ATWOOD OCEANICS INC
AMENDED & RESTATED CREDIT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>13
<FILENAME>h01564exv10w8.txt
<DESCRIPTION>AMENDED & RESTATED CREDIT AGREEMENT
<TEXT>
<PAGE>


                                                                    EXHIBIT 10.8





                                   AMENDED AND
                            RESTATED CREDIT AGREEMENT

                                      AMONG

                         ATWOOD OCEANICS PACIFIC LIMITED
                                   AS BORROWER

                                       AND

                                  BANK ONE, NA
                   AND THE FINANCIAL INSTITUTIONS NAMED HEREIN
                                    AS BANKS

                                  BANK ONE, NA
                             AS ADMINISTRATIVE AGENT

                                     NORDEA
                             AS DOCUMENTATION AGENT

                        CREDIT LYONNAIS, NEW YORK BRANCH
                 AND FORTIS CAPITAL CORP., AS SYNDICATION AGENTS

                         BANC ONE CAPITAL MARKETS, INC.,
                      AS LEAD ARRANGER AND SOLE BOOK RUNNER

                     $100,000,000 REVOLVING CREDIT FACILITY

                                FEBRUARY 20, 2002



<PAGE>



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              Page No.
                                                                                                              --------
<S>      <C>                                                                                                     <C>
1.       Definitions..............................................................................................1

2.       Commitments of the Bank.................................................................................11
         (a)      Terms of Revolving Commitment..................................................................11
         (b)      Procedure for Borrowing........................................................................11
         (c)      Voluntary Reduction of Revolving Commitment....................................................11
         (d)      Type and Number of Advances....................................................................12
         (e)      Status of Obligations..........................................................................12
         (f)      Mandatory Reduction of Revolving Commitment....................................................12

3.       Notes Evidencing Loans..................................................................................12
         (a)      Form of Notes..................................................................................12
         (b)      Issuance of Additional Notes...................................................................12
         (c)      Interest Rates.................................................................................12
         (d)      Payment of Interest............................................................................12
         (e)      Payment of Principal...........................................................................12
         (f)      Payment to Banks...............................................................................13
         (g)      Sharing of Payments, Etc.......................................................................13
         (h)      Non-Receipt of Funds by the Agent..............................................................13

4.       Interest Rates..........................................................................................13
         (a)      Options........................................................................................13
         (b)      Interest Rate Determination....................................................................14
         (c)      Conversion Option..............................................................................14
         (d)      Recoupment.....................................................................................14

5.       Special Provisions Relating to Loans....................................................................15
         (a)      Unavailability of Funds or Inadequacy of Pricing...............................................15
         (b)      Change in Laws.................................................................................15
         (c)      Increased Cost or Reduced Return...............................................................15
         (d)      Discretion of Bank as to Manner of Funding.....................................................16
         (e)      Breakage Fees..................................................................................17

6.       Collateral Security.....................................................................................17

7.       Fees....................................................................................................17
         (a)      Unused Fee.....................................................................................17
         (b)      Agency Fees....................................................................................18

8.       Prepayments.............................................................................................18
         (a)      Voluntary Prepayments..........................................................................18
         (b)      Mandatory Prepayment...........................................................................18

9.       Representations and Warranties..........................................................................18
         (a)      Creation and Existence.........................................................................18
         (b)      Power and Authority............................................................................18
         (c)      Binding Obligations............................................................................19
         (d)      No Legal Bar or Resultant Lien.................................................................19
         (e)      No Consent.....................................................................................19
         (f)      Financial Condition............................................................................19
         (g)      Liabilities....................................................................................19
         (h)      Litigation.....................................................................................19
         (i)      Taxes; Governmental Charges....................................................................19
         (j)      Titles, Etc....................................................................................20
         (k)      Defaults.......................................................................................20
         (l)      Casualties; Taking of Properties...............................................................20
         (m)      Use of Proceeds; Margin Stock..................................................................20
         (n)      Location of Business and Offices...............................................................20
         (o)      Compliance with the Law........................................................................20
         (p)      No Material Misstatements......................................................................21
</TABLE>


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<TABLE>
<CAPTION>
                                                                                                              Page No.
                                                                                                              --------
<S>      <C>                                                                                                     <C>

         (q)      ERISA..........................................................................................21
         (r)      Public Utility Holding Company Act.............................................................21
         (s)      Environmental Matters..........................................................................21
         (t)      Liens..........................................................................................22
         (u)      Subsidiaries...................................................................................22

10.      Conditions of Lending...................................................................................22

11.      Affirmative Covenants...................................................................................24
         (a)      Financial Statements and Reports...............................................................24
         (b)      Annual Financial Statements....................................................................24
         (c)      Quarterly Financial Statements.................................................................24
         (d)      Fleet Employment Report........................................................................24
         (e)      Annual Appraisals..............................................................................24
         (f)      Additional Information.........................................................................25
         (g)      Certificates of Compliance.....................................................................25
         (h)      Taxes and Other Liens..........................................................................25
         (i)      Compliance with Laws...........................................................................25
         (j)      Further Assurances.............................................................................25
         (k)      Performance of Obligations.....................................................................25
         (l)      Insurance......................................................................................25
         (m)      Accounts and Records...........................................................................26
         (n)      Right of Inspection............................................................................26
         (o)      Notice of Certain Events.......................................................................26
         (p)      ERISA Information and Compliance...............................................................26
         (q)      Environmental Compliance.......................................................................27
         (r)      Environmental Notifications....................................................................27
         (s)      Environmental Indemnifications.................................................................28
         (t)      Change of Principal Place of Business..........................................................28
         (u)      Payables and Other Indebtedness................................................................28
         (v)      Collateral Maintenance.........................................................................28
         (w)      Maintenance of Rigs............................................................................28
         (x)      Rate Management Transactions...................................................................29

12.      Negative Covenants......................................................................................29
         (a)      Negative Pledge................................................................................29
         (b)      Current Ratio..................................................................................29
         (c)      Funded Debt to EBITDA..........................................................................29
         (d)      Interest Coverage Ratio........................................................................29
         (e)      Funded Debt to Tangible Net Worth..............................................................29
         (f)      Tangible Net Worth.............................................................................29
         (g)      Consolidations and Mergers.....................................................................29
         (h)      Debts, Guaranties and Other Obligations........................................................30
         (i)      Dividends......................................................................................30
         (j)      Loans and Advances.............................................................................30
         (k)      Sale or Discount of Receivables................................................................31
         (l)      Nature of Business.............................................................................31
         (m)      Transactions with Affiliates...................................................................31
         (n)      Investments....................................................................................31
         (o)      Amendment to Charter Documents.................................................................31
         (p)      Management of Rigs.............................................................................31
         (q)      Charter of Rigs................................................................................31
         (r)      Modification of Rigs...........................................................................32
         (s)      Sale of Rigs, etc..............................................................................32

13.      Events of Default.......................................................................................32
</TABLE>


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<TABLE>
<CAPTION>
                                                                                                              Page No.
                                                                                                              --------
<S>      <C>                                                                                                     <C>
14.      The Agent and the Banks.................................................................................34
         (a)      Appointment and Authorization..................................................................34
         (b)      Note Holders...................................................................................34
         (c)      Consultation with Counsel......................................................................35
         (d)      Documents......................................................................................35
         (e)      Resignation or Removal of Agent................................................................35
         (f)      Responsibility of Agent........................................................................35
         (g)      Independent Investigation......................................................................36
         (h)      Indemnification................................................................................36
         (i)      Benefit of Section 14..........................................................................37
         (j)      Pro Rata Treatment.............................................................................37
         (k)      Assumption as to Payments......................................................................37
         (l)      Other Financings...............................................................................37
         (m)      Interests of Banks.............................................................................37
         (n)      Investments....................................................................................37
         (o)      Withholding Tax................................................................................38

15.      Exercise of Rights......................................................................................38

16.      Notices.................................................................................................38

17.      Expenses................................................................................................38

18.      Indemnity...............................................................................................39

19.      Governing Law...........................................................................................39

20.      Invalid Provisions......................................................................................40

21.      Maximum Interest Rate...................................................................................40

22.      Amendments or Waivers...................................................................................40

23.      Multiple Counterparts...................................................................................41

24.      Conflict................................................................................................41

25.      Survival................................................................................................41

26.      Parties Bound...........................................................................................41

27.      Assignments and Participations..........................................................................41

28.      Choice of Forum: Consent to Service of Process and Jurisdiction.........................................42

29.      Waiver of Jury Trial....................................................................................43

30.      Other Agreements........................................................................................43

31.      Financial Terms.........................................................................................43
</TABLE>



Exhibits

<TABLE>
<S>                  <C>   <C>
Exhibit "A".......   --    Notice of Borrowing
Exhibit "B".......   --    Note
Exhibit "C".......   --    Atwood's/Deep Seas' Guaranty
Exhibit "D".......   --    Australia's Guaranty
Exhibit "E".......   --    Certificate of Compliance
Exhibit "F".......   --    Assignment and Acceptance Agreement
</TABLE>


Schedules
<TABLE>
<S>                  <C>   <C>
Schedule 1........   --    Liens
Schedule 2........   --    Financial Condition
Schedule 3........   --    Liabilities
Schedule 4........   --    Litigation
Schedule 5........   --    Subsidiaries
</TABLE>


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<PAGE>

<TABLE>
<S>                  <C>   <C>
Schedule 6........   --    Environmental Matters
Schedule 7........   --    Loans and Advances
</TABLE>


                                      -iv-


<PAGE>


                      AMENDED AND RESTATED CREDIT AGREEMENT

     THIS AMENDED AND RESTATED CREDIT AGREEMENT (hereinafter referred to as the
"Agreement") executed as of the 20th day of February, 2002 by and among ATWOOD
OCEANICS PACIFIC LIMITED, a Cayman Islands company ("Borrower"), ATWOOD
OCEANICS, INC., a Texas corporation ("Atwood"), ATWOOD DEEP SEAS, LTD., a Texas
limited partnership ("Deep Seas") and ATWOOD OCEANICS AUSTRALIA PTY LIMITED, an
Australian corporation ("Australia") (Atwood, Deep Seas and Australia shall
hereinafter be collectively referred to as "Guarantors" and, individually, as
"Guarantor"), Bank One, NA, a national banking association ("Bank One") and each
of the financial institutions which is a party hereto (as evidenced by the
signature pages to this Agreement) or which may from time to time become a party
hereto pursuant to the provisions of Section 27 hereof or any successor or
assignee thereof (hereinafter collectively referred to as "Banks", and
individually, "Bank") and Bank One, as Administrative Agent ("Agent") and
NORDEA, as Documentation Agent and Credit Lyonnais, New York Branch and Fortis
Capital Corp., as Syndication Agents.

                              W I T N E S S E T H:

     WHEREAS, as of June 30, 2000, Borrower, Guarantors, the Banks and the Agent
entered into a Credit Agreement pursuant to which the Banks made available to
the Borrower a revolving credit facility of up to $50,000,000 (the "Original
Credit Agreement"); and

     WHEREAS, the Borrower has requested that the Banks agree to make certain
amendments to the Original Credit Agreement and the Banks have agreed to amend
the Original Credit Agreement on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree as follows:

     1.   DEFINITIONS. When used herein the terms "Agent", "Agreement",
"Atwood", "Bank", "Banks", "Bank One", "Borrower", "Deep Seas", "Guarantor" and
"Guarantors" shall have the meanings indicated above. When used herein the
following terms shall have the following meanings:

     "Advance or Advances" shall mean a loan or loans hereunder.

     "Affiliate" shall mean any Person which, directly or indirectly, controls,
is controlled by or is under common control with the relevant Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean a member of the board of directors, a partner or an
officer of such Person, or any other Person with possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, through the ownership (of record, as trustee, or by
proxy) of voting shares, partnership interests or voting rights, through a
management contract or otherwise. Any Person owning or controlling directly or
indirectly ten percent or more of the voting shares, partnership interests or
voting rights, or other equity interest of another Person shall be deemed to be
an Affiliate of such Person.

     "Alternate Base Rate" shall mean, as of any date, a rate of interest per
annum equal to the higher of (i) the Prime Rate for such date, and (ii) the sum
of the Federal Funds Effective Rate for such date plus one-half of one percent
(.50%) per annum.

     "Assignment and Acceptance" shall mean a document substantially in the form
of Exhibit "F" hereto.

     "Assignment of Insurances" shall mean those certain Assignments of
Insurance dated of even date herewith from Borrower and Australia to Agent on
behalf of the Banks, assigning to the Banks all policies and



<PAGE>

contracts of insurance in respect of the Rigs and all other claims, rights and
proceeds related thereto, said assignment secures the obligations of the
Borrower and Australia under this Agreement and under the Australian Guaranty.

     "Assignment of Charter Hire, Drilling Contract, Revenues and Earnings"
shall mean those certain Assignments of Charter Hire, Drilling Contract,
Revenues and Earnings dated of even date herewith from Borrower and Australia to
Agent on behalf of the Banks, assigning to the Banks all of Borrower's and
Australia's interest in day rate payments, freights, charter hire and other
monies earned or to be earned arising out of any charter parties, drilling
contracts or as a result of the ownership, chartering and other operations of
any kind whatsoever relating to the Rigs and certain other rights and
obligations arising pursuant to such agreements. Said assignment secures the
obligations of the Borrower under this Agreement and Guarantor under its
Guaranty.

     "Base Rate" shall mean, as of any date, the sum of the Alternate Base Rate
plus the Base Rate Margin.

     "Base Rate Loans" shall mean any loan during any period which bears
interest based upon the Base Rate or which would bear interest based upon the
Base Rate if the Maximum Rate ceiling was not in effect at that particular time.

     "Base Rate Margin" shall mean:

          (i)   three-fourths of one percent (.75%) per annum whenever Atwood's
     ratio of Consolidated Funded Debt to Consolidated EBITDA is greater than
     2.25 to 1.0; or

          (ii)  three-eighths of one percent (.375%) per annum whenever Atwood's
     ratio of Consolidated Funded Debt to Consolidated EBITDA is equal to or
     less than 2.25 to 1.0 but greater than 2.0 to 1.0; or

          (iii) one-eighth of one percent (.125%) per annum whenever Atwood's
     ratio of Consolidated Funded Debt to Consolidated EBITDA is equal to or
     less than 2.0 to 1.0 but greater than 1.5 to 1.0; and

          (iv)  zero percent (0%) per annum whenever Atwood's ratio of
     Consolidated Funded Debt to Consolidated EBITDA is equal to or less than
     1.5 to 1.0.

For the purposes of calculating the Base Rate Margin for each new or existing
Tranche, Atwood's (i) Consolidated Funded Debt shall fluctuate from day to day,
and (ii) Consolidated EBITDA shall be calculated quarterly as of the end of each
fiscal quarter and annualized. The Base Rate Margin shall be recalculated by
Agent from time to time and be effective upon (a) the making of any Advance
hereunder, (b) the receipt by the Banks of any payment or prepayment or (c)
receipt by Agent of the Borrower's quarterly Certificate of Compliance provided
by Borrower pursuant to Section 11(b) hereof.

     "Borrowing Date" is used herein as defined in Section 2(b) hereof.

     "Business Day" means (i) with respect to any borrowing, payment or note
selection of LIBOR Loans, a day (other than Saturdays or Sundays) on which banks
generally are open in Chicago, Illinois and New York, New York for the conduct
of substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire systems and dealings in United States
dollars are carried on in the London interbank market, and (ii) for all other
purposes, a day (other than Saturdays and Sundays) on which banks generally are



                                      -2-
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open in Chicago, Illinois for the conduct of substantially all of their
commercial lending activities and interbank wire transfers can be made on the
Fedwire system.

     "Capital Leases" shall mean any lease in respect of which the obligations
thereunder constitute Capitalized Lease Obligations.

     "Capitalized Lease Obligations" shall mean, without duplication, all
obligations of any Person to pay rent or amounts under any lease of, or other
arrangement conveying the right to use, real or personal property, or a
combination thereof, which obligations shall have been or should be, in
accordance with GAAP, capitalized on the books of such Person.

     "Cash Equivalents" shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Bank, (y)
any domestic commercial bank of recognized standing having capital and surplus
in excess of $100,000,000 or (z) any Bank (or the parent company of such bank)
whose short-term commercial paper rating from Standard & Poor's Corporation
("S&P") is at least A-1 or the equivalent thereof or from Moody's Investors
Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof (any such
bank, an "Approved Bank"), in each case with maturities of not more than six
months from the date of acquisition, (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Bank or Approved Bank
or by the parent company of any Bank or Approved Bank and commercial paper
issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-1 or the equivalent thereof by
S&P or at least P-1 or the equivalent thereof by Moody's (any such company, an
"Approved Company"), or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2 or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within six
months after the date of acquisition and (v) investments in money market funds
substantially all of whose assets are comprised of securities of the type
described in clauses (i) through (iv) above.

     "Change of Control" shall mean the acquisition by any Person or group of
Persons acting together of beneficial ownership (within the meaning of Rule
13(d)-3 of the Securities Exchange Commission under the Securities Exchange Act
of 1934) of thirty percent (30%) or more of the outstanding shares of voting
stock of Atwood.

     "Change of Management" shall occur if both (i) John R. Irwin ceases to act
as President and Chief Executive Officer, and (ii) James M. Holland ceases to
act as Senior Vice President and Secretary of Atwood, other than as a result of
death, disability or normal retirement of either.

     "Collateral" is used herein as defined in Section 6 hereof.

     "Consolidated Current Assets" shall mean the current assets of Atwood and
its Subsidiaries on a consolidated basis determined in accordance with GAAP and
in a manner consistent with prior periods.

     "Consolidated Current Liabilities" shall mean the current liabilities of
Atwood and its Subsidiaries on a consolidated basis as determined in accordance
with GAAP and in a manner consistent with prior periods.

     "Consolidated EBITDA" shall mean for any period for Atwood and its
Subsidiaries on a consolidated basis, (A) the sum of the amounts for such period
of (i) Consolidated Net Income, (ii) depreciation expense, (iii) provisions for
taxes based on income, (iv) Consolidated Interest Expense, (v) amortization and
write-off of




                                      -3-
<PAGE>

deferred financing costs to the extent deducted in determining Consolidated Net
Income, and (vi) losses on sales of assets (excluding sales in the ordinary
course of business) and other extraordinary losses, less (B) extraordinary gains
for such period, all determined in accordance with GAAP and in a manner
consistent with prior periods.

     "Consolidated Equity" shall mean, at any time, the shareholder's equity of
Atwood and its Subsidiaries on a consolidated basis as determined in accordance
with GAAP and in a manner consistent with prior periods.

     "Consolidated Funded Debt" shall mean all Debt of Atwood and its
Subsidiaries calculated on a consolidated basis in accordance with GAAP and in a
manner consistent with prior periods.

     "Consolidated Interest Expense" shall mean, for any period, total interest
expense (including that attributable to Capitalized Lease Obligations) of Atwood
and its Subsidiaries on a consolidated basis in accordance with GAAP with
respect to all outstanding Debt of Atwood and its Subsidiaries, including,
without limitation, all commissions, discounts and other fees and charges owed
with respect to Letters of Credit and bankers' acceptance financing.

     "Consolidated Net Income" shall mean, for any period, the net income (or
loss) of Atwood and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in accordance with GAAP and in a
manner consistent with prior periods.

     "Consolidated Tangible Net Worth" shall mean, at any time, the Consolidated
Equity of Atwood and its Subsidiaries on a consolidated basis determined in
accordance with GAAP and in a manner consistent with prior periods, less all
unamortized debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights and organization
expense.

     "Debt" shall mean as to Atwood, the Borrower or any Subsidiary of Atwood or
the Borrower, all obligations and liabilities of the Borrower or such
Subsidiaries to any other person, including, without limitation, all debts,
claims and indebtedness, heretofore, now and/or from time to time hereafter
owing, due or payable, however evidenced, created, incurred, acquired or owing
and however arising, whether under written or oral agreement, operation of law,
or otherwise. Debt includes, without limiting the foregoing, (i) indebtedness
for borrowed money (including without duplication obligations to reimburse the
issuer of any letter of credit or any guarantor or surety), (ii) indebtedness
for the deferred purchase price of property or services, excluding trade
accounts payable within ninety (90) days and arising in the ordinary course of
business, (ii) indebtedness evidenced by bonds, debentures, notes or other
similar instruments, (iv) obligations and liabilities secured by a Lien on
property owned by Atwood, Borrower or any Subsidiary of the Borrower or Atwood,
whether or not Atwood, Borrower or any such Subsidiary has assumed such
obligations and liabilities and the amount of which Debt shall not exceed the
fair market value of the property subject to the Lien if Atwood, Borrower or any
such Subsidiary has not assumed such obligations and liabilities, (v)
obligations or liabilities created or arising under any Capitalized Lease, (vi)
all net payments or amounts owing by Atwood, Borrower or any Subsidiary of the
Borrower or Atwood in respect of interest rate protection agreements, foreign
currency exchange agreements, commodity swap agreements or other interests,
exchange rate or commodity hedging arrangements and (vii) liabilities in respect
of unfunded vested benefits under any Plan. The Debt of the Borrower, Atwood or
any Subsidiary of the Borrower or Atwood shall include the Debt of any
partnership or joint venture in which the Borrower, Atwood or any Subsidiary of
the Borrower or Atwood is a general or venture partner. The Debt of the
Borrower, Atwood or any Subsidiary of the Borrower or Atwood shall not include
trade payables and expense accruals incurred or assumed in the ordinary course
of the Borrower's, Atwood's or such Subsidiary's business (including trade
payables and expense accruals of any partnership or joint venture in which the
Borrower, Atwood or any Subsidiary of the Borrower or Atwood is a general or
venture partner; provided, such payables





                                      -4-
<PAGE>

have not remained unpaid for a period of ninety (90) days after the same became
due unless the Borrower, Atwood or such Subsidiary is diligently contesting same
in good faith).

     "Default" shall mean any Event of Default and the occurrence of an event or
condition which would with the giving of any requisite notice and/or passage of
time or both constitute an Event of Default.

     "Default Rate" shall mean the Alternate Base Rate plus 2.75% per annum.

     "Defaulting Bank" is used herein as defined in Section 3(f) hereof.

     "Effective Date" shall mean the date upon which all of the conditions
precedent set forth in Section 10(a) hereof are met.

     "Eligible Assignee" shall mean any of (i) a Bank or any Affiliate of a
Bank; (ii) a commercial bank organized under the laws of the United States, or
any state thereof, and having a combined capital and surplus of at least
$100,000,000; (iii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000, provided that such bank
is acting through a branch or agency located in the United States; and (iv) a
Person that is primarily engaged in the business of commercial banking and that
(A) is a subsidiary of a Bank, (B) a subsidiary of a Person of which a Bank is a
subsidiary, or (C) a Person of which a Bank is a subsidiary; provided, however,
that as a condition precedent to any bank organized under the laws of any other
country other than the United States qualifying as an "Eligible Assignee" shall
be the providing by such bank of the U.S. Internal Revenue Service forms
required by Section 14(o) of this Agreement;

     "Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C.A. Section 9601, et seq., the Resource
Conservation and Recovery Act, as amended by the Hazardous Solid Waste Amendment
of 1984, 42 U.S.C.A. Section 6901, et seq., the Clean Water Act, 33 U.S.C.A.
Section 1251, et seq., the Clean Air Act, 42 U.S.C.A. Section 1251, et seq., the
Toxic Substances Control Act, 15 U.S.C.A. Section 2601, et seq., The Oil
Pollution Act of 1990, 33 U.S.G. Section 2701, et seq., and all other laws,
statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions,
rules, regulations, orders, permits and restrictions of any federal, state,
county, municipal and other governments, departments, commissions, boards,
agencies, courts, authorities, officials and officers, domestic or foreign,
relating to oil pollution, air pollution, water pollution, noise control and/or
the handling, discharge, disposal or recovery of on-site or off-site asbestos,
radioactive materials, spilled or leaked petroleum products, distillates or
fractions and industrial solid waste or "hazardous substances" as defined by 42
U.S.C. Section 9601, et seq., as amended, as each of the foregoing may be
amended from time to time.

     "Environmental Liability" means any claim, demand, obligation, cause of
action, order, violation, damage, injury, judgment, penalty or fine, cost of
enforcement, cost of remedial action or any other costs or expense whatsoever,
including reasonable attorneys' fees and disbursements, resulting from the
violation or alleged violation of any Environmental Law or the release of any
substance into the environment which is required to be remediated by a
regulatory agency or governmental authority or the imposition of any
Environmental Lien (as hereinafter defined) which could reasonably be expected
to individually or in the aggregate have a Material Adverse Effect.

     "Environmental Lien" means a Lien in favor of any court, governmental
agency or instrumentality or any other Person (i) for any Environmental
Liability or (ii) for damages arising from or cost incurred by such court or
governmental agency or instrumentality or other person in response to a release
or threatened release of




                                      -5-
<PAGE>

asbestos or "hazardous substance" into the environment, the imposition of which
Lien could reasonably be expected to have a Material Adverse Effect.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.

     "Event of Default" is used herein as defined in Section 13 hereof.

     "Federal Funds Effective Rate" shall mean, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m.
(Chicago, Illinois time) on such day on such transactions received by the Agent
from three (3) Federal funds brokers of recognized standing selected by the
Agent in its sole discretion.

     "Financial Statements" shall mean balance sheets, income statements,
statements of cash flow and appropriate footnotes and schedules, prepared in
accordance with GAAP and in a manner consistent with prior periods.

     "First Naval Mortgage" shall mean that certain First Naval Mortgage,
recorded at the Office of the Public Registry the Republic of Panama at Micro
jacket 18403, Document 166156 as of October 27, 2000, as the same may be amended
from time to time, on the vessel ATWOOD FALCON executed by Borrower to Agent on
behalf of the Banks pursuant to which Borrower mortgages the ATWOOD FALCON to
the Banks to secure its obligations under this Agreement and under any Rate
Management Transaction.

     "First Ship Mortgage" shall mean that certain Ship Mortgage dated of even
date herewith on the vessel VICKSBURG executed by Australia to Agent on behalf
of the Banks pursuant to which Australia mortgages the VICKSBURG to the Banks to
secure its obligations under its Guaranty.

     "GAAP" shall mean generally accepted accounting principles, consistently
applied in the United States of America.

     "Governmental Authority" shall mean any nation or government, any federal,
state, province, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

     "Guarantors' Credit Agreement" shall mean that certain Restated Credit
Agreement among Atwood, Deep Seas, the Banks, the Agent dated of even date
herewith pursuant to which the Banks made available to the Guarantors a
$75,000,000 revolving credit facility.

     "Guaranties" shall mean the unconditional guaranties of Atwood and Deep
Seas of all obligations owed the Banks by Borrower in the form of (i) Exhibit
"C" hereto for Atwood and Deep Seas and (ii) the Guarantee and Indemnity
Agreement of Australia substantially in the form of Exhibit "D" hereto.

     "Hazardous Substances" shall mean petroleum and used oil, or any other
pollutant or contaminant, hazardous, dangerous or toxic waste, substance or
material as defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. Sec. 9601, et seq. (hereinafter
called "CERCLA"); the Resource Conversation and Recovery Act, as amended, 42
U.S.C. 6901, et seq. (hereinafter called "RCRA"); the Toxic Substances Control
Act, as amended, 15 U.S.C. Sec. 2601 et seq. (hereinafter called





                                      -6-
<PAGE>

"TSCA"); the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sec.
1801, et seq (hereinafter called "HMTA"); the Oil Pollution Act of 1990, Pub. L.
No. 101-380, 104 Stat. 484 (1990) (hereinafter called "OPA"); or any other
statute, law, ordinance, code or regulation of any Governmental Agency relating
to or imposing liability or standards of conduct concerning the use, production,
generation, treatment, storage, recycling, handling, transportation, release,
threatened release or disposal of any hazardous, dangerous or toxic waste,
substance or material, currently in effect or at any time hereafter adopted.

     "Interest Payment Date" shall mean in the case of Base Rate Loans, the last
day of each calendar quarter, and in the case of LIBOR Loans with an Interest
Period of three (3) months or less, the last day of the applicable Interest
Period, and in the case of LIBOR Loans with an Interest Period of six (6)
months, the earlier of (i) the last day of each Interest Period or (ii) the last
day of each calendar quarter.

     "Interest Period" shall mean with respect to any LIBOR Loan (i) initially,
the period commencing on the date such LIBOR Loan is made and ending one (1),
two (2), three (3), or six (6) months thereafter as selected by the Borrower
pursuant to Section 4(a)(ii), and (ii) thereafter, each period commencing on the
day following the last day of the next preceding Interest Period applicable to
such LIBOR Loan and ending one (1), two (2), three (3) or six (6) months
thereafter, as selected by the Borrower pursuant to Section 4(a)(ii); provided,
however, that (i) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next succeeding
Business Day unless the result of such extension would be to extend such
Interest Period into the next calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day, (ii) if any Interest Period
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) such Interest Period shall end on the last Business Day of a
calendar month, and (iii) any Interest Period which would otherwise expire after
the Maturity Date shall end on such Maturity Date.

     "LIBOR Base Rate" shall mean the offered rate for the period equal to or
next greater than the Interest Period for U.S. dollar deposits of not less than
$1,000,000 as of 11:00 a.m., City of London, England time two (2) Business Days
prior to the first day of the Interest Period as shown on the display designate
as "British Bankers' Association Interest Settlement Rates" on Reuter's for the
purpose of displaying such rate. In the event that such rate is not available on
Reuter's then such offered rate shall be otherwise independently determined by
Agent from an alternate, substantially similar independent source available to
Agent or shall be calculated by Agent by substantially similar methodology as
that theretofore used to determine such offered rate.

     "LIBOR Loan" means any loan during any period which bears interest at the
LIBOR Rate, or which would bear interest at such rate if the Maximum Rate
ceiling was not in effect at a particular time.

     "LIBOR Margin" shall be:

     (i)   two and one-quarter percent (2.25%) per annum whenever Atwood's ratio
           of Consolidated Funded Debt to Consolidated EBITDA is greater than
           2.25 to 1.0: or

     (ii)  one and seven-eighths of one percent (1.875%) per annum whenever
           Atwood's ratio of Consolidated Funded Debt to Consolidated EBITDA is
           equal to or less than 2.25 to 1.0 but greater than 2.0 to 1.0; or

     (iii) one and five-eighths percent (1.625%) per annum whenever Atwood's
           ratio of Consolidated Funded Debt to Consolidated EBITDA is equal to
           or less than 2.0 to 1.0 but greater than to 1.50 to 1.0; or




                                      -7-
<PAGE>

     (iv)  one and one-quarter percent (1.25%) per annum whenever Atwood's ratio
           of Consolidated Funded Debt to Consolidated EBITDA is equal to or
           less than 1.50 to 1.0 but greater than 1.0 to 1.0; or

     (v)   one percent (1%) per annum whenever Atwood's ratio of Consolidated
           Funded Debt to Consolidated EBITDA is equal to or less than 1.0 to
           1.0.

     For purposes of calculating the LIBOR Margin for each new or existing
     Tranche, Atwood's (i) Consolidated Funded Debt shall fluctuate from day to
     day, and (ii) Consolidated EBITDA shall be calculated quarterly as of the
     end of each fiscal quarter and annualized. The LIBOR Margin shall be
     recalculated by Agent from time to time and be effective upon (a) the
     making of any Advance hereunder, (b) the receipt by the Banks of any
     payment or prepayment or (c) receipt by Agent of the Borrower's quarterly
     Certificate of Compliance provided by Borrower pursuant to Section 11(b)
     hereof.

     "LIBOR Rate" means, with respect to a LIBOR Loan for the relevant Interest
Period, the sum of (i) the quotient of (A) the LIBOR Base Rate applicable to
such Interest Period, divided by (B) one minus the Reserve Requirement
(expressed as a decimal) applicable to such Interest Period, plus the (ii) LIBOR
Margin. The LIBOR Rate shall be rounded to the next higher multiple of 1/16th of
one percent if the rate is not such a multiple.

     "Lien" shall mean any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance or lien (statutory or otherwise) of every kind and
character.

     "Loan Documents" shall mean this Agreement, the Notes, the Security
Instruments and all other documents executed in connection with the transaction
described in this Agreement.

     "Majority Banks" shall mean Banks holding 66-2/3% or more of the Revolving
Commitments.

     "Material Adverse Effect" shall mean any circumstance or event which could
have a material adverse effect on (i) the assets or properties, liabilities,
financial condition, business, operations, or prospects of the Borrower and its
Subsidiaries, taken as a whole, or (ii) the ability of the Borrower and its
Subsidiaries, taken as a whole, to carry out its businesses as of the date of
this Agreement or as proposed at the date of this Agreement to be conducted, or
(iii) the ability of Borrower to meet its obligations under the Note, this
Agreement or the other Loan Documents on a timely basis, or (iv) the validity or
enforceability of any Loan Document against Borrower.

     "Maturity Date" shall mean June 30, 2005.

     "Maximum Rate" is used herein as defined in Section 21 hereof.

     "Notes" shall mean the revolving notes substantially in the form of Exhibit
"B" hereto issued or to be issued hereunder to each Bank, respectively, to
evidence the indebtedness to such Bank arising by reason of the Advances on the
Revolving Loans, together with all modifications, renewals and extensions
thereof or any part thereof.

     "Notice of Borrowing" is used herein as defined in Section 2(b) hereof.

     "Other Financings" is used herein as defined in Section 14(l) hereof.

     "Payor" is used herein as defined in Section 3(h) hereof.




                                      -8-
<PAGE>

     "Permitted Liens" shall mean (i) Liens for taxes, governmental charges,
levies or other assessments that are not yet delinquent (or that, if delinquent,
are being contested in good faith by appropriate proceedings, levy and execution
thereon having been stayed and continue to be stayed and for which Borrower has
set aside on its books adequate reserves in accordance with GAAP); (ii) maritime
(including, without limitation, Liens for insurance premiums or calls and Liens
arising under charters), materialmen's, mechanic's, repairmen's, employee's,
warehousemen's, landlord's, carrier's, contractor's, sub-contractor's and other
Liens (including any financing statements filed in respect thereof) incidental
to obligations incurred by Borrower in connection with the construction,
maintenance, transportation, storage or operation of Borrower's assets, Rigs or
properties to the extent not delinquent (or which, if delinquent, are being
contested in good faith by appropriate proceedings and for which Borrower has
set aside on its books adequate reserves in accordance with GAAP); (iii) all
contracts, agreements and instruments, any interest or title of a lessor or
charterer under any lease permitted by this Agreement and all defects and
irregularities and other matters affecting Borrower's assets and properties
which were in existence or arose at the time Borrower's assets and properties
were originally acquired by Borrower and all routine operational agreements
entered into in the ordinary course of business, which contracts, agreements,
instruments, defects, irregularities and other matters and routine operational
agreements are not such as to, individually or in the aggregate, interfere
materially with the operation, value or use of Borrower's assets and properties,
considered in the aggregate; (iv) liens in connection with workmen's
compensation, unemployment insurance or other social security, old age pension
or public liability obligations; (v) legal or equitable encumbrances deemed to
exist by reason of the existence of any litigation or other legal proceeding or
arising out of a judgment or award with respect to which an appeal is being
prosecuted in good faith and levy and execution thereon have been stayed and
continue to be stayed; (vi) Liens incurred pursuant to the Security Instruments;
and (vii) Liens existing at the date of this Agreement which have been disclosed
to Banks in Borrower's September 30, 1999 Financial Statements or identified in
Schedule "1" hereto and which are either released by the Effective Date or
consented to by the Banks.

     "Person" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.

     "Plan" shall mean any plan subject to Title IV of ERISA and maintained by
Borrower, or its Subsidiaries, or any such plan to which Borrower or its
Subsidiaries are required to contribute on behalf of its employees.

     "Prime Rate" shall mean a rate per annum equal to the prime rate of
interest announced from time to time by Agent or its parent (which is not
necessarily the lowest rate of interest charged to any customer), changing when
and as said prime rate changes.

     "Pro Rata or Pro Rata Part" shall mean for each Bank, (i) for all purposes
where no Revolving Loan is outstanding, such Bank's Revolving Commitment
Percentage and (ii) otherwise, the proportion which the portion of the
outstanding Revolving Loans owed to such Bank bears to the aggregate outstanding
Revolving Loans owed to all Banks at the time in question.

     "Rate Management Transactions" shall mean any transaction (including an
agreement with respect thereto) now existing or hereafter entered into by either
Borrower which is a rate swap, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, forward exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
these transactions) or any combination thereof, whether linked to one or more
interest rates, foreign currencies, commodity prices, equity prices or other
financial measures.




                                      -9-
<PAGE>

     "Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
and other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.

     "Required Payment" is used herein as defined in Section 3(h) hereof.

     "Reserve Requirement" means, with respect to any Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.

     "Revolving Commitment" shall mean (A) for all Banks, $100,000,000 as
reduced from time to time pursuant to Section 2(c) and Section 2(f) hereof and
(B) as to any Bank, its obligation to make Advances hereunder on the Revolving
Loans in amounts not exceeding, in the aggregate, the amount set forth opposite
the name of such Bank on Schedule 8 or in its Assignment and Acceptance.

     "Revolving Commitment Percentage" shall mean for each Bank the percentage
derived by dividing its Revolving Commitment at the time of determination by
Revolving Commitments of all Banks at the time of determination.

     "Revolving Loans" shall mean loans made under the Revolving Commitment
pursuant to Section 2 hereof.

     "Rigs" shall mean the ATWOOD FALCON, the VICKSBURG and any other offshore
drilling rigs acceptable to the Banks which may be mortgaged to the Banks by
Borrower from time to time.

     "Security Instruments" shall mean this Agreement, the First Naval Mortgage,
the Assignments of Insurance, the Assignments of Charter Hire, Drilling
Contracts, Revenues and Earnings, the Guaranties and other collateral documents
covering all such documents to be in form and substance satisfactory to Agent.

     "Subsidiary" shall mean any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by Borrower or another subsidiary.

     "Total Outstandings" shall mean as of any date, the total principal balance
outstanding on the Notes.

     "Tranche" means a set of LIBOR Loans made by the Banks at the same time and
for the same Interest Period.

     "Unused Commitment Fee Rate" shall be:

     (i)  one-half of one percent (.50%) per annum whenever Atwood's ratio of
          Consolidated Funded Debt to Consolidated EBITDA is greater than 2.0 to
          1.0: or

     (ii) three-eighths of one percent (.375%) per annum whenever Atwood's ratio
          of Consolidated Funded Debt to Consolidated EBITDA is equal to or less
          than 2.0 to 1.0.

     For the purpose of calculating the Unused Commitment Fee Rate, Atwood's (i)
     Consolidated Funded Debt shall fluctuate from day to day, and (ii)
     Consolidated EBITDA shall be calculated quarterly as of the end of each
     fiscal quarter and annualized. The Unused Commitment Fee




                                      -10-
<PAGE>


     Rate shall be recalculated by Agent from time to time and be effective upon
     (a) the making of any Advance hereunder, (b) the receipt by the Banks of
     any payment or prepayment or (c) receipt by Agent of the Borrower's
     quarterly Certificate of Compliance provided by Borrower pursuant to
     Section 11(b) hereof.

     2.   COMMITMENTS OF THE BANK.

          (a)  Terms of Revolving Commitment. On the terms and conditions
     hereinafter set forth, each Bank agrees severally to make Advances to
     Borrower from time to time during the period beginning on the Effective
     Date and ending on the Maturity Date in such amounts as Borrower may
     request up to an amount not to exceed, in the aggregate principal amount
     outstanding at any time, the Revolving Commitment. Subject to the terms
     hereof, the Borrower may borrow, repay and reborrow hereunder. The
     obligation of Borrower hereunder shall be evidenced by this Agreement and
     the Note or Notes issued in connection herewith, said Note or Notes to be
     as described in Section 3 hereof. Notwithstanding any other provision of
     this Agreement, no Advance shall be required to be made hereunder if any
     Default or Event of Default (as hereinafter defined) has occurred and is
     continuing. Each Advance under the Revolving Commitment shall be an amount
     of at least $1,000,000 or a whole number multiple thereof. Irrespective of
     the face amount of the Note or Notes, the Banks shall never have the
     obligation to Advance any amount or amounts in excess of the Revolving
     Commitment or to increase the Revolving Commitment.

          (b)  Procedure for Borrowing. Whenever Borrower desires an Advance
     hereunder, it shall give Agent telegraphic, telex, facsimile or telephonic
     notice ("Notice of Borrowing") of such requested Advance, which in the case
     of telephonic notice, shall be promptly confirmed in writing. Each Notice
     of Borrowing shall be in the form of Exhibit "A" attached hereto and shall
     be received by Agent not later than 11:00 a.m. Chicago, Illinois time, (i)
     one Business Day prior to the date upon which any such Advance is requested
     to be funded (the "Borrowing Date") in the case of the Base Rate Loan, or
     (ii) three (3) Business Days prior to any proposed Borrowing Date in the
     case of LIBOR Loans. Upon receipt of such Notice, Agent shall immediately
     advise each Bank thereof; provided, that if the Banks have received at
     least one (1) Business Day's notice of such Advance prior to funding of a
     Base Rate Loan, or at least three (3) Business Days' notice of each Advance
     prior to funding in the case of a LIBOR Loan, each Bank shall provide Agent
     at its office at 1 Bank One Plaza, 10th Floor, Chicago, Illinois 60670, not
     later than 1:00 p.m., Chicago, Illinois time, on the Borrowing Date, in
     immediately available funds, its pro rata share of the requested Advance,
     but the aggregate of all such fundings by each Bank shall never exceed such
     Bank's Revolving Commitment. Not later than 2:00 p.m., Chicago, Illinois
     time, on the Borrowing Date, Agent shall make available to Borrower at the
     same office, in like funds, the aggregate amount of such requested Advance.
     Neither Agent nor any Bank shall incur any liability to Borrower in acting
     upon any Notice referred to above which Agent or such Bank believes in good
     faith to have been given by a duly authorized officer or other person
     authorized to borrow on behalf of Borrower or for otherwise acting in good
     faith under this Section 2(b). Upon funding of Advances by Banks in
     accordance with this Agreement, pursuant to any such Notice of Borrowing,
     Borrower shall have effected Advances hereunder.

          (c)  Voluntary Reduction of Revolving Commitment. Borrower may at any
     time, or from time to time, upon not less than three (3) Business Days
     prior written notice to Agent, reduce or terminate the Revolving
     Commitment; provided, however, that (i) each reduction in the Revolving
     Commitment must be in the amount of at least $1,000,000 or in increments of
     $1,000,000 and (ii) each reduction must be accompanied by a prepayment of
     the Notes in the amount by which the outstanding principal balance of the
     Notes exceeds the Revolving Commitment as reduced pursuant to this Section
     2(c).



                                      -11-
<PAGE>

          (d)  Type and Number of Advances. Any Advance under the Revolving
     Commitment may be a Base Rate Loan or a LIBOR Loan, or any combination
     thereof, as selected by Borrower pursuant to Section 4 hereof. The total
     number of LIBOR Loans that may be outstanding at any time may never exceed
     six (6).

          (e)  Status of Obligations. The obligations of the Banks under the
     Revolving Commitment are several and not joint. The failure of any Bank to
     make an Advance required to be made by it shall not relieve any other Bank
     of its obligation to make its Advance, and no Bank shall be responsible for
     the failure of any other Bank to make the Advance to be made by such other
     Bank.

          (f)  Mandatory Reduction of Revolving Commitment. Notwithstanding
     anything to the contrary herein, (i) on December 31, 2003, the Revolving
     Commitment shall be reduced to $85,714,285, and (ii) on December 31, 2004,
     the Revolving Commitment shall automatically be reduced to $71,428,570.
     Provided, however, that if on either such date, the then outstanding
     principal balance of the Notes exceeds the Revolving Commitment, as reduced
     pursuant to this Section 2(f), then, in such event, the Borrower shall
     immediately prepay to the Agent for the pro rata benefit of the Banks, an
     amount equal to such excess.

     3.   NOTES EVIDENCING LOANS. The loans described above in Section 2 shall
be evidenced by notes of the Borrower as follows:

          (a)  Form of Notes. The Revolving Loans shall be evidenced by Notes in
     the aggregate face amount of $100,000,000, and shall be in the form of
     Exhibit "B" hereto with appropriate insertions. Notwithstanding the face
     amount of the Notes, the actual principal amount due from Borrower to Banks
     on account of the Notes, as of any date of computation, shall be the sum of
     Advances then and theretofore made on account thereof, plus outstanding
     Reimbursement Obligations less all principal payments actually received by
     Banks in collected funds with respect thereto. Although the Notes may be
     dated as of the Effective Date, interest in respect thereof shall be
     payable only for the period during which the loans evidenced thereby are
     outstanding and, although the stated amount of the Notes may be higher, the
     Notes shall be enforceable, with respect to Borrower's obligation to pay
     the principal amount thereof, only to the extent of the unpaid principal
     amount of the loans.

          (b)  Issuance of Additional Notes. At the Effective Date there shall
     be outstanding Notes in the aggregate face amount of $100,000,000 payable
     to the order of the Banks for each such Bank's Pro Rata Part of the
     Revolving Commitment. From time to time new Notes may be issued to other
     Banks as such Banks become parties to this Agreement. Upon request from
     Agent, Borrower shall execute and deliver to Agent any such new or
     additional Notes. From time to time as new Notes are issued the Agent shall
     require that each Bank exchange their Notes for newly issued Notes to
     reflect the extent of each Bank's Revolving Commitments hereunder.

          (c)  Interest Rates. The unpaid principal balance of all outstanding
     Advances under the Notes shall bear interest from time to time as set forth
     in Section 4 hereof.

          (d)  Payment of Interest. Interest on the Notes shall be payable to
     the Agent for the ratable benefit of the Banks on each Interest Payment
     Date.

          (e)  Payment of Principal. Principal of the Notes shall be due and
     payable to the Agent for the ratable benefit of the Banks on the Maturity
     Date unless earlier due in whole or in part as a result




                                      -12-
<PAGE>

     of an acceleration of the amount due or pursuant to the mandatory
     prepayment provisions of Sections 8(b) hereof.

          (f)  Payment to Banks. Each Bank's Pro Rata Part of payment or
     prepayment of the Revolving Loans shall be directed by wire transfer to
     such Bank by the Agent at the address provided to the Agent for such Bank
     for payments no later than 2:00 p.m., Chicago, Illinois, time on the
     Business Day such payments or prepayments are deemed hereunder to have been
     received by Agent; provided, however, in the event that any Bank shall have
     failed to make an Advance as contemplated under Section 2 hereof (a
     "Defaulting Bank") and the Agent or another Bank or Banks shall have made
     such Advance, payment received by Agent for the account of such Defaulting
     Bank or Banks shall not be distributed to such Defaulting Bank or Banks
     until such Advance or Advances shall have been repaid in full to the Bank
     or Banks who funded such Advance or Advances. Any payment or prepayment
     received by Agent at any time after 12:00 noon, Chicago, Illinois, time on
     a Business Day shall be deemed to have been received on the next Business
     Day. Interest shall cease to accrue on any principal as of the end of the
     day preceding the Business Day on which any such payment or prepayment is
     deemed hereunder to have been received by Agent. Payment by the Borrower of
     any principal, interest or other fees or expenses due hereunder to the
     Agent shall extinguish the obligations of Borrower to each Bank for such
     principal, interest or other fees or expenses actually paid.

          (g)  Sharing of Payments, Etc. If any Bank shall obtain any payment
     (whether voluntary, involuntary, or otherwise) on account of the Revolving
     Loans, (including, without limitation, any set-off) which is in excess of
     its Pro Rata Part of payments on the Revolving Loans such Bank shall
     purchase from the other Banks such participation as shall be necessary to
     cause such purchasing Bank to share the excess payment pro rata with each
     of them; provided that, if all or any portion of such excess payment is
     thereafter recovered from such purchasing Bank, the purchase shall be
     rescinded and the purchase price restored to the extent of the recovery.
     Borrower agrees that any Bank so purchasing a participation from another
     Bank pursuant to this Section may, to the fullest extent permitted by law,
     exercise all of its rights of payment (including the right of offset) with
     respect to such participation as fully as if such Bank were the direct
     creditor of Borrower in the amount of such participation.

          (h)  Non-Receipt of Funds by the Agent. Unless the Agent shall have
     been notified by a Bank or Borrower (the "Payor") prior to the date on
     which such Bank is to make payment to the Agent of the proceeds of a
     Revolving Loans to be made by it hereunder or Borrower is to make a payment
     to the Agent for the account of one or more of the Banks, as the case may
     be (such payment being herein called the "Required Payment"), which notice
     shall be effective upon receipt, that the Payor does not intend to make the
     Required Payment to the Agent, the Agent may assume that the Required
     Payment has been made and may, in reliance upon such assumption (but shall
     not be required to), make the amount thereof available to the intended
     recipient on such date and, if the Payor has not in fact made the Required
     Payment to the Agent, the recipient of such payment shall, on demand, pay
     to the Agent the amount made available to it together with interest thereon
     in respect of the period commencing on the date such amount was made
     available by the Agent until the date the Agent recovers such amount at the
     rate applicable to such portion of the applicable Revolving Loan.

     4.   INTEREST RATES.

          (a)  Options.

               (i)  Base Rate Loans. On all Base Rate Loans, the Borrower agrees
          to pay interest on the Revolving Loans calculated on the basis of the
          actual days elapsed in a year consisting of 365 or, if appropriate 366
          days, with respect to the unpaid principal amount of




                                      -13-
<PAGE>

          each Base Rate Loan from the date the proceeds thereof are made
          available to Borrower until maturity (whether by acceleration or
          otherwise), at a varying rate per annum equal to the lesser of (i) the
          Maximum Rate (defined herein), or (ii) the Base Rate. Subject to the
          provisions of this Agreement as to prepayment, the principal of the
          Notes representing Base Rate Loans shall be payable as specified in
          Section 3(e) hereof and the interest in respect of each Base Rate Loan
          shall be payable on each Interest Payment Date. Past due principal
          and, to the extent permitted by law, past due interest in respect to
          each Base Rate Loan, shall bear interest, payable on demand, at a rate
          per annum equal to the Default Rate.

               (ii) LIBOR Loans. On all LIBOR Loans, the Borrower agrees to pay
          interest calculated on the basis of a year consisting of 360 days with
          respect to the unpaid principal amount of each LIBOR Loan from the
          date the proceeds thereof are made available to Borrower until
          maturity (whether by acceleration or otherwise), at a varying rate per
          annum equal to the lesser of (i) the Maximum Rate, or (ii) the LIBOR
          Rate. Subject to the provisions of this Agreement with respect to
          prepayment, the principal of the Notes shall be payable as specified
          in Section 3(e) hereof and the interest with respect to each LIBOR
          Loan shall be payable on each Interest Payment Date. Past due
          principal and, to the extent permitted by law, past due interest shall
          bear interest, payable on demand, at a rate per annum equal to the
          Default Rate. Upon three (3) Business Days' written notice prior to
          the making by the Banks of any LIBOR Loan (in the case of the initial
          Interest Period therefor) or the expiration date of each succeeding
          Interest Period (in the case of subsequent Interest Periods therefor),
          Borrower shall have the option, subject to compliance by Borrower with
          all of the provisions of this Agreement, as long as no Event of
          Default exists, to specify whether the Interest Period commencing on
          any such date shall be a one (1), two (2), three (3) or six (6) month
          period. If Agent shall not have received timely notice of a
          designation of such Interest Period as herein provided, Borrower shall
          be deemed to have elected to convert all maturing LIBOR Loans to Base
          Rate Loans.

          (b)  Interest Rate Determination. The Agent shall determine each
     interest rate applicable to the Revolving Loans hereunder pursuant to the
     terms of this Agreement. The Agent shall give prompt notice to Borrower of
     each rate of interest so determined and its determination thereof shall be
     conclusive absent error.

          (c)  Conversion Option. Borrower may elect from time to time (i) to
     convert all or any part of its LIBOR Loans to Base Rate Loans by giving
     Agent irrevocable notice of such election in writing prior to 10:00 a.m.
     (Chicago, Illinois time) on the conversion date and such conversion shall
     be made on the requested conversion date, provided that any such conversion
     of LIBOR Loan shall only be made on the last day of the Interest Period
     with respect thereof, (ii) to convert all or any part of its Base Rate
     Loans to LIBOR Loans by giving the Agent irrevocable written notice of such
     election three (3) Business Days prior to the proposed conversion and such
     conversion shall be made on the requested conversion date or, if such
     requested conversion date is not a Business Day, on the next succeeding
     Business Day. Any such conversion shall not be deemed to be a prepayment of
     any of the loans for purposes of this Agreement on the Notes.

          (d)  Recoupment. If at any time the applicable rate of interest
     selected pursuant to Sections 4(a)(i) or 4(a)(ii) above shall exceed the
     Maximum Rate, thereby causing the interest on the Notes to be limited to
     the Maximum Rate, then any subsequent reduction in the interest rate so
     selected or subsequently selected shall not reduce the rate of interest on
     the Notes below the Maximum Rate until the total amount of interest accrued
     on the Note equals the amount of interest which would have




                                      -14-
<PAGE>

     accrued on the Notes if the rate or rates selected pursuant to Sections
     4(a)(i) or (ii), as the case may be, had at all times been in effect.

     5.   SPECIAL PROVISIONS RELATING TO LOANS.

          (a)  Unavailability of Funds or Inadequacy of Pricing. In the event
     that, in connection with any proposed LIBOR Loan, the Agent reasonably
     determines, which determination shall, absent manifest error, be final,
     conclusive and binding upon all parties, due to changes in circumstances
     since the date hereof, adequate and fair means do not exist for determining
     the LIBOR Rate or such rate will not accurately reflect the costs to the
     Banks of funding LIBOR Loans for such Interest Period, the Agent shall give
     notice of such determination to the Borrower and the Banks, whereupon,
     until the Agent notifies the Borrower and the Banks that the circumstances
     giving rise to such suspension no longer exist, the obligations of the
     Banks to make, continue, or convert Loans into LIBOR Loans shall be
     suspended, and all loans to Borrower shall be Base Rate Loans during the
     period of suspension.

          (b)  Change in Laws. If at any time any new law or any change in
     existing laws or in the interpretation of any new or existing laws shall
     make it unlawful for any Bank to make or continue to maintain or fund LIBOR
     Loans hereunder, then such Bank shall promptly notify Borrower in writing
     and such Bank's obligation to make, continue, or convert Loans into, LIBOR
     Loans under this Agreement shall be suspended until it is no longer
     unlawful for such Bank to make or maintain LIBOR Loans. Upon receipt of
     such notice, Borrower shall either repay the outstanding LIBOR Loans owed
     to the Banks, without penalty, on the last day of the current Interest
     Periods (or, if any Bank may not lawfully continue to maintain and fund
     such LIBOR Loans, immediately), or Borrower may convert such LIBOR Loans at
     such appropriate time to Base Rate Loans.

          (c)  Increased Cost or Reduced Return.

          If, after the date hereof, the adoption of any applicable law, rule,
     or regulation, or any change in any applicable law, rule, or regulation, or
     any change in the interpretation or administration thereof by any
     governmental authority, central bank, or comparable agency charged with the
     interpretation or administration thereof, or compliance by any Bank with
     any request or directive (whether or not having the force of law) of any
     such governmental authority, central bank, or comparable agency:

               (A)  shall subject such Bank to any tax, duty, or other charge
          with respect to any LIBOR Loan, its Notes, or its obligation to make
          LIBOR Loans, or change the basis of taxation of any amounts payable to
          such Bank under this Agreement or its Notes in respect of any LIBOR
          Loan (other than franchise taxes and taxes imposed on the overall net
          income of such Bank);

               (B)  shall impose, modify, or deem applicable any reserve,
          special deposit, assessment, or similar requirement (other than
          reserve requirements, if any, taken into account in the determination
          of the LIBOR Rate) relating to any extensions of credit or other
          assets of, or any deposits with or other liabilities or commitments
          of, such Bank, including the Commitment of such Bank hereunder; or

               (C)  shall impose on such Bank or on the London interbank market
          any other condition affecting this Agreement or its Notes or any of
          such extensions of credit or liabilities or commitments;




                                      -15-
<PAGE>

     and the result of any of the foregoing is to increase the cost to such Bank
     of making, converting into, continuing, or maintaining any LIBOR Loan or to
     reduce any sum received or receivable by such Bank under this Agreement or
     its Notes with respect to any LIBOR Loan, then Borrower shall pay to such
     Bank on demand such amount or amounts as will reasonably compensate such
     Bank for such increased cost or reduction.

          If, after the date hereof, any Bank shall have determined that the
     adoption of any applicable law, rule, or regulation regarding capital
     adequacy or any change therein or in the interpretation or administration
     thereof by any governmental authority, central bank, or comparable agency
     charged with the interpretation or administration thereof, or any request
     or directive regarding capital adequacy (whether or not having the force of
     law) of any such governmental authority, central bank, or comparable
     agency, has or would have the effect of reducing the rate of return on the
     capital of such Bank or any corporation controlling such Bank as a
     consequence of such Bank's obligations hereunder to a level below that
     which such Bank or such corporation could have achieved but for such
     adoption, change, request, or directive (taking into consideration its
     policies with respect to capital adequacy), then from time to time upon
     demand Borrower shall pay to such Bank such additional amount or amounts as
     will reasonably compensate such Bank for such reduction.

          Each Bank shall promptly notify Borrower and Agent of any event of
     which it has knowledge, occurring after the date hereof, which will entitle
     such Bank to compensation pursuant to this Section 5(c) and will designate
     a separate lending office, if applicable, if such designation will avoid
     the need for, or reduce the amount of, such compensation and will not, in
     the judgment of such Bank, be otherwise disadvantageous to it. Any Bank
     claiming compensation under this Section 5(c) shall furnish to Borrower and
     Agent a statement setting forth the additional amount or amounts to be paid
     to it hereunder which shall be conclusive in the absence of manifest error.
     In determining such amount, such Bank may use any reasonable averaging and
     attribution methods.

          Any Bank giving notice to the Borrower through the Agent, pursuant to
     Section 5(c) shall give to the Borrower a statement signed by an officer of
     such Bank setting forth in reasonable detail the basis for, and the
     calculation of such additional cost, reduced payments or capital
     requirements, as the case may be, and the additional amounts required to
     compensate such Bank therefor.

          Within five (5) Business Days after receipt by the Borrower of any
     notice referred to in Section 5(c), the Borrower shall pay to the Agent for
     the account of the Bank issuing such notice such additional amounts as are
     required to compensate such Bank for the increased cost, reduce payments or
     increase capital requirements identified therein, as the case may be. If
     any Bank requests compensation by Borrower under this Section 5(c),
     Borrower may, by notice to such Bank (with a copy to Agent), suspend the
     obligation of such Bank to make or continue LIBOR Loans, or to convert all
     or part of the Base Rate Loans owing to such Bank to LIBOR Loans, until the
     event or condition giving rise to such request ceases to be in effect (in
     which case the provisions of Section 5(c) shall be applicable); provided
     that such suspension shall not affect the right of such Bank to receive the
     compensation so requested.

          (d)  Discretion of Bank as to Manner of Funding. Notwithstanding any
     provisions of this Agreement to the contrary, each Bank shall be entitled
     to fund and maintain its funding of all or any part of its Loan in any
     manner it sees fit, it being understood, however, that for the purposes of
     this Agreement all determinations hereunder shall be made as if each Bank
     had actually funded and maintained each LIBOR Loan through the purchase of
     deposits having a maturity corresponding to the last day of the Interest
     Period applicable to such LIBOR Loan and bearing an interest rate to the
     applicable interest rate for such LIBOR Period.




                                      -16-
<PAGE>

          (e)  Breakage Fees. Without duplication under any other provision
     hereof, if any Bank incurs any loss, cost or expense including, without
     limitation, any loss of profit and loss, cost, expense or premium
     reasonably incurred by reason of the liquidation or re-employment of
     deposits or other funds acquired by such Bank to fund or maintain any LIBOR
     Loan or the relending or reinvesting of such deposits or amounts paid or
     prepaid to the Banks as a result of any of the following events other than
     any such occurrence as a result in the change of circumstances described in
     Sections 5(a) and (b):

               (i)   any payment, prepayment or conversion of a LIBOR Loan on a
                     date other than the last day of its Interest Period
                     (whether by acceleration, prepayment or otherwise);

               (ii)  any failure to make a principal payment of a LIBOR Loan on
                     the due date thereof; or

               (iii) (any failure by the Borrower to borrow, continue, prepay or
                     convert to a LIBOR Loan on the dates specified in a notice
                     given pursuant to Section 2(b) or 4(c) hereof;

     then the Borrower shall pay to such Bank such amount as will reimburse such
     Bank for such loss, cost or expense. If any Bank makes such a claim for
     compensation, it shall furnish to Borrower and Agent a statement setting
     forth the amount of such loss, cost or expense in reasonable detail
     (including an explanation of the basis for and the computation of such
     loss, cost or expense) and the amounts shown on such statement shall be
     conclusive and binding absent manifest error.

     6.   COLLATERAL SECURITY. To secure the performance by Borrower and the
Guarantors of their obligations hereunder, and under the Note and Security
Instruments, whether now or hereafter incurred, matured or unmatured, direct or
contingent, joint or several, or joint and several, including extensions,
modifications, renewals and increases thereof, and substitutions therefore,
Borrower and the Guarantors shall contemporaneously with or prior to the
execution of this Agreement and the Notes, grant and assign to Agent for the
ratable benefit of the Banks a first and prior Lien on the Rigs, together with
an assignment of the insurance covering such Rigs, the charter hire, drilling
contract earnings and revenues of the Rigs. All agreements and obligations
arising out of Rate Management Transactions between Borrower and the Banks or
their Affiliates shall be secured by the Collateral and paid on a pari passu
basis with the indebtedness and obligations of Borrower under this Agreement and
the other Loan Documents. The Rigs and other collateral in which Borrower and
the Guarantors have herewith granted or hereafter grant to Agent for the ratable
benefit of the Banks a first and prior Lien (to the satisfaction of the Agent)
in accordance with this Section 6, as such properties and interests are from
time to time constituted, are hereinafter collectively called the "Collateral."

The granting and assigning of such security interests and Liens by Borrower and
the Guarantors shall be pursuant to Security Instruments in form and substance
reasonably satisfactory to the Agent. Borrower and the Guarantors will cause to
be executed and delivered to the Agent, in the future, additional Security
Instruments if the Agent reasonably deems such are necessary to insure
perfection or maintenance of Banks' Liens in the Collateral or any part thereof.

In addition to the granting of the first and prior Liens referred to above,
Borrower shall also (i) grant to the Banks a negative pledge on all of its other
assets and (ii) provide the Guaranties.

     7.   FEES.

          (a)  Unused Fee. Borrower shall pay to Agent for the ratable benefit
     of the Banks an unused commitment fee (the "Unused Commitment Fee")
     equivalent to the Unused Commitment Fee Rate times the daily average of the
     unadvanced portion of the Revolving Commitment. The Unused



                                      -17-
<PAGE>

     Commitment Fee shall be payable in arrears on the last Business Day of each
     calendar quarter beginning March 29, 2002 with the final fee payment due on
     the Maturity Date for any period then ending for which the Unused
     Commitment Fee shall not have been theretofore paid. In the event the
     Revolving Commitment terminates on any date prior to the end of any such
     monthly period, Borrower shall pay to the Agent for the ratable benefit of
     the Banks, on the date of such termination, the total Unused Commitment Fee
     due for the period in which such termination occurs.

          (b)  Agency Fees. Borrower shall pay to the Agent certain fees for
     acting as Agent hereunder in the amounts previously agreed between Borrower
     and the Agent.

     8.   PREPAYMENTS.

          (a)  Voluntary Prepayments. Subject to the provisions of Section 5(e)
     hereof, the Borrower may at any time and from time to time, without penalty
     or premium, prepay the Notes, in whole or in part. Each such prepayment
     shall be made on at least three (3) Business Days' notice to Agent in the
     case of LIBOR Loan Tranches and on one (1) Business Day's notice in the
     case of Base Rate Loans and shall be in a minimum amount of (i) $500,000 or
     any integral multiples thereof (or the unpaid balance of the Notes,
     whichever is less), for Base Rate Loans, plus accrued interest thereon and
     (ii) $1,000,000 or any integral multiples thereof (or the unpaid balance on
     the Notes, whichever is less) for LIBOR Loans, plus accrued interest
     thereon to the date of prepayment.

          (b)  Mandatory Prepayment. In the event the Total Outstandings ever
     exceed the Revolving Commitment, the Borrower shall immediately prepay,
     without premium or penalty, subject to the provisions of Section 5(e)
     hereof with respect to LIBOR Loans, the principal amount of the Notes in an
     amount at least equal to such excess plus accrued but unpaid interest
     thereon to the date of such prepayment.

     9.   REPRESENTATIONS AND WARRANTIES. In order to induce the Banks to enter
into this Agreement, Borrower hereby represents and warrants to the Banks (which
representations and warranties will survive the delivery of the Notes) that:

          (a)  Creation and Existence. Borrower is a company duly organized,
     validly existing and in good standing under the laws of the jurisdiction in
     which it was formed and is duly qualified in all jurisdictions wherein
     failure to qualify may result in a Material Adverse Effect. Atwood and
     Australia are corporations duly organized, validly existing and in good
     standing under the laws of the jurisdiction in which they were each formed
     and are duly qualified in all jurisdictions wherein failure to qualify may
     result in a Material Adverse Effect. Deep Seas is a limited partnership
     duly formed, validly existing and in good standing under the laws of the
     state of its formation and is duly qualified in all jurisdictions wherein
     failure to qualify may result in a Material Adverse Effect. The Borrower
     and the Guarantors each have all power and authority to own their
     respective properties and assets and to transact the business in which it
     is engaged.

          (b)  Power and Authority. Borrower is duly authorized and empowered to
     create and issue the Notes; and Borrower is duly authorized and empowered
     to execute, deliver and perform its obligations under the Loan Documents to
     which it is a party, including this Agreement; and all corporate action on
     Borrower's part requisite for the due creation and issuance of the Notes
     and on Borrower's part requisite for the due execution, delivery and
     performance of the Loan Documents, including this Agreement, has been duly
     and effectively taken. Each Guarantor is duly authorized and empowered to
     execute, deliver and perform its obligations under the Loan Documents to
     which it is a party, including this Agreement and its Guaranty; all
     corporate action on each Guarantor's part requisite




                                      -18-
<PAGE>

     for the due execution, delivery and performance of the Loan Documents to
     which it is a party, including this Agreement and the Guaranty, has been
     duly and effectively taken.

          (c)  Binding Obligations. This Agreement does, and the Notes and other
     Loan Documents upon their creation, issuance, execution and delivery will,
     constitute valid and binding obligations of Borrower, enforceable in
     accordance with its respective terms (except that enforcement may be
     subject to any applicable bankruptcy, insolvency, or similar debtor relief
     laws now or hereafter in effect and relating to or affecting the
     enforcement of creditors rights generally). This Agreement does and the
     Guaranty and other Loan Documents upon its creation, issuance, execution
     and delivery will, constitute valid and binding obligations of each
     Guarantor enforceable in accordance with its respective terms (except that
     enforcement may be subject to any applicable bankruptcy, insolvency, or
     similar debtor relief laws now or hereafter in effect and relating to or
     affecting the enforcement of creditors rights generally).

          (d)  No Legal Bar or Resultant Lien. The Notes and the Loan Documents,
     including this Agreement and the Guaranties, do not and will not, to the
     best of Borrower's and each Guarantor's knowledge, violate any provisions
     of any material contract, agreement, law, regulation, order, injunction,
     judgment, decree or writ to which Borrower or either Guarantor is subject,
     or result in the creation or imposition of any lien or other encumbrance
     upon any assets or properties of Borrower or either Guarantor, other than
     those contemplated by this Agreement.

          (e)  No Consent. Neither the execution, delivery and performance by
     Borrower of the Notes and the Loan Documents, including this Agreement nor
     the execution, delivery and performance by the Guarantors of this Agreement
     and the Guaranties, requires the consent or approval of any other person or
     entity, including without limitation any regulatory authority or
     governmental body of the United States or any state thereof or any
     political subdivision of the United States or any state thereof.

          (f)  Financial Condition. The audited Financial Statements of Atwood
     dated September 30, 2001, which have been delivered to the Agent are
     complete and correct in all material respects, and fairly and accurately
     reflect in all material respects the financial condition and results of the
     operations of Atwood as of the date or dates and for the period or periods
     stated. No change has since occurred in the condition, financial or
     otherwise, of Borrower which is reasonably expected to have a Material
     Adverse Effect, except as disclosed to the Banks in Schedule "2" attached
     hereto.

          (g)  Liabilities. Neither Borrower nor any Subsidiary has any material
     (individually or in the aggregate) liability, direct or contingent, except
     as disclosed to the Banks in the Financial Statements and on Schedule "3"
     attached hereto. No unusual or unduly burdensome restrictions, restraint,
     or hazard exists by contract, law or governmental regulation or otherwise
     relative to the business, assets or properties of Borrower or any
     Subsidiary which is reasonably expected to have a Material Adverse Effect.

          (h)  Litigation. Except as described in the Financial Statements, or
     as otherwise disclosed to the Banks in Schedule "4" attached hereto, there
     is no litigation, legal or administrative proceeding, investigation or
     other action of any nature pending or, to the knowledge of the officers of
     Borrower or any Subsidiary threatened against or affecting Borrower or any
     Subsidiary which involves the possibility of any judgment or liability not
     fully covered by insurance, and which is reasonably expected to have a
     Material Adverse Effect.

          (i)  Taxes; Governmental Charges. Borrower and each of its
     Subsidiaries have filed all tax returns and reports required to be filed
     and has paid all taxes, assessments, fees and other




                                      -19-
<PAGE>

     governmental charges levied upon it or its assets, properties or income
     which are due and payable, including interest and penalties, the failure of
     which to pay could reasonably be expected to have a Material Adverse
     Effect, except such as are being contested in good faith by appropriate
     proceedings and for which adequate reserves for the payment thereof as
     required by GAAP has been provided and levy and execution thereon have been
     stayed and continue to be stayed.

          (j)  Titles, Etc. Borrower and each of its Subsidiaries have good and
     defensible title to all of their respective assets, including without
     limitation, the Rigs, free and clear of all liens or other encumbrances
     except Permitted Liens.

          (k)  Defaults. Neither Borrower nor any Subsidiary is in default and
     no event or circumstance has occurred which, but for the passage of time or
     the giving of notice, or both, would constitute a default under any loan or
     credit agreement, indenture, mortgage, deed of trust, security agreement or
     other agreement or instrument to which Borrower or any Subsidiary are a
     party in any respect that would be reasonably expected to have a Material
     Adverse Effect. No Event of Default hereunder has occurred and is
     continuing.

          (l)  Casualties; Taking of Properties. Since the dates of the latest
     Consolidated Financial Statements of Atwood delivered to Banks, neither the
     business nor the assets or properties of Borrower or any Subsidiary have
     been affected (to the extent it is reasonably likely to cause a Material
     Adverse Effect) as a result of any fire, explosion, earthquake, flood,
     drought, windstorm, accident, strike or other labor disturbance, embargo,
     requisition or taking of property or cancellation of contracts, permits or
     concessions by any domestic or foreign government or any agency thereof,
     riot, activities of armed forces or acts of God or of any public enemy.

          (m)  Use of Proceeds; Margin Stock. The availability under the
     Revolving Commitment will be used by Borrower for general corporate
     purposes other than hostile acquisitions including, but not limited to, the
     purchase of offshore drilling rigs and the stock and/or assets of companies
     which own or operate offshore rigs. Borrower is not engaged principally or
     as one of its important activities in the business of extending credit for
     the purpose of purchasing or carrying any "margin stock" as defined in
     Regulation U of the Board of Governors of the Federal Reserve System (12
     C.F.R. Part 221), or for the purpose of reducing or retiring any
     indebtedness which was originally incurred to purchase or carry a margin
     stock or for any other purpose which might constitute this transaction a
     "purpose credit" within the meaning of said Regulation U.

     Neither Borrower nor any person or entity acting on behalf of Borrower has
     taken or will take any action which might cause the loans hereunder or any
     of the Loan Documents, including this Agreement, to violate Regulation U or
     any other regulation of the Board of Governors of the Federal Reserve
     System or to violate the Securities Exchange Act of 1934 or any rule or
     regulation thereunder, in each case as now in effect or as the same may
     hereafter be in effect.

          (n)  Location of Business and Offices. The principal place of business
     and chief executive offices of Borrower is located at the address stated in
     Section 16 hereof.

          (o)  Compliance with the Law. To the best of Borrower's knowledge,
     neither Borrower nor any Subsidiary:

               (i)  is in violation of any law, judgment, decree, order,
          ordinance, or governmental rule or regulation to which Borrower, or
          any of its assets or properties are subject; or




                                      -20-
<PAGE>

               (ii) has failed to obtain any license, permit, franchise or other
          governmental authorization necessary to the ownership of any of its
          assets or properties or the conduct of its business;

     which violation or failure is reasonably expected to have a Material
     Adverse Effect.

          (p)  No Material Misstatements. No information, exhibit or report
     furnished by Borrower to the Banks in connection with the negotiation of
     this Agreement contained any material misstatement of fact or omitted to
     state a material fact or any fact necessary to make the statement contained
     therein not materially misleading.

          (q)  ERISA. Borrower and each Subsidiary is in compliance in all
     material respects with the applicable provisions of ERISA, and no
     "reportable event", as such term is defined in Section 403 of ERISA, has
     occurred with respect to any Plan of Borrower.

          (r)  Public Utility Holding Company Act. Borrower is not a "holding
     company", or "subsidiary company" of a "holding company", or an "affiliate"
     of a "holding company" or of a "subsidiary company" of a "holding company",
     or a "public utility" within the meaning of the Public Utility Holding
     Company Act of 1935, as amended.

          (s)  Environmental Matters.

          The Borrower and each Guarantor has duly complied in all material
     respects with, and the Rigs and other properties and operations are in
     compliance in all material respects with, the provisions of all applicable
     environmental, health and safety laws, codes and ordinances and all rules
     and regulations promulgated thereunder of all Governmental Authorities
     unless such compliance would violate the laws or regulations of the
     jurisdiction in which the Rigs is operating.

          As of the date of this Agreement, except as disclosed to the Agent in
     writing or Schedule "6" hereto, neither the Borrower nor any Guarantor has
     received notice from any Governmental Authority, and has no knowledge, of
     any fact(s) which constitute a violation of any applicable environmental,
     health or safety laws, codes or ordinances, and any rules or regulations
     promulgated thereunder of all Governmental Authorities, which relate to the
     use or ownership of the Rigs or other properties owned or operated by the
     Borrower or any Guarantor.

          The Borrower and each Guarantor have been issued all required permits,
     licenses, certificates and approvals of all Governmental Authorities
     relating to (i) air emissions, (ii) discharges to surface water or ground
     water, (iii) noise emissions, (iv) solid or liquid waste disposal, (v) the
     use, operation, storage, transportation, treatment, recycling or disposal
     of Hazardous Substances or (vi) other environmental, health or safety
     matters necessary for the ownership or operation of the Rigs or other
     properties owned or operated by the Borrower or any Guarantor and such
     permits, licenses, certificates and approvals are in full force and effect
     on the date of this Agreement.

          Except as disclosed to the Agent in writing or Schedule "6" hereto, to
     the best of the Borrower's and each Guarantor's knowledge, except in
     accordance with a valid governmental permit, license, certificate or
     approval, there has been no spill or unauthorized discharge or release of
     any Hazardous Substance to the environment at, from, or as a result of any
     operations on the Rigs or other properties and operations owned or operated
     by the Borrower or any Guarantor required to be reported to any
     Governmental Authority.




                                      -21-
<PAGE>

          Except as disclosed to the Agent in writing or Schedule "6" hereto,
     there has been no material complaint, compliance order, compliance
     schedule, notice letter, notice of citation or other similar notice from
     any environmental agency which concerns the operations of the Rigs or other
     properties owned or operated by the Borrower or any Guarantor.

          (t)  Liens. Except (i) as disclosed on Schedule "1" hereto and (ii)
     for Permitted Liens, the assets and properties of Borrower are free and
     clear of all liens and encumbrances.

          (u)  Subsidiaries. All of Borrower's Subsidiaries are listed on
     Schedule "5" hereto.

     10.  CONDITIONS OF LENDING.

          (a)  The effectiveness of this Agreement, and the obligation to make
     the initial Advance under the Revolving Commitment shall be subject to
     satisfaction of the following conditions precedent:

               (i)  Execution and Delivery. Borrower shall have executed and
          delivered the Agreement, the Notes, the Amendment to First Naval
          Mortgage, the Assignments of Insurance, the Assignments of Charter
          Hire, Drilling Contracts and Revenue and Earnings and other required
          documents, all in form and substance satisfactory to the Agent;

               (ii) Guarantors' Execution and Delivery. The Guarantors shall
          have executed and delivered to Agent this Agreement, their respective
          Guaranties, the Amendment to First Naval Mortgage, the First Ship
          Mortgage, the Assignments of Insurance, the Assignments of Charter
          Hire, Drilling Contracts and Revenues and Earnings, the Restated
          Pledge Agreement for Stock and the Restated Pledge Agreements for
          Notes and other required documents, all in form and substance
          satisfactory to Agent;

               (iii) Legal Opinion. The Agent and the Banks shall have received
          from Borrower's U.S., Cayman, Panamanian and Australian legal counsel
          a favorable legal opinion in form and substance satisfactory to Agent;

               (iv) Corporate Resolutions. The Agent shall have received
          appropriate certified corporate resolutions of the Borrower, Atwood,
          Australia and the general partner of Deep Seas;

               (v)  Good Standing. The Agent shall have received evidence of
          existence and good standing for Borrower and the Guarantors;

               (vi) Incumbency. The Agent shall have received a signed
          certificate of Borrower and each Guarantor certifying the names of the
          officers of Borrower and the Guarantors (or, in the case of Deep Seas,
          its general partner) authorized to sign loan documents on behalf of
          Borrower and the Guarantors, together with the true signatures of each
          such officer. The Agent may conclusively rely on such certificate
          until the Agent receives a further certificate of Borrower or the
          Guarantors canceling or amending the prior certificate and submitting
          signatures of the officers, named in such further certificate;

               (vii) Memorandum and Articles of Association. The Agent shall
          have received copies of any amendment to the Memorandum and Articles
          of Association of Borrower, certified by the appropriate Governmental
          Authority of the jurisdiction of its incorporation,




                                      -22-
<PAGE>

          and a copy of any amendment to the bylaws, if any, of Borrower
          certified by Borrower as being true, correct and complete;

               (viii) Confirmation of Class. The Agent shall have received
          satisfactory confirmation of class certificate for the Rigs from the
          American Bureau of Shipping dated within thirty (30) days of the
          Effective Date showing the Rigs to be classified as Maltese Cross A1
          Column Stabilized Drilling Units dated within thirty (30) days of the
          Effective Date;

               (ix) Payment of Fees. The Agent shall have received payment in
          full of all fees due at the Effective Date;

               (x)  Insurance. Agent shall have received copies of all of
          Borrower's and Australia's insurance on the Rigs, including but not
          limited to hull and machinery insurance, protection and indemnity
          insurance and pollution insurance, all in form and substance
          satisfactory to the Agent and its insurance consultant;

               (xi) Appraisal. The Agent shall have received an initial desk top
          appraisal of the Rigs prepared by an independent appraisal firm or
          offshore drilling rig brokerage firm acceptable to the Agent, said
          appraisal to be satisfactory to the Agent, provided, however, the Rigs
          shall have an appraised fair market value of at least $150,000,000 and
          an orderly liquidation appraisal value of at least $121,000,000;

               (xii) Mortgages. The Agent shall have received evidence of the
          filing of (A) the First Naval Mortgage with the appropriate
          authorities in the necessary filing jurisdictions in Panama and (B)
          the First Ship Mortgage with appropriate authorities in the necessary
          filing jurisdictions of Australia;

               (xiii) Required Bank Approval. The Agent shall have received the
          consents of Majority Banks to this amendment and restatement as
          required by the Original Credit Agreement, said consent being
          evidenced by execution by Majority Banks of this Agreement;

               (xiv) Representation and Warranties. The representations and
          warranties of Borrower under this Agreement are true and correct in
          all material respects as of such date, as if then made (except to the
          extent that such representations and warranties related solely to an
          earlier date);

               (xv) No Event of Default. No Default or Event of Default shall
          have occurred and be continuing;

               (xvi) Other Documents. Agent shall have received such other
          instruments and documents incidental and appropriate to the
          transaction provided for herein as Bank or its counsel may reasonably
          request, and all such documents shall be in form and substance
          reasonably satisfactory to the Agent; and

               (xvii) Legal Matters Satisfactory. All legal matters incident to
          the consummation of the transactions contemplated hereby shall be
          reasonably satisfactory to special counsel for Agent retained at the
          expense of Borrower.




                                      -23-
<PAGE>

          (b)  The obligation of the Banks to make any Advance on the Revolving
     Commitment (including the initial Advance) shall be subject to the
     following additional conditions precedent that, at the date of making each
     such Advance and after giving effect thereto:

               (i)  Representation and Warranties. The representations and
          warranties of Borrower under this Agreement are true and correct in
          all material respects as of such date, as if then made (except to the
          extent that such representations and warranties related solely to an
          earlier date);

               (ii) No Event of Default. No Default or Event of Default shall
          have occurred and be continuing;

               (iii) Other Documents. Agent shall have received such other
          instruments and documents incidental and appropriate to the
          transaction provided for herein as Agent or its counsel may reasonably
          request, and all such documents shall be in form and substance
          reasonably satisfactory to the Agent; and

               (iv) Legal Matters Satisfactory. All legal matters incident to
          the consummation of the transactions contemplated hereby shall be
          reasonably satisfactory to special counsel for Agent retained at the
          expense of Borrower.

     11.  AFFIRMATIVE COVENANTS. The Borrower covenants and agrees with the
Banks and the Agent that, so long as any Revolving Commitment, Revolving Loan or
any fee, expense, or any other amount payable under any Loan Document shall
remain unpaid and outstanding:

          (a)  Financial Statements and Reports. Borrower shall promptly furnish
     to the Agent for delivery to the Banks from time to time upon request such
     information regarding the business and affairs and financial condition of
     Borrower, as the Banks may reasonably request, and will furnish, or cause
     Atwood to furnish, to the Agent for delivery to the Banks:

          (b)  Annual Financial Statements. As soon as available, and in any
     event within one hundred twenty (120) days after the close of each fiscal
     year, the annual audited consolidated Financial Statements and unaudited
     consolidating Financial Statements of Atwood, prepared in accordance with
     GAAP and in a manner consistent with prior years;

          (c)  Quarterly Financial Statements. As soon as available, and in any
     event within sixty (60) days after the end of each calendar quarter of each
     year (except the last calendar quarter of any fiscal year), the quarterly
     unaudited consolidated and consolidating Financial Statements of Atwood
     prepared in accordance with GAAP and in a manner consistent with prior
     periods;

          (d)  Fleet Employment Report. As soon as available, and in any event
     within sixty (60) days of the end of each calendar quarter of each year, a
     quarterly fleet employment report setting forth the location, charter,
     term, and rate for all offshore drilling rigs owned and operated by Atwood
     or its Subsidiaries (including, without limitation, the ATWOOD FALCON and
     the VICKSBURG) as of the date of such report, such reports to be in form
     and substance satisfactory to Agent; and

          (e)  Annual Appraisals. As soon as available, and in any event within
     ninety (90) days after the close of each fiscal year of Borrower, an annual
     desk top appraisal on the Rigs prepared by an independent appraisal firm or
     offshore drilling brokerage firm chosen by the Agent and reasonably
     acceptable to Borrower;




                                      -24-
<PAGE>

          (f)  Additional Information. Promptly upon request of the Agent from
     time to time any additional financial information or other information that
     the Agent may reasonably request.

     All such reports, information, balance sheets and Financial Statements
     referred to in Subsection 11(a) above shall be in such detail as the Agent
     may reasonably request.

          (g)  Certificates of Compliance. Concurrently with the furnishing of
     the annual Financial Statements pursuant to Subsection 11(a)(i) hereof and
     the quarterly unaudited Financial Statements pursuant to Subsection
     11(a)(ii) hereof, Borrower will furnish or cause to be furnished to the
     Agent a certificate in the form of Exhibit "E" attached hereto, signed by
     the President or Chief Financial Officer of Borrower, which certificate may
     be combined with the certificate furnished by the Guarantors pursuant to
     Section 11(b) of the Guarantor's Credit Agreement.

          (h)  Taxes and Other Liens. Borrower shall and shall cause each
     Subsidiary to pay and discharge promptly all lawful taxes, assessments and
     governmental charges or levies imposed upon Borrower or any Subsidiary or
     upon the income or any assets or property of Borrower or any Subsidiary as
     well as all claims of any kind (including claims for labor, materials,
     supplies and rent) which, if unpaid, might become a Lien or other
     encumbrance upon any or all of the assets or property of Borrower or any
     Subsidiary and which could reasonably be expected to result in a Material
     Adverse Effect; provided, however, that the Borrower and its Subsidiaries
     shall not be required to pay any such tax, assessment, charge, levy or
     claim if the amount, applicability or validity thereof shall currently be
     contested in good faith by appropriate proceedings diligently conducted,
     levy and execution thereon have been stayed and continue to be stayed and
     if Borrower or Subsidiary shall have set up adequate reserves therefor, if
     required, under GAAP.

          (i)  Compliance with Laws. Borrower shall and shall cause each
     Subsidiary to observe and comply with all applicable laws, statutes, codes,
     acts, ordinances, orders, judgments, decrees, injunctions, rules,
     regulations, orders and restrictions relating to environmental standards or
     controls or to energy regulations of all federal, state, county, municipal
     and other governments, departments, commissions, boards, agencies, courts,
     authorities, officials and officers, domestic or foreign, where the failure
     to so observe and comply is reasonably expected to have a Material Adverse
     Effect.

          (j)  Further Assurances. Borrower will cure promptly any defects in
     the creation and issuance of the Note and the execution and delivery of the
     Notes and the Loan Documents, including this Agreement. Borrower at its
     sole expense will promptly execute and deliver to Agent upon its reasonable
     request all such other and further documents, agreements and instruments in
     compliance with or accomplishment of the covenants and agreements in this
     Agreement, or to correct any omissions in the Note or more fully to state
     the obligations set out herein.

          (k)  Performance of Obligations. Borrower will pay the Notes and other
     obligations incurred by it hereunder according to the reading, tenor and
     effect thereof and hereof.

          (l)  Insurance. The Borrower and Australia and each of their
     Subsidiaries is now maintaining and will continue to maintain insurance
     with financially sound and reputable insurers with respect to their
     respective assets against such liabilities, fires, casualties, risks and
     contingencies and at such types and amounts as is customary in the case of
     persons engaged in the same or similar businesses or similarly situated and
     in amounts which are consistent with prudent business practices. Upon the
     request of the Agent, the Borrower and Australia will furnish or cause to
     be furnished to the Agent from time to time a summary of each respective
     insurance company of the Borrower and




                                      -25-
<PAGE>

     Australia, and each of their Subsidiaries, will provide the Agent with
     copies of all policies covering the Rigs, and, if requested, will furnish
     the Agent with copies of the applicable policies covering their other
     material assets. In addition, the Borrower and Australia shall maintain the
     following insurance on the Rigs:

          The Borrower and Australia shall insure, or cause to be insured, the
     Rigs pursuant to the terms of Article I, Section 15 of the First Naval
     Mortgage in the case of Borrower, and Clause 7.3 of the First Ship Mortgage
     in the case of Australia. The Borrower and Australia will promptly notify
     the Agent of any material changes in such insurances or any change in the
     underwriters or clubs providing such insurances. The Borrower and Australia
     shall annually but no later than the anniversary date of this Agreement
     furnish the Agent with evidence of all such insurance policies currently in
     force.

          If no Default or Event of Default has occurred and is continuing, the
     Borrower or Australia, as the case may be, shall be entitled to the
     proceeds of any hull or machinery insurance to restore, rebuild or repair a
     Rigs in the event of less than a total, constructive total or compromised
     total loss of a Rigs as determined by Borrower's or Australia's insurers to
     the reasonable satisfaction of the Agent. If a Default or Event of Default
     has occurred and is continuing at the date of any such loss or if the loss
     is a total, constructive total or compromised total loss, then, in such
     event, the proceeds shall be paid to the Banks and applied ratably as a
     prepayment on the principal amount of the Notes.

          (m)  Accounts and Records. Borrower and each Subsidiary will keep
     books, records and accounts in which full, true and correct entries will be
     made of all dealings or transactions in relation to its business and
     activities, prepared in a manner consistent with prior years, subject to
     changes suggested by Borrower's or any Subsidiary's auditors.

          (n)  Right of Inspection. Borrower and Australia and each of their
     respective Subsidiaries will permit any officer, employee or agent of the
     Agent, at its expense, to (A) examine Borrower's, Australia's and each of
     their respective Subsidiary's books, records and accounts, and take copies
     and extracts therefrom, and (B) inspect the Rigs, all at such reasonable
     times during normal business hours and as often as the Agent may reasonably
     request.

          (o)  Notice of Certain Events. Borrower shall promptly notify the
     Agent if Borrower learns of the occurrence of (i) any event which
     constitutes an Event of Default together with a detailed statement by
     Borrower of the steps being taken to cure the Event of Default; or (ii) any
     legal, judicial or regulatory proceedings affecting Borrower, any
     Subsidiary, or any of the material assets or properties of Borrower or any
     Subsidiary which, if adversely determined, could reasonably be expected to
     have a Material Adverse Effect; or (iii) any dispute between Borrower or
     any Subsidiary and any governmental or regulatory body or any other person
     or entity which, if adversely determined, might reasonably be expected to
     cause a Material Adverse Effect; or (iv) any other matter which in
     Borrower's opinion is reasonably expected to have a Material Adverse
     Effect.

          (p)  ERISA Information and Compliance. Borrower shall and shall cause
     each Subsidiary to promptly furnish to the Agent immediately upon becoming
     aware of the occurrence of any "reportable event", as such term is defined
     in Section 4043 of ERISA, or of any "prohibited transaction", as such term
     is defined in Section 4975 of the Internal Revenue Code of 1954, as
     amended, in connection with any Plan or any trust created thereunder, a
     written notice signed by the chief financial officer of Borrower or such
     Subsidiary specifying the nature thereof, what action Borrower or such
     Subsidiary is taking or proposes to take with respect thereto, and, when
     known, any action taken by the Internal Revenue Service with respect
     thereto.




                                      -26-
<PAGE>

          (q)  Environmental Compliance.

          The Borrower, Australia and each of their Subsidiaries will comply
     with and will use their best efforts to cause their agents, contractors and
     sub-contractors (while such Persons are acting within the scope of their
     contractual relationship with the Borrower, Australia and each of their
     respective Subsidiaries) to so comply with (A) all applicable
     environmental, health and safety laws, codes and ordinances, and all rules
     and regulations promulgated thereunder of all Governmental Authorities and
     (B) the terms and conditions of all applicable permits, licenses,
     certificates and approvals of all Governmental Authorities now or hereafter
     granted or obtained with respect to the Rigs or other properties owned or
     operated by the Borrower, Australia or their respective Subsidiaries unless
     such compliance would violate the laws or regulations of the jurisdictions
     in which the Rigs are operating.

          The Borrower, Australia and their respective Subsidiaries will use
     their best efforts and safety practices to prevent the unauthorized
     release, discharge, disposal, escape or spill of Hazardous Substances on or
     about the Rigs or other properties owned or operated by the Borrower,
     Australia or the Subsidiaries.

          (r)  Environmental Notifications. The Borrower shall notify the Agent,
     in writing, within five (5) Business Days of any of the following events
     occurring after the date of this Agreement:

          Any written notification made by Borrower, Australia or any of their
     respective Subsidiaries to any federal, state or local environmental agency
     required under any federal, state or local environmental statute,
     regulation or ordinance relating to a spill or unauthorized discharge or
     release of any Hazardous Substance to the environment at, from, or as a
     result of any operations on, the Rigs or other properties and operations
     owned or operated by the Borrower or any Subsidiary.

          Knowledge by an officer of the Borrower or Australia or any Subsidiary
     of receipt of service by Borrower or Australia or any Subsidiary of any
     complaint, compliance order, compliance schedule, notice letter, notice of
     violation, citation or other similar notice or any judicial demand by any
     court, federal, state or local environmental agency, alleging (A) any
     spill, unauthorized discharge or release of any Hazardous Substance to the
     environment from, or as a result of the operations on, the Rigs or other
     properties owned or operated by the Borrower or Australia or any Subsidiary
     or (B) violations of applicable laws, regulations or permits regarding the
     generation, storage, handling, treatment, transportation, recycling,
     release or disposal of Hazardous Substances on or as a result of operations
     on the Rigs or other properties and operations owned or operated by the
     Borrower or Australia or their respective Subsidiaries.

          It is understood by the parties hereto that the aforementioned notices
     are solely for the Agent's information, may not otherwise be required by
     any federal, state or local environmental laws, regulations or ordinances,
     and are to be considered confidential information by the Banks and the
     Agent.

          The term "environmental agency" as used herein shall include, but not
     be limited to, the United States Environmental Protection Agency, the
     United States Coast Guard, the United States Mineral Management Service,
     the United States Department of Transportation (in its administration of
     the Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801, et seq.)
     and other analogous or similar Governmental Authorities regulating or
     administering statutes, regulations or ordinances relating to or imposing
     liability or standards of conduct concerning the generation, storage, use,
     production, transportation, handling, treatment, recycling, release or
     disposal of any Hazardous Substance.




                                      -27-
<PAGE>

          (s)  Environmental Indemnifications.

          The Borrower and each Guarantor hereby agrees to indemnify and hold
     the Agent and the Banks jointly and severally harmless from and against any
     and all claims, losses, liability, damages and injuries of any kind
     whatsoever asserted against the Agent and the Banks with respect to or as a
     direct result of the presence, escape, seepage, spillage, release, leaking,
     discharge or migration from any Rigs or other properties owned or operated
     by the Borrower, any Guarantor or any Subsidiary of any Hazardous
     Substance, including without limitation, any claims asserted or arising
     under any applicable environmental, health and safety laws, codes and
     ordinances, and all rules and regulations promulgated thereunder of all
     Governmental Authorities, regardless of whether or not caused by or within
     the control of the Borrower, any Guarantor or any Subsidiary.

          It is the parties' understanding that the Agent and the Banks do not
     now, have never and do not intend in the future to exercise any operational
     control or maintenance over the Rigs or any other properties and operations
     owned or operated by the Borrower, any Guarantor or any Subsidiary, nor
     have they in the past, presently, or intend in the future to, maintain an
     ownership interest in the Rigs or any other properties owned or operated by
     the Borrower, any Guarantor or any Subsidiary except as may arise upon
     enforcement of the Agent's rights under the First Naval Mortgage and the
     First Ship Mortgage.

          Should, however, the Agent or the Banks hereafter exercise any
     ownership interest in or operational control over the Rigs or any other
     properties owned or operated by the Borrower, any Guarantor or any
     Subsidiary, e.g., including but not limited to, through foreclosure, then
     the above stated indemnity and hold harmless shall be limited with respect
     to any actions or failures to act by the Agent or the Banks subsequent to
     exercising such interest or operational control, to the extent such action
     or inaction by the Agent or the Banks is admitted by the Agent or the Banks
     is found by a court of competent jurisdiction to have caused or made worse
     any condition for which liability is asserted, including but not limited
     to, the presence, escape, seepage, spillage, leaking, discharge or
     migration on or from the Rigs or other properties owned or operated by the
     Borrower, any Guarantor or any Subsidiary of any Hazardous Substance.

          (t)  Change of Principal Place of Business. Borrower shall give Agent
     at least thirty (30) days prior written notice of its intention to move its
     principal place of business from the address set forth in Section 16
     hereof.

          (u)  Payables and Other Indebtedness. Borrower and each Subsidiary
     shall pay their trade payables and other Debt that arise in the ordinary
     course of business promptly as they become due except to the extent any
     such trade payables or Debt are being contested in good faith.

          (v)  Collateral Maintenance. The Borrower or Australia, as
     appropriate, shall maintain as Collateral at all times the Rigs with (i) an
     aggregate fair market appraised value of at least 125% of the Revolving
     Commitment, and (ii) a liquidation appraised value of at least 100% of the
     Revolving Commitment. In the event the foregoing required Collateral
     maintenance is not met, the Borrower will either reduce the Revolving
     Commitment to a level supported by the Collateral (as required above) or
     pledge additional Collateral acceptable to Agent within thirty (30) days.

          (w)  Maintenance of Rigs. The Borrower or Australia, as appropriate,
     will maintain, or cause to be maintained, the Rigs in the highest
     classification for such drilling rigs with the American Bureau of Shipping
     or such other classification society as the Agent may approve.




                                      -28-
<PAGE>

          (x)  Rate Management Transactions. The Borrower shall promptly perform
     all obligations and promptly pay all amounts due any Lender under any Rate
     Management Transaction.

     12.  NEGATIVE COVENANTS. The Borrower covenants and agrees, and with
respect to Subsections 12(b), (c), (d), (e), (f), (p), (q), (r) and (s), the
Guarantors covenant and agree, with the Banks, the Agent that, so long as any
Revolving Commitment, Revolving Loan or any fee, expense, or any other amount
payable under any Loan Document shall remain unpaid and outstanding:

          (a)  Negative Pledge. Neither the Borrower nor any of its Subsidiaries
     shall without the prior written consent of the Banks:

               (i)  create, incur, assume or permit to exist any Lien, security
          interest or other encumbrance on any of its assets or properties now
          owned or hereafter acquired, except Permitted Liens; or

               (ii) sell, lease, transfer or otherwise dispose of, in any fiscal
          year, any of its material assets or properties, except for (1) sales,
          leases, transfers, charters (including drilling contracts) or other
          dispositions made in the ordinary course of the Borrower's business
          and (2) sales, leases, transfers, charters (including drilling
          contracts) or other dispositions between Borrower and a Subsidiary or
          as otherwise permitted under subparagraph (p), (q) and (s) of this
          Section 12, and (3) sales, leases, transfers, charters (including
          drilling contracts) or other dispositions of its assets (other than
          Collateral) which, on a pro forma basis after giving effect thereto,
          do not result in a violation of Subsections 12(b), (c), (d), (e) or
          (f).

          (b)  Current Ratio. Guarantors will not allow the ratio of
     Consolidated Current Assets to Consolidated Current Liabilities to be less
     than 1.25 to 1.0 as of the end of any fiscal quarter.

          (c)  Funded Debt to EBITDA. Guarantors will not allow their ratio of
     (i) Consolidated Funded Debt to (ii) Consolidated EBITDA to be greater than
     (A) 2.75 to 1.0 as of the end of any fiscal quarter from December 31, 2001
     to March 31, 2003, and (B) 2.5 to 1.0 as of the end of any fiscal quarter.

          (d)  Interest Coverage Ratio. Guarantors will not allow the ratio of
     Consolidated EBITDA to Consolidated Interest Expense to be less than 3.0 to
     1.0 as of the end of each fiscal quarter.

          (e)  Funded Debt to Tangible Net Worth. Guarantors will not allow the
     ratio of Consolidated Funded Debt to Consolidated Tangible Net Worth to be
     more than .9 to 1.0 as of the end of any fiscal quarter.

          (f)  Tangible Net Worth. Guarantors will not allow the Consolidated
     Tangible Net Worth to be less than $210,000,000 plus fifty percent (50%) of
     Consolidated Net Income, if positive, for each fiscal quarter beginning
     with the fiscal quarter ended December 31, 2001, plus 75% of the proceeds
     of any sale of equity after September 30, 2001, tested at the end of each
     fiscal quarter.

          (g)  Consolidations and Mergers. Neither the Borrower nor any
     Subsidiary will consolidate or merge with or into any other Person, except
     that the Borrower or any Subsidiary may merge with another Person if
     Borrower or such Subsidiary is the surviving entity in such merger, and any
     Subsidiary may merge with any Subsidiary, if, after giving effect to any
     such merger or consolidation, no Default or Event of Default shall have
     occurred and be continuing.




                                      -29-
<PAGE>

          (h)  Debts, Guaranties and Other Obligations. Neither the Borrower nor
     any of the Subsidiaries will incur, create, assume or in any manner become
     or be liable in respect of any Debt, nor will Borrower or any Subsidiary
     guarantee or otherwise in any manner become or be liable in respect of any
     indebtedness, liabilities or other obligations of any other person or
     entity, whether by agreement to purchase the indebtedness of any other
     person or entity or agreement for the furnishing of funds to any other
     person or entity through the purchase or lease of goods, supplies or
     services (or by way of stock purchase, capital contribution, advance or
     loan) for the purpose of paying or discharging the indebtedness of any
     other person or entity, or otherwise, except that the foregoing
     restrictions shall not apply to:

               (i)  the Notes and any renewal or increase thereof; or

               (ii) taxes, assessments or other government charges which are not
          yet due or are being contested in good faith by appropriate action
          promptly initiated and diligently conducted, if such reserve as shall
          be required by GAAP shall have been made therefor and levy and
          execution thereon have been stayed and continue to be stayed; or

               (iii) additional indebtedness for borrowed money which, together
          with the indebtedness permitted by Section 12(h)(iii) of the
          Guarantors' Credit Agreement, does not exceed $10,000,000 in the
          aggregate outstanding at any time; or

               (iv) intercompany indebtedness between Borrower and Guarantors
          permitted by Guarantors' Credit Agreement; or

               (v)  intercompany indebtedness between Borrower or any Subsidiary
          of Borrower and Atwood or any subsidiary of Atwood in an amount not
          greater than the principal amount outstanding as of March 31, 2000; or

               (vi) additional intercompany indebtedness payable by Borrower or
          any Subsidiary of Borrower to Atwood or any Subsidiary of Atwood
          which, together with the indebtedness permitted by Section 12(h)(vii)
          of the Guarantors' Credit Agreement, does not exceed $5,000,000 in the
          aggregate; or

               (vii) indebtedness for insurance premiums incurred in the
          ordinary course of business; or

               (viii) renewals or extensions (but not increases in) of any or
          all of the foregoing.

          (i)  Dividends. Borrower will not declare or pay any dividend,
     purchase, redeem or otherwise acquire for value any of its stock now or
     hereafter outstanding, return any capital to its stockholders, or make any
     distribution of its assets to its stockholders as such, except the
     foregoing shall not apply to dividends from Borrower to Atwood.

          (j)  Loans and Advances. Neither Borrower nor any of its Subsidiaries
     shall make or permit to remain outstanding any loans or advances to or in
     any person or entity, except that the foregoing restriction shall not apply
     to:




                                      -30-
<PAGE>

               (i)  loans or advances to any person, the material details of
          which have been set forth in the Financial Statements of Atwood
          heretofore furnished to Banks or on Schedule "7" hereto; or

               (ii) inter-company loans or advances between the Borrower and the
          Guarantors permitted by the Guarantors' Credit Agreement; or

               (iii) additional loans and advances to Subsidiaries of Atwood or
          Borrower which together with the loans and advances permitted by
          Section 12(j)(iii) of the Guarantors' Credit Agreement, do not exceed
          $5,000,000 in the aggregate; or

               (iv) loans or advances to employees incurred in the ordinary
          course of business not to exceed $50,000 in the aggregate outstanding
          at any time.

          (k)  Sale or Discount of Receivables. Neither Borrower nor any
     Subsidiary will discount or sell with recourse, or sell for less than the
     greater of the face or market value thereof, any of its notes receivable or
     accounts receivable.

          (l)  Nature of Business. Neither Borrower nor any Subsidiary will
     permit any material change to be made in the character of its business as
     carried on at the date hereof.

          (m)  Transactions with Affiliates. Neither Borrower nor any Subsidiary
     will enter into any transaction with any Affiliate, except transactions
     upon terms that are no less favorable to it than would be obtained in a
     transaction negotiated at arm's length with an unrelated third party.

          (n)  Investments. Neither Borrower nor any Subsidiary shall make any
     investment in any person or entity, except such restriction shall not apply
     to:

               (i)   investments existing at the Effective Date as disclosed in
          the Financial Statements;

               (ii)  investments in Subsidiaries; and

               (iii) investments consisting of Cash Equivalents.

          (o)  Amendment to Charter Documents. Neither Borrower nor any
     Subsidiary will permit any amendment to its Memorandum and Articles of
     Association or equivalent charter document.

          (p)  Management of Rigs. Except for a sale, transfer or assignment of
     ownership of a Rig to the Borrower or a Guarantor, Borrower will not change
     nor will it allow Australia to change, the flag, class, ownership,
     management or control of the Rigs without the prior written consent of the
     Agent.

          (q)  Charter of Rigs.

               (i)  Neither Borrower nor Australia shall cause or allow the any
          of the Rigs to be bareboat chartered to any party other than a
          Subsidiary or a Guarantor without the prior written consent of the
          Agent, which consent shall not be unreasonably withheld.

               (ii) In the case of any bareboat or time charter of any Rig to
          any Subsidiary or Guarantor, Borrower shall or shall cause Australia
          to, execute and deliver to the Agent an





                                      -31-
<PAGE>

          assignment of drilling contract revenues and earnings similar in form
          and substance to the Assignment of Charter Hire, Drilling Contract
          Revenues and Earnings entered into by the Borrower and dated of even
          date herewith.

          (r)  Modification of Rigs. Neither Borrower nor Australia shall cause
     or allow any change in the physical characteristics of the Rigs that would,
     in the reasonable judgment of the Agent, materially interfere with the
     suitability of the Rigs for normal commercial offshore drilling operations,
     the consent of the Agent to any such modification not to be unreasonably
     withheld.

          (s)  Sale of Rigs, etc. Except for a sale, transfer or assignment to
     the Borrower or Guarantor, neither Borrower nor Australia shall sell,
     transfer or assign any of the Rigs, any right to receive the revenue from
     the Rigs or any property serving as collateral for the Revolving
     Commitment; provided, however, that the Borrower or Australia may sell,
     transfer or assign any surplus or scrap equipment from the Rigs.

     13.  EVENTS OF DEFAULT. Any one or more of the following events shall be
considered an "Event of Default" as that term is used herein:

          (a)  Borrower shall fail to pay when due or declared due the principal
     of, and the interest on, the Notes, or any fee or any other material
     indebtedness of Borrower incurred pursuant to this Agreement or any other
     Loan Document; or

          (b)  Any representation or warranty made under this Agreement, or in
     any certificate or statement furnished or made to the Banks pursuant
     hereto, or in connection herewith, or in connection with any document
     furnished hereunder, shall prove to be untrue in any material respect as of
     the date on which such representation or warranty is made (or deemed made),
     or any representation, statement (including financial statements),
     certificate, report or other data furnished or to be furnished or made
     under any Loan Document, including this Agreement, proves to have been
     untrue in any material respect, as of the date as of which the facts
     therein set forth were stated or certified; or

          (c)  Default shall be made in the due observance or performance of any
     of the covenants or agreements contained in the Loan Documents, including
     this Agreement (excluding covenants contained in Section 12 of the
     Agreement for which there is no cure period), and such default shall
     continue for more than thirty (30) days after the giving of written notice
     thereof by the Agent to the Borrower; or

          (d)  Default shall be made in the due observance or performance of the
     covenants contained in Section 12 of this Agreement; or

          (e)  Default shall be made in respect of any obligation for borrowed
     money, other than the Notes, for which Borrower or any Subsidiary is liable
     (directly, by assumption, as guarantor or otherwise), or any obligations
     secured by any mortgage, pledge or other security interest, lien, charge or
     encumbrance with respect thereto, on any asset or property of Borrower or
     any Subsidiary or in respect of any agreement relating to any such
     obligations unless neither Borrower nor any Subsidiary is liable for same
     (i.e., unless remedies or recourse for failure to pay such obligations is
     limited to foreclosure of the collateral security therefor), and if such
     default shall continue beyond the applicable grace period, if any; or

          (f)  Borrower or any Subsidiary shall commence a voluntary case or
     other proceedings seeking liquidation, reorganization or other relief with
     respect to itself or its debts under any





                                      -32-
<PAGE>

     bankruptcy, insolvency or other similar law now or hereafter in effect or
     seeking an appointment of a trustee, receiver, liquidator, custodian or
     other similar official of it or any substantial part of its property, or
     shall consent to any such relief or to the appointment of or taking
     possession by any such official in an involuntary case or other proceeding
     commenced against it, or shall make a general assignment for the benefit of
     creditors, or shall fail generally to pay its debts as they become due, or
     shall take any corporate action authorizing the foregoing; or

          (g)  An involuntary case or other proceeding, shall be commenced
     against Borrower or any Subsidiary seeking liquidation, reorganization or
     other relief with respect to it or its debts under any bankruptcy,
     insolvency or similar law now or hereafter in effect or seeking the
     appointment of a trustee, receiver, liquidator, custodian or other similar
     official of it or any substantial part of its property, and such
     involuntary case or other proceeding shall remain undismissed and unstayed
     for a period of thirty (30) days; or an order for relief shall be entered
     against Borrower or any Subsidiary under the federal bankruptcy laws as now
     or hereinafter in effect; or

          (h)  A final judgment or order for the payment of money in excess of
     $1,000,000 (or judgments or orders aggregating in excess of $1,000,000)
     shall be rendered against Borrower or any Subsidiary and such judgments or
     orders shall continue unsatisfied and unstayed for a period of thirty (30)
     days unless such judgment or orders are fully covered by insurance or
     supersedeas bond; or

          (i)  In the event the aggregate principal amount outstanding under the
     Notes shall at any time exceed the Revolving Commitment established for the
     Notes, and Borrower shall fail to comply with the provisions of Section
     8(b) hereof; or

          (j)  A Change of Control shall occur; or

          (k)  A Change of Management shall occur; or

          (l)  Default shall occur under Guarantors' Credit Agreement; or

          (m)  Default shall occur on a Rate Management Transaction.

     Upon occurrence of any Event of Default specified in Subsections 13(f) and
(g) hereof, the entire principal amount due under the Notes and all interest
then accrued thereon, and any other liabilities of Borrower hereunder, shall
become immediately due and payable all without notice and without presentment,
demand, protest, notice of protest or dishonor or any other notice of default of
any kind, all of which are hereby expressly waived by Borrower. In any other
Event of Default, the Agent, upon request of Majority Banks, shall by notice in
writing to Borrower declare the principal of, and all interest then accrued on,
the Notes and any other liabilities hereunder to be forthwith due and payable,
whereupon the same shall forthwith become due and payable without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or other
notice of any kind, all of which Borrower hereby expressly waives, anything
contained herein or in the Notes to the contrary notwithstanding. Nothing
contained in this Section 13 shall be construed to limit or amend in any way the
Events of Default enumerated in the Notes, or any other document executed in
connection with the transaction contemplated herein.

     Upon the occurrence and during the continuance of any Event of Default, the
Banks are hereby authorized at any time and from time to time and to the extent
permitted by applicable law, without notice to Borrower (any such notice being
expressly waived by Borrower), to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by any of the Banks to or for the credit or
the account of Borrower against any and all of the indebtedness





                                      -33-
<PAGE>

of Borrower under the Notes and the Loan Documents, including this Agreement,
irrespective of whether or not the Banks shall have made any demand under the
Loan Documents, including this Agreement or the Notes and although such
indebtedness may be unmatured. Any amount set-off by any of the Banks shall be
applied against the indebtedness owed the Banks by Borrower pursuant to this
Agreement and the Notes. The Banks agree promptly to notify Borrower after any
such setoff and application, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of the Bank
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Banks may have.

     14.  THE AGENT AND THE BANKS.

          (a)  Appointment and Authorization. Each Bank hereby appoints Agent as
     its nominee and agent, in its name and on its behalf: (i) to act as nominee
     for and on behalf of such Bank in and under all Loan Documents; (ii) to
     arrange the means whereby the funds of Banks are to be made available to
     Borrower under the Loan Documents; (iii) to take such action as may be
     requested by any Bank under the Loan Documents (when such Bank is entitled
     to make such request under the Loan Documents); (iv) to receive all
     documents and items to be furnished to Banks under the Loan Documents; (v)
     to be the secured party, mortgagee, beneficiary, and similar party in
     respect of, and to receive, as the case may be, any collateral for the
     benefit of Banks; (vi) to promptly distribute to each Bank all material
     information, requests, documents and items received from Borrower under the
     Loan Documents; (vii) to promptly distribute to each Bank such Bank's Pro
     Rata Part of each payment or prepayment (whether voluntary, as proceeds of
     insurance thereon, or otherwise) in accordance with the terms of the Loan
     Documents and (viii) to deliver to the appropriate Persons requests,
     demands, approvals and consents received from Banks. Each Bank hereby
     authorizes Agent to take all actions and to exercise such powers under the
     Loan Documents as are specifically delegated to such Agent by the terms
     hereof or thereof, together with all other powers reasonably incidental
     thereto. With respect to its commitments hereunder and the Notes issued to
     it, Agent and any successor Agent shall have the same rights under the Loan
     Documents as any other Bank and may exercise the same as though it were not
     the Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly
     indicated, include Agent and any successor Agent in its capacity as a Bank.
     Agent and any successor Agent and its Affiliates may accept deposits from,
     lend money to, act as trustee under indentures of and generally engage in
     any kind of business with Borrower, and any person which may do business
     with Borrower, all as if Agent and any successor Agent were not Agent
     hereunder and without any duty to account therefor to the Banks; provided
     that, if any payments in respect of any property (or the proceeds thereof)
     now or hereafter in the possession or control of Agent which may be or
     become security for the obligations of Borrower arising under the Loan
     Documents by reason of the general description of indebtedness secured or
     of property contained in any other agreements, documents or instruments
     related to any such other business shall be applied to reduction of the
     obligations of Borrower arising under the Loan Documents, then each Bank
     shall be entitled to share in such application according to its pro rata
     part thereof. Each Bank, upon request of any other Bank, shall disclose to
     all other Banks all indebtedness and liabilities, direct and contingent, of
     Borrower to such Bank as of the time of such request.

          (b)  Note Holders. From time to time as other Banks become a party to
     this Agreement, Agent shall obtain execution by Borrower of additional
     Notes, in the form of Exhibit B hereto, in amounts representing the
     Revolving Commitment of each such new Bank, up to an aggregate face amount
     of all Notes not exceeding $100,000,000. The obligation of such Bank shall
     be governed by the provisions of this Agreement, including but not limited
     to, the obligations specified in Section 2 hereof. From time to time, Agent
     may require that the Banks exchange their Notes for newly issued Notes to
     better reflect the Revolving Commitments of the Banks. Agent may treat the
     payee of any Note as the




                                      -34-
<PAGE>

     holder thereof until written notice of transfer has been filed with it,
     signed by such payee and in form satisfactory to Agent.

          (c)  Consultation with Counsel. Banks agree that Agent may consult
     with legal counsel selected by Agent and shall not be liable for any action
     taken or suffered in good faith by it in accordance with the advice of such
     counsel. BANKS ACKNOWLEDGE THAT GARDERE WYNNE SEWELL LLP IS COUNSEL FOR
     BANK ONE, BOTH AS AGENT AND AS A BANK, AND THAT SUCH FIRM DOES NOT
     REPRESENT ANY OF THE OTHER BANKS IN CONNECTION WITH THIS TRANSACTION.

          (d)  Documents. Agent shall not be under a duty to examine or pass
     upon the validity, effectiveness, enforceability, genuineness or value of
     any of the Loan Documents or any other instrument or document furnished
     pursuant thereto or in connection therewith, and Agent shall be entitled to
     assume that the same are valid, effective, enforceable and genuine and what
     they purport to be.

          (e)  Resignation or Removal of Agent. Subject to the appointment and
     acceptance of a successor Agent as provided below, Agent may resign at any
     time by giving written notice thereof to Banks and Borrower, and Agent may
     be removed at any time with or without cause by Majority Banks. If no
     successor Agent has been so appointed by Majority Banks (and approved by
     Borrower) and has accepted such appointment within 30 days after the
     retiring Agent's giving of notice of resignation or removal of the retiring
     Agent, then the retiring Agent may, on behalf of Banks, appoint a successor
     Agent. Any successor Agent must be approved by Borrower, which approval
     will not be unreasonably withheld. Upon the acceptance of any appointment
     as Agent hereunder by a successor Agent, such successor Agent shall
     thereupon succeed to and become vested with all the rights and duties of
     the retiring Agent, and the retiring Agent shall be discharged from its
     duties and obligations hereunder. After any retiring Agent's resignation or
     removal hereunder as Agent, the provisions of this Section 14 shall
     continue in effect for its benefit in respect to any actions taken or
     omitted to be taken by it while it was acting as Agent.

          (f)  Responsibility of Agent. It is expressly understood and agreed
     that the obligations of Agent under the Loan Documents are only those
     expressly set forth in the Loan Documents and that Agent, as the case may
     be, shall be entitled to assume that no Default or Event of Default has
     occurred and is continuing, unless Agent, as the case may be, has actual
     knowledge of such fact or has received notice from a Bank or Borrower that
     such Bank or Borrower consider that a Default or an Event of Default has
     occurred and is continuing and specifying the nature thereof. Neither Agent
     nor any of their directors, officers, attorneys or employees shall be
     liable for any action taken or omitted to be taken by them under or in
     connection with the Loan Documents, except for its or their own gross
     negligence or willful misconduct. Agent shall incur no liability under or
     in respect of any of the Loan Documents by acting upon any notice, consent,
     certificate, warranty or other paper or instrument believed by it to be
     genuine or authentic or to be signed by the proper party or parties, or
     with respect to anything which it may do or refrain from doing in the
     reasonable exercise of its judgment, or which may seem to it to be
     necessary or desirable.

          Agent shall not be responsible to Banks for any of Borrower's
     recitals, statements, representations or warranties contained in any of the
     Loan Documents, or in any certificate or other document referred to or
     provided for in, or received by any Bank under, the Loan Documents, or for
     the value, validity, effectiveness, genuineness, enforceability or
     sufficiency of or any of the Loan Documents or for any failure by Borrower
     to perform any of its obligations hereunder or thereunder. Agent may employ
     agents and attorneys-in-fact and shall not be answerable, except as to
     money or




                                      -35-
<PAGE>

     securities received by it or its authorized agents, for the negligence or
     misconduct of any such agents or attorneys-in-fact selected by it with
     reasonable care.

          The relationship between Agent and each Bank is only that of agent and
     principal and has no fiduciary aspects. Nothing in the Loan Documents or
     elsewhere shall be construed to impose on Agent any duties or
     responsibilities other than those for which express provision is therein
     made. In performing its duties and functions hereunder, Agent does not
     assume and shall not be deemed to have assumed, and hereby expressly
     disclaims, any obligation or responsibility toward or any relationship of
     agency or trust with or for Borrower or any of its beneficiaries or other
     creditors. As to any matters not expressly provided for by the Loan
     Documents, Agent shall not be required to exercise any discretion or take
     any action, but shall be required to act or to refrain from acting (and
     shall be fully protected in so acting or refraining from acting) upon the
     instructions of all Banks and such instructions shall be binding upon all
     Banks and all holders of the Notes; provided, however, that Agent shall not
     be required to take any action which is contrary to the Loan Documents or
     applicable law.

          Subject to Section 22 hereof, Agent shall have the right to exercise
     or refrain from exercising, without notice or liability to the Banks, any
     and all rights afforded to Agent by the Loan Documents or which Agent may
     have as a matter of law. Agent shall not have liability to Banks for
     failure or delay in exercising any right or power possessed by Agent
     pursuant to the Loan Documents or otherwise unless such failure or delay is
     caused by the gross negligence of the Agent, in which case only the Agent
     responsible for such gross negligence shall have liability therefor to the
     Banks.

          (g)  Independent Investigation. Each Bank severally represents and
     warrants to Agent that it has made its own independent investigation and
     assessment of the financial condition and affairs of Borrower in connection
     with the making and continuation of its participation hereunder and has not
     relied exclusively on any information provided to such Bank by Agent in
     connection herewith, and each Bank represents, warrants and undertakes to
     Agent that it shall continue to make its own independent appraisal of the
     credit worthiness of Borrower while the Notes are outstanding or its
     commitments hereunder are in force. Agent shall not be required to keep
     itself informed as to the performance or observance by Borrower of this
     Agreement or any other document referred to or provided for herein or to
     inspect the properties or books of Borrower. Other than as provided in this
     Agreement, Agent shall not have any duty, responsibility or liability to
     provide any Bank with any credit or other information concerning the
     affairs, financial condition or business of Borrower which may come into
     the possession of Agent.

          (h)  Indemnification. Banks agree to indemnify Agent, ratably
     according to their respective Revolving Commitments on a Pro Rata basis,
     from and against any and all liabilities, obligations, losses, damages,
     penalties, actions, judgments, suits, costs, expenses or disbursements of
     any proper and reasonable kind or nature whatsoever which may be imposed
     on, incurred by or asserted against Agent in any way relating to or arising
     out of the Loan Documents or any action taken or omitted by Agent under the
     Loan Documents, provided that no Bank shall be liable for any portion of
     such liabilities, obligations, losses, damages, penalties, actions,
     judgments, suits, costs, expenses or disbursements resulting from Agent's
     gross negligence or willful misconduct. Each Bank shall be entitled to be
     reimbursed by the Agent for any amount such Bank paid to Agent under this
     Section 14(h) to the extent the Agent has been reimbursed for such payments
     by Borrower or any other Person. THE PARTIES INTEND FOR THE PROVISIONS OF
     THIS SECTION TO APPLY TO AND PROTECT THE AGENT FROM THE CONSEQUENCES OF ANY
     LIABILITY INCLUDING STRICT LIABILITY IMPOSED OR THREATENED TO BE IMPOSED ON
     AGENT AS WELL AS FROM THE CONSEQUENCES OF ITS OWN NEGLIGENCE, WHETHER OR
     NOT THAT NEGLIGENCE IS THE SOLE, CONTRIBUTING OR CONCURRING CAUSE OF ANY
     SUCH LIABILITY.




                                      -36-
<PAGE>

          (i)  Benefit of Section 14. The agreements contained in this Section
     14 are solely for the benefit of Agent and the Banks and are not for the
     benefit of, or to be relied upon by, Borrower, any affiliate of Borrower or
     any other person.

          (j)  Pro Rata Treatment. Subject to the provisions of this Agreement,
     each payment (including each prepayment) by Borrower and collection by
     Banks (including offsets) on account of the principal of and interest on
     the Notes and fees provided for in this Agreement, shall be made Pro Rata;
     provided, however, in the event that any Defaulting Bank shall have failed
     to make an Advance as contemplated under Section 3 hereof and Agent or
     another Bank or Banks shall have made such Advance, payment received by
     Agent for the account of such Defaulting Bank or Banks shall not be
     distributed to such Defaulting Bank or Banks until such Advance or Advances
     shall have been repaid in full to the Bank or Banks who funded such Advance
     or Advances.

          (k)  Assumption as to Payments. Except as specifically provided
     herein, unless Agent shall have received notice from Borrower prior to the
     date on which any payment is due to Banks hereunder that Borrower will not
     make such payment in full, Agent may, but shall not be required to, assume
     that Borrower has made such payment in full to Agent on such date and Agent
     may, in reliance upon such assumption, cause to be distributed to each Bank
     on such due date an amount equal to the amount then due such Bank. If and
     to the extent Borrower shall not have so made such payment in full to
     Agent, each Bank shall repay to Agent forthwith on demand such amount
     distributed to such Bank together with interest thereon, for each day from
     the date such amount is distributed to such Bank until the date such Bank
     repays such amount to Agent, at the interest rate applicable to such
     portion of the Revolving Loans.

          (l)  Other Financings. Without limiting the rights to which any Bank
     otherwise is or may become entitled, such Bank shall have no interest, by
     virtue of this Agreement or the Loan Documents, in (a) any present or
     future loans from, letters of credit issued by, or leasing or other
     financial transactions by, any other Bank to, on behalf of, or with
     Borrower (collectively referred to herein as "Other Financings") other than
     the obligations hereunder; (b) any present or future guarantees by or for
     the account of Borrower which are not contemplated by the Loan Documents;
     (c) any present or future property taken as security for any such Other
     Financings; or (d) any property now or hereafter in the possession or
     control of any other Bank which may be or become security for the
     obligations of Borrower arising under any loan document by reason of the
     general description of indebtedness secured or property contained in any
     other agreements, documents or instruments relating to any such Other
     Financings.

          (m)  Interests of Banks. Nothing in this Agreement shall be construed
     to create a partnership or joint venture between Banks for any purpose.
     Agent, Banks and Borrower recognize that the respective obligations of
     Banks under the Revolving Commitments shall be several and not joint and
     that neither Agent, nor any of Banks shall be responsible or liable to
     perform any of the obligations of the other under this Agreement. Each Bank
     is deemed to be the owner of an undivided interest in and to all rights,
     titles, benefits and interests belonging and accruing to Agent under the
     Security Instruments, including, without limitation, liens and security
     interests in any collateral, fees and payments of principal and interest by
     Borrower under the Revolving Commitments on a Pro Rata basis. Each Bank
     shall perform all duties and obligations of Banks under this Agreement in
     the same proportion as its ownership interest in the Loans outstanding at
     the date of determination thereof.

          (n)  Investments. Whenever Agent in good faith determines that it is
     uncertain about how to distribute to Banks any funds which it has received,
     or whenever Agent in good faith determines that there is any dispute among
     the Banks about how such funds should be distributed, Agent may choose to




                                      -37-
<PAGE>

     defer distribution of the funds which are the subject of such uncertainty
     or dispute. If Agent in good faith believes that the uncertainty or dispute
     will not be promptly resolved, or if Agent is otherwise required to invest
     funds pending distribution to the Banks, Agent may invest such funds
     pending distribution (at the risk of Borrower). All interest on any such
     investment shall be distributed upon the distribution of such investment
     and in the same proportions and to the same Persons as such investment. All
     monies received by Agent for distribution to the Banks (other than to the
     Person who is Agent in its separate capacity as a Bank) shall be held by
     the Agent pending such distribution solely as Agent for such Banks, and
     Agent shall have no equitable title to any portion thereof.

          (o)  Withholding Tax. Each Bank agrees to furnish (if it is organized
     under the laws of any jurisdiction other than the United States or any
     State thereof) to the Agent and the Borrower prior to the time that the
     Borrower is required to make any payment of principal, interest or fees
     hereunder, to such Bank, duplicate executed originals of either U.S.
     Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form
     1001 (wherein such Bank claims entitlement to the benefits of a tax treaty
     that provides for a complete exemption from U.S. federal income withholding
     tax on all payments hereunder) and a Form W-8 and agrees to provide new
     Forms 4224 or 1001 and Form W-8, upon the expiration of any previously
     delivered from or comparable statements in accordance with applicable U.S.
     law and regulations and amendments thereto, and agrees to comply with all
     applicable U.S. laws and regulations with regard to such withholding tax
     exemption.

     15.  EXERCISE OF RIGHTS. No failure to exercise, and no delay in
exercising, on the part of the Agent or the Banks, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right. The rights of the Agent and the Banks hereunder shall be in addition to
all other rights provided by law. No modification or waiver of any provision of
the Loan Documents, including this Agreement, or the Note nor consent to
departure therefrom, shall be effective unless in writing, and no such consent
or waiver shall extend beyond the particular case and purpose involved. No
notice or demand given in any case shall constitute a waiver of the right to
take other action in the same, similar or other circumstances without such
notice or demand.

     16.  NOTICES. Any notices or other communications required or permitted to
be given by this Agreement or any other documents and instruments referred to
herein must be given in writing either by facsimile transmission or personally
delivered or couriered or mailed by prepaid certified or registered mail to the
party to whom such notice or communication is directed at the address of such
party as follows: (a) BORROWER: ATWOOD OCEANICS PACIFIC LIMITED, Maples &
Calder, P.O. Box 309, Upland House, George Town, Grand Cayman, B.W.I, Facsimile
No. (809) 949-8080; Attention: Tim Ridley, with a copy to Guarantors;
GUARANTORS: c/o ATWOOD OCEANICS, INC. and ATWOOD DEEP SEAS, LTD., 15835 Park Ten
Place Drive, Houston, Texas 77084, Facsimile No. (281) 492-0345; Attention:
James M. Holland, Senior Vice President and Secretary; (b) AGENT: c/o AGENT,
BANK ONE, NA, 1 Bank One Plaza, 10th Floor, IL1-0362, Chicago, Illinois 60670,
Facsimile No. (312) 732-3055, Attention: Kenneth J. Fatur, Director, Capital
Markets and (c) any Bank at its address shown on any addendum hereto. Any such
notice or other communication shall be deemed to have been given (whether
actually received or not) on the day it is personally delivered or delivered by
facsimile as aforesaid or, if mailed, on the third day after it is mailed as
aforesaid. Any party may change its address for purposes of this Agreement by
giving notice of such change to the other party pursuant to this Section 16.

     17.  EXPENSES. Borrower shall pay (i) all reasonable and necessary
out-of-pocket expenses of the Agent, including reasonable fees and disbursements
of special counsel for the Agent, in connection with the preparation of this
Agreement, the other Loan Documents, title and other due diligence and closing
of the transaction described in this Agreement, any waiver or consent hereunder
or any amendment hereof or any default or Event of Default or alleged default or
Event of Default hereunder, (ii) all reasonable and necessary





                                      -38-
<PAGE>

out-of-pocket expenses of the Agent, including reasonable fees and disbursements
of special counsel for the Agent in connection with the preparation of any
participation agreement for a participant or participants requested by Borrower
or any amendment thereof and (iii) if a default or an Event of Default occurs,
all reasonable and necessary out-of-pocket expenses incurred by the Banks,
including fees and disbursements of counsel, in connection with such default and
Event of Default and collection and other enforcement proceedings resulting
therefrom. THE BORROWER HEREBY ACKNOWLEDGES THAT GARDERE WYNNE SEWELL LLP IS
SPECIAL COUNSEL TO BANK ONE, AS AGENT AND AS A BANK, UNDER THIS AGREEMENT AND
THAT IT IS NOT COUNSEL TO, NOR DOES IT REPRESENT THE BORROWER IN CONNECTION WITH
THE TRANSACTIONS DESCRIBED IN THIS AGREEMENT. The Borrower is relying on
separate counsel in the transaction described herein. The Borrower shall
indemnify the Banks against any transfer taxes, document taxes, assessments or
charges made by any governmental authority by reason of the execution, delivery
and filing of the Loan Documents. The obligations of this Section 17 shall
survive any termination of this Agreement, the expiration of the Loans and the
payment of the indebtedness of the Borrower to the Banks hereunder and under the
Notes.

     18.  INDEMNITY. Borrower agrees to indemnify and hold harmless the Banks
and their respective officers, employees, agents, attorneys and representatives
(singularly, an "Indemnified Party", and collectively, the "Indemnified
Parties") from and against any loss, cost, liability, damage or expense
(including the reasonable fees and out-of-pocket expenses of counsel to the
Banks, including all local counsel hired by such counsel) ("Claim") incurred by
the Banks in investigating or preparing for, defending against, or providing
evidence, producing documents or taking any other action in respect of any
commenced or threatened litigation, administrative proceeding or investigation
under any federal securities law, federal or state environmental law, or any
other statute of any jurisdiction, or any regulation, or at common law or
otherwise, which is alleged to arise out of or is based upon any acts, practices
or omissions or alleged acts, practices or omissions of Borrower or its agents
or arises in connection with the duties, obligations or performance of the
Indemnified Parties in negotiating, preparing, executing, accepting, keeping,
completing, countersigning, issuing, selling, delivering, releasing, assigning,
handling, certifying, processing or receiving or taking any other action with
respect to the Loan Documents and all documents, items and materials
contemplated thereby even if any of the foregoing arises out of an Indemnified
Party's ordinary negligence. The indemnity set forth herein shall be in addition
to any other obligations or liabilities of Borrower to the Banks hereunder or at
common law or otherwise, and shall survive any termination of this Agreement,
the expiration of the Revolving Loans and the payment of all indebtedness of
Borrower to the Banks hereunder and under the Notes, provided that Borrower
shall have no obligation under this Section to the Bank with respect to any of
the foregoing arising out of the gross negligence or willful misconduct of any
Indemnified Party. If any Claim is asserted against any Indemnified Party, the
Indemnified Party shall endeavor to notify Borrower of such Claim (but failure
to do so shall not affect the indemnification herein made except to the extent
of the actual harm caused by such failure). The Indemnified Party shall have the
right to employ, at Borrower's expense, counsel of the Indemnified Parties'
choosing and to control the defense of the Claim. Borrower may at its own
expense also participate in the defense of any Claim. Each Indemnified Party may
employ separate counsel in connection with any Claim to the extent such
Indemnified Party believes it reasonably prudent to protect such Indemnified
Party. THE PARTIES INTEND FOR THE PROVISIONS OF THIS SECTION TO APPLY TO AND
PROTECT EACH INDEMNIFIED PARTY FROM THE CONSEQUENCES OF ANY LIABILITY INCLUDING
STRICT LIABILITY IMPOSED OR THREATENED TO BE IMPOSED ON AGENT AS WELL AS FROM
THE CONSEQUENCES OF ITS OWN ORDINARY NEGLIGENCE, WHETHER OR NOT THAT NEGLIGENCE
IS THE SOLE, CONTRIBUTING, OR CONCURRING CAUSE OF ANY CLAIM.

     19.  GOVERNING LAW. THIS AGREEMENT IS BEING EXECUTED IN PART AND DELIVERED,
AND IS INTENDED TO BE PERFORMED, IN HOUSTON, HARRIS, COUNTY, TEXAS, AND THE
SUBSTANTIVE LAWS OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT
AND INTERPRETATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND INSTRUMENTS
REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN.




                                      -39-
<PAGE>


     20.  INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Agreement, such provisions shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of the Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement.

     21.  MAXIMUM INTEREST RATE. Regardless of any provisions contained in this
Agreement or in any other documents and instruments referred to herein, the
Banks shall never be deemed to have contracted for or be entitled to receive,
collect or apply as interest on the Notes any amount in excess of the Maximum
Rate, and in the event any Bank ever receives, collects or applies as interest
any such excess, or if an acceleration of the maturities of any Notes or if any
prepayment by Borrower result in Borrower having paid any interest in excess of
the Maximum Rate, such amount which would be excessive interest shall be applied
to the reduction of the unpaid principal balance of the Notes for which such
excess was received, collected or applied, and, if the principal balance of such
Note is paid in full, any remaining excess shall forthwith be paid to Borrower.
All sums paid or agreed to be paid to the Banks for the use, forbearance or
detention of the indebtedness evidenced by the Notes and/or this Agreement
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such indebtedness until payment
in full so that the rate or amount of interest on account of such indebtedness
does not exceed the Maximum Rate. In determining whether or not the interest
paid or payable under any specific contingency exceeds the Maximum Rate of
interest permitted by law, Borrower and the Banks shall, to the maximum extent
permitted under applicable law, (i) characterize any non-principal payment as an
expense, fee or premium, rather than as interest; and (ii) exclude voluntary
prepayments and the effect thereof; and (iii) compare the total amount of
interest contracted for, charged or received with the total amount of interest
which could be contracted for, charged or received throughout the entire
contemplated term of the Notes at the Maximum Rate.

     For purposes of Section 303 of the Texas Finance Code, to the extent
applicable to any Lender or Agent, Borrowers agree that the Maximum Rate shall
be the "weekly ceiling" as defined in said Chapter, provided that such Lender or
Agent, as applicable, may also rely, to the extent permitted by applicable laws
of the State of Texas and the United States of America, on alternative maximum
rates of interest under the Texas Finance Code or other laws applicable to such
Lender or Agent from time to time if greater.

     22.  AMENDMENTS OR WAIVERS. Neither this Agreement nor any other Loan
Document nor any terms hereof or thereof may be changed, waived or discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the Borrower and the Majority Banks, provided that no such change,
waiver, discharge or termination shall, without the consent of each Bank (other
than a Defaulting Bank) affected thereby, (i) extend the Maturity Date (it being
understood that any waiver of the application of any prepayment of the Revolving
Loans or the method of application of any prepayment shall not constitute any
such extension), to reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any post-default
increase in interest rates) or fees thereon, or reduce the principal amount
thereof, (ii) increase the Revolving Commitment of any Bank over the amount
thereof then in effect (it being understood that a waiver of any condition,
covenant, Default or Event of Default shall not constitute a change in the terms
of any Revolving Commitment of any Bank), (iii) release or permit the release of
any Collateral from the Lien of the respective Security Instruments, except as
permitted by Sections 12(s) and 12(a)(ii), (iv) amend, modify or waive any
provision of this Section 22, (v) reduce the percentage specified in the
definition of Majority Banks (it being understood and agreed that, with the
consent of the Majority Banks, additional extensions of credit pursuant to this
Agreement may be included in the determination of Majority Banks on
substantially the same basis as the Revolving Commitments (and related
extensions of credit) are included on the Effective Date), (vi) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement, (vii) waive, change the timing or amount of, or extend any
mandatory reduction in the Revolving





                                      -40-
<PAGE>

Commitment, (viii) waive any of the conditions precedent to the Effective Date
or making of any Loan or Advance or (ix) amend this sentence. No provision of
Section 2, or any other provisions relating to the Administrative Agent may be
modified without the consent of the Administrative Agent.

     23.  MULTIPLE COUNTERPARTS. This Agreement may be executed in a number of
identical separate counterparts, each of which for all purposes is to be deemed
an original, but all of which shall constitute, collectively, one agreement. No
party to this Agreement shall be bound hereby until a counterpart of this
Agreement has been executed by all parties hereto.

     24.  CONFLICT. In the event any term or provision hereof is inconsistent
with or conflicts with any provision of the Loan Documents, the terms or
provisions contained in this Agreement shall be controlling.

     25.  SURVIVAL. All covenants, agreements, undertakings, representations and
warranties made in the Loan Documents, including this Agreement, the Notes or
other documents and instruments referred to herein shall survive all closings
hereunder and shall not be affected by any investigation made by any party.

     26.  PARTIES BOUND. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns, heirs,
legal representatives and estates, provided, however, that Borrower may not,
without the prior written consent of the Banks, assign any rights, powers,
duties or obligations hereunder.

     27.  ASSIGNMENTS AND PARTICIPATIONS.

          (a)  Each Bank shall have the right to sell, assign or transfer all or
     any part of its Note or Notes, its Revolving Commitments and its rights and
     obligations hereunder to an Eligible Assignee; provided, that with each
     sale, assignment or transfer (other than to an Affiliate, a Bank or a
     Federal Reserve Bank), shall require the consent of Borrower and Agent,
     which consents will not be unreasonably withheld; provided, however, that
     no consent of Borrower shall be required if an Event of Default has
     occurred and is continuing. Any such assignee, transferee or recipient
     shall have, to the extent of such sale, assignment, or transfer, the same
     rights, benefits and obligations as it would if it were such Bank and a
     holder of such Note, Revolving Commitment and rights and obligations,
     including, without limitation, the right to vote on decisions requiring
     consent or approval of all Banks or Majority Banks and the obligation to
     fund its Revolving Commitment; provided, further, that (1) each such sale,
     assignment, or transfer (other than to an Affiliate, a Bank or a Federal
     Reserve Bank) shall be in an aggregate principal amount not less than
     $5,000,000, (2) each remaining Bank shall at all times maintain Revolving
     Commitments then outstanding in an aggregate principal amount at least
     equal to $1,000,000; (3) no Bank may offer to sell its Note or Notes,
     Revolving Commitment, rights and obligations or interests therein in
     violation of any securities laws; and (4) no such assignments (other than
     to a Federal Reserve Bank) shall become effective until the assigning Bank
     and its assignees delivers to Agent and Borrower an Assignment and
     Acceptance and the Note or Notes subject to such assignment and other
     documents evidencing any such assignment. An assignment fee in the amount
     of $3,000 for each such assignment (other than to an Affiliate, a Bank or
     the Federal Reserve Bank) will be payable to Agent by assignor or assignee.
     Within five (5) Business Days after its receipt of copies of the Assignment
     and Acceptance and the other documents relating thereto and the Note or
     Notes, Borrower shall execute and deliver to Agent (for delivery to the
     relevant assignee) a new Note or Notes evidencing such assignee's assigned
     Revolving Commitment, and within a reasonable time after delivery of such
     new Note or Notes to Agent, Agent shall return the old or replaced Note or
     Notes to Borrower, and if the assignor Bank has retained a portion of its
     Revolving Commitment, a replacement Note in the principal amount of the
     Revolving Commitment retained by the assignor (except as provided in the
     last sentence of this paragraph (a) such Note or Notes, to be in exchange
     for, but not in




                                      -41-
<PAGE>

     payment of, the Note or Notes held by such Bank). On and after the
     effective date of an assignment hereunder, the assignee shall for all
     purposes be a Bank, party to this Agreement and any other Loan Document
     executed by the Banks and shall have all the rights and obligations of a
     Bank under the Loan Documents, to the same extent as if it were an original
     party thereto, and no further consent or action by Borrower, Banks or the
     Agent shall be required to release the transferor Bank with respect to its
     Revolving Commitment assigned to such assignee and the transferor Bank
     shall henceforth be so released.

          (b)  Each Bank shall have the right to grant participations in all or
     any part of such Bank's Notes and Revolving Commitment hereunder to one or
     more pension plans, investment funds, financial institutions or other
     Persons, provided, that:

               (i)  each Bank granting a participation shall retain the right to
          vote hereunder, and no participant shall be entitled to vote hereunder
          on decisions requiring consent or approval of Bank or Majority Banks
          (except as set forth in (iii) below);

               (ii) in the event any Bank grants a participation hereunder, such
          Bank's obligations under the Loan Documents shall remain unchanged,
          such Bank shall remain solely responsible to the other parties hereto
          for the performance of such obligations, such Bank shall remain the
          holder of any such Note or Notes for all purposes under the Loan
          Documents, and Agent, each Bank and Borrower shall be entitled to deal
          with the Bank granting a participation in the same manner as if no
          participation had been granted; and

               (iii) no participant shall ever have any right by reason of its
          participation to exercise any of the rights of Banks hereunder, except
          that any Bank may agree with any participant that such Bank will not,
          without the consent of such participant (which consent may not be
          unreasonably withheld) consent to any amendment or waiver requiring
          approval of all Banks.

               (iv) It is understood and agreed that any Bank may provide to
          assignees and participants and prospective assignees and participants
          financial information and reports and data concerning Borrower's
          properties and operations which was provided to such Bank pursuant to
          this Agreement.

               (v)  Upon the reasonable request of either Agent or Borrower,
          each Bank will identify those to whom it has assigned or participated
          any part of its Notes and Revolving Commitment, and provide the
          amounts so assigned or participated.

     28.  CHOICE OF FORUM: CONSENT TO SERVICE OF PROCESS AND JURISDICTION. THE
OBLIGATIONS OF BORROWER UNDER THE LOAN DOCUMENTS ARE PERFORMABLE IN HARRIS
COUNTY, TEXAS. ANY SUIT, ACTION OR PROCEEDING AGAINST THE BORROWER WITH RESPECT
TO THE LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT THEREOF,
MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS, COUNTY OF HARRIS, OR IN THE
UNITED STATES COURTS LOCATED IN HARRIS COUNTY, TEXAS AND THE BORROWER HEREBY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY
SUCH SUIT, ACTION OR PROCEEDING. THE BORROWER HEREBY IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN SAID COURT BY THE
MAILING THEREOF BY BANK BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWER, AS APPLICABLE, AT THE ADDRESS FOR NOTICES AS PROVIDED IN SECTION 16.
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR



                                      -42-
<PAGE>

HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO ANY LOAN DOCUMENT BROUGHT IN THE COURTS LOCATED IN THE
STATE OF TEXAS, COUNTY OF HARRIS, AND HEREBY FURTHER IRREVOCABLY WAIVES ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.

     29.  WAIVER OF JURY TRIAL. THE BORROWER HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

     30.  OTHER AGREEMENTS. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     31.  FINANCIAL TERMS. All accounting terms used in this Agreement which are
not specifically defined herein shall be construed in accordance with GAAP.


                 REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK



                                      -43-
<PAGE>


     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.



                                      BORROWER:

                                      ATWOOD OCEANICS PACIFIC LIMITED
                                      a Cayman Islands company

                                      By: /s/ MICHAEL CARDENAS
                                          --------------------------------
                                          Michael Cardenas, Director


                                      GUARANTORS:

                                      ATWOOD OCEANICS, INC.,
                                      a Texas corporation

                                      By: /s/ JOHN R. IRWIN
                                          --------------------------------
                                          John R. Irwin
                                          President

                                      By: /s/ JAMES M. HOLLAND
                                          --------------------------------
                                          James M. Holland
                                          Senior Vice President


                                      ATWOOD DEEP SEAS, LTD.,
                                      a Texas limited partnership

                                      By: Atwood Hunter Co.,
                                          its general partner

                                          By: /s/ JAMES M. HOLLAND
                                              ----------------------------
                                              James M. Holland
                                              Vice President


                                      ATWOOD OCEANICS AUSTRALIA PTY
                                      LIMITED, an Australian corporation

                                      By: /s/ JAMES GRANT
                                          --------------------------------
                                          Name:  James Grant
                                          Title: Attorney



                                      -44-
<PAGE>



                                      BANKS:

Revolving Commitment:                 BANK ONE, NA, a national
$16,000,001                           banking association (Main Office Chicago)
                                      as a Bank and as Administrative Agent


                                      By: /s/ KENNETH J. FATUR
                                          --------------------------------
                                          Kenneth J. Fatur
                                          Director, Capital Markets


                                      Address for Notices for
                                      operational matters:

                                      1 Bank One Plaza, IL 1-0634
                                      Chicago, Illinois 60670
                                      Attention:     Mattie Reed
                                      Telephone No.: (312) 732-5219
                                      Fax No.:       (312) 732-4840


                                      Address for Notices for
                                      credit matters:

                                      1717 Main Street
                                      Dallas, Texas 75201
                                      Attention:     Stephen Lescher
                                      Telephone No.: (214) 290-2731
                                      Fax No.:       (214) 290-2332




                                      -45-
<PAGE>


Revolving Commitment:                 CREDIT LYONNAIS, NEW YORK BRANCH
$12,857,143                           as a Bank and as Syndication Agent


                                      By: /s/ BERNARD WEYMULLER
                                          --------------------------------
                                          Name:  Bernard Weymuller
                                          Title: Senior Vice President


                                      Address for Notices for
                                      operational matters:

                                      Credit Lyonnais
                                      1301 Avenue of the Americas
                                      New York, New York 10019

                                      Attention:  Bindu Menor
                                                 --------------------
                                      Telephone No.:  (212) 261-7633
                                      Fax No.:        (917) 849-5440

                                      Address for Notices for credit matters:

                                      Credit Lyonnais
                                      1301 Travis Street
                                      Houston, Texas 77002

                                      Attention:  Joseph Maxwell
                                                 -----------------------
                                      Telephone No.:  (713) 890-8612
                                      Fax No.:        (713) 890-8668




                                      -46-
<PAGE>


Revolving Commitment:                 FORTIS CAPITAL CORP.
$13,142,857                           as a Bank and as Syndication Agent


                                      By: /s/ CHRISTOPHER TURTON
                                          --------------------------------
                                          Name:  Christopher Turton
                                          Title: Managing Director


                                      By: /s/ CHR. TOBIAS BACKER
                                          --------------------------------
                                          Name:  Chr. Tobias Backer
                                          Title: Assistant Vice President


                                      Address for Notices for
                                      operational matters:

                                      Three Stanford Plaza
                                      301 Tresser Boulevard
                                      Stanford, Connecticut 06901

                                      Attention:    Marlene Purrier-Ellis
                                                   -----------------------
                                      Telephone No.: (203) 705-5753
                                      Fax No.:       (203) 705-5888


                                      Address for Notices for
                                      credit matters:

                                      Three Stanford Plaza
                                      301 Tresser Boulevard
                                      Stanford, Connecticut 06901

                                      Attention:    Chr. Tobras Backer
                                                   ------------------------
                                      Telephone No.: (203) 705-5787
                                      Fax No.:       (203) 705-5896




                                      -47-
<PAGE>



Revolving Commitment:                 NORDEA, ACTING THROUGH NORDEA BANK
$15,714,286                           FINLAND PLC, NEW YORK BRANCH, as a Bank
                                      and as Documentation Agent


                                      By: /s/ MARTIN LUNDER
                                          --------------------------------
                                          Name:  Martin Lunder
                                          Title: Senior Vice President


                                      By: /s/ HANS CHR. KJELSRUD
                                          --------------------------------
                                          Name:  Hans Chr. Kjelsrud
                                          Title: Senior Vice President


                                      Address for Notices for
                                      operational matters:

                                      437 Madison Avenue
                                      New York, New York 10022

                                      Attention:     Loan Administration
                                      Telephone No.: (212) 318-9300
                                      Fax No.:       (212) 421-4420


                                      Address for Notices for
                                      credit matters:

                                      437 Madison Avenue
                                      New York, New York 10022

                                      Attention:     Shipping, Offshore & Oil
                                                     Services
                                      Telephone No.: (212) 318-9300
                                      Fax No.:       (212) 421-4420




                                      -48-
<PAGE>



Revolving Commitment:                 THE BANK OF TOKYO-MITSUBISHI, LTD.
$5,714,286

                                      By: /s/ ICHIRO OTANI
                                          --------------------------------
                                          Name:  Ichiro Otani
                                          Title: Deputy General Manager


                                      Address for Notices for
                                      operational matters:

                                      1100 Louisiana Street, Suite 2800
                                      Houston, Texas 77002

                                      Attention:    Nadra Breir
                                                   -------------------------
                                      Telephone No.: (713) 655-3847
                                      Fax No.:       (713) 658-0116

                                      Address for Notices for
                                      credit matters:

                                      1100 Louisiana Street, Suite 2800
                                      Houston, Texas 77002

                                      Attention:    Damian Sullivan
                                                   -------------------------
                                      Telephone No.: (713) 655-3808
                                      Fax No.:       (713) 658-0116




                                      -49-
<PAGE>


Revolving Commitment:                 CREDIT AGRICOLE INDOSUEZ
$10,285,714

                                      By: /s/ ISABELLE BILLECOCQ
                                          --------------------------------
                                          Name:  Isabelle Billecocq
                                                 -------------------------
                                          Title: Assistant Vice President
                                                 -------------------------

                                      By: /s/ MARYVONNE DOURVER
                                          --------------------------------
                                          Name:  Maryvonne Dourver
                                                 -------------------------
                                          Title: Vice President
                                                 -------------------------


                                      Address for Notices for
                                      operational matters:

                                      Credit Agricole Indosuez
                                      9, Quai Du President Paul Doumer
                                      92920 La Defense Cedex
                                      FRANCE

                                      Attention:     Sylvie Godet-Couery/Sophie
                                                     Guittet
                                      Telephone No.: +33 141 89 12 49
                                      Fax No.:       +33 141 89 19 34


                                      Address for Notices for
                                      credit matters:

                                      Credit Agricole Indosuez
                                      Representative Office Norway
                                      P.O. Box 1675
                                      0120 Oslo Norway

                                      Attention:     Jonas Gustad
                                      Telephone No.  +47 22 01 06 50
                                      Fax No.:       +47 22 61 06 51




                                      -50-
<PAGE>


Revolving Commitment:                 NATEXIS BANQUES POPULAIRES
$7,428,571

                                      By: /s/ TIMOTHY L. POLVADO
                                          --------------------------------
                                          Name:  Timothy L. Polvado
                                          Title: Vice President and
                                                 Group Manager


                                      By: /s/ DONOVAN C. BROUSSARD
                                          --------------------------------
                                          Name:  Donovan C. Broussard
                                          Title: Vice President



                                      -51-

<PAGE>


Revolving Commitment:                 THE FUJI BANK, LIMITED,
$7,428,571                            HOUSTON AGENCY


                                      By: ________________________________
                                      Name: ______________________________
                                      Title: _____________________________


                                      Address for Notices for
                                      operational matters:

                                      ------------------------------------
                                      ------------------------------------
                                      Attention:     _____________________
                                      Telephone No.: _____________________
                                      Fax No.:       _____________________



                                      Address for Notices for
                                      credit matters:

                                      ------------------------------------
                                      ------------------------------------
                                      Attention:     _____________________
                                      Telephone No.: _____________________
                                      Fax No.:       _____________________




                                      -52-
<PAGE>


Revolving Commitment:                 WHITNEY NATIONAL BANK
$11,428,571

                                      By: /s/ HARRY C. STAHEL
                                          --------------------------------
                                          Name:  Harry C. Stahel
                                          Title: Senior Vice President


                                      By: ________________________________
                                      Name: ______________________________
                                      Title: _____________________________


                                      Address for Notices for
                                      operational matters:

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

                                       Attention:    Sarah Brombacher
                                                    -----------------------
                                       Telephone No.: (504) 552-4804
                                                      -----------------------
                                       Fax No.:       (504) 599-3073
                                                      -----------------------

                                       Address for Notices for
                                       credit matters:

                                       228 St. Charles Avenue
                                       New Orleans, LA 70130

                                       Attention:    Harry C. Stakel
                                                    -----------------------
                                       Telephone No.:  (504) 586-7206
                                                      -----------------------
                                       Fax No.:        (504) 586-3409
                                                      -----------------------


                                      -53-

</TEXT>
</DOCUMENT>
