unconventional gas in the market. Prolonged increases in the worldwide supply of natural gas, whether  from conventional or unconventional sources, will exert downward pressure on natural gas prices. A  prolonged downturn in natural gas pricing would likely have a negative impact on development plans of  exploration and production companies, which in turn, may result in a decrease in demand for offshore  support vessel services. This consequence could be particularly acute in the company’s U.S. operating  segment, which is more oriented towards natural gas than crude oil production, and therefore more sensitive  to the changes in the market pricing for natural gas than to changes in the market pricing of crude oil. Uncertainty about future global economic market conditions makes it challenging for the company to  forecast operating results and to make decisions about future investments. The success of the company's  business is both directly and indirectly dependent upon conditions in the global financial and commercial  markets that are outside its control and difficult to predict. Uncertain economic conditions may lead our  customers to postpone spending in response to tighter credit and reductions in income or asset values,  which may lead many financial lenders and institutional investors to reduce, and in some cases, cease to  provide funding to borrowers, which, in turn, will adversely affect the liquidity and financial condition of our  customers. These factors may also adversely affect the company’s liquidity and financial condition. Factors  such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws (including  laws relating to taxation), trade barriers, commodity prices, currency exchange rates and controls, and  national and international political circumstances (including wars, terrorist acts or security operations) can  have a material negative impact on the company's business and operations, which in turn would reduce its  revenues and profitability.  Prolonged material economic downturn in crude oil and natural gas prices can negatively impact the  development plans of exploration and production companies. In addition, a prolonged recession may result  in a decrease in demand for offshore support vessel services and a reduction in charter rates and/or  utilization rates, which would have a material adverse effect on the company’s results of operations, cash  flows and financial condition. Prior to mid-2008, oil and gas companies had increased their respective  exploration and development activities in response to a very favorable pricing environment for oil and gas  that existed at that time. Worldwide demand for oil and gas dropped precipitously and energy prices sharply  declined during the last half of calendar 2008 as a result of a global economic recession. Over one year  later, there are signs that economic improvement is underway; however, the pace of recovery and demand  for energy and, in turn, offshore supply vessel services has been slow.  The company operates in a highly competitive industry, which could depress vessel charter rates and  utilization and adversely affect the company’s financial performance. We compete for business with our  competitors on the basis of price; reputation for quality service; quality, suitability and technical capabilities  of vessels; availability of vessels; safety and efficiency; and cost of mobilizing vessels from one market to  another. In addition, competition in international markets may be adversely affected by regulations requiring,  among other things, the awarding of contracts to local contractors, the employment of local citizens and/or  the purchase of supplies from local vendors that favor or require local ownership. In general, declines in the  level of offshore drilling and development activity by the energy industry negatively affect the demand for the  company’s vessels and result in downward pressure on day rates. Extended periods of low vessel demand  and/or low day rates reduce the company’s revenues. Over the past decade, construction of offshore vessels of the types the company operates has increased  significantly. Excess offshore supply vessel capacity likewise exerts downward pressure on charter rates.  Excess capacity can occur when newly constructed vessels enter the market and when vessels are  mobilized between market areas. While the company is committed to the construction of additional vessels,  it has also sold and/or scrapped a significant number of vessels over the last several years. A discussion  about the aging of the company’s fleet, which has necessitated the company’s new vessel construction  programs, appears in the “Vessel Count, Dispositions, Acquisitions and Construction Programs” section of  Item 7 in this report. Also, please read “Potential Overcapacity in the Offshore Marine Industry” risk below  for further information that can exert downward pricing pressures on charter rates.  Potential Overcapacity in the Offshore Marine Industry  The Offshore Marine Service Industry is Highly Competitive  Difficult Economic Market Conditions  -17- 