UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q
[X] QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE 
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31,
2006

[  ] TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934

For the transition period from
_____________ to __________________

Commission File Number: 0-21086

Global Industries, Ltd.

(Exact name of registrant as specified in
its charter)

|Louisiana                                                        | 72-1212563                          
|---------------------------------------------------------------- | ------------------------------------
|(State or
  other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
|                                                                 |                                     
|                                                                 |                                     
|8000 Global Drive                                                | 70665                               
|Carlyss, Louisiana                                               | (Zip Code)                          
|(Address of
  principal executive offices)                       |                                     

(337) 583-5000(Registrant's telephone number,
including area code)

None

(Former name, former address and former
fiscal year, if changed since last report)

Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.  [X]  YES  
[ ]  NO

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer. See definition of "accelerated filer and large
accelerated filer" in Rule 12b-2 of the Exchange Act.    

            Large accelerated filer     [X]    
Accelerated filer     [  ]    
Non-accelerated filer     [ 
]

Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange 
Act).               [  ]      YES     [X]     NO

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares
of the Registrant's Common Stock outstanding, as of May 5, 2005 was 115,094,670.

Global Industries, Ltd.
Index - Form 10-Q

Part I - Financial
Information

|Item 1. | Financial
  Statements - Unaudited                           
|------- | -------------------------------------------------------------
|        | Report of Independent Registered Public
  Accounting Firm    
|        | Condensed Consolidated Statements of
  Operations            
|        | Condensed Consolidated Balance Sheets.                       
|        | Condensed Consolidated Statements of Cash
  Flows            
|        | Notes to Condensed
  Consolidated Financial Statements.      
|        |                                                              
|        |                                                              
|Item 2. | Management's
  Discussion and Analysis of Financial Condition
|        | and Results of Operations                                    
|        |                                                              
|        |                                                              
|Item 3. | Quantitative and Qualitative Disclosures About Market Risk   
|        |                                                              
|        |                                                              
|Item 4. | Controls and Procedures                                      
|        |                                                              

##### Part II - Other Information

|Item 1.  | Legal Proceedings | 31
|-------- | ----------------- | --
|         |                   |   
|         |                   |   
|Item 1A. | Risk Factors      | 32
|         |                   |   
|Item 6.  | Exhibits          | 32
|         |                   |   
|         |                   |   
|         | Signature         | 33
|         |                   |   
|         |                   |   
|         |                   |   

PART I - FINANCIAL
INFORMATION

Item 1.
           Financial Statements.

REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
     Global Industries, Ltd.:

We have reviewed the accompanying Condensed
Consolidated Balance Sheet of Global Industries, Ltd. and subsidiaries as of March
31, 2006, and the related Condensed Consolidated Statements of Operations and
of Cash Flows for the three-month periods ended March 31, 2006 and 2005. These
interim financial statements are the responsibility of the Company's
management.

We conducted our review in accordance with
standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical
procedures and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.

Based on our review, we are not aware of any
material modifications that should be made to such Condensed Consolidated Interim
Financial Statements for them to be in conformity with accounting principles
generally accepted in the United States of America.

We have previously audited, in accordance with
standards of the Public Company Accounting Oversight Board (United States), the
Consolidated Balance Sheet of Global Industries, Ltd. and subsidiaries as of
December 31, 2005, and the related Consolidated Statements of Operations, Shareholders'
Equity, and Cash Flows for the year then ended (not presented herein); and in
our report dated March 14, 2006, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying Condensed Consolidated Balance Sheet as of December 31, 2005
is fairly stated, in all material respects, in relation to the Consolidated Balance
Sheet from which it has been derived.

DELOITTE
& TOUCHE LLP



May
9, 2006
  Houston, Texas

Global
Industries, Ltd.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In
thousands, except per share data)
(Unaudited)

|                                             |   | Three Months 
  Ended March 31,
|-------------------------------------------- | - | -------------------------------
|Results of
  Operations                      |   | 2006                           
|                                             |   |                                
|Revenues                                     | $ | 246,267                        
|Cost of operations                           |   | 198,137                        
|Gross profit                                 |   | 48,130                         
|Net (gains) on asset disposal                |   | (291)                          
|Selling, general and administrative expenses |   | 16,286                         
|Operating income                             |   | 32,135                         
|Other expenses
  (income)                    |   |                                
|Interest expense                             |   | 2,036                          
|Other                                        |   | (33)                           
|Income before
  income taxes                 |   | 30,132                         
|Income taxes                                 |   | 11,368                         
|Net Income                                   | $ | 18,764                         
|                                             |   |                                
|                                             |   |                                
|Earnings
  Per Common Share                  |   |                                
|Basic
  earnings per share                   | $ | 0.16                           
|Diluted
  earnings per share                 |   | 0.16                           
|                                             |   |                                
|                                             |   |                                
|                                             |   |                                
|Weighted Average
  Common Shares Outstanding |   |                                
|Basic                                        |   | 114,171                        
|Diluted                                      |   | 115,609                        

See Notes to Condensed
Consolidated Financial Statements.

Global
Industries, Ltd.CONDENSED
CONSOLIDATED BALANCE SHEETS(In thousands)
(Unaudited)

|                                                     |  | March 31,     |  | December 31,
|---------------------------------------------------- |  | ------------- |  | ------------
|                                                     |  | 2006          |  | 2005        
|ASSETS                                               |  |               |  |             
|Current Assets                                       |  |               |  |             
|Cash                                                 |  | $    114,289  |  | $  128,615  
|Receivables
  - net of allowance of $11,002 for 2006 |  |               |  |             
|and $7,757
  for 2005, respectively                  |  | 153,350       |  | 181,433     
|Unbilled
  work on uncompleted contracts             |  | 123,045       |  | 76,291      
|Contract
  costs incurred not yet recognized         |  | 51,330        |  | 34,076      
|Deferred
  income taxes                              |  | 14,158        |  | 14,158      
|Prepaid
  expenses and other                         |  | 44,918        |  | 34,448      
|Total
  current assets                               |  | 501,090       |  | 469,021     
|Property and Equipment, net                          |  | 334,411       |  | 330,402     
|Other Assets                                         |  |               |  |             
|Deferred
  charges, net                              |  | 23,480        |  | 19,125      
|Goodwill,
  net                                      |  | 37,388        |  | 37,388      
|Other                                                |  | 1,124         |  | 1,378       
|Total
  other assets                                 |  | 61,992        |  | 57,891      
|Total                                                |  | $    897,493  |  | $   857,314 
|                                                     |  |               |  |             
|LIABILITIES AND SHAREHOLDERS' EQUITY                 |  |               |  |             
|Current
  Liabilities                                |  |               |  |             
|Current maturities of long-term
  debt               |  | $       3,960 |  | $      3,960
|Accounts payable                                     |  | 139,141       |  | 119,000     
|Employee-related liabilities                         |  | 16,014        |  | 14,092      
|Income taxes payable                                 |  | 35,571        |  | 25,726      
|Accrued interest                                     |  | 693           |  | 2,249       
|Advance billings on uncompleted contracts            |  | 12,382        |  | 21,308      
|Vinci
  (Groupe GTM) litigation liability            |  | 35,749        |  | 34,911      
|Other accrued liabilities                            |  | 11,175        |  | 15,725      
|Total current liabilities                            |  | 254,685       |  | 236,971     
|                                                     |  |               |  |             
|Long-Term Debt                                       |  | 71,280        |  | 73,260      
|Deferred Income Taxes                                |  | 49,652        |  | 49,491      
|Other Liabilities                                    |  | 761           |  | 787         
|                                                     |  |               |  |             
|Commitments and Contingencies                        |  | --            |  | --          
|                                                     |  |               |  |             
|Shareholders' Equity                                 |  |               |  |             
|Common stock
  issued, 114,925 and 114,344 shares,   |  |               |  |             
|respectively                                         |  | 1,149         |  | 1,144       
|Additional
  paid-in capital                         |  | 355,801       |  | 350,550     
|Accumulated
  other comprehensive loss               |  | (8,688)       |  | (8,978)     
|Retained
  earnings                                  |  | 172,853       |  | 154,089     
|Total
  shareholders' equity                         |  | 521,115       |  | 496,805     
|Total                                                |  | $    897,493  |  | $   857,314 

See Notes to Condensed
Consolidated Financial Statements.



Global
Industries, Ltd.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

|                                                            |  | Three Months Ended
  March 31,
|----------------------------------------------------------- |  | ------------------------------
|                                                            |  | 2006                          
|Cash Flows
  From Operating Activities                      |  |                               
|Net income                                                  |  | $     18,764                  
|Adjustments to
  reconcile net income to net cash provided  |  |                               
|by operating
  activities:                                  |  |                               
|Depreciation
  and amortization                             |  | 11,775                        
|Stock-based
  compensation expense                          |  | 2,680                         
|Provision
  for doubtful accounts                           |  | 3,774                         
|Less (gain)
  on sale or disposal of property and equipment |  | (3)                           
|Deferred
  income taxes                                     |  | 161                           
|Other                                                       |  | (32)                          
|Changes
  in operating assets and liabilities               |  |                               
|Receivables, unbilled work, and contract costs              |  | (39,699)                      
|Prepaid
  expenses and other                                |  | (10,212)                      
|Accounts
  payable, employee-related liabilities and other  |  |                               
|accrued
  liabilities                                       |  | 17,709                        
|Deferred dry-dock costs incurred                            |  | (6,968)                       
|Net
  cash  (used in) operating activities                  |  | (2,051)                       
|                                                            |  |                               
|Cash Flows From Investing Activities                        |  |                               
|Proceeds from sale of assets                                |  | 3                             
|Additions to property and equipment                         |  | (13,095)                      
|Additions
  to deferred charges                             |  | (68)                          
|Net cash (used in) investing activities                     |  | (13,160)                      
|                                                            |  |                               
|Cash Flows
  From Financing Activities                      |  |                               
|Proceeds from sale of common stock, net                     |  | 2,865                         
|Repayment of long-term debt                                 |  | (1,980)                       
|Net cash provided by (used in) financing activities         |  | 885                           
|                                                            |  |                               
|Cash                                                        |  |                               
|Decrease                                                    |  | (14,326)                      
|Beginning of period                                         |  | 128,615                       
|End of period                                               |  | $    114,289                  

See Notes to Condensed
Consolidated Financial Statements.

Global Industries, Ltd.Notes to Condensed
Consolidated Financial Statements (Unaudited)

1.     Basis of Presentation - The accompanying unaudited Condensed
Consolidated financial statements include the accounts of Global Industries,
Ltd. and its subsidiaries (the "Company," "we," "us," or "our").

In
the opinion of management of the Company, all adjustments (such adjustments
consisting only of a normal recurring nature) necessary for a fair presentation
of the operating results for the interim periods presented have been included
in the unaudited condensed consolidated financial statements. Operating results
for the period ended March 31, 2006 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2006. These
financial statements should be read in conjunction with our audited consolidated
financial statements and related notes thereto included in our Annual Report on
Form 10-K for the year ended December 31, 2005. Certain reclassifications have
been made to the prior period financial statements in order to conform to the
classifications adopted for reporting in 2006.

2.      Contracts in Progress and Revenue
Recognition - Revenues from
construction contracts, which are generally recognized on the
percentage-of-completion method, are measured by relating the actual cost of
work performed to date to the current estimated total cost (the cost-to-cost
method) of the respective contract. Contract costs include all direct material
and labor costs and those indirect costs related to contract performance, such
as indirect vessel costs (including depreciation and amortization), labor,
supplies, and repairs. Certain costs may be excluded from the cost-to-cost
method of measuring progress, such as significant costs for materials and major
third-party subcontractors if it appears that such exclusion would result in a
more meaningful measurement of actual contract progress and resulting periodic
allocation of income. Provisions for estimated losses, if any, on uncompleted
contracts are made in the period in which such losses are determined. Selling,
general and administrative costs are charged to expense as incurred. We also
provide services on a day-rate basis to many of our customers. Revenues for day-rate
services are recognized as the services are rendered and when collectability is
reasonably assured.

3.    Receivables
- Trade and other receivables are stated at net realizable value, and the allowances
for uncollectible accounts were $11.0 million and $7.8 million at March 31, 2006
and December 31, 2005, respectively. Certain receivables represent amounts that
have not yet been billed to the customer pursuant to contractually specified
milestone billing requirements. At March 31, 2006 and December 31, 2005, our
receivables included unbilled receivables of $123.0 million and $76.3 million,
respectively. We include claims and unapproved change orders in contract
revenues to the extent of costs incurred when (1) the contract or other
evidence provides a legal basis for the claim, (2) additional costs are not the
result of deficiencies in our performance, (3) costs are identifiable, and (4)
evidence supporting the claim is objective and verifiable. The basis for our
recorded unapproved change orders and claims was formed after we engaged in an
extensive contract review, a review of the supporting evidence and, generally,
obtained a legal opinion from either internal or external legal counsel.
Additionally, we believe that we have objective, verifiable evidence to support
these claims. That evidence consists of explicit contractual terms and/or
written legal opinions. The claims and
unapproved change orders included in receivables amounted to $38.3 million at March 31, 2006 and $37.2 million at
December 31, 2005. Unbilled retainage at March 31, 2006 was $2.0 million and is
expected to be billed and collected in 2006. Unbilled retainage at December 31,
2005 was $2.6 million. Contract costs incurred not yet recognized represents
those contract costs which have been incurred but excluded from our percentage
of completion computation under the cost-to-cost method in order to provide a
more meaningful measurement of actual contract progress.

Costs and Estimated Earnings on Uncompleted
Contracts:

March 31,
  
  December 31,2006
  
  2005(In thousands)Costs incurred on uncompleted contracts
  
  $   252,940
  
  $   567,266Estimated (losses) earnings
  
  65,181
  
  62,038Costs
  and estimated earnings on uncompleted contracts
  
  318,121
  
  629,304Less: Billings to date
  
  255,502
  
  608,27262,619
  
  21,032Plus:
  Accrued revenue
  
  48,044
  
  33,951$   110,663
  
  $     54,983Included in
  accompanying balance sheets under thefollowing
  captions:Unbilled work on uncompleted
  contracts
  
  $   123,045
  
  $     76,291Advance billings on
  uncompleted contracts
  
  (12,382)
  
  (21,308)$   110,663
  
  $     54,983


4.     Goodwill- Goodwill represents the excess cost over
the fair value of net assets acquired and is tested on an annual basis or when
circumstances indicate that impairment may exist. The carrying amount of
goodwill as of March 31, 2006 and
December 31, 2005 was approximately $37.4 million and is primarily attributable
to our Latin America segment.

5.      Property and Equipment-Property and equipment are stated at cost less accumulated depreciation.
Expenditures for property and equipment and items that substantially increase
the useful lives of existing assets are capitalized at cost and depreciated.
Routine expenditures for repairs and maintenance are expensed as incurred.
Except for major construction vessels that are depreciated on the
units-of-production (UOP) method over estimated vessel operating days,
depreciation is provided utilizing the straight-line method over the estimated
useful lives of the assets. The UOP method is based on vessel utilization days
and more closely correlates depreciation expense to vessel revenue. In addition,
the UOP method provides for a minimum depreciation floor in periods with
nominal vessel use. If we applied only a straight-line depreciation method,
less depreciation expense would be recorded in periods of high vessel
utilization and revenues, and more depreciation expense would be recorded in
periods of low vessel utilization and revenues.

6.      Income Taxes - Our effective tax rate for the three
months ended March 31, 2006 was 38%.
This rate varies from our 35% U.S. Federal statutory rate due primarily to taxes
in certain foreign jurisdictions that are taxed on a deemed profits (i.e., percentage
of revenue) basis, net operating losses in certain foreign jurisdictions where we
did not record a tax benefit and certain permanent book to tax differences.

7.     Financing Arrangements - At March 31, 2006, we were in
compliance with all covenants associated with our revolving credit facility and
had no borrowings outstanding, $68.5 million in letters of credit outstanding,
and $16.5 million of credit availability under the credit facility.

Our Title XI bonds mature in 2025. The
bonds carry an interest rate of 7.71% per annum and require semi-annual
payments of $2.0 million, plus interest. The agreement pursuant to which the
Title XI bonds were issued contains certain covenants, including the
maintenance of minimum working capital and net worth requirements. If not met,
additional covenants become applicable that would restrict our operations and
our ability to pay cash dividends. At March 31, 2006, we were in compliance
with these covenants.

We also have a $16.0 million short-term
credit facility at one of our foreign locations that is secured by a letter of
credit.

8.     Commitments and Contingencies - We are a party to
legal proceedings and potential claims arising in the ordinary course of
business. Management does not believe these matters will materially affect our
consolidated financial statements.

In November
1999, we notified Groupe GTM (now Vinci), that as a result of material adverse
changes and other breaches by Vinci, we were no longer bound by and were
terminating the Share Purchase Agreement to purchase the shares of ETPM S.A.
Vinci responded stating that they believed we were in breach. The Share
Purchase Agreement provided for liquidated damages of $25.0 million to be paid
by a party that failed to consummate the transaction under certain
circumstances. We notified Vinci that we did not believe that the liquidated
damages provision was applicable to our termination of the Share Purchase
Agreement. On December 23, 1999, we filed suit against Vinci in the Tribunal de
Commerce de Paris to recover damages. On June 21, 2000, Vinci filed an answer
and counterclaim against us seeking the liquidated damages of $25.0 million and
other damages, costs and expenses of approximately $3.2 million based on then
current exchange rates. In November 2003, the Tribunal de Commerce de Paris ruled in favor of Vinci in the matter and awarded Vinci $25.0 million plus
approximately $8.5 million in interest, exchange rate differential and legal
fees. As a result, although we have not yet paid the judgment, we recorded a
$33.5 million (pre-tax) provision in the fourth quarter of 2003. We appealed
this verdict in the Cour d'appel de Paris. On April 12, 2004 the Cour d'appel
de Paris heard the case before three appellate judges. A decision was rendered in
May 2005 by the Cour d'appel de Paris upholding the lower court decision. Vinci
has filed an enforcement action in the United States District Court for the
Eastern District of Louisiana (civil action number 05-3251). The Company
intends to defend this action by Vinci, however, the Company may be required to
pay the judgment in the near future. We have also filed an appeal in the French
Supreme Court on the additional costs associated with the exchange rate
differential. Our balance sheet at March 31, 2006 includes a $35.7 million
liability representing the judgment and associated legal fees, interest, and
exchange rate differential. Although the provision for the judgment had a
significant impact on our reported results for 2003, we do not believe that the
ultimate outcome of this matter will have a material adverse effect on our
future results of operations or business.

On June 30, 2005, we were notified by the
Mexican appeals court of an unfavorable decision in litigation related to an
audit assessment of 1999 corporate income and value added taxes totaling $15.4
million. The assessment is related to the timing of contract revenue recognition
for Mexican tax purposes. The assessed amount includes taxes adjusted for
inflationary costs of approximately $5.4 million and penalties and interest of
approximately $10.0 million. As a result of this decision, Global may file
amended corporate returns for subsequent years that will result in decreased
taxes for those years and offset the amount of tax assessed. Global is
currently negotiating the amount of the taxes and interest with the Mexican tax
authorities. A reserve of $2.5 million dollars has been established and
recorded in our Latin America segment. This reserve represents management's
assessment of the most likely outcome of the dispute settlement.

The terms of
our contracts typically include liquidated damages provisions in the event that
certain deadlines or conditions are not met.

In December
of 2005, we entered into a long-term charter for a newly built dive support
vessel to be delivered in June 2006. This charter, which includes a five-year
fixed term and a one-year option, requires monthly payments denominated in
Norwegian kroners at an annual rate of approximately 63.1 million kroners (or $9.6
million at March 31, 2006). During the first quarter of 2006, we entered into a
forward currency agreement which will allow us to fulfill our Norwegian kroner
obligations during the fixed term of the charter at predetermined exchange
rates. Under the terms of the forward currency agreement, our required U.S.
dollar payments will gradually increase from approximately $9.6 million during
the first year of the charter to $10.1 million during the last year of the
fixed term of the charter.

During the
first quarter of 2006, we entered into a long-term charter for a newly built
dive support vessel to be delivered in September 2006. This charter, which
includes a three-year fixed term and a one-year option, requires monthly
payments denominated in Norwegian kroners at an annual rate of approximately
78.5 million kroners (or $11.9 million as of March 31, 2006). During the second
quarter of 2006, we entered into a forward exchange contract which will allow us
to fulfill our Norwegian kroner obligations for the first fourteen months of
our three-year commitment under the charter at predetermined exchange rates.
Under the terms of the forward exchange contract, the aggregate amount of our required
U.S. dollar payments for the first fourteen months of the charter will be
approximately $14.9 million.

In the normal
course of our business, we provide guarantees and performance, bid, and payment
bonds pursuant to agreements to perform construction services, or in connection
with bidding to obtain such agreements. All of these guarantees are secured by
parent company guarantees. The aggregate amount of these guarantees and bonds
at March 31, 2006 was $87.3 million in surety bonds and $68.5 million in bank
guarantees/letters of credit. The surety bonds and bank guarantees/letters of
credit were due to expire between April 2006 and March 2008 and between April
2006 and December 2009, respectively.

We
estimate that the cost to complete capital expenditure projects in progress at March
31, 2006 approximates $11.6 million.

9.     Derivative Financial Instruments
- Due to the international nature of our business operations and the variable
interest rate provisions of our revolving credit facility, we are exposed to
certain risks associated with changes in foreign currency exchange rates and
interest rates. From time to time, we enter into derivative agreements (hedging
instruments) to hedge our exposure to specific foreign currency or interest rate
risks (hedged items). We do not use derivative financial instruments for trading
purposes. As of March 31, 2006, we had entered into one significant forward
exchange contract to hedge our Norwegian kroner commitments under a long-term
vessel charter entered into in December 2005. The Company accounts for this
instrument as a cash flow hedge, as defined by Statement of Financial Accounting
Standards No. 133, (SFAS
133), Accounting for Derivative Instruments and Hedging Activities.Under
SFAS 133, all derivatives which are designated as hedges and meet certain
requirements are granted special hedge accounting treatment. Generally, under
this accounting treatment, all periodic changes in the fair value of the
derivative financial instruments which are designated as hedges and that are
considered to be effective, as defined by SFAS 133, are recorded in
"accumulated other comprehensive income" until the associated hedged item is
settled. The Company is exposed to the risk that, at some future point in time,
its derivative financial instruments which are designated as hedges may no
longer be considered effective as defined by SFAS 133, or may no longer qualify
for hedge accounting treatment for some other reason. In such case, the amount
of accumulated other comprehensive income associated with the disqualified
derivative financial instrument as well as future periodic changes in value
will be included in the Company's results of operations. Ineffectiveness, as
defined by SFAS 133, results when the change in the total fair value of a
derivative financial instrument which is designated as a hedge does not
equal the change in fair value of the associated hedged item. All changes in
fair value which are associated with ineffectiveness will be included in the
results of operations of the Company during the period of the change. As of
March 31, 2006, the Company's only significant hedging instrument had been
specifically tailored to a specific foreign currency commitment of the Company,
and we believe that the probability of future ineffectiveness is low. During
the quarters ended March 31, 2006 and 2005, the Company did not recognize any
gains or losses in its results of operations due to ineffectiveness. As of
March 31, 2006, the Company had $0.3 million in unrealized gains, net of tax,
in accumulated other comprehensive income related to forward exchange hedges.
Included in this total is approximately $0.1 million in net unrealized gains
which are expected to be realized in earnings during the twelve months
following March 31, 2006.

10.   Other
Comprehensive Income-Comprehensive income included
changes in the fair value of certain derivative financial instruments which
qualify for hedge accounting treatment. Comprehensive income totaled $19.1
million for the quarter ended March 31, 2006 and $7.5 million for the quarter
ended March 31, 2005. The differences between net income and comprehensive
income for each of the comparable quarters presented are as follows.

Quarter Ended March
  31,2006
  
  2005(In thousands)Net Income
  
  $     18,764
  
  $      7,496Unrealized
  gain on derivative instruments, net ofdeferred taxes of $156 and $-0-
  
  290
  
  --Comprehensive
  Income
  
  $     19,054
  
  $       7,496


A
roll-forward of the amounts included in accumulated other comprehensive income
(loss),
net of taxes, is shown below.

|                                              |  | Accumulated
  Translation 
  Adjustment |  | Foreign
  Exchange 
  Agreements |  | Accumulated 
  Other
  Comprehensive
  Income (Loss)
|--------------------------------------------- |  | --------------------------------------- |  | -------------------------------- |  | ----------------------------------------------------
|Balance
  at December 31, 2005                |  | $ (8,978)                               |  | $        --                      |  | $      (8,978)                                      
|2006
  Change in value 2006
  Change in Value |  | --                                      |  | 290                              |  | 290                                                 
|Reclassifications
  to earnings               |  | --                                      |  | --                               |  | --                                                  
|Balance
  at March 31, 2006                   |  | $ (8,978)                               |  | $     290                        |  | $      (8,688)                                      

The
amount of accumulated translation adjustment included in accumulated other
comprehensive income (loss) relates to subsidiaries whose functional currency
was not the U.S. dollar in certain prior years. The amount of gain on forward
exchange agreements included in accumulated other comprehensive income (loss)
is associated with forward exchange agreements which hedge the Company's
Norwegian kroner commitments under long-term vessel charters. This gain (or
potentially a loss) will be reclassified to results of operations over the
lives of the charters (or portion of the charter lives hedged) to offset any
variability in Norwegian kroner exchange rates in order to achieve the U.S.
dollar base charter expense described in the commitments and contingencies
footnote.

11.   Segment
Information - During the first quarter of 2006, our operations
management and internal financial reporting were reorganized into five business
units: Gulf of Mexico, Latin America, West Africa, Middle East (including
India), and Asia Pacific.  Each of these business units includes both offshore
construction activities and diving activities for a particular region of the
world.  Management has determined that the Gulf of Mexico business unit
includes two reportable segments under SFAS 131, Disclosures About Segments
of an Enterprise and Related Information, and has presented six segments in
this note to the financial statements: Gulf of Mexico Offshore Construction Division
("OCD"), Gulf of Mexico Diving, Latin America, West Africa, Middle East, and
Asia Pacific. The amounts shown for the comparable period in 2005 have been
restated to correspond to the new presentation of segments. The following tables
present information about the profit or loss of each of the Company's six
reportable segments for the quarters ended March
31, 2006 and 2005. The information contains certain allocations of
corporate expenses that we deem reasonable and appropriate for the evaluation
of results of operations.

|                         |  | Quarter Ended March 31,
|------------------------ |  | -----------------------
|                         |  | 2006                   
|                         |  | (In thousands)         
|Total
  segment revenues |  |                        
|Gulf of Mexico OCD       |  | $    59,992            
|Gulf of Mexico Diving    |  | 29,461                 
|Latin America            |  | 62,494                 
|West Africa              |  | 33,081                 
|Middle East              |  | 72,271                 
|Asia Pacific             |  | 5,348                  
|Subtotal                 |  | $  262,647             

|                          |  |              |  |             
|------------------------- |  | ------------ |  | ------------
|                          |  |              |  |             
|Intersegment eliminations |  |              |  |             
|Gulf of Mexico Diving     |  | $   (15,745) |  | $  (4,108)  
|Latin America             |  | (635)        |  | --          
|Subtotal                  |  | $   (16,380) |  | $ 
  (4,108)

|                                            |  |             |  |            
|------------------------------------------- |  | ----------- |  | -----------
|Consolidated
  revenues                     |  | $  246,267  |  | $ 137,256  
|                                            |  |             |  |            
|                                            |  |             |  |            
|                                            |  |             |  |            
|                                            |  |             |  |            
|                                            |  |             |  |            
|Income
  (loss) before taxes                |  |             |  |            
|Gulf of Mexico OCD                          |  | $    11,631 |  | $     9,921
|Gulf of Mexico Diving                       |  | 7,930       |  | 4,830      
|Latin America                               |  | (1,112)     |  | 2,476      
|West Africa                                 |  | 4,083       |  | (4,116)    
|Middle East                                 |  | 11,921      |  | 6,509      
|Asia Pacific                                |  | (3,849)     |  | (7,585)    
|Over
  (under) allocated corporate expenses |  | (472)       |  | 437        
|Consolidated
  income before taxes          |  | $    30,132 |  | $   12,472 

12.Stock-Based Compensation - During first
quarters of 2006 and 2005, we had three stock-based compensation plans that
provide for the granting of restricted stock, stock options, performance-based
shares, performance-based units, or any combination thereof to directors,
officers and employees.

Our 1992 Restricted Stock Plan provided
for awards of shares of restricted stock to employees approved by a committee
of the Board of Directors. Under the plan, 712,000 shares of common stock had
been reserved for issuance. Forfeiture restrictions on shares granted under the
plan lapse 33-1/3% on the third, fourth, and fifth anniversary date of grant. During
the first quarter of 2005, no awards were made under the plan. The plan was
terminated in 2005.

The 1998 Equity Incentive Plan permits
the granting of both stock options and restricted stock awards to officers and employees
approved by a committee of the Board of Directors. The plan also authorizes the
Chief Executive Officer to grant stock options and restricted stock awards to
non-officer employees. The maximum number of shares of common stock that may be
granted as options or restricted stock to any one individual during any
calendar year is 10% of the number of shares authorized under the 1998 Plan,
and repricing of outstanding options is prohibited without the approval of our
shareholders. As of March 31, 2006, 7,500,000 shares of common stock have been
reserved for issuance under the plan of which 828,792 were available for grant.
Option awards are generally granted with an exercise price equal to the market
price of the Company's stock at the date of grant. Options granted under the
plan in 2005 and 2006 vest over periods ranging from three to five years and
have ten year contractual terms. Forfeiture restrictions on restricted shares
granted under the plan in 2006 and 2005 lapse on the third anniversary date of
the grant.  Performance-based units granted under the plan, whose vesting is
contingent upon meeting various Company-wide performance goals, have forfeiture
restrictions which lapse at the end of a three-year performance period. The
performance period for the 2005 shares awarded under this plan ends on December
31, 2007. No performance awards were granted under this plan in 2006.

The 2005 Stock Incentive Plan permits the
grants of non-qualified stock options, incentive stock options, restricted
stock, performance awards, phantom shares, stock appreciation rights,
substitute awards, and other stock-based awards ("Awards") to the Company's
employees, directors, and consultants and to employees and consultants of its
Subsidiaries, provided that incentive stock options may be granted solely to
employees. A maximum of 5,500,000 shares of common stock may be delivered
pursuant to Awards under the 2005 Stock Incentive Plan, provided that no more
than 60% of such shares may be delivered in payment of restricted stock or phantom
share awards. As of March 31, 2006, 4,260,500 were available for grant. No
awards were granted under this plan in 2005. Options granted under the plan in
2006 vest 33-1/3% per year for three years and have a ten year contractual
term. Forfeiture restrictions on restricted shares lapse 100% after three
years. Performance-based units granted under the plan, whose vesting is
contingent upon meeting various Company-wide performance goals, have forfeiture
restrictions which lapse at the end of a three-year performance period. The
performance period for the 2006 units awarded under this plan ends on December
31, 2008.

Compensation cost that has been charged
against income for the Company's stock-based compensation plans was $2.7
million and $0.7 million for the quarters ended March 31, 2006 and 2005,
respectively. No compensation cost was capitalized as a part of inventory or
fixed assets. The total income tax benefit recognized in the income statement
for share-based compensation arrangements was $1.0 million and $0.3 million for
the quarters ended March 31, 2006 and 2005, respectively.

Effective January 1, 2006, we adopted
SFAS No. 123 (Revised 2004), Share-Based Payment (SFAS 123R), using
the modified prospective transition method. Under this method, we record
compensation expense at fair value for all awards granted after the date of
adoption for SFAS 123R. In addition, we record compensation expense at fair
value (as previous awards continue to vest) for the unvested portion of
previously granted stock option awards that were outstanding as of the date of
adoption. Compensation for time-based restricted stock and performance-based
restricted stock or units is based upon the grant date fair value of the stock
or units awarded. We anticipate that the annual impact on our diluted earnings
per share will be between $.01 and $.03 per share. The impact on the first
quarter of 2006 of implementing SFAS 123R was less than $0.01 per share.

Pro forma information for the first
quarter of 2005 is provided to show the effect of amortizing stock-based
compensation to expense on a straight-line basis over the vesting period. Had
compensation costs been determined as prescribed by SFAS 123R, the net
income and earnings per share would have been as follows.

Quarter Ended March 31, 2005(In thousands except per share amounts)Net income (loss) as reported
  
  $              7,496Add: Recognized stock compensation expense,
  net of taxes
  
  457Less: SFAS 123R pro forma stock compensation
  expense, net of taxes
  
  (1,733)Pro-forma net
  income (loss)
  
  $               6,220As reported :Basic
  
  $                0.07Diluted
  
  0.07Pro forma:Basic
  
  $               
  0.06Diluted
  
  0.05


The following tables
summarize the methods used to measure compensation cost for the various types
of awards granted under the plans:

|                              
|------------------------------
|Award
  Type                  
|Stock Options:                
|                              
|                              
|Time-based
  Restricted Stock:
|                              
|                              
|Performance
  Shares:         

In the first quarter of 2005, the fair
value of stock options was estimated using the Black-Scholes option valuation
model with the following assumptions:

2005Expected life
  in years
  
  6 yearsInterest rate
  
  4.54%Volatility
  
  46.59%Forfeiture
  rate
  
  ActualExpected
  dividends
  
  -0-


The expected life represents the period
of time that options granted are expected to be outstanding. The risk-free rate
is based upon the rate for 10 year U.S. Treasury strips. Volatility is based
upon the historical volatility of the Company's stock.

|                              
|------------------------------
|Award
  Type                  
|Stock Options:                
|                              
|                              
|Time-based
  Restricted Stock:
|                              
|                              
|Performance
  Shares/Units:   

In the first quarter of 2006, the fair
value of stock options was estimated using the Black-Scholes option valuation
model with the following assumptions:

2006Expected life
  in years
  
  6 yearsInterest rate
  
  4.98%Volatility
  
  54.82%Forfeiture
  rate
  
  25.0%Expected
  dividends
  
  -0-


The expected life represents the period
of time that options granted are expected to be outstanding. The risk-free rate
is based upon the rate for 10 year U.S. Treasury strips. Volatility is based
upon the historical volatility of the Company's stock. The forfeiture rate is
based upon historical forfeitures of options granted.

The
following tables summarize the activity for the first quarter of 2006.

STOCK OPTIONS

|                                   |  | Outstanding Options         
|---------------------------------- |  | ----------------------------
|                                   |  | Quarter Ended March 31, 2006
|                                   |  |                             
|                                   |  |                             
|                                   |  |                             
|                                   |  | Shares                      
|Outstanding
  at December 31, 2005 |  | 4,459,050                   
|Granted                            |  | 843,300                     
|Forfeited
  or expired             |  | (54,600)                    
|Exercised                          |  | (360,473)                   
|Outstanding at March 31,
  2006    |  | 4,887,277                   
|Exercisable at March 31,
  2006    |  | 3,512,687                   

The weighted average
grant date fair value of options granted during the quarters ended March 31,
2006 and 2005 was $7.04 and $4.43, respectively. The total intrinsic value
(i.e., the fair market value of the underlying stock less exercise price) of
options exercised during the quarters ended March 31, 2006 and 2005 was $1.9
million and $0.5 million, respectively.

Cash received for
options exercised during the quarters ended March 31, 2006 and 2005 was $2.8
million and $1.4 million, respectively.

|                                   |  | Non-Vested Options          
|---------------------------------- |  | ----------------------------
|                                   |  | Quarter Ended March 31, 2006
|                                   |  |                             
|                                   |  |                             
|                                   |  |                             
|                                   |  | Shares                      
|Outstanding
  at December 31, 2005 |  | 782,990                     
|Vested                             |  | (228,000)                   
|Forfeited
  or expired             |  | (23,700)                    
|Granted                            |  | 843,300                     
|Outstanding at March 31,
  2006    |  | 1,374,590                   

As of March 31, 2006, there was $4.3
million of total unrecognized compensation cost related to nonvested options.
That cost is expected to be recognized over a weighted average period of 4.75
years.

TIME-BASED
RESTRICTED STOCK

|                                      |  | Outstanding Shares          
|------------------------------------- |  | ----------------------------
|                                      |  | Quarter Ended March 31, 2006
|                                      |  |                             
|                                      |  |                             
|                                      |  |                             
|                                      |  | Shares                      
|Outstanding
  at December 31, 2005    |  | 846,174                     
|Granted                               |  | 202,400                     
|Forfeited
  or expired                |  | (9,000)                     
|Vested and Released to
  participants |  | (15,000)                    
|Outstanding at March 31,
  2006       |  | 1,024,574                   

The weighted average grant date fair
value of restricted shares granted during the quarter ended March 31, 2005 was
$9.20. The total fair value of awards vesting for the quarters ended March 31,
2006 and 2005 was $0.2 million and $0.5 million, respectively.

As of March 31, 2006, there was $5.6
million of total unrecognized compensation cost related to nonvested time-based
restricted shares that is expected to be recognized over a weighted-average period
of 1.8 years.

PERFORMANCE SHARES

|                                   |  | Outstanding Shares          
|---------------------------------- |  | ----------------------------
|                                   |  | Quarter Ended March 31, 2006
|                                   |  |                             
|                                   |  |                             
|                                   |  |                             
|                                   |  | Shares                      
|Outstanding
  at December 31, 2005 |  | 796,250                     
|Granted                            |  | --                          
|Forfeited
  or expired             |  | (26,250)                    
|Outstanding
  at March 31, 2006    |  | 770,000                     

The
non-vested and outstanding shares displayed in the above tables assume that
shares are issued at the maximum performance level (100%). Shares which are
earned based upon a criteria other than a market condition are assumed issued
at 75% of the maximum performance level. The aggregate value reflects
the impacts of current expectations of achievement and stock price.

No
shares were granted during the quarters ended March 31, 2006 and 2005. No
shares vested during the quarters ended March 31, 2006 and 2005.

As of
March 31, 2006, there was $ 0.4 million of total unrecognized compensation cost
related to non-vested performance shares that is expected to be recognized over
a weighted-average period of 1.75 years.



PERFORMANCE-BASED UNITS

|                                   |  | Outstanding Units           
|---------------------------------- |  | ----------------------------
|                                   |  | Quarter Ended March 31, 2006
|                                   |  |                             
|                                   |  |                             
|                                   |  |                             
|                                   |  | Shares                      
|Outstanding
  at December 31, 2005 |  | --                          
|Granted                            |  | 189,000                     
|Forfeited
  or expired             |  | (5,425)                     
|Outstanding
  at March 31, 2006    |  | 183,575                     

The
aggregate value reflects the value of performance units given current
expectations of performance through the end of the cycle.

The
non-vested and outstanding shares displayed in the above tables assume that
shares are issued at the maximum performance level (100%). Shares which are
earned based upon a criteria other than a market condition are assumed issued
at 75% of the maximum performance level. The aggregate value reflects
the impacts of current expectations of achievement and stock price.

As of
March 31, 2006, there was a total of $2.5 million of compensation cost related
to nonvested performance unit awards that is expected to be recognized over a
weighted-average period of 2.75 years.

Non-Employee
Director Compensation Plan - Each non-employee director
must receive $35,000 of his or her annual retainer in the form of a restricted
stock award with a one year forfeiture period to be issued under our 1998 Equity
Incentive Plan. Each director may elect to receive the remainder of his or her
retainer and any meeting fees or other compensation in cash or in the form of a
restricted stock award. The number of shares awarded is based upon the closing
price of the stock on the date immediately preceding the date the compensation
is due. The forfeiture restrictions automatically renew on the earlier of the
date of the Annual Shareholders' Meeting or June 1 of each year, unless prior
to December 31 of the preceding year, the director elects not to have his
restrictions automatically renew. During the quarters ended March 31, 2006 and
2005, no restricted shares were issued to directors under the new compensation
policy.

Item
2.   Management's Discussion and Analysis of Financial Condition and Results of
Operations.

From
time to time, our management or persons acting on our behalf make
forward-looking statements to inform existing and potential security holders
about our Company. These statements may include projections and estimates
concerning the timing and success of specific projects and our future backlog,
revenues, income, and capital spending. Forward-looking statements are
generally accompanied by words such as "estimate," "project," "believe,"
"expect," "anticipate," "plan," "goal," or other words that convey the
uncertainty of future events or outcomes.

In
addition, various statements in this Quarterly Report, including those that
express a belief, expectation or intention, as well as those that are not
statements of historical fact, are forward-looking statements. We are including
the following discussion to inform our existing and potential security holders
generally of some of the risks and uncertainties that can affect our Company
and to take advantage of the "safe harbor" protection for forward-looking
statements that applicable federal securities law affords.

Our
forward-looking statements speak only as of the date of this Quarterly Report;
we disclaim any obligation to update these statements unless required by
securities law, and we caution you not to rely on them unduly. We have based
these forward-looking statements on our current expectations and assumptions
about future events. While our management considers these expectations and
assumptions to be reasonable, they are inherently subject to significant
business, economic, competitive, regulatory, and other risks, contingencies and
uncertainties, most of which are difficult to predict and many of which are
beyond our control. These risks, contingencies and uncertainties relate to,
among other matters, the following:

        
fluctuations in the
prices or demand for oil and gas;

        
the level of offshore
drilling activity;

        
operating hazards;

        
industry conditions;

        
foreign exchange and
currency fluctuations;

        
changes in laws and
regulations;

        
acquisition or
divestitures;

        
environmental
matters; and

        
the availability of
capital resources.

We
believe the items we have outlined above are important factors that could cause
our actual results to differ materially from the estimates in our financial
statements and those expressed in a forward-looking statement made in this
report or elsewhere. We have discussed many of these factors in more detail
elsewhere in this report. These factors are not necessarily all the important
factors that could affect us. Unpredictable or unknown factors we have not
discussed in this report could also have material adverse effects on actual
results of matters that are the subject of our forward-looking statements. We
do not intend to update our description of important factors each time a
potential important factor arises, except as required by applicable securities
laws and regulations. We advise existing and potential security holders that
they should be aware that important factors not referred to above could affect
the accuracy of our forward-looking statements. For more detailed information
regarding risks, see the discussion of risk factors in our Annual Report on
Form 10-K for 2005 and Item 1A of this report.

The
following discussion presents management's discussion and analysis of our
financial condition and results of operations.

Results of Operations

General

During
the first quarter of 2006, our operations management and internal financial
reporting were reorganized into five business units: Gulf of Mexico, Latin
America, West Africa, Middle East (including India), and Asia Pacific.  Each of
these business units includes both offshore construction activities and diving
activities for a particular region of the world.  Management has determined
that the Gulf of Mexico business unit includes two reportable segments under
SFAS 131, Disclosures About Segments of an Enterprise and Related
Information,and has presented six segments in the notes to financial
statements and in its discussion in this section of the report: Gulf of Mexico
OCD, Gulf of Mexico Diving, Latin America, West Africa, Middle East, and Asia
Pacific. All amounts for the comparable period in 2005 have been restated to
correspond to the new presentation of segments.

Our results of operations are
affected by the overall level of activity of the offshore construction industry
in the Gulf of Mexico and in the international regionsin which we
operate. This overall level of offshore construction activity is principally
determined by three factors: first, the oil and gas industry's ability to
economically justify placing discoveries of oil and gas reserves in production;
second, the oil and gas industry's need to clear all structures from the lease
once the oil and gas reserves have been depleted; and third, weather events
such as major hurricanes. Our results of operations also reflect our ability to
win jobs through competitive bidding and manage awarded jobs to successful
completion.

Our competition and inherent
operating risks vary by area of the world in which we operate and affect individual
segment profitability.

Our results of operations in
terms of revenues, gross profit, and gross profit as a percentage of revenues
("margins") are principally driven by three factors: (1) our level of offshore
construction activity ("activity"), (2) pricing, which can be affected by
contract mix, and (3) operating efficiency on any particular construction
project ("productivity").

Offshore Construction

The level of our offshore
construction activity in any given period has a significant impact on our
results of operations. The offshore construction business is capital and
personnel intensive; and, as a practical matter, many of our costs, such as depreciation
and the wages of skilled workers, are effectively fixed in the short run
regardless of whether or not our vessels are being utilized in productive
service. In general, as activity increases, a greater proportion of these fixed
costs are recovered through operating revenues; and, consequently, gross profit
and margins increase. Conversely, as activity decreases, our revenues decline
but our costs do not decline proportionally, thereby constricting our gross
profit and margins.  Our activity level can be affected by changes in demand
due to economic or other conditions in the oil and gas exploration industry,
seasonal conditions in certain geographical areas, and/or our ability to win
the bidding for available jobs.  Our results of operations depend heavily upon
our ability to obtain, in a very competitive environment, a sufficient quantity
of offshore construction contracts with sufficient gross profit margins to
recover the fixed costs associated with our offshore construction business.

Most of our offshore
construction revenues are obtained through international contracts which are
generally larger, more complex, and of longer duration than our typical
domestic contracts. Most of these international contracts require a significant
amount of working capital, are bid on a lump-sum basis, and are secured by a
letter of credit or performance bond. Operating cash flows may be negatively
impacted during periods of escalating activity due to the substantial amounts
of cash required to initiate these projects and the normal delays between cash
expenditures by the Company and cash receipts from the customer. Additionally,
lump-sum contracts are inherently risky and are subject to many unforeseen
circumstances and events that may affect productivity. As productivity
decreases, with no offsetting decrease in costs or increases in revenue,
contract margins erode compared to our bid margins. As a result, our revenues
and margins are subject to a high degree of variability.

Change orders are a significant
aspect of any construction business and are particularly significant in the
offshore construction business.  A change order is a request to alter the
performance of a previously agreed upon construction contract.  Change orders
may include changes in specifications or design, method or manner of
performance, facilities, equipment, site, or the period for completion of the
work.  Change orders are common in our business due to the nature of offshore
construction contracts and sometimes add to the degree of project execution
difficulty. A change order usually increases the scope of work but may also
decrease the scope and consequently, the amount of contract revenue and costs
which are recognized. Either the customer or the Company may initiate a change
order. At the time of initiation, a change order may be approved or unapproved
by either party, priced or unpriced, or defined or undefined regarding detailed
scope. Even when the scope of work is defined, the associated increase or
decrease in contract revenue will often be governed by contract terms or
negotiated later, sometimes after the work is performed. We recognize these
change orders as revenue in accordance with accounting principles generally
accepted in the United States.

Diving

Most of our diving revenues are
the result of short-term work, involve numerous smaller contracts, and are
usually based on a day-rate charge. Financial risks associated with these types
of contracts are normally limited due to their short-term and non-lump sum
nature. Revenues and margins from our diving activities tend to be more
consistent than from our offshore construction activities.

Overview

Due to
sustained high energy prices, growing expectations for high energy prices in
the future, and the occurrence of two major hurricanes in the U.S. Gulf of
Mexico in the second half of 2005, demand for our offshore construction services
continued to intensify during the first quarter of 2006. Income before taxes
increased by $17.7 million to $30.1 million in the first quarter ended March
31, 2006 compared to the first quarter of 2005 primarily due to a $23.8 million
increase in gross profit which was partially offset by a $6.0 million increase
in selling, general and administrative expenses. The increase in gross profit
between comparable periods was primarily due to an increase in our overall
level of construction activity. The amount of selling, general, and
administrative expenses for the current year's quarter included $0.7 million of
additional expense related to the adoption of SFAS 123R, Share-Based Payment.

The
following table sets forth, for the periods indicated, our statements of
operations expressed as a percentage of revenues.

|                                               |  | Quarter Ended March 31,
|---------------------------------------------- |  | -----------------------
|                                               |  | 2006                   
|                                               |  |                        
|Revenues                                       |  | 100%                   
|Cost of operations.                            |  | 80.5                   
|Gross profit                                   |  | 19.5                   
|Net (gains) on
  asset disposal                |  | (0.1)                  
|Selling, general and administrative
  expenses |  | 6.6                    
|Operating income                               |  | 13.0                   
|Other expenses
  (income)                      |  |                        
|Interest expense                               |  | 0.8                    
|Other                                          |  | 0.0                    
|Income before income taxes                     |  | 12.2                   
|Income taxes                                   |  | 4.6                    
|Net income                                     |  | 7.6                    

Quarter
Ended March 31, 2006 Compared to Quarter Ended March 31, 2005

Quarter Ended
   
   March 31,2006
   
   2005
   
   Percentage Change(in thousands)
  
  (Unfavorable)Revenues
  $
  246,267
  $
  137,256
  
  79%Cost of operations
  
  198,137
  
  112,959
  
  (75)Gross profit
  
  48,130
  
  24,297
  
  98Net (gains) on asset disposal
  
  (291)
  
  (112)
  
  160Selling, general and administrative
  expenses
  
  16,286
  
  10,282
  
  (58)Operating income
  
  32,135
  
  14,127
  
  127Other expenses
  (income)Interest
  expense
  
  2,036
  
  2,384
  
  15Other
  
  (33)
  
  (729)
  
  (95)Income before income taxes
  
  30,132
  
  12,472
  
  142Income taxes
  
  11,368
  
  4,976
  
  (128)Net income
  $
  18,764
  $
  7,496
  
  150%


Revenues.Revenues increased by 79% to $246.3 million for the first quarter of 2006
primarily due to an increase in worldwide construction activity. Worldwide
utilization of our major construction vessels increased to 60% in the first
quarter of 2006 compared to 47% in the same quarter last year, and total diver
days in our Gulf of Mexico Diving segment increased by 59% between comparable
quarters. Price increases in our Gulf of Mexico Diving segment also contributed
to this increase in revenues. For a detailed discussion of revenues and income
before taxes for each geographical area, see "Segment Information" below.

Depreciation
and Amortization.  The amount of depreciation and amortization expense,
including the amortization of dry-docking costs, included in our cost of
operations for the quarter ended March 31, 2006 was $11.6 million compared to
the $10.9 million included in the quarter ended March 31, 2005. The increase is
due primarily to higher utilization of our major construction vessels, which
are depreciated on a units of production basis.

Gross
Profit.Gross profit increased by $23.8 million primarily due to the increase
in revenues described above. As a percentage of revenues, gross profit
increased to 19.5% in the first quarter of 2006 from 17.7% in the first quarter
of 2005. The beneficial effects of increased activity and improved pricing on
gross profit margins were partially offset by cost increases in certain
segments, especially costs related to the retention of skilled workers during
this period of high demand and repairs and maintenance expenses.

Net
Gains on Asset Disposal.  Net gains on asset disposal were $0.3 million
in the first quarter of 2006 as compared to $0.1 million in the first quarter
of 2005.  There were no significant dispositions of assets in either of the
comparable quarters.

Selling,
General and Administrative Expenses. Selling, general and
administrative expenses increased by $6.0 million to $16.3 million in the first
quarter of 2006 primarily due to increases in expenses related to stock-based
compensation, administrative labor, and professional fees related to auditing. 
Stock-based compensation increased as a result of (1) the issuance of
restricted stock, options, and performance units, (2) the effect of assumptions
of good performance on the amount of expense recognized with respect to
performance units, and (3) the initiation of expense recognition with respect
to employee stock options as a result of our adoption of SFAS 123R on January
1, 2006. Administrative labor increased due to an accumulation of small
increases in administrative labor costs in our operating segments, corporate
administration, and expenses related to the retention and hiring of personnel.

Interest
Expense.  Interest expense was $2.0 million for the quarter ended March
31, 2006 compared to $2.4 million for the quarter ended March 31, 2005. Interest
expense was relatively constant because there was no significant change in our
debt level between comparable quarters.

Other
Expense/Income.  Other income declined $0.7 million between comparable
quarters primarily due to increased foreign exchange losses which were
partially offset by an increase in interest income.

Net
Income.  Our net income increased 150% to $18.8 million in the
first quarter of 2006, primarily due to an increase in gross profit which was
partially offset by an increase in selling, general and administrative expenses
as discussed above. Our effective tax rate for the quarter ended March 31, 2006
was 38% as compared to 40% for the same period last year. The effective tax
rates for both comparable quarters were in excess of 35% primarily due to low
earnings and/or losses in certain foreign jurisdictions which are taxed on a
deemed profits (i.e., percentage of revenue) basis and/or net operating losses
in certain foreign jurisdictions where we did not record a tax benefit. For the
three months ended March 31, 2005, on a pro forma basis giving effect to the
adoption of SFAS 123R, our net income would have been $1.3 million less than
reported for the period. For the year ending December 31, 2006, we do not
anticipate that the adoption of SFAS 123R will have a material impact on our
results of operations. For a detailed discussion of the impact of adopting SFAS
123R on our financial statements, please read Note 12 to the Notes to Condensed
Consolidated Financial Statements contained elsewhere in this Quarterly Report.

Segment
Information.

The
following sections discuss the results of operations for each of our reportable
segments during the quarter ended March 31, 2006.

Gulf
of Mexico Offshore Construction Division

Revenues
increased 157% to $60.0 million for the quarter ended March 31, 2006 primarily
due to a substantial increase in activity. Demand for the services provided by
our Gulf of Mexico OCD segment increased between comparable quarters due to
high energy prices and the effects of Hurricanes Katrina and Rita. Several
vessels which had been temporarily relocated to other segments returned to the Gulf of Mexico between comparable quarters. Six barges achieved 73% utilization in the
quarter ended March 31, 2006 compared to three barges achieving 61% utilization
in the same period last year. During the first quarter of 2006, the G/P
37 was returned to service after refurbishment following an extended
period of idleness, and the Pipeliner 5 was removed from service
due to regulatory docking requirements. Income before taxes increased by $1.7
million to $11.6 million. The beneficial effect of the increase in revenues
described above was partially offset by (1) an increase in the amount of
intercompany Gulf of Mexico Diving segment services billed to projects by our
Gulf of Mexico OCD segment with no markup, (2) productivity issues on one
deepwater pipeline construction project, (3) increased costs related to the
return of vessels which had been temporarily relocated to other segments during
the prior year quarter, (4) increased costs related to the retention and hiring
of skilled workers, (5) increased overhead costs, especially tugs for barges,
due to high demand, and (6) an increase in the proportion of corporate expenses
allocated to this segment. A comparison of bidding activity between comparable
quarters was not meaningful for this segment due to a high level of hurricane
repair work which was being contracted on a day-rate basis.

Gulf of MexicoDiving

Revenues
increased by 118% to $29.5 million in the first quarter of 2006 primarily due
to an increase in activity and improved pricing. Demand for the services of
this segment increased between comparable quarters due to high energy prices
and the effects of Hurricanes Katrina and Rita. Total diver days increased by
59% between comparable quarters, but the proportion of high margin saturation
diving services declined slightly. Billing rates increased by approximately 15%
between comparable quarters. Income before taxes increased by $3.1 million to
$7.9 million in the first quarter of 2006, primarily due to the increase in the
overall level of activity. Profit margins declined between comparable quarters.
The beneficial effect of improved pricing on profit margins was more than offset
by (1) higher direct labor costs due to wage increases required to retain
skilled divers and supervisors in a period of strong demand, (2) increased use
of higher cost contract divers, other contract labor, and outside services due
to a shortage of qualified personnel, and (3) higher repair and maintenance
expenses.

Latin America

Revenues
declined by 5% between comparable quarters to $62.5 million in the first
quarter of 2006 primarily due to a decrease in the activity of our major
construction vessels in the region partially offset by an increase in
subcontracted services and work performed by a chartered-in vessel. One major
project commenced during the current year's quarter compared to five
significant projects which were in progress in the prior year's quarter. Three
major construction vessels achieved 53% utilization in the first quarter of
2006 compared to five major construction vessels achieving 75% utilization in
the same period last year. Income before taxes declined $3.6 million between
comparable quarters to a loss before taxes of $1.1 million in the first quarter
of 2006. Project level margins improved slightly as a modest margin on the one
ongoing project in the current year's first quarter was supplemented by the favorable
resolution of claims and change orders on several substantially completed
projects. Project level margins in the current year's first quarter were
negatively impacted by a decline in amount of diving work performed by Company
divers. Total diver days declined by 59% between comparable quarters and the
proportion of high margin saturation diving services declined to 27% from 56%
in the prior year's quarter. This decrease in diving activity was caused by a
decrease in overall construction activity and a shortage of qualified personnel
which necessitated the use of a contract diving service for a substantial
portion of the diving work performed in the current year's quarter. Gross
margins declined slightly between comparable quarters due to lower recoveries
resulting from lower utilization of our major construction vessels, increased
indirect labor costs, and increased costs related to the relocation of
saturation diving systems between vessels. Both bidding activity and the dollar
volume of bidding activity in this region declined between comparable periods.

West Africa

Revenues
increased by $29.6 million to $33.1 million in the first quarter of 2006
primarily due to an increase in activity between comparable quarters. Five
significant projects were in progress during the current year's first quarter
compared to only one significant project in progress in the prior year's first quarter.
Two major construction vessels achieved 49% utilization in the first quarter of
2006 compared to three major construction vessels achieving 4% utilization in
the same quarter last year. Income before taxes increased by $8.2 million to
income of $4.1 million in the first quarter of 2006 compared to a loss of $4.1
million in the first quarter of 2005 primarily due to the beneficial effects of
increased activity on gross profit and margins which was partially offset by
higher repairs and maintenance expense and support vessel costs. Results for
the prior year's first quarter were negatively impacted by a lack of
substantial activity in the region. Both bidding activity and the dollar volume
of bidding activity in this region increased between comparable periods.

Middle East

Revenues
increased by 190% to $72.3 million in the first quarter of 2006 primarily due
to an increase in activity between comparable quarters. One large multi-year
project was in progress during the current year's quarter compared to one smaller
but significant project in the prior year's quarter. Three major construction
vessels were temporarily mobilized to the Middle East from our Asia Pacific
segment to facilitate work performed during the first quarter of 2006. The
number of major construction vessel days worked in our Middle East segment
increased by 158% between comparable quarters. Income before taxes increased by
$5.4 million to $11.9 million for the first quarter of 2006 primarily due to
the increase in activity. Project level profit margins declined slightly
between comparable quarters, and gross profit margins declined somewhat further
due to reduced recoveries resulting from the use of Asia Pacific major
construction vessels in the current year's first quarter. Both bidding activity
and the dollar volume of bidding activity declined between comparable quarters.

AsiaPacific

Revenues
declined by 48% to $5.3 million in the first quarter of 2006 primarily due to a
decline in activity between comparable quarters. There was no utilization of
major construction vessels in this region during the first quarter of 2006 as
three major construction vessels were temporarily mobilized to the Middle East segment and the Hercules spent the entire quarter undergoing scheduled
repairs and upgrades. Substantially all of the revenue recorded during the
first quarter of 2006 was related to one project which was ongoing during the
quarter. Loss before taxes decreased by $3.7 million primarily due to the
transfer of vessel costs to the Middle East segment. Bidding activity was
constant but the dollar volume of bidding activity increased between comparable
quarters.

Liquidity
and Capital Resources

Overview

The principal uses of cash in
our business generally have been investment in our assets (particularly for the
enhancement and acquisition of vessels) and funding working capital and losses
from operations, and repayment of debt. Cash to fund the needs of our business
has been provided primarily by operations, debt financing, asset sales, and
equity issuances.

We expect activity levels to
increase over the next twelve months. Our backlog increased to $689.9 million at
March 31, 2006 from $576.1 million at December 31, 2005. In April 2006, we were
awarded an additional major project in Mexico which has an estimated value of
$130.0 million. This increase in activity will require increases in working
capital. We expect that our cash balances and credit facility will provide
adequate funding for this anticipated increase in working capital to the extent
it occurs in advance of increases in our cash flows from operations. In
addition, the judgment against us in the Groupe GTM (now Vinci) litigation may
require a substantial cash payment pending our appeal of the judgment. Capital
expenditures for the remainder of 2006 are currently expected to be between $25
million and $30 million.

Cash
Flow

Our cash balance decreased by $14.3 million to $114.3 million at March
31, 2006 from $128.6 million at December 31, 2005. Net cash used by our
operating activities during the quarters ended March 31, 2006 and 2005 was $2.1
million and $43.3 million, respectively. Cash flows from operations during the
current year's first quarter were negatively impacted by expenditures related
to the initiation and/or escalation of activities with respect to several
substantial international projects. We expect that the adverse effects
associated with these expenditures will be temporary in nature and reverse when
cash associated with these projects is collected from customers. Working
capital increased by $14.4 million during the first quarter of 2006 to $246.4
million at March 31, 2006. We expect that working capital will continue to
increase as activity increases. Approximately 81% of our $689.9 million backlog
at March 31, 2006 is expected to be performed during 2006.

Investing
activities resulted in a $13.2 million net use of cash. Proceeds from the sale
of assets supplemented by cash on hand, funded capital expenditures of $13.1
million. We estimate that the cost to complete capital expenditure projects in
progress at March 31, 2006 will be approximately $11.6 million. These capital
expenditures are primarily related to vessel, diving systems, and equipment
upgrades.

As
of March 31, 2006, we had purchased 3.7 million shares of our common stock
since the inception of our $30.0 million stock repurchase program at a total
cost of $24.1 million. We did not repurchase any shares in the first quarter of
2006. Our credit facility described below limits stock repurchases.

Long-Term
Debt

Long-Term debt outstanding at March
31, 2006 (including current maturities) includes $75.2 million of Title XI
bonds and no amounts drawn against our revolving credit facility.

Our outstanding Title XI bonds
mature in 2025. The bonds carry an interest rate of 7.71% per annum and require
aggregate semi-annual payments of $2.0 million, plus interest. The agreement
pursuant to which the Title XI bonds were issued contains certain covenants,
including the maintenance of minimum working capital and net worth
requirements. If these covenants are not met, additional covenants become
applicable that restrict our operations and our ability to pay cash dividends. At
March 31, 2006, we were in compliance with the covenants under our Title XI
bonds.

We maintain our $85.0 million
revolving credit facility that matures in March 2008. Our credit facility
includes financial and other covenants, including requirements of minimum net
worth, maximum leverage ratio, and a minimum fixed charge coverable ratio. The
interest rate spreads can range from 0.75% to 1.75% and 1.75% to 2.75% for
prime rate and LIBOR, respectively, based upon borrowings and certain of our
financial ratios. There were no amendments to our revolving credit facility
during the first quarter of 2006. At March 31, 2006, we were in compliance with
all covenants associated with this credit facility and had no borrowings, $68.5
million in letters of credit outstanding, and $16.5 million of credit availability
under the credit facility.

Other Indebtedness and Obligations

We also have a $16.0 million
short-term credit facility at one of our foreign locations which is secured by
a letter of credit. Additionally, in the normal course of business, we provide
guarantees and performance, bid, and payment bonds pursuant to agreements or in
connection with bidding to obtain such agreements to perform construction
services. All of these guarantees are secured by parent company guarantees. The
aggregate amount of these guarantees and bonds at March 31, 2006 was $87.3
million in surety bonds and $68.5 million in bank guarantees/letters of credit.
The surety bonds and bank guarantees/letters of credit were due to expire
between April 2006 and March 2008 and between April 2006 and December 2009,
respectively.

We have a long-term charter of
the Titan 2, a 456-foot self-propelled twin-hulled derrick ship.
The vessel charter payments are approximately $6.1 million annually. The charter
term is 120 months expiring August 2013. This charter can be canceled by us at
anytime, subject to a termination penalty of the transfer to the vessel owner
of title to our dynamic positioning ("DP") system used on the vessel. The DP
system was purchased and installed on the Titan 2 at our cost in
the first quarter of 2002 for a total cost of $8.9 million.

In December of 2005, we entered
into a long-term charter for a newly built dive support vessel to be delivered
in June 2006. This charter, which includes a five-year fixed term and a
one-year option, requires monthly payments denominated in Norwegian kroners at
an annual rate of approximately 63.1 million kroners (or $9.6 million as of March
31, 2006). During the first quarter of 2006, we entered into a forward currency
agreement which will allow the Company to fulfill its Norwegian kroner
obligations during the fixed term of the charter at predetermined exchange
rates. Under the terms of the forward currency agreement, the Company's
required U.S. dollar payments will gradually increase from approximately $9.6
million during the first year of the charter to $10.1 million during the last
year of the fixed term of the charter.

During the first quarter of
2006, we entered into a long-term charter for a second newly built dive support
vessel to be delivered in September 2006. This charter, which includes a
three-year fixed term and a one-year option, requires monthly payments
denominated in Norwegian kroners at an annual rate of approximately 78.5
million kroners (or $11.9 million as of March 31, 2006). During the second
quarter of 2006, we entered into a forward exchange contract which will allow
the Company to fulfill its Norwegian kroner obligations for the first fourteen
months of the three-year commitment under the charter at predetermined exchange
rates.  Under the terms of the forward exchange contract, the aggregate amount
of the Company's required U.S. dollar payments for the first fourteen months of
the charter will be approximately $14.9 million.

Liquidity Outlook

We expect funds available under
our credit facility, available cash, and cash generated from operations to be
sufficient to fund our operations (including the anticipated increase in
working capital required to fund increasing activity levels), scheduled debt
retirement, planned capital expenditures for the next twelve months, as well as
any required payments related to the Vinci (Groupe GTM) judgment.  In addition,
as we have in the recent past, we will also continue to evaluate the divesture
of assets which are no longer critical to our operations in order to reduce our
operating costs and debt levels.

Over the longer term, we expect
cash from operations, supplemented by equity financings and proceeds from
long-term debt, to provide sufficient funds to operate and expand our business
and maintain our fleet.  For flexibility, we maintain a shelf registration
statement that as of May 5, 2006 permits the issuance of up to $365.8 million
of debt and equity securities.  In addition, as we have historically done, we
will continue to evaluate the merits of any opportunities that may arise for
acquisitions of equipment or businesses, which may require additional
liquidity.

Industry
and Business Outlook

We expect worldwide activity to continue to increase during the next
twelve months. Persistently high oil prices and the effects of two major
hurricanes in the U.S. Gulf of Mexico have increased demand for our offshore
construction and diving services. At the present time, it appears that our
assets in the U.S. Gulf of Mexico will be highly utilized during 2006 as
massive hurricane damage and historically high energy prices drive demand for
our services in this region. Due to an increasing proportion of hurricane
repair work contracted on a day-rate basis, our domestic backlog and bidding
activity levels are not indicative of the level of demand for our services in
the U.S. Gulf of Mexico. Due to persistently high energy prices, demand for our
services in international regions has increased as well. As of March 31, 2006,
our backlog in international regions was $661.7 million.

Coupled with this worldwide demand for services, however, is a
corresponding demand for experienced personnel in our industry. This high level
of demand for personnel has fully utilized the currently available pool of
experienced personnel, especially in the U.S. Gulf of Mexico.  Given this
situation, we must make every effort to retain our experienced personnel and
continuously seek, find, and train new personnel.  If we are unable to retain
and hire a sufficient number of qualified personnel, our operations may suffer
due to an inability to accept additional work or due to performance or safety
issues. Additionally, other activities which are associated with periods of
high demand, such as relocating vessels, recommissioning vessels, and
coordinating an increasing number of projects, also increase the level of risk
in our operations.

Critical Accounting
Policies and Estimates

For a
discussion of critical accounting policies and estimates, see Item 7. Management
Discussion and Analysis of Financial Condition and Results of Operations - Critical
Accounting Policies and Estimates in our Annual Report on Form 10-K for the
year ended December 31, 2005, which discussion is incorporated herein by
reference.

Item
3.            Quantitative and Qualitative Disclosures About Market Risk.

We use
natural hedging techniques to hedge against foreign currency exchange losses by
contracting, to the extent possible, international construction jobs to be
payable in U.S. dollars. We also, to the extent possible, maintain cash
balances at foreign locations in U.S. dollar accounts. We do not believe that a
change in currency rates in the regions in which we operate would have a
significant effect on our results of operations. Additional quantitative and
qualitative disclosures about market risk are in Item 7A, Quantitative and
Qualitative Disclosures About Market Risk, of our Annual Report on Form 10-K
for the year ended December 31, 2005.

During
the fourth quarter of 2005, we entered into a five-year charter for a newly
built dive support vessel to be delivered for service in June 2006. Under the
terms of the charter, we will be required to make monthly payments denominated
in Norwegian kroners at an annual rate of approximately 63.1 million kroners
(or $9.6 million as of March 31, 2006). During the first quarter of 2006, we
entered into a forward exchange contract which effectively fixes the exchange
rate for our commitments under this long-term charter. Under the terms of the
forward currency agreement, the Company's required U.S. dollar payments will
gradually increase from approximately $9.6 million during the first year of the
charter to $10.1 million during the last year of the fixed term of the charter.

During the first quarter of
2006, we entered into a long-term charter for a newly built dive support vessel
to be delivered in September 2006. This charter, which includes a three-year
fixed term and a one-year option, requires monthly payments denominated in
Norwegian kroners at an annual rate of approximately 78.5 million kroners (or
$11.9 million as of March 31, 2006). During the second quarter of 2006, we
entered into a forward exchange contract which effectively fixes our exchange
rate for the first fourteen months of our three-year commitment under this
long-term charter. Under the terms of the forward exchange contract, the
aggregate amount of the Company's required U.S. dollar payments for the first
fourteen months of the charter will be approximately $14.9 million. As of May
10, 2006, the Company was exposed to the risk of changes in the Norwegian
kroner/U.S. dollar exchange rate with respect to the 143.9 million kroner (or
$21.8 million as of March 31, 2006) commitment associated with the remaining 22-month, unhedged portion of this charter. A 10% appreciation in the value of the
Norwegian kroner relative to the U.S. dollar would increase the aggregate
amount of charter expense recognized during the unhedged portion of this charter
by approximately $2.2 million.

Item 4.            Controls
and Procedures.

As of the end of the period
covered by this report, our management, with the participation of our Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of our disclosure controls and procedures. These disclosure controls and
procedures are designed to provide us with a reasonable assurance that all of
the information required to be disclosed by us in our periodic reports filed under
the Securities and Exchange Act of 1934 is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed and maintained to ensure that all of the information
required to be disclosed by us in our reports is accumulated and communicated
to our management, including our principal executive officer and chief financial
officer, as appropriate to allow those persons to make timely decisions regarding
required disclosure.

Based on their evaluation, our
Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures are effective to ensure that material
information relating to our company is made known to management on a timely
basis. Our Chief Executive Officer and Chief Financial Officer noted no
significant deficiencies or material weaknesses in the design or operation of
our internal controls over financial reporting (as defined in Rule 13a-15(f)
under the Exchange Act) that are likely to adversely affect our ability to
record, process, summarize and report financial information. There have been no
changes in our internal control over financial reporting that occurred during
our last fiscal quarter that have materially affected or are reasonably likely
to materially affect our internal control over financial reporting.



PART II - OTHER INFORMATION

Item 1.            Legal
Proceedings.

In November 1999, we notified Groupe GTM (now Vinci),
that as a result of material adverse changes and other breaches by Vinci, we
were no longer bound by and were terminating the Share Purchase Agreement to
purchase the shares of ETPM S.A. Vinci responded stating that they believed we
were in breach. The Share Purchase Agreement provided for liquidated damages of
$25.0 million to be paid by a party that failed to consummate the transaction
under certain circumstances. We notified Vinci that we did not believe that the
liquidated damages provision was applicable to our termination of the Share
Purchase Agreement. On December 23, 1999, we filed suit against Vinci in
Tribunal de Commerce de Paris to recover damages. On June 21, 2000, Vinci filed
an answer and counterclaim against us seeking the liquidated damages of $25.0
million and other damages, costs and expenses of approximately $3.2 million based
on then current exchange rates. In November 2003, the Tribunal de Commerce de Paris ruled in favor of Vinci in the matter and awarded Vinci $25.0 million plus
approximately $8.5 million in interest, exchange rate differential and legal
fees. As a result, although we have not yet paid the judgment, we recorded a
$33.5 million (pre-tax) provision in the fourth quarter of 2003. We appealed
this verdict in the Cour d'appel de Paris. On April 12, 2004 the Cour d'appel
de Paris heard the case before three appellate judges.  A decision was rendered
in May 2005 by the Cour d'appel de Paris upholding the lower court decision. Vinci
has filed an enforcement action in the United States District Court for the
Eastern District of Louisiana (civil action number 05-3251). The Company
intends to defend this action by Vinci, however, the Company may be required to
pay the judgment in the near future. We have also filed an appeal in the French
Supreme Court on additional costs associated with the exchange rate
differential. Our balance sheet at March 31, 2006 includes a $35.7 million
liability representing the judgment and associated legal fees, interest, and
exchange rate differentials. Although the provision for the judgment had a
significant impact on our reported results for 2003, we do not believe that the
ultimate outcome of this matter will have a material adverse effect on our
future results of operations or business.

On June 30, 2005, we were notified by the Mexican
appeals court of an unfavorable decision in litigation related to an audit
assessment of 1999 corporate income and value added taxes totaling $15.4
million. The assessment is related to the timing of contract revenue recognition
for Mexican tax purposes. The assessed amount includes taxes adjusted for
inflationary costs of approximately $5.4 million and penalties and interest of
approximately $10.0 million. As a result of this decision, Global may file
amended corporate returns for subsequent years that will result in decreased
taxes for those years and offset the amount of tax assessed. Global is
currently negotiating the amount of the taxes and interest with the Mexican tax
authorities. A reserve of $2.5 million has been established and recorded in our
 Latin America segment. This reserve represents management's assessment of the
most likely outcome of the dispute settlement.

Our operations are subject to the inherent risks of
offshore marine activity including accidents resulting in the loss of life or
property, environmental mishaps, mechanical failures, and collisions. We insure
against these risks consistent with industry standards. We believe our
insurance should protect us against, among other things, the accidental total
or constructive total loss of the fair market value of our vessels. We also
carry workers' compensation, maritime employer's liability, general liability,
and other insurance customary in our business. All insurance is carried at
levels of coverage and deductibles that we consider financially prudent. Recently,
our industry has experienced a tightening in the builders' risk market, which
has increased deductibles and reduced coverage.

Our services are provided in hazardous environments
where accidents involving catastrophic damage or loss of life could result, and
litigation arising from such an event may result in us being named a defendant
in lawsuits asserting large claims. Although there can be no assurance that the
amount of insurance carried by our company is sufficient to protect us fully in
all events, management believes that our insurance protection is adequate for
our business operations. A successful liability claim for which we are
underinsured or uninsured could have a material adverse effect on the Company.

We are involved in various routine legal proceedings
primarily involving claims for personal injury under the General Maritime Laws
of the United States and Jones Act as a result of alleged negligence. We
believe that the outcome of all such proceedings, even if determined adversely,
would not have a material adverse effect on our business or financial
statements.

Item 1A.          Risk
Factors.

In addition to the other information set forth in this
Quarterly Report, you should consider carefully the factors discussed in Part
I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended
December 31, 2005, which could materially affect our business, financial
condition or future results of operations. The risks described in our Annual
Report on Form 10-K are not the only risks facing our Company. Additional risks
and uncertainties not currently known to us or that we currently deem to be
immaterial also may materially adversely affect our business, financial
condition or operating results.

Item 6.            Exhibits.

|  |                             |                                                            
|- | --------------------------- | -----------------------------------------------------------
|* | 15.1
  -                    | Letter
  regarding unaudited interim financial information.
|* | 31.1
  -                    | Section
  302 Certification of CEO, William J. Doré        
|* | 31.2
  -                    | Section
  302 Certification of CFO, Peter S. Atkinson      
|* | 32.1
  -                    | Section
  906 Certification of CEO, William J. Doré        
|* | 32.2
  -                    | Section
  906 Certification of CFO, Peter S. Atkinson      
|  |                            
|* | Included
  with this filing
|  |                             |                                                            

Signature

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereto
duly authorized.

|GLOBAL INDUSTRIES, LTD.                     
|--------------------------------------------
|                                            
|By:/S/  
  PETER S. ATKINSON                
|Peter S. Atkinson                           
|President and Chief Financial Officer       
|(Principal Financial and Accounting Officer)

May 10, 2006