or any of its Affiliates;

(iv) Any violation by Seller or any of its Affiliates of
any law, statute, rule or administrative regulation or any judgment,
order, injunction or decree of any Governmental Entity applicable to
or binding upon Seller or any such Affiliate or the Assets which
affects the ownership or operation of the Assets or results in any
change in the Assumed Liabilities;

(v) Any litigation, arbitration proceedings or
governmental proceedings, suits or investigations before any
Governmental Entity relating to facts that existed before the Closing
which affects the ownership or operation by Buyer or its Affiliates of
the Assets or results in any change in the Assumed Liabilities;

(vi) Any violation by Seller or any of its Affiliates of
or default by Seller or any such Affiliate under any Applicable Laws,
including, without limitation, Applicable Environmental Laws, which
affects the ownership or operation of the Assets or results in any
change in the Assumed Liabilities, or any remedial obligation under
any Applicable Environmental Laws arising out of or related to the
ownership or operation of the Assets prior to Closing;

(vii) Any Claim by any person who is an employee of Seller
or any of its Affiliates on the date of this Agreement that relates
solely to any employment of such employee by Seller or any of its
Affiliates prior to the Closing;

(viii) Any Claim related to the financial statements to be
delivered to Buyer by Seller pursuant to Section 10.10 insofar as such
Claim is based upon, arises out of or otherwise is in respect of an
untrue statement or alleged untrue statement of a material fact
contained in, or an omission or an alleged omission of a material fact
from, such financial statements;

(ix) Any Claim of any fiscal authority filed against any
of the Purchased Subsidiaries relating to Taxes due by Affiliates of
Seller or by any company or enterprise that belongs to the same group
of companies and enterprises to which Seller belongs with

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respect to which the Purchased Subsidiaries could be held liable
because they belonged to such group prior to Closing;

(x) Any Claim for a call or other assessment based on,
arising from or attributable to conditions existing before the Closing
as a result of membership or other participation by any Purchased
Subsidiary in any mutual insurance association or similar
organization, and without regard to the Buyer Basket;

(xi) Without regard to the Buyer Basket, any Claim arising
from the breach by Seller of the representations and warranties of
Seller set forth in Section 5.1(b) as they relate to a Subsidiary of
Seller formed under the laws of Liberia;

(xii) Notwithstanding anything to the contrary set forth in
this Agreement and without regard to the Buyer Basket, any Claim
(including without limitation a Claim for lost profits) arising from a
breach by Seller of the covenants and agreements of Seller set forth
in Section 2.5(b); or

(xiii) Any Claim related to any of the matters set forth on
Schedules 5.11, 5.12(a), 5.12(b), 5.14(a), 5.14(b), 5.15, 5.16(a),
5.17(a) or 5.23(c).

(c) Buyer shall notify Seller and Parent within 45 Business Days
of the assertion of any Claim or discovery of any fact (which fact has been
brought to the attention of a responsible executive officer of Buyer) upon
which Buyer intends to base a claim for indemnification hereunder; provided,
however, that the failure of Buyer so to notify Seller and Parent shall not
relieve Seller and Parent from any liability under this Agreement to Buyer with
respect to such Claim unless Seller is prejudiced or damaged by the failure to
receive timely notice. In the event of any Claims, Seller, at its option, may
assume (with legal counsel reasonably acceptable to Buyer) the defense of any
claim, demand, lawsuit or other proceeding brought against Buyer, which claim,
demand, lawsuit or other proceeding may give rise to the indemnity obligation
of Seller under this Section 14.2, and may assert any defense of Seller or
Buyer; provided, however, that Buyer shall have the right at its own expense to
participate jointly with Seller in the defense of any claim, demand, lawsuit or
other proceeding in connection with which Buyer claims indemnification
hereunder. Notwithstanding the right of Buyer so to participate, Seller shall
have the sole right to settle or otherwise dispose of such claim, demand,
lawsuit or other proceeding on such terms as Seller, in its sole discretion,
shall deem appropriate with respect to any issue involved in such claim,
demand, lawsuit or other proceeding as to which (i) Seller shall have
acknowledged the obligation to indemnify Buyer hereunder or (ii) Buyer shall
have declined so to participate; provided, however, that no such Claim shall be
settled by Seller in a manner that could reasonably be expected to have a
material adverse effect on the business of Buyer without the prior written
consent of Buyer.

(d) Notwithstanding anything herein to the contrary, except for
the obligation to indemnify set forth in Section 14.2(b)(ix) which shall
continue for a period of five years after the date on which the relevant tax
return for 1996 is accepted for filing and the indemnity obligation set forth
in Section 12.7, which shall continue indefinitely, neither Seller nor Parent
pursuant to its guaranty hereunder shall have any obligation to indemnify Buyer
or its Affiliates pursuant to this Agreement, whether pursuant to the
provisions of Sections 5.24, 6.5, 10.11,

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<PAGE> 61
Article XIV (other than Section 14.2(b)(ix)) or otherwise, and such obligation
of Seller (and of Parent pursuant to its guaranty) to indemnify Buyer and its
Affiliates shall expire and terminate, unless Seller and Parent shall have
received written notice of such claim for indemnity prior to close of business
on the expiration of five (5) years after the Closing Date.

(e) Notwithstanding any provision herein to the contrary, the
indemnification obligations of Seller and Parent hereunder shall be limited in
the aggregate to the amount of the Cash Purchase Price.

14.3 Limitation of Remedies. The indemnification obligations of
Buyer and Seller set forth in this Agreement, including in this Article XIV,
shall be limited to indemnification for actual damages suffered and shall not
include incidental, consequential, special or indirect damages; provided,
however, that any such incidental, consequential, special or indirect damages
recovered by a third party against a party entitled to indemnity under this
Agreement shall be included in the damages recoverable pursuant to the
indemnities herein.

14.4 Applicability of Indemnification Obligation. EACH OF THE
AGREEMENTS TO INDEMNIFY, DEFEND OR HOLD HARMLESS CONTAINED IN SECTION 14.1 OR
14.2 SHALL APPLY IRRESPECTIVE OF WHETHER THE SUBJECT CLAIM IS BASED IN WHOLE OR
IN PART UPON THE SOLE OR CONTRIBUTORY NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR
GROSS), BREACH OF WARRANTY, OR BREACH OR VIOLATION OF ANY DUTY IMPOSED BY ANY
LAW OR REGULATION, ON THE PART OF THE BENEFICIARY OF THE AGREEMENT, EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT.

ARTICLE XV

EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS

15.1 General Disclaimer.

(a) BUYER UNDERSTANDS AND AGREES THAT, OTHER THAN REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS SET FORTH HEREIN AND ANY WARRANTIES OF OR
CONCERNING TITLE SET FORTH HEREIN OR IN ANY INSTRUMENT OF CONVEYANCE TO BE
EXECUTED AND DELIVERED PURSUANT TO THIS AGREEMENT, NEITHER SELLER, PARENT, NOR
ANYONE ACTING ON ITS OR THEIR BEHALF, MAKE ANY EXPRESS OR IMPLIED
REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ASSUMED LIABILITIES, THE
BUSINESS, THE VESSELS, OR THE ASSETS (CURRENT, FIXED, PERSONAL, REAL, TANGIBLE
AND INTANGIBLE) REFERRED TO HEREIN, INCLUDING BUT NOT LIMITED TO SEAWORTHINESS,
CONDITION OR WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN,
WHETHER LATENT OR PATENT, CAPACITY, SUITABILITY, UTILITY, SALABILITY,
AVAILABILITY, COLLECTIBILITY, OPERATIONS, CONDITION, MERCHANTABILITY

54
<PAGE> 62
OR FITNESS FOR A PARTICULAR PURPOSE, AND BUYER ACCEPTS SAID VESSELS AND ASSETS
ON AN "AS IS, WHERE IS, WITH ALL FAULTS" BASIS.

(b) Seller and Parent expressly disclaim, and Buyer accepts such
disclaimer, with respect to any and all obligations or liabilities for
representations and warranties, express or implied, contained in, or from
omissions from, any written or oral communications other than those set forth
in this Agreement or in any document, certificate or other writing furnished or
to be furnished by Seller or Parent pursuant hereto or in connection herewith.

(c) Except as set forth in Articles V and VI of this Agreement or
in any document, certificate or other writing furnished or to be furnished by
Seller or Parent pursuant hereto or in connection herewith, neither Seller nor
Parent nor anyone acting on their behalf has made any further representation or
warranty, either express or implied, concerning the subject matter of this
Agreement and the transactions contemplated hereby, and Buyer has not relied on
any such further representation or warranty. Except for the representations
and warranties expressly set forth in this Agreement, no other representations
or warranties, either express or implied, have been made by or on behalf of
Seller or Parent or relied upon by Buyer. Buyer acknowledges and affirms that
it will have had the opportunity to complete its own independent investigation,
analysis and evaluation of the Business and the prospects of the Business and
that it has been afforded the opportunity to inspect the Vessels and the other
tangible Assets.

15.2 Survival. All representations and warranties contained in
this Agreement, each of the agreements (except to the extent any such agreement
is limited by its terms) contained in Article X, and the agreements to
indemnify and defend contained in Sections 5.24, 6.5, 7.7, 10.11 and 12.7 and
Article XIV shall remain operative and in full force and effect and shall
survive consummation of the transactions contemplated hereby at the Closing,
including, without limitation, the delivery of the Assets to Buyer hereunder.

ARTICLE XVI

MISCELLANEOUS

16.1 Notices. All notices and other communications required or
permitted to be given or made hereunder by either party hereto shall be in
writing and shall be deemed to have been duly given if delivered personally or
transmitted by first class registered or certified mail, postage prepaid,
return receipt requested, or sent by prepaid overnight delivery service, or
sent by cable, telegram, telefax or telex, to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):

If to Buyer:

Noble Drilling Corporation
Attn: Mr. James C. Day
10370 Richmond Avenue, Suite 400
Houston, Texas 77042
Telefax: 713-953-1126

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with a copy to:

Robert D. Campbell, Esq.
Thompson & Knight, P.C.
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
Telefax: 214-969-1715

If to Seller:

Neddrill Holding B.V.
Attn: Mr. F.W. van Riet
Coolsingel 139
3012 A G Rotterdam
The Netherlands
Telefax: 31 10 240 5625

with a copy to:

W. Garney Griggs, Esq.
Griggs & Harrison, P.C.
1301 McKinney, Suite 3200
Houston, Texas 77010
Telefax: 713-651-1944

If to Parent:

Royal Nedlloyd N.V.
Attn: Mr. H.H. Meijer
Boompjes 40
3011 XB Rotterdam
The Netherlands
Telefax: 31 10 400 6190

with a copy to:

W. Garney Griggs, Esq.
Griggs & Harrison, P.C.
1301 McKinney, Suite 3200
Houston, Texas 77010
Telefax: 713-651-1944

16.2 Entire Agreement. This Agreement, including the Schedules,
Exhibits, Annexes and other writings referred to herein or delivered pursuant
hereto, constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect

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<PAGE> 64
to the subject matter hereof other than the Confidentiality Agreement between
Seller and Buyer dated October, 1995.

16.3 Amendments and Waiver; Rights and Remedies. This Agreement
may be amended, superseded, cancelled, renewed or extended, and the terms
hereof may be waived, only by a written instrument signed by the parties or, in
the case of a waiver, by the party waiving compliance. No delay on the part of
either party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of either party
of any such right, power or privilege, or any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity. The rights and remedies
of either party based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the fact that the
act, omission, occurrence or other state of facts upon which any claim of any
such inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in this Agreement (or
in any other agreement between the parties) as to which there is no inaccuracy
or breach.

16.4 Governing Law. Except as otherwise set forth in Section
10.1(e)(iv), the parties agree that all disputes in any way relating to,
arising under, connected with, or incident to this Agreement, and over which
the United States federal courts have subject matter jurisdiction, shall be
litigated, if at all, exclusively in the United States District Court for the
Southern District of Texas, Houston Division, and, if necessary, the
corresponding appellate courts. The parties further agree that all disputes in
any way relating to, arising under, connected with, or incident to this
Agreement, and over which the United States federal courts do not have subject
matter jurisdiction, shall be litigated, if at all, exclusively in the Courts
of the State of Texas, in Harris County, and, if necessary, the corresponding
appellate courts. The parties also agree that Texas law exclusively shall
govern all terms of this Agreement, including this Section. Seller and Parent
expressly submit themselves to the personal jurisdiction of the State of Texas;
provided,however, that nothing herein shall require or be construed to
constitute the submission by Seller and/or Parent to the personal jurisdiction
of the State of Texas with respect to any claim other than those arising under
or pursuant to this Agreement.

16.5 Binding Effect; Assignment; Third Party Benefit.

(a) This Agreement and all the provisions hereof shall be binding
upon and inure to the benefit of the parties and their respective successors
and permitted assigns; provided, however, that neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by either
of the parties hereto (by operation of law or otherwise) without the prior
written consent of the other party, except that Buyer may upon notice to Seller
direct that title to all or part of the Assets be taken in one or more of
Buyer's wholly owned subsidiaries (direct or indirect) (a "Buyer Designee");
provided, however, that (i) each Buyer's Designee shall be made a party to this
Agreement at or prior to the Closing and (ii) no such designation shall relieve
Buyer of any of its duties, liabilities or obligations hereunder.

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(b) Subject to Section 12.7, nothing in this Agreement, express or
implied, is intended to or shall confer upon any person other than Buyer,
Parent and Seller any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.

16.6 No Specific Performance. The parties hereto represent and
acknowledge that the remedies provided at law for any violation by either party
of its obligations set forth in this Agreement would be adequate and, as a
result, each party hereto hereby disclaims and waives any right to seek or
obtain specific performance for any violation of its rights set forth in this
Agreement. Notwithstanding the preceding sentence, the liquidated damages
provided for by Section 13.3 shall constitute the sole remedy available to the
parties with respect to the matters covered thereby, and any party may seek
specific performance of any obligation of another party to pay such liquidated
damages.

16.7 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same agreement.

16.8 References. All references in this Agreement to Articles,
Sections and other subdivisions refer to the Articles, Sections and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement," "herein," "hereof," "hereby," "hereunder" and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited.

16.9 Severability of Provisions. If any provision of this
Agreement is held to be unenforceable, this Agreement shall be considered
divisible and such provision shall be deemed inoperative to the extent it is
deemed unenforceable, and in all other respects this Agreement shall remain in
full force and effect; provided, however, that if any such provision may be
made enforceable by limitation thereof, then such provision shall be deemed to
be so limited and shall be enforceable to the maximum extent permitted by
applicable law.

16.10 Gender. Pronouns in masculine, feminine, and neuter genders
shall be construed to include any other gender, and words in the singular form
shall be construed to include the plural and vice versa, unless the context
otherwise requires.

16.11 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only, do not constitute a part of this
Agreement, and shall not affect in any manner the meaning or interpretation of
this Agreement.

16.12 Currency. All currency amounts in this Agreement are stated
in United States dollars unless otherwise expressly indicated.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers hereunto duly authorized as of the date
first above written.

"BUYER"
NOBLE DRILLING CORPORATION

By: /s/ JAMES C. DAY
------------------------------------
Name: James C. Day
Title: Chairman, President and Chief
Executive Officer

"SELLER"
NEDDRILL HOLDING B.V.

By: /s/ F.W. VAN RIET
------------------------------------
Name: F.W. van Riet
Title: Managing Director

"PARENT"
ROYAL NEDLLOYD N.V.

By: /s/ H.H. MEIJER
------------------------------------
Name: H.H. Meijer
Title: Member of the Managing Board

[The Schedules and Exhibits to this Agreement of Sale and Purchase are listed
in the Table of Contents and are omitted herefrom in accordance with Item
601(b)(2) of Regulation S-K. The registrant agrees to furnish supplementally a
copy of any omitted Schedule or Exhibit to the Securities and Exchange
Commission upon its request.]

<PAGE> 1
EXHIBIT 12.1

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

Three Months Ended
March 31, Year Ended December 31,
------------------------- ---------------------------------------------------------
Pro Forma Pro Forma
1996 1996 1995 1995 1995 1994 1993 1992 1991
------- ------- ------- --------- --------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings available for
fixed charges . . . . . . . . .

Income from continuing
operations . . . . . . . . $20,860 $12,229 $1,059 $10,760 $ 4,866 $27,195 $24,415 $(36,582) $(36,757)

Add:
Interest expense . . . . 5,986 3,176 3,024 23,379 12,156 12,351 8,038 13,274 20,411
----- ----- ----- ------- ------- ------- ------- ------ ------
Total . . . . . . . . . . $26,846 $15,405 $4,083 $34,139 $17,022 $39,546 $32,453 $(23,308) $(16,346)
======= ======= ====== ======= ======= ======= ======= ======== ========
Fixed Charges

Interest expense . . . . . . $ 5,986 $ 3,176 $ 3,024 $23,379 $12,156 $12,351 $ 8,038 $ 13,274 $ 20,411
-------- ------- ------- ------- ------- ------- ------- -------- --------
Ratio of earnings to
fixed charges . . . . . . . . 4.48 4.85 1.35 1.46 1.40 3.20 4.04 N.M. N.M.
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

COMBINATION OF RATIOS OF EBITDA TO INTEREST EXPENSE AND LONG-TERM DEBT TO EBITDA

Three Months Ended
March 31, Year Ended December 31,
-------------------------- ------------------------------------------------------------
Pro Forma Pro Forma
1996 1996 1995 1995 1995 1994 1993 1992 1991
------- ------- ------ -------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating income . . . $ 25,202 $ 14,097 $ 2,013 $ 29,112 $ 11,449 $ 18,163 $ 28,909 $(30,259) $(23,287)

Depreciation . . . . . 14,247 8,930 8,834 57,759 36,496 39,519 28,886 27,248 30,052
-------- -------- -------- -------- -------- -------- -------- -------- --------
EBITDA . . . . . . . . $ 39,449 $ 23,027 $ 10,847 $ 86,871 $ 47,941 $ 57,682 $ 57,795 $ (3,011) $ (6,765)
======== ======== ======== ======== ======== ======== ======== ======== ========

Interest expense . . . $ 5,986 $ 3,176 $ 3,024 $ 23,375 $ 12,156 $ 12,351 $ 8,038 $ 13,274 $ 20,411
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ratio of EBITDA to
interest expense . . . 6.59x 7.25x 3.59x 3.72x 3.94x 4.67x 7.19x N.M. N.M.
======== ======== ======== ======== ======== ======== ======== ======== ========

Long-term debt . . . . $251,048 $126,048 $129,923 $254,923 $129,923 $126,546 $127,144 $ 87,280 $ 73,145
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ratio of long-term
debt to EBITDA . . . . 6.36x 5.47x 11.98x 2.93x 2.71x 2.19x 2.20x N.M. N.M.
========= ======== ======== ======== ======== ======== ======== ========= =========
</TABLE>

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
January 31, 1996, except as to Note 16, which is as of March 13, 1996, appearing
on page 19 of Noble Drilling Corporation's Annual Report on Form 10-K for the
year ended December 31, 1995. We also consent to the reference to us under the
heading "Experts" in such Prospectus.

PRICE WATERHOUSE LLP

Houston, Texas
April 26, 1996

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report and to all references to our Firm included in or made a part of this
registration statement.

Arthur Andersen LLP

Houston, Texas
April 26, 1996

<PAGE> 1
INDEPENDENT AUDITORS' CONSENT

To the shareholder of Neddrill Holding B.V.

We consent to the use of our report dated February 15, 1996, with respect to
the consolidated balance sheets of Neddrill Holding B.V., and subsidiaries as
of December 31, 1995 and 1994 and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1995, which report appears in the Form S-3
Registration Statement of Noble Drilling Corporation dated April 26, 1996. We
also consent to the reference to our firm under the heading "Experts" in the
prospectus of Noble Drilling Corporation.

Rotterdam, The Netherlands KPMG Accountants N.V.
April 26, 1996