SHAREHOLDER LETTER “Knowledgeofwha t  ispossibleis  t he beginningofhappiness.” Sa n t aya n a ,  H i s p a n i c A m e ri ca n Ph i l o s o ph e r, 19 2 0 As i n p as t  le tt ers,  I  will  n o t d elve excl u sively i n t o o u r 2003 ex p loi t s. Ra t h er,  I h o p e yo u  will  t ake  t h e  t i m e t o rea d t h ro u g h o u r a nn u al re p or t a n d ge t all  t h e o p era t io n al  d e t ails a n d  fi n a n cial  h ig h lig h t s yo u d esire. I  believe  I  ca n  bes t h el p  o u r s h are h ol d ers a n d  o t h ers La t e i n t h e year o n e of  t h e s u bsea co n s t r u c t io n co mp a n ies we  h ave  h a d d isc u ssio n s wi t h  fro m t i m e  t o t i m e regar d i n g  t h e acq u isi t io n  of  t h eir  n o n -i n t egra t e d R O V asse t s  d eci d e d t o  p u t u p for sale  t h eir  d rill s u pp or t R O V b u si n ess a n d we were selec t e d t o n ego t ia t e a  p u rc h ase agree m e n t . W e s u bseq u e n t ly close d t h is  t ra n sac t io n i n Febr u ary of 2004 a n d sig n ifica n t ly ex p a n d e d o u r R O V o p era t io n s overall, p ar t ic u larly i n  excelle n t d ee p wa t er  m arke t s o u t si d e  t h e U .S.  G u lf of  M exico. N o t  o n ly will  t h is acq u isi t io n i mm e d ia t ely be n efi t  o u r  C u s t o m ers a n d  S h are h ol d ers, we believe i n t egra t i n g  t h e bes t p rac t ices fro m eac h co mp a n y will s t re n g t h e n  o u r lo n g- t er m  clai m  of bei n g t h e  p re m ier  p rovi d er of  u n d erwa t er i n t erve n t io n services i n t h e i n d u s t ry.  “Mana rr ivesasanovicea t  eachageofhislife.” C h a m f or t ,  F r e n c h w ri t e r, 1776  I n  o u r  M O PS seg m e n t , we i n ves t e d  $44  m illio n i n  a 50 %  i n t eres t  i n t h e  M e d u sa S p ar LL C , a co mp a n y for m e d t o ow n  a n  eq u i t y ow n ers h i p p osi t io n  i n  a s p ar (floa t i n g  p ro d u c t io n facili t y), w h ic h was i n i t ially p lace d i n service  t o  p ro d u ce  t h e  M e d u sa fiel d for M u r p h y a n d  i t s  p ar t n ers. T h is is a so p h is t ica t e d  asse t wi t h a 20+year  d esig n life, w h ic h we acq u ire d a t a p rice below  t o d ay’s re p lace m e n t cos t .  I believe s p ars will beco m e  t h e  p ro d u c t io n facili t y of c h oice for d ee p wa t er  d evelo pm e n t i n t h e  G u lf of  M exico a n d o u r ow n ers h i p p osi t io n gives  u s a n o t h er way  t o p rofi t ably  p ar t ici p a t e i n t h is  d ee p wa t er  p rovi n ce. A n d fi n ally, i n o u r A d va n ce d T ec h n ologies seg m e n t we a dd e d N a u t icos, a s p ecial t y e n gi n eeri n g co mp a n y p rovi d i n g services largely  t o  t h e  U .S.  N avy. 2003 was a n i n t eres t i n g  t ra n si t io n year for O cea n eeri n g. W e bega n t h e year believi n g t h e seco n d h alf wo u l d bri n g i n recor d p rofi t s - o n l y t o observe o u r  C u s t o m ers  n o t s p e n d i n g as  m u c h as  h ig h co mm o d i t y  p rices  h ave  n or m ally le d u s t o ex p ec t . Wh ile  n o t  a  n ew recor d ,  t h e $29.3  m illio n n e t  i n co m e was  t h e  t h ir d h ig h es t  i n  o u r  h is t ory. I n t h e m ea n t i m e, we s h ar p e n e d o u r foc u s o n lo n g- t er m va l u e crea t io n for o u r S h are h ol d ers. Ac t u ally 2003 was  t h e begi nn i n g of a  n ew  “lo n g r u n ”  t o ex p a n d t h e  p rofi t abili t y of  O cea n eeri n g. I n  1997 we i n i t ia t e d  a n  orga n ic grow t h p h ase of o u r lo n g- t er m s t ra t egic  p la n t o i n crease  t h e  v al u e of  t h e co mp a n y by  d esig n i n g a n d b u il d i n g o u r  ow n asse t s. By  t h e close of  t h is  p h ase a t year-e n d 2001, we  h a d  alrea d y beg u n p la nn i n g  t o i n i t ia t e  t h e n ex t p h ase by  t aki n g a  h ar d er look a t beco m i n g  a n acq u irer  of b u si n esses. “ T he  r ewa r dofa  t hingwelldoneis  t oh a vedonei t .” E m e r s o n ,  A m e ri c a n P o e t , 1 8 44 Early i n  2003 we close d t h e  p u rc h ase of O I S.  T h is acq u isi t io n crea t e d a  fif t h oilfiel d re p or t i n g  seg m e n t ,  I n s p ec t io n . D u ri n g  t h e year  t h e I n s p ec t io n seg m e n t m a d e al m os t $17  m illio n of  g ross  p rofi t o n n early $137  m illio n of sales -  m ore t h a n t h ree t i m es o u r 2002 i n s p ec t io n b u si n ess.  W e ex p ec t a dd i t io n al i n s p ec t io n p rofi t s as we  a dd n ew  t ec h n ologies  t o  t h is seg m e n t  i n  2004 a n d  beyo n d . D u ri n g  t h e co u rse of  t h e year we als o acq u ire d Refla n ge, a  H o u s t o n s p ecial t y  m a n u f ac t u rer of  s u bsea co mp o n e n t s, a n d Ro t a t or, a  N orwegia n s p ecial t y  m a n u fac t u rer of s u bsea valves, t o a dd t o o u r s u bsea  p ro d u c t s seg m e n t .  T h ese a c q u isi t io n s, co u p le d  wi t h t h e  p la nn e d  q u a d r u p li n g i n  size of o u r worl d wi d e s t eel  t u be  u m bilical ca p aci t y a n d reloca t i n g o u r  H o u s t o n facili t ies  t o Pa n a m a  C i t y, Flori d a,  p osi t io n t h e s u bsea  p ro d u c t s gro u p for recor d p rofi t s i n  2004 a n d  beyo n d . 2003AnnualRepo r t P a ge 2 O ceanee r ing  I n t e r na t ional  “ H ewhowouldleaphighmus tt akea  l o ng  r un…” D a n i s h P ro ve rb