Form 10-K

Securities and Exchange Commission
Washington, D.C.  20549

Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996

OR

 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  0-22032

AMERICAN OILFIELD DIVERS, INC.
(Exact name of registrant as specified in its charter)

Louisiana                           72-0918249
(State or other jurisdiction of     (I.R.S. Employer
incorporation or organization)      Identification No.)

130 E. Kaliste Saloom Road
Lafayette, Louisiana                       70508
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (318) 234-4590

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common
Stock, no par value
                                                       (Title of class)

      Indicate by check mark if disclosure of delinquent filers pursuant
to  Item  405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information  statements  incorporated  by  reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
      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.  
Yes X No___.
      Aggregate market value of the voting stock  held by non-affiliates
(affiliates  being,  for  these  purposes  only,  directors,   executive
officers  and  the  holders  of  more than 5% of the registrant's Common
Stock) of the registrant at February  28,  1997,  based upon the closing
sale price of the Common Stock on the NASDAQ National Market: $97,942,246
      Number of shares of Common Stock outstanding at February 28, 1997:
10,463,248

Documents Incorporated by Reference
            Portions  of  the  proxy  statement  dated  April  7,  1997,
distributed in connection with the Annual Meeting of Shareholders  to be
held on May 16, 1997, is incorporated into Part III of this Report.

<PAGE>

ITEM 1.  BUSINESS


General

   American  Oilfield  Divers, Inc. (together with its subsidiaries, the
"Company"  or  "AOD") provides  subsea  services  and  products  to  the
offshore oil and  gas industry in the Gulf of Mexico, the West Coast and
select international  markets.  In addition, the Company provides inland
underwater services and products to domestic industrial and governmental
customers.  The Company's  services  are  provided through approximately
240 dive crews and are supported by a Company-owned  fleet  of 20 diving
support  vessels  (DSVs),  14  of  which  operate in the Gulf of Mexico.
Based upon the number of divers employed, the  size of its DSV fleet and
the  number of customers served, the Company believes  that  it  is  the
leading provider of diving services in the Gulf of Mexico.

   Since  its  establishment  in  1981,  the  Company  has  considerably
expanded  the  scope  of  its  products  and  services  through internal
development  and selective acquisitions.  In the last three  years,  the
Company's revenue has doubled as a result of improved demand in its core
Gulf of Mexico  market and through internal growth and acquisitions that
have expanded the Company's service and product offerings.  For the year
ended  December  31,  1996,  the  Company's  revenue  increased  19%  to
$105.8 million and EBITDA (earnings before interest, taxes, depreciation
and amortization)  more than doubled to $16.2 million as compared to the
fiscal year ended October 31, 1995.

   In November 1996,  the Company acquired 97% of the outstanding common
stock of Hard Suits Inc.  (HSI) for $11.8 million through an unsolicited
tender offer.  HSI manufactures,  markets  and operates a one-atmosphere
diving  suit  known  as the "NEWTSUIT(TM)".  HSI's  NEWTSUIT(TM)  technology
allows  for  manned  diving   in   deep   water  without  saturation  or
decompression, which are required by current  practices  for manned deep
water  diving.   NEWTSUIT(TM)  technology significantly reduces  operating
costs  associated with deep water  projects  due  to  the  reduction  in
personnel  and  time  needed  to  complete  such  projects.  The current
NEWTSUIT(TM) is capable of operations in water depths  up  to  1,200 feet.
HSI  has  developed  the  technology  to  manufacture a suit capable  of
operation  at depths up to 2,000 feet and is  working  with  the  United
States Navy  to produce a prototype.  The Company intends to manufacture
the NEWTSUIT(TM)  primarily  for  its  own  use and for sale to the United
States  Navy  and other navies. HSI also manufactures  and  markets  the
Remora(TM), a subsea rescue vehicle for submarines. The Company intends to
acquire the remainder of the outstanding common stock of HSI in 1997.

   In February 1997, the Company completed a secondary stock offering of
3,553,315 shares  of  common  stock  which provided the Company with net
proceeds of approximately $40 million.   The  Company used approximately
$16  million  to  repay  borrowings  outstanding at  December  31,  1996
including $12,450,000 to acquire HSI.   The  Company  intends to use the
remaining  proceeds  for  general corporate purposes, including  working
capital requirements and to  fund  any  future  capital expenditures and
strategic asset acquisitions.

   Key elements of the Company's growth strategy are to continue to:

*  Focus  on  Gulf  of  Mexico  Market.  The Company's  Gulf  of  Mexico
   operations will continue to be  its  core  business.  Since 1993, the
   Company has significantly increased the number  and  capabilities  of
   its  DSVs  in  the  Gulf of Mexico.  The Company believes it is well-
   positioned to take advantage  of  opportunities in the Gulf of Mexico
   market.

*  Diversify Revenue Base.  Over the past  three  years, the Company has
   expanded  its  operations  to  inland  markets, the U.S.  West  Coast
   market,  and  select international markets,  including  West  Africa,
   Latin America, and the Middle East.  Revenues from these sources have
   increased  substantially  over  the  past  three  years,  from  $12.3
   million, or  23%  of  total revenue, in the fiscal year ended October
   31, 1994 to $41.9 million,  or  40%  of  total  revenue, for the year
   ended December 31, 1996.

*  Provide Single-Source Solutions for Customers.  Through  expansion of
   its  fleet  of  DSVs and the broadening of its services and products,
   the Company can offer  total project management services.  Management
   believes this integrated approach simplifies a customer's procurement
   process  and  reduces  the   Company's   dependence   on  third-party
   contractors.

*  Expand Services and Products.  By adding the Big Inch, Tarpon Systems
   and NEWTSUIT(TM) products, the Company has significantly  broadened its
   capabilities and complemented its core subsea services business.  The
   Company  intends  to  continue  to  expand  its services and products
   internally and through strategic acquisitions.

Subsea and Other Services

   The  Company  provides  subsea  services  to support  all  phases  of
offshore  oil  and  gas  activities,  including  drilling,   production,
abandonment,   and   salvage.    These  services  include  construction,
installation, maintenance, repair,  inspection  and  support of drilling
operations; development of offshore pipelines and production  platforms;
and  ongoing production activities.  Subsea services are provided  to  a
diverse  group of customers, including major and independent oil and gas
exploration   and   production   companies,   offshore  engineering  and
construction companies, and major pipeline transmission  companies.  The
Company's  offshore  operations  are currently performed through  manned
surface and saturation diving activities  at  depths  up  to 1,000 feet.
With  the acquisition of HSI, the Company intends to use the  NEWTSUIT(TM)
as a cost-effective  alternative  for  operations  at depths up to 1,200
feet.

   On December 31, 1996, the Company employed approximately  400 divers,
tenders, and diving supervisors, supported by the Company's fleet  of 20
DSVs,  ranging  in  length  from  65 to 210 feet, and a 150-foot jack-up
derrick barge with a 220-ton Manitowoc  crane.   The  Company  owns  and
operates  seven ROVs.  Five of these are observation ROVs, which support
the Company's  diving  activities, and two are work-class ROVs outfitted
with manipulators to perform  tasks  in  depths  up  to 3,000 feet.  The
Company owns seven NEWTSUITsTM, six of which are deployed for operations
in  Australia,  the  North Sea, and the Gulf of Mexico.   The  Company's
offshore diving operations  are  coordinated  through  regional  staging
facilities  in the Port of Iberia and Harvey, Louisiana; Houston, Texas;
Oxnard, California;  Dubai,  United  Arab  Emirates;  and Port Harcourt,
Nigeria.

   The Company provides a variety of specialized inland  diving services
to  industrial and governmental customers.  These services  include  the
maintenance, repair, and inspection of bridges, docks, piers, pipelines,
and other  inland  underwater structures, the inspection and maintenance
of hydroelectric and  nuclear  power  plants  and  small to medium-sized
general construction projects requiring underwater capabilities.  Inland
operations  are  coordinated  through  regional  staging  facilities  in
Houston, Texas; Kansas City, Kansas; and Columbus,  Ohio.   The  Company
also   provides  inland  diving  services  from  its Oxnard,  California
operations base.

   The Company also provides environmental remediation and emergency oil
spill response  services  to  customers  operating  in  both  inland and
offshore markets.  The Company's services include oil and chemical spill
containment  and removal, remediation of naturally occurring radioactive
material, pit  closure, bioremediation, asbestos abatement services, and
confined space entry activities.

   Most  of the Company's  operations  are  subject  to  weather-related
seasonality as well as cyclical demand based on the capital expenditures
of  oil and  gas  companies  for  offshore  production  and  exploration
activities.

   Traditional  Diving  Techniques.   The  Company  conducts  its diving
operations  using  the  three traditional diving techniques: air diving,
mixed  gas  diving  and  saturation   diving,   all   of   which  use  a
surface-supplied  breathing media.  With the addition of the  NEWTSUIT(TM)
technology, the Company has an alternative method of diving at depths up
to 1,200 feet.

   The choice among  the  three  traditional techniques is determined by
diver decompression requirements,  which  are  in turn determined by the
depth  at  which the diver works and the time to be  spent  at  a  given
depth.  Decompression  is the process by which the diver's depth (or the
ambient pressure) is decreased  over  a  period  of  time long enough to
prevent  the gases absorbed by the diver's body tissues  from  expanding
into vapor  and causing the "bends," a medical condition that can result
in injury or  death.   As dive depth and dive time increase, the diver's
body tissues absorb increasing  amounts  of  ambient gases and require a
corresponding increase in decompression time.   After  a given time at a
given  depth, the diver's body tissues reach the "saturation  point"  at
which no  additional  gases  are absorbed.  As a result, additional time
spent at that depth will not require  additional decompression time when
the diver ascends.  As a general rule,  after  the  saturation  point is
reached,  approximately  one  day of decompression time is required  for
ascent from each approximately 100 feet of water depth.

   The air diving technique is  employed  in  relatively  shallow  water
projects  (up  to approximately 160 feet) of short duration and does not
require divers to  reach the saturation point.  In air diving, which the
Company uses to provide  many  of its diving services, divers are linked
to the surface by a diving umbilical containing compressed air lines and
communications equipment.  The diver  enters the water directly, without
the  use  of  a  diving bell, descends to the  work  site,  accomplishes
project-related activities,  and begins to decompress in the water as he
ascends to the surface.  Decompression  is conducted through timed stops
at intervals of ten feet and in a decompression  chamber  upon return to
the surface.  The length of time a diver is required to remain  at  each
interval  depends  upon  dive  length and depth.  At depths in excess of
approximately 220 feet the diver  is  required  to  enter  a diving bell
before surfacing.

   Mixed gas diving is used for projects of relatively short duration in
water depths between 160 and 300 feet.  For this type of diving,  divers
breathe a mixture of helium and oxygen, which reduces nitrogen narcosis,
the  harmful  effect  of  nitrogen  when  breathed  at  relatively  high
pressures  for  extended  periods.   This  type  of diving also requires
decompression as the diver ascends in the water and the use of a surface
decompression chamber.  The decompression times required  for  mixed gas
diving generally exceed those required for air diving.

   For  subsea  projects in depths of 300 to 1,000 feet and for projects
of relatively long  duration at depths below approximately 180 feet, the
Company typically conducts  its  operations  by  using saturation diving
techniques from a special pressurized chamber on the  surface  in  which
the  divers live at a pressure equivalent to the depth of the work site.
Saturation  diving is generally considered the safest and most efficient
form of the three  traditional  diving techniques.  The chamber in which
the divers live is filled with a  mixture  of  helium  and  oxygen  that
saturates  the  divers'  body  tissues.  Divers are transported from the
surface to the work site by a pressurized  diving  bell.   After working
underwater  for six to eight hours, divers are transported back  to  the
DSV by the diving  bell, and return to the pressurized living chamber to
be replaced by a new  group of divers who are lowered to the job site to
continue the underwater  work.   The  Company  currently  operates  five
saturation  diving  systems,  each  of which can accommodate four to six
divers at a time.  This allows the Company  to conduct diving operations
24  hours  a  day.   During  such  a  project,  the pressurized  chamber
functions as living quarters with food, showers, sleeping accommodations
and sanitary facilities.  Saturation diving systems and their associated
life-support equipment are generally built into DSVs,  but  can  also be
located  on drilling rigs, production platforms, barges or other vessels
or structures.   The  primary advantage of saturation diving is that the
divers can remain under  pressure  and  make repeated dives for extended
periods  (generally  up  to  a  maximum  of  30 days)  before  beginning
decompression.  This method reduces the risks and delays associated with
frequent decompression and enhances overall productivity.

   The headquarters and principal staging facilities  of  the  Company's
Gulf  of  Mexico diving operations are at the Port of Iberia, Louisiana.
A regional  staging  facility is located in Harvey, Louisiana.  Both the
Port  of  Iberia  and Harvey  offices  are  full-service,  decentralized
operations centers,  strategically  located  for the rapid deployment of
personnel and equipment.

   One-Atmosphere Diving.  One-atmosphere diving,  in which the diver is
maintained at normal surface atmospheric pressure, is  an alternative to
saturation diving for jobs in depths up to 1,200 feet.   In  this method
of  diving, the diver wears a proprietary diving suit developed  by  HSI
known  as  the  "NEWTSUIT(TM)."  The diver wearing a NEWTSUIT(TM) enters the
water and returns to the surface  with  the  assistance  of a NEWTSUIT(TM)
launch and recovery diving system but without the need of  a pressurized
diving  bell.   Atmospheric pressure is maintained at all times  in  the
NEWTSUIT(TM), thereby  eliminating the diver's need for any decompression.
This permits the diver  to  make  repeated dives at atmospheric pressure
without the delays and costs associated  with  frequent decompression or
saturation diving.

   The Company does not expect to use the NEWTSUIT(TM)  as  a  replacement
for traditional diving techniques, but believes that the suit will serve
as   an   additional  diving  technique  in  appropriate  circumstances,
particularly  those in which substantial decompression time is required.
When using the NEWTSUIT(TM) the diver performs tasks not by the direct use
of his own hands but by means of manipulators outfitted with specialized
tools.  Consequently, the time spent by the diver in actually performing
certain tasks in  a NEWTSUIT(TM) may be substantially longer than the time
required for the same  tasks using other diving techniques.  The Company
believes, however, that  in  certain  applications  the overall time and
costs  required to complete a project may be decreased  because  of  the
elimination of decompression time.  The Company believes that refinement
of the tools  used  with  the NEWTSUIT(TM) will increase the efficiency of
one-atmosphere diving and broaden its application.

   Diving Support Services.   In  connection with its diving operations,
the  Company  provides  support services  that  minimize  dependence  on
third-party subcontractors  and maximize safety and use of the Company's
vessels, equipment, personnel and organizational structure.  The Company
operates a small fleet of leased  crew  cabs and vans that transport its
dive  crews  and  small  equipment  items from  its  facilities  to  the
Company's DSVs.  This capability minimizes  the  Company's  reliance  on
third-party   truck   fleets,  permits  project  scheduling  efficiency,
enhances reliability and  quality control, and significantly reduces its
costs.  For medium to large  equipment hauls, the Company generally uses
third-party  truck fleets, which  for  these  purposes  are  capable  of
providing reliable,  quality  service at greatly reduced costs.  As part
of the Company's DSV operations,  the Company also provides full-service
catering  services  to  the  vessel  and   dive  crews,  which  minimize
dependence on third-party caterers and permit  the  Company  to  further
control  costs.   The Company's diving support services distinguish  the
Company from its competitors  and  are  consistent  with  the  Company's
business strategy.

   International   Services.   In  July 1992,  the  Company  established
administrative offices  in  Lagos,  Nigeria and an operations office and
shop in Port Harcourt, Nigeria to provide diving services to oil and gas
companies operating in Nigeria and other  West  African  locations.  The
Company has expanded its activities in West and South Africa and to seek
further international expansion of its diving services in Latin America,
the  Middle  East,  and  Southeast  Asia.   In March, 1995, the  Company
acquired certain diving and related assets located in Dubai, United Arab
Emirates, and established an operational and  sales  office  in Dubai to
provide diving services to oil and gas companies operating in the Middle
East.  The Company is reviewing its presence in the Middle East  and, if
no  significant  opportunities  materialize  in  the first six months of
1997, the Company may elect to reduce its resource  commitment  to  this
area.  The Company currently maintains two DSVs in Port Harcourt.

   Inland  and  West Coast Services.  The Company's inland United States
diving operations  have  historically  provided a variety of specialized
domestic diving services, including pipeline  repair,  pipeline lowering
and  anchoring,  underwater  drilling, underwater welding,  burning  and
sawing, bridge inspection, dock  and  pier  inspection  and  repair, and
installation  and  repair  of water intake and outflow structures.   The
Company also performs underwater  construction,  maintenance, repair and
inspection  of hydroelectric and nuclear plants.  The  Company's  inland
operations are conducted in lakes and rivers and along coast lines.  The
operations bases  of  the  Company's  inland  operations  are located in
Houston, Texas; Kansas City, Kansas; and Columbus, Ohio.  The operations
base  of  the  Company's  West  Coast  Services  are  located in Oxnard,
California.  Recently, the Company has changed the focus  of  its inland
operations to larger marine construction projects, in which the  Company
functions  as  prime  contractor.   To reduce the effect of seasonality,
during winter months the Company expects  to focus primarily on projects
in warm-weather states that are less likely  to be adversely affected by
winter weather.

   Environmental  Remediation  and Oil Spill Response  Operations.   The
Company is an environmental contractor  serving  customers  operating in
both inland and offshore markets and specializes in emergency  oil spill
response  and  hazardous  waste  remediation  activities.  The Company's
areas  of  expertise  include  bioremediation, oil  and  chemical  spill
containment and removal, remediation  of naturally occurring radioactive
material (NORM), pit closure, asbestos  abatement services, and confined
space entry activities.


Subsea Products

   One-Atmosphere Diving Suits.  The NEWTSUIT(TM)  is an articulated metal
suit with patented joints that allow the diver a relatively  wide  range
of  motion and to work at surface atmospheric pressure (one atmosphere).
The NEWTSUIT(TM)  and other products and related services are manufactured
and developed by  HSI in North Vancouver, British Columbia, Canada.  The
current NEWTSUIT(TM) is capable of operations to water depths up to 1,200
feet.  The Company intends  to  manufacture the NEWTSUIT(TM) primarily for
its own use and for sale to the United  States Navy and to the navies of
other  countries.   HSI has developed a suit  capable  of  operation  at
depths up to 2,000 feet  and  is  working with the United States Navy to
produce a prototype.  The Company is also considering the feasibility of
a one-atmosphere diving suit for deployment  in  shallower  waters using
HSI technology.

   Submarine  Rescue  System.  HSI also manufactures a submarine  rescue
vehicle known as the "Remora(TM),"  a  submersible decompression chamber
that  has  an  articulated  skirt  to permit  docking  with  a  disabled
submarine  at  angles of up to 60 degrees. The Remora(TM) is  capable  of
recovering, and subsequently transferring  under  pressure,  up  to nine
persons  at  a  time  from  a disabled submarine.  One fully operational
Remora(TM) has been sold for  the  benefit of the Royal Australian Navy,
and the Company is currently marketing  the  Remora(TM) to the navies of
other nations.

   Pipeline Connector Products.   The Company manufactures and markets a
patented line of subsea pipeline connectors used in the construction and
repair of underwater pipelines. The Big Inch product  line  manufactured
by  the  Company includes Flexiforge(TM) end connectors, Ball Flange(TM)
connectors  and Load Limiting(TM) connectors used in pipeline and flowline
tie-ins, emergency  repairs  to  pipelines, flow lines and risers and to
retrofit  mainline  lateral tie-ins.   The  Company  offers  a  standard
product  line  and also  offers  modifications  of  its  connectors  for
specialized applications.   In  the  last  two  years,  the  Company has
diversified into land-based pipeline components with a product  line  of
electrical  isolation  joints  known  as  Big Inch Insulating FlangesTM,
which  are used to isolate segments of pipelines  from  corrosion.   The
Company  has  also developed the InnerLOCK(TM) Cutter system, a mechanical
cutter that removes stubs (abandoned in-place drillpipe) without the use
of explosives,  by  cutting them from inside the pipe and the BIMS-Tap(TM)
Tee, a mechanical subsea  "hot  tap"  device that permits the joining of
two subsea pipelines without requiring  the  pipelines  to be brought to
the  surface  and  without interrupting the flow in the pipelines.   The
Company  believes  that   the   Big   Inch   products   permit  pipeline
construction,  repair  and  removal  to  be  performed  faster and  more
efficiently than conventional systems.

   Components of Big Inch connectors are forged and machined to Big Inch
specifications by various unaffiliated contractors in the  United States
and  the  United  Kingdom.   At its Houston plant, the Company assembles
these components, and the assembled products are shipped to customers or
used by the Company in its own  diving  operations.   Assembly,  quality
control and warehousing of Big Inch products are conducted at offices in
Houston, Texas and Aberdeen, Scotland.  Although Big Inch sales are made
primarily  to  users  in  the Gulf of Mexico and the North Sea, Big Inch
products are marketed and sold  worldwide  through both its Aberdeen and
Houston offices.  Big Inch products are marketed in conjunction with the
Company's subsea services and are also sold to third-party installers.

   Marginal  Well  Production  Systems.   The Company  manufactures  and
installs the Tarpon System, a patented production  system primarily used
in  offshore  marginal field development.  A Tarpon System  consists  of
underwater anchor  piles  and  a  cable  guying assembly that supports a
site-specific well protector caisson, boat landing, platform and related
production equipment.  Tarpon Systems are  best suited for marginal well
production in water depths from 80 to 300 feet and for the production of
larger  fields  using  a  satellite  system  of multiple  Tarpon  System
structures  tied  into  a  central  production  facility.   The  Company
believes  that  Tarpon  Systems  are  a  cost-effective  alternative  to
traditional, fixed multi-leg platforms or  other minimal systems because
of  their  relatively  low  construction  costs and  ability  for  rapid
installation, allowing oil and gas producers  to  recognize  early  cash
flows  from  production.   The Company has at least seven competitors in
this market, comprised primarily  of  engineering firms.  The Company is
actively seeking opportunities for the  Tarpon System both in the United
States and select international areas including  West Africa, the Middle
East, India and Southeast Asia.

   Concrete  Storage Barges. The Company manufactures  concrete  storage
barges  that may  be  used  as  an  alternative  to  steel  tankers  for
offloading  and  storage  of  up to 350,000 barrels of oil either on the
surface  or  in water depths up to  approximately  350  feet.   Concrete
floating or subsea  barges  can be used with a Tarpon System for storage
of oil produced from marginal  fields that do not have existing pipeline
infrastructure.  The Company also  intends to offer the concrete storage
barges to others on a stand-alone basis.

Marketing

   The Company's marketing efforts with  respect  to its diving services
are  primarily  concentrated  in the Gulf Coast and West  Coast  of  the
United States, in West Africa and  in  the  Middle  East.   The  Company
maintains  a  focused  marketing  effort  through  a  direct sales force
consisting of approximately 20 full-time sales personnel  operating from
Lafayette,   Houma,  and  Harvey,  Louisiana;  Houston,  Texas;  Oxnard,
California; Kansas  City,  Kansas; and Columbus, Ohio.  The Company also
has sales offices located in  Lagos,  Nigeria  and  Dubai,  United  Arab
Emirates.  The Company's senior management participates in the Company's
marketing efforts.  The Company's diving services are often marketed  in
conjunction  with  Big Inch and Tarpon System products and the Company's
other service and product lines.

Safety and Quality Assurance

   The  Company maintains  a  stringent  safety  and  quality  assurance
program  that  encompasses  all  areas  of  its  operations  and  relies
substantially  on  employee  experience  and  involvement.   An offshore
safety officer is assigned to every diving project regardless  of  size.
In  connection with its safety program, the Company maintains a rigorous
in-house   diver  training  program.   The  Company's  training  program
requires each  new  diver  (who must be a graduate of a certified diving
school) to spend at least 6  to 10 days of intensive onshore skill based
training prior to offshore deployment.  In addition, each new diver must
spend at least two years as a  diving  tender, maintaining equipment and
providing other top-side support to more  experienced divers and, in the
process,  learning  how  to  complete  diving  assignments   safely  and
efficiently,  and approximately two years as a junior diver on  a  large
crew, gaining more  experience  from  the  Company's senior divers.  The
Company stresses diver safety and training throughout the diver's tenure
with  the Company.  The Company believes that  its  safety  program  and
commitment   to  quality  have  given  it  a  competitive  advantage  in
attracting and  retaining  customers and divers.  The accomplishments of
the Company's safety program  were  recognized  by  the  National Oceans
Industries Association ("NOIA"), which awarded its Safety  in Seas Award
jointly to the Company and the Gulf of Mexico business unit  of  Chevron
USA,  Inc.  in 1996.  In 1997, NOIA awarded its Safety in Seas Award  to
the Company for  its  SMARTSM  program.   The  program  emphasizes Self-
Esteem,  Management,  Accountability, Responsibility and Training.   The
Company is the only award  winner  that has won the Safety in Seas Award
in two consecutive years.

Customers and Competition

   The Company's offshore customers  include  a  broad base of major and
independent oil and gas companies, offshore engineering and construction
companies and major pipeline transmission firms.   The  Company provided
diving and related services to approximately 700 customers  in  the year
ended  December 31, 1996.  The Company's ten largest customers accounted
for 44%  of  the  Company's total revenue in the year ended December 31,
1996 and for 46% and  39%  of  the  Company's  total revenues during the
fiscal  years  ended October 31, 1995 and 1994, respectively.   For  the
year ended December  31,  1996  and  the  year  ended  October 31, 1994,
Chevron U.S.A. accounted for 24% and 10%, respectively, of the Company's
total  revenues.   For the year ended October 31, 1995, United  Meridian
Corporation accounted  for 14% of the Company's total revenues.  In 1995
the Company entered into  an  alliance  agreement  with Chevron U.S.A.'s
Gulf  of  Mexico business unit under which the Company  is  a  preferred
provider of  diving  services  and has received a significant portion of
the Chevron unit's undersea work at prevailing rates.

   The level of activity that the  Company  may  perform  for  a  single
offshore  customer  depends  on,  among  other things, the amount of the
customer's capital expenditure budget devoted  to diving projects in any
single year.  This amount may vary substantially  from year to year.  As
a result, customers that account for a significant  portion  of revenues
in  one  fiscal year may represent an immaterial portion of revenues  in
other years.

   The available  market  for  diving  services  is  essentially divided
between the call-out (or day rate) market and the turnkey  (fixed price)
market.   Contracts are obtained either through direct negotiation  with
the customer  or  pursuant  to  bidding  procedures  established  by the
offshore  customer.   The  Company typically enters into "master service
agreements" or similar arrangements with most of its offshore customers,
that expedite providing call-out diving services for those customers and
enhance the Company's customer relationships.  These contracts establish
daily rates and terms (such as insurance requirements) for services that
the customer may need in the  future  or  on an emergency basis.  Master
service agreements may be long-term, may be  reviewed  and  renewed each
year, or may be of whatever duration the parties stipulate.

   In  past  years the Company derived approximately 80% to 90%  of  its
revenues from  the  call-out  market and approximately 10% to 20% of its
revenues  from  the  turnkey  market.    More   recently,  however,  the
percentage of turnkey revenues derived by the Company  has  increased to
approximately 20% to 30%.  The Company expects this trend to continue as
its  customers  attempt  to  use  fixed  price contracts as a method  of
reducing  their  costs  and risks and to predetermine  their  costs  for
budgetary purposes.  The  Company  attempts  to  minimize  the financial
risks  associated  with  fixed-price  contracts  by  stipulating certain
conditions to its performance that, if not met by the  customer,  result
in  increased  charges.   The  Company  may  not,  however,  be  able to
anticipate  all such risks and, especially in a very competitive market,
the Company may not be able to obtain such protective terms.

   The Company's  inland  customers  include utility companies, railroad
companies,  state  and  federal  governmental   agencies  (such  as  the
U.S. Army  Corps of Engineers and the U.S. Bureau  of  Reclamation)  and
political subdivisions  such  as  city  and  county governments.  Inland
diving and related services contracts are generally obtained pursuant to
formal   bidding   procedures   established  by  the  inland   customer.
Competition in the inland market  is  based  largely  on price, although
type  of  equipment  available,  location of or ability to  deploy  such
equipment and quality of service are  other  factors  considered  by the
customer.

   Because   diving  services  contracts  in  the  call-out  market  are
generally bid  upon  and  entered  into  one  to  two weeks prior to the
planned commencement of the projects, the Company in the past has had no
significant call-out diving services backlog.  However,  as  a result of
recent  increases  in  turnkey projects and the increased activities  of
Inland and West Coast Services  (in  which  turnkey  projects  are  more
common),  at  February  28, 1997 the Company's backlog of projects to be
performed in 1997 was approximately $22.6 million.

   The offshore diving industry  is highly competitive and is influenced
by events largely beyond the control  of  the Company.  At various times
since  1986,  many oil and gas companies significantly  decreased  their
expenditures for  development projects in the Gulf of Mexico in response
to substantial declines in oil and gas prices.  Also during that period,
a number of smaller  diving  firms  have  been  acquired  or have ceased
operations   entirely.    In  addition,  some  of  the  Company's  major
competitors have reorganized  and  redirected their efforts to different
or  more specialized markets.  While  more  than  50 independent  diving
companies  operated  in  the  Gulf  of  Mexico  in  1980, fewer than ten
currently  operate  on  an  on-going  basis in the Gulf of  Mexico.   In
addition, three offshore construction companies operating in the Gulf of
Mexico own diving subsidiaries or divisions  that  provide substantially
all  of  the  diving  services  required  by  their  respective   parent
companies.   The Company has three principal competitors in its Gulf  of
Mexico market,  Oceaneering International, Inc., Global Industries, Ltd.
and Cal Dive International,  Inc. The remaining smaller diving companies
in the Gulf of Mexico also compete  with the Company for diving projects
that  require  less  sophisticated  equipment   or   diving  techniques.
Although the Company occasionally provides diving services  to  offshore
construction companies with in-house diving operations, the Company does
not expect to derive substantial revenues from such services.  Moreover,
such   in-house  diving  operations  also  provide  diving  services  to
unaffiliated third parties and compete with the Company and other diving
companies in the Gulf of Mexico on a limited basis.

   The  Company   has   two   major   competitors  with  well  developed
international  sales  capabilities (Hydro  Tech,  Inc.  and  Oceaneering
International, Inc.) that  manufacture  product lines of connectors used
in the repair and construction of underwater  pipelines.   Both of these
manufacture connectors using elastimer seal technology as opposed to the
patented  Big  Inch  metal-to-metal  seal  technology.   Several smaller
companies  also  compete  in  the connector market, one of which  offers
metal-to-metal seal technology.   Despite  the generally higher price of
Big  Inch  products,  management  believes  that  the  Company  competes
effectively on the basis of the installation, responsiveness and quality
advantages associated with its metal-to-metal seal technology.

   Competition for underwater services historically  has been based upon
the type of underwater equipment available, location of  or  ability  to
deploy  such  equipment, quality of service and price.  In recent years,
price  has been  the  most  important  factor  in  obtaining  contracts,
although  the abilities to develop improved equipment and techniques and
to attract  and  retain skilled personnel are also important competitive
factors.  The Company  believes, however, that the awarding of contracts
on the basis of pre-existing  relationships  between  the  customer  and
supplier,  combined  with  the reliability and quality of the supplier's
services, is a trend that has benefited the Company.  An example of this
is the Company's relationship  with  Chevron  U.S.A.'s  Gulf  of  Mexico
business unit, which has resulted in the Company's obtaining one of only
two such alliances currently existing between a diving contractor and  a
major oil company in the Gulf of Mexico market.  The Company competes in
all  of  its  service  and  product  lines  with  both  large  and small
companies,  and  certain  of these companies are larger and have greater
financial and other resources  than  the  Company.  Should the Company's
competitors   develop  and  market  products  or   services   that   are
technologically  superior  to  any  products  manufactured  or  services
rendered  by  the  Company, the Company's ability to market its products
and services would be significantly impaired.


Patents

   The Company owns  certain technology (including patents) with respect
to its Big Inch pipeline connector products line, the pressurized rotary
joints  used  in  the  NEWTSUIT(TM),   certain   underwater  Ultrascan(TM)
radiography systems, its Sonar ScourVision(TM) system,  and  the  Tarpon
System.   The  Company  believes  that  its  customer  relationships and
reputation,  together  with  its technical expertise, responsiveness  to
customers  and full-service capabilities,  are  of  greater  competitive
significance  to  the  Company than its technology.  While the Company's
business is not dependent  on any one of its patents, the loss of patent
protection for the Company's  entire  Big Inch product line could have a
material  adverse  effect on the Company's  competitive  position.   The
Company's Big Inch patents  generally  are scheduled to expire from 1999
to  2003.  Although the patent for one of  the  Big  Inch  products  has
expired, due to the high start-up costs of this product, management does
not believe  that the loss of the exclusive use of this patent will have
a material adverse  effect  on  the Company's competitive position.  The
patents covering the NEWTSUI(TM) joints  will  expire  in  the years 2004
through  2009  and  have  an  average  remaining  term  of approximately
nine years.

Government Regulation

   Many aspects of the Company's operations are subject to  governmental
regulation,  including  regulation  by  the  U.S. Coast  Guard  and  the
Occupational  Safety  and  Health  Administration, as well as by private
industry organizations such as the American  Bureau  of Shipping and the
Association of Diving Contractors.  The Coast Guard sets  certain safety
standards  and  is  authorized  to  investigate  vessel  accidents   and
recommend  improved  safety  standards  relating to vessels and offshore
diving.   The  Occupational  Safety and Health  Administration  performs
similar functions with respect  to  the Company's onshore facilities and
operations.  Virtually all employees  engaged  in the Company's offshore
diving operations are covered by provisions of the  Jones Act, the Death
on the High Seas Act and general maritime law, which  operate  to exempt
these  employees from the limits of liability established under worker's
compensation  laws  and  instead  permit them or their representative to
maintain an action against the Company  for  damages  for  a job related
injury,  with  no  limitations  on  the  Company's  potential liability.
Certain  of  the  Company's  employees  may  also  be  covered   by  the
Longshoremen  and  Harbor Worker's Act, which permits such employees  to
seek compensation for  a job related injury under that act.  As a result
of the Company's expansion  into  Nigeria,  the  Middle  East  and other
foreign  jurisdictions,  the  Company  is also subject to regulation  by
other governments.

   The    Company    is    required   by   various   governmental    and
quasi-governmental agencies  to  obtain  certain  permits,  licenses and
certificates  with  respect  to  its  operations.  The kinds of permits,
licenses and certificates required in the  Company's  operations  depend
upon a number of factors.  The Company believes that it has obtained  or
can  obtain all permits, licenses and certificates that are necessary to
the conduct of its business.

   In  addition, the Company depends on the demand for its services from
the oil  and  gas  industry  and,  therefore,  the Company's business is
affected  by  laws  and  regulations,  as  well  as changing  taxes  and
governmental policies, relating to the oil and gas  industry  generally.
In particular, the exploration and development of oil and gas properties
located on the Outer Continental Shelf of the United States is regulated
primarily by the Minerals Management Service.

   The operations of the Company are also affected by numerous  federal,
state  and  local  laws  and  regulations  relating to protection of the
environment including the Outer Continental Shelf Lands Act, the Federal
Water Pollution Control Act of 1972 and the  Oil  Pollution Act of 1990.
In addition, the Company's environmental services operations are subject
to regulation by various local, state and federal agencies including the
Louisiana  Department  of  Environmental  Quality and U.S. Environmental
Protection  Agency,  among others.  The Company  is  not  aware  of  any
non-compliance with applicable  environmental  laws and regulations that
would likely have a material adverse effect on the Company's business or
financial condition.  The requirements of these laws and regulations are
becoming increasingly complex, stringent and expensive  to  comply with,
and some environmental laws provide for liability for damages to natural
resources (including damage to fish and wildlife) or threats  to  public
health  and  safety.   Certain  environmental  laws  provide for "strict
liability"   for   remediation  of  spills  and  releases  of  hazardous
substances into the  environment  even  after  such substances have been
transferred to a disposal contractor.  Sanctions  for non-compliance may
include revocation of permits, corrective action orders,  administrative
or civil penalties, and criminal prosecution.  Such laws and regulations
may expose the Company to liability for (i) its actions that  may  cause
environmental  damage  such  as  vessel collisions with rigs, tankers or
pipelines,    (ii) environmental    harm     caused     by     defective
Company-manufactured   products,   improper   installation  of  products
manufactured by others or the improper handling  of hazardous materials,
(iii) the conduct of or conditions caused by others, or (iv) acts of the
Company that are in compliance with all applicable laws at the time such
acts were performed.  It is possible that changes  in  the environmental
laws  and  enforcement  policies  thereunder, or claims for  damages  to
persons, property, natural resources  or the environment could result in
substantial  costs  and  liabilities  to  the  Company.   The  Company's
insurance policies provide liability coverage  for sudden and accidental
occurrences of pollution, clean-up and containment  of  the foregoing in
amounts  that  the  Company  believes  are  comparable to policy  limits
carried in the offshore diving industry.

   The Company's vessel operations in the Gulf  of Mexico are considered
to be engaged in "coastwise trade" under federal  maritime  law and are,
therefore, subject to special regulation by federal government agencies.
Under  these  laws and regulations, only vessels owned by United  States
citizens that are  built  in and documented under the laws of the United
States  may  engage in "coastwise  trade."  Certain  provisions  of  the
Company's Articles  of  Incorporation  are intended to aid in compliance
with the foregoing requirements regarding  ownership  by  persons  other
than United States citizens.

Insurance

   The  Company's  operations  are  subject  to  the  inherent  risks of
offshore  and  inland  marine activity including accidents resulting  in
personal injury, the loss  of  life  or property, environmental mishaps,
mechanical failures and collisions.  The  Company's  diving  and  vessel
operations  involve numerous hazards to divers, vessel crew members  and
equipment, and  can  result  in greater incidence of employee injury and
death and equipment loss and damage  than  occurs  in many other service
industries.  The Company's ownership and operation of vessels gives rise
to  large  and varied liability risks, severe risks of  collisions  with
other  vessels   or   structures,   sinkings,  fires  and  other  marine
casualties, which can result in significant  claims  for damages against
both  the  Company  and third parties for, among other things,  personal
injury, death, property  damage,  pollution  and  loss of business.  The
Company's   manufacturing   operations   involve   significant    risks,
particularly      product     liability     and     warranty     claims.
Company-manufactured  products  installed  in the past, as well as those
installed in the future, could give rise to such claims.

   The  Company maintains insurance that it believes  is  in  accordance
with  general  and  industry  standards  against  normal  risks  of  its
operations.   The  Company  also carries workers' compensation, maritime
employer's liability, general  liability,  product  liability  and other
insurance customary in its business.  All insurance is carried at levels
of  coverage  and  deductibles  that  the  Company considers financially
prudent, although there can be no guarantee that the amount of insurance
carried by the Company is sufficient to protect  it fully in all events.
Liabilities to customers and third parties for damages caused by claimed
defects in products manufactured by the Company may  be  significant and
are  not insured to the extent that they are in the nature  of  warranty
claims or consequential damages.  A successful liability claim for which
the Company  is  underinsured or uninsured could have a material adverse
effect on the Company.   Moreover,  no  assurance  can be given that the
Company will be able to maintain adequate insurance  in  the  future  at
rates that it considers reasonable or that all types of coverage will be
available.


Employees

   The  size  of  the  Company's work force, other than its clerical and
administrative personnel,  is  variable  and  depends upon the Company's
workload at any particular time.  Diving personnel  are  paid  only  for
actual  days  worked,  but  are  available on a year-round basis and are
entitled  to  participate  in  all of  the  Company's  employee  benefit
programs.  At December 31, 1996,  the  Company  employed 182 divers, 141
tenders, 43 diving supervisors, 327 vessel crewmen,  barge  crewmen  and
operations  support  personnel,  and  207  clerical  and  administrative
personnel.  Of these persons, 760 are hourly employees (divers  are paid
on  an  hourly  basis)  and  140  are  salaried  employees.  The Company
believes that its relationship with its employees is satisfactory.



        UNCERTAINTY OF FORWARD-LOOKING INFORMATION; RISK FACTORS

   Certain  of the statements set forth in Items 1, 3 and 7 and elsewhere  
in this report (such as, for example, statements as to  planned  capital
expenditures and  market opportunities; anticipated personnel and vessel
rates and utilization;  extent  of  future rate of pipeline installation
and repair; anticipated demand for Company  products;  anticipated  deep
water development activities; international expansion opportunities; and
anticipated  Company  diversification) are not statements of historical
fact, are forward-looking and are based upon the Company's current  belief  
as to the outcome and timing of such future  events.   A variety of risks 
and  uncertainties  including  many beyond the control of the Company can 
affect the outcome and timing of such events and can affect the financial  
performance  of  the Company generally. These factors include, but are not 
limited to, the matters described below.  Should one or more of these risks 
or uncertainties occur, or should underlying assumptions prove incorrect, 
the Company's financial performance could be affected and actual  results  
and plans could differ materially from those expressed in the forward-looking
statements.   Investors  and prospective investors should  consider  the
following information, as  well  as  the  other information contained in
this report, in making any investment decision  with  respect to Company
securities.

Cyclical Demand; Dependence on Energy Industry

   The   demand   for   the  Company's  offshore  diving  services   has
traditionally been cyclical,  depending  on the condition of the oil and
gas industry, and specifically on the capital  expenditures  of  oil and
gas companies for exploration and production  activities.  These capital
expenditures  are influenced by both short-term and long-term trends  in
oil and gas prices,  expectations  about  future  prices,  the  cost  of
exploring  for,  producing  and  delivering  oil  and  gas, the sale and
expiration  dates  of  offshore  leases in the United States  and  other
nations, the discovery rate of new  oil  and  gas  reserves  in offshore
areas,  local  and  international  political,  regulatory  and  economic
conditions and the ability of oil and gas companies to generate capital.
The  Company believes there has been a general increase in the level  of
exploration  and  production  activities in the Gulf of Mexico in recent
years resulting from increases in oil and gas prices, but the extent and
duration of this condition is beyond the control of the Company and will
depend primarily upon worldwide  oil  and  gas  prices  and  the capital
expenditures  of  oil  and  gas  companies for offshore development.   A
significant or prolonged reduction  in  natural gas or oil prices in the
future would likely depress offshore drilling  and development activity,
reduce the demand for the Company's services and  could  have a material
adverse  effect  on  the  Company's  financial condition and results  of
operations.

Operating Risks and Limitation of Insurance Coverage

   The Company's operations involve a  high  degree of operational risk,
particularly of personal injuries, fines and costs imposed by government
agencies,  product  liability  and  warranty  claims,  and  third  party
consequential damage claims.  The Company's diving and vessel operations
involve numerous hazards to divers, vessel crew  members  and equipment,
and  result  in  a  greater  incidence of employee injury and death  and
equipment loss and damage than  occurs in many other service industries.
Virtually  all  employees  engaged  in  the  Company's  offshore  diving
operations are covered by provisions  of the Jones Act, the Death on the
High Seas Act and general maritime law,  which  operate  to exempt these
employees  from  the  limits  of  liability  established  under worker's
compensation laws and, instead, permit them or their representatives  to
maintain  actions  against  the  Company  for  damages  or  job  related
injuries, with no limitations on the Company's potential liability.  The
Company's  ownership  and  operation  of  vessels give rise to large and
varied liability risks, such as risks of collisions  with  other vessels
or  structures, sinkings, fires and other marine casualties,  which  can
result  in  significant  claims for damages against both the Company and
third parties for, among other  things, personal injury, death, property
damage,  pollution and loss of business.   The  Company's  manufacturing
operations involve significant risks, particularly product liability and
warranty claims  and  installation risks.  Company-manufactured products
installed in the past,  as  well as those to be installed in the future,
could give rise to such claims.  The Company maintains insurance that it
believes is in accordance with  general  industry  standards against the
normal risks of its operations.  Such insurance, however,  is subject to
various  exclusions,  and  there  can be no assurance that the Company's
insurance  policies  will  be  sufficient   or   effective   under   all
circumstances  or  against  all  liabilities to which the Company may be
subject.  Liabilities to customers and third parties for claimed defects
in products or damages caused by defective  products manufactured by the
Company may be significant and are not insured  to  the extent that they
are in the nature of warranty claims or other claims  based on breach of
contract, nor has the Company established substantial reserves  for such
claims.   A  successful claim for which the Company is not fully insured
could have a material  adverse effect upon the Company and its financial
condition.  Moreover, no assurance can be given that the Company will be
able to maintain adequate  insurance  in  the  future  at  rates that it
considers  reasonable  or  that all types of coverage will be available.
See "Business--Insurance."


Availability of Divers

   Divers require up to two  years  of  diving school followed by two or
more years of apprenticeship and on-the-job  training  before  they  are
considered  qualified  to work as divers for the Company.  With only six
diving schools producing  diving  graduates  qualified to be employed by
the Company (a decrease from 12 in 1980), fewer divers are available for
employment.   As a result, there can be no assurance  that  the  Company
will have a supply  of qualified divers sufficient to conduct and expand
the  Company's diving  operations.   Although  none  of  the  terms  and
conditions  of  employment  of  the  Company's  divers are determined by
collective bargaining with a union, there can be  no  assurance that the
Company's divers may not be subject to union organization  attempts  and
collective  bargaining  in  the  future.   The Company believes that its
ability to employ divers and other employees not subject to a collective
bargaining agreement is important to its ability to compete successfully
for diving work.

Contract Bidding Risks

   A significant percentage of the Company's  total  revenues is derived
from  increasingly  large  contracts  performed on a fixed-price  basis.
This percentage and the relative size of  such contracts are expected to
increase  in the future.  Fixed-priced contracts  are  inherently  risky
because of  the possibility of underbidding and the Company's assumption
of substantially  all  of the project's operational risks.  The revenue,
cost and gross profit realized  on  such  contracts  often vary from the
estimated amounts for various reasons including, among  others,  changes
in  weather  and other job conditions, variations in labor and equipment
productivity  (such  as  equipment  failure)  from  original  estimates,
project  modifications   creating   unreimbursable  costs  overruns  and
supplier or subcontractor failure to  perform.   These  factors  and the
risks inherent in the diving and the inland marine construction industry
can  result in reduced profitability or losses on fixed-price contracts.
When demand  for the Company's diving services decreases, the percentage
of fixed-price contracts may increase.  Accordingly, the normal negative
effects on the  Company's operations resulting from decreased demand can
be exacerbated by  an  increased  percentage  of  fixed-price contracts.
Moreover, the failure to obtain large projects, delays  in  the awarding
of  large  projects, the postponement of previously awarded projects  or
delays  in completion  of  large  projects  may  negatively  impact  the
Company's results of operations and financial condition.  See "Business-
-Customers and Competition."

Effect of Adverse Weather Conditions; Seasonality

   The Company's  diving  services--both  offshore and inland--are often
curtailed when adverse weather conditions are  present  or  anticipated.
During  such  periods  of  curtailed activity, the Company continues  to
incur operating expenses, but  revenues  from  operations are delayed or
reduced.   Weather  conditions  during the winter months  are  generally
adverse and substantially curtail the Company's diving activities in the
Gulf of Mexico and, to a lesser but  nevertheless substantial extent, in
the  inland waters of the United States.   Winter  conditions  typically
begin  in December and continue until April, although in some years, can
begin as  early  as  late  September and  continue  through  early  May.
Although  adverse  weather  is  more  typical  during the winter months,
operations can be curtailed by weather conditions  at  any  time, as has
happened,  for  example,  during  extended  periods when hurricanes  and
tropical depressions are present or expected in the Gulf of Mexico.

Availability of DSVs

   There  has been no significant construction  of  vessels  within  the
worldwide marine  support services industry since the early 1980s.  As a
result, there is a  shortage  of  both  new  and  used  DSVs and vessels
convertible  into DSVs.  Thus, the Company's ability to replace  vessels
or increase the  size of its DSV fleet through the purchase of new, used
or converted vessels  may  be  significantly  adversely affected by this
shortage and any acquisition may be cost prohibitive.

International Operations

   The Company's international diving activities,  which started in West
Africa  in  1992,  have  continued  to  expand and play an  increasingly
important  role in Company operations.  These  international  operations
are subject  to  additional  risks,  including  the  Company's  relative
inexperience  in  new  international  markets,  financial  and political
instability,  civil unrest, asset seizures or nationalization,  currency
restrictions, fluctuations and revaluations, import-export restrictions,
and tax and other  regulatory  requirements.   There can be no assurance
that the Company will not experience material adverse  developments with
respect to its operations outside the United States; such  developments,
if  they  were  to  occur, could have a material adverse effect  on  the
Company's results of operations and financial condition.  See "Business-
-Subsea and Other Services--International Services."

Dependence on Key Personnel

   The Company's success  depends  on the continued active participation
of the Company's key officers and operating  personnel.  The loss of the
services  of  any  one of these persons could have  a  material  adverse
effect  upon the Company.   The  Company  does  not  hold  key-man  life
insurance  policies  covering  any Company officer, nor does the Company
have employment agreements or non-competition agreements with any of its
key officers or employees other  than  Rodney  W. Stanley, the Company's
President and Chief Executive Officer.  See "Executive  Officers  of the
Registrant."

Regulatory and Environmental Matters

   The  Company's  DSVs  and  operations are subject to various types of
governmental  regulation,  including   many  federal,  state  and  local
environmental  protection  laws  and  regulations,  which  are  becoming
increasingly complex and stringent.  In addition, the Company depends on
the  demand  for  its  services  from  the oil  and  gas  industry  and,
therefore,  the  Company's  operations  are   affected   by   laws   and
regulations, as well as changing taxes and policies, relating to the oil
and  gas  industry  generally.   Significant  fines and penalties may be
imposed for non-compliance, and certain environmental  laws impose joint
and several "strict liability" for remediation of spills and releases of
oil and hazardous substances rendering a person liable for environmental
damage,  without  regard  to  negligence  or fault on the part  of  such
person.  Such laws and regulations may expose  the  Company to liability
for the conduct of or conditions caused by others, or  for  acts  of the
Company  which  are  in  compliance with all applicable laws at the time
such acts were performed.   The Company does not believe that compliance
with current environmental laws  or  regulations  is  likely  to  have a
material adverse effect on the Company's business or financial condition
or results of operations.  See "Business--Government Regulation."

Competition

   The   Company's   business  is  highly  competitive.   Although  some
consolidation  has occurred  in  the  Gulf  of  Mexico  diving  services
industry in recent  years,  the remaining companies aggressively compete
for  available  diving  projects.    While  the  Company  believes  that
customers continue to consider the quality  of  the  supplier's services
and equipment, price has become an increasingly more important factor in
the selection process.  In all of its operations, the  Company  competes
with  both  large  and small companies, and certain of these competitors
are larger and have  greater  financial  and  other  resources  than the
Company.    It   is   possible  that  competitors,  particularly  large,
international companies,  could  relocate  vessels,  other equipment and
personnel  to  the Gulf of Mexico and other areas in which  the  Company
operates with the  result  that competition could increase and adversely
affect  the  Company's  revenues  and  operating  margins.   Should  the
Company's competitors develop  and  market services or products that are
technologically superior to those of  the Company, the Company's ability
to market its services and products would be significantly impaired.  In
addition, it is possible for an experienced  individual  in the industry
who has at least minimal contacts with customers and divers  to  begin a
business  that could compete successfully with the Company, particularly
with respect  to  smaller, independent customers.  See "Business--Subsea
Products--Pipeline  Connector  Products"  and  "Business--Customers  and
Competition."

Anti-Takeover Provisions

   Certain  provisions of the Company's Amended and Restated Articles of
Incorporation  (the "Articles of Incorporation") and By-laws, including,
among others, provisions  allowing  the  Company's Board of Directors to
issue preferred stock, and certain provisions  of the Louisiana Business
Corporation  Law under which the Company is incorporated,  may  tend  to
deter potential unsolicited offers or other efforts to obtain control of
the Company that  are  not  approved  by  the  Board of Directors.  Such
provisions may therefore deprive the stockholders  of  opportunities  to
sell  shares of the Common Stock at prices higher than prevailing market
prices.

Absence of Dividends

   The  Company  has  never  paid cash dividends on its Common Stock and
intends for the near future to  retain  any earnings otherwise available
for  dividends  for the future operation and  growth  of  the  Company's
business.  In addition,  the  Company's  loan  agreement  restricts  the
payment  of  cash  dividends on its capital stock.  See "Market  for the
Registrant's Common Equity and Related Shareholder Matters."

Limitation on Foreign Ownership

   The Company's Articles  of  Incorporation  contain limitations on the
percentage of outstanding Common Stock and other  classes  of securities
that  can be owned by persons who are not United States citizens  within
the meaning  of  certain  statutes  relating  to the ownership of United
States  flag  vessels.   Consistent  with  statutory  requirements,  the
Articles of Incorporation prohibit the ownership of more than 23% of the
outstanding Common Stock by persons other than  United  States citizens.
The restrictions imposed by the Company's Articles of Incorporation  may
at  times preclude United States citizens from transferring their Common
Stock  to  persons other than United States citizens.  This may restrict
the available  market  for  resale of shares of Common Stock and for the
issuance of shares of Common Stock by the Company.


ITEM 2.  PROPERTIES

   Vessels.  The Company's offshore diving activities are performed from
the Company's 20 DSVs, as well  as  from structures and vessels owned by
others.  The DSVs are offshore utility and supply vessels that have been
converted  and  equipped  to  support  diving  operations  for  offshore
construction, inspection, maintenance, and  repair  work.   All  of  the
Company's  vessels  are  United  States-flagged  vessels  except for the
"American Eagle" (Honduran-flagged), the "American Constitution" and the
"American  Pioneer" (Panamanian-flagged).  Eleven of the Company's  DSVs
are mortgaged  as  collateral  for  the  Company's bank borrowings.  The
following table describes the Company's DSVs,  all of which are owned by
wholly owned subsidiaries of the Company:

<TABLE>
<CAPTION>
                                                                      Vessel
                                                                      Length     Year
Vessel                    Vessel Type           Home Port             (feet)   Acquired
_______                   ___________           _________            ________ __________

<S>                       <C>                  <C>                     <C>       <C>
American Constitution     Four-point anchor    Port of Iberia, La      210       1996
                          system/saturation
                          diving/moonpool
American Pioneer          Dynamically          Port of Iberia, La      200       1996
                          positioned/ ROV and 
                          NEWTSUIT(TM) support
American Recovery         Tug/diving support   Oxnard, Ca.             150       1996
American Pride            Four-point anchor    Port Harcourt, Nigeria  185       1990
                          system   
American Victory          Four-point anchor    Port of Iberia, La.     166       1993
                          system 
American Star             Four-point anchor    Port of Iberia, La.     165       1989
                          system/ saturation 
                          diving
American Patriot          Four-point anchor    Oxnard, Ca.             165       1994
                          system/40-ton crane
American Triumph          Four-point anchor    Port of Iberia, La.     165       1996
                          system 
American Independence     Four-point anchor    Port of Iberia, La.     165       1996
                          system 
American Eagle            Four-point anchor    Port Harcourt, Nigeria  150       1986
                          system    
American Spirit           Four-point anchor    Port of Iberia, La.     130       1994
                          system  
American Liberty          Four-point anchor    Fourchon, La.           125       1990
                          system
American Diver            Diving support       Port of Iberia, La.     110       1983
Pipeline Surveyor         Diving support       Fourchon, La.           110       1985
American Scout            Diving support       Port of Iberia, La.     110       1996
Pipeline Inspector        Diving support       Port of Iberia, La.     105       1985
Pipeline Diver            Diving support       Port of Iberia, La.     105       1985
Pipeline Observer         Diving support       Fourchon, La.            95       1990
American Progress         Crewboat/survey      Oxnard, Ca.              65       1994
                          support 
American Endeavor         Utility tug/ROV      Oxnard, Ca.              65       1994
                          support

</TABLE>
   In addition to the DSVs listed above, the Company operates a 150-foot
jack-up  derrick barge, the "American Intrepid," which it time-chartered
in 1995.   The  Company owns a 220-ton Manitowoc crane that is installed
on the American Intrepid.

   The Company manages  its vessel fleet so as to maintain a competitive
presence in each of its targeted  market  areas  and  to  pursue project
opportunities  as  they  arise  in  each  area.   The Company frequently
evaluates the need to reposition vessels and from time  to time does so.
For example, in August 1995 the Company repositioned the  American Pride
from  its  Dubai,  United  Arab  Emirates  operations  base to its  Port
Harcourt, Nigeria base to pursue chartering opportunities in West Africa
in  fiscal  1996  and  in  November 1996  the  Company repositioned  the
American  Eagle  from its Port of Iberia, Louisiana  base  to  its  Port
Harcourt, Nigeria  base.   The  average  age of the Company's vessels is
approximately 27 years.

   The Company's vessel fleet is maintained,  as  required by law and by
its   insurers,   in   accordance  with  governmental  regulations   and
classification standards  of  either  or  both  the  American  Bureau of
Shipping   and   the   U.S. Coast   Guard   or,   with  respect  to  its
foreign-flagged  vessels,  the  regulations  of  the respective  foreign
governments.  The Company's United States-flagged vessels are subject to
annual inspections and to drydocking in which compliance with applicable
regulations  and  standards  is  monitored,  after which  any  necessary
modifications or repairs are made.  In addition  to complying with these
regulations and standards, the Company performs supplemental repairs and
maintenance  on its vessels as part of a regular preventive  maintenance
schedule and on an as-needed basis.

   The vessels  are also equipped with various winches, cranes and other
support equipment.   Several  of  the Company's DSVs are equipped with a
four-point anchor system that maintains  the  ship  in  proper position.
The  dynamic positioning system of the "American Pioneer"  can,  through
thrusters  coordinated by the vessel's onboard computer system, maintain
the vessel on  station for an extended period of time without the use of
anchors.

   ROVs.   The  Company's   ROVs  are  submersible,  unmanned,  remotely
controlled  vehicles  that are  powered  and  operated  from  a  surface
platform (a DSV, barge  or  other  platform) by a crew of trained pilots
through  an  umbilical  containing  electric  power  and  communications
cables.  The Company's ROVs are generally  used  to  complement, support
and  increase  inspection  work and photography tasks. At  December  31,
1996, the Company owned and  operated  five  observation ROVs, which are
equipped with subsea lights, sonar, video cameras  and  other  equipment
that  transmit  subsea  video  and  other  information  to their surface
operators to support the work of the Company's divers.  Also at December
31,  1996,  the Company operated two work ROVs, which are equipped  with
lights and video equipment as well as manipulators, which permit them to
perform tasks in water depths up to 3,000 feet.

   Facilities.  The  Company typically leases office facilities to house
its  administrative  staff   (other   than   the   Lafayette   corporate
headquarters  building and the Port of Iberia operations base, which  it
owns), shops equipped  for  fabrication, testing, repair and maintenance
activities, warehouses and yard  areas  for  storage and mobilization of
equipment enroute to work sites, and dock facilities  for  the Company's
DSVs.   The  Company  has  facilities  in California, Kansas, Louisiana,
Ohio, Texas, Canada, Nigeria, and the United Arab Emirates.  The Company
also owns a facility in Houma, Louisiana that is currently held for sale
and not used as an operations base.  The  following  table describes the
Company's primary facilities:

<TABLE>
<CAPTION>
                        Approximate
   Location             Square Feet      Primary Use(s)
   ________             ___________      _______________  
<S>                         <C>         <C>   
Lafayette, Louisiana        24,000      Corporate headquarters
Lafayette, Louisiana         6,000      Tarpon Systems/jack-up barge operations
Port of Iberia, Louisiana   29,000(1)   Gulf of Mexico diving and vessel operations
Harvey, Louisiana           31,000(2)   Gulf of Mexico diving operations
Houston, Texas              27,240(3)   Big Inch/Inland headquarters
Oxnard, California          23,000(4)   West Coast diving operations
Kansas City, Kansas          9,000(5)   Inland diving operations
Columbus, Ohio               8,600(6)   Inland diving operations
Dubai, UAE                  11,500(7)   International diving operations
Port Harcourt, Nigeria      13,500(8)   International diving operations
Vancouver, Canada            4,970(9)   HSI headquarters/shop space

__________________________
(1)      Includes  approximately  6,000 square  feet  of  office  space,
         23,000 square  feet  of  shop/warehouse space, 23 acres of yard
         space and 1,800 feet of waterfront access.

(2)      Includes approximately 4,000 square  feet  of  office space and
         27,000 square feet of shop/warehouse space.

(3)      Includes  approximately  8,500 square  feet  of  office  space,
         18,740 square  feet  of  shop/warehouse space and 83,160 square
         feet of yard space and parking.

(4)      Includes approximately 10,000 square  feet  of office space and
         13,000 square feet of shop/warehouse space.

(5)      Includes  approximately  2,700 square  feet  of  office  space,
         6,300 square feet of shop/warehouse space and approximately one
         acre of yard space.

(6)      Includes  approximately  3,000 square  feet  of  office  space,
         5,600 square feet of shop/warehouse space and two acres of yard
         space.

(7)      Includes  approximately 3,000 square feet of office  space  and
         8,500 square feet of shop/warehouse space.

(8)      Includes  approximately  3,500 square  feet  of  office  space,
         10,000 square  feet  of  shop/warehouse space and 16,000 square
         feet of yard space.

(9)      Includes approximately 2,970  square  feet  of office space and
         2,000 square feet of shop/warehouse space.

</TABLE>

   Equipment.   The  Company  owns  an  extensive  inventory  of  diving
equipment, including six saturation diving systems (five  of  which  are
operational),  seven  NEWTSUITsTM (one of which is used for training and
demonstration only), compressors,  decompression chambers, high pressure
water  blasters, jet pumps, hydraulic  power  tools,  welding  machines,
tuggers,    underwater    video    systems,    UltrascanTM    recordable
non-destructive testing systems, and TH-1000 x-ray systems.  The Company
performs  routine  maintenance  on  all  of  its equipment and generates
timely  status reports to track use and availability  of  the  Company's
equipment.

ITEM 3.  LEGAL PROCEEDINGS

   A large  oil  and  gas  company  has  instituted  litigation  against
subsidiaries  of  the Company in Edinburgh, Scotland seeking damages  of
approximately U.S. $3.0 million,  plus  interest and costs, on the basis
of  allegations that a product supplied by  the  subsidiaries  exhibited
design  faults  upon  installation  in  a  North Sea pipeline.  Prior to
installation the product was hydrostatically  tested  onshore and during
the  test it did not leak or otherwise malfunction.  After  installation
but before  oil  or  gas  flowed through the pipeline under pressure the
product  was  removed  and  replaced   by   the   customer  against  the
recommendations of the Company's subsidiaries.  The product did not leak
and no environmental damage is alleged.  The Company  believes  that the
product  was fully suitable for service and intends to defend the  claim
vigorously,  although  no  assurance  can  be  given  as to the ultimate
outcome of the litigation.

   The  Company  and  certain  of its subsidiaries are also  parties  to
various  routine  legal  proceedings   primarily  involving  claims  for
personal injury under the General Maritime Laws of the United States and
the   Jones   Act  as  a  result  of  alleged  negligence   or   alleged
"unseaworthiness"  of the Company's vessels.  While the outcome of these
lawsuits cannot be predicted  with  certainty, the Company believes that
its insurance coverage with respect to  such claims is adequate and that
the outcome of all such proceedings, even if determined adversely, would
not  have  a  material  adverse  effect  on its  business  or  financial
condition or results of operations.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS

      No matter was submitted to a vote of the security holders, through
the solicitation of proxies or otherwise,  during  the fourth quarter of
the year ended December 31, 1996.

                  EXECUTIVE OFFICERS OF THE REGISTRANT

   The following table sets forth certain information  as of the date of
this Prospectus with respect to the directors and executive  officers of
the Company.

Name                 Age         Position
______              _____        __________
George C. Yax        55        Director and Chairman of the Board

Rodney W. Stanley    52        Director, President and Chief Executive Officer

Prentiss A. Freeman  48        Director, Executive Vice President and Chief
                                 Operating Officer

Cathy M. Green       31        Vice  President-Finance and Chief Financial 
                               Officer

Quinn J. Hebert      33        Corporate Counsel and Secretary

Robert B. Suggs      49        Vice President/General Manager-Offshore Division


   The following biographies describe the  business  experience  of  the
directors and executive officers of the Company:

   George  C. Yax  co-founded  the  Company  in  1981  and has served as
Chairman of the Board since its inception.  Mr. Yax served  as President
and   Chief   Executive  Officer  from  the  Company's  inception  until
December 1996.   Mr. Yax  has  over 28 years of experience in the subsea
services  industry.   Mr. Yax  is a  director  of  the  National  Oceans
Industries Association and has also served in various officer capacities
for the Association of Diving Contractors.   Mr. Yax  holds a BBA degree
and an MBA degree from Sam Houston University.

   Rodney W. Stanley joined the Company on August 1, 1996  as a Director
and Senior Vice President-International Operations and became  President
and   Chief   Executive   Officer   of  the  Company  in  December 1996.
Mr. Stanley  has  over 33 years of experience  in  the  subsea  services
industries.  From 1995  to  May 1996,  he  served as President and Chief
Executive Officer of Hard Suits Inc., which  was acquired by the Company
in  1996.   From  1986  to  1995,  Mr. Stanley was President  and  Chief
Executive  Officer of Sonsub, Inc., a  leading  provider  of  specialist
subsea engineering  and  heavy work class ROV services, which he founded
in 1986.  From 1969 to 1984,  he  held  various  management positions at
Divcon, Inc. and its successor, Oceaneering International, Inc.

   Prentiss A. Freeman joined the Company in 1986  as Vice President and
General  Manager  of  the  Company's  New  Orleans  office.   He  became
Executive Vice President and General Manager of the Company  in 1987 and
has served as the Company's Executive Vice President and Chief Operating
Officer since 1988.  From 1983 to 1986, he served as President and Chief
Operating  Officer of Sonat Subsea Services (Americas), Inc., which  was
acquired by  the  Company  in  1986.   Mr. Freeman  has over 28 years of
experience in the subsea services industry, including  six  years  as  a
diver.

   Cathy  M. Green  joined  the Company in 1994 as Corporate Controller.
She  became  Vice  President-Finance  and  Chief  Financial  Officer  in
January 1996.  Ms. Green  has  over  eight  years  of  experience in the
accounting  profession.   From 1988 to 1994, she was employed  by  Price
Waterhouse LLP, an independent  public  accounting firm, and served as a
manager at such firm from 1992 to 1994.   Ms. Green  holds  a  BS degree
from  the  University  of  New  Orleans.   She  is  a  Certified  Public
Accountant.

   Quinn  J. Hebert joined the Company in 1993 as Corporate Counsel  and
Secretary.   Mr. Hebert  has over eight years of experience in the legal
profession.  From 1988 to 1993, he was an associate with the law firm of
Jones,  Walker, Waechter, Poitevent,  Carrere  &  Denegre,  L.L.P.,  New
Orleans,  Louisiana.   Mr. Hebert holds a BA degree from Louisiana State
University and a JD degree  from  Boston College.  He is a member of the
Louisiana Bar Association.

   Robert B. Suggs joined the Company  in  1985  as  the  Company's Vice
President-Operations.  He became Vice President/General Manager-Offshore
Division  in  1990.   From  1981  to  1985,  Mr. Suggs  served  as  Vice
President-Diving   Services   for  Sea  Con,  Inc.  In  1975,  Mr. Suggs
co-founded Sea Dive, Inc., which  was sold to Sea Con, Inc. in 1981.  He
has over 25 years of experience in  the  diving  industry, including six
years as a diver.  He served in the United States  Navy aboard a nuclear
submarine from 1966 to 1970.

<PAGE>
                                
                                
                                
                                PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS


   The  Common  Stock  of the Company commenced trading  on  the  NASDAQ
National Market under the symbol "DIVE" on July 21, 1993.  The following
table presents high and low bid quotes for the Company's Common Stock as
reported by the NASDAQ National  Market  System  for each fiscal quarter
and interim period since trading began on July 21,  1993.   In 1996, the
Company   changed  the  end  of  its  fiscal  year  from  October 31  to
December 31.

                                                      High       Low
                                                      ----       ---
Quarter Ended:
   July 31, 1993(1)                                 $ 9.750    $9.000
   October 31, 1993                                  12.500     9.250
Quarter Ended:
   January 31, 1994                                  12.250     8.375
   April 30, 1994                                    10.250     7.250
   July 31, 1994                                      9.750     6.500
   October 31, 1994                                   7.500     6.000
Quarter Ended:
   January 31, 1995                                   7.000     5.375
   April 30, 1995                                     6.750     5.500
   July 31, 1995                                      6.750     5.750
   October 31, 1995                                   6.313     5.375
Transition Period:
   November 1, 1995 to December 31, 1995              7.875     5.625
Quarter Ended:
   March 31, 1996                                     8.750     6.750
   June 30, 1996                                     11.000     8.125
   September 30, 1996                                11.375     8.125
   December 31, 1996                                 14.125     9.750

(1)Prices are for the period July 21 to July 31, 1993.

   At February  28, 1997, the Company had approximately 2,000 holders of
its Common Stock,  including  record holders and individual participants
in security position listings.

   The Company has not paid cash dividends on its Common Stock since its
inception.  The Board of Directors  does  not  anticipate payment of any
cash dividends in the near future and intends to  continue  its  present
policy  of retaining earnings for reinvestment in the operations of  the
Company.   The  amended  and restated loan agreement between the Company
and its lending bank restricts  the  Company's  payment of dividends for
any fiscal quarter to 15% of the average of quarterly  net income of the
Company for the immediately preceding four fiscal quarters.


ITEM 6.  SELECTED FINANCIAL DATA

      The  selected financial and other data set forth below  should  be
read in conjunction  with  the  consolidated financial statements of the
Company and notes thereto and "Management's  Discussion  and Analysis of
Financial  Condition  and  Results of Operations" included elsewhere  in
this Form 10-K.
                 Selected Consolidated Financial and Other Data
              (In thousands, except per share and operating data)

<TABLE>
<CAPTION>

                                            Fiscal Year    Two Months
                                               Ended         Ended       Fiscal Year Ended October 31,
                                            December 31,  December 31,  _________________________________
                                               1996         1995 (1)     1995     1994     1993     1992
                                            ____________  ____________   _____    _____    _____    _____
<S>                                          <C>            <C>         <C>      <C>      <C>      <C>
Income Statement Data
  Diving and related revenues                $105,772       $15,486     $88,660  $52,755  $51,023  $36,875
  Diving and related expenses                  70,066        10,346      63,180   35,338   30,635   22,084
  Selling, general and 
   administrative expenses                     19,486         3,055      19,318   14,222   10,808    8,303
  Depreciation and amortization                 6,815           889       5,064    3,415    2,153    1,650
  Operating income (loss)                       9,405         1,196       1,098     (220)   7,427    4,838
  Non-recurring charge (2)                        ---           ---         ---      ---  (27,301)     ---
  Interest expense                              1,246           220       1,377      297      341      277
  Income (loss) from continuing operations 
   before income taxes and minority interest    8,971           994        (151)    (264) (20,030)   4,834
  Income (loss) from continuing operations      5,021           574        (329)    (257) (13,199)   3,269
  Loss from discontinued operations               ---           ---         ---   (1,696)    (638)    (555)
  Net income (loss)                             5,021           574        (329)  (1,953) (13,837)   2,714
  Earnings (loss) per share                       .74           .09        (.05)    (.29)   (2.52)    0.54
  Weighted average common shares outstanding    6,787         6,709       6,709    6,706    5,484    5,044

Other Data:
  EBITDA (3)                                  $16,220        $2,085      $6,162   $3,195   $9,580   $6,488
  EBITDA Margin (3)                                15%           13%          7%       6%      19%      18%
    Cash flow from operations                  19,642          (297)      1,375    4,423    3,968    3,344

Balance Sheet Data
  Working capital                             $12,222       $15,898     $14,067  $14,087  $26,362  $ 8,366
  Property, plant and equipment, net           43,041        25,550      26,079   24,424   14,659    8,693
  Total assets                                 92,907        63,921      69,408   61,607   47,601   26,068
  Current portion of long-term debt             1,702         1,375       2,000    2,488      121    1,144
  Long-term debt, less current portion          8,459         5,413       5,121    5,443      ---    2,189
  Total stockholders' equity                   45,845        39,555      38,989   39,327   41,099   14,168

Operating Data
  Average number of dive crews employed (4)       248           230         239      221      163      100
  Dive crew days (5)                           40,131         5,922      35,869   22,455   25,149   17,158
  Number of diving support vessels
     (DSVs) at end of period                       20            14          14       15       11       10
  DSV days (6)                                  3,565           443       2,831    2,376    2,227    1,636
  DSV utilization (7)                              51%           52%         47%      49%      59%      45%
                                                                                   
(1) In June 1996 the Board of Directors of the Company changed the Company's 
    fiscal year end from October 31 to December 31.

(2) Non-recurring,  non-cash  incentive compensation charge incurred at the
    time of the Company's initial public offering,  at  which time forfeiture 
    restrictions applicable to stock previously awarded to Company employees 
    were eliminated.

(3) The  Company  calculates  EBITDA  (earnings   before  interest,  taxes,
    depreciation and amortization) as operating income plus depreciation and 
    amortization. EBITDA should not be considered as an alternative to net 
    income  as  an  indication of the  Company's  operating  performance  or 
    as an alternative to cash flow as a  better measure of liquidity.  EBITDA 
    margin represents  EBITDA divided by the Company's total revenues in that 
    period.

(4) A  dive crew generally consists of (i) a  diver  and  a  tender  (diver
    trainee/assistant) or (ii) one diving supervisor.

(5) A dive  crew day is one calendar day during which one Company dive crew
    was engaged in an active  project,  was in transit or was waiting on 
    inclement weather while under contract.

(6) A DSV day is one calendar  day  in  which  one  Company DSV is offshore
    performing services, in transit or waiting on inclement weather while 
    under contract.

(7) DSV  utilization  is  DSV  days  expressed as a percentage of DSV capacity.   
    DSV capacity is the average number of DSVs  available  for  operation  in  
    a  given period multiplied  by  the  number  of  days  in  that  period.   
    The  Company's  maximum DSV utilization  is  limited by the seasonality of 
    offshore operations.  See "Management's Discussion and Analysis  of  
    Financial Condition and Results of Operations--Results of Operations."
</TABLE>       
<PAGE>       

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
        AND RESULTS OF OPERATIONS


   The following discussion of the Company's financial condition,
results of operations, historical financial resources and working
capital, and income taxes should be read in conjunction with  the
consolidated  financial statements of the Company and  the  notes
thereto included in this Annual Report.  For a description of the
Company's  accounting  policies, see  Note  1  to  the  Company's
consolidated financial statements.

  In June 1996, the Board of Directors of the Company changed the
Company's fiscal year end from October 31 to December 31 so as to
report  its  quarterly  and annual results  of  operations  on  a
comparable  basis  with  other  companies  in  the  oil  and  gas
industry.   As a result of this change in year end, the following
discussion  includes the year ended December 31,  1996;  the  two
fiscal  years  ended October 31, 1995 and 1994 and the  two-month
transition periods ended December 31, 1995 and 1994.

Overview

   The  Company's operations are affected by a number of factors,
the most significant of which is the activity of the offshore oil
and gas industry in the Gulf of Mexico, especially the timing  of
capital  expenditures  by oil and gas companies.   These  capital
expenditures  are influenced by oil and gas prices,  expectations
about  future  prices, the cost of exploring for,  producing  and
delivering oil and gas, the sale and expiration dates of offshore
leases  in  the  United  States and  international  markets,  the
discovery  rate  of new oil and gas reserves in  offshore  areas,
local, state, federal and international political, regulatory and
economic conditions, and the ability of oil and gas companies  to
generate  capital,  all of which are beyond the  control  of  the
Company.   Natural  gas  factors have a  greater  effect  on  the
operation  of the Company than oil factors because a majority  of
the production in the Gulf of Mexico is natural gas.

   The  Company's results of operations will generally vary  from
reporting period to reporting period depending in large  part  on
the  location and type of work being performed, the  mix  of  the
marine  services being performed, the season of the year and  the
job  conditions  encountered.   The  diving  industry  is  highly
seasonal  as a result of the weather conditions that  affect  the
timing  of  platform and pipeline construction and  other  diving
related  activities  of  oil and gas companies  in  the  Gulf  of
Mexico,  and  the  inland activities of the Company's  customers.
The   winter   conditions   that  are  generally   present   from
December  through April substantially reduce the work that  could
otherwise be performed by the Company's dive crews and limit  the
use  of  the  Company's DSVs stationed in  the  Gulf  of  Mexico.
Although adverse weather conditions occurring from time  to  time
from  May  through November may also adversely affect vessel  use
and diving operations, historically a disproportionate amount  of
the  Company's  diving services have been performed  during  this
period.  The Company expects a higher concentration of its  total
revenues   and  net  income  to  be  earned  during   the   third
(July  through  September) and fourth (October through  December)
quarters  of  its  fiscal year compared  to  the  first  (January
through  March)  and second (April through June)  quarters.   The
Company  expects the winter weather patterns to continue to  have
an  adverse  effect  on the Company's Gulf of Mexico  and  inland
diving operations.

   In  general, large, complex underwater inland diving  projects
are awarded on a fixed price basis.  With such projects, contract
revenues  are recognized on a percentage of completion basis  for
individual  contracts  based on the ratio of  costs  incurred  to
total  estimated costs at completion.  Contract  price  and  cost
estimates  are  reviewed  periodically  as  work  progresses  and
adjustments  proportionate to the percentage  of  completion  are
reflected  in contract revenues and gross profit in the reporting
period when such estimates are revised.  All known or anticipated
losses on contracts are provided for currently.  At December  31,
1996,   the  Company  accounted  for  10  contracts  (aggregating
$1,689,000, or approximately 28%, of unbilled revenue at December
31,  1996)  using the percentage of completion  method.   If  the
Company  continues to expand its operations in the inland  market
and  the number of turnkey projects in the Gulf of Mexico awarded
to  the  Company increases, the Company believes that  a  greater
proportion of its inland and Gulf of Mexico diving contracts will
be  accounted  for using the percentage of completion  accounting
method.


Results of Operations

    The  Company  analyzes  the  results  of  its  operations  by
separating  them  into  four  geographic  and  product   markets:
(i)  Gulf  of  Mexico diving and related services, derrick  barge
services,  and environmental remediation and emergency oil  spill
response services ("Gulf Services"); (ii) all diving and  related
services  performed  outside the United States  and  its  coastal
waters,   except   Latin   America  ("International   Services");
(iii)  diving  and  related services off the United  States  West
Coast,  inland within the United States and in the coastal waters
off  Latin America ("Inland and West Coast Services");  and  (iv)
sales  and installations of Big Inch pipeline connectors,  Tarpon
Systems  marginal  well production systems and  concrete  storage
barges,  and  Hard  Suits  Inc. products  and  services  ("Subsea
Products").   The  following table sets forth,  for  the  periods
indicated, additional information on the operating results of the
Company in each of those four markets:
                              
<TABLE>                              
<CAPTION>
                              
                                                                           Two Months Ended
                             Year ended December 31, Year ended October 31,  December 31,
                              ____________________   _____________________   ______________
                                1996      1995(1)      1995        1994       1995     1994
                                ----      ----         ----        ----       ----     ----
                                       (Unaudited)                                  (Unaudited)
                                                  (Dollars in thousands)
<S>                            <C>        <C>          <C>         <C>       <C>       <C>
Gulf Services                                             
  Diving and related revenues  $ 53,220   $49,987      $49,522     $35,733   $ 9,929   $9,463
  Diving and related expenses    36,037    38,118       37,362      24,887     6,888    6,087
                               _________  ________     ________    ________ ________ _________
  Gross profit                   17,183    11,869       12,160      10,846     3,041    3,376
  Gross profit percentage          32.3%     23.7%        24.6%       30.4%     30.6%    35.7%

International Services
  Diving and related revenues  $  7,837   $16,653      $17,079     $ 3,889   $   924   $ 1,350
  Diving and related expenses     5,490    10,837       11,318       2,545       595     1,077
                               _________  _________    _________   ________ _________ _________
  Gross profit                    2,347     5,816        5,761       1,344       329       273
  Gross profit percentage          29.9%     34.9%        33.7%       35.0%     35.6%     20.2%

Inland and West Coast Services
  Diving and related revenues  $ 34,097   $15,180      $14,539     $ 8,439   $ 3,909   $ 3,268
  Diving and related expenses    22,025    10,074       10,114       5,619     2,488     2,528
                               ________  _________    _________   _________  _________ _________
  Gross profit                   12,072     5,106        4,425       2,820     1,421       740
  Gross profit percentage          35.4%     33.6%        30.4%       33.4%     36.4%     22.6%

Subsea Products                                           
  Diving and related revenues  $ 10,618   $ 7,066      $ 7,520     $ 4,694   $   724   $ 1,178
  Diving and related expenses     6,514     4,095        4,386       2,287       375       667
                               _________  _________    _________   ________  _________ _________
  Gross profit                    4,104     2,971        3,134       2,407       349       511
  Gross profit percentage          38.7%     42.0%        41.7%       51.3%     48.2%     43.4%

Total                                                     
  Diving and related revenues  $105,772   $88,886      $88,660     $52,755   $15,486   $15,259
  Diving and related expenses    70,066    63,124       63,180      35,338    10,346    10,359
                               _________  _________    _________   ________  _________ _________
  Gross profit                   35,706    25,762       25,480      17,417     5,140     4,900
  Gross profit percentage          33.8%     29.0%        28.7%       33.0%     33.2%     32.1%

</TABLE>
(1)   Information  for  the  year  ended  December  31,  1995  is
presented for comparison purposes only.

   For  additional information concerning the operations  of  the
Company  in  geographic  areas, see  note  12  to  the  financial
statements of the Company included in this Annual Report.

   The  following  table  sets forth for  the  periods  indicated
certain  consolidated  income  statement  data  expressed  as   a
percentage of consolidated revenues.

<TABLE>
<CAPTION>

                                                   Year Ended                        Two Months Ended
                                                   December 31, Year Ended October 31, December 31,
                                                   ___________    ________________    ____________
                                                  1996    1995(1)   1995    1994      1995    1994
                                                  ____    ____      ____    ____      ____    ____

                                                         (Unaudited)                       (Unaudited)
<S>                                               <C>      <C>      <C>      <C>      <C>     <C>
Percentage of consolidated revenues:
Selling, general and administrative exepenses     18.4%    22.0%    21.8%    27.0%    19.7%   18.8%
Depreciation and amortization                      6.4      5.8      5.7      6.5      5.7     5.2
Operating income(loss)                             8.9      1.2      1.2      (.4)     7.7     8.0
Income (loss) from continuing operations                                       
  before income taxes and minority interest        8.5      (.3)     (.2)     (.5)     6.4     7.2
Net income (loss)                                  4.7      (.4)     (.4)    (3.7)     3.7     4.0

(1)   Information  for  the  year  ended  December  31,  1995  is
presented for comparison purposes only.

</TABLE>

   In the year ended December 31, 1996, the Company continued  to
experience  significant  growth in  its  operations  and  related
revenues.  Factors contributing to the increased activity include
the following:

        First, the oil and gas industry in the Gulf of Mexico has
     continued  to strengthen, resulting in an increase  in  both
     the  demand  and  the day rates charged  for  the  Company's
     divers  and  DSVs.  The improved industry trends  have  also
     contributed  to  increased demand for the  Company's  subsea
     pipeline  connector products and derrick barge  services  in
     the Gulf of Mexico.  The Company anticipates that this trend
     will continue as long as supply and demand fundamentals  for
     oil  and  gas and demand for infrastructure-related projects
     remain strong in the Gulf of Mexico.

        Second,  the  activity  level of Inland  and  West  Coast
     Services  has  increased  substantially,  primarily  due  to
     improved bidding and estimating processes, and the Company's
     ability to obtain large turnkey projects.  For example,  the
     Company  completed  in  1996 the approximately  $15  million
     Chevron  platform abandonment project and  also  expects  to
     complete in late 1997 the approximately $8 million  Port  of
     Brownsville  project.  Although no assurances can  be  given
     that  the Company will obtain projects of a size similar  to
     these  projects in the future, the Company believes  it  has
     positioned itself to bid on competitive projects of  similar
     size and scope going forward.

     Although  the  revenue and activity level  of  International
     Services  were  significant in fiscal  1995,  this  was  due
     primarily  to  the installation of a Tarpon System  off  the
     Ivory Coast.  Revenue and activity levels returned to a more
     representative level during 1996.
    
   As  a  result  of  strong  commodity prices  and  the  related
increased  drilling  activity in 1996,  the  Company  anticipates
demand for its products and services, particularly in the Gulf of
Mexico, to remain strong in 1997 as a significant portion of  oil
and  gas  field development enters the construction phase.   This
strong demand for products and services is expected to result  in
increased  utilization  and rates for  the  Company's  personnel,
equipment and diving support vessels

  The Company's profitability improved substantially from 1995 to
1996  due  primarily  to the non-recurrence  of  several  adverse
factors that gave rise to losses in 1995.

       First, the Company experienced cost overruns and losses on
     certain nonrecurring turnkey diving projects in the Gulf  of
     Mexico  and Dubai aggregating approximately $1.5 million  in
     fiscal  1995.   The Company identified the causes  of  these
     problems  and,  in  response, has  implemented  new  project
     management and bidding procedures.

        Second,  the  pipelay/bury  barge  "American  Enterprise"
     recorded an operating loss of approximately $1.5 million  in
     fiscal  1995  due to low use and lower than  expected  gross
     profit  margins,  both  of  which  adversely  affected   the
     Company's  overall gross profit margins.   After  evaluating
     the American Enterprise's results of operations, the Company
     sold  the barge on March 1, 1996 for $5.4 million, resulting
     in a nonrecurring gain in the first quarter of 1996.

       Third, the inland operations recorded an operating loss of
     approximately  $660,000  in  fiscal  1995.   This  loss  was
     attributable  primarily to low revenue levels in  the  first
     and  second quarters of fiscal 1995 coupled with  the  fixed
     costs  of  developing  the  inland  market  and  lower  than
     expected  gross  profit margins on the  larger  construction
     projects,  which  involve a relatively  high  percentage  of
     third  party costs.  The Company believes a portion  of  the
     inland   diving  market  is  sensitive  to  similar  weather
     patterns  affecting  the  Gulf  of  Mexico  diving   market.
     However, during the latter half of 1995 and continuing  into
     1996, the inland operations experienced high activity levels
     and  were  profitable.   Further, the Company  believes  the
     inland  diving  market  can  reduce  the  Company's  overall
     dependence on the oil and gas industry, which is subject  to
     several external factors as previously described.

Acquisitions

   In  November 1996, the Company acquired 97% of the outstanding
common  stock  of  HSI,  a  manufacturer  and  marketer  of  one-
atmosphere diving suits, through an unsolicited tender offer  for
a cash purchase price of $11.8 million.
The  purchase was funded through borrowings on the Company's line
of credit, which were repaid subsequent to December 31, 1996 with
the  proceeds from the secondary offering of the Company's common
stock.   The Company intends to acquire the remaining outstanding
common  shares of Hard Suits and to seek delisting of all  shares
from  both  the  Toronto  and  Vancouver  Stock  Exchanges.   The
transaction  was  accounted  for under  the  purchase  method  of
accounting.  The results of operations of Hard Suits are included
in  the  consolidated statement of operations for the two  months
ended December 31, 1996.

   The  following  table sets forth certain  pro  forma  combined
statement of operations data for the year ended December 31, 1996
and   the  fiscal  year  ended  October  31,  1995  assuming  the
acquisition  occurred on January 1, 1996 and  November  1,  1994,
respectively.

                                           For the Years Ended
                                        December 31,   October 31,
                                           1996          1995
                                        ____________   ____________
                                               (Unaudited)
                                             (in thousands)

Diving and related revenues             $  110,005   $   102,061
Gross profit                                36,096        28,426
Selling, general and administrative      
  expense                                   22,078        23,340
Depreciation and amortization                9,302         8,433
Operating income (loss)                      4,717        (3,347)
Interest expense                             2,278         2,533
Net loss                                      (431)       (5,630)
Net loss per share                            (.06)         (.84)

   These pro forma combined statements of operations reflect both
the  historical  operating losses of HSI and  certain  pro  forma
expense  adjustments related to the purchase  of  HSI,  including
additional interest expense on the borrowings under the Company's
line  of  credit,  and additional depreciation  and  amortization
related to tangible and intangible assets acquired.  However,  as
stated  above, the Company repaid the debt incurred  to  purchase
HSI  with a portion of the proceeds of its secondary offering  of
common  stock and therefore does not anticipate incurring ongoing
interest expense related to the HSI acquisition.

   Over the course of 1996, the Company acquired six vessels, two
of  which  are  suitable  for operations in  deeper  waters,  and
certain  diving  assets to be used in its Gulf of  Mexico  diving
operations.   The  vessels  acquired  during  1996  include   the
"American  Constitution," a 210-foot vessel that has  since  been
undergoing modifications for use as a DSV, including installation
of a moonpool and outfitting with a saturation diving system; the
"American  Pioneer,"  a  200-foot dynamically  positioned  vessel
dedicated   to  supporting  work-class  ROV;  and  the  "American
Recovery,"  a 150-foot tug/diving support vessel to  support  its
West Coast operations.

   Finally,  in  November  1996,  the  Company  acquired  certain
operating assets of a manufacturer of concrete storage barges for
cash and a note payable totaling approximately $1.7 million;  the
note  was  paid  in  January 1997.  Concrete floating  or  subsea
barges  can  be  used with a Tarpon System as an  alternative  to
steel  tankers  for offloading and storage of oil  produced  from
marginal   fields   that  do  not  have  an   existing   pipeline
infrastructure.  The Company also intends to offer  the  concrete
storage barges to others on a stand-alone basis.

  Year Ended December 31, 1996 Compared to Year Ended October 31,
1995

   Factors affecting the results of operations in the year  ended
December 31, 1996 as compared to the year ended December 31, 1995
would  be substantially the same as those discussed below in  the
comparison between the year ended December 31, 1996 and the  year
ended October 31, 1995.

   Diving  and  related  revenues.   The  Company's  consolidated
revenues  increased 19%, from $88.7 million for  the  year  ended
October  31,  1995 to $105.8 million for the year ended  December
31,  1996.   The  difference between these  two  amounts  is  due
primarily   to   the   following  increases:  (i)   approximately
$19.6  million was attributable to increased activity  by  Inland
and  West  Coast Services, approximately $14.3 million  of  which
resulted  from the Chevron platform abandonment project  off  the
coast   of  California;  (ii)  approximately  $6.4  million   was
attributable to increased diving and vessel activity in the  Gulf
of  Mexico; (iii) approximately $3.6 million was attributable  to
the  operations of the "American Intrepid," the Company's jack-up
derrick  barge, which was operational for only a portion  of  the
year ended October 31, 1995; (iv) approximately $3.0 million  was
attributable to increased sales of the Company's subsea  pipeline
connector products and (v) approximately $1.4 million was due  to
revenue from the Company's new Tarpon concrete storage barge  and
HSI  products.   The  increase in revenue was offset  by  certain
revenue  decreases,  including  (i)  approximately  $6.8  million
attributable   to  the  "American  Enterprise,"   the   Company's
pipelay/bury   barge   that  was   sold   on   March   1,   1996,
(ii)  approximately  $9.2 million attributable  to  International
Services,  primarily as a result of non-recurring work associated
with  the installation of a Tarpon System off the Ivory Coast  in
1995,  and  (iii)  approximately  $1.3  million  attributable  to
decreased  demand for the Company's Tarpon Systems marginal  well
production systems.

   Diving and related expenses.  The Company's diving and related
expenses  increased 11%, from $63.1 million for  the  year  ended
October 31, 1995 to $70.0 million for the year ended December 31,
1996.   The difference between these two amounts is due primarily
to  the following increases: (i) approximately $11.9 million  was
attributable  to  increased activity by  Inland  and  West  Coast
Services;  (ii)  approximately $2.0 million was  attributable  to
increased  diving  and vessel activity in  the  Gulf  of  Mexico;
(iii)   approximately  $3.7  million  was  attributable  to   the
operations  of  the  "American Intrepid," the  Company's  jack-up
derrick  barge, which was operational for only a portion  of  the
year ended October 31, 1995; (iv) approximately $1.6 million  was
attributable to increased sales of the Company's subsea  pipeline
connector products and (v) approximately $1.2 million was due  to
the Company's new Tarpon concrete storage barge and HSI products.
The increase in expenses was offset by certain expense decreases,
including  (i)  approximately $7.3 million  attributable  to  the
"American Enterprise," the Company's pipelay/bury barge that  was
sold   on   March  1,  1996,  (ii)  approximately  $5.8   million
attributable to International Services, primarily as a result  of
non-recurring work associated with the installation of  a  Tarpon
System  off  the  Ivory  Coast in 1995  and  (iii)  approximately
$700,000  attributable  to  decreased demand  for  the  Company's
Tarpon Systems marginal well production systems.

  Selling, general and administrative expenses.  Selling, general
and  administrative expenses increased 1%, from $19.3 million for
the  year  ended October 31, 1995 to $19.5 million for  the  year
ended  December 31, 1996. The increase was primarily attributable
to   (i)  a  $143,000  increase  in  the  selling,  general   and
administrative expenses of International Services primarily as  a
result  of supporting the activities of the operations and  sales
office  in  Dubai,  which did not have full  operations  for  the
entire  year of fiscal 1995, (ii) $125,000 in severance  paid  in
connection with personnel layoffs during January 1996  and  (iii)
other increases necessary to support the increased operations  of
the  Company in 1996.  These increases were offset by the  effect
of  cost  cutting  measures which were put into  place  in  1995.
Selling,  general and administrative expenses as a percentage  of
revenues  decreased from 22% for the year ended October 31,  1995
to 18% for the year ended December 31, 1996.

   Depreciation and amortization.  Depreciation and  amortization
increased  35%, from $5.1 million for the year ended October  31,
1995  to $6.8 million for the year ended December 31, 1996.   The
increase  includes  a pretax charge of $500,000,  $290,000  after
tax, attributable to the implementation of Statement of Financial
Accounting  Standards No. 121, "Accounting for the Impairment  of
Long-Lived  Assets and for Long-Lived Assets to be Disposed  Of,"
(SFAS 121) effective January 1, 1996.  The charge is included  in
depreciation  and amortization in the consolidated  statement  of
operations  for the year ended December 31, 1996.  The  remaining
increase  was attributable to additions and improvements  to  the
Company's  operational and administrative  assets.   Depreciation
expense  for  Gulf Services increased approximately $774,000  due
primarily to the addition of new dive support vessels and  diving
equipment, and depreciation expense for Subsea Products increased
$451,000 due to the acquisition of HSI.  Depreciation expense for
the other operating groups increased by approximately $519,000 as
a  result of various improvements and additions to fixed  assets.
These  increases  were  offset  by a  reduction  in  depreciation
expense  of  $493,000 attributable to the "American  Enterprise,"
which was sold on March 1, 1996.

   Operating  income.   For  the year ended  December  31,  1996,
operating income was $9.4 million compared to operating income of
$1.1   million  for  the  year  ended  October  31,  1995.    The
significant  change in operating income was due primarily  to  an
overall increase in the Company's gross profit margin for reasons
described  above from $25.5 million, or 28.7%, in the year  ended
October  31, 1995 to $35.7 million, or 33.8%, in the  year  ended
December  31,  1996.  This increase in operating income  for  the
year  ended  December 31, 1996 was offset by  increases  in  both
selling, general and administrative expenses and depreciation and
amortization.

   Other income (expense).  For the year ended December 31, 1996,
other expense (net) of $434,000 was comprised of interest expense
of  $1,246,000,  which was offset by a net gain  on  disposal  of
assets of $708,000 and other income of $104,000.  The net gain on
the  disposal of assets includes the non-recurring  gain  on  the
sale  of  the  "American  Enterprise" offset  by  losses  on  the
disposal  of other fixed assets.  This compares to other  expense
(net)  of  $1,249,000 in the comparable period  of  fiscal  1995,
which was comprised of interest expense of $1,377,000, and a loss
on  the disposal of assets of $130,000, offset by other income of
$258,000.

  Net income (loss).  As a result of the factors discussed above,
the  Company  recorded net income of $5.0 million,  or  $.74  per
share,  in the year ended December 31, 1996, compared  to  a  net
loss  of $329,000, or ($.05) per share, in the year ended October
31, 1995.

  Two Months Ended December 31, 1995 Compared to Two Months Ended
December 31, 1994

   Diving  and  related  revenues.   The  Company's  consolidated
revenues increased 1%, from $15.3 million in the two months ended
December  31,  1994  to  $15.5 million in the  two  months  ended
December  31,  1995.   The  $227,000  increase  in  revenues  was
comprised   of   (i)   an  increase  of  approximately   $640,000
attributable  to  increased diving activity by  Inland  and  West
Coast  Services; (ii) an increase of approximately  $1.0  million
attributable  to the operations of the "American  Intrepid,"  the
Company's  jack-up  derrick barge; (iii) a decrease  of  $393,000
attributable to the operations of the "American Enterprise,"  the
Company's  pipelay/bury barge, which was sold on March  1,  1996;
(iv)  a  decrease of $426,000 attributable to the diving activity
of  International  Services;  and  (v)  a  decrease  of  $454,000
attributable to decreased subsea products sales.

   Diving and related expenses.  The Company's diving and related
expenses decreased 1%, from $10.4 million in the two months ended
December  31,  1994  to  $10.3 million in the  two  months  ended
December  31,  1995.   The  $14,000  decrease  in  expenses   was
comprised   of   (i)   an   increase  of  approximately   $40,000
attributable  to  increased diving activity by  Inland  and  West
Coast  Services; (ii) an increase of approximately  $1.0  million
attributable  to the operations of the "American  Intrepid,"  the
Company's  jack-up  derrick barge; (iii) a decrease  of  $278,000
attributable to the operations of the "American Enterprise,"  the
Company's  pipelay/bury barge, which was sold on March  1,  1996;
(iv)  a  decrease of $481,000 attributable to the diving activity
of  International  Services;  and  (v)  a  decrease  of  $291,000
attributable to decreased subsea products sales.

  Selling, general and administrative expenses.  Selling, general
and  administrative expenses increased 6%, from $2.9 million  for
the  two  months ended December 31, 1994 to $3.1 million for  the
two  months ended December 31, 1995.  This increase was primarily
due to a $127,000 increase in expenses attributable to supporting
the  activities of the operations and sales office in  Dubai  for
the two months ended December 31, 1995.  This office did not have
full  operations in the same period of 1994.  Although there  was
an  overall  increase  in  the  level  of  selling,  general  and
administrative expenses during the two months ended December  31,
1995, these expenses, as a percentage of revenues, increased less
than  1%, from 19% for the two months ended December 31, 1994  to
20% for the two months ended December 31, 1995.

   Depreciation and amortization.  Depreciation and  amortization
increased 11%, from $799,000 in the two months ended December 31,
1994 to $889,000 for the two months ended December 31, 1995.  The
increase  was attributable to additions and improvements  to  the
Company's operational and administrative assets primarily in Gulf
Services and International Services.

   Operating  income.  Operating income decreased from $1,228,000
for  the two months ended December 31, 1995 to $1,196,000 for the
two  months ended December 31, 1994.  The slight decrease was due
to  the  increase in selling, general and administrative expenses
and  depreciation and amortization expenses for  the  two  months
ended December 31, 1995 as described above.

   Other income (expense).  For the two months ended December 31,
1995,  other expense (net) of $202,000 was comprised of  interest
expense  of $220,000, offset by miscellaneous other income  items
totaling  $18,000.   This  compares to  other  expense  (net)  of
$137,000  in  the comparable two-month period ended December  31,
1994, which was comprised of interest expense of $183,000, offset
by miscellaneous other income items of $46,000.

   Net  income.  As a result of the factors discussed above,  the
Company  recorded net income of $574,000, or $.09 per  share,  in
the two months ended December 31, 1995, compared to net income of
$611,000, or $.09 per share, in the two months ended December 31,
1994.

   Year Ended October 31, 1995 Compared to Year Ended October 31,
1994

   Diving and related revenues.  The Company's revenues increased
68%, from $52.8 million in fiscal 1994 to $88.7 million in fiscal
1995.   Of  the  $35.9 million increase, (i)  $13.2  million  was
attributable   to  increased  diving  activity  of  International
Services,  primarily  in  West  Africa,  (ii)  $8.3  million  was
attributable to increased diving and vessel activity in the  Gulf
of Mexico, (iii) $10.5 million was attributable to the results of
operations  of  assets  acquired and  operations  established  in
fiscal  1994  that were not operational for the  entire  year  of
fiscal  1994,  and  (iv)  $1.9 million was  attributable  to  the
operations of the "American Intrepid," the Company's new  jack-up
derrick  barge.  Of the $10.5 million increase from the Company's
expanded  operations,  $3.1 million was from  pipelay/bury  barge
operations, $5.1 million was due to activity of Inland  and  West
Coast  Services, $1.8 million was from Tarpon Systems operations,
and  $565,000  was from environmental remediation and  oil  spill
response operations.

   Diving  and related expenses.  Diving and related expenses  in
fiscal  1995 increased 79%, from $35.3 million in fiscal 1994  to
$63.2  million  in  fiscal 1995.  Of the $27.9 million  increase,
(i)  $8.8  million  was  attributable  to  the  increased  diving
activity  of  International Services, primarily in  West  Africa,
(ii)  $6.3  million was attributable to the increased diving  and
vessel  activity in the Gulf of Mexico, (iii) $10.0  million  was
attributable  to  the  expanded operations discussed  above,  and
(iv)   $1.3  million  was  attributable  to  the  derrick   barge
operations.   Of  the $10.0 million increase from  the  Company's
expanded  operations,  $4.4 million was from  pipelay/bury  barge
operations, $3.7 million was from Inland and West Coast Services,
$1.5 million was from Tarpon Systems operations, and $434,000 was
from environmental remediation and oil spill response operations.

  Selling, general and administrative expenses.  Selling, general
and administrative expenses increased 36%, from $14.2 million  in
fiscal  1994  to  $19.3  million in fiscal  1995.   Approximately
$2.6  million,  or  51%  of  the increase,  was  attributable  to
supporting the assets acquired and operations established  during
fiscal 1994.  Although there was an overall increase in the level
of selling, general and administrative expenses during the fiscal
year,  these expenses as a percentage of total revenues decreased
from 27% in fiscal 1994 to 22% in fiscal 1995.

   Depreciation and amortization.  Depreciation and  amortization
expenses  increased  48%, from $3.4 million  in  fiscal  1994  to
$5.1  million  in  fiscal  1995.  Of the $1.7  million  increase,
approximately  $1.1 million was attributable to  depreciation  of
assets  acquired and operations established during  fiscal  1994.
The  remainder of the increase was attributable to additions  and
improvements  to  the  Company's operational  and  administrative
assets.

  Operating income (loss).  For fiscal 1995, the Company recorded
operating  income of approximately $1.1 million  compared  to  an
operating  loss  of approximately $220,000 in fiscal  1994.   The
increase  in  operating income was primarily due  to  substantial
increases in the Company's total revenues in 1995; however,  this
significant  revenue increase was offset by several factors  that
adversely   affected   the  Company's   combined   gross   profit
percentage,  including  losses on certain turnkey  projects,  the
operating  losses on the American Enterprise, and  the  operating
loss   of  the  inland  diving  operations,  all  of  which  were
previously described.

   Other income (expense).  For fiscal 1995, other expense  (net)
of   $1.2   million   was  comprised  of  interest   expense   of
$1.4 million, a loss of $130,000 on the disposal of fixed assets,
and  other  income of $258,000.  This compares to  other  expense
(net) of $44,000 for fiscal 1994, which was comprised of interest
expense  of $297,000, a gain on the disposal of fixed  assets  of
$21,000,  and other income of $232,000.  The increase in interest
expense in 1995 was due primarily to increased average borrowings
under  the  Company's revolving line of credit  during  the  year
compared  to  fiscal  1994.  In addition,  fiscal  1995  interest
expense  includes  a discount of $159,000 on the  sale  of  notes
receivable during the year.

   Net  loss.   As a result of the factors discussed  above,  the
Company  recorded a net loss of $329,000, or $.05 per share,  for
fiscal  1995  compared to a net loss of $1,953,000, or  $.29  per
share, for fiscal 1994.


Liquidity and Capital Resources

   The  Company's primary liquidity needs are, generally, to fund
working capital requirements and to make capital expenditures for
acquisitions  of,  and  improvements to,  facilities,  DSVs,  and
diving  and related equipment.  The Company also incurs  expenses
for  mobilization and project execution throughout the course  of
its  contracts, while collections from customers typically do not
occur  until approximately 90 days after completion of  the  job.
The  Company  has  traditionally supported these working  capital
requirements by using a combination of internally generated funds
and short-term and long-term debt.

   During February 1997, the Company completed a secondary  stock
offering  of 3,553,315 shares of common stock which provided  the
Company with net proceeds of approximately $40 million, of  which
$16  million was used to repay borrowings outstanding  under  the
line  of credit agreement.  The Company believes that cash  flows
from  operations,  borrowings available  under  its  bank  credit
facility and the remaining proceeds from the stock offering  will
provide  sufficient funds to meet its working capital and capital
expenditure requirements for 1997.

   Cash flow from operations.  The Company has generated positive
net  cash  flow from operations for each of the last  three  full
fiscal years with $19.6 million in 1996, $1.4 million in 1995 and
$4.4 million in 1994.  The primary factors affecting amounts  and
timing  of cash flows from operating activities are the  same  as
those affecting results of operations discussed above.

  Investing activities.  Cash flows from investing activities are
primarily  related  to capital expenditures and  acquisitions  of
businesses.   For  the  year  ended December  31,  1996,  capital
expenditures were $22.0 million which included the acquisition of
six  DSVs and certain other diving equipment.  In addition, $12.6
million   was  expended  for  the  acquisition  of  HSI.    These
expenditures  were  funded by a combination  of  long-term  debt,
borrowings under the line of credit and proceeds of $5.4  million
received  from the sale of the "American Enterprise."  Management
expects   that   the  Company  will  continue  to  make   capital
expenditures  for  improvements to its existing  assets  and  for
acquisitions of assets in support of its growth strategy.

  Financing activities.  Cash flows from financing activities are
primarily attributable to borrowings and repayments on  both  the
Company's  long-term  indebtedness and  credit  facilities.   The
Company has a $15 million revolving line of credit with a bank at
the prime rate (8.25% at December 31, 1996).  The line is secured
by  and limited to certain qualifying accounts receivable and  is
cross-collateralized  by  certain of the  Company's  vessels  and
equipment.     During  October  1996,  the  Company  received   a
$5.0  million  increase in the line of credit to  facilitate  the
funding of its purchase of the outstanding common shares  of  HSI
until  such  time  as permanent financing could be  arranged.  At
December  31, 1996, $12.6 million was outstanding under the  line
of  credit  agreement. On February 7, 1997, the  Company  used  a
portion of the proceeds of its secondary stock offering to  repay
all amounts outstanding under the line of credit agreement.

   The Company also has a long-term note payable to a bank in the
amount  of $9.6 million at December 31, 1996 at a fixed  interest
rate  of  7.9%.  The terms of the note require monthly  principal
payments  of $125,000, plus interest, with a balloon  payment  of
$3.1 million due on May 31, 2001.  This debt is secured by eleven
DSVs and certain diving equipment.

Income Taxes

    The  Company  conducts  operations  in  various  foreign  tax
jurisdictions including Canada, the United Kingdom, Nigeria,  and
the  United Arab Emirates and anticipates that it will expand its
operations into other foreign tax jurisdictions.  It is  possible
that  a  number  of  these  foreign tax  jurisdictions  may  have
corporate  income  tax  rates  that exceed  the  current  maximum
U.S.  corporate  income  tax rate  of  34%.   As  a  result,  the
Company's operations in these jurisdictions could result  in  the
Company  experiencing an overall effective tax rate in excess  of
the  current  maximum U.S. tax rate applicable  to  corporations.
See  Note 9 to the consolidated financial statements included  in
this  Annual  Report  for  the reconciliation  of  the  statutory
federal income tax rate to the Company's effective tax rate.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      In  this report, the consolidated financial statements  and
supplementary  data of the Company appear on pages  K-35  through
pages K-53 and are incorporated in this Item 8 by reference.  See
Index to Financial Schedules on page K-33.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

                      PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The information required by Item 10 will be included in the
Company's definitive proxy statement for its 1997 annual  meeting
of  shareholders  and is incorporated herein by  reference.   For
information  regarding executive officers  of  the  Company,  see
"Executive Officers of the Registrant" in Part I of this report.

ITEM 11. EXECUTIVE COMPENSATION

      The information required by Item 11 will be included in the
Company's definitive proxy statement for its 1997 annual  meeting
of shareholders and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The information required  by  Item  12  will be included in the 
Company's definitive proxy statement for its 1997 annual meeting of  
shareholders and is incorporated herein by reference.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information required by Item 13 will be  included  in  the  
Company's definitive proxy statement for its 1997 annual meeting of 
shareholders and is incorporated  herein by reference.

                                         PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  Documents filed as part of this report.

         1. Financial Statements..
               (i)   Report of Independent Accountants
               (ii)  Consolidated Balance Sheets
               (iii) Consolidated Statements of Operations
               (iv)  Consolidated Statements of Changes in 
                       Stockholders' Equity
               (v)   Consolidated Statements of Cash Flows
               (vi)  Notes to Consolidated Financial Statements
         2. Financial Statement Schedules.
               All schedules are omitted as the required information is 
               inapplicable  or the information is presented in the 
               Consolidated Financial Statements or notes thereto.

         3. Exhibits:  Those exhibits  marked with an asterisk ("*") refer 
               to exhibits (or portions thereof in the case of Exhibit  13.1)  
               filed  herewith  and listed in the Exhibit Index which appears 
               immediately before the first such exhibit; the  other  exhibits  
               are incorporated herein by reference, as indicated in the 
               following list.

Exhibit
 No.
____________________________________________________________________________
3.1   Amended and Restated Articles of Incorporation of the Company.(1)
3.2   By-laws of the Company.(1)
4.1   See Exhibits  3.1  and  3.2  for  provisions  of  the Company's 
      Amended and Restated Articles of Incorporation and By-laws defining 
      the rights of holders of Common Stock.
4.2   Specimen of Common Stock certificate.(1)
10.1  American Oilfield Divers, Inc. 1993 Incentive Compensation Plan.(1)
10.2  American Oilfield Divers, Inc. Non-Employee Director Stock Option 
      Plan.(1)
10.3  American Oilfield Divers, Inc. Profit Sharing and Retirement Plan.(1)
10.4  American Oilfield Divers, Inc. Employee Stock Option Plan.(2)
10.5  Asset Purchase Agreement by and among American Corrosion Services, 
      Inc., American Oilfield Divers, Inc., Corrtherm, Inc. and Corrpro 
      Companies, Inc. dated November 23, 1994, incorporated by reference 
      to the Company's Current Report on Form 8-K dated November 23, 1994.(3)
10.6  Escrow Agreement dated November 23, 1994 by and among American Oilfield
      Divers, Inc., American Corrosion Services, Inc., Corrpro Companies, Inc.,
      Corrtherm, Inc. and Phelps Dunbar, L.L.P., incorporated by reference to 
      the Company's Current Report on Form 8-K dated November 23, 1994.(3)
10.7  Lease dated December 1, 1984 between American Oilfield  Divers, Inc. 
      and Le Triomphe General Partnership,a Louisiana general partnership, 
      of which George C. Yax, the Chairman of the Board, President,  and  
      Chief  Executive Officer, is a general partner owning a 9.1%  interest,
      relating to the Company's Broussard, Louisiana facility.(1)
10.8  Business Park Lease dated April 23, 1993, between American Oilfield 
      Divers, Inc. and The Texas Development Company relating to the Houston, 
      Texas facility.(2)
10.9  Lease dated July 21, 1989 between Mr. Yax and American Oilfield Divers, 
      Inc. with respect to the Texas hunting facility and Amendment No. 1 
      thereto dated December 1, 1994.(3)
10.10 Lease dated September 28, 1989 between  Mr.  Freeman  and  American 
      Oilfield Divers, Inc. with respect to the Mississippi hunting facility 
      and Amendment  No.  1 thereto dated December 1, 1994.(3)
10.11 Amended and Restated Loan Agreement dated September 22, 1994, among 
      American Oilfield  Divers,  Inc.,  certain  of  its subsidiaries and 
      First National  Bank  of Commerce.(3)
10.12 Second Amended and Restated Loan Agreement, dated April 3, 1996 
      among American Oilfield Divers, Inc., certain of its subsidiaries and 
      First National Bank of Commerce.
10.13 Employment Agreement dated August 1, 1996 between American Oilfield 
      Divers, Inc. and Rodney W. Stanley.
10.14 Form of Indemnity Agreement by and between American Oilfield Divers, 
      Inc. and each of Messrs. Yax, Freeman, Weems, Suggs, Green, Hebert, 
      O'Malley and Lasher.(1)
13.1  * The Company's 1996 Annual Report to Shareholders.
21.   * List of Subsidiaries of the Company.
23.1  * Consent of Price Waterhouse.
24.   * Powers of Attorney.
27.1  * Financial Data Schedule.
____________________________________________________________________________
(1) Indicates exhibit  previously  filed with the Securities and Exchange 
    Commission in the Company's Registration Statement on Form S-1,
    (Registration No 33-63920), on June 4, 1993, as amended.
(2) Indicates exhibit previously filed  with  the Securities and Exchange 
    Commission in the Company's Annual Report on Form 10-K for the fiscal 
    year ended October 31, 1993.
(3) Indicates exhibit previously filed with the Securities and Exchange 
    Commission  in  the Company's Annual Report on Form 10-K for the fiscal 
    year ended October 31, 1994.
(4) Indicates exhibit previously filed with the Securities and Exchange 
    Commission in the Company's Quarterly Report on Form 10-Q for the 
    quarterly period ended April 30, 1995.

(b)  Reports on Form 8-K

     During the last quarter of the year ended  December  31,  1996, the 
Company filed the following reports on Form 8-K:


      Date of Report                Item Reported:
   October 16, 1996 (Form 8-K) Item  5,  "Other  Events," announcing  the
                               extension  of  the  offer  by  AOD  Acquisition
                               Corp., a wholly owned subsidiary of the Company
                               to  purchase all of the outstanding  shares  of
                               Hard Suits Inc.
   October 31, 1996 (Form 8-K) Item  2,  "Acquisition  or  Disposition of
                               Assets," regarding the purchase of  9.6 million
                               or 97% of the outstanding shares of Hard  Suits
                               Inc.;  Item  5,  "Other  Events," regarding the
                               execution   of   a   lock-up   agreement    and
                               Acquisition  Agreement  with  the  Chairman and
                               Chief Executive Officer of Hard Suits  Inc. and
                               Item  7,  "Financial  Statements and Exhibits,"
                               exhibits to the tender offer.
   October 31, 1996 (Form 8-KA)Item   7,   "Financial    Statements   and
                               Exhibits,"  filing  the consolidated  financial
                               statements of Hard Suits Inc.

<PAGE>
                                        Signatures

     Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934,  the registrant has duly caused this report to  be  
signed  on  its  behalf  by  the undersigned, thereunto duly authorized on 
March 27, 1997.

                                          American Oilfield Divers, Inc.


                                    By:   /s/ Rodney W. Stanley
                                        ___________________________
                                         Rodney W. Stanley
                               President and Chief Executive Officer

     Pursuant  to the requirements of the Securities Exchange Act of 1934, 
this report has been signed below  by  the  following  persons  on  behalf  
of  the  registrant and in the capacities and on the dates indicated.


      Signature                   Title                      Date
     __________                   _____                      _____

   /s/ George C. Yax
________________________
     George C. Yax           Chairman of the Board        March 27, 1997



 /s/ Rodney W. Stanley
_________________________
   Rodney W. Stanley        President and Chief           March 27, 1997
                             Executive Officer
                           (Principal Executive Officer)


/s/ Prentiss A. Freeman
__________________________
  Prentiss A. Freeman      Executive Vice President       March 27, 1997
                            Chief Operating Officer
                            and Director


           *
__________________________
  William C. O'Malley          Director                   March 27, 1997


           *
__________________________
   Stephen A. Lasher           Director                   March 27, 1997


   /s/ Cathy M. Green
___________________________
     Cathy M. Green          Vice President - Finance     March 27, 1997
                             and Chief Financial Officer
                             (Principal Financial and
                              Accounting Officer)


*By: /s/ Cathy M. Green
   ________________________
     Cathy M. Green
    Attorney-in-fact

                       INDEX TO FINANCIAL STATEMENTS AND SCHEDULES




Index to Financial Statements                                             Page
_______________________________________________________________________________

Report of Independent Accountants                                         K-35
Consolidated Balance Sheets                                               K-36
Consolidated Statements of Operations                                     K-38
Consolidated Statements of Changes in Stockholders' Equity                K-39
Consolidated Statements of Cash Flows                                     K-40
Notes to Consolidated Financial Statements                                K-42
Selected Quarterly Financial Data                                         K-53

<PAGE>

                  Report of Independent Accountants


To the Board of Directors and Stockholders
 of American Oilfield Divers, Inc.


In  our  opinion,  the  accompanying consolidated balance sheets and the
related  consolidated  statements   of   operations,   of   changes   in
stockholders'  equity  and of cash flows present fairly, in all material
respects, the financial  position  of American Oilfield Divers, Inc. and
its subsidiaries at December 31, 1996 and 1995, and the results of their
operations and their cash flows for  the  year  ended December 31, 1996,
the two months ended December 31, 1995 and each of  the two years in the
period  ended  October  31, 1995, in conformity with generally  accepted
accounting   principles.    These    financial    statements   are   the
responsibility  of  the Company's management; our responsibility  is  to
express an opinion on  these  financial  statements based on our audits.
We conducted our audits of these statements in accordance with generally
accepted auditing standards which require  that  we plan and perform the
audit  to  obtain  reasonable  assurance  about  whether  the  financial
statements  are  free  of  material  misstatement.   An  audit  includes
examining,  on  a  test  basis,  evidence  supporting  the  amounts  and
disclosures  in  the  financial  statements,  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management, and
evaluating  the  overall financial statement presentation.   We  believe
that our audits provide  a  reasonable  basis  for the opinion expressed
above.

PRICE WATERHOUSE LLP
New Orleans, Louisiana
February 17, 1997
                      
                      
<PAGE>                      
                      
                     AMERICAN OILFIELD DIVERS, INC.
                   __________________________________

                      CONSOLIDATED BALANCE SHEETS
                   __________________________________
                   (in thousands, except share data)


                                                             December 31,
                                                           1996       1995
                                                           ____       ____
ASSETS

Current assets:
  Cash and cash equivalents                              $ 1,322     $   788
  Accounts receivable, net of
   allowance for doubtful accounts
   of $500 and $380                                       20,095      13,014
  Unbilled revenue                                         5,929      13,683
Other receivables                                          2,171       2,025
  Current deferred tax asset                                 --        1,700
  Inventories                                              4,651       2,261
  Prepaid expenses                                         1,566       1,380
                                                         _________  _________
   Total current assets                                   35,734      34,851

Property, plant and equipment, net                        43,041      25,550

Deferred tax asset                                            --          57
Intangible and other assets                               14,132       3,463
                                                        __________  _________
                                                         $92,907    $ 63,921
                                                        ==========  =========

                      The accompanying notes are an integal part
                          of these financial statements.
<PAGE>




                                                                December 31,
                                                              1996      1995
                                                              ____      ____
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                          $ 9,609   $ 6,027
  Income taxes payable                                        1,756       --
  Other liabilities                                           9,139     3,676
  Short-term borrowings                                       1,306     7,875
  Current portion of long-term debt                           1,702     1,375
                                                            ________  ________
    Total current liabilities                                23,512    18,953

Deferred tax liability                                        2,601       --
Borrowings under a line of credit agreement                  12,450       --
Long-term debt, less current portion                          8,459     5,413
Other                                                            40       --
                                                            ________  ________
    Total liabilities                                        47,062    24,366
                                                            ________  ________
Commitments and contingencies (Note 13)                        --         --

Stockholders' equity:
  Preferred stock, no par value;
    5,000,000 shares authorized; none issued                   --         --
  Common stock, no par value;
    30,000,000 shares authorized; 6,879,867
    and 6,709,497 issued and outstanding at
    stated value at December 31, 1996 and
    1995                                                      1,373     1,360
  Additional paid-in capital                                 42,059    40,837
  Foreign currency translation adjustments                     (98)      (132)
  Retained earnings (accumulated deficit)                     2,511    (2,510)
                                                           _________  ________
    Total stockholders' equity                               45,845    39,555
                                                           _________  ________
                                                            $92,907   $63,921
                                                           =========  ========
                 
                       The accompanying notes are in integral part
                          of these financial statements.
<PAGE>
                 
                    AMERICAN OILFIELD DIVERS, INC.
                    _______________________________

                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 _____________________________________
                 (in thousands, except per share data)

<TABLE>
<CAPTION>

        
                                       Year Ended       Year Ended      Two Months Ended
                                       December 31,     October 31,        December 31,
                                      ______________   _____________     ________________
                                          1996         1995     1994      1995      1994

<S>                                     <C>           <C>      <C>       <C>      <C> 
Diving and related revenues             $105,772      $88,660  $52,755   $15,486  $ 15,259

Costs and expenses:
  Diving and related expenses             70,066       63,180   35,338    10,346    10,359
  Selling, general and administrative
   expenses                               19,486       19,318   14,222     3,055     2,873
  Depreciation and amortization            6,815        5,064    3,415       889       799
                                         _________   _________ _________ _________ _________
     Total costs and expenses             96,367       87,562   52,975    14,290    14,031
                                         _________   _________ _________ _________ _________
Operating income (loss)                    9,405        1,098    (220)     1,196     1,228
                                         _________   _________ _________ _________ _________
Other income (expense):
  Interest expense                        (1,246)      (1,377)    (297)     (220)     (183)
  Gain (loss) on sale or abandonment
   of property and equipment and
   other assets                              708         (130)      21         5         1
  Other income, net                          104          258      232        13        45
                                         _________   _________ _________ _________ _________     
     Total other expense                    (434)      (1,249)     (44)     (202)     (137)
                                         _________   _________ _________ _________ _________
Income (loss) from continuing 
  operations before income taxes 
  and minority interest                    8,971         (151)    (264)      994     1,091
Income tax expense  attributable
  to continuing operations                 3,950           62       75       420       480
                                         _________   _________ _________ _________ _________
Income (loss) from continuing operations
  before minority interest                 5,021         (213)    (339)      574       611
Minority interest in (earnings) loss of
  subsidiary                                 --          (116)      82        --        --
                                         _________   _________ _________ _________ _________
Income (loss) from continuing operations   5,021         (329)    (257)      574       611
                                         _________   _________ _________ _________ _________
Discontinued operations:
  Loss from discontinued operations
   through October 31, 1994, less
   income tax benefit of $539                 --           --   (1,054)       --        --
  Estimated loss on disposal, less
   income tax benefit of $331                 --           --     (642)       --        --
                                         _________   _________ _________ _________ _________  
  Loss from discontinued operations           --           --   (1,696)       --        --
                                         _________   _________ _________ _________ _________
Net income (loss)                         $ 5,021      $ (329) $(1,953)  $   574    $  611
                                         =========   ========= ========= ========= =========
Net income (loss) per share:
  Continuing operations                   $   .74      $ (.05) $  (.04)  $   .09    $  .09
  Discontinued operations                      --          --     (.25)       --        --
                                         _________   _________ _________ _________ _________
Net income (loss) per share               $   .74      $ (.05) $  (.29)  $   .09    $  .09
                                         =========   ========= ========= ========= ==========
Weighted average common shares 
   outstanding                              6,787       6,709    6,706     6,709     6,709
                                         =========   ========= ========= ========= ==========
</TABLE>
                                   The accompanying notes are an integral part
                                          of these financial statements.

<PAGE>
                         AMERICAN  OILFIELD DIVERS, INC.
                         ________________________________

       CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
       ___________________________________________________________

FOR THE YEAR ENDED DECEMBER 31, 1996, THE TWO MONTHS ENDED DECEMBER 31, 1995
             AND THE YEARS ENDED OCTOBER 31, 1995 AND 1994
                   (in thousands, except share data)


<TABLE>
<CAPTION>
                                                                         Foreign   (Accumulated
                                          Common Stock      Additional   Currency    Deficit)
                                         _________________   Paid-in    Translation  Retained 
                                         Shares     Amount    Capital   Adjustments  Earnings     Total
                                         ______     ______    _______   ___________  ________     _____
<S>                                     <C>         <C>       <C>         <C>        <C>        <C>
Balance at October 31, 1993             6,688,750   1,359     $40,674     $(132)     $  (802)   $ 41,099

Issuance of common stock                   20,747       1         163        --           --         164
Net effects of translation
 of foreign currency                           --      --          --        17           --          17
Net loss                                       --      --          --        --       (1,953)     (1,953)
                                        ___________ _________ __________  _________ ___________ ___________
Balance at October 31, 1994             6,709,497   1,360      40,837      (115)      (2,755)     39,327

Net effects of translation of
 foreign currency                              --      --          --        (9)          --          (9)
Net loss                                       --      --          --        --         (329)       (329)
                                        ___________ _________ __________  _________ ___________ ___________
Balance at October 31, 1995             6,709,497   1,360      40,837      (124)      (3,084)     38,989

Net effects of translation of
 foreign currency                              --      --          --        (8)          --          (8)
Net income                                     --      --          --        --          574         574  
                                        ___________ _________ __________  _________ ___________ ___________
Balance at December 31, 1995            6,709,497   1,360      40,837      (132)      (2,510)     39,555
                                                                         
Issuance of common stock                   71,685       6         594        --           --         600
Exercise of stock options                  98,685       7         680        __           __         687
Net effects of translation of                                   
 foreign currency                              --       --         --        34           --          34
Other                                          --       --        (52)       --           --         (52)
Net income                                     --       --         --        --        5,021       5,021
                                        ___________ _________ __________  _________ ___________ ___________
Balance at December 31, 1996            6,879,867   $1,373    $42,059     $ (98)     $ 2,511     $45,845
                                        =========== ========= ==========  ========= ===========


</TABLE>
                           The accompanying notes are an integral part
                                of these financial statements.
<PAGE>


                    AMERICAN OILFIELD DIVERS, INC.
                    ______________________________
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                 _____________________________________
                             (in thousands)
<TABLE>
<CAPTION>

                                           Year Ended     Year Ended        Two  Months Ended
                                          December 31,    October 31,       December 31,
                                          ______________ _______________   __________________
                                              1996        1995     1994     1995       1994
                                              _____      _____     ____     ____       ____
                                                                                 (unaudited)
<S>                                          <C>        <C>       <C>      <C>       <C>
Cash flows from operating activities:
  Cash received from customers               $106,620   $80,070   $51,962  $ 19,657  $ 13,125
  Cash paid to suppliers and employees        (85,548)  (77,285)  (53,570)  (19,137)  (13,527)
  Interest paid                                (1,246)   (1,217)     (273)     (220)     (182)
  Income taxes refunded (paid)                   (147)     (167)    6,112       (21)       12
  Other cash received (paid)                      (37)      (26)      192      (576)     (356)
                                             ___________ ________ ________ _________ _________

     Net cash provided by (used by) operating
      activities                               19,642      1,375    4,423      (297)     (928)
                                             ___________ ________ ________ _________ _________
Cash flows from investing activities:
  Decrease (increase) in other assets             781     (1,551)  (1,902)      (44)      (37)
  Capital expenditures                        (22,128)    (7,884) (17,824)     (322)     (315)
  Acquisition of Hard Suits Inc., including
   capital assets of $6,000,000 and net of
   cash received (Note 2)                     (12,597)       --        --        --        --  
  Net proceeds from sales of assets             6,131      1,541       17        35        --
  Proceeds from insurance claims                  535      1,565       --        --        --
  Proceeds from sale of notes receivable           --      2,762       --        --        --
  Receipt of payments on notes receivable          --        480       --        --        --
  Maturity of short-term investment                --         --      498        --        --
                                             ___________ ________ ________ _________ _________
     Net cash used by investing activities    (27,278)    (3,087) (19,211)     (331)     (352)
                                             ___________ ________ ________ _________ _________
Cash flows from financing activities:
  Repayments of long-term debt                 (7,708)   (2,810)     (213)     (333)     (401)
  Proceeds from long-term borrowings           10,500     2,000     8,023        --        --
  Net proceeds under line of credit 
    agreement                                   4,743     2,470     4,830       575       950
Issuance of common stock under exercise
   of options                                     687        --        --        --        --
  Other                                           (52)       --        --        --        --
                                             ___________ ________ ________ _________ _________
     Net cash provided by financing 
       activities                               8,170     1,660    12,640       242       549
                                             ___________ ________ ________ _________ _________
Net increase (decrease) in cash                   534       (52)   (2,148)     (386)     (731)

Cash and cash equivalents at beginning 
  of period                                       788     1,226     3,374     1,174     1,226
                                             ___________ ________ ________ _________ _________
Cash and cash equivalents at end of period     $1,322   $ 1,174   $ 1,226    $  788    $  495
                                             =========== ======== ======== ========= =========
</TABLE>

                         The accompanying notes are an integral part
                               of these financial statements.

<PAGE>

                    AMERICAN OILFIELD DIVERS, INC.
                   _________________________________
                 
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                  _____________________________________
                             (in thousands)

<TABLE>
<CAPTION>
                                               Year Ended     Year Ended      Two Months Ended
                                              December 31,    October 31,       December 31,
                                              ____________  _______________  __________________
                                                  1996       1995     1994      1995     1994
                                                 _______     _______  _______  ________ ________
                                                                                       (unaudited)
<S>                                              <C>        <C>      <C>       <C>     <C>       
Reconciliation of net income to net cash
  provided by operating activities:
   Net income (loss)                             $ 5,021    $ (329)  $(1,953)  $ 574   $  611
   Adjustments to reconcile net income to
     net cash provided by operating activities:
      (Gain) loss on sale or abandonment of
        property and equipment and other
        assets                                      (708)      130       (21)     (5)     --
      Discount on sale of note receivable             --       159        --       --     --
      Write-down of assets held for sale              --        --       648       --     --
      Minority interest in earnings (loss) of
        subsidiary                                    26       116       (82)      --     --
      Depreciation and amortization                6,815     5,064     4,022      889    799
      Provision for loss on receivables              398       237        92       80     70
      Receivables written off                       (278)     (345)     (144)      --    (20)
      (Increase) decrease in deferred tax
        asset                                      1,777       930    (1,407)      --     --
      Increase (decrease) in deferred tax
        liability                                    301        --    (1,017)      --     --
      (Increase) decrease in current assets,
        net of the effect of businesses
        acquired  (Note 2):-
         Accounts receivable                      (6,905)   (6,465)   (4,521)  10,775 (1,876)
Unbilled receivables                               7,754    (1,790)   (1,764)  (6,604)  (151)
         Tax refund receivable                                 125     6,149       --   (102)   
         Other receivables                           167      (409)      (40)    (590)  (400)
         Current deferred tax asset                           (950)    1,525      400    492   
         Inventories                              (1,845)     (549)     (803)     (70)   120
         Prepaid expenses                            (47)     (912)     (239)     555    (83)
      Increase (decrease) in current
        liabilities, net of the effect of
        businesses acquired:-
         Accounts payable and other
            liabilities                            5,441     6,363     3,978   (6,301)   (388)
         Income taxes payable                      1,725        --        --       --      --
                                                  ______     _____    _______  ________ _______
           Total adjustments                      14,621     1,704     6,376     (871) (1,539)
                                                  ______     _____    _______  ________ _______
            Net cash provided by (used by)
              operating activities               $19,642   $ 1,375   $ 4,423   $ (297) $ (928)
                                                 =======   =======   =======   ======= ========
</TABLE>
Supplemental disclosure of noncash activities:-

In two separate transactions, the Company issued  common stock valued at
approximately $600,000 and entered into a note payable for $1,138,368 in
connection  with its acquisition of certain diving support  vessels  and
equipment in  1996.  Fixed assets and inventory totalling $4,886,890 are
classified as assets  held  for  sale  at October 31, 1994.  The Company
issued  common  stock  valued  at  $164,000  in   connection   with  its
acquisition of a business during 1994.


                       The accompanying notes are an integral part
                            of these financial statements.
<PAGE>


                     AMERICAN OILFIELD DIVERS, INC.
                     _______________________________
               
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               __________________________________________


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
____________________________________________________

The Company and Principles of Consolidation
___________________________________________

The  consolidated  financial statements include the accounts of American
Oilfield  Divers,  Inc.   and   its   wholly-owned   and  majority-owned
subsidiaries (the Company).  All material intercompany  transactions and
balances have been eliminated in consolidation.

On  June 26, 1996, the Company's Board of Directors resolved  to  change
the Company's  fiscal  year-end from October 31 to December 31 to enable
the Company to report its  quarterly and annual results of operations on
a comparable basis with other companies in the oil and gas industry.

During 1996, the Company acquired 97% of the outstanding common stock of
Hard Suits Inc. (see Note 2).

Effective October 31, 1994,  the  Company  sold  certain  assets  of its
subsidiary,  American  Corrosion  Services,  Inc.   The  purchase  price
totalled  $4,900,000  and  included notes receivable of $3,386,000 which
were sold, with recourse, in  April 1995, and have a balance outstanding
of $1,365,789 at December 31, 1996.

In February 1997, the Company completed  a  secondary  stock offering of
3,553,315  shares  of common stock which provided the Company  with  net
proceeds of approximately  $40  million.  The Company used approximately
$16 million to repay borrowings outstanding  under its line of credit at
December 31, 1996 and intends to use the remaining  proceeds for general
corporate purposes, including working capital requirements  and  to fund
any future capital expenditures and strategic asset acquisitions.

Use of Estimates
_________________

The  preparation  of  financial  statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported  amounts  of assets and liabilities
and disclosure of contingent liabilities at the  date  of  the financial
statements and the reported amounts of revenues and expenses  during the
reporting period.  Actual results could differ from those estimates.

Revenue Recognition
___________________

Revenue is recognized on projects of short duration at the time services
are rendered at estimated collectible amounts.  Revenue is recognized on
fixed  price (turnkey) contracts on the percentage of completion  method
based on  the  ratio  of  costs  incurred  to  total  estimated costs at
completion.  Contract price and cost estimates are reviewed periodically
as work progresses and adjustments are reflected in the  period in which
such  estimates  are revised. Provisions for estimated losses  on  fixed
price contracts are  made  in  the  period  such  losses are determined.
Unbilled revenue represents revenue attributable to work completed prior
to the balance sheet date which has not been billed and work in progress
at the balance sheet date which will be billed at the  completion of the
related contract.  All amounts included in unbilled revenue  at December
31,  1996  and 1995 are estimated to be billed and collected within  the
current year.

Diving and related  expenses  include all the direct labor and benefits,
materials unique to or installed  in  the  project,  and  vessel related
expenses,  and  are  charged  as  incurred.   General and administrative
expenses are charged to expense as incurred.

Inventories
___________

Inventories are valued at the lower of cost or  market determined on the
first-in, first-out basis.

Other Assets
_____________

Other  assets  include  goodwill,  patents and trademarks,  organization
costs,  deferred  drydock  costs and noncompete  agreements,  which  are
amortized on the straight-line method over their estimated useful lives,
ranging from two to fifteen years.

Property, Plant and Equipment
______________________________

Property, plant and equipment  are  carried  at  cost.   Depreciation of
assets is computed by the straight-line method over the estimated useful
lives of the related assets.  Amortization of leasehold improvements  is
computed by the straight-line method over the shorter of the useful life
of  the asset or the life of the lease.  Useful lives range from 5 to 10
years  for vessels and surveying equipment; 3 to 10 years for diving and
other equipment;  3  to  5  years  for transportation equipment; 3 to 10
years for leasehold improvements; 5 years for furniture and fixtures and
30 years for buildings.  As the Company  has  not  had  any construction
projects   of   significant  duration,  no  interest  costs  have   been
capitalized in connection  with  these  projects; however, certain labor
and other direct construction costs have been capitalized as part of the
assets.

Assets retired or otherwise disposed of are  removed  from  the accounts
along  with any related depreciation and amortization and the  resultant
gain or  loss  is  reflected  in  income.   Maintenance  and repairs are
charged to expense as incurred.

As a result of the change in fiscal year-end, the Company  was  required
to  implement  Statement  of  Financial  Accounting  Standards  No. 121,
"Accounting  for  the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," (SFAS 121) for the fiscal year ended December
31, 1996.  This pronouncement  requires a review for impairment whenever
circumstances indicate that the  carrying  amount  of long-lived assets,
certain  identifiable  intangibles and goodwill may not  be  recoverable
through future cash flows.   In  accordance  with  SFAS 121, the Company
recognized a pre-tax charge of $500,000 ($290,000 after tax, or $.04 per
share),  effective January 1, 1996, on certain of the  Company's  diving
assets which  are  not expected to be fully utilized in operations.  The
charge is included in  depreciation  and amortization for the year ended
December 31, 1996.

Foreign Currency Translation
____________________________

Income  statement  accounts are translated  at  average  exchange  rates
during the year and the balance sheet is converted as of the last day of
the  fiscal  year  at the  current  rate  of  exchange.   The  resulting
translation  adjustment   is   recorded   as  a  separate  component  of
stockholders' equity.

Income Taxes
_____________

The Company files a consolidated federal income tax return.  The Company
provides for taxes on the basis of items included  in  the determination
of income for financial reporting purposes regardless of the period when
such  items  are  reported for tax purposes.  Accordingly,  the  Company
records deferred tax  liabilities and assets for future tax consequences
of events that have been  recognized  in different periods for financial
and tax purposes.

Earnings (Loss) Per Share
__________________________

Earnings (loss) per common share is calculated  by  dividing  net income
(loss)  by  the  weighted  average  number  of  common shares, including
redeemable  common  shares, outstanding during each  year.   Outstanding
stock  options  are common  stock  equivalents  but  are  excluded  from
earnings  per common  share  as  the  effect  would  not  be  materially
dilutive.

Stock Compensation
__________________

The Company  has adopted Statement of Financial Accounting Standards No.
123 "Accounting for Stock Based Compensation" (SFAS 123).  In accordance
with the provisions  of  SFAS  123, the Company has elected to apply the
provisions  of  APB Opinion No. 25,  "Accounting  for  Stock  Issued  to
Employees" and related  Interpretations  in  accounting  for  its  stock
option plans.  Compensation expense is the excess, if any, of the quoted
market  price  of  the stock at the grant date or other measurement date
over the amount the employee must pay to acquire the stock.

Cash and Cash Equivalents
_________________________

For purposes of the  consolidated statement of cash flows, cash and cash
equivalents include short-term  highly  liquid investments with original
maturities of three months or less.

Fair Value of Financial Instruments
___________________________________

The  carrying  amount  of  financial instruments,  which  include  cash,
accounts receivable, accounts  payable  and  notes payable, approximates
fair values at December 31, 1996.

Reclassifications
_________________

Certain  amounts  in  the  1995  Consolidated Balance  Sheet  have  been
reclassified to conform to the 1996 presentation.

Interim Financial Statements
_____________________________

The accompanying financial statements  for the two months ended December
31, 1994 are unaudited.  In management's opinion, such interim financial
statements reflect all normal recurring adjustments necessary for a fair
statement of the results of operations for  such  interim period.  These
interim  financial  statements  should be read in conjunction  with  the
Company's audited financial statements included herein.

The offshore oilfield services industry  in the Gulf of Mexico is highly
seasonal as a result of weather conditions  and  the  timing  of capital
expenditures   by   the   oil   and   gas  industry.   As  a  result,  a
disproportionate amount of the Company's  total  revenues and net income
is earned during the third (July through September)  and fourth (October
through  December)  quarters  of its fiscal year.  Results  for  interim
periods  are not necessarily indicative  of  the  results  that  may  be
expected for the complete fiscal year.

NOTE 2 - ACQUISITION
____________________

From October  31, 1996 to November 15, 1996, a subsidiary of the Company
acquired approximately 97% of the outstanding common stock of Hard Suits
Inc., a publicly  traded  company  on  the  Toronto  and Vancouver Stock
Exchanges,  for  a cash purchase price of approximately  $12.6  million,
including transaction  costs. The purchase was funded through borrowings
on  the  Company's line of  credit,  which  were  repaid  subsequent  to
December 31,  1996  with  the  proceeds from a secondary offering of the
Company's common stock (see Notes  1  and  7).   The  Company intends to
acquire  the remaining outstanding common shares of Hard  Suits  and  to
seek delisting  of  all shares from both the Toronto and Vancouver Stock
Exchanges.  The transaction  was accounted for under the purchase method
of accounting.  The results of  operations of Hard Suits are included in
the  consolidated  statement of operations  for  the  two  months  ended
December 31, 1996.

The purchase price was  allocated to the assets of Hard Suits Inc. based
on estimated fair values as follows (in thousands):

Current assets                                       $1,362
Property, plant and equipment                         6,000
Patents and other intangible assets                   8,900
Goodwill                                              2,888
Liabilities assumed                                  (4,190)
Deferred tax liability                               (2,300)
                                                    ________
                                                    $12,660
                                                    ========
The following unaudited pro  forma information presents a summary of the
consolidated results of operations  of  the Company and Hard Suits as if
the  acquisition  occurred  on January 1, 1996  and  November  1,  1994,
respectively.    Pro   forma  adjustments   include   depreciation   and
amortization, interest charges  on  borrowings on the line of credit and
tax benefit related to additional interest charges.

                                                  For the Years Ended
                                          December 31, 1996  October 31, 1995
                                          _________________  _________________
                                                        (Unaudited)
                                                       (in thousands)

Diving and related revenues                      $110,005         $ 102,061
Net loss                                             (431)           (5,630)
Net loss per share                                   (.06)             (.84)


NOTE 3 - INVENTORIES
____________________

Inventories consist of the following (in thousands):
                                                               December 31,
                                                               ______________
                                                               1996     1995
                                                               ----     ----
Fuel                                                          $  152   $  101
Supplies                                                         659    1,026
Work in process                                                2,491      444
Finished goods                                                 1,349      690
                                                              _______  _______
                                                              $4,651   $2,261
                                                              =======  =======
NOTE 4 - INTANGIBLE AND OTHER ASSETS
____________________________________

Intangible and other assets consist of the following (in thousands):
                                                               
                                                               December 31,
                                                               ____________
                                                               1996    1995
                                                               ----    ----
Trademarks and patents                                        $9,991  $1,090
Goodwill                                                       3,791     609
Deferred drydock expenses                                      1,791   1,484
Other                                                          1,371   1,787
                                                              _______ _______
                                                              16,944   4,970

Less -  Accumulated amortization                              (2,812) (1,507)
                                                              _______ _______
                                                              $14,132 $3,463
                                                              ======= =======
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
______________________________________

Property, plant and equipment consist of the following (in thousands):
                                                                
                                                                December  31,
                                                                _____________
                                                                1996     1995
                                                                ----     ----
Diving equipment                                              $24,388  $16,056
Manufacturing and related equipment                             3,224      892
Vessels and surveying equipment                                24,244   17,454
Furniture and fixtures                                          4,130    3,463
Leasehold improvements                                          1,381    1,080
Construction in progress                                        3,016      665
Building                                                        2,498    2,699
Land                                                            1,347      591
Transportation equipment                                          704      703
Construction Equipment                                            537       --
                                                              _________ _______
                                                               65,469   43,603
Less - Accumulated depreciation
     and amortization                                         (22,428) (18,053)
                                                              ________ ________
                                                              $43,041  $25,550
                                                              ======== ========

Construction in progress at December  31,  1996  primarily  consists  of
construction of various items of equipment.  The total costs to complete
the projects have been estimated by management to approximate $2,000,000
and are estimated to be completed at various times during fiscal 1997.

The  net  book  value  of  assets  pledged  as  collateral to secure the
Company's debt (see Note 8) was $13,645,587 and $11,492,133  at December
31, 1996 and 1995.

NOTE 6 - OTHER LIABILITIES
___________________________

Other liabilities consist of the following (in thousands):
                                                            December  31,
                                                            ______________
                                                            1996     1995
                                                            ----     ----

Accrued compensation                                       $  993   $  313
Workers' compensation liability                               817      624
Job related accruals and other                              7,329    2,739
                                                           ________ _______
                                                           $9,139   $3,676
                                                           ======== =======

NOTE 7 - SHORT-TERM BORROWINGS AND BORROWINGS UNDER LINE OF CREDIT
__________________________________________________________________

Short-term borrowings and borrowings under the line of credit  agreement
consist of the following (in thousands):

                                                         December  31,
                                                         ______________
                                                         1996      1995
Note payable to a company for purchase of                ----      ----
certain assets; interest at 6%; unsecured;
due on January 3, 1997 (paid in full on
January 3, 1997)                                       $ 1,138    $   --

Revolving line of credit agreement with
a bank; interest at a prime rate (8.25%
at December 31, 1996) and due in
quarterly installments                                  12,618      7,875
                                                       --------   --------
                                                        13,756      7,875

Less:  Amount classified as long-term                  (12,450)        --
                                                       ---------  --------
                                                       $ 1,306     $7,875
                                                       =========  ========

During  1996,  the  line  of  credit  was  increased from $15,000,000 to
$20,000,000 to facilitate the purchase of Hard  Suits.  The line expires
on  March  31,  1997  but  the  Company  expects to renew such line  for
$15,000,000.   At  December  31,  1996,  $12,450,000   of   the  balance
outstanding  under the line of credit is classified as long-term  as  it
relates to the  acquisition  of  Hard Suits Inc. and, at the date of the
borrowing, the Company intended to  refinance  the debt to arrange for a
long-term  payment  schedule.   Subsequent  to December  31,  1996,  the
Company  repaid  all  amounts  outstanding  under  the  line  of  credit
agreement using the proceeds of its secondary  offering  of common stock
(see Note 1).  The line is secured by and limited to certain  qualifying
accounts  receivable,  is  collateralized  by  certain  of the Company's
vessels  and  certain  other assets and is subject to certain  covenants
(see Note 8).

NOTE 8 - LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

                                                        December  31,
                                                        _____________
                                                        1996     1995
Note payable to a bank, interest at 7.90%;              ----     ----
monthly principal installments of $125
plus interest with a balloon payment of
$3,125 on May 31, 2001; secured by
11 vessels and certain diving equipment                $9,625   $   --

Various government assistance notes, non-
interest bearing and unsecured; payable
in various installments through July 1999.                458       --

Various notes payable to a bank, with
interest rates ranging from 8.75% to
9.50%; monthly principal installments
totalling $166 plus interest; maturity
dates August 9, 1999 through April 3,
2000; secured by seven vessels and
certain diving equipment                                   --    6,788

Other long-term debt                                       78       --
                                                       ________ ________
                                                       10,161    6,788

Less - Current portion                                 (1,702)  (1,375)
                                                       ________ ________
                                                       $8,459   $5,413
                                                       ======== ========

Aggregate maturities of long-term debt in the fiscal years subsequent to
December 31, 1996 are as follows (in thousands):

              1997                          $1,702
              1998                           1,668
              1999                           1,632
              2000                           1,534
              2001 and thereafter            3,625
                                            _______
                                            $10,161

The Company's long term  debt  and line of credit agreements require the
Company to maintain certain financial  ratios  and a specified amount of
equity,  include  restrictions on capital expenditures  and  also  limit
payment or declaration  of  dividends  to an amount not to exceed 15% of
average net income for the four previous quarters.

NOTE 9 - INCOME TAXES
_____________________

The  provision  (benefit) for income taxes  attributable  to  continuing
operations is comprised of the following (in thousands):

                               Year Ended    Year Ended    Two Months Ended
                               December 31,  October 31,     December 31,
                               ___________  ____________   _________________
                                  1996      1995    1994         1995
                                  ----      ----    ----         ---- 
Current tax expense:
  Federal                        $1,120     $ --    $ 305        $  --
  State                             770       13      140           --
  Foreign                            --       69       --           --
                                 ________  _______  _______     ________

Total current tax expense         1,890       82      445           --

Deferred tax (benefit) provision  2,060      (20)    (370)         420
                                 ________  ________ ________    _________
  Total provision for income 
    taxes                        $3,950    $  62    $  75       $  420
                                 ________  ________ ________    _________

A summary of the  components  of  the  provision  (benefit) for deferred
income taxes follows (in thousands):

                                  Year Ended    Year Ended    Two Months Ended
                                  December 31,  October 31,    December 31,
                                  ____________  ___________   ________________
                                      1996     1995     1994         1995
                                      ----     ----     ----         ----

Utilization of tax loss 
  carryforwards                      $2,896      --      --         $ 338
Minimum tax credit                     (703)     --      --            --
Foreign tax loss carryforward            --      --    (329)           --
Excess tax over book depreciation       (80)   (111)   (100)           80

Other, net                              (53)     91      59             2
                                     ________ _______ _______       _______
Total provision (benefit) for 
  deferred income taxes              $2,060   $ (20)  $(370)        $ 420
                                     ======== ======= =======       =======

The difference between the taxes provided for continuing  operations  at
the  United States statutory rate and the Company's actual tax provision
is reconciled below (in thousands):

                                  Year Ended    Year Ended   Two Months Ended
                                  December 31,  October 31,    December 31,
                                 _____________ _____________ ________________
                                      1996     1995     1994       1995
                                      ----     ----     ----       ----
Taxes provided at United States 
 statutory rate                      $3,050    $(51)    $(90)     $ 338
State tax expense, net of 
 federal benefit                        508      13       76         33
Non-deductible meals and 
 entertainment                           71     118       99         20
Foreign tax expense                     200      --       --         --
Other, net                              121     (18)     (10)        29
                                    _________ ________ ________   ________
  Total provision for income taxes   $3,950    $ 62    $  75      $ 420
                                    ========= ======== ========   ========

The approximate  effect  of temporary differences and carryforwards that
give rise to deferred tax balances were as follows (in thousands):
                                                                
                                                           December  31,
                                                           _____________
                                                           1996     1995
                                                           ----     ----

Federal net operating loss carryforward                  $   --   $ 1,679
Deferred drydock expense                                   (437)     (317)
Allowance for doubtful accounts                             150       102
Accrued insurance                                           182       182
Other, net                                                  105        54
                                                         ________ ________
Current deferred tax asset                               $  --    $ 1,700
                                                         ======== ========
Depreciable asset basis differences                      $(6,380) $(2,400)
Federal, state and foreign net operating
  loss carryforward                                        2,600    1,917
Foreign tax credit carryforward                              163      163
Minimum tax credit carryforward                            1,075      372
Other, net                                                   (59)       5
                                                         ________ ________
Noncurrent deferred tax asset (liability)                $(2,601) $    57
                                                         ======== ========

At December 31, 1996 the Company  had  federal,  state  and  foreign net
operating loss carryforwards (NOL's) of approximately $6,200,000,  which
can  be  used to offset future taxable income.  Approximately $4,100,000
of the NOL's  relate  to  the Company's Canadian subsidiary, Hard Suits.
Such carryforwards, which may  provide  future  tax  benefits, expire in
1998 through 2002.  Based on the Company's forecast for future earnings,
management  has determined that future taxable income will  more  likely
than not be sufficient to utilize the NOL's prior to their expiration.

NOTE 10 - STOCKHOLDERS' EQUITY
______________________________

Incentive Compensation Plan
___________________________

Under the 1993 Incentive Compensation Plan, officers and other employees
of the Company  may  be  granted stock options, stock awards, restricted
stock, performance share awards  or  cash  awards.   A  total of 500,000
shares of common stock have been reserved for issuance under  the  Plan.
The  exercise price of an incentive option may not be less than the fair
market  value  of the common stock on the date of the grant.  A total of
336,500 options  had  been  granted under this plan at fair market value
prices ranging from $5.67 to  $9.00  per  share  over terms ranging from
five  to ten years from date of grant.  At December  31,  1996,  207,813
options   are   outstanding   of  which  162,434  are  exercisable.   No
compensation expense was recognized  in  connection with the issuance of
these options.

Pursuant to an employment agreement dated  July  16, 1996, an officer of
the Company was granted 375,000 options to purchase  common  stock at an
exercise  price  of  $8.75 per share which equaled fair market value  of
the date of grant.  Of the total options granted, 225,000 are subject to
shareholder approval  in 1997.  If shareholder approval is not obtained,
the Company will be required  to  provide  the officer with the economic
equivalent of those options not approved.  The options vest in one-fifth
increments  over  a five year period, contingent  upon  meeting  certain
performance  goals  which   will  be  established  by  the  Compensation
Committee.   As of December 31,  1996,  such  goals  had  not  yet  been
established.   However,  assuming  the  goals  were established and met,
management has determined that any related compensation  cost would have
been immaterial for the year ended December 31, 1996.

Director Plan
______________

Under  the  Director Plan, non-employee directors automatically  receive
options to purchase  1,500  shares of common stock upon first becoming a
director and annually thereafter  on  the  day following the date of the
Company's annual meeting of stockholders.  The  option exercise price is
equal to the fair market value of the common stock on the date of grant.
A maximum of 50,000 shares are reserved for issuance under the Plan.  As
of December 31, 1996, options to purchase 12,000  shares of common stock
at prices ranging from $6.625 to $9.00 per share have  been  granted and
are  outstanding.   The  options  are immediately exercisable over  five
years from date of grant.  No compensation  expense  was  recognized  in
connection with the issuance of these options.

Employee Stock Option Plan
___________________________

The Employee Plan provides for the one-time grant of non-qualified stock
options to purchase shares of common stock for employees meeting certain
eligibility  requirements.   A  total  of 160,000 shares of common stock
were reserved for issuance under the Employee  Plan  and,  in  September
1993, options for 149,952 shares were granted to certain employees.  The
fair  market  value  of the common stock on the date of grant was $10.00
per share.  The options  with  respect to one-third of the shares became
exercisable on September 21, 1995 at a price of $9.00 per share and have
expired as of December 31, 1996.   The  options with respect to a second
one-third of the shares become exercisable  on March 21, 1997 at a price
of $10.00 per share and must be exercised no  later  than  September 21,
1998  or  automatically  expire.  The options with respect to the  final
one-third of the shares become  exercisable on March 21, 1998 at a price
of $10.00 per share and must be exercised  no  later  than September 21,
1998  or automatically expire.  No compensation expense  was  recognized
with the issuance of these options.

If compensation  expense  for  stock  option  grants had been determined
based upon the fair value at the grant date for awards under these plans
consistent with the methodology prescribed by SFAS  123,  the  impact on
the  Company's  net  income  and earnings per share would be immaterial.
Pro forma compensation expense  was based on stock options grants during
1996 and may not be indicative of  the  effects on net income and income
per share in future years.  The fair value  of the options was estimated
at the date of grant using the Black Scholes  option-pricing  model with
the  following  weighted-average assumptions for the year ended December
31, 1996:  Dividends  yield-0;  expected  volatility  of  37%, risk free
interest rates of approximately 5.6% and expected life of 5  years.  The
weighted  average  fair  value of options granted during the year  ended
December 31, 1996 was $3.93.

Transactions involving stock options are summarized as follows:

<TABLE>
<CAPTION>

                                                                     Total        Weighed Average
                                    Incentive  Directors Employee Stock Options  Exercise Price of
                                       Plan      Plan     Plan     Outstanding  Options Outstanding
                                       ----      ----     ----     -----------  -------------------
<S>                                  <C>        <C>      <C>         <C>               <C>
Balance at October 31, 1993          156,500    3,000    149,952     309,452           $8.68

  Granted                            170,000    3,000         --     173,000            7.52
  Forfeited                               --       --    (10,611)    (10,611)           9.67
                                     -------    ------   -------     -------
Balance at October 31, 1994          326,500    6,000    139,341     471,841            8.23

  Granted                              6,000    3,000         --       9,000            6.54
  Forfeited                           (6,667)      --    (18,931)    (25,598)           9.10
                                     --------   -----    --------    --------
Balance at October 31, 1995          325,833    9,000    120,410     455,243            8.15

  Expired                                 --       --    (35,515)    (35,515)           9.67
  Forfeited                               --       --     (3,437)     (3,437)           9.67
                                     --------   ------   --------    --------
Balance at December 31, 1995         325,833    9,000     81,458     416,291            8.01

  Granted (1)                          4,000    3,000         --       7,000            8.06
  Exercised                          (98,685)      --         --     (98,685)           6.95
  Forfeited                          (23,335)      --    (13,263)    (36,598)           8.29
                                     --------  -------   --------    --------
Balance at December 31, 1996         207,813   12,000     68,195     288,008          $ 8.41
                                     ========  =======   ========    ========

(1) Performance based stock options totalling 375,000 for which vesting
  criteria has not been established.
</TABLE>
The following table summarizes information concerning currently
outstanding and exercisable stock options:
<TABLE>
<CAPTION>

                                Options Outstanding                          Options Exercisable
                              ___________________________                  ____________________________
                                            Weighted          Weighted                   Weighted
    Range of                 Number     Average Remaining     Average       Number        Average
   Exercise Price           Outstanding Contractual Life   Exercise Price  Exercisable   Exercise Price
   --------------           ----------- -----------------  --------------  -----------   ---------------
<S>                            <C>          <C>                <C>            <C>            <C>            
$5.00 - $7.50                  132,913      6.88               $ 7.27         91,534         $ 7.21
$7.51 - $10.00                 155,095      1.84                 9.39         82,900           8.94

</TABLE>

NOTE 11 - EMPLOYEE BENEFITS
----------------------------

Effective January 1, 1989,  the  Company  established a qualified 401(k)
profit sharing plan (the Plan) for employees.  The  Plan  provides for a
30% match of employee contributions directed toward the purchase  of the
Company's common stock and a 10% match for all other contributions up to
15%  of gross pay.  Such employer contributions vest over a period of  5
years  and  totalled  $116,909  for  the  year  ended December 31, 1996,
$17,038  for  the  two months ended December 31, 1995  and  $89,795  and
$80,241 for the years  ended October 31, 1995 and 1994.  Under the terms
of the Plan, participants  may elect to purchase shares of the Company's
common stock on the open market through a broker.

NOTE 12 - BUSINESS SEGMENT, GEOGRAPHIC AREA AND MAJOR CUSTOMER INFORMATION
--------------------------------------------------------------------------

The Company classifies its operations under one business segment, diving
and  related  revenues.   A  summary  operations  by  geographical  area
follows (in thousands):
<TABLE>
<CAPTION>

                                                        United States             Consolidated
                                 Africa(1)     Canada     and other    Corporate     Total
Year Ended October 31, 1994      ------        ------   -------------  ----------  ------------
----------------------------  
<S>                              <C>           <C>       <C>             <C>         <C>
Diving and related revenues      $ 3,889       $   --    $   48,866      $   --      $  52,755
Operating income (loss)             (241)          --            21          --           (220)
Identifiable assets (2)            3,146           --        56,304       2,157         61,607

Year Ended October 31, 1995
---------------------------
Diving and related revenues      $18,974       $   --    $   69,686      $   --      $  88,660
Operating income (loss)            2,883           --        (1,785)         --          1,098
Identifiable assets (2)           10,354           --        56,877       2,177         69,408

Two Months Ended December 31, 1995
----------------------------------

Diving and related revenues      $   924       $   --    $   14,562       $  --      $  15,486
Operating income (loss)             (150)          --         1,346          --          1,196
Identifiable assets (2)            7,046           --        55,118       1,757         63,921

Year Ended December 31, 1996
-----------------------------
Diving and related revenues      $ 7,838       $  532    $   97,402       $  --      $ 105,772
Operating income (loss)             (963)        (593)       10,961          --          9,405
Identifiable assets                8,664       18,367        65,876          --         92,907

(1)Includes the Company's diving  and  related services provided off the
   coast of West Africa and Dubai, United Arab Emirates.

(2)Identifiable assets are those assets used in the Company's operations
   in each area.  Corporate assets consist of the Company's deferred tax
   asset.

</TABLE>

The Company's ten largest customers accounted  for $50,559,682 or 44% of
the Company's total revenues during the year ended  December  31,  1996;
$5,591,707  or  65%  during  the  two  months  ended  December 31, 1995;
$40,451,000 or 46% during 1995 and $23,027,000 or 39% during  1994.   Of
the ten customers, there was one that accounted for more than 10% of the
Company's  revenues during each of the following periods: $27,343,026 or
24% for the  year ended December 31, 1996; $2,445,311 or 16% for the two
months ended December  31,  1995,  $12,782,000  or  14%  during 1995 and
$6,022,000 or 10% during 1994.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Legal Matters

A   large   oil  and  gas  company  has  instituted  litigation  against
subsidiaries  of  the  Company in Edinburgh, Scotland seeking damages of
approximately U.S. $3,000,000,  plus interest and costs, on the basis of
allegations that a product supplied by the subsidiaries exhibited design
faults upon installation in a North Sea pipeline.  Prior to installation
the product was hydrostatically tested  onshore  and  during the test it
did  not leak or otherwise malfunction.  After installation  but  before
oil or  gas  flowed  through the pipeline under pressure the product was
removed and replaced by  the customer against the recommendations of the
Company's subsidiaries.  The  product  did not leak and no environmental
damage is alleged.  The Company believes  that  the  product  was  fully
suitable  for  service  and  intends  to  defend  the  claim vigorously,
although  no  assurance can be given as to the ultimate outcome  of  the
litigation.

The Company and  certain of its subsidiaries are also parties to various
routine legal proceedings primarily involving claims for personal injury
under the General  Maritime  Laws of the United States and the Jones Act
as a result of alleged negligence  or  alleged  "unseaworthiness" of the
Company's  vessels.   While  the  outcome  of these lawsuits  cannot  be
predicted  with  certainty,  the  Company believes  that  its  insurance
coverage with respect to such claims is adequate and that the outcome of
all such proceedings, even if determined  adversely,  would  not  have a
material  adverse  effect  on  its  business  or  financial condition or
results of operations.

Insurance

The  Company's operations involve a higher degree of  operational  risk,
product   liability  and  warranty  claims  than  that  found  in  other
industries.   Management  is  of  the opinion that it maintains adequate
insurance, in line with industry standards, to insure itself against the
normal risks of operations.

Operating Leases

Leases are primarily for buildings  and  vehicles used in operations and
are  classified  as  operating  leases.  The amount  of  future  minimum
rentals for these noncancellable leases with terms in excess of one year
are as follows at December 31, 1996 (in thousands):

              1997                     $1,099
              1998                       470
              1999                       318
              2000                       238
              2001                        25
                                       ------
                                       $2,150
                                       ======
Total rental expense under operating  leases  was  $937,919 for the year
ended December 31, 1996, $153,316 for the two months  ended December 31,
1995, and $1,249,196 and $983,214 for the years ended October  31,  1995
and 1994.


                      Selected Quarterly Financial Data
                    (in thousands, except per share data)


The  following  table  sets forth selected unaudited quarterly financial
information.

<TABLE>
<CAPTION>
                                                        Quarter Ended
                                                       ________________
                                           January 31, April 30, July 31, October 31,
                                             1994         1994     1994      1994
                                             ----         ----     ----      ----    
<S>                                        <C>         <C>       <C>       <C> 
Diving and related revenues                $ 8,305     $ 8,946   $13,570   $ 21,934
Operating income (loss) from 
  continuing operations                       (709)       (699)     (614)     1,802
Income (loss) from continuing operations      (328)       (407)     (412)       890
Loss from discontinued operations (including 
  loss on disposal)                           (274)       (170)     (266)      (986)
Net loss                                      (602)       (577)     (678)       (96)
Earnings (loss) per share:
 Continuing operations                        (.05)       (.06)     (.06)       .13
 Discontinued operations                      (.04)       (.03)     (.04)      (.14)
 Net loss                                     (.09)       (.09)     (.10)      (.01)
Weighted average common shares outstanding   6,695       6,709     6,709      6,709
                                                        
                                                        Quarter Ended
                                                       ________________
                                           January 31, April 30, July 31, October 31,
                                             1995         1995     1995      1995
                                             ----         ----     ----      ----    

Diving and related revenues                $19,638     $12,287   $24,908    $31,827
Operating income (loss)                        384      (3,117)    1,632      2,199
Net income (loss)                              141      (2,126)      685        971
Earnings (loss) per share                      .02        (.32)      .10       .14
Weighted average common shares outstanding   6,709       6,709     6,709     6,709

</TABLE>


<TABLE>
<CAPTION>
                                 January 31,  April 30,    June 30,    September 30, December 31,
                                    1996       1996         1996(1)       1996          1996
                                    ----       ----         ----          ----          ----
<S>                              <C>          <C>          <C>          <C>           <C>
Diving and related revenues      $22,162      $19,179      $26,829      $33,409       $ 26,306
Operating income                   1,427          595        2,992        5,296          1,092
Net income                           709          471        1,735        2,851            331
Earnings per share                   .11          .07          .26          .42            .05
Weighted average common 
  shares outstanding               6,709        6,726        6,788        6,806          6,840


(1)On June 26, 1996, the Company's Board of Directors resolved to change
   the Company's year end from October 31 to December 31.

</TABLE>