Jack Jurkoshek – Director, IR Jay Collins – President & CEO Marvin Migura – SVP & CFO Bob Mingoia – VP & Treasurer

Jim Crandell – Barclays Kevin Pollard – J.P. Morgan Chris Lasine [ph] – Simmons & Co. Joe Gibney – Capital One Victor Marchon – RBC Capital Joe Agular – Johnson Rice

Good morning, my name is Abigail and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. (Operator instructions) Thank you. Mr. Jurkoshek, you may begin your conference.

Thank you. Good morning everybody. We would like to thank you for joining in on our fourth quarter call. As usual, a webcast to this event is being made available through the StreetEvents Network Service by Thomson Reuters. Joining me this morning is Jay Collins, our President and Chief Executive Officer, who will lead the call; Marvin Migura, our Chief Financial Officer; and Bob Mingoia, our Treasurer. Just as a reminder, before we start, remarks we make during the course of the call regarding our business strategy, plans for future operations and industry conditions are forward-looking statements, made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. And I'm now going turn the call over to Jay.

Good morning and thanks for joining the call. It is a pleasure to be here with you today. We achieved record earnings for the fifth consecutive year in 2008, up more than 10% over last year’s results. This was attributable to best ever performances by our ROV, Subsea Products, and Inspection business segments. Compared to 2007, ROV operating income growth was accomplished by expanding our fleet, and increasing average revenue per day on hire for our services. Subsea Products profits grew on the strength of increased ROV tooling sales and higher throughput at our umbilical plants. Inspection results rose as we secured additional work associated with offshore production platforms, LNG, and petrochemical facilities and pipelines of higher margins. We succeeded in improving inspection profits in each of the major geographic markets we serve. As of the impairment charge we recorded on our investment in the Ocean Pensador, we finished the year stronger than we had anticipated at the time of our last call, largely due to better fourth quarter performance by our Subsea Projects business. As you are aware, we are facing a deteriorating macroeconomic environment that threatens a prolonged worldwide recession, oil prices not seen since 2004, and an exceptionally tight credit market. These conditions are having a negative impact on oil and gas exploration and development spending plans, and consequently, our earnings prospects for 2009. Our current EPS guidance range for 2009 is $3 to $3.60. This reflects our assessment of first, reduced market demand for many of our services and products, with the notable exception of requirements for our ROVs, pricing pressure that we expect to face during the year, and for our inspection business, an unfavorable currency impact of the stronger US dollar relative to the British pound. Despite these headwinds, Oceaneering is positioned to prosper…

Good morning, everyone. Thank you, Jay. Unallocated expenses were basically flat with 2007, as an increase in information technology related costs to support the company's growth was offset by lower incentive compensation plan expenses and corporate overhead. Moving on to cash flow, we add depreciation and the impairment charge back to our net income. We generated a record $314 million in cash flow for the year, $40 million or 15% more than we did in 2007. If you add depreciation and the impairment charge back to our operating income, you have $433 million, which is up 13% over 2007 results. Any way you want to measure our 2008 record cash generation, you will find a meaningful increase over last year's results. During 2008, we continued to find organic growth and acquisition opportunities. Our capital expenditures totaled $252 million and included ROV fleet growth and upgrades, the acquisition of GTO Subsea AS, a Norwegian rental provider of specialized subsea dredging and excavation equipment, and expansion of our subsea products manufacturing capabilities. Nearly 90% of our CapEx was spent on our ROV and Subsea Products businesses. These investments demonstrate our focus on providing services and products to support deepwater and subsea completion activities and position Oceaneering for increased earnings in the years ahead. Our balance sheet remains in excellent condition. At year-end, we had total debt of $229 million and equity of $968 million. Our debt-to-cap percentage was 19%. Now I'm turning the call back over to Jay. Thank you.

Thank you, Marvin. In summary, we believe our record annual 2008 earnings performance and cash generation were significant. We achieved increased profit contributions from three of our oil fields business operations and set records in each of them. Our focus on providing service and products for deepwater and subsea completions positions us to participate in a major sector of growth trend in oil fields service and products industry. As I stated earlier, for 2009, we are forecasting EPS in the range of $3 to $3.60 on an estimated average of 55.2 million shares outstanding. Compared to 2008, our forecast assumptions are that we will achieve profit growth from our ROV business with similar profit contribution from Subsea Products and declines in operating income from our Subsea Projects, Inspection and MOPs operations. Further delays in offshore development projects would of course dampen our expectation for Subsea Products profit in 2009. We anticipate flat to down margin percentages from all of our business segments. Our ROV business earned 47% of our total operating income in 2008 and we expect it contribute even a larger percentage in 2009. The annual 2009 versus 2008 budget segment changes we envision are as follows. ROV operating income will grow primarily due to increased drill support activity on new floating rigs as they are put into service. We expect to add between 24 and 30 vehicles to our fleet in 2009. These are anticipated to be added fairly evenly during the year, placed on their projected timing of new rig deliveries. We have already secured contract commitments for 22 of our anticipated 2009 ROV additions. This reflects the growing market demand for ROV services and our status as the premier supplier. We currently expect to put 18 of our 2009 vehicles additions into drill support service. We…

(Operator instructions) your first question comes from Jim Crandell with Barclays. Your line is open. Jim Crandell – Barclays: Hey, thank you. Good morning. Jay, I sense you have altered your views on the market, not just over the last quarter, but over the last month. Have you become more cautious on the earnings outlook for all five of your business segments over the past month, and I guess how would you characterize your thinking on how your view has changed toward the likely profit outlook for your businesses recently?

I don't know necessarily over the last month, Jim but it does seem like almost in the last every month the oil prices continue to slide lower that the outlook gets a little bit worse. We are now seeing I guess a few mid water floater or two that doesn't have a job, which we didn't see a month or so ago. So I wouldn't say it is drastically different, but it just seems to me that there hasn't been really any good news in the last 90 days and it just continues to slide a little bit south all the time, although not drastically different than what we have been thinking.

I think yes we are a little bit more cautious because, as Jay said, we really haven't seen any good news, Jim, it just seems like it has all been – and we do read what the analysts write and it seems to be very cautionary. So I think it is prudent.

It is amazing that three or four months ago, we thought our outlook was a reasonable basis to make a forecast and clearly that has changed dramatically since then. Jim Crandell – Barclays: Reading what the analysts write, that is why you are probably confused on the –.

Let me share with you a story, Jim, when we asked one of our operating guys what scares him the most, his answer has been talking to you guys because we don't see it in the operating markets that are existing today what you are wondering and worrying about. So–

You guys are scaring us too.

Yes, but we are a little about more cautious. Jim Crandell – Barclays: Okay, I just had a couple of specific questions. On the ROV side, it appears you are seeing more of tools and service and the implication is lower utilization and lower average pricing, at least in the quarter. Is there any sort of reading into this, and I asked the question because you did allude to possible pricing pressure in the ROV market, Jay.

I think that pricing difference really relates to currency issues. You know, we have a big operation in Norway and a smaller operation in (inaudible) and that currency change has resulted in lower prices in those sectors. We – it is not the result of any lowering prices in 2008.

And I think there has been a slight change in mix to where we have had more increased drilling days in the fourth quarter as relative to – I mean, our mix right now is 69-31. We had slightly more construction work and that always reduces the day rate. I mean, as you noted also, the operating income margin was unusually high because of good cost control as they indicated. Jim Crandell – Barclays: Okay, but on a go-forward basis would you expect pressure on ROV rates from rigs sitting idle in a more competitive situation?

Well, one of the things on the rigs going idle that the rigs – with regard to pricing in general, we do have customers asking for discounts, we do have – we are asking for increases in many cases, the personnel prices have gone up and some of these new rigs, new equipment is going out and in some cases higher prices than older equipment were. So it is a complete mix. We are in discussions with clients about their requests for rate reductions and in some cases, we are asking for rate increases. So there is full discussions going on, but we really don't foresee oversupplied ROV market in the near future. Jim Crandell – Barclays: My last question, Jay, and then I will – ask these questions together about the subsea products and if you could address them. There is – could you discuss whether you think there is any change in the way the umbilical business is done. To what extent are you seeing the bundling of umbilicals with trees, what this means for Oceaneering, and can you also comment on whether you think you have your share of the market in 2008 and what the magnitude of the price competition is to win some of the umbilical jobs that are out there.

Yes, Jim. With regard to bundling, I don't think that has changed. We always are up against some competitors that do bundle and so I think that has not changed, that is part of the market that we face all the time. With regard to market share, the Quest information shows that we increased our market share from 20%, these are awards made during the year from 20% in 2007 to 31% in 2008. So I think we did gain some on that basis. And with regard to pricing pressure, there certainly is some, the umbilical market is very competitive right now and so you are quite accurate. That is true. Jim Crandell – Barclays: And can you give us some sense, Jay, is the magnitude of the pricing pressure on some of the bigger jobs in terms of a range in percentages on what you’re having to discount to win the job?

No, I really would rather not comment on that, Jim. Sorry. Jim Crandell – Barclays: Okay, thank you very much.

Your next question comes from Kevin Pollard with J.P. Morgan. Your line is open. Kevin Pollard – J.P. Morgan: Thanks, good morning. I wanted to ask you a little bit more about the product side of the business. Your guidance is for flat operating income, but it sounds like you are kind of expecting the revenue to actually decline and the cost cutting to offset that. Is that a fair interpretation of your comments?

Well, that is true. We are saying we are trying to achieve flat results. Clearly if revenue goes down, then margins need to come up a little bit. If we can keep revenue up, then we can make it with flat margins. So some combination of revenue and margins what our expectation is for flat results. So we are doing a lot of things to reduce costs and increase efficiency, which should lead to higher margins, which should protect us against some revenue declines, but we are working both sides of it. But somewhere in there, I guess our expectation is for at least flat results. Kevin Pollard – J.P. Morgan: Your guidance range is pretty wide, which I think is understandable given the current environment. Would you say that the big swing factor in that wide range in your guidance comes from the most part from that product side of the business and how that unfolds as the year progresses?

I think that certainly is an area that has the most swing possibility. And I guess also our Gulf of Mexico project business certainly has the possibility of wider swings as well. Marvin would know what pricing might turn out to be in that industry.

Given the lack of visibility, Kevin, into the second half, I think – I just want to underscore exactly what Jay said. Because of the size of products, we had that sentence in there that further delays would dampen our expectation and that causes us to be prudent and give a lighter range. And I think the other is exactly as Jay said, Gulf of Mexico project work in the second half. Kevin Pollard – J.P. Morgan: :

Only minor adjustments as each one of those business segments is different, but in some cases we have not good backlogs and we're trying to make sure that each business just (inaudible) to the business that we actually do have. So we have not seen the need for significant changes in that, although we have done some smaller changes. Kevin Pollard – J.P. Morgan: And Marvin, just give me that CapEx figure for 2009 again. I'm sorry I missed that.

$175 million. Kevin Pollard – J.P. Morgan: Thanks a lot, guys.

Your next question comes from Chris Lasine [ph] with Simmons & Co. Your line is open. Chris Lasine – Simmons & Co.: Thanks, good morning, guys. First question is, where do we stand today in terms of Gulf of Mexico Hurricane repair work, in terms of how much is left do you think and how much opportunity is still there today for the first six months of this year?

I would say we are involved in some of that repair work in the first quarter, but then we see it trailing off throughout the rest of the year. But then some of it is longer term. It will take in through the summer and so forth to work on some of that work. So I would say, first quarter trailing off into the second quarter, we should get the most of it done. There is still (inaudible) of work to be done from previous hurricanes in prior years though. Some of these things are short term but there are some longer-term projects. Chris Lasine – Simmons & Co.: Okay, and then switching to ROVs. Do you anticipate, given with what AMP companies are doing budget wise, do you anticipate a greater shift towards drilling from here or maintenance and construction at this point?

You know, it looks like our growth is now more predicted to be on the drilling side as we see these new rigs coming out and so far I don't see the number of bulk jobs increasing quite in proportion to the number of rigs for 2009 and early 2010. On the other hand, the vessels are all harder to predict and that tends to be shorter term as well. So sometimes vessel jobs show up without much warning, whereas rig job you can see two or three years in advance. But I would say, as you saw this quarter, the mix moved toward drilling and I would expect that to probably go a little bit further over the next couple of quarters.

And I think as Jay said, Chris, in the opening remarks that we secured 22 contract commitments for our 2009 anticipated ROV additions and those are expected to be in drill support service. So they are actually where we see it right now, but as Jay said, vessels are a little harder to forecast. Chris Lasine – Simmons & Co.: Okay, that is helpful. One final, if I may. Have you begun to think about 2010 in your preparations for unit additions on the ROV side?

Sure. We are looking out at least two years on the ROV build program and we are trying to win those jobs and plan for those – that utilization trying to look to what is going to roll off of other jobs, but – so we are doing that essentially on a monthly basis looking two years ahead. We are quite involved in that. Chris Lasine – Simmons & Co.: Okay, thank you very much.

Your next question comes from Joe Gibney with Capital One. Your line is open. Joe Gibney – Capital One: Thanks, good morning everybody. Just wanted to circle on a little bit on the products side, I was curious would you give us an update on where we stand in some of the BOP control systems and what development costs run through there at those systems, and shift to kind of what the status is there?

You know, our first two systems are on rigs, the rigs haven't quite got to work yet. So that is the status on the first two jobs. We are working on two other jobs that will both be delivered this year. I think we're pretty much through the – we are through with the development costs that really hurt us last year and moving towards a product that is designed and we are looking for other jobs that we can sell. Now we have developed what we think is a really great product. It cost us more money to develop, took us longer, but we think it is a great product and we are on the market trying to sell it right now. Joe Gibney – Capital One: Okay, and just a little clarity on the first quarter guidance, on the MOP side and in particular, when does the Producer roll off or has it rolled off, I think you had previously characterized this as roughly $10 million year over year change in MOPs on the operating income side and with this Producer rolling in, is that still a fairly accurate way to look at it?

Yes, that is correct. We are confident that will work through March, which is not very long from now of course, but could continue to work a few more months after that. Once it just finishes that job, there will be some fail on that for (inaudible) and field clean up, but then it will be stacked I believe and while we are looking for some other jobs, I wouldn’t think that it would work in 2009, it would be 2010 before it can go back to work, if we find another job for it. Joe Gibney – Capital One: Okay, that is helpful. And Marvin this one is for you just relative to some of the debt maturities this year, how should we be thinking about those roughly $105 million that you got scheduled to mature this year in terms of the timing of the payback more front half weighted or tail half expectation there?

It is all due, Joe, in September. We have the ability to prepay the $85 million under the 364 day facility and it is got a little higher for interest rate associated with it, a little higher spread over LIBOR, it is LIBOR based, short term, so it is pretty low interest rates right now. But that is what we will be doing with our cash and sure enough our balance sheet, reducing our leverage and waiting to see how the year unfolds. But the maturities come in September in the third quarter, and as Jay said right now, we have got $105 million coming up in maturities, we have got $196 million available, and we should have $300 million of cash. So if you take the $500 million, if you add the $196 million plus the $300 million, and you subtract from it $175 million CapEx and $105 million from debt maturities, you see that we just do not have a liquidity issue.

That revolver is due in 2012, and there is a good likelihood that the banks will be willing to extend the 364 day facility but we really just don't see the need for it right now. Joe Gibney – Capital One: Appreciate it, guys. I will turn it back.

Your next question comes from Victor Marchon with RBC Capital. Your line is open. Victor Marchon – RBC Capital: Thank you. Good morning. First question I had, I apologize as I missed this. You guys had said how many of your 2009 ROV adds already have contracts. What was that number?

We said 22 have commitments and we expect to add some more between 24 and 30 during the year and of the 22, 18 are going on drilling rigs, in drill support. Victor Marchon – RBC Capital: Thank you for that. Secondly, I was just on projects. I just wanted to see – because you guys can talk potentially additional international opportunities, known that you have the performer in West Africa and your comments regarding the market this year in the Gulf of Mexico. I wanted to see if there are opportunities to move additional assets out of the Gulf if there were any opportunities.

I would say at the moment we're planning to keep the fleet we have in the Gulf for the rest of the year. We do look around for other opportunities, but I am not anticipating that we will move any of our equipment out of the Gulf this year and while we say we think there is more competition and it will become more competitive in the Gulf, we think we will achieve you reasonable utilization this year and have another good year, although not as good as last year. So – we like the Gulf of Mexico market for our services. Victor Marchon – RBC Capital: And the last one, just Marvin on the CapEx question, how much of that is maintenance versus growth, do you guys put that out?

Yes, we do. Notionally we expect to spend, in the $175 million, we would expect to spend $30 million of maintenance CapEx. And that really depends. I mean maintenance CapEx really depends a lot upon the market and the utilization of our assets. So in a good market, we will spend $30 million or so and in a tighter market, we will be able to reduce that amount, because if you got equipment that is being stacked, you don't spend a lot of money maintaining it unless you have an opportunity to put it back to work. Victor Marchon – RBC Capital: Great. That's all I had. Thank you, guys.

The next question comes from Joe Agular with Johnson Rice. Your line is open. Joe Agular – Johnson Rice: Thank you, good morning. I want to ask you a question on your guidance for 2009 of $3 to $3.60 and specifically, the comment that you all make on the Subsea Products and the potential development delays. Is that what would – if there are delays would push it more towards $3 or I guess what I'm trying to get, is some of your thinking of which top and bottom end of that range?

Well, I think as we have said, if we get more delays in projects particularly I guess in the (inaudible) smaller independent push it smaller jobs and those umbilicals don't get ordered, that could certainly reduce our outlook. General delays of Gulf of Mexico type projects where we sell OIE, we rent and sell products and services for deepwater Gulf of Mexico. Those things can get more delay than we see at the moment. So I think that creates some of the downside and as we mentioned earlier, the second half of the year, Gulf of Mexico project market, we don't really – that is not the business that has long term backlogs. So a few months ahead is about as far as we usually can see and so if that market were to slow down more than we forecast to be more competitive. So that is the kind of thing that could happen; we're chasing some big orders in multiflex. If those big orders were to be delayed, that could have an impact on us as well. Joe Agular – Johnson Rice: Okay, but those are the things that would push you towards that $3 number?

What we said, is that ROVs are going to be up. Inspection is going to be down primarily because of currency. MOPs is going to be down because of the Ocean Producer contracts going away. But all that is sort of small compared to the variability of products and in the second half of projects. Joe Agular – Johnson Rice: Right I wanted to make sure I was not misreading something there that could change the $3 to $3.60 range, but what you are saying is that that sort of the low-end down the –

That is what moves us along that range and that is why the range is a little bit larger but I mean if you look at the midpoint, which a lot of you have the tendency to do, then it really is 10% up or down. Joe Agular – Johnson Rice: Correct, okay. Another question, may be a little bit minor I guess but in the ROV side, do you have any number of ROVs going into production facilities this year?

Like on a spar? Joe Agular – Johnson Rice: Don't you sometimes get contracts?

I think I can think of one that we have gone on to a spar, it could be another one also but absolutely, we do that and yes, at least one I can think of, yes. Joe Agular – Johnson Rice: Okay, that's it for me. Thank you very much.

There are no further questions in the queue at this time.

Thank you very much. We appreciate everyone's participation.

This concludes your conference call for today. You may now disconnect.