Exhibit 10.

BAREBOAT CHARTER AGREEMENT BETWEEN

CHILES OFFSHORE LLC
AND
PERFORADORA CENTRAL, S.A. DE C.V.

THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)

STANDARD BAREBOAT CHARTER
CODE NAME: "BARECON 89"
PART I

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1. SHIPBROKER: 2. PLACE AND DATE:

Not Applicable Mexico City November 30, 1999

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3. OWNERS/PLACE OF BUSINESS: 4. BAREBOAT CHARTERER'S (CHARTERER)/PLACE OF
BUSINESS:
PERFORADORA CENTRAL, S.A. DE C.V.
Montes Urales No. 520 CHILES OFFSHORE LLC, OR SUBSIDIARY TO BE NAMED
Lomas de Chapultepec, Mexico D.F. 11000 11200 Westheimer, Suite 410
Houston, Texas 77042-3227
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5. VESSEL'S NAME, CALL SIGN AND FLAG (Cl. 9(c)): 6. TYPE OF VESSEL:

TONALA, IMO No. 8764523, HP - 9700, Panama Flag LeTourneau Design, Super 116C Jackup Mobile Offshore
Drilling Unit
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7. GRT/NRT: 8. WHEN/WHERE BUILT:

6679 / 2003 2000/TDI Halter, Pascagoula, Mississippi

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9. TOTAL DWT (abt.) IN METRIC TONS ON SUMMER 10. CLASS (Cl. 6):
FREEBOARD:
American Bureau of Shipping Maltese Cross A1
Self-Elevating Mobile Drilling Unit
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11. DATE OF LAST SPECIAL SURVEY BY THE VESSEL'S 12. FURTHER PARTICULARS OF VESSEL (ALSO INDICATE
CLASSIFICATION SOCIETY: MINIMUM NUMBER OF MONTHS' VALIDITY OF CLASS
CERTIFICATES AGREED ACC. TO Cl. 10):
Not Applicable
Length 74.14m, Breadth 62.83m, Depth 7.92m
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13. PORT OR PLACE OF DELIVERY (Cl. 2): 14. TIME FOR DELIVERY (Cl. 2):

TDI Halter Yard, Pascagoula, Mississippi See Clause 2

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15. CANCELING DATE: 16. PORT OR PLACE OF REDELIVERY (Cl. 10):

Not Applicable Sabine Pass, Texas subject to Clause 10

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17. RUNNING DAYS' NOTICE IF OTHER THAN STATED IN Cl. 2: 18. FREQUENCY OF DRY-DOCKING IF OTHER THAN STATED IN
Cl. 6:
Not Applicable
As required by Vessel's Class Society
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19. TRADING LIMITS (Cl. 3): 20. CHARTER PERIOD:

See Clause 3 See Clause 21

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21. CHARTER HIRE (Cl. 7): 22. RATE OF INTEREST PAYABLE ACC. TO Cl. 7(f) AND,
IF APPLICABLE, ACC. TO PART IV:
See Clause 7
15% per annum
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23. CURRENCY AND METHOD OF PAYMENT (Cl. 7): 24. PLACE OF PAYMENT; ALSO STATE BENEFICIARY AND
BANK ACCOUNT (Cl. 7):
See Clause 7
See Clause 7
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25. BANK GUARANTEE/BOND (SUM AND PLACE) (OPTIONAL): 26. MORTGAGE(S), IF ANY, (STATE WHETHER Cl. 8
APPLIES) (Cl. 8):
Not Applicable
Clause 8 applies
 ------------------------------------------------------------- -----------------------------------------------------------
27. INSURANCE (MARINE AND WAR RISKS) (STATE VALUE ACC. 28. ADDITIONAL INSURANCE COVER, IF ANY, FOR OWNERS'
TO Cl. 9(f): ACCOUNT LIMITED TO (Cl. 8(f)):

USD105,000,000, Clause 9 applies No Dollar Limit

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29. ADDITIONAL INSURANCE COVER, IF ANY, FOR CHARTERS' 30. LATENT DEFECTS (ONLY TO BE FILLED IN IF PERIOD
ACCOUNT LIMITED TO (Cl. 8(f)): OTHER THAN STATED IN Cl. 2):

No Dollar Limit Not Applicable

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31. WAR CANCELLATION (INDICATE COUNTRIES AGREED) 32. BROKERAGE COMMISSION AND TO WHOM PAYABLE
(Cl. 18): (Cl. 19):

United States of America and Mexico Not Applicable

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33. LAW AND ARBITRATION (Cl. 20): 34. NUMBER OF ADDITIONAL CLAUSES COVERING SPECIAL
PROVISIONS, IF AGREED:
See Clause 20
See Part II
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35. NEWBUILDING VESSEL (INDICATE WITH "YES" OR "NO" 36. NAME AND PLACE OF BUILDERS (ONLY TO BE FILLED IN
WHETHER PART III APPLIES) (OPTIONAL): IF PART III APPLIES):

No (See Clause 2) Not Applicable

------------------------------------------------------------- -----------------------------------------------------------
37. VESSEL'S YARD BUILDING NO. (ONLY TO BE FILLED IN 38. DATE OF BUILDING CONTRACT (ONLY TO BE FILLED IN
IF PART III APPLIES): IF PART III APPLIES):

Not Applicable Not Applicable

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39. HIRE/PURCHASE AGREEMENT (INDICATE WITH "YES" OR 40. BAREBOAT CHARTER
REGISTRY (INDICATE WITH "YES" "NO" WHETHER PART IV APPLIES) (OPTIONAL):
OR "NO" WHETHER PART V APPLIES) (OPTIONAL):

No No
------------------------------------------------------------- -----------------------------------------------------------
41. FLAG AND COUNTRY OF THE BAREBOAT CHARTER REGISTRY 42. COUNTRY OF THE UNDERLYING REGISTRY (ONLY TO BE
(ONLY TO BE FILLED IN IF PART V APPLIES): FILLED IN IF PART V APPLIES):

Not Applicable Not Applicable

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

Page 2

THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)

STANDARD BAREBOAT CHARTER
CODE NAME: "BARECON 89"

PART II

1) DEFINITIONS

In this Charter, the following terms shall have the meanings hereby
assigned to them:

a) "Affiliate" of a particular entity which owns more than fifty percent

(50%) of such particular entity, an entity in which such particular
entity owns more than fifty percent (50%) or an entity more than fifty
percent (50%) of which is owned by the same entity that owns more than
fifty percent (50%) of such particular entity. Ownership for purposes
of this definition includes any direct and indirect ownership. Entity
for purposes of this definition includes any juridical or natural
person or other business entity established in accordance with the law
of the country of its establishment.

b) "Charterer" shall mean Chiles Offshore LLC, a Delaware limited

liability company.

c) "Management Fees" shall mean the fees deducted by the Charterer as

consideration for the Charterer's management of the Vessel for the
purpose of calculating the Net Operating Margin and the Supplemental
Hire, as described in Clause 7 hereof.

d) "Net Operating Margin" shall mean Net Operating Revenues less direct
Vessel operating costs (including self-insured retentions and survey
reserves) less the Management Fees, calculated in accordance with U.S.
generally accepted accounting principles.

e) "Net Operating Revenues" shall mean gross revenues received by the

Charterer through its utilization of the Vessel for a given calendar
quarter, plus mobilization/demobilization revenues from the Vessel,
 less mobilization/demobilization expenses for the Vessel.

f) "Owner" shall mean Perforadora Central, S.A. de C.V., a corporation

organized under the laws of Mexico.

g) "Port of Delivery" shall mean the port stated in Box 13 of Part I of

this Charter.

h) "Supervisory Crews" shall mean two (2) rig managers, two (2) assistant
rig managers, two (2) safety coordinators, two (2) materials
coordinators, two (2) rig engineers, two (2) sr. electricians, two (2)
sr. mechanics and four (4) crane operators employed by the Charterer.

i) "Supplemental Hire" shall mean fifty percent (50%) of the difference

between (i) Net Operating Margin, less (ii) the hire of the Vessel
payable pursuant to Clause 7(a) hereof, which shall be calculated in
accordance with U.S. generally accepted accounting principles and
payable quarterly by the Charterer to the Owner as additional
compensation.

j) "Vessel" shall mean the vessel described in Boxes 5 through 10 of this

Charter and on Exhibit 1 attached hereto.

k) "Warm Stacked" shall mean the period of time when the Vessel is not
under contract or being mobilized to or from a contract location but
is being maintained in ready to work condition.

l) "Working Capital Account" shall mean the Charterer's working capital

account established by the Charterer in the name of the Vessel at
Southwest Bank of Texas, N.A., Houston, Texas for the purpose of
supporting the working capital needs of the Vessel, as more
particularly described in Clause 7 hereof.

2) DELIVERY

a) After the Make Ready Period (as defined in Clause 2 (c) hereof), the
Vessel shall be delivered and taken over by the Charterer at the port
or place indicated in Box 13, in such ready berth as the Charterer may
direct (or at such place offshore from such location as either party
may reasonably request).

b) The Owner shall before and at the time of delivery exercise due
diligence to make the Vessel seaworthy and in every respect ready in
hull, machinery and equipment for service under this Charter. The
Vessel shall be properly documented at time of delivery under the laws
and flag of Panama. The parties acknowledge that the Owner may take
delivery of the Vessel from the Vessel manufacturer at an offshore
location, in which event the Owner shall, at its own expense, return
the Vessel to the Vessel manufacturer's yard so that the work
described in this Clause 2 may be completed during the Make Ready
Period prior to delivery of the Vessel to the Charterer.

Page 3

c) The parties acknowledge that the Vessel is currently being

constructed, and that delivery to the Owner is anticipated on or about
January 14th, 2000. Prior to delivery of the Vessel to the Charterer,
the Owner and the Charterer shall cooperate in preparing the Vessel
such that it is ready to fully perform all operations consistent with
its design criteria, including, without limitation, being provided
with the appropriate spare parts and supplies (the "Owner Spares") and
a full crew with proper training and certificates, being tested in
every way according to normal and customary industry practice, and
having all deficiencies corrected that are identified prior to
delivery. The Owner shall be responsible for providing the Vessel with
such spare parts and supplies and correcting all such deficiencies.
The Charterer shall be responsible for providing a full crew with
proper training and certificates. During the foregoing period prior to
delivery to the Charterer (the "Make Ready Period"), the Owner shall
pay a management fee of $1,500 per day to the Charterer, as provided
in Clause 7(d) hereof. The parties shall solicit the sale of the Owner
Spares to a third party supplier (the "Supplier") of replacement
inventory for the Vessel. If the Supplier purchases any or all of the
Owner Spares, the proceeds shall be paid to the Owner. Thereafter, the
Charterer shall separately track the Owner Spares and the spare parts
supplied by the Supplier, and the Owner shall be reimbursed from time
to time (on a quarterly basis) for any portion of the Owner Spares
that is utilized in connection with the operation of the Vessel during
the term of this Charter or is otherwise not returned to the Owner
with the Vessel at the expiration or termination of this Charter. All
spare parts that are not Owner Spares shall be removed from the Vessel
at the expiration or termination of this Charter, except to the extent
that the Owner makes arrangements to purchase such spare parts
inventory form the owner thereof.
 d) The Owner and the Charterer have surveyed the Vessel prior to its
delivery to the Charterer and have jointly agreed on the preparations
that are necessary for the Vessel as described in Clause 2(c) hereof
during the Make Ready Period. The Owner and the Charterer have agreed
on a budget estimate for such preparations including the budgeted
amount for the Management Fees payable during the Make Ready Period.
The Owner shall pay the amount of such budget into an escrow bank
account established and maintained by the Charterer at Southwest Bank
of Texas, N.A., Houston, Texas (separate from the Working Capital
Account), prior to commencement of such preparations. The Charterer
shall withdraw from such escrow account the amounts necessary to
prepare the Vessel as described herein and for payment of the
Management Fees during the Make Ready Period. To the extent that the
cost of the preparations agreed to by the Owner and the Charterer
exceed such budget amount paid by the Owner, the Owner shall pay such
additional amount for which it is responsible pursuant to this Clause
2. The Make Ready Period shall begin no later than January 14th, 2000.
Direct out-of-pocket crew expenses of $50,000 incurred by Charterer
from December 8th, 1999 through January 14th, 2000 shall be amortized
over the first 365 days of the Charter Period and recovered as first
cash out prior to the payment of any Hire, Management Fee or
Supplemental Hire pursuant to Clause 7.

3) TRADING LIMITS

The Vessel shall only be employed within the United States Gulf of
Mexico and such other areas as the Owner and MARAD (as defined in
Clause 8 hereof) may approve (the "Operations Area").

4) INSPECTION

a) The Owner shall have the right at any time to inspect or survey
the Vessel or instruct a duly authorized surveyor to carry out
such survey on its behalf to ascertain the condition of the
Vessel and satisfy it that the Vessel is being properly repaired
and maintained. Inspection or survey in drydock shall be made
only when the Vessel shall be in drydock for the Charterer's
purpose, which shall include dockings required by the
classification rules. However, the Owner shall have the right to
require the Vessel to be drydocked for inspection if the
Charterer is not docking her at normal classification intervals.
The fees for such inspection or survey shall, in the event of the
Vessel being found to be in the condition provided in Clause 6
hereof, be payable by the Owner and shall be paid by the
Charterer only in the event of the Vessel being found to require
repairs or maintenance in order to achieve the condition so
provided. All time taken in respect of inspection, survey or
repairs shall count as time on hire and shall form part of the
Charter period.

b) The Charterer shall also permit the Owner to inspect the Vessel's
logbooks, daily drilling reports and other records whenever
requested and shall whenever required by the Owner furnish it
with full information regarding any casualties or other accidents
or damage to the Vessel.

Page 4

c) The Owner may appoint a representative who shall be entitled to

be aboard the Vessel at all times. Such representative's salary
and travel expenses shall be paid by the Owner. The Charterer
shall provide such representative with food and lodging on the
Vessel and transportation from the shore base to and from the
Vessel (consistent with the standard of transportation for the
Vessel during such period of use) free of charge.

5) INVENTORIES AND CONSUMABLE OIL AND STORES

Unless otherwise agreed, the Vessel shall be delivered with bunkers,

lubricants and water as on board and shall be redelivered with
sufficient bunkers to reach the next bunkering location on route to
its next point of call. The Charterer and the Owner, respectively,
shall at the time of delivery and redelivery take over and pay for all
bunkers, lubricating oil and water in the said Vessel at the then
current market prices at the ports of delivery and re-delivery,
respectively.

6) MAINTENANCE AND OPERATION

a) The Vessel shall during the Charter period be in the full possession
and at the absolute disposal for all purposes of the Charterer and
under its complete control in every respect. The Charterer shall
 maintain the Vessel, her machinery, boilers, appurtenances and spare
parts in a good state of repair, in efficient operating condition and
in accordance with good commercial maintenance practice and it shall
keep the Vessel with unexpired classification of the class indicated
in Box 10 and with other required certificates in force at all times.

b) Unless otherwise agreed, in the event of any improvement, structural

changes or new equipment becoming necessary for the continued
operation of the Vessel by reason of new class requirements or by
compulsory legislation, the Owner shall pay all such costs of such
changes or equipment.

c) The Charterer shall establish and maintain financial security or

responsibility in respect of oil or other pollution damage as required
by any government, including Federal, state or municipal or other
division or authority thereof, to enable the Vessel, without penalty
or charge, lawfully to enter, remain at, or leave any port, place,
territorial or contiguous waters of any country, state or municipality
in performance of this Charter without any delay. This obligation
shall apply whether or not such requirements have been lawfully
imposed by such government or division or authority thereof. The
Charterer shall make and maintain all arrangements by bond or
otherwise as may be necessary to satisfy such requirements at the
Charterer's sole expense (charged as a direct Vessel operating cost)
and the Charterer shall indemnify the Owner against all consequences
whatsoever (including loss of time) for any failure or inability to do
so.

d) The Charterer shall at its own expense and by its own procurement man,
victual, navigate, operate, supply, fuel and repair the Vessel
whenever required during the Charter period and it shall pay all
charges and expenses (charged as a direct Vessel operating cost) of
every kind and nature whatsoever incidental to its use and operation
of the Vessel under this Charter, including any foreign general
municipality and/or state taxes imposed on the Charterer or its use of
the Vessel. The Master, officers and crew of the Vessel shall be the
servants of the Charterer.

e) The Charterer shall make no structural changes in the Vessel or

changes in the machinery, boilers, appurtenances or spare parts
thereof or add additional equipment to the Vessel except after first
securing the approval thereof of the Owner and any mortgagee (to the
extent such mortgagee's approval is required). The Owner shall respond
to any such request for approval within a reasonable time period. The
Charterer shall pay the incremental costs of such changes, additional
equipment or modifications as agreed to by the parties, the cost of
which shall be repaid to the Charterer out of Net Operating Revenues
prior to calculation of Net Operating Margin. Such changes,
modifications or additional equipment shall be the property of the
Charterer and shall be removed from the Vessel at the end of the
Charter Period if such removal can be accomplished without structural
damage to the Vessel. If the Owner so agrees, the Charterer shall, if
the Owner so requires, restore the Vessel to its former condition
before the termination of the Charter.

f) The Charterer shall have the use of all outfit, equipment, and
appliances on board the Vessel at the time of delivery, provided the
same or their substantial equivalent shall be returned to the Owner on
redelivery in the same good order and condition as when received,
ordinary wear and tear excepted. The Charterer shall from time to time
during the Charter Period replace such items of equipment as shall be
so damaged or worn as to be unfit for use. All repairs to or
replacement of any damaged, worn or lost parts or equipment shall be
affected in such manner (both as regards workmanship and quality of
materials) as not to diminish the value of the Vessel. The Charterer
has the right to fit additional equipment at its expense and risk but
the Charterer shall remove such equipment at the end of the period if
requested by the Owner.

Page 5

g) Any equipment including radio equipment on hire on the Vessel at time

of delivery shall be kept and maintained by the Charterer and the
Charterer shall assume the obligations and liabilities of the Owner
under any lease contracts in connection therewith and shall reimburse
the Owner for all expenses incurred in connection therewith, also for
any new equipment required in order to comply with radio regulations.

h) After the Make Ready Period described in Clause 2(c) hereof, the Owner
shall be responsible for repairs or renewals (i) costing in excess of
$30,000, or (ii) occasioned by latent defects in the Vessel, her
machinery or appurtenances that are covered by warranties from the
shipyard, LeTourneau or the suppliers of machinery, goods or services,
Owner will take all reasonable steps to require such defect to be
 repaired or replaced by the shipyard, LeTourneau or supplier, as
appropriate. To the extent possible, Owner shall assign such
warranties to Charterer. Subject to (i) above, in the event the
shipyard, LeTourneau or supplier, as appropriate, refuses to make such
repairs or is not responsible thereof, the cost of such repairs shall
be paid by Charterer and shall be charged as a direct Vessel operating
cost. All other repairs shall be the responsibility of the Charterer
and shall be charged as a direct Vessel operating cost.

i) Any equipment added to the Vessel by Charterer shall be approved by

the Vessel's Classification Society to the extent such approval is
required.

j) The Charterer shall provide properly qualified and experienced

personnel to fill all positions on the Vessel. The Charterer shall not
engage any personnel in a training capacity unless such personnel are
under the direct supervision of an experienced person. All personnel
provided by the Charterer shall have received appropriate instructions
in the operation of the equipment for which they are responsible and
shall have attended schools or other training appropriate for their
particular position on the Vessel.

k) All Vessel moves shall be under the supervision of a properly

qualified and certificated rig mover. The Charterer shall require that
adequate bottom surveys be obtained either by the Charterer's customer
or by the Charterer so that appropriate precautions can be taken when
moving the Vessel to a new location.

7) HIRE/MANAGEMENT FEE/SUPPLEMENTAL HIRE

a) The Charterer shall pay to the Owner for the hire of the Vessel
thirty-seven percent (37%) of the Net Operating Revenues generated by
the Vessel and received by the Charterer through contracts entered
into by the Charterer, calculated on a quarterly basis.
Notwithstanding the foregoing, the hire of the Vessel shall not exceed
the Net Operating Margin. The hire of the Vessel shall commence on and
from the date and hour of her first delivery to the Charterer. Subject
to Clause 9(g) and Clause 18 hereof, such hire shall continue until
the date and hour when the Vessel is redelivered by the Charterer to
the Owner at the termination of this Charter.

b) The Working Capital Account shall be a segregated bank account

maintained in the Charterer's name, and the Charterer shall not
co-mingle funds of the Charterer unrelated to this Charter in such
account. The Charterer may use the funds in the Working Capital
Account for operating expenses only to the extent receipts generated
by the Vessel are not adequate to cover such expenses. The Working
Capital Account shall initially be funded by the parties with an
estimated working capital need of $750,000. The Owner shall fund
$500,000 of such amount, and the Charterer shall fund the remaining
$250,000 of such amount, within five (5) days after the execution of
this Charter. Thereafter, from time to time during the term of this
Charter, if the balance in the Working Capital Account is equal to or
less than $250,000, the Owner shall make contributions to the Working
Capital Account within ten (10) days of written notice from the
Charterer, in an amount necessary to restore a cash balance of
$250,000 in the Working Capital Account for the operation of the
Vessel. Any balance in the Working Capital Account remaining at the
end of the term of this Charter, after all amounts properly payable
out of the Working Capital Account have been paid, shall be returned
to the Owner and the Charterer in the ratio of their respective
contributions to the Working Capital Account. The Charterer may deduct
the working capital charges for the Vessel and the amounts payable by
the Owner hereunder from the Working Capital Account.

c) Within forty-five (45) days after the end of each calendar quarter
(i.e., March 31, June 30, September 30 and December 31), the Charterer
shall provide a report outlining the calculation of the hire pursuant
to Clause 7(a) hereof and the Supplemental Hire pursuant to Clause
7(e) hereof, and the deduction of any unpaid amounts owed to the
Charterer by the Owner pursuant to this Charter, for the preceding
quarter. Payment of hire and the Owner's share of the Supplemental
Hire shall be made by the Charterer to the Owner's bank account at
Southwest Bank of Texas N.A., Houston, Texas or to such other place as
may be designated in writing by the Owner and agreed to by the
Charterer and shall be by electronic funds transfer.

Page 6

d) The Charterer shall deduct the Management Fees from the Net Operating
Revenues (or the Working Capital Account, if there are insufficient
Net Operating Revenues) during periods other than the Make Ready
Period, and from the escrow account described in Clause 2(d) hereof
during the Make Ready Period, on a monthly basis. The Management Fee
shall be equal to U.S.$2,000 per day for any period of time after the
 Make Ready Period described in Clause 2(c) hereof during which the
Vessel (i) is entitled to payment of a dayrate under a drilling or
workover contract, (ii) is being mobilized to or from a safe anchorage
in connection with such a contract, (iii) is off hire but waiting to
commence a contract that has been executed or otherwise committed to,
or (iv) is Warm Stacked (for the first thirty (30) days of such Warm
Stacked status). After the first thirty (30) days of Warm Stacked
status, and during the Make Ready Period, the Management Fee shall be
equal to U.S.$1,500 per day.

e) SUPPLEMENTAL HIRE

i) The Owner shall be entitled to additional compensation in an

amount equal to the Supplemental Hire.

ii) It is specifically understood and agreed that calculation of

Supplemental Hire amounts shall be performed on a cash and not an
accrual basis, except for accrual of self-insured retentions and
survey reserves.

iii) Supplemental Hire shall be payable to the Owner on a quarterly

basis (utilizing calendar quarters, i.e., January 1 through March
31, April 1 through June 30, July 1 through September 30, October
1 through December 31), based on such quarter's result. Should
the Supplemental Hire in any period be less than zero, no payment
of Supplemental Hire will be due.

iv) The Charterer shall provide a report pursuant to Clause 7(c)

hereof setting out the calculation of the Supplemental Hire.

v) In the event that this Charter terminates for any reason prior to
the expiration of any quarter, Supplemental Hire shall be payable
by the Charterer to the Owner based on the period from the
beginning of the then current calendar quarter up to the time of
such termination. As soon as practicable after such termination,
the Charterer shall provide a report for such period, and the
Supplemental Hire shall be payable to the Owner within ten (10)
days of delivery of such report and receipt of funds from the
Charterer's customer.

f) Should the Vessel be a Total Loss (as defined in Clause 9(f) hereof),
all hire shall cease from the date and time of such Total Loss.

g) Any amounts required to be advanced or paid by either party pursuant

to the provisions of this Charter, which are not paid on the date they
become due, shall bear interest from the due date until such amounts
are actually paid at a rate of fifteen percent (15%) per annum.

h) This charter may be terminated prior to the expiration of the Charter

period by the Owner upon thirty (30) days prior written notice to the
Charterer if the Vessel is stacked and off hire for more than forty
percent (40%) of the days in any calendar quarter (other than for
repairs for which the Owner is responsible under Clause 6(h) hereof
and except during the first calendar quarter in which the Vessel is
delivered to the Charterer);

i) Upon expiration of the term of this Charter or any termination prior

thereto for any reason whatsoever, the Charterer shall have the option
to continue employment of the Supervisory Crews on board the Vessel
for a period of six (6) months from the time of expiration or
termination of this Charter. The cost of payroll, benefits and travel
(least expensive commercial class) for the Supervisory Crews shall be
paid by the Owner to the Charterer from the time of actual expiration
or termination until the Supervisory Crews have been assigned to work
on other vessels by the Charterer. The Owner also shall pay to the
Charterer all payroll, benefits and travel for all personnel of the
Charterer engaged in the operation of the Vessel other than the
Supervisory Crews for a maximum period of one (1) month from the time
of actual expiration or termination.

j) In no event shall either party be liable to the other for any

consequential, special or indirect damages including, without
limitation, loss of business opportunity, loss of production or loss
of use of profit or loss of supplemental hire.

Page 7

8) MORTGAGE

The parties acknowledge that the Vessel is subject to a United States

Maritime Administration Security ("MARAD") Agreement and Preferred Ship
Mortgage. The Charterer agrees to subordinate its rights to the rights of
MARAD as Mortgagee. The parties also acknowledge and agree to the various
standard MARAD provisions that prevent the Vessel from working in certain
countries and have certain requirements concerning the type of insurance
which must be carried, the amounts of coverage and which require that MARAD
be named as additional insured. The Charterer agrees to comply with such
 MARAD provisions and other reasonable MARAD requirements with respect to
insurance provisions. The Owner reserves the right to negotiate changes to
the terms and provisions of the Mortgage and Security Agreement; in
particular, the parties acknowledge that MARAD requires that a certain
percentage of the insurance coverage be offered to United States insurance
companies.

9) INSURANCE AND REPAIRS

a) During the Charter period, the Vessel shall be kept insured by the
Charterer with the coverages specified in the attached Exhibit 1 and
as required by MARAD as set forth above. All such insurance related to
the operation of the Vessel shall be provided by the Charterer;
provided, however, that the cost thereof and the cost of any and all
deductibles and self-insured retentions that are not reimbursed by
underwriters shall be charged as direct Vessel operating costs
hereunder.

b) If the Charterer fails to arrange and keep any of the insurances

provided for under the provisions of this Clause 9 in the manner
described herein, the Owner shall notify the Charterer whereupon the
Charterer shall rectify the position within ten (10) days from the
date of such notice, failing which the Owner shall have the right to
place such insurances and require the Charterer to reimburse it for
any loss resulting from the lack of such insurances and/or the premium
cost incurred by Owner in placing such insurance.

c) The Charterer shall, subject to the approval of the Owner and the
underwriters, effect all insured repairs and shall undertake
settlement of all costs in connection with such repairs as well as
insured charges, expenses and liabilities (reimbursement to be secured
by the Charterer from the underwriters) to the extent of coverage
under the insurances herein provided for. Any expense of any loss or
casualty, including deductibles and self-insured retentions, not
reimbursed by underwriters pursuant to this Clause shall be charged as
direct Vessel operating costs.

d) The Charterer shall remain responsible for and shall effect repairs
and settlement of costs and expenses incurred thereby in respect of
all other repairs not covered by the insurances and/or not exceeding
any possible franchise(s) or deductibles provided for in the
insurances.

e) If the conditions of the above insurances permit additional insurance

to be placed by the parties, such cover shall be limited to the amount
for each party set out in Box 28 and Box 29, respectively. The Owner
or the Charterer, as the case may be, shall immediately furnish the
other party with particulars of any additional insurance effected by
them, including copies of any cover notes or policies and the written
consent of the insurers of any such required insurance in any case
where the consent of such insurers is necessary.

f) Should the Vessel become an actual, constructive, compromised or

agreed total loss (a "Total Loss") under the insurances required under
this Clause 9, all insurance payments for such loss shall be paid to
MARAD who shall retain the moneys payable to it according to its
interest. To the extent any of such insurance payments are not payable
to MARAD, such insurance payments shall be deposited by the insurance
carrier or MARAD, as applicable, in a separate escrow account in the
name of the Vessel at Southwest Bank of Texas, N.A., Houston, Texas.
The moneys in such escrow account shall be distributable to the Owner
and Charterer according to their respective interests, but shall not
be released by such bank except pursuant to (i) the written directions
of the Owner and Charterer acting together, or (ii) the written
directions of an arbitrator pursuant to Clause 20 hereof.

g) If the Vessel becomes a Total Loss under the insurances arranged by

the Charterer in accordance with this Clause 9, this Charter shall
terminate as of the date of such Total Loss.

h) Each party shall upon the request of the other party, promptly execute
such documents as may be reasonably required to enable such requesting
party to abandon the Vessel to insurers and claim a constructive total
loss.

i) For the purpose of insurance coverage against marine and war risks
under the provisions of this Clause 9, the value of the Vessel is the
sum indicated in Box 27.

j) In the event the Vessel is used in locations other than the United
States Gulf of Mexico, the Charterer shall provide political risk and
other insurance as required by MARAD, and to comply with all
applicable laws and regulations concerning liabilities for personal
injury to the crew or to others, to comply with local pollution laws
and to comply with such other laws and regulations which may be
applicable.

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10) REDELIVERY

a) The Charterer shall at the expiration of the Charter period redeliver

the Vessel at a safe and ice-free port as indicated in Box 16 or as
otherwise agreed. Upon the written request of the Owner, that
Charterer shall deliver the Vessel to such alternate offshore location
or port as requested by the Owner, provided that the Owner pays all
costs and expenses of such redelivery to the extent such costs and
expenses exceed the costs and expenses that the Charterer would have
incurred in redelivering the Vessel as indicated in Box 16. The
Charterer shall give the Owner not less than thirty (30) days'
preliminary and not less than fourteen (14) days' definite notice of
expected date of redelivery. Any changes thereafter in Vessel's
position shall be notified immediately to the Owner.

b) Notwithstanding anything in this Charter to the contrary, should the

Vessel be engaged in operations pursuant to a contract by which the
Charter Period may be exceeded on the expiration or termination of
this Charter, the Charter period shall automatically extend and the
Charterer shall have the use of the Vessel for such time as required
to complete such contract and for a reasonable period of time
thereafter to permit the Vessel's re-delivery pursuant to this Clause.

c) The Vessel shall be redelivered to the Owner in the same or as good

structure, state, condition and class as that in which she was
delivered, fair wear and tear excepted.

d) The Vessel upon redelivery shall have her survey cycles up to date and
class certificates valid for at least six (6) months following the
date of redelivery.

11) NON-LIEN AND INDEMNITY

a) The Charterer will not suffer, nor permit to be continued, any lien or
encumbrance incurred by it or its agents, which might have priority
over the title and interest of the Owner in the Vessel.

b) The Charterer shall indemnify and hold the Owner harmless against any
lien of whatsoever nature arising upon the Vessel during the Charter
period while she is under the control of the Charterer, and against
any claims against the Owner arising out of or in relation to the
operation of the Vessel by the Charterer. Should the Vessel be
arrested by reason of claims or liens arising out of her operation
hereunder by the Charterer, the Charterer shall at its own expense
take all reasonable steps to secure that within a reasonable time the
Vessel is released and at its own expense put up bail to secure
release of the Vessel.

c) The Owner shall indemnify and hold the Charterer harmless against any
lien of whatsoever nature arising out of its acts or omissions
relating to its ownership of the Vessel during the Charter period and
against any claims against the Vessel or the Charterer arising out of
or in relation to the ownership of the Vessel by the Owner. Should the
Vessel be arrested by reason of claims or liens arising out of the
acts or omissions of the Owner, the Owner shall at its own expense put
up bail to secure release of the Vessel. The parties, however,
acknowledge that the Vessel is and shall continue to be mortgaged to
MARAD.

12) LIEN

The Charterer shall have no lien against the Vessel.

13) SALVAGE

All salvage performed by the Vessel shall be for the joint benefit of
the Charterer and the Owner and the cost of repairing damage
occasioned thereby shall be borne by them jointly. The Vessel shall be
off hire during any salvage operations involving property other than
that owned or contracted for by the Charterer.

14) WRECK REMOVAL

In the event of the Vessel becoming a wreck or obstruction to

navigation, the Charterer shall indemnify the Owner against any sums
whatsoever which the Owner shall become liable to pay and shall pay in
consequence of the Vessel becoming a wreck or obstruction to
navigation.

15) GENERAL AVERAGE

General Average, if any, shall be adjusted and settled in Houston,

Texas according to the York-Antwerp Rules 1974 or any subsequent
modification thereof current at the time of the casualty. The Charter
Hire shall not contribute to General Average.
 Page 9

16) ASSIGNMENT AND SUB-DEMISE

The Charterer shall not assign this Charter nor sub-demise the Vessel
except to any Affiliate or subsidiary of the Charterer without the
prior written consent of the Owner, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, the Owner
acknowledges that the Charterer intends to enter into contracts with
third parties for the use of the Vessel in connection with various
well operations on behalf of such third parties, and agrees that none
of such contracts shall constitute an assignment or sub-demise of this
Charter. The Owner may assign the proceeds of this Charter to MARAD as
security pursuant to the Security Agreement between the Owner and
MARAD.

17) CHILES OFFSHORE GUARANTEE

If the Charterer assigns this Charter to any Affiliate or subsidiary

of the Charterer pursuant to Clause 16 hereof, Chiles Offshore LLC
shall guarantee such assignee's performance under this Charter,
including such assignee's obligation to pay charter hire pursuant to
this Charter.

18) REQUISITION/ACQUISITION

In the event of the Owner being deprived of its ownership interest in

the Vessel by any requisition of title or use of the Vessel by any
governmental or other competent authority (hereinafter referred to as
a "Compulsory Acquisition"), then, irrespective of the date during the
Charter period when such Compulsory Acquisition may occur, this
Charter shall be deemed terminated as of the date of such Compulsory
Acquisition. In such event, Charter hire shall be considered as earned
and to be paid up to the date and time of such Compulsory Acquisition.

19) WAR

a) Unless the consent of the Owner be first obtained, the Vessel shall
not be ordered nor continue to any place or on any voyage nor be used
on any service which will bring her within a zone which is dangerous
as the result of any actual or threatened act of war, hostilities,
warlike operations, acts of piracy or of hostility or malicious damage
against it or any other vessel or its cargo by any person, body or
State whatsoever, revolution, civil war, civil commotion or the
operation of international law (a "War Zone"), nor be exposed in any
way to any risks or penalties whatsoever consequent upon the
imposition of sanctions, nor carry any goods that may in any way
expose it to any risks of seizure, capture, penalties or any other
interference of any kind whatsoever by the belligerent or fighting
powers or parties or by any Government or Ruler. If required by MARAD
or reasonably requested by Owner, war risk insurance shall be
obtained, the premium cost thereof to be charged as a direct Vessel
operating cost.

b) The Vessel shall have liberty to comply with any orders or directions
as to departure, arrival, routes, ports of call, stoppages,
destination, delivery or in any otherwise whatsoever given by the
Government of the nation under whose flag the Vessel sails or any
other Government or any person (or body) acting or purporting to act
with the authority of such Government or by any committee or person
having under the terms of the war risks insurance on the Vessel the
right to give any such orders or directions.

c) In the event of outbreak of war (whether there be a declaration of war

or not) between any two or more of the countries as stated in Box 31,
both the Owner and the Charterer shall have the right to cancel this
Charter, whereupon the Charterer shall redeliver the Vessel to the
Owner in accordance with Clause 10 hereof, if she has cargo on board
after discharge thereof at destination, or if debarred under this
Clause from reaching or entering such redelivery port, at a near, open
and safe port as directed by the Owner, or if she has no cargo on
board, at the port at which she then is or if at sea at a near, open
and safe port as directed by the Owner. In all cases hire shall
continue to be paid in accordance with Clause 7 hereof, and except as
aforesaid all other provisions of this Charter shall apply until
redelivery.

d) In the event of the movement of the Vessel to the waters of any

country other than the waters offshore from the United States during
the term of this Charter, the Charterer shall cooperate with the Owner
in giving advance notice of such movement to MARAD and to comply with
such requirements as may be imposed by MARAD, including those
prohibiting the Vessel from going to such area or requirements for
additional insurance which may include such political risk insurance
as is reasonably available as required by MARAD. If the insurance
required by MARAD is not reasonably available, the Charterer shall not
move the Vessel to such waters.
20) LAW AND ARBITRATION

a) This Charter shall be governed by and construed in accordance with the

general maritime law of the United States of America. To the extent
United States general maritime law is not applicable, this Charter
shall be governed by and construed in accordance with the laws of the
State of Texas, but excluding any conflicts of law rules or provisions
that would direct or refer to the laws of another jurisdiction.

Page 10

b) The Owner and the Charterer agree that any and all disputes,
differences, claims, counterclaims, demands, causes of action,
controversies, questions and other matters (collectively, a "Dispute")
between the Owner and the Charterer shall be resolved by binding
arbitration, whether a Dispute sounds in contract, tort or otherwise,
at law or in equity, under state or federal law, whether provided by
statute or common law, and whether for damages or any other relief.

c) Either the Owner or the Charterer (the "Initiating Party") may

initiate a binding arbitration proceeding by providing written notice
to the other party (the "Responding Party") describing the Dispute to
be settled by binding arbitration. Such written notice shall include
the Initiating Party's suggested impartial arbitrator or a list of
impartial arbitrators from which the Responding Party may select one
arbitrator. The Responding Party shall have fifteen (15) days in which
to respond in writing to the Initiating Party either (a) accepting the
Initiating Party's suggested impartial arbitrator, or (b) specifying
the name of one of the listed impartial arbitrators that is acceptable
to the Responding Party (if such a list was provided by the Initiating
Party), or (c) suggesting an alternative impartial arbitrator or a
list of impartial arbitrators from which the Initiating Party may
select an arbitrator. If the Responding Party requests a different
arbitrator or specifies a list of arbitrators, the Initiating Party
and the Responding Party shall have seven (7) days from the Initiating
Party's receipt of such response in which to agree upon a mutually
acceptable impartial arbitrator. If the parties cannot agree on an
impartial arbitrator within such seven (7) day period, the Initiating
Party shall apply to the American Arbitration Association for it to
select an impartial arbitrator generally knowledgeable and experienced
in the subject matter of the Dispute within ten (10) days of such
written notice. The selection of the American Arbitration Association
shall be binding on the Owner and the Charterer.

d) The parties shall use their best efforts to have the arbitral
proceeding concluded and a judgment rendered by the arbitrator within
sixty (60) days of the initiation of the arbitration proceeding. All
arbitration proceedings shall be conducted in English in Houston,
Texas in accordance with the rules existing as of the date hereof of
the American Arbitration Association. The arbitrator shall decide all
issues regarding the Dispute, including the validity, construction and
interpretation of this arbitration provision and this Charter, and all
procedural aspects of the arbitration conducted pursuant to this
provision, including, without limitation, determination of the issues
that are subject to arbitration (I.E., arbitrability), the scope of
the arbitral issues, allegations of fraud, waiver, latches, delay
or other defenses of arbitrability, and the rules governing conduct of
the arbitration (including, without limitation, the time for filing
and answer, the time for filing of counterclaims, the times for
amending the pleadings, the specificity of the pleadings, the extent
and scope of discovery, the issuance of subpoenas, the times for the
designation of experts, the receipt of evidence, and the award of
attorneys' fees as provided herein and by applicable law). The parties
agree that the arbitrator shall have no authority to award and the
parties shall have no right to receive (whether through arbitration or
court proceedings) and hereby waive any and all rights to, treble,
exemplary, consequential or punitive damages of any type under any
circumstances, regardless of whether such damages may be available
under applicable law, the law of any other state, or federal law, or
under the rules of the American Arbitration Association. The decision
of such arbitrator shall be final and non-appealable, and judgment
upon any award rendered by the arbitration may be entered in any court
having jurisdiction over the party against whom the judgment is sought
to be enforced.

e) The costs (including, without limitation, reasonable fees and expenses

of counsel and experts for the parties) of such arbitration
(including, without limitation, the cost to enforce or preserve the
rights awarded in the arbitration) shall be borne by the party against
whom the arbitrator's decision is rendered. If the decision of the
arbitrator is not clearly against one of the parties or if the
decision of the arbitrator is against more than one party on any one
or more issues, each party shall pay its own costs and the cost of the
arbitrator shall be borne equally by the parties. The parties
acknowledge that it is their intent that any and all Disputes between
the Owner and the Charterer shall be resolved by binding arbitration
 in lieu of litigation between the Owner and the Charterer. The parties
agree that, if the Owner or the Charterer initiate any court
proceeding regarding any Dispute prior to arbitration (and other than
to enter a judgment upon and enforce any award rendered by arbitration
as provided herein after arbitration), the party that did not initiate
such litigation shall be entitled to recover all costs and expenses
associated with such court proceeding, including, without limitation,
reasonable fees and expenses of counsel, regardless of the ultimate
outcome of the Dispute. The arbitrator shall award such costs and
expenses to such party separately from any award of costs based on the
final decisions of the arbitrator regarding the Dispute.

21) CHARTER PERIOD AND OPTIONS

The term of this Charter shall commence upon execution and delivery of
this Charter by the parties, and shall terminate at 12:00 Midnight, on
the date eighteen (18) months after the date on which the Vessel
arrives on the first location pursuant to a contract entered into by
the Charterer for utilization of the Vessel. The term shall
automatically be extended for additional one (1) year periods, until
either party gives written notice to the other party of non-renewal
not less than ninety (90) days prior to the end of the then current
term. The term of this Charter shall be the initial term plus any
extension of this Charter pursuant to the foregoing automatic
renewals.

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22) TAXES

a) The Owner assumes full and exclusive liability and shall make its
Affiliates similarly liable, to timely file all returns and promptly
pay when due all taxes based on income or profits imposed by any
governmental entity having jurisdiction to levy such charges in
connection with the Charter's compensation to the Owner under this
Charter or otherwise in connection with the Owner's operations.

b) The Charterer assumes full and exclusive liability, and shall make its
Affiliates similarly liable, to timely file all returns and promptly
pay when due all taxes based on income or profits imposed by any
governmental entity having jurisdiction to levy such charges in
connection with the Charterer's income in connection with this Charter
or otherwise in connection with the Charterer's operations.

c) Any sales tax, lease tax, value added tax, property tax, turnover tax,
customs duties, import and export tax, and similar taxes imposed on
the Vessel or the operation thereof in connection with this Charter
that are not paid to the Charterer by its customers pursuant to their
contractual obligations, shall be paid by the Charterer and charged as
a direct Vessel operating cost.

23) REPRESENTATIONS

a) Owner represents that it will make its best efforts to obtain all
necessary approvals from the Shipyard to allow the Charterer access to
the facilities for the purpose of performing the Make Ready work.

b) The Owner represents that the Vessel has not been chartered,
contracted, or otherwise committed in any way for the use of, or to
provide services to, any person or entity other than the Charterer.

24) CONDITIONS

This Charter is subject to approval by MARAD of the form of the

Charter, the Charterer, and the provisions of the Charterer's
insurance program for use of the Vessel in the U.S. Gulf of Mexico. In
the event that these approvals are not obtained, none of the
provisions of this Charter shall be effective except for the
provisions of Clause 2 hereof with respect to the Make Ready Period.
In such event, Owner shall be responsible for reimbursing Charterer
for all expenses incurred with respect to the Make Ready period plus
any reasonable expenses related to the disposition of the crew.

Page 12

25) NOTICES

All correspondence relating to this Charter shall be sent by facsimile

and overnight courier and shall be addressed as follows:

If to the Owner to: Mr. Patricio Alvarez Morphy

Perforadora Central, S.A. de C.V.
Montes Urales No. 520
Lomas de Chapultepec
Mexico, D.F. 11000
Facsimile No.: 011-525-520-1859
 With a copy to: Mr. Neal D. Hobson
Milling Benson Woodward L.L.P.
909 Poydras Street, Suite 2300
New Orleans, LA 70112
Facsimile: (504) 569-7001

If to the Charterer to: Mr. William E. Chiles

Chiles Offshore L.L.C.
11200 Westheimer, Suite 410
Houston, Texas 77042-3227
Facsimile: (713) 339-3888

With a copy to: Mr. N.L. Stevens III

Gardere Wynne Sewell & Riggs, L.L.P.
1000 Louisiana, Suite 3400
Houston, TX 77002-5007
Facsimile: (713) 276-5807

Each party shall have the right to change its address for notice by
the giving of fifteen (15) days prior written notice thereof to the
other party hereto.

26) CURRENCY

All amounts expressed herein shall be in United States dollars.

PARTS III, IV AND V ARE INTENTIONALLY DELETED AND DO NOT APPLY

PREAMBLE - It is mutually agreed that this Contract shall be performed subject

to the conditions in this Charter which shall include PART I and PART II. In the
event of a conflict of conditions, the provisions of PART I shall prevail over
those of PART II to the extent of such conflict but no further. It is further
mutually agreed that PART III and/or PART IV and/or PART V shall only apply and
shall only form part of this Charter if expressly agreed and stated in the Boxes
35, 39 and 40. If PART III and/or PART IV and/or PART V apply, it is further
mutually agreed that in the event of a conflict of conditions, the provisions of
PART I and PART II shall prevail over those of PART III and/or PART IV and/or
PART V to the extent of such conflict but no further.

Signature (Owners)

PERFORADORA CENTRAL, S.A. DE C.V.

By: /s/ Patricio Alvarez Morphy

-------------------------------
Patricio Alvarez Morphy
President

Signature (Charterer's)

CHILES OFFSHORE LLC

By:/s/ William E. Chiles

-------------------------------
William E. Chiles
President and CEO

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