The present invention provides a new drilling tool useful in machining hydraulic port seals for fluid power ports. The drilling tool drills the port hole to size in a solid material for the minor thread diameter in combination with forming the port in a single operation. The drilling tool has a tool holder having a rotational axis, a first drilling insert having cutting surfaces on a first side and a mounting surface on a second side, at least one second drilling insert having a predetermined cutting surface portion and a mounting portion which is mounted on the holder at a location from the rotational axis of the holder. The at least one second drilling insert has first and second portions which engage and machine a work piece in a drilling operation to form a spot face and a seal form.