==============================================================================
 Form 10-K
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Securities and Exchange Commission
Washington, D.C.  20549

/x/ Annual Report Pursuant to Section 13 or 15(d) of
    The Securities Exchange Act of 1934
    For the fiscal year ended December 31, 1997

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.)

900 Town & Country Lane, Suite 400
Houston, Texas                      77024
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (713) 430-1100

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 March 2, 1998, based upon the closing
sale price of the Common   Stock   on   the   Nasdaq Stock
Market:                                                     $96,689,918
Number of shares of Common Stock outstanding at March 2, 1998: 10,640,760

Documents Incorporated by Reference
    Portions  of  the  proxy  statement dated April 8, 1998 distributed in
connection with the Annual Meeting of  Shareholders to be held on May
15,  1998,  is  incorporated  into Part III of this Report.

<PAGE>

ITEM 1.  BUSINESS

General

   American Oilfield Divers, Inc. together with  its subsidiaries, currently
   doing business under the tradename "Ceanic"     (collectively,    the
   "Company"  or "Ceanic"),  provides subsea   services   and   products
   including     field    development services to the  offshore  oil and
   gas industry as well as industrial and governmental customers in  the
   Americas   Region,  Europe  Africa Region  and Asia  Pacific  Region.
   The   Company's    services    are provided through approximately 550
   divers,       tenders,      diving supervisors, vessel  captains  and
   crewmen  and  are  supported  by a Company-owned  fleet  of 21 diving
   support  vessels  (DSVs),   16  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  four
   years, the Company's  revenue  has more  than  doubled as a result of
   improved demand  in  its core Gulf  of   Mexico   market  and  through
   internal growth  and acquisitions, both       domestically        and
   internationally,     that     have expanded the Company's service and
   product  offerings.   For the year ended   December  31,  1997,   the
   Company's revenue increased 25% to $132.7 million.

   New  Corporate  Name. In February 1998, the Company announced  it  had
   adopted    Ceanic   as   its   new tradename  and  that  it  planned,
   subject  to shareholder  approval, to change  its  corporate  name to
   Ceanic  Corporation. The Company has    grown    beyond   providing
   traditional  diving   and   vessel services  to the U.S. oil and  gas
   industry   and    the    Company's management believes that the  name
   Ceanic   reflects   the  Company's diversification      into       an
   international   subsea  contractor with   a   diverse   client   base
   including not only oilfield diving and  vessel  services,  but   also
   deepwater     remotely    operated vehicle ("ROV") services and field
   development services,  provided to government     and    non-oilfield
   commercial customers  spread  over the entire Americas region and  in
   key  international  markets.   The Company     will     submit    for
   shareholder approval at its annual shareholder meeting to  be held in
   May 1998, a proposal to amend  the Company's        Articles       of
   Incorporation to provide  for  the name change.

   Corporate  Realignment  and  Refocus.
   During 1997 the Company identified  certain    market    opportunities
   appropriate   to   its   mix    of  personnel  and  assets,  including
   the  deepwater remote intervention  market   and  the  marginal  field
   development  market.   The Company also  identified  certain  markets
   and  opportunities which  did  not fit into  its  strategic  plan and
   determined  it  to be in its  best interests   to   discontinue   its
   efforts   in  those  areas.    For example, the  Company  closed  its
   Kansas  City,  Kansas  office  and Dubai, United Arab Emirates office
   and    sold    its   environmental services subsidiary in 1997 as the
   operating results  in  these areas did   not   meet   the   Company's
   expectations  and these areas  did not   otherwise   fit   into   the
   Company's strategic plan.

   To more fully exploit its assets, the Company also during  1997  added
   approximately  twenty  middle  and senior  managers from a variety of
   backgrounds   in  the  subsea  and topside  oil and  gas  industries,
   having   over    400    years   of management experience collectively.
   The Company believes these new managers together with the  Company's
   existing    core    of    seasoned executives  will benefit the  long
   term interests of the Company.

   Finally, the Company realigned its reporting lines and  business  units
   into four primary service regions. The  primary  service  regions are
   the    Americas   Region   (North, Central  and  South  America), the
   General    Contracting    Division (inland    and    coastal   United
   States), Europe Africa  Region and Asia    Pacific    Region.     The
   Company's  product  lines  are the Ceanic Hardsuits Product Division,
   Big  Inch  Products  Division  and Ceanic  Field Development Division
   (includes  Tarpon  Guyed Monotower Products   and   Ceanic   Concrete
   Products).  Each regional  manager or    product   division   manager
   reports   to  one  of  two  senior executives.  The Company's regions
   are supported  by  a matrix of six service   lines  include   diving,
   intervention   teams,   government services,       vessel,      field
   development       and      general contracting   which   assist    in
   maximizing   asset  and  personnel utilization in  each  region.  The
   Company  believes  this  corporate realignment      will      enhance
   communication to better focus  and streamline the organization.


   Growth  Strategy.   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 and
   equipment  in  the  Gulf  of  Mexico.  In 1997, the Company significantly
   expanded its fleet of work class  ROVs  in the Gulf of Mexico from two to
   five.  By the end of fiscal 1998, the Company expects to have at least 12
   work class ROVs available for use in the  Gulf  of  Mexico and elsewhere.
   The  Company  believes  it  is  well-positioned  to  take  advantage   of
   opportunities  in  the  Gulf of Mexico market, particularly the expanding
   deepwater market.

*  Focus on Expanded Markets.   Over  the  past  four years, the Company has
   expanded its operations to inland markets, the  U.S.  West  Coast market,
   and select international markets including the Europe Africa  Region  and
   the  Asia  Pacific  Region.   Revenues  from these sources have increased
   substantially over the past three years,  from  $12.3  million, or 23% of
   total  revenue,  for  the  fiscal  year ended October 31, 1994  to  $45.2
   million or 34% in the fiscal year ended  December  31, 1997.  The Company
   intends to focus on the development of the revenues  and profitability of
   these expanded operations.

*  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  including  field
   development  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 Hardsuit  products  line and
Ceanic Field Development Division, which includes the Tarpon Guyed Monotower
and  Ceanic  Concrete 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.

   Significant Events.   In  November 1996,  the Company acquired 97% of the
outstanding capital stock of Hard Suits Inc. ("HSI") for approximately $11.8
million through an unsolicited tender offer.   HSI manufactures, markets and
operates  a  one-atmosphere  diving  suit known as the  "HARDSUIT (TM)".  The
Company's HARDSUIT (TM) one-atmospheric diving system technology ("ADS") allows
for manned diving in deep water without  saturation  or decompression, which
are required by current practices for manned deep water  diving.  HARDSUIT (TM)
ADS  technology  significantly reduces operating costs associated with  deep
water projects by  eliminating the need for saturation and decompression and
associated personnel  cost  and  time needed to complete such projects.  The
current HARDSUIT (TM) ADS 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.  In late fiscal 1997, the HARDSUIT (TM)
ADS 2000-foot prototype  began  initial  builder's  trials  with  the United
States  Navy.   The Company expects to deliver the suit to the U.S. Navy  in
fiscal  1998.   The  Company  intends  to  manufacture  the  HARDSUIT (TM)  ADS
primarily for its  own  use and for sale to the United States Navy and other
non-commercial applications.  HSI also manufactures and markets the REMORA(R),
a subsea rescue vehicle for submarines.   The Company acquired the remainder
of the outstanding capital stock of HSI in fiscal 1997 for $1.65 per share.

   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
approximately $12.4 million to acquire HSI.  The Company used  the remaining
proceeds   for   general   corporate  purposes,  including  working  capital
requirements  and  to  fund  capital   expenditures   and   strategic  asset
acquisitions.

   In  May  1997,  the  Company sold its corporate headquarters building  in
Lafayette, Louisiana and moved its corporate headquarters to Houston, Texas.

   In June 1997, the Company  acquired  substantially  all  of the assets of
Contract  Diving  Services, Pty Ltd., and its affiliates ("CDS"),  a  subsea
services provider based  in  Perth,  Western Australia.  The acquisition was
accounted for using the purchase method of accounting.

   In August 1997, the Company acquired  the  M/V  American Defender, a 220-
foot  class  dynamically positioned vessel, capable of  supporting  ROV  and
HARDSUIT (TM) diving suit operations and accommodates approximately 63 persons.
After a drydocking  to  upgrade  the  vessel,  the M/V American Defender was
available for work in the Gulf of Mexico at the end of the fourth quarter in
fiscal 1997.

   In October 1997, the Company sold all the issued  and  outstanding shares
of common stock in American Pollution Control Corporation,  its wholly owned
environmental services subsidiary.

   In December 1997, the Company announced the execution of a  contract with
Perry  Tritech,  Inc. ("Perry Tritech Contract") to purchase up to  ten  new
generation work class  ROVs  capable of working in water depths up to 10,000
feet, with delivery expected to  begin  in  the second quarter of 1998.  The
Company believes this new generation ROV will  provide it with a competitive
advantage over existing work class ROVs in the Gulf of Mexico market.

Subsea and Other Services

   The  Company  through  its  regional bases 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  performed  primarily  through manned surface and saturation
diving activities at depths up to 1,000  feet.  With the acquisition of HSI,
the  Company  has  used  the  HARDSUIT (TM) diving  suit  as  a  cost-effective
alternative for certain operations  at  a maximum depth of 1,200 feet.  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.

   On December 31, 1997, the  Company  employed  approximately  400  divers,
tenders,  and  diving  supervisors,  supported  by the Company's fleet of 21
DSVs, ranging in length from 65 to 220 feet.  The  Company's offshore diving
operations are coordinated through regional staging  facilities  in the Port
of  Iberia  and  Fourchon,  Louisiana;  Houston,  Texas; Oxnard, California;
Perth, Australia; Aberdeen, Scotland; and Port Harcourt, Nigeria.

     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  HARDSUIT (TM) diving suit
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 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 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  or  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 owns and 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, 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.

    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  approximately  1,200 feet.  In
this  method of diving, the diver wears a proprietary diving suit  developed
by HSI known as the "HARDSUIT (TM)." The diver wearing a HARDSUIT(TM) ADS enters
the water  and  returns  to  the surface with the assistance of a HARDSUIT (TM)
launch and recovery diving system  but  without  the  need  of a pressurized
diving  bell.   Atmospheric  pressure  is  maintained  at all times  in  the
HARDSUIT (TM) ADS, 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  HARDSUIT (TM)  ADS  when  deployed  consists  of  two
HARDSUIT (TM) diving suits and a launch and recovery system.

   The  Company  does  not expect to use the HARDSUIT (TM) ADS 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
HARDSUIT (TM) ADS  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  HARDSUIT (TM)  ADS  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 HARDSUIT (TM) ADS will increase  the efficiency of one-atmosphere
diving and broaden its application.

    Diving Support Services.  In connection with  its diving operations, the
Company  often  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.  In the Americas
Region, 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 generally provides full-service catering to the
vessel and dive crews,  which  minimizes  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.

   Remote  Intervention Technology Services.  The Company currently owns and
operates 12  ROVs, of which 7 are observation ROVs and 5 are work class ROVs
compared to 7  ROVs in 1996.  As a result of the Perry Tritech Contract, the
Company expects  to have 12 work class ROVs by the end of 1998.  Observation
ROVs generally support  the  Company's manned diving activities whereas work
class ROVs are outfitted with  manipulators to perform tasks in depths up to
10,000 feet.  The Company also owns  and  operates  eleven HARDSUIT (TM) diving
suits, eight of which are deployed for operations in  Australia,  the  North
Sea  and  the  Gulf  of Mexico, and three of which are used for training and
demonstration.

   In February 1998, the  Company  announced  that  Shell  had  awarded  the
Company  a  contract to design, build, test and operate a deepwater pipeline
burial system  operated with the assistance of a work class ROV for the URSA
and ANGUS project  pipelines.   The  Company  believes  this  Shell contract
confirms its deepwater remote intervention expertise.

   The Company is not attempting to compete head-to-head with more  seasoned
ROV  companies  such  as  Oceaneering  or  Sonsub in the Americas Region and
elsewhere,  but  has  identified a deepwater, high  technology  market  that
offers numerous opportunities  with  long-term growth potential.  The Remote
Intervention Technology Division's initial  primary  focus  is  the  Gulf of
Mexico  market,  but  the  Company expects to deploy its remote intervention
assets on a worldwide basis in fiscal 1998.

   The  Company  currently  markets   the  HARDSUIT (TM)  ADS,  diving  support
services,  remote  intervention technology  and  vessels,  in  the  Americas
Region.  While some  product and service lines have been sold in each of the
other Company regions,  the  Company  intends to add personnel and assets to
expand the offering of these services and products to the other regions.

    Ceanic Americas Region.  The Americas  Region  constitutes the Company's
traditional core Gulf of Mexico diving and vessels group.   This  region  is
the  Company's  largest  region,  producing 51% of the Company's fiscal 1997
revenues and employing 617 of its 1070  employees.  With 16 of the Company's
21 DSVs operating in the Gulf of Mexico,  the  Company  believes  it has the
largest fleet of dedicated DSVs in the Gulf of Mexico.  The headquarters and
principal staging facility of the Company's Gulf of Mexico diving and vessel
operations  are at the Port of Iberia, Louisiana.  The Port of Iberia  is  a
full-service, decentralized operations center, strategically located for the
rapid  deployment   of   personnel   and  equipment.   Traditional  industry
indicators such as capital expenditures  by  oil  companies,  rig count, OCS
lease  sales,  among  others,  indicate  a  strong  demand for the Company's
diving, vessel and ancillary services in the Gulf of  Mexico  in  1998.   In
late  1997, the Company leased a facility at the Port of Fourchon, Louisiana
to act  as,  among  other  things,  its  deepwater  dock for its dynamically
positioned vessels and an operational support facility.

   Ceanic Asia Pacific Region.  With the acquisition  of  CDS  in June 1997,
Ceanic  established  its  regional headquarters in Perth, Australia.   Perth
acts as Ceanic's regional staging  facility  and  coordinates  the Company's
efforts  in  this area.  The Company offers a full range of subsea  services
including traditional diving, vessel and ROV services and specialized remote
subsea coring  services.   The  Company operates a pair of HARDSUIT (TM) diving
suits, two small vessels in Western  Australia  and maintains the REMORA(R)
submarine rescue system for the Australian Navy.  The Company has identified
certain market niches in this region such as specialized  turnkey  contracts
and  maintenance  services  based on applying an integrated approach to  the
suite of Company capabilities.   The  Company  believes  that  the long term
prospects for this region are solid.

     Ceanic  Europe Africa Region.  The Company's Aberdeen, Scotland  office
acts  as  regional   headquarters  to  support  and  coordinate  its  subsea
operations  in the North  Sea  and  in  both  West  and  South  Africa.   In
July 1992, the  Company established administrative offices in Lagos, Nigeria
and an operations  office  and  shop  in  Port  Harcourt, Nigeria to provide
diving and related services to oil and gas companies  operating  in  Nigeria
and  other West African locations. Since 1992, the Company has expanded  its
activities  into  South Africa.  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.  In fiscal
1997, the Company reviewed its presence in the Middle East closing its Dubai
office  in May 1997, due in large part to disappointing  operating  results.
The Company  has  repositioned  personnel  and  assets elsewhere to maximize
utilization.  The Company currently maintains two  DSVs  in  Port  Harcourt.
The Company believes its mix of personnel and equipment in its Europe Africa
Region  offers  it  an attractive opportunity to take full advantage of  the
available market niches.   The Company is reviewing its options in the North
Sea and intends to take advantage  of  market  niche  opportunities  as they
present themselves.

   Ceanic  General Contracting Division.  The Company provides a variety  of
specialized   general   contracting  and  marine  construction  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 general  construction  projects
requiring Ceanic's underwater  capabilities.   The  Company  has changed the
focus  of  its  General Contracting Division to larger, more complex  marine
construction projects, in which the Company functions as prime contractor as
opposed to acting  as  subcontractor  on small to medium sized projects that
the Company has primarily performed in the past.  Ceanic General Contracting
Division's operations are coordinated through regional staging facilities in
Oxnard, California; Houston, Texas; and  Columbus,  Ohio.   In  addition  to
general  marine contracting, the California office also provides traditional
offshore diving,  vessel,  ROV and related ancillary services to the oil and
gas industry and other customers on the West Coast and in Latin America.  To
reduce the effect of seasonality  during  winter months, the Company expects
its  General  Contracting  Division  to  focus  primarily   on  projects  in
warm-weather states that are less likely to be adversely affected  by winter
weather.

Ceanic Subsea Products

   Ceanic  Hardsuit Products Division.  The HARDSUIT (TM) ADS is an articulated
metal suit with  patented  joints that allows the diver to have a relatively
wide  range  of  motion  and  work  at  surface  atmospheric  pressure  (one
atmosphere).  The HARDSUIT (TM) diving  suit  and  other  products  and related
services  are  manufactured  and  developed  by  Ceanic  in North Vancouver,
British  Columbia,  Canada.   The  current  HARDSUIT (TM)  ADS  is  capable  of
operations  in  water  depths  up  to  1,200  feet.  The Company intends  to
manufacture the HARDSUIT (TM) ADS primarily for its own use and for sale to the
United  States  Navy  and  to  the  navies of other countries.   Ceanic  has
developed and produced a prototype suit capable of operation at depths up to
2,000 feet that is undergoing testing by the United States Navy.

     Ceanic  also  manufactures a submarine  rescue  vehicle  known  as  the
"REMORA(R)," 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(R) is capable of recovering, and subsequently transferring under
pressure, up to nine people at a time from a disabled submarine.  One  fully
operational  REMORA(R)  has been sold to and is in the service of the Royal
Australian Navy, and the Company  is  currently  marketing the REMORA(R) to
the navies of other nations.

   Big Inch Marine Systems Products Division.  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 Flanges(TM), 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.  The Company assembles  these  components at its Houston
plant 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  the  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.

    Ceanic Field Development Division.  The  Company designs, fabricates and
installs the Tarpon Guyed Monotower, a patented  substructure primarily used
in offshore minimum facilities field development.   A Tarpon Guyed Monotower
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 Guyed Monotowers  are  best suited for
minimum  facilities  in  water  depths  from  80  to  300  feet and for  the
production  of  larger  fields  using a satellite system of multiple  Tarpon
Guyed Monotower structures tied into  a  central  production  facility.  The
Company  believes  that  the  Tarpon  Guyed  Monotower  is  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  Guyed  Monotower  both  in  the United
States  and select international areas including Europe, Africa, the  Middle
East, India  and  Southeast  Asia.   To date the Company has installed 40 of
these systems in the Gulf of Mexico and worldwide.

   The  Company  manufactures concrete structures  that  act  as  foundation
platforms for production  facilities in shallow water.  These structures are
ideally suited for quick installation  in  remote  areas  with  little or no
infrastructure  support.   The  Company  also  markets  the supply of subsea
storage facilities for use as an alternative to steel tankers for offloading
and  storage  of  up  to  500,000 barrels of oil in water depths  of  up  to
approximately 300 feet.  Concrete storage systems can be used in conjunction
with a Tarpon Guyed Monotower  for  storage  of  oil  produced from marginal
fields that do not have existing pipeline infrastructure.

   Ceanic  markets its Field Development capabilities to  provide  a  single
source solution  to  satisfy  its  customers' minimum facilities development
needs.   Due  to  its low cost and flexible  approach  to  minimal  facility
development, the Company  believes  there  is a significant market niche for
its  field  development services, particularly  in  Ceanic's  Europe  Africa
Region and Asia  Pacific  Region.  Once the Field Development Division gains
significant market acceptance,  the  Company  expects  to undertake a larger
portion of its customers field development projects and  be in a position to
act as a turnkey field development provider.

     Government  Services.   Utilizing  the  core capabilities  of  Ceanic's
commercial service lines, such as diving, vessels,  intervention  technology
and  general  contracting, the Company is able to support a wide variety  of
governmental needs.   The  Company's diving and intervention services can be
offered in support of search  and  salvage  operations  and  the  Hard  Suit
operations  can  support  the military's submarine rescue requirements.  The
Company's General Contracting  division is able to support the expansion and
maintenance of infrastructures.  The REMORA(R) rescue system, built by Hard
Suits, is now operated and maintained  for  the  Australian Navy by our Asia
Pacific  Region.   The  REMORA(R)  system employs rotary  joint  technology
similar to that used in the HARDSUIT (TM)  ADS  to assist in rescuing personnel
from  distressed submarines.  Like the HARDSUIT (TM)  ADS,  the  REMORA(R) is
marketed to navies worldwide.

Marketing

   The  Company's  marketing  efforts  are  primarily  concentrated  in  the
Americas  Region, Europe Africa Region and Asia Pacific Region.  The Company
maintains a focused marketing effort through a direct sales force consisting
of approximately  25 full-time sales personnel operating from Lafayette, and
New Orleans, Louisiana;  Houston, Texas; Oxnard, California; Columbus, Ohio;
Aberdeen, Scotland; Lagos, Nigeria; Perth, Australia; and Vancouver, Canada.
The Company's senior management  team  also  participates  in  the Company's
marketing  efforts.   The  Company's  diving services are often marketed  in
conjunction with Big Inch and Ceanic Field  Development  Divisions' 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  five  days  of
intensive  onshore training prior to offshore deployment.  In addition, each
new diver must  generally  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  with  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
SMART(SM)  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 for the year
ended December 31, 1997.  The Company's  ten largest customers accounted for
33% of the Company's total revenue in the  year ended December 31, 1997.  No
one customer accounted for more than 10% of  the  Company's  revenues during
the  year  ended  December  31, 1997.  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  in  the  Americas Region 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  and provide for
various indemnities in favor of the customer.  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 customers for  its  General  Contracting  Division  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.
General Contracting  Division  contracts  are generally obtained pursuant to
formal  bidding procedures established by its  customer  and  awarded  on  a
turnkey  (fixed  price)  basis.   Competition  in  the  General  Contracting
Division is  based primarily 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 the General  Contracting
Division, at February 28,  1998  the  Company's  backlog  of  projects to be
performed in 1998 was approximately $31.5 million.

   The offshore diving industry in the Americas Region 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 that manufacture  product lines of connectors used in the
repair  and  construction of underwater  pipelines  (Hydro  Tech,  Inc.  and
Oceaneering International,  Inc.).   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.

   The Company has a number of  major  competitors with well developed sales
capabilities (Racal, Oceaneering, Subsea  International  and  Sonsub) in the
remote  intervention market including ROVs and one-atmosphere diving  suits.
Several smaller companies compete in the ROV market.

   Competition  for  underwater services in the Americas Region 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  HARDSUIT (TM)  ADS,  certain  underwater Ultrascan(TM) radiography
systems, its Sonar ScourVision(TM) system,  and  the Tarpon Guyed Monotower.
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 HARDSUIT (TM) ADS joints will expire in the
years 2004 through 2009  and have an average remaining term of approximately
eight 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,  Australia  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  may  be considered
to  be  engaged  in  "coastwise  trade" under federal maritime law and  may,
therefore, be 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.  The determination  of  whether  its  vessel operations are
considered  to be engaged in "coastwide trade" is a fact  intensive  inquiry
and depends on the facts and circumstances of each particular case.

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, 1997, the Company  employed  206 divers, 150 tenders, 43 diving
supervisors,  157  vessel  crewmen,  barge crewmen  and  operations  support
personnel, 190 technical support for the  Intervention  Technology, Big Inch
Field  Development,  and  Concrete Products Divisions and 324  clerical  and
administrative personnel.   Of  these  persons,  884  are  hourly  employees
(divers  are  paid on an hourly basis) and 186 are salaried employees.   The
Company also relies  on  diving  personnel  employed  on a contract basis to
support  its  international  operations.   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 services and 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, among other things, improvements in oil and gas
exploration  technology  such  as  three-dimensional seismic and directional
drilling, which have decreased the average  cost  of production.  The extent
and  duration  of  this condition, however, is beyond  the  control  of  the
Company and will depend ultimately upon worldwide oil and gas prices and the
capital expenditures of oil and gas companies for offshore development.  Oil
prices have declined  significantly  over  the  past  15  months and further
significant  declines  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 Personnel

   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.
Moreover, it takes approximately one year for an ROV technician and/or pilot
to be considered an experienced ROV operator qualified  to  work on or pilot
an  ROV  and  competition  for  qualified  ROV  technicians  and  pilots  is
significant.   As a result, there can be no assurance that the Company  will
have a supply of  qualified divers and ROV technicians and pilots sufficient
to  conduct  and  expand   the  Company's  diving  and  remote  intervention
operations.  Although none of  the terms and conditions of employment of the
Company's U.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 and  elsewhere.   Winter  conditions typically begin in
December and continue until April in the Americas  Region,  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.  While  pent-up
demand for diving services  may  increase  the Company's activities at times
during  the  winter  when  adverse weather abates,  the  winter  months  are
generally periods of low demand,  as  a  result  of  which  Company activity
levels may remain low even during fair weather periods of the winter months.

Availability and Supply 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.   Although  the Company has been able to purchase and
convert four vessels since January 1996,  and  expects  to acquire others in
1998 at costs that it considers favorable, 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.  Moreover, in 1997,
certain companies have either repositioned  existing  DSVs  to  the  Gulf of
Mexico  or contracted to construct new DSVs for delivery in 1998 and beyond.
These repositioned  and  new  build  DSVs  will  compete  directly  with the
Company's  DSV  fleet and could adversely affect the Company's revenues  and
operating margins.  The Company expects this trend to continue in 1998.

International Operations

   The Company's  international service and product offerings, which started
in West Africa in 1992,  have  continued  to expand and play an increasingly
important  role  in  Company  operations.   These  international  operations
including  those in the Europe Africa Region and  Asia  Pacific  Region  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 executive  officers
other  than  Rodney  W. Stanley, the Company's President and Chief Executive
Officer and Kevin C. Peterson,  the  Company's  Executive Vice President and
Chief Operating 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 Americas Region diving services  and  ROV
industry in recent  years,  the remaining companies aggressively compete for
available  diving  and  ROV  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, ROVs, 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  21 DSVs,  as  well  as  from  structures and vessels owned by
others.  The DSVs are generally 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 Defender," "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:


                                                             Vessel
                                                             Length   Year
Vessel                Vessel Type              Home Port     (feet)  Acquired
------                -----------              ---------     ------  --------

American Defender      Dynamically            Fourchon, La.    220      1997
                       positioned/ROV and
                       HARDSUIT (TM) ADS
                       support
American Constitution  Four-point anchor      Port of Iberia,  210      1996
                       system/                La.
                       saturation
                       diving/moonpool
American Pioneer       Dynamically            Fourchon, La.    200      1996
                       positioned/ ROV and
                       HARDSUIT (TM) ADS
                       support
American Pride         Four-point anchor      Port Harcourt,   185      1990
                       system                 Nigeria
American Victory       Four-point anchor      Port of Iberia,  166      1993
                       system                 La.
American Star          Four-point anchor      Port of Iberia,  165      1989
                       system/ saturation     La.
                       diving
American Patriot       Four-point anchor      Long Beach, Ca.  165      1994
                       system/40-ton crane
American Triumph       Four-point anchor      Port of Iberia,  165      1996
                       system                 La.
American Independence  Four-point anchor      Port of Iberia,  165      1996
                       system                 La.
American Recovery      Tug/diving support     Port of Iberia,  150      1996
                                              La.
American Eagle         Four-point anchor      Port Harcourt,   150      1986
                       system                 Nigeria
American Spirit        Four-point anchor      Port of Iberia,  130      1994
                       system                 La.
American Liberty       Four-point anchor      Port of Iberia,  125      1990
                       system                 La.
American Diver         Diving support         Port of Iberia,  110      1983
                                              La.
Pipeline Surveyor      Diving support         Port of Iberia,  110      1985
                                              La.
American Scout         Diving support         Port of Iberia,  110      1996
                                              La.
Pipeline Inspector     Diving support         Port of Iberia,  105      1985
                                              La.
Pipeline Diver         Diving support         Port of Iberia,  105      1985
                                              La.
Pipeline Observer      Diving support         Port of Iberia,   95      1990
                                              La.
American Progress      Crewboat/survey        Oxnard, Ca.       65      1994
                       support
American Endeavor      Utility tug/ROV        Oxnard, Ca.       65      1994
                       support

   Ceanic  has entered into an agreement to purchase a 240-foot  dynamically
positioned special  service  vessel  to  be  named the "Ceanic Legend."  The
Company expects to consummate the purchase in  the  third  quarter  of 1998,
subject  to  the  satisfaction of certain conditions precedent customary  to
transactions of this type.

   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.  The average
age of the Company's vessels is approximately 28 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" and "American Defender"
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.  At December 31, 1997,
the Company owned and operated seven 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, 1997, the Company
operated  five  work  class ROVs, which are equipped with lights  and  video
equipment as well as manipulators,  which  permit  them  to perform tasks in
water depths up to 8,200 feet.  The Company expects to have approximately 19
ROVs by the end of fiscal 1998.  The Company entered into  the Perry Tritech
Contract  in  December 1997 to purchase up to ten new generation,  deepwater
work class ROVs  capable  of  working  in  water  depths  up to 10,000 feet.
Delivery of six of these ROVs is expected in each quarter of  1998 beginning
with the second quarter.

   Facilities. The Company typically leases office facilities to  house  its
administrative  staff  (other than 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,  Louisiana,  Ohio,  Texas, Canada,
Nigeria,  Scotland  and  Australia.   The  following  table  describes   the
Company's primary facilities:


                      Approximate
Location              Square Feet      Primary Use(s)
--------              -----------      --------------

Houston, Texas          26,000            Corporate headquarters
Port of Iberia,
  Louisiana             29,000<F1>         Americas Region headquarters
Perth, Australia         7,400<F2>        Asia Pacific Region headquarters
Aberdeen, Scotland       3,000<F3>        Europe Africa Region headquarters
Houston, Texas          27,240<F4>        Big Inch Marine Systems Division
Oxnard, California      23,000<F5>        Ceanic General Contracting office
Columbus, Ohio           8,600<F6>        Ceanic General Contracting office
Port of  Fourchon,
   Louisiana            22,000<F7>        Americas Region operations
Port Harcourt, Nigeria  13,500<F8>        West Africa diving operations
Vancouver, Canada        4,970<F9>        Ceanic Hardsuits Products Division

<F1>     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.

<F2>     Includes  approximately  3,130  square feet of office space,  4,270
         square  feet of warehouse space and  16,860  square  feet  of  yard
         space.

<F3>     Includes  approximately  3,000  square  feet of office space of and
         approximately one acre of yard space.

<F4>     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.

<F5>     Includes  approximately  10,000 square feet  of  office  space  and
         13,000 square feet of shop/warehouse space.

<F6>     Includes  approximately  3,000 square   feet   of   office   space,
         5,600 square  feet  of  shop/warehouse  space and two acres of yard
         space.

<F7>     Includes 7,000 square feet of office space, 15,000 square feet of
         storage  space,  18 acre tract of land and approximately  1,300 feet
         of dock frontage approximately 20 feet of clearance for Ceanic's
         deepwater DSVs.

<F8>     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.

<F9>     Includes approximately  2,970 square feet of office space and 2,000
         square feet of shop/warehouse space.

   Equipment.  The Company owns an  extensive inventory of diving equipment,
including six saturation diving systems  (five  of  which  are operational),
eleven  HARDSUIT (TM)  diving suits (three of which are 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

   In  November  1996,  a  large oil and gas company  instituted  litigation
against subsidiaries of the  Company  in Edinburgh, Scotland seeking damages
of approximately $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.

   In  November  1997,  an  oilfield  service  company instituted litigation
against the Company in United States Federal Court in New Orleans, Louisiana
seeking damages on the basis of allegations that  the  Company  had breached
the terms of a time-charter.  The plaintiff leased to the Company  a jack-up
derrick  barge which had been reoutfitted by the Company and which foundered
and sank on  April 27, 1997 while performing a platform abandonment project.
The plaintiff alleges the losses incurred as a result of the barge's sinking
to be $13.0 million  plus  interest and costs, of which the Company has paid
the plaintiff insurance proceeds  of  $3.0  million.   Plaintiff alleges the
losses  to  be in excess of the insured value of the barge.   Plaintiff  and
Company unsuccessfully  attempted  to  mediate  this  matter.   The  Company
believes  the  barge's  value was equal to its insured value 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, 1997.

ITEM 4A.  EXECUTIVE OFFICERS OF THE REGISTRANT

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

Name                 Age         Position
-----                ---         ---------

Rodney W. Stanley    53          Director,  President  and  Chief  Executive
                                 Officer

Kevin C. Peterson    40          Director, Executive Vice President and
                                 Chief Operating Officer

Robert B. Suggs      50          Senior Vice President - Americas Region

Gordon J. Cowe       43          Vice President - Corporate Engineering


Cathy M. Green       32          Vice President-Finance  and Chief Financial
                                 Officer

Quinn J. Hebert      34          Corporate Counsel and Secretary


   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 34 years of experience in  the  subsea services industry.  From 1995 to
May 1996, he served as President and Chief  Executive  Officer of Hard Suits
Inc.,  which  was acquired by the Company in November 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.

   Kevin C. Peterson joined the Company on May 15, 1997  as  a  Director and
Executive  Vice  President  and  President -  Technologies  Group and became
Executive  Vice  President  and  Chief  Operating  Officer in October  1997.
Mr. Peterson  has  over  25  years  of  experience  in the  subsea  services
industry.   In 1997, Mr. Peterson served as President  and  Chief  Executive
Officer of Perry  Tritech,  Inc.   From  1990  to  1997  when  he joined the
Company,  Mr.  Peterson  served as President and Chief Executive Officer  of
Coflexip Stena Offshore Inc.  From 1984 to 1990 he served as General Manager
for the International Group  of  Perry  Technologies.  From 1980 to 1984 Mr.
Peterson served as Vice President and General  Manager  of Jared/Oceaneering
in Houston, Texas.

   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  and  in  1997,  became  Senior Vice President - Americas
Region.  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.

   Gordon  J.  Cowe  joined  the  Company in May 1997  as  Vice  President -
 Corporate Engineering.  Mr. Cowe has  corporate responsibility for Ceanic's
Field Development Division, Concrete Products Division and Big Inch Products
Division.  Mr. Cowe has over 20 years of  engineering and project management
experience.  Prior to joining the Company,  Mr.  Cowe  served as Senior Vice
President of Sonsub International Inc., a subsidiary of  Saipem,  from  1996
until  joining  the  Company in 1997.  From 1994 to 1996, Mr. Cowe served as
Engineering Manager/Deputy  Alliance  Manager  for  Transfield  Worley Joint
Venture and as Managing Director of Granherne Ltd.  Prior to that  time,  he
held  various  engineering  management positions.  Mr. Cowe has a BSC Honors
Degree  in  Mechanical  Engineering  from  the  University  of  Strathclyde,
Scotland.

   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 ten 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  ten  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.


                                  PART II

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


   The common stock of the Company is traded  on  the NASDAQ National Market
under  the symbol "DIVE".  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 quarter.

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
Quarter Ended:
   March 31, 1997                                    13.000    10.625
   June 30, 1997                                     12.250     8.750
   September 30, 1997                                19.375    11.875
   December 31, 1997                                  20.75    10.625


   At March 2, 1998, the Company had  approximately  3,200  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
                                                    December 31,  December 31,   Fiscal Year Ended October
                                                    ------------  ------------   -------------------------
                                                    1997    1996     1995<F1>      1995     1994     1993
                                                    ----    ----     ----          ----     ----     ----
<S>                                              <C>       <C>       <C>          <C>     <C>       <C>
Income Statement Data
  Diving and related revenues                    $132,728  $105,772  $15,486      $88,660 $52,755   $51,023
  Diving and related expenses                      89,204    70,066   10,346       63,180  35,338    30,635
  Selling, general and administrative expenses     27,424    19,486    3,055       19,318  14,222    10,808
  Depreciation and amortization                    11,663     6,815      889        5,064   3,415     2,153
  Operating income (loss)                           4,437     9,405    1,196        1,098    (220)    7,427
  Non-recurring charge<F2>                            ---       ---      ---          ---     ---   (27,301)
  Interest expense                                  1,056     1,246      220        1,377     297       341
  Income (loss) from continuing operations before
    income taxes and minority interest              5,006     8,971      994        (151)    (264)  (20,030)
  Income (loss) from continuing operations          2,231     5,021      574        (329)    (257)  (13,199)
  Loss from discontinued operations                   ---      ---      ---          ---   (1,696)     (638)
  Net income (loss)                                 2,231     5,021      574        (329)  (1,953)  (13,837)
  Earning (loss) per common share:<F3>
    Basic                                             .22       .74      .09        (.05)    (.29)    (2.52)
    Diluted                                           .22       .73      .09        (.05)    (.29)    (2.52)
  Weighted average common shares outstanding<F3>:
    Basic                                          10,166     6,787    6,709       6,709    6,706     5,484
    Diluted                                        10,267     6,836    6,713       6,709    6,706     5,484

Other Data:
    EBITDA<F4>                                    $16,100   $16,220   $2,085      $6,162   $3,195    $9,580
    EBITDA Margin<F4>                                 12%       15%      13%          7%       6%       19%
    Cash flow from operations                      (7,234)   19,642     (297)      1,375    4,423     3,968

Balance Sheet Data
  Working capital                                 $25,588   $12,222  $15,898     $14,067  $14,087   $26,362
  Property, plant and equipment, net               63,318    43,041   25,550      26,079   24,424    14,659
  Total assets                                    134,300    92,907   63,921      69,408   61,607    47,601
  Current portion of long-term debt                 2,163     1,702    1,375       2,000    2,488       121
  Long-term debt, less current portion              8,060     8,459    5,413       5,121    5,443       ---
  Total stockholders' equity                       90,251    45,845   39,555      38,989   39,327    41,099

Operating Data
  Average number of dive crews employed<F5>           249       248      230         239      221       163
  Dive crew days<F6>                               51,419    40,131    5,922      35,869   22,455    25,149
  Number of diving support vessels
     (DSVs) at end of period                           21        20       14          14       15        11
  DSV days <F7>                                     3,895     3,565      443       2,831    2,376     2,227
  DSV utilization<F8>                                  53%       51%      52%         47%      49%       59%

<FN>
<F1> In  June 1996  the Board of Directors of the Company changed the Company's fiscal year end from
     October 31 to December 31.

<F2> 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.

<F3> The Company  has  adopted Statement of Financial Accounting Standards No. 128 "Earnings  Per  Share."
     Basic  earnings per common share is computed using the weighted average  number  of
     shares outstanding for the period.  Diluted earnings per common share  is  computed using the weighted
     average number of shares outstanding  per  common  share  adjusted  for  the incremental
     shares  attributed  to  outstanding options to purchase  common stock.

<F4> 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.

<F5> A  dive crew  generally  consists  of  (i) a diver and a tender (diver trainee/assistant) or (ii) one diving
     supervisor.

<F6> 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.

<F7> 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.

<F8> 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."
</FN>
</TABLE>

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 two fiscal years ended December 31, 1997
and  December 31, 1996; the fiscal  year  ended  October 31,  1995  and  the
two-month transition period ended December 31, 1995.

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
activities  of  the  Company's General Contracting Division 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.  Winter weather conditions also adversely affect  the
inland operations  of  the Company's General Contracting Division.  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 General Contracting Division operations.

   In  general, large, complex general contracting projects performed by the
General  Contracting Division and turnkey projects in the Gulf of Mexico 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 fully  provided  for  currently.   At  December  31,  1997,  the Company
accounted for 22 contracts (aggregating $4,116,000, or approximately 38%, of
unbilled  revenue  at  December 31, 1997) using the percentage of completion
method.  If the Company  continues  to  expand its operations in the general
contracting 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 general contracting  and  Gulf of Mexico 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 five  geographic and product markets: (i) Gulf of Mexico diving, vessel
and  remote intervention  technology  services  ("Americas  Region");  (ii) 
diving and related services performed in Australia and Southeast Asia ("Asia
Pacific  Region"); (iii) diving and related services performed in Europe and
Africa  ("Europe  Africa  Region");  (iv)  general  contracting  and  marine
construction  services  off  the United States West Coast, inland within the
United  States  and  in  the coastal  waters  off  Latin  America  ("General
Contracting Division"); and  (v)  sales and installations of Big Inch Marine
Systems products, Hard Suit products and Field Development Division products
which  include  the  Tarpon Guyed  Monotower  and  concrete  storage  barges
("Subsea Products").   The  following  table  sets  forth,  for  the periods
indicated, additional information on the operating results of the Company in
each of those five markets:

<TABLE>
<CAPTION
                                                                    Year Ended    Two Months Ended
                                      Year Ended December 31,         October        December 31,
                                   ------------------------------   ----------    ----------------
                                    1997       1996      1995(1)        1995        1995     1994
                                    ----       ----      ----           ----        -----    ----                  
                                                      (Unaudited)                         (Unaudited)
                                                 (Dollars in thousands)
<S>                               <C>        <C>        <C>          <C>         <C>        <C>
Americas Region
 Diving and related revenues      $ 68,339   $ 53,220   $ 49,987     $49,522     $ 9,929    $  9,463
 Diving and related expenses        44,690     36,037     38,118      37,362       6,888       6,087
 Gross profit                       23,649     17,183     11,869      12,160       3,041       3,376
 Gross profit percentage             34.6%      32.3%       23.7%       24.6%       30.6%       35.7%
Asia Pacific Region
 Diving and related revenues      $ 2,798         --         --          --          --          --
 Diving and related expenses        1,766         --         --          --          --          --
 Gross profit                       1,032         --         --          --          --          --
 Gross profit percentage             36.9%        --         --          --          --          --
Europe Africa Region
 Diving and related revenues      $11,798   $  7,837   $  16,653     $17,079     $   924    $  1,350
 Diving and related expenses        7,845      5,490      10,837      11,318         595       1,077
 Gross profit                       3,953      2,347       5,816       5,761         329         273
 Gross profit percentage             33.5%      29.9%       34.9%       33.7%       35.6%       20.2%
General Contracting Division
 Diving and related revenues      $30,583   $  34,097  $  15,180     $14,539     $ 3,909     $ 3,268
 Diving and related expenses       21,955      22,025     10,074      10,114       2,488       2,528
 Gross profit                       8,628      12,072      5,106       4,425       1,421         740
 Gross profit percentage             28.2%       35.4%      33.6%       30.4%       36.4%       22.6%
Subsea Products
 Diving and related revenues      $19,210   $  10,618   $  7,066     $ 7,520     $   724     $ 1,178
 Diving and related expenses       12,948       6,514      4,095       4,386         375         667
 Gross profit                       6,262       4,104      2,971       3,134         349         511
 Gross profit percentage             32.6%       38.7%      42.0%       41.7%       48.2%       43.4%
Total
 Diving and related revenues     $132,728   $ 105,772   $ 88,886     $88,660     $15,486     $15,259
 Diving and related expenses       89,204      70,066     63,124      63,180      10,346      10,359
 Gross profit                      43,524      35,706     25,762      25,480       5,140       4,900
 Gross profit percentage             32.8%       33.8%      29.0%       28.7%       33.2%       32.1%

<F1>  Information for the year ended December 31, 1995 is presented for comparative 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>
<TABLE>
<CAPTION>
                                         Year Ended              Year            Two Months Ended
                                        December 31,        Ended October 31,      December 31,
                                        ------------        -----------------   ------------------

                                1997       1996     1995<F1>      1995           1995       1994
                                -----      ----     ----          ----           -----      ----
                                                  (Unaudited)                           (Unaudited)
<S>                             <C>        <C>        <C>         <C>            <C>        <C>
Percentage of consolidated
  revenues:
Selling, general and
  administrative expenses        20.7%      18.4%      22.0%      21.8%          19.7%      18.8%
Depreciation and                  8.8        6.4        5.8        5.7            5.7        5.2
amortization
Operating income                  3.3        8.9        1.2        1.2            7.7        8.0
Income (loss) from continuing
  operations before income
  taxes and minority interest     3.8        8.5        (.3)       (.2)           6.4        7.2
Net income (loss)                 1.7        4.7        (.4)       (.4)           3.7        4.0

<F1> Information for the year ended December 31, 1995 is presented for comparative purposes only.
</TABLE>

   In  the year ended December 31, 1997, the Company continued to experience
significant growth in its operations and related revenues.  Factors contributing
to the increased activity include the following:

      First,  oil and gas industry activities in the Gulf of Mexico have
      remained strong and have resulted in continued increases in both
      the demand and the day rates charged for the Company's divers and DSVs.
      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, as a result of its  new  subsidiaries,  the Company
      experienced revenue growth in its manufacturing of Hardsuit products
      and Field  Development  Division  concrete storage  barges, and its
      subsea services provided in the Asia Pacific region.

   Although  the  General  Contracting  Division  continued  to  have strong
activity in 1997, there was a decrease in revenue from 1996 primarily due to
the   nonrecurring  nature  of  the  Chevron  platform  abandonment  project
performed  off  the  coast  of  California  in  1996.   However, the Company
believes it has positioned itself to bid on competitive projects  of similar
size and scope going forward.

   Finally,  the  Company experienced a reduction in its revenue from  those
operations in markets  which  did  not fit into the Company's strategic plan
and that were discontinued during 1997.   These include diving operations in
Kansas  City,  Kansas and Dubai, United Arab  Emirates,  and  derrick  barge
services provided by American Marine Construction, Inc.

   During 1997,  the Company continued its long-term focus on expansion into
deepwater Gulf of Mexico markets and certain international markets by adding
strategic assets and  key  management  infrastructure.   As  a  result, both
selling,  general and administrative expenses and depreciation expense  have
increased during  1997  adversely  affecting  short-term  profitability  but
positioning the Company for long-term growth.

Acquisitions and Dispositions

   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
transaction was accounted for under the purchase method of  accounting.   In
June  1997  the  Company acquired the remaining 3% of the outstanding common
stock of HSI at $1.65  per  share  as  a result of which HSI became a wholly
owned  subsidiary of the Company.  The results  of  operations  of  HSI  are
included  in  the  consolidated statement of operations from the acquisition
date.

   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 HSI 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)                             4,716          (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
directly related to the HSI acquisition.

   During 1997, the  Company acquired one vessel, suitable for operations in
deeper waters, and certain  diving  assets  to be used in its Gulf of Mexico
diving  operations.   The  vessel  acquired during  1997  is  the  "American
Defender,"  a  220-foot class dynamically  positioned  vessel  dedicated  to
supporting work-class ROVs.

   On June 21, 1997, the Company acquired substantially all of the assets of
Contract Diving  Services,  Pty  Ltd., and its affiliates, a subsea services
provider based in Perth, Western Australia.

   In October 1997, the Company sold  all  the issued and outstanding shares
of common stock in American Pollution Control Corporation.

  Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

   Diving  and  related  revenues.   The  Company's   consolidated  revenues
increased 25%, from $105.8 million for the year ended December  31,  1996 to
$132.7  million  for  the  year  ended December 31, 1997.  The $27.0 million
increase is due primarily to (i)   the  Americas  Region's increased Gulf of
Mexico diving and vessel activity; (ii)  revenue attributable  to  sales  of
the  Company's new Hardsuit products and Field Development Division concrete
storage  barges,  and  operations  in  its new Asia-Pacific region and (iii)
increased activity in West Africa.  The  increase  in  revenue was offset by
lower overall revenue for the General Contracting Division,  primarily  as a
result  of  the  nonrecurring  nature  of  the  Chevron platform abandonment
project off the coast of California in 1996, and a reduction in revenue from
the American Intrepid, the Company's jack-up derrick  barge,  which  sank in
April 1997.

   Diving and related expenses.   Diving and related expenses increased 27%,
from $70.1 million for the year ended December 31, 1996 to $89.2 million for
the  year  ended  December  31,  1997.  The  $19.1  million  increase is due
primarily to (i)  the Americas Region's increased Gulf of Mexico  diving and
vessel  activity;  (ii)   sales  of the Company's new Hardsuit products  and
Field Development Division concrete  storage  barges,  and operations in its
new Asia Pacific Region and (iii) increased activity in West Africa.

   Selling,  general  and  administrative  expenses.  Selling,  general  and
administrative expenses increased 41%, from $19.5 million for the year ended
December 31, 1996 to $27.4 million for the year ended December 31, 1997. The
increase  was primarily attributable to supporting  the  operations  of  the
newly acquired Hardsuit Products Division and the Field Development Concrete
Storage Division  and  the  Asia Pacific region; supporting increased diving
and vessel activity in the Gulf of Mexico; and supporting the Company's long
term  investment  in  its  new  international   and   deepwater   management
infrastructure.    Selling,   general   and  administrative  expenses  as  a
percentage of revenues increased from 18%  for  the  year ended December 31,
1996 to 21% for the year ended December 31, 1997.

   Depreciation  and amortization.  Depreciation and amortization  increased
72%, from $6.8 million for the year ended December 31, 1996 to $11.7 million
for the year ended  December 31, 1997.  The increase includes pretax charges
of $1,500,000 related  to the reduction in the carrying value of certain HSI
identifiable assets and associated goodwill to their expected net realizable
value, and approximately $400,000 for the write off goodwill associated with
the closure of the Company's  Kansas  office, both charges being recorded in
accordance  with  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).   The  remaining  increase  in
depreciation and amortization is attributable  to the acquisition of HSI and
Contract Diving Services, as well as other additions and improvements to the
Company's operational and administrative assets.

   Operating  income.  Although the Company's revenues  increased  by  $27.0
million, the gross  profit  percentage was slightly lower at 33% compared to
34% in 1996.  The most significant  factor  which  resulted in the Company's
overall  reduced gross profit in 1997 is the nonrecurrence  of  the  General
Contracting  Division's  platform  abandonment  project  for Chevron off the
coast of California which was performed in 1996.  This division's 1997 gross
profit  decreased  by  $3.4  million  and  resulted  in a reduction  in  the
companywide gross profit percentage.  In addition to the  lower gross profit
percentage,   both   selling,   general  and  administrative  expenses   and
depreciation and amortization expenses  increased,  as discussed above, such
that  operating  income decreased to $4.4 million as compared  to  operating
income of $9.4 million for the year ended December 31, 1996.

   Other income (expense).   For  the  year  ended  December 31, 1997, other
income (net) of $569,000 was comprised of interest income of $444,000, other
income of $587,000, and a gain on the disposal of assets of $594,000, offset
by interest expense of $1,056,000.  The gain on the disposal  of  assets was
primarily due to the sale of the Company's Lafayette, Louisiana headquarters
building.   This  compares  to other expense (net) of $434,000 for the  year
ended  December  31,  1996  which  was  comprised  of  interest  expense  of
$1,246,000, which was offset  by  a  net  gain  on  disposal  of  assets  of
$708,000, interest income of $57,000 and other income of $47,000.

   Income  tax  expense.   The $1,500,000 charge related to the write-off of
HSI's  goodwill was a nondeductible  charge  for  income  tax  purposes  and
resulted  in  an  overall  increase  in  the Company's effective tax rate to
approximately 55% in 1997 as compared to 44% in 1996.

   Net  income.  As a result of the factors  discussed  above,  the  Company
recorded  net  income  of  $2.2 million or $.22 per share, in the year ended
December 31,1997, compared to  net  income  of   $5.0 million,  or  $.74 per
share, in the year ended December 31, 1996.

  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 $17.1 million
increase  was  due  primarily  to:  (i)   increased activity by the  General
Contracting  Division,  most of which resulted  from  the  Chevron  platform
abandonment project off the  coast of California; (ii)  increased diving and
vessel activity in the Gulf of  Mexico;  (iii)   operations of the Company's
jack-up derrick barge, which was operational for only  a portion of the year
ended  October  31,  1995; (iv)  increased sales of the Company's  Big  Inch
subsea pipeline connector  products  and  (v)  revenue  from  sales  of  the
Company's new Field Development Division concrete storage barge products and
Hardsuit  products.   The  increase in revenue was offset by certain revenue
decreases attributable to (i) the Company's pipelay/bury barge that was sold
on March 1, 1996, (ii) the Europe  Africa  region,  primarily as a result of
the  non-recurrence  of work associated with the installation  of  a  Tarpon
Guyed Monotower off the Ivory Coast in 1995, and (iii)  decreased demand for
the Company's Tarpon Guyed Monotower products.

   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 increase  of  $6.9
million  is  due  primarily  to:  (i)   increased  activity  by  the General
Contracting  Division,  most  of  which  resulted  from the Chevron platform
abandonment project off the coast of California; (ii)   increased diving and
vessel activity in the Gulf of Mexico; (iii)  operations  of  the  Company's
jack-up derrick barge, which was operational for only a portion of the  year
ended  October  31,  1995;  (iv)   increased sales of the Company's Big Inch
subsea pipeline connector products and  (v) sales of the Company's new Field
Development Division concrete storage barge  products and Hardsuit products.
The increase in expense was offset by certain expense decreases attributable
to  (i) the Company's pipelay/bury barge that was  sold  on  March 1,  1996,
(ii) the  Europe  Africa region, primarily as a result of non-recurring work
associated with the  installation  of a Tarpon Guyed Monotower off the Ivory
Coast in 1995, and (iii)  decreased  demand  for  the Company's Tarpon Guyed
Monotower products.

   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 the  Europe  Africa  Region
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
companywide  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  the  Americas   Region
increased  approximately  $774,000 due primarily to the addition of new dive
support vessels and diving  equipment, and depreciation expense for 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 sale of the Company's pipelay barge.

   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, interest
income of $57,000 and other income of $47,000.  The net gain on the disposal
of assets includes the non-recurring gain on the  sale  of the pipelay barge
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  $222,000  and
interest income of $36,000.

   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  attributable  to
increased  diving  activity by the  General  Contracting  Division;  (ii) an
increase attributable  to  the  operations  of the Company's jack-up derrick
barge;  (iii) a  decrease attributable to the operations  of  the  Company's
pipelay/bury barge,  which  was  sold  on  March 1,  1996;  (iv) a  decrease
attributable  to  the  diving  activity  in  West Africa; and (v) a decrease
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  attributable  to
increased  diving  activity  the  General  Contracting  Division;  (ii)   an
increase  attributable  to  the  operations of the Company's jack-up derrick
barge; (iii) a decrease attributable  to  the  operations  of  the Company's
pipelay/bury  barge,  which  was  sold  on  March 1,  1996; (iv)  a decrease
attributable  to  diving  activity  in  West  Africa;  and  (v) a   decrease
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 the Americas Region and in West Africa.

   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.

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,  its  facilities,  its  DSVs  and  diving  and related
equipment.   The  Company also incurs expenses for mobilization and  project
execution throughout  the  term  of  its  contracts,  while collections from
customers typically do not occur until approximately 90 to  120  days  after
completion  of  the  project.  The Company has traditionally supported these
working capital requirements  by using a combination of internally generated
funds and short-term and long-term  debt.   The  Company  believes that cash
flows  from  operations  and  borrowings  available  under  its bank  credit
facility and other sources will provide sufficient funds to meet its working
capital and capital expenditure requirements for 1998.

   The  Company's subsidiary, HSI, continued to experience operating  losses
during fiscal  1997,  resulting  in  increased working capital requirements.
Although  the  Company  expects this trend  to  continue  into  early  1998,
management believes it should eventually be reversed and HSI should generate
operating profits through  its  strategy  to  (i)  utilize HSI technology to
support  the  Company's intervention technologies group,  (ii)  develop  the
substantial opportunities  the Company believes exist in the military market
and (iii) review ways to reduce costs.

   Cash flow from operations.   Net  cash flows from the Company's operating
activities are attributable primarily  to cash received from customers, cash
paid to suppliers and employees, and income  taxes  paid.   During 1997, net
cash used by operating activities was $7.3 million and was due  primarily to
timing differences in the receipt of cash from its customers and payments to
suppliers.  The Company generated positive net cash flow from operations for
each  of the previous two fiscal years with $19.6 million in 1996  and  $1.4
million  in  1995.  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, 1997, capital expenditures were $27.3 million  which
included  the  purchase  of (i) one dynamically positioned vessel, two work-
class ROVs, the assets of  Contract  Diving  Services,  Pty  Ltd.,  and  one
HARDSUITTM   diving  system;  (ii)  upgrades  to  existing  DSVs  and diving
equipment;  and (iii) acquisition of certain other diving equipment.   These
expenditures  were  funded  by a combination of borrowings under the line of
credit and proceeds of $24 million received from the Company's February 1997
secondary offering of common  stock.   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.   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.   Other  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 (8.50%  at  December 31, 1997).
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. At December 31, 1997, $8.8 million was outstanding under the line
of credit agreement.  Subsequent to December 31, 1997, the Company  received
a  $10.0 million  increase in the line of credit bringing the line of credit
to $25 million to facilitate  its increased working capital needs.  At March
12, 1998, the balance outstanding  under  the  line  of credit agreement was
approximately $14.0 million.

   The Company also has a long-term note payable to a  bank in the amount of
$8.1 million  at December 31, 1997 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.

   In  connection  with its purchase of certain assets in 1997, the  Company
entered into a note  payable  for  $1,743,000.   The  note  is  non-interest
bearing  and  unsecured.   The  terms  of  the  note  require  three  annual
installments beginning June 21, 1998.

Income Taxes

   The  Company  conducts  operations  in  various foreign tax jurisdictions
including Canada, the United Kingdom, Nigeria, and Australia 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  Company's  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  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.

Impact of the Year 2000 

   The Company has assessed and continues  to  assess the impact of the Year
2000 issue on its reporting systems and operations.   The year 2000 is
the result of computer programs being written using two  digits  rather than
four to define the applicable year.  Any of the Company's computer  programs
that  have  date-sensitive  software may recognize a date using "00" as  the
year 1900 rather than the year  2000.   This  could  potentially result in a
system  failure  or  miscalculations  causing  disruptions   of  operations,
including,   among   other   things,   a   temporary  inability  to  process
transactions,  send  invoices, or engage in other  similar  normal  business
activities.

   The Company had already  planned to implement new computer accounting and
management information software  to  increase  operational  efficiencies and
information analysis and, to that end, purchased software and  committed  to
implement  the  software  over  the  course  of early 1998 to mid 1999.  The
Company believes that, with the implementation  of  this  new  software, the
Year  2000  issue  should be resolved. Although the Company is still 
assessing the impact of the Year 2000 issue on its other operating systems, 
at this time the Company believes it will not have a material impact on the 
Company's financial position or results of operations.

   The  Company  has not yet initiated formal communications with all of its
significant suppliers  and  vendors  to  ensure  that  those parties have
appropriate  plans to address year 2000 issues where they  may  otherwise
impact the operations  of the Company; however, the Company does not have
any significant suppliers  or  vendors  that  directly interface with the
Company's information technology systems.  There is no guarantee that the
systems of other companies on which the Company  relies will be converted
timely and will not have an adverse effect on the Company.

   New Accounting Pronouncements

   In June 1997, the Financial Accounting Standards Board  issued  Statement
   of  Financial  Accounting  Standards  No.  130 (SFAS 130), "Comprehensive
   Income," which is effective for fiscal years beginning after December 15,
   1997.   SFAS  130  establishes  standards for reporting  and  display  of
   comprehensive  income  and  its components  (revenue,  expenses,  foreign
   currency gains and losses) in  a  full  set  of general purpose financial
   statements.  The Company will implement the statement  in  1998 and will,
   as   required,   reclassify  financial  statements  for  earlier  periods
   presented for comparative  purposes.   Adoption  of  the statement is not
   anticipated  to  have  a  material  effect  on  the  Company's  financial
   statement presentation.

   Also  in  June  1997,  the  Financial Accounting Standards  Board  issued
   Statement  of  Financial  Accounting   Standards   No.  131  (SFAS  131),
   "Disclosures  about  Segments of an Enterprise and Related  Information,"
   which is effective for  fiscal  years  beginning after December 15, 1997.
   SFAS 131 establishes standards for the way  that  public companies report
   information about operating segments in both annual and interim financial
   statements,  as  well  as  establishes  standards  for disclosures  about
   products and services, geographic areas and major customers.  The Company
   will  adopt  SFAS 131 in 1998.  The Company is currently  evaluating  the
   impact of this statement on its financial reporting.

   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<F1>.
3.2    By-laws of the Company.<F1>
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.<F1>
10.1   American Oilfield Divers, Inc. Amended and Restated Compensation
       Plan.<F2>
10.2   American Oilfield Divers, Inc. Non-Employee Director Stock Option
       Plan.<F1>
10.3   American Oilfield Divers, Inc. Profit Sharing and Retirement Plan.<F1>
10.4   American Oilfield Divers, Inc. Employee Stock Option Plan.<F3>
10.5   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.<F4>
10.6   Employment Agreement dated August 1, 1996 between American Oilfield
       Divers, Inc. and Rodney W. Stanley.<F5>
10.7   *Employment Agreement dated May 15, 1997 between American Oilfield
       Divers, Inc. and Kevin C. Peterson.
10.8   Form of Indemnity Agreement by and between American Oilfield Divers,
       Inc. and each of Messrs. Yax, Stanley, Peterson, Cowe, Suggs, Green,
       Hebert, O'Malley and Lasher.<F1>
13.1   *The Company's 1997 Annual Report to Shareholders.
21.    *List of Subsidiaries of the Company.
23.1   *Consent of Price Waterhouse.
24.    *Powers of Attorney.
------------------------------------------------------------------------------
<F1> 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.
<F2> Indicates exhibit  previously  field  with  the  Securities and Exchange
     Commission in the Company's Proxy Statement dated April 1, 1997.
<F3> 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.
<F4> Indicates exhibit previously filed with the Securities and Exchange
     Commission in the Company Annual Report on Form 10-K for the year ended
     December 31, 1996.
<F5> Indicates exhibit previously filed with the Securities and Exchange
     Commission in the Company's Form 8-K dated July 16, 1996.



 (b) Reports on Form 8-K

     During  the  last  quarter  of the year ended December  31,  1997,  the
Company filed the following reports on Form 8-K:


      Date of Report                           Item Reported:
   November 5, 1997 (Form 8-K) Item  5,  "Other Events," announcing the fiscal
                               1997 third  quarter  earnings and other matters
                               and the award of approximately  $10  million in
                               projects.

<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
24, 1998

                                          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


               *
          -------------
           George C. Yax        Chairman of the Board        March 24, 1998


      /s/ Rodney W. Stanley
          -----------------
           Rodney W. Stanley    President and Chief          March 24, 1998
                                Executive Officer and
                                       Director
                              (Principal Executive Officer)
                                    

      /s/ Kevin C. Peterson
          -----------------
          Kevin C. Peterson     Executive Vice President      March 24, 1998
                                 Chief Operating Officer
                                    and Director


                *
           -----------------
           William C. O'Malley         Director                March 24, 1998


                 *
           ------------------
           Stephen A. Lasher          Director                 March 24, 1998


      /s/ Cathy M. Green
          -------------------
          Cathy M. Green        Vice President - Finance and    March 24, 1998
                                 Chief Financial Officer
                                 (Principal Financial and
                                   Accounting Officer)


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

<PAGE>

 INDEX TO FINANCIAL STATEMENTS AND SCHEDULES


 Index to Financial Statements                Page


Report of Independent Accountants               K-38
Consolidated Balance Sheets                     K-39
Consolidated Statements of Operations           K-40
Consolidated Statements of Changes in
   Stockholders' Equity                         K-41
Consolidated Statements of Cash Flows           K-42
Notes to Consolidated Financial Statements      K-44
Selected Quarterly Financial Data               K-62

<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, 1997 and 1996, and

the results of their operations and their cash flows for each of the

two years in the period ended December 31, 1997, the two months ended

December 31, 1995 and the year 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.

/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP

Houston, Texas
February 19, 1998



<PAGE>
AMERICAN OILFIELD DIVERS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
------------------------------------------------------------------------------

(in thousands)                                            1997       1996


                            Assets

Current assets:
 Cash and cash equivalents                             $   1,407    $ 1,322
 Accounts receivable, net of allowance for doubtful
   accounts of $600 and $500                              32,604     20,095
 Unbilled revenue                                         10,870      5,929
 Other receivables                                         3,225      2,171
 Inventories                                               5,428      4,651
 Prepaid expenses                                          1,752      1,566
                                                       ---------   ---------
   Total current assets                                   55,286     35,734
Property, plant and equipment, net                        63,318     43,041
Intangible and other assets                               15,696     14,132
                                                       ---------   ---------
                                                       $ 134,300  $  92,907
                                                       =========   =========

                         Liabilities and Stockholders' Equity
Current liabilities:
 Accounts payable                                      $   8,379  $   9,609
 Income taxes payable                                        160      1,756
 Short-term borrowings                                     8,808      1,306
 Current portion of long-term debt                         2,163      1,702
 Other liabilities                                        10,188      9,139
                                                       ---------  ---------
   Total current liabilities                              29,698     23,512
Deferred tax liability                                     3,115      2,601
Borrowings under a line of credit agreement,
  long-term portion                                                  12,450
Long-term debt, less current portion                       8,060      8,459
Other liabilities                                          3,176         40
                                                       ---------  ---------
   Total liabilities                                      44,049     47,062
                                                       ---------  ---------
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,
   10,640,760 and 6,879,867 issued and outstanding
   at stated value at December 31, 1997 and 1996           1,824      1,373
 Additional paid-in capital                               84,065     42,059
 Foreign currency translation adjustments                   (380)       (98)
 Retained earnings                                         4,742      2,511
                                                        ---------  ---------
   Total stockholders' equity                             90,251     45,845
                                                        ---------  ---------
                                                       $ 134,300  $  92,907
                                                        =========  =========


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

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Consolidated Statements of Operations
-------------------------------------------------------------------------------
(in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                              Year
                                                        Year ended           Ended       Two months ended
                                                        December 31,       October 31,     December 31,
                                                     -----------------     ----------    ---------------
                                                        1997    1996         1995          1995      1994
                                                                                                   (unaudited)
<S>                                                 <C>        <C>          <C>          <C>       <C> 
Diving and related revenues                         $ 132,728  $ 105,772    $ 88,660     $ 15,486  $ 15,259

Costs and expenses:
 Diving and related expenses                           89,204     70,066      63,180       10,346   10,359
 Selling, general and administrative
    expenses                                           27,424     19,486      19,318        3,055    2,873
 Depreciation and amortization                         11,663      6,815       5,064          889      799 
                                                      -------    -------      -------      -------  -------
   Total costs and expenses                           128,291     96,367      87,562       14,290   14,031
                                                      -------    -------      -------      -------  -------
Operating income                                        4,437      9,405       1,098        1,196    1,228
                                                      -------    -------      -------      -------  -------
Other income (expense):
 Interest expense                                      (1,056)    (1,246)     (1,377)        (220)    (183)
 Gain (loss) on sale or abandonment
   of property and equipment
   and other assets                                       594        708        (130)           5        1
 Interest income                                          444         57          36            5
 Other, net                                               587         47         222            8       45
                                                      -------    -------      -------      -------  -------
   Total other income (expense)                           569       (434)     (1,249)        (202)    (137)
                                                      -------    -------      -------      -------  -------
Income (loss) before income taxes and
 minority interest                                      5,006      8,971        (151)         994    1,091
Income tax expense                                      2,775      3,950          62          420      480
                                                      -------    -------      -------      -------  -------
Income (loss) before minority interest                  2,231      5,021        (213)         574      611
                                                      -------    -------      -------      -------  -------
Minority interest in earnings
  of subsidiary                                                                 (116)
                                                      --------   -------      --------     -------  -------
Net income (loss)                                   $   2,231    $ 5,021      $ (329)      $  574   $  611
                                                      =======    =======      =======      =======  =======
Earnings (loss) per common share:
 Basic                                              $     .22    $   .74      $ (.05)      $  .09   $  .09
                                                      =======    =======      =======      =======  =======
 Diluted                                            $     .22    $   .73      $ (.05)      $  .09   $  .09
                                                      =======    =======      =======      =======  =======
Weighted average common shares
  outstanding:
 Basic                                                 10,166      6,787       6,709        6,709    6,709
                                                      =======    =======      =======      =======  =======
 Diluted                                               10,267      6,836       6,709        6,713    6,709
                                                      =======    =======      =======      =======  =======
</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Consolidated Statement of Changes in Stockholders' Equity
------------------------------------------------------------------------------
<TABLE>
<CAPTION>

(in thousands, except share data)                                             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, 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
  to purchase certain assets                   71,685         6         594                                   600
Issuance of common stock under
  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

Issuance of common stock,
  net of issuance costs                     3,553,315        431     39,689                                40,120
Issuance of common stock
  for asset purchases                          48,193          5        495                                   500
Issuance of common stock under
  exercise of stock options                   159,385         15      1,304                                 1,319
Tax benefit related to employee
  stock option exercises                                                455                                   455
Net effects of translation of
  foreign currency                                                                 (282)                     (282)
Other                                                                    63                                    63
Net income                                                                                       2,231      2,231
                                            ----------  --------   ---------    ---------   -----------  ----------

Balance at December 31, 1997                10,640,760    $1,824    $84,065       $ (380)      $ 4,742    $90,251
                                            ===========  =======  =========    ==========   ============  =========

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


AMERICAN OILFIELD DIVERS, INC.
Consolidated Statement of Cash Flows
------------------------------------------------------------------------------


</TABLE>
<TABLE>
<CAPTION>

                                                                           Year
                                                        Year ended        Ended       Two months ended
                                                        December 31,    October 31,     December 31,
                                                     -----------------  ----------    ---------------
                                                         1997    1996      1995        1995      1994
                                                                                             (unaudited)
<S>                                                  <C>       <C>         <C>         <C>      <C>         
Cash flows from operating activities:
 Cash received from customers                        $ 114,580 $ 106,620   $ 80,070    $ 19,657 $ 13,125
 Cash paid to suppliers and employees                 (116,446)  (85,548)   (77,285)    (19,137) (13,527)
 Interest paid                                          (1,056)   (1,246)    (1,217)       (220)    (182)
 Income taxes (paid) refunded                           (4,402)     (147)      (167)        (21)      12
 Other cash paid, net                                      (22)      (37)       (26)       (576)    (356)
                                                     ----------- --------- ----------  ---------- --------
   Net cash provided by (used by)
      operating activities                              (7,346)   19,642      1,375        (297)    (928)
                                                     ----------- --------- ----------  ---------- --------
Cash flows from investing activities:
 Decrease (increase) in other assets                    (3,131)      781     (1,551)        (44)     (37)
 Capital expenditures                                  (27,298)  (22,128)    (7,884)       (322)    (315)
 Acquisition of business, net of
   cash received                                                 (12,597)
 Net proceeds from sales of assets                       2,050     6,131      1,541          35
 Proceeds from insurance claims                          1,000       535      1,565
 Proceeds from sale of notes receivable                                       2,762
 Receipt of payments on notes receivable                                        480
                                                     ----------- --------- ----------  ---------- --------
   Net cash used by investing activities               (27,379)  (27,278)    (3,087)       (331)    (352)
                                                     ----------- --------- ----------  ---------- --------
Cash flows from financing activities:
 Repayments of long-term debt and
   short-term borrowings                                (2,819)   (7,708)    (2,810)       (333)    (401)
 Proceeds from long-term borrowings                               10,500      2,000
 Net proceeds (payments) under line of
   credit agreement                                     (3,810)    4,743      2,470         575      950
 Proceeds from issuance of common
   stock, net of issuance costs                         40,120
 Issuance of common stock under
    exercise of options                                  1,319       687
 Other                                                               (52)
                                                     ----------- --------- ----------  ---------- --------
   Net cash provided by financing
     activities                                         34,810     8,170      1,660         242      549
                                                     ----------- --------- ----------  ---------- --------
Net increase (decrease) in cash                             85       534        (52)       (386)    (731)
Cash and cash equivalents at beginning
 of period                                               1,322       788      1,226       1,174    1,226
                                                     ----------- --------- ----------  ---------- --------
Cash and cash equivalents at end of period            $  1,407   $ 1,322   $  1,174     $   788  $   495
                                                     =========== ========= ==========  ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Consolidated Statement of Cash Flows (Continued)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                         Year
                                                        Year ended      Ended    Two months ended
                                                        December 31,  October 31,  December 31,
                                                     ----------------- ---------- ---------------
                                                         1997    1996    1995        1995   1994
                                                                                         (unaudited)
<S>                                                  <C>      <C>      <C>        <C>    <C>         
Reconciliation of net income to cash provided                                            
  by operating activities:
 Net income (loss)                                   $  2,231 $  5,021 $  (329)   $  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              (594)    (708)    130        (5)
  Discount on sale of note receivable                                      159
  Minority interest in earnings
    of subsidiary                                                   26     116
  Depreciation and amortization                        11,663    6,815   5,064       889     799
  Provision for loss on receivables                       658      398     237        80      70
  Receivables written off                                (558)    (278)   (345)              (20)
  Compensation expense on stock options                    63
  Decrease in deferred tax asset                                 1,777     930
  Increase in other liabilities                         1,116
  Increase (decrease) in deferred tax liability           (32)     301
  (Increase) decrease in current assets, net
    of effect of business acquired (Note 2):-
   Accounts receivable                                (12,609)  (6,905) (6,465)   10,775  (1,876)
   Unbilled receivables                                (4,941)   7,754  (1,790)   (6,604)   (151)
   Tax refund receivable                                                   125              (102)
   Other receivables                                   (1,054)     167    (409)     (590)   (400)
   Current deferred tax asset                                             (950)      400     492
   Inventories                                           (777)  (1,845)   (549)      (70)    120
   Prepaid expenses                                      (186)     (47)   (912)      555     (83)
  Increase (decrease) in current liabilities,
    net of the effect of businesses acquired:
   Accounts payable and other liabilities                (730)   5,441   6,363    (6,301)   (388)
   Income taxes payable                                (1,596)   1,725
                                                       -------  ------  -------   ------- -------
    Total adjustments                                  (9,577)  14,621   1,704      (871) (1,539)
                                                       -------  ------  -------   ------- -------
    Net cash provided by (used by)
      operating activities                           $ (7,346) $19,642  $1,375    $ (297) $  (928)
                                                        ======  ======   ======    ======= =======
</TABLE>

Supplemental disclosure of noncash activities:-

The Company issued common stock valued at $500,000 in connection with its
purchase of certain equipment in 1997.  The Company entered into a note
payable for $1,743,000 to finance its purchase of certain equipment and
related goodwill during 1997.  The Company entered into a capital lease
obligation of $2,289,427 for the lease of certain equipment in 1997.  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.

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

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statments
December 31, 1997 and 1996
------------------------------------------------------------------------------

1.     Summary of Significant Accounting Policies

The Company
American Oilfield Divers, Inc. (the Company), currently doing
business under the tradename "Ceanic", provides subsea services and
products including field development services to the offshore oil and
gas industry as well as industrial and governmental customers in the
U.S. Gulf of Mexico, U.S. West Coast, and certain U.S. inland markets
as well as to customers in the Europe Africa and Asia Pacific
Regions.  Operations in the U.S. Gulf of Mexico represent a
significant portion of the Company's business.  The Company's primary
customers include major and independent oil and gas companies,
offshore engineering and construction companies and major pipeline
transmission firms.

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.

In February 1997, the Company issued 3,553,315 shares of common stock
which provided the Company with net proceeds of $40,120,000 (net of
issuance costs of approximately $600,000).  The Company used
approximately $16 million to repay borrowings outstanding under its
line of credit agreement and used the remaining proceeds for general
corporate purposes, including working capital requirements and
funding of capital expenditures and strategic asset acquisitions.

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

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 in the period
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,
1997 and 1996 are expected to be billed and collected within the
current year.

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

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 to operations as incurred.  General
and administrative expenses are charged to expense as incurred.

Concentrations of Credit Risk
Trade accounts receivable are due from companies of varying size
engaged principally in oil and gas activities.  The Company reviews
the financial condition of customers prior to extending credit and
generally does not require collateral.

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

Intangible and Other Assets
Intangible and other assets include intangible assets, goodwill,
patents and trademarks, organization costs and noncompete agreements,
which are amortized using the straight-line method over their
estimated useful lives, ranging from five to fifteen years.  Also
included are deferred drydock costs which represent costs incurred
for government required recertification of vessels; the costs of
which are generally amortized over the recertification period,
ranging from three to five years.  Amortization expense totaled
$4,310,100, $388,110, $369,653 and $138,915 for the years ended
December 31, 1997 and 1996, the year ended October 31, 1995 and the
two months ended December 31, 1995.

Property, Plant and Equipment
Property, plant and equipment are carried at cost, reduced by
provisions to recognize economic impairment when management
determines such impairment has occurred.  Depreciation of assets is
computed using the straight-line method over the estimated useful
lives of the related assets.  Amortization of leasehold improvements
is computed using 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.  Depreciation expense
totaled $7,353,214, $6,427,079, $4,694,586 and $749,656 for the years
December 31, 1997 and 1996, the year ended October 31, 1995 and the
two months ended December 31, 1995.

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statments
December 31, 1997 and 1996
------------------------------------------------------------------------------

Long Lived Assets
In accordance with Statement of Financial Accounting Standards
No. 121 (SFAS 121), "Accounting for Long Lived Assets," the Company
reviews long lived assets for impairment whenever circumstances
indicate that the carrying amount of long lived assets, certain
identifiable intangible assets and goodwill may not be recoverable
through future cash flows.

Effective January 1, 1996, the Company recognized a pre-tax charge of
$500,000 ($290,000 after tax, or $.04 per share) on certain of the
Company's diving assets which are not expected to be fully utilized
in operations.  This charge is included in depreciation and
amortization for the year ended December 31, 1996.

Foreign Currency Translation
The financial statements of subsidiaries outside the U.S., except the
Company's Canadian subsidiary, are measured using the local currency
as the functional currency.  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 accounts for income taxes using a liability approach that
requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been
recognized in the Company's financial statements or tax returns.

Earnings (Loss) Per Common Share
The Company adopted Statement of Financial Accounting Standards
No. 128 (SFAS 128), "Earnings Per Share," beginning with the year
ended December 31, 1997.  All prior period earnings per share data
have been restated to conform to the provisions of this statement.
Basic earnings per common share is computed using the weighted
average number of shares outstanding for the period.  Diluted
earnings per common share is computed using the weighted average
number of shares outstanding per common share adjusted for the
incremental shares attributed to outstanding options to purchase
common stock.  The reconciliation between the computations is as
follows (table amounts in thousands, except per share data):

                       Net    Weighted Average Shares     Earnings Per Share
                     income   --------------------------- ------------------
                     (loss)     Basic  Incremental Diluted   Basic  Diluted

Year ended:
 December 31, 1997   $ 2,231   10,166      101    10,267  $   .22  $  .22
 December 31, 1996     5,021    6,787       49     6,836      .74     .73
 October 31,  1995      (329)   6,709        4     6,709     (.05)   (.05)
Two months ended
  December 31, 1995      574    6,709        4     6,713      .09     .09


<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

Incremental shares attributable to assumed exercise of stock options
for the year ended October 31, 1995 were excluded from the
computation of diluted earnings per share as the effect would be
antidilutive.

Stock Compensation
In accordance with the provisions of Statement of Financial
Accounting Standards No. 123 (SFAS 123), "Accounting for Stock Based
Compensation", 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.

Cash and Cash Equivalents
Cash and cash equivalents include short-term highly liquid
investments with maturities at date of purchase of three months or
less.

Fair Value of Financial Instruments
The carrying amount of financial instruments, which include cash,
receivables, accounts payable and notes payable, approximates fair
values at December 31, 1997 and 1996.

Reclassifications
Certain amounts in the 1996 financial statements have been
reclassified to conform to the 1997 presentation.

Interim Financial Information
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.  Results for interim periods are
not necessarily indicative of the results that may be expected for
the complete fiscal year.

2.   Business Acquisitions and Dispositions

During 1997, the Company closed its Kansas City, Kansas office,
resulting in a write-off of goodwill of approximately $400,000 which
is included in depreciation and amortization expense in the
consolidated statement of operations for the year ended December 31,
1997.

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. (HSI), 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 an offering of
the Company's common stock (see Notes 1 and 7).  The transaction was
accounted for under the purchase method of accounting.  The results
of operations of HSI are included in the consolidated statement of
operations from the acquisition date.

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

The purchase price was allocated to the assets of HSI 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                                 3,888
        Liabilities assumed                     (4,190)
        Deferred tax liability                  (3,300)
                                               -------
                                               $12,660
                                               =======

During the third quarter of 1997, adjustments were made to deferred
taxes and property and equipment upon completion of the Company's
valuation study (Note 9).  The net impact of such adjustments
increased goodwill by $1,000,000 and represents the final revision to
the purchase price allocation.

In June 1997, the Company acquired the remaining 3% of the
outstanding common shares of HSI for $1.65 per share and delisted all
shares from both the Toronto and Vancouver Stock Exchanges.

The following unaudited pro forma information presents a summary of
the consolidated results of operations of the Company and HSI 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 (unaudited, in
thousands).

                                              For the years ended
                                           ------------------------
                                           December 31,  October 31,
                                               1996        1995

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


In addition, the Company had other asset acquisitions and
dispositions during 1997, including transactions with related parties
(Note 14), that were not individually significant.

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statments
December 31, 1997 and 1996
------------------------------------------------------------------------------
                          
3.   Inventories

Inventories consist of the following (in thousands):

                                                    December 31,
                                                    ------------
                                                    1997    1996

Fuel                                               $  224  $  152
Supplies                                            1,197     659
Work in process                                     2,769   2,491
Finished goods                                      1,238   1,349
                                                   ------  ------
                                                   $5,428  $4,651
                                                   ======  ======

4.   Intangible and Other Assets

Intangible and other assets consist of the following (in thousands):

                                                  December 31,
                                                ----------------
                                                 1997      1996

Trademarks and patents                         $  9,827  $  9,991
Goodwill                                          5,328     3,791
Deferred drydock expenses                         3,592     1,791
Other                                             2,265     1,371
                                                 -------  --------
                                                 21,012    16,944
Less - accumulated amortization                  (5,316)   (2,812)
                                                 ------   --------
                                               $ 15,696  $ 14,132
                                                 =======   =======
In connection with a delay in the Company's ability to produce and
deliver a HARDSUIT(TM) diving suit capable of working in depths of up
to 2,000 feet, the Company reviewed for impairment the carrying
amounts of certain long lived assets, identifiable intangible assets
and associated goodwill recorded on the books of its Hard Suits Inc.
subsidiary and recorded a charge of $1,500,000 in the third quarter
of 1997.  The charge represents the difference between the carrying
amount of certain identifiable intangible assets and associated
goodwill and the fair value of such assets determined using a risk
adjusted cash flow model.  The charge is included in depreciation and
amortization expense in the consolidated statement of operations for
the year ended December 31, 1997.

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

5.   Property, Plant and Equipment

Property, plant and equipment consist of the following (in
thousands):

                                                   December 31,
                                                -----------------
                                                 1997      1996

Diving and related equipment                   $ 39,384  $ 25,786
Vessels and surveying equipment                  35,799    24,295
Construction in progress                          5,200     4,427
Furniture and fixtures                            4,804     3,978
Building                                          1,967     2,498
Manufacturing and related equipment               1,426     1,310
Land                                              1,085     1,347
Transportation equipment                            705       657
Leasehold improvements                              634       546
Construction equipment                              619       625
                                                 ------    ------
                                                 91,623    65,469
                                               
Less - accumulated depreciation and
  amortization                                  (28,305)  (22,428)
                                                 -------   -------
                                               $ 63,318  $ 43,041
                                                 =======   ======

Construction in progress at December 31, 1997 primarily consists of
construction of various items of equipment.  The total costs to
complete the projects have been estimated by management to
approximate $25,650,000 and are estimated to be completed at various
times through 1999.  The estimate to complete includes purchase
commitments totaling $8,100,000 at December 31, 1997 (Note 13).

The net book value of assets pledged as collateral to secure the
Company's debt (Note 8) was $14,252,471 and $13,645,587 at December
31, 1997 and 1996.  Assets under capital leases totaling $2,456,890
were included in property, plant and equipment at December 31, 1997.

6.   Other Liabilities

Other liabilities, current portion, consist of the following (in
thousands):

                                                   December 31,
                                                  --------------
                                                  1997      1996

Accrued compensation                           $  2,085   $   993
Workers' compensation liability                   1,044       817
Contract related accruals and other               7,059     7,329
                                               --------   --------
                                               $ 10,188   $ 9,139
                                               ========   ========

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

Included in long-term portion of other liabilities are capital lease
obligations totaling $2,019,867.  The leases have terms ranging from
six months to two years, monthly lease payments ranging from $7,625
per month to $36,330 per month, and have purchase options at the end
of the lease terms.  As it is the Company's intention to purchase
these assets during 1998 with funds obtained through long-term
borrowings, and the Company has the ability to obtain the financing,
these capital lease obligations have been classified as long-term
liabilities as of December 31, 1997.

7.   Short-Term Borrowings

Short-term borrowings consist of the following (in thousands):

                                                              December 31,
                                                              ------------
                                                              1997     1996

Revolving line of credit agreement with a bank; interest
  at a prime rate (8.50% at December 31, 1997) and due
  in monthly installments                                   $  8,808   $12,618

Note payable to a company for purchase of certain
  assets; interest at 6%; unsecured; due on January 3, 1997              1,138
                                                              -------  -------
                                                                8,808   13,756
Less - amount classified as long-term                                  (12,450)
                                                              -------   ------
                                                             $  8,808  $ 1,306
                                                              =======   ======

At December 31, 1996, $12,450,000 of the balance outstanding under
the line of credit is classified as long-term as it related to the
acquisition of HSI 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 at that time
using the proceeds of an offering of common stock (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 (Note 8).

Subsequent to December 31, 1997, the revolving line of credit
agreement was increased to $25 million with no other change in terms
to facilitate the Company's expanded working capital needs.  As of
March 12, 1998, the balance outstanding under the line of credit
agreement was $13,972,311.

<PAGE>

AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

8.   Long-Term Debt

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

                                                     December 31,
                                                    --------------
                                                    1997      1996
                                                
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   $   8,125 $   9,625

Note payable to shareholders for purchase of
  certain assets; noninterest bearing and
  unsecured; payable in three annual installments
  beginning June 21, 1998, net of
  imputed discount                                  1,743

Various government assistance notes, noninterest
  bearing and unsecured; payable in various
  installments through July 1999                      355       458

Other long-term debt                                             78
                                                  --------- ---------
                                                   10,223    10,161
Less - current portion                             (2,163)   (1,702)
                                                  -------- ----------
                                                $   8,060  $  8,459
                                                  -------- ----------


Aggregate maturities of long-term debt in the fiscal years subsequent
to December 31, 1997 are as follows (in thousands):

              1998                 $ 2,163
              1999                   2,389
              2000                   2,046
              2001                   1,500
              2002 and thereafter    2,125
                                   --------
                                   $10,223
                                   --------


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.


AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

9.   Income Taxes

The components of income (loss) before income taxes were as follows
(in thousands):

                                                    Two months
                     Year ended      Year ended       ended
                    December 31,     October 31,  December 31,
                   -------------     ----------    ----------
                    1997     1996        1995         1995


Domestic        $  6,040   $10,052     $ (315)      $  994
Foreign           (1,034)   (1,081)       164
                ---------- --------   ---------    ---------
                $  5,006   $ 8,971     $ (151)      $  994
                ---------- --------   ---------    ---------

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


                                                                  Two months
                                    Year ended      Year ended       ended
                                    December 31,     October 31,  December 31,
                                   -------------     ----------    ----------
                                   1997     1996        1995         1995
Current tax expense:
 Federal                        $  2,552 $  1,120
 State                               235      770       $ 13
 Foreign                                                  69
                                  ------   -------     -------
   Total current tax expense       2,787    1,890         82
Deferred tax (benefit) provision:
 Domestic                            308    2,450        (20)       $ 420
 Foreign                            (320)    (390)
                                  -------  -------     -------      ------
   Total deferred tax (benefit)
     provision                       (12)   2,060        (20)         420
                                  -------  -------     -------      ------
   Total provision for income
     taxes                      $  2,775 $  3,950       $ 62        $ 420
                                  =======  =======     =======      ======

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

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


                                                                  Two months
                                    Year ended      Year ended       ended
                                    December 31,     October 31,  December 31,
                                   -------------     ----------    ----------
                                   1997     1996        1995         1995


Basis difference in depreciable
    assets                         $  798  $  (80)     $ (111)     $   80
Minimum tax credit                 (1,075)   (703)
Recognition of foreign tax loss
  carryforwards                       343
Deferred drydock expenses            (227)     (42)
Impact of tax loss carryforwards     (150)   2,896                    338
Accrued insurance                     177
Other, net                            122      (11)        91           2
                                   -------- --------   -------     -------

   Total provision (benefit) for
      deferred income taxes        $  (12)  $2,060      $ (20)      $ 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):


                                                                  Two months
                                    Year ended      Year ended       ended
                                    December 31,     October 31,  December 31,
                                   -------------     ----------    ----------
                                   1997     1996        1995         1995

Tax provided at United States
   statutory rate                 $ 1,708  $ 3,050   $  (51)        $ 338
Nondeductible goodwill                646       42
State tax expense, net of federal
  benefit                             385      508       13            33
Nondeductible meals and entertainment  89       71      118            20
Foreign tax expense (benefit)         (31)     200
Other, net                            (22)      79      (18)           29
                                   ------- --------  --------      --------
   Total provision for income
      taxes                       $ 2,775  $ 3,950   $   62         $ 420
                                   ======= ========  ========     =========
<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

The approximate effect of temporary differences and carryforwards
that give rise to deferred tax balances were as follows (in
thousands):

                                                  December 31,
                                                 1997      1996

Deferred drydock expense                       $   (664)  $  (437)
Allowance for doubtful accounts                     204       150
Accrued insurance                                   359       182
Other, net                                          105       105
                                               ---------- ---------
Current deferred tax asset                     $      4
                                               ========== =========
Depreciable asset basis differences            $  (5,582) $(6,380)
Federal, state and foreign net operating loss
   carryforwards                                   1,694    2,600
Foreign tax credit carryforwards                    160       163
Minimum tax credit carryforwards                            1,075
Other, net                                          613       (59)
                                               ---------- ---------
Noncurrent deferred tax liability              $ (3,115)  $(2,601)
                                               ========== =========



At December 31, 1997 the Company had state and foreign net operating
loss carryforwards (NOLs) of approximately $11,500,000 and
$2,800,000, respectively, which can be used to offset future taxable
income.  Approximately $1,700,000 of the NOLs relate to the Company's
Canadian subsidiary, HSI.  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 NOLs prior to their expiration.

As discussed in Note 2, a reduction of approximately $1,000,000 was
made to the deferred tax asset associated with the acquisition of HSI
based on the completion of an assessment of the NOL's generated prior
to the acquisition.

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 were reserved for issuance under
the Plan.  In May 1997 the 1993 Incentive Compensation Plan was
amended to become the Amended and Restated Incentive Compensation
Plan.  The amendments, approved by shareholders of the Company in May
1997, included an increase in total shares available for issuance
under the Plan and an increase in the minimum exercise price of a
stock option granted under the Plan from 85% of fair market value on
date of grant to 100% of fair market value on the date of grant along
with amendments in several other miscellaneous provisions.  Under the
current Amended and Restated Compensation Plan, 1,200,000 shares of
common stock have been reserved for issuance to officers of the
Company and a total of 500,000 shares have been reserved for issuance
to nonofficers of the Company.  As of December 31, 1997, a total of
1,424,331 options had been granted under the Plan at fair market
value prices ranging from $5.67 to $15.56 per share with vesting
schedules ranging from three to five years with a ten year term.  No
compensation expense was recognized in connection with the issuance
of these options.

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------
Included in total options granted under the Plan are 200,000 options
which were granted in 1997 to an officer at an exercise price of $9
per share with a fair market value of $11.50 per share on the date of
grant.  The options vest over a five year period.  Compensation
expense of $62,500 was recognized during 1997.

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 on the date of grant.  The options vested in one-fifth
increments over a five year period, contingent upon meeting certain
performance goals which were to be established by the Compensation
Committee.  In April 1997, the Compensation Committee decided to
eliminate the performance milestone provision as a vesting
requirement and canceled the original grant of 375,000 options
granted to the officer to make his salary package consistent with
that of other senior executives of the Company.  The officer was
issued 300,000 options to purchase common stock at an exercise price
of $9 per share which equaled fair market value on the date of grant.
The shares vest in increments of one-fifth per year beginning
August 1, 1997.  No compensation expense was recognized in connection
with the issuance of these options.

Director Plan
Under the Director Plan, nonemployee 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, 1997, options to purchase 15,000
shares of common stock at prices ranging from $6.625 to $11.625 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 nonqualified
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 became
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 in
connection with the issuance of these options.


<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

Transactions involving stock options are summarized as follows:

<TABLE>
<CAPTION>
                                                                              Weighted
                                                                  Total       Average
                                                                  Stock       Exercise
                                Incentive  Directors  Employee   Options      Price of Options
                                   Plan      Plan       Plan    Outstanding   Outstanding

<S>                              <C>         <C>      <C>        <C>         <C>
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                           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

 Granted:
  Noncompensatory                928,500     3,000               931,500      13.00
  Compensatory                   200,000                         200,000       9.00
                               ----------   ------    --------  ---------   
                               1,128,500     3,000             1,131,500      12.25
 Exercised                      (145,980)             (13,405)  (159,385)      8.88
 Forfeited                       (10,667)              (6,096)   (16,763)      8.79
                               -----------  ------    -------- ----------     -----
Balance at December 31,1997    1,179,666    15,000     48,694  1,243,360     $12.84
                               ==========  ========   ======== ==========    ======
</TABLE>
<PAGE>

AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

The following table summarizes information concerning currently
outstanding and exercisable stock options:

                          
                     Options outstanding            Options exercisable
              ---------------------------------  ------------------------
                         Weighted
                         Average     Weighted                 Weighted
  Range of               remaining   average                  average
  exercise     Number    contractual exercise       Number    exercise
   prices    outstanding    life      price       exercisable  price

$6.50-$9.00    626,166      8.42     $  8.87       124,500   $  8.34
$9.01-$15.56   617,194      9.40       15.21        50,621     10.11
             ----------                            -------
             1,243,360                             175,121
             ==========                            =======

The weighted average fair value of options where the exercise price of 
common stock equals the market price on the date of grant was $6.88
and $3.93 per option during 1997 and 1996.  The weighted average fair
value of options where the exercise price does not equal the market
price of the stock on the date of grant was $6.89 per option during
1997.  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:

                                    Year ended
                                    December 31,
                                -------------------
                                1997           1996

       Expected Life            5 years      5 years
       Interest rate           6.16%-6.64%     5.6%
       Volatility                 53%           37%
       Dividend                    0             0



Stock-based compensation costs computed in accordance with SFAS 123
would have reduced pretax and net income by $649,000 and
$402,000 in 1997 if the fair value of the options granted in
the year had been recognized as compensation expense on a
straight-line basis over the vesting period of the grant.  The
pro forma impact during 1997 would have reduced basic and
diluted earnings per share by $0.04 in 1997.
The pro forma effect on 1996 was not significant.  Pro forma
compensation expense based on stock options grants during 1997
and 1996 may not be indicative of the effects on net income and
income per share in future years because it does not take into
consideration pro forma compensation expense related to grants
made prior to the year ended December 31, 1996.  There were no
stock option grants during the year ended October 31, 1995.

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 totaled $271,081 and $116,909 for
the years ended December 31, 1997 and 1996, $17,038 for the two
months ended December 31, 1995 and $89,795 for the year ended October
31, 1995.  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.

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

12.  Business Segment, Geographic Area and Major Customer Information

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


<TABLE>
<CAPTION>
                                  Europe             United States                        Consolidated
                                 Africa<F1>   Canada  and other   Corporate   Elimination   Total

                                               
Year Ended October 31, 1995
---------------------------
<S>                            <C>           <C>       <C>         <C>          <C>        <C> 
Diving and related revenues    $  18,974               $ 69,686                            $  88,660
Operating income (loss)            2,883                 (1,785)                               1,098
Identifiable assets<F2>           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<F2>            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)           (1,082)      (593)     11,080                               9,405
Identifiable assets<F2>            8,664     18,367      65,876                              92,907


Year Ended December 31, 1997
----------------------------
Diving and related revenues     $ 11,798    $ 3,338    $117,592                            $132,728
Transfer between geographic areas             1,570                             $(1,570)
                                ---------   --------   ---------                ---------  ---------
   Total revenues                 11,798      4,908     117,592                 $(1,570)   $132,728

Operating income (loss)              565     (5,224)      9,096                               4,437
Transfer between geographic areas               706                                (706)
                                ---------   --------   ---------                ---------  ---------
   Total operating income (loss)     565     (4,518)      9,096                    (706)      4,437
Identifiable assets<F2>            9,549     20,169     104,582                             134,300

<FN>
<F1> Includes the Company's diving and related services provided
     off the coast of Europe, West Africa, and Dubai, United Arab
     Emirates.

<F2> Identifiable assets are those assets used in the Company's
     operations in each area.  Corporate assets consist of the
     Company's net deferred tax asset.
</FN>
</TABLE>
<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

The Company's ten largest customers accounted for $43,193,331 or 33%
of the Company's total revenues during the year ended December
31, 1997; $50,559,682 or 44% during the year ended December 31,
1996, $5,591,707 or 65% during the two months ended December 31,
1995 and $40,451,000 or 46% during the year ended October 31,
1995.  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 the year ended
October 31, 1995.  No one customer accounted for more than 10%
of the Company's revenues during the year ended December 31, 1997.

13.  Commitments and Contingencies

Legal Matters
In November 1996, a large oil and gas company initiated 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, at this time, that the product was fully suitable for
service and intends to defend itself vigorously against this claim,
although no assurance can be given as to the ultimate outcome of the
litigation.

In November 1997, an oilfield service company instituted litigation
against the Company in United States Federal Court in New Orleans,
Louisiana seeking damages on the basis of allegations that the
Company had breached the terms of a time-charter contract.  The
plaintiff leased to the Company a jack-up derrick barge which had
been reoutfitted by the Company and which foundered and sank on
April 27, 1997 while performing a platform abandonment project.  The
plaintiff alleges the losses incurred as a result of the barge's
sinking to be $13.0 million plus interest and costs, of which the
Company had paid the plaintiff insurance proceeds of $3.0 million.
The plaintiff alleges the losses to be in excess of the insured value
of the barge.  The plaintiff and Company unsuccessfully attempted to
mediate this matter.  The Company believes the barge's value was
equal to its insured value 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 business involves 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.

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

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, 1997 (in thousands):


             1998          $1,290
             1999             968
             2000             827
             2001             338
             2002             214
                           -------
                           $3,637
                           =======


Total rental expense under operating leases was $1,007,000 and
$937,919 for the years ended December 31, 1997 and 1996, $1,249,196
for the year ended October 31, 1995 and $153,316 for the two months
ended December 31, 1995.

Letters of Credit
In the ordinary course of business, the Company issues letters of
credit which may be drawn down upon certain events including the
Company's failure to perform under certain contracts.  At
December 31, 1997, the Company had letters of credit outstanding
totaling $427,689 which expire at various times through 1999.

Purchase Commitments
As of December 31, 1997, the Company had entered into purchase
commitments totaling $8,100,000 for various operating equipment.
Subsequent to year end, the Company entered into additional purchase
commitments totaling $14,000,000.

14.  Related Party Transactions

During 1997, the Company purchased a dynamically positioned vessel
for $2,250,000 from a company whose Chairman of the Board, President
and Chief Executive Officer also serves as a member of the Board of
Directors of American Oilfield Divers, Inc.  Also in 1997, the
Company sold its environmental services subsidiary, American
Pollution Control, Inc., for $275,000 in cash to a company owned by
the Company's Chairman of the Board.  The Company believes that the
prices involved in these transactions, which were negotiated at arm's
length, are favorable to the Company.

<PAGE>
AMERICAN OILFIELD DIVERS, INC.
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
------------------------------------------------------------------------------

The following table sets forth selected unaudited quarterly financial
information:


                                             Quarter ended
                                  ---------------------------------------------
                               March 31,  June 30,   September 30 December 31,
                                   1996       1996       1996        1996

Diving and related revenues    $ 19,228   $ 26,829   $   33,409  $   26,306
Operating income                     25      2,992        5,296       1,092
Net income                          104      1,735        2,851         331
Earnings per share - basic          .02        .26          .42         .05
Earnings per share - diluted        .02        .25          .42         .05




                                              Quarter ended
                          ---------------------------------------------------
                              March 31,  June 30,   September 30   December 31,
                               1997       1997          1997          1997

Diving and related revenues   $ 28,576   $ 28,177   $   37,154  $   38,821
Operating income                   601      2,340          177       1,319
Net income (loss)                  226      1,642        (622)         985
Earnings (loss) per share - basic  .03        .16        (.06)         .09
Earnings (loss) per share -            
  diluted                          .03        .16        (.06)         .09


<PAGE>
                                            INDEX TO EXHIBITS


Exhibit                            
Number   Description of Exhibit   

3.1    Amended and Restated Articles of Incorporation of the Company<F1>.
3.2    By-laws of the Company.<F1>
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.<F1>
10.1   American Oilfield Divers, Inc. Amended and Restated Compensation
       Plan.<F2>
10.2   American Oilfield Divers, Inc. Non-Employee Director Stock Option
       Plan.<F1>
10.3   American Oilfield Divers, Inc. Profit Sharing and Retirement Plan.<F1>
10.4   American Oilfield Divers, Inc. Employee Stock Option Plan.<F3>
10.5   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.<F4>
10.6   Employment Agreement dated August 1, 1996 between American Oilfield
       Divers, Inc. and Rodney W. Stanley.<F5>
10.7   *Employment Agreement dated May 15, 1997 between American Oilfield
       Divers, Inc. and Kevin C. Peterson.
10.8   Form of Indemnity Agreement by and between American Oilfield Divers,
       Inc. and each of Messrs. Yax, Stanley, Peterson, Cowe, Suggs, Green,
       Hebert, O'Malley and Lasher.<F1>
13.1   *The Company's 1997 Annual Report to Shareholders.
21.    *List of Subsidiaries of the Company.
23.1   *Consent of Price Waterhouse.
24.    *Powers of Attorney.
------------------------------------------------------------------------------
<F1> 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.
<F2> Indicates exhibit  previously  field  with  the  Securities and Exchange
     Commission in the Company's Proxy Statement dated April 1, 1997.
<F3> 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.
<F4> Indicates exhibit previously filed with the Securities and Exchange
     Commission in the Company Annual Report on Form 10-K for the year ended
     December 31, 1996.
<F5> Indicates exhibit previously filed with the Securities and Exchange
     Commission in the Company's Form 8-K dated July 16, 1996.