Good morning. My name is Marlene and I will be your conference operator today. At this time I would like to welcome everyone to the First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions). Thank you. Mr. Jurkoshek, you may begin your conference.

Good morning everybody. I would like you thank you for joining us on our 2009, first quarter earnings conference call. As usual the webcast of 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 be leading 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 earnings guidance, 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.

Thank you, Jack. Good morning and thanks for joining the call. It is a pleasure to be here with you today. A record first quarter EPS of $0.80 were above guidance range we gave last quarter and better than last year's first quarter result. This is attributed to our business focus on deepwater and Subsea completion activity and our expertise in underwater platform and pipeline repair. This performance was particularly gratifying, given the sharp downturn in market demand many companies in the oil field service industry are experiencing. We raised the bottom of our previous 2009 EPS guidance range by $0.10 to account for our excellent performance in the first quarter, resulting in the range of $3.10 to $3.60. Much uncertainty remains in predicting the rate of Subsea field development order flow for the balance of this year. This includes demand for ROV construction support services, the timing of Subsea hardware orders and requirements for our deepwater vessel exploration services. Given our first quarter performance and outlook for the rest of the year, we're now anticipating that our EPS in 2009 will not follow our historical quarterly pattern. Instead of our Q1 being in the 17 to 21% range as it has been for several years, we expect it will be in the range of 22 to 26% of our 2009 results. As is customary in determining our earnings guidance, we consider many factors including the reduced market demand for many of our services and products with a notable exceptional now, as the requirements for ROVs and pricing pressure we're experiencing from our customers and competitors. Despite these headwinds, Oceaneering is positioned to prosper in 2009. Although not immune to the slowdown of industry activity, we believe the deepwater markets we serve will be among the least vulnerable to our…

Marlene, we're ready for the Q&A now.

(Operator Instructions). Your first question comes from the line of Eric Hoffman (ph). Your line is open.

Hey, guys. Great quarter.

Thank you. Good morning.

Morning. Couple of quick questions for you on Subsea Products. First, I was hoping that you could give us a just a rough breakdown of order intake in 1Q in products between Multiflex and ROV.

No, I'm sorry we just don't give that breakdown. As you can see, our backlog was down about 5% over in total. So I think we'll just leave it at that.

Okay. That's fair. So we're also hearing that their -- a lot of about these upcoming Petrobras tenders for Subsea trees and manifolds, I guess some time in May, can you talk about the potential near term umbilical orders may be associated with these tenders and then more generally about the opportunity for Subsea products in Brazil?

We see Brazil as an excellent market going forward, probably the fastest growing place in the next five years. And we think the demand from umbilicals there will be very strong. We're working with Petrobras on potential orders and we have plant that's in Brazil, basically designed to work for Petrobras. So they are our primary customer and we think they will have significant demand later in this year and for the next several years.

Okay. Thanks so much.

Your next question comes from the line of Chris Lasine (ph). Your line is open.

Thanks. Good morning.

Good morning, Chris.

First question is, I was wondering if you could give us a little color on looking at product backlog and order intake. Do you have a general figure as to what you expect in yearly order flow?

No, I am sorry we really don't keep up with that number. We did sort of keep up with backlog, but we don't really project order flow as such. I think, we did say that we anticipate backlog improving throughout the year but I don't have a number for you.

Okay. And along with similar lines, revenue out of backlog, how do you expect that, I guess to progress over the year or just for the year in general?

We only do that analysis which you are talking about Chris, once a year.

Yeah.

And we don't do it at year end and I have to go back and double check but I think the number was 90%

90%. That year-end backlog was expected to be booked in 2009.

Okay. And then switching to ROVs, was the sequential decline in implied day rate, was that a factor primarily of foreign exchange?

And job mix.

And job mix? And would you expect that as you see some of these new units come on over the course of the year? Will they -- are they coming on higher pricing then what we are seeing now?

I don't think we really want to go and poke. We've said all the year that our outlook for the ROV business for the year is predicated on increase in days on hire.

We really don't comment on specific contracts, whether they are for new build rigs or for existing work?

I would say it certainly is generally true that the newer contracts have fairly newer bigger hire spect equipment, which would have higher day rates. And then also just make the point about, we do get higher revenue per day on construction jobs, which were down in the first quarter, compared to maybe the second or third. And so that does affect the mix. Hope that answers your question.

Yeah, thank you very much.

Your next question comes from line of Neal Dingmann. Your line is open.

Good morning guys.

Good morning Neal.

Say, Jack I was wondering on the guidance that's out there, I mean is most of that just already in reined (ph) as far as backlog and sort of contracts that you have already seen or just sort to getting the sense of -- you have given pretty good colors as far as what you expect on the ROVs products, projects et cetera, just wonder how much sort of assumptions you based on that if that's possible?

Well I can't really give you it's sort of risk adjusted really, what you are looking for, Neal and I would say that a lot of our work is booked and build as we go along, a lot of service work is a call-out basis. By no means is anything given. We got a lot of jobs to do during -- for the remaining part of the quarter and so I would say it's not anymore than our normal risk, but I certainly wouldn't tell you that, hey the second quarters in the bag. So I think we have a lot of work to book and execute. So we are not just stamping those widgets. We have lots of interesting things happening and a lot of jobs to book and bill for the remaining quarter. But this is the normal way that we operate.

Got it and then a follow-up on the projects. What did you say or have you said as far as drydock going forward for the remainder of the year. Have you already announced your work. What does that look like on the...

We only have the one drydock this year. There is nothing else, no other drydocks happening in this year.

Okay. Perfect, thanks guy's great quarter.

You bet.

Your next question comes from the line of Steven Gengaro. Your line is open.

Thanks. Good morning gentlemen.

Morning Steven.

A couple of quick things. The first, when you're -- talking about Petrobras and the umbilical side, do they on the umbilical side, do they have the same constraints and local content as they do with Subsea trees, I think they do, is that correct?

I'm pretty sure that the tree market, Petrobras, there are several umbilical manufactures in Brazil and they provide backlog. There's large majority of umbilicals that are sold to Petrobras, but not all of them. So Petrobras has the ability to buy outside the country whenever they want.

Okay, that's helpful. And then, I think you mentioned in your prepared remarks that you have won contracts on 15 of 25 rigs, which have been less (ph) so far, is that right?

On the remaining new billed rigs that have not yet been delivered.

On the remaining 22 rigs that haven't been delivered this year, we've contracts on 16 of those rigs and we'll provide 17 vehicles on those 16 rigs. That's correct.

Okay. And then on the contracts, you said, I think you said you have 22 contracts on your lease. Is that for the full year or is that of the 18 to 24 that are going to work through the next three quarters?

Ask that again? Steve, I'm sorry.

You had said that you had 24 to 30 ROVs that are being delivered this year into your fleet. 18 to 24 over the next three quarters, but then you mentioned you have 22 contracts, is that for the next nine months or is that a full year '09 number?

That's on the next nine months.

Oh great. Okay, I just wanted to clarify.

And Steven, you were correct that we did say and it is true that the 25 rigs that out of the 91 that have ROV contracts left, we won 15 of those to provide 16 ROV.

Great, okay. And actually my question was going to be around that point and that is, is the trend negative, I mean it sounded like you were way ahead of the game and then that number seems to be more reasonably down from your traditional market share. I think we're getting more competitive on prices, or shall I read anything into that or just ahead of sort of normal reaction of market share?

I think the key thing to know is that four of these jobs were in Brazil, where we have traditionally had about a third of the market share. And we won about half of jobs in Brazil for new rigs as opposed to the high percent that we had in the rest of the world. So our cumulative, I gave you the other number on cumulative total of all the new builds since we started in 2007, we've won 30 out of 40 or 75%. And in Brazil, we won half of the work in Brazil.

Good, that helps clarify. Thank you.

I will just add to that and we've won 80% of the rest.

I think Steven that is exactly correct, it is part of pricing pressure and it is normalization of market share. When you start out batting a thousand you really don't expect to end the season that way, right.

Right, and that makes sense, I was just wanted to understand.

And particularly in Brazil, price matters most.

Very good. Now that does help. Thank you.

Good.

Your next question comes from the line of Joe Gibney. Your line is open.

Good morning everybody.

Good morning Joe.

Morning.

I just wanted to follow-up a little bit on the lack of seasonality, your comments their about the little bit of shift from your typical seasonality in particular on the project side, I think you intimated that it will be down a little bit in the second quarter. Usually see a little bit of the seasonal uptick in terms of utilization in the Gulf. Just curious what is the shift, I guess this year versus your typical seasonal pattern, that has changed?

I think the main thing is just extraordinarily good first quarter, we did have hurricane carry over work and we had almost 80% vessel utilization in the project business, which is a very high number for the first quarter. So I would say we, we just had extraordinarily good first quarter and some of that related of course to the carry over hurricane work.

Okay.

And in respect to ROVs, we don't count on having always lower than anticipated daily operating cost. So, we think the exceptional performance by, the exceptional execution by the ROV group, additional hurricane work and high utilization of our Gulf of Mexico vessels as well as I mean we just had a very quiet and very good quarter and we don't expect to be able to maintain that consistently. It was above the average performance in Q1.

Okay. That's fair, I appreciate. Anything new on the MOP side relative to the roll off well, and what was the timing specifically of that, and any incremental outlook for what they are in the back half of the year?

No, nothing to comment there, we are clearly coming to the end of that contract.

Okay.

And nothing to report about future work.

Okay.

It's highly unlikely that it would roll over from one contract that has been on for seven years and go to another contract without serious retrofit.

Sure, understood. Last one, Marvin for you, just thinking about the remaining debt pay down here. You said you prepaid 25 million in the quarter? Well, how should we think about, I guess the incremental debt pay down to your 105 (ph) million scheduled to mature this year and rateably through out the year, does that create the pressure?

It really is, yeah we expect with our cash flows to be able to pay that down. We are not going to wait till September and hold cash until that debt is due. We didn't see any increase in our cash balances from 12/31, but I mean I expect we are going to play a conservative and look at over cash flow forecast and pay down debt when we think that makes the most sense, hold cash when see the liquidity issues. I mean like bills coming up. So we think that our debt is going to rateably go down during the year.

Okay. Thanks guys, I appreciate it.

Your next question comes from line Brad Handler. Your line is open.

Thanks. Good morning.

Morning Brad.

Could you guys just speak please more to, I guess the Gulf of Mexico and the hurricane recovery. What's -- the Q1 may have -- it sounds like Q1 may have been a little bit stronger than you thought it would be three months ago or four months ago. What -- tell us a little bit about what's happening now in the field?

I would say we have competing forces, on the one hand we have more vessels competing and it is a highly competitive market. But we do have hurricane repair work and salvage work that is still left over from the last hurricanes. I think that will continue throughout this year and into 2010. So we have a tail of the hurricane work, but we also have a generally increasingly very competitive market.

And that's helpful. So it does sound like may be there is, ultimately there is more work on the repair side then you were thinking a while ago with that, is that fair?

I think that's probably we ought to be we certainly were busier than we thought, it's kind of hard to judge. You see how much, you know that lot of platforms get damaged, but it's not quite sure when it will play out and when we'll do it and how concentrated it will be. But it certainly produced higher utilization for us in that. Certainly there are some major projects out there that we are talking to clients about they will go on for some period of time.

And I think we captured the lions of year of the work because of our ability to do these under water specialty jobs. So, we had a better first quarter and as Jay said it, it is going to be tougher to repeat in Q2 because of competing forces and the work is declining as we complete it.

Okay. So, it is rolling of and there is more vessels working and so that as this ratchets down the rest of the...

Right, you got it.

I guess is an unrelated follow-up, and switching gears to your activities in West Africa. I guess you mentioned favorable mix on the inspection side. But, can you just fill in the little bit what do you see there, how visible is work through the balance of '09 there and maybe the amount of learning about this in the process moving to.

Our West Africa business seems to be pretty steady at the moment. There is some growth continuing there. But I would say is not booming like Brazil is at the moment. The inspection change was we exited a man power related business that was relatively low margin and we're able to eliminate some overhead. And so that was just a better product mix for us. So that's what was happening there. Otherwise, I would say it's good strong market but not a boom at the moment.

Okay, that's helpful. Thanks guys.

Your next question comes from the line of Joe Agular. Your line is open.

Good morning.

Good morning Joe.

I was just wondering Jay that they orders I know you don't want to get into numbers necessarily, but could you maybe discuss the orders in 2009, relative to 2008 overall. Are you expecting flat down, up,

For what, Joe this is Jack?

Subsea products.

Well fair, okay. I think our call on right now would be lower.

Okay. And then just remind again sort of the lead time in terms of between orders turning into revenues?

I think in thermal plastic (ph) umbilical, we could start on the thermal plastic umbilical in probably 90 days from when we receive orders. Steel tube would not be longer if we have to order the steel tubes. Clearly on our OEI type product, we could start probably even smaller jobs, even building, making even similar and of course some of our stuff is -- we can begin work almost immediately. So, I'll say the longer lead time will be the steel tube jobs, which is probably get to 3-4-5-6 months on some cases and other things that are 90 days down since to start work pretty quickly.

Okay, I was just trying to understand it just because if you get towards the back half of this year, you are entering to 2010, what potentially if some orders do start to shake lose, how soon they could impact your numbers?

Hey Joe, I am going to here again and clarify what Jack said. We expect revenues to be down year-over-year from 2009. 2009 will be lower in products revenue than 2008. Our order flow I think we have a different view on, we do what Jay said in his opening comments is that based on discussions with customers we are hopeful that we will see improved order flow and operating results in the second half of 2009. So, it is something that we are monitoring very closely, because we know it can impact us reasonably quickly. Our book-to-bills, since on the big jobs we do percentage of completion, it is as soon as we get -- there's a time lag A, after you get the order and B, when you get the instructions that they are allowing you to commence production until the final design is -- specifications are satisfied. So, I'm going to say that we are hopeful that we're going to see an increase in order flow and we know and you know that we don't predict backlog anymore because it's seems like there's been inexplicable delays in it. But I think we are more hopeful looking forward than we have been in the last two quarters.

Oh, that's interesting. Thank you, Marvin. One other question if I could? I don't know if you've mentioned this, but do you have you mentioned of number of ROV startups that you expect to have in 2010 from the new rig contracts?

No, we haven't. We won't predict that number for a while.

Okay. Thank you.

You bet.

Any more questions? Are you still alive?

Your next question comes from the line of Joe Agular. Your line is open.

Hey Joe, you went blank on me there.

Hey, Marlene.

Yes, I'm here. Can you hear me?

Yeah, we just talk to Joe Agular.

May be another question. Joe, do you have another question.

Your next question comes from the line, sorry, he must have still have been in queue. Your next question comes from the line of Brad Handler. Your line is open.

Thanks, I got back in queue.

Good morning Brad.

Hi, again. Maybe I could just ask you to follow-up on that last comment. You did say it and we didn't really follow-up in our Q&A. But would you say that the discussions that are leading you to be more hopeful, to the extent that your visibility on the projects, I guess, is this a little bit of some of the logical catch up on the umbilical side, relative to the trees that we've talked about so much or rather is that some optimism about projects pursue -- some new projects coming down the pipe that would be may be countered to the pessimism in the marketplace.

I don't think we're breaking any new ground on new project starting up. I think this is just the lag of lack of orders in the past and the fact that the first quarter was particularly poor and then booking in bulk orders. So I think there is some momentum building, some backlog of orders to be placed and while we've been discussing some of these orders with clients, we haven't got them to the finish line yet. So we can change it and look at our year in advance and say about the same number of orders out there that we have for the 18 months, may be even two years. So when we have particularly low booking quarter like we had in the first quarter, we do think that the second -- rest of the year will be better than that. But I think we are not trying to break any new ground here.

And we are not trying to signal anything other than, we are hopeful. And we said we qualified that we could get better results, predicated on timely securing these additional orders. So it's still an end, James was very clear on how competitive the pricing is until a lot more of this over capacity in the industry gets utilized. But I think it is fair to say that we are optimistic.

Marlene, are you still there? Marlene?

Your next question comes from the line of John Donald. Your line is open.

Morning guys.

Hey John.

Just want to circle back on the guidance update here, given the better than expected results in first quarter and the prospects for potential better results in both the products and ROVs going forward, it kind of suggested there might be some -- in order to get to the down side of this guidance I feel some pretty steep declines in the other product lines and segments. What environment macro wise do you see that we take to have that happen, I mean, I know originally that your $4 guidance was based on $70 per barrel of oil and you are cutting it down the rate from last conference call, oil is more in the $40 range, do you see that to be a big retrenchment in oil prices or is there something else that you are seeing that would potentially have some risk at the down side of this guidance range.

John I want to try that. I mean one of the things that we started in our opening remarks about how much uncertainty remains in predicting the subsea field development, order flow rate for the balance of the year. And that includes as Jay articulated ROV construction support, the timing of hardware, subsidy hardware orders and the requirements for our deep water vessel installation services. I think our range is very achievable, I mean in any kind of normal market. We don't go ahead and tie our range to oil prices specifically like, that one day when we say it was predicated on $70 oil, we make $4. We're not doing that now and we're not looking at it. I don't think, if all it takes is a few project delays and Jay said we don't bring these Subsea hardware orders to the finish line. And you can see the lower end of it. We think we'll find it and we think either end is possible at this time.

Okay, great. Thanks guys.

You bet.

Your next question comes from the line of Stephen Gengaro. Your line is open.

Thank you, just a quick follow-up and its back to the umbilical question. Obviously the last two years were disappointing, right from the order flow perspective. Have you seen and have you guys been able to explain it maybe better than you could have, because I know that's something we struggle with and where these trees are being ordered and by now your market share was real good last year. I'm just to get sense of internally, you've kind of come up with maybe an answer?

I'm sorry we don't have any better thoughts then we've had in the past. I think it does seem clear to us that as long as these steel architectures keep changing at all, the umbilical deal, wasn't the last things ordered. But now as we have people delaying and being very cautious on the start-up for this project we've added that into the mix as well. But sorry we don't any new great insights for you there.

But there still all local that with umbilical, we now that right?

Yeah, that's right.

Right, we got several umbilical.

Okay, thank you

Your next question from line of Victor Marchon. Your line is open.

Thanks, good morning everyone.

Good morning Victor.

Morning.

Just a question on the back half, want to see what you guys have to say just from an OIE perspective. You talked a lot about the Multiflex business. I just want to get a sense as you progressed through the year, how do you see the OIE order flow. It's going to be more steady than Multiflex, or is it a similar type of outlook where it's more likely a second half than we start to see things pick up?

I would say that has been a steadier backlog overall. We have several businesses that all contribute to that backlog. So I would say it tends to be steadier, but certainly not without risk. But now with opportunities as well. So while there is uncertainty there, it has much variation than we see on umbilical side.

And usually it is shorter term, book-to-bill. So if the order flow rate does have a hick-up, you'll see it quicker in the revenue recognition than in the umbilicals we see longer term.

All right. Okay. Thank you for that. And the other one I had was just on the Producer. Does that contract end in the second quarter?

Most likely. I mean, it ends when the field runs out of oil. It's kind of on a day to day, month to month sort of rolling thing and so we really don't know. We just give the call one day and say, it's over.

Okay.

We've got it in our forecast ending here in the second quarter.

All right. Good deal. Thank you guys. That's all I had.

Good.

There are no further questions at this time.

All right. Well, thank you very much.

Take care, guys.

This concludes today's conference call. You may now disconnect.