UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-Q**


(Mark
      One)


**x** **** **QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934**


For
      the
      quarterly period ended June 30, 2006





** ̈** **** **TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934** ****





Commission
      File Number: 0-28316





**Trico
      Marine Services, Inc.**





(Exact
      name of registrant as specified in its charter)





Delaware
              (State
                or other jurisdiction of
              incorporation
                or organization)
            72-1252405
              (I.R.S.
                Employer
              Identification
                No.)2401
                Fountainview Drive, Suite 920
              Houston,
                Texas
              (Address
                of principal executive offices)
            77057
              (Zip
                code)





Registrant’s
      telephone number, including area code: (713) 780-9926








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  ̈





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


Large
      Accelerated Filer  ̈ Accelerated Filer x Non-accelerated filer  ̈





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes o No x





Indicate
      by check mark whether the registrant has filed all documents and reports
      required to be filed by Section 12, 13 or 15(d) of the Securities Exchange
      Act
      of 1934 subsequent to the distribution of securities under a plan confirmed
      by a
      court. Yes x No  ̈





The
      number of shares of the registrant’s common stock, $0.01 par value per share,
      outstanding at August 4, 2006 was 14,735,795.











i


**TRICO
      MARINE SERVICES, INC**


**REPORT
      FORM 10-Q**


**FOR
      THE QUARTER ENDED JUNE 30, 2006**





**TABLE
      OF CONTENTS**




















Page**Part
                I.**
            Financial
                InformationItem
                1. Financial StatementsStatements
                of Condensed Consolidated Balance Sheet (Unaudited)
            1Statements
                of Condensed Consolidated Operations for the Three Months Ended
                (Unaudited)
            2Statements
                of Condensed Consolidated Operations for the Six Months Ended
                (Unaudited)
            3Statements
                of Condensed Consolidated Cash Flow (Unaudited)
            4Statements
                of Condensed Consolidated Stockholder’s Equity (Unaudited)
            5Notes
                to the Condensed Consolidated Financial Statements
                (Unaudited)
            6Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            25Item
                3. Quantitative and Qualitative Disclosures About Market
                Risk.
            37Item
                4. Controls and Procedures
            38**Part
                II.**
            Other
                InformationItem
                1. Legal Proceedings
            38Item
                2. Unregistered Sales of Equity Securities and Uses of
                Proceeds
            39Item
                3. Defaults upon Senior Notes
            39Item
                4. Submission of Matters to a Vote of Security Holders
            39Item
                5. Other Information
            40Item
                6. Exhibits
            41Signature
                Page
            42





**PART
      I - FINANCIAL INFORMATION**





**Item
      1. Financial Statements.**








**TRICO
                MARINE SERVICES, INC. AND SUBSIDIARIES****Condensed
                Consolidated Balance Sheets****as
                of June 30, 2006 and December 31, 2005***(Dollars
                in thousands, except share and per share amounts)***(Unaudited)***`*
            
            **June
                30,**
            
            **December
                31,****2006**
            
            **2005**ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            88,940
            
            $
            51,218Restricted
                cash
            
            
            535
            
            
            570Accounts
                receivable, net
            
            
            49,668
            
            
            42,986Prepaid
                expenses and other current assets
            
            
            4,177
            
            
            3,484Assets
                held for sale
            
            
            5,127
            
            
            5,853Total
                current assets
            
            
            148,447
            
            
            104,111Property
                and equipment:Land
                and buildings
            
            
            1,906
            
            
            1,844Marine
                vessels
            
            
            257,222
            
            
            241,360Construction-in-progress
            
            
            5,561
            
            
            235Transportation
                and other
            
            
            2,074
            
            
            1,566266,763
            
            
            245,005Less
                accumulated depreciation and amortization
            
            
            32,854
            
            
            19,359Net
                property and equipment
            
            
            233,909
            
            
            225,646Restricted
                cash - noncurrent
            
            
            11,623
            
            
            7,253Other
                assets
            
            
            8,168
            
            
            7,212Total
                assets
            
            $
            402,147
            
            $
            344,222LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilities:Short-term
                and current maturities of debt
            
            $
            22,777
            
            $
            36,610Accounts
                payable
            
            
            7,358
            
            
            6,295Accrued
                expenses
            
            
            11,159
            
            
            10,715Accrued
                insurance reserve
            
            
            3,008
            
            
            3,426Accrued
                interest
            
            
            133
            
            
            288Income
                taxes payable
            
            
            1,191
            
            
            518Total
                current liabilities
            
            
            45,626
            
            
            57,852Long-term
                debt, including premiums
            
            
            9,265
            
            
            9,928Deferred
                income taxes
            
            
            54,497
            
            
            46,055Deferred
                revenues on unfavorable contracts (see Note 4)
            
            
            3,155
            
            
            5,379Other
                liabilities
            
            
            3,043
            
            
            2,576Total
                liabilities
            
            
            115,586
            
            
            121,790Commitments
                and contingencies
            
            
            -
            
            
            -Non-controlling
                Interest
            
            
            17,295
            
            
            -Stockholders'
                equity:Preferred
                stock, $.01 par value, 5,000,
            
            
            -
            
            
            -Common
                stock, $.01 par value, 25,000,000 shares authorized, 14,736,795 and
                14,638,103shares
                issued and outstanding at June 30, 2006 and December 31, 2005,
                respectively
            
            
            147
            
            
            146Warrants
                - Series A
            
            
            1,649
            
            
            1,649Warrants
                - Series B
            
            
            634
            
            
            634Additional
                paid-in capital
            
            
            221,972
            
            
            208,143Retained
                earnings
            
            
            44,617
            
            
            20,100Cumulative
                foreign currency translation adjustment
            
            
            247
            
            
            (8,240
            )Total
                stockholders' equity
            
            
            269,266
            
            
            222,432Total
                liabilities and stockholders' equity
            
            $
            402,147
            
            $
            344,222*The
                accompanying notes are an integral part of these condensed consolidated
                financial statements.*






1


**TRICO
                  MARINE SERVICES, INC. AND SUBSIDIARIES****Condensed
                  Consolidated Statements of Operations****(Unaudited)***(Dollars
                  in thousands, except share and per share amounts)***Three
                  months**
              
              **Three
                  months****ended**
              
              **ended****June
                  30, 2006**
              
              **June
                  30, 2005**Revenues:Charter
                  hire
              
              $
              59,897
              
              $
              39,945Amortization
                  of non-cash deferred revenues (See Note 4)
              
              
              1,313
              
              
              3,168Other
                  vessel income
              
              
              246
              
              
              44Total
                  revenues
              
              
              61,456
              
              
              43,157Operating
                  expenses:Direct
                  vessel operating expenses and other
              
              
              29,019
              
              
              22,959General
                  and administrative
              
              
              6,717
              
              
              5,062Depreciation
                  and amortization expense
              
              
              6,426
              
              
              6,360Insurance
                  recovery from a loss on assets held for sale
              
              
              (605
              )
              
              -Gain
                  on sales of assets
              
              
              (350
              )
              
              (278
              )Total
                  operating expenses
              
              
              41,207
              
              
              34,103Operating
                  income
              
              
              20,249
              
              
              9,054Interest
                  expense
              
              
              (403
              )
              
              (2,186
              )Amortization
                  of deferred financing costs
              
              
              (46
              )
              
              (94
              )Other
                  income (loss) , net
              
              
              426
              
              
              (165
              )Income
                  before income taxes
              
              
              20,226
              
              
              6,609Income
                  tax expense
              
              
              8,087
              
              
              3,044Net
                  income
              
              $
              12,139
              
              $
              3,565Basic
                  income per common share:Net
                  income
              
              $
              0.83
              
              $
              0.35Average
                  common shares outstanding
              
              
              14,600,247
              
              
              10,224,348Diluted
                  income per common share:Net
                  income
              
              $
              0.80
              
              $
              0.34Average
                  common shares outstanding
              
              
              15,170,537
              
              
              10,438,659*The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.*






2




**TRICO
                  MARINE SERVICES, INC. AND SUBSIDIARIES****Condensed
                  Consolidated Statements of Operations****(Unaudited)*****(Dollars
                  in thousands, except share and per share
                  amounts)***|
              **Predecessor****Successor
                  Company**
              |
              **Company****Period
                  from**
              |
              **Period
                  from****Six
                  months**
              
              **March
                  15, 2005**
              |
              **January
                  1, 2005****ended**
              
              **through**
              |
              **through****June
                  30, 2006**
              
              **June
                  30, 2005**
              |
              **March
                  14, 2005**Revenues:
              
              
              
              
              
              
              |Charter
                  hire
              
              $
              110,379
              
              $
              47,475
              |
              $
              29,869Amortization
                  of non-cash deferred revenues (See Note 4)
              
              
              2,582
              
              
              3,837
              |
              
              -Other
                  vessel income
              
              
              327
              
              
              55
              |
              
              17Total
                  revenues
              
              
              113,288
              
              
              51,367
              |
              
              29,886|Operating
                  expenses:
              
              
              
              
              
              
              |Direct
                  vessel operating expenses and other
              
              
              50,221
              
              
              26,962
              |
              
              16,217General
                  and administrative
              
              
              12,459
              
              
              7,021
              |
              
              4,030Amortization
                  of marine inspection costs
              
              
              -
              
              
              -
              |
              
              2,055Depreciation
                  and amortization expense
              
              
              12,528
              
              
              7,497
              |
              
              6,703Insurance
                  recovery from a loss on assets held for sale
              
              
              (605
              )
              
              -
              |
              
              -(Gain)
                  loss on sales of assets
              
              
              (1,117
              )
              
              (278
              )|
              
              2Total
                  operating expenses
              
              
              73,486
              
              
              41,202
              |
              
              29,007|Operating
                  income
              
              
              39,802
              
              
              10,165
              |
              
              879|Reorganization
                  costs
              
              
              -
              
              
              -
              |
              
              (6,659
              )Gain
                  on debt discharge
              
              
              -
              
              
              -
              |
              
              166,459Fresh-start
                  adjustments
              
              
              -
              
              
              -
              |
              
              (219,008
              )Interest
                  expense
              
              
              (884
              )
              
              (2,680
              )|
              
              (1,940
              )Amortization
                  of deferred financing costs
              
              
              (96
              )
              
              (112
              )|
              
              (50
              )Other
                  income (loss), net
              
              
              659
              
              
              (10
              )|
              
              5Income
                  (loss) before income taxes
              
              
              39,481
              
              
              7,363
              |
              
              (60,314
              )|Income
                  tax expense
              
              
              14,964
              
              
              3,692
              |
              
              1,047|Net
                  income (loss)
              
              $
              24,517
              
              $
              3,671
              |
              $
              (61,361
              )||Basic
                  income (loss) per common share:
              
              
              
              
              
              
              |Net
                  income (loss)
              
              $
              1.68
              
              $
              0.36
              |
              $
              (1.66
              )Average
                  common shares outstanding
              
              
              14,588,546
              
              
              10,203,623
              |
              
              36,908,505|Diluted
                  income (loss) per common share:
              
              
              
              
              
              
              |Net
                  income (loss)
              
              $
              1.62
              
              $
              0.35
              |
              $
              (1.66
              )Average
                  common shares outstanding
              
              
              15,113,672
              
              
              10,390,611
              |
              
              36,908,505*The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.*




3


**TRICO
                  MARINE SERVICES, INC. AND SUBSIDIARIES****Condensed
                  Consolidated Statements of Cash Flows****(Unaudited)***(Dollars
                  in thousands)*|
              **Predecessor****Successor Company**
              |
              **Company****Period
                  from**
              |
              **Period
                  from****Six
                  months**
              
              **March
                  15, 2005**
              |
              **January
                  1, 2005****ended**
              
              **through**
              |
              **through****June
                  30, 2006**
              
              **June
                  30, 2005**
              |
              **March
                  14, 2005**Net
                  income (loss)
              
              $
              24,517
              
              $
              3,671
              |
              $
              (61,361
              )Adjustments
                  to reconcile net income (loss) to net cash
              
              
              
              
              
              
              |provided
                  by (used in) operating activities:
              
              
              
              
              
              
              |Depreciation
                  and amortization
              
              
              12,590
              
              
              7,592
              |
              
              8,808Amortization
                  of non-cash deferred revenues (see Note 4)
              
              
              (2,582
              )
              
              (3,837
              )|
              
              -Deferred
                  marine inspection costs
              
              
              -
              
              
              -
              |
              
              (1,277
              )Deferred
                  income taxes
              
              
              13,319
              
              
              3,258
              |
              
              1,397Gain
                  on debt discharge
              
              
              -
              
              
              -
              |
              
              (166,459
              )Fresh
                  start adjustments
              
              
              -
              
              
              -
              |
              
              219,008Loss
                  (gain) on sales of assets
              
              
              (1,117
              )
              
              (278
              )|
              
              2Provision
                  for doubtful accounts
              
              
              1,094
              
              
              40
              |
              
              40Stock
                  based compensation
              
              
              1,123
              
              
              1,553
              |
              
              9Change
                  in operating assets and liabilities:
              
              
              
              
              
              
              |Accounts
                  receivable
              
              
              (6,528
              )
              
              (7,100
              )|
              
              2,404Prepaid
                  expenses and other current assets
              
              
              (574
              )
              
              (1,087
              )|
              
              (630
              )Accounts
                  payable and accrued expenses
              
              
              931
              
              
              (4,167
              )|
              
              7,676Other,
                  net
              
              
              (475
              )
              
              298
              |
              
              (449
              )Net
                  cash provided by (used in) operating activities
              
              
              42,298
              
              
              (57
              )|
              
              9,168|Cash
                  flows from investing activities:
              
              
              
              
              
              
              |Purchases
                  of property and equipment
              
              
              (7,294
              )
              
              (686
              )|
              
              (947
              )Proceeds
                  from sales of assets
              
              
              2,138
              
              
              1,552
              |
              
              -Increase
                  in restricted cash
              
              
              (4,272
              )
              
              (965
              )|
              
              508Other,
                  net
              
              
              -
              
              
              (26
              )|
              
              (211
              )Net
                  cash used in investing activities
              
              
              (9,428
              )
              
              (125
              )|
              
              (650
              )|Cash
                  flows from financing activities:
              
              
              
              
              
              
              |Net
                  proceeds from issuance of common stock
              
              
              168
              
              
              1,788
              |
              
              -Proceeds
                  from issuance of debt
              
              
              15,878
              
              
              59,550
              |
              
              54,550Repayment
                  of debt
              
              
              (32,627
              )
              
              (69,013
              )|
              
              (56,771
              )Contribution
                  from non-controlling interest
              
              
              20,910
              
              
              -
              |
              
              -Deferred
                  financing costs and other
              
              
              -
              
              
              -
              |
              
              (375
              )Net
                  cash provided (used in) financing activities
              
              
              4,329
              
              
              (7,675
              )|
              
              (2,596
              )|Effect
                  of exchange rate changes on cash and cash equivalents
              
              
              523
              
              
              (459
              )|
              
              62|Net
                  increase (decrease) in cash and cash equivalents
              
              
              37,722
              
              
              (8,316
              )|
              
              5,984Cash
                  and cash equivalents at beginning of period
              
              
              51,218
              
              
              19,154
              |
              
              13,170Cash
                  and cash equivalents at end of period
              
              $
              88,940
              
              $
              10,838
              |
              $
              19,154|Supplemental
                  cash flow information:
              
              
              
              
              
              
              |Income
                  taxes paid
              
              $
              681
              
              $
              71
              |
              $
              72Interest
                  paid
              
              $
              1,141
              
              $
              3,435
              |
              $
              1,265Operating
                  cash payments from reorganization items
              
              $
              -
              
              $
              4,290
              |
              $
              1,457*The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.*
 4


**TRICO
                    MARINE SERVICES, INC. AND SUBSIDIARIES****Condensed
                    Consolidated Statement of Stockholders' Equity****for
                    the six months ended June 30, 2006****(Unaudited)***(Dollars
                    in thousands, except share amounts)***Cumulative****Foreign****Additional**
                
                
                
                **Currency**
                
                **Total****Common
                    Stock**
                
                **Warrants
                    - Series A**
                
                **Warrants
                    - Series B**
                
                **Paid-In**
                
                **Retained**
                
                **Translation**
                
                **Stockholders'****Shares**
                
                **Dollars**
                
                **Shares**
                
                **Dollars**
                
                **Shares**
                
                **Dollars**
                
                **Capital**
                
                **Earnings**
                
                **Adjustment**
                
                **Equity**Balance,
                    December 31, 2005
                
                
                14,638,103
                
                $
                146
                
                
                496,579
                
                $
                1,649
                
                
                497,438
                
                $
                634
                
                $
                208,143
                
                $
                20,100
                
                $
                (8,240
                )
                $
                222,432Stock
                    based compensation
                
                
                98,485
                
                
                1
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                1,285
                
                
                -
                
                
                -
                
                
                1,286Exercise
                    of warrants for common stock
                
                
                207
                
                
                -
                
                
                (74
                )
                
                -
                
                
                (133
                )
                
                -
                
                
                5
                
                
                -
                
                
                -
                
                
                5Tax
                    benefit from the utilization of fresh-start NOL
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                8,924
                
                
                -
                
                
                -
                
                
                8,924Gain
                    recognition on the sale of interest in EMSL
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                3,615
                
                
                -
                
                
                -
                
                
                3,615Comprehensive
                    Income:Gain
                    on foreign currency translation
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                8,487
                
                
                8,487Net
                    income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                24,517
                
                
                -
                
                
                24,517Comprehensive
                    income:
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                33,004Balance,
                    June 30, 2006
                
                
                14,736,795
                
                $
                147
                
                
                496,505
                
                $
                1,649
                
                
                497,305
                
                $
                634
                
                $
                221,972
                
                $
                44,617
                
                $
                247
                
                $
                269,266*The
                    accompanying notes are an integral part of these condensed consolidated
                    financial statements.*




5
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




**1.
      Interim financial statement presentation:**





The
      condensed consolidated financial statements for Trico Marine Services, Inc.
      (the
“Company”) included herein are unaudited but reflect, in management’s opinion,
      all adjustments that are necessary for a fair presentation of the nature of
      the
      Company’s business. The results of operations for the period from January 1,
      2005 through March 14, 2005 are prior to fresh-start accounting as described
      below and are therefore not comparable to the results of subsequent periods.
      The
      results of operations for the first and second quarters of 2006 are not
      necessarily indicative of the results that may be expected for the full fiscal
      year or any future periods. The financial statements included herein should
      be
      read in conjunction with the consolidated financial statements and notes thereto
      included in the Company’s Annual Report on Form 10-K for the year ended December
      31, 2005.





On
      December 21, 2004, Trico Marine Services, Inc. and two of its U.S. subsidiaries,
      Trico Marine Assets, Inc. and Trico Marine Operators, Inc., (collectively,
      the
“Debtors”) filed “prepackaged” voluntary petitions for reorganization under
      chapter 11 (“Chapter 11”) of title 11 of the United States Code (the “Bankruptcy
      Code”) in the United States Bankruptcy Court for the Southern District of New
      York (the “Bankruptcy Court”) under case numbers 04-17985 through 04-17987. The
      reorganization was jointly administered under the caption “In re Trico Marine
      Services, Inc., et al., Case No. 04-17985.” The Debtors operated as
      debtors-in-possession pursuant to the Bankruptcy Code during the period from
      December 21, 2004 through March 15, 2005 (the “Exit Date”).





The
      financial statements for the period in which the Company was in bankruptcy
      were
      prepared in accordance with the American Institute of Certified Public
      Accountant’s Statement of Position 90-7, “Financial Reporting by Entities in
      Reorganization Under the Bankruptcy Code” (“SOP 90-7”). SOP 90-7 requires the
      Company to, among other things, (1) identify transactions that are directly
      associated with the bankruptcy proceedings from those events that occur during
      the normal course of business, (2) identify pre-petition liabilities subject
      to
      compromise from those that are not subject to compromise or are post-petition
      liabilities and
      (3)
      apply “fresh-start” accounting rules upon emergence from bankruptcy (see
      Note 3). During the reorganization, the Company’s only liabilities subject to
      compromise were its $250 million 8 7/8% senior notes due 2012 (the “Senior
      Notes”) and the related accrued interest. In addition, the Company discontinued
      accruing interest on the Senior Notes as of December 21, 2004 (the “Commencement
      Date”), which interest would have totaled approximately $5.1 million during the
      period from the Commencement Date to the Exit Date.





In
      accordance with SOP 90-7, the Company adopted “fresh-start” accounting as of the
      Exit Date. Fresh-start accounting is required upon a substantive change in
      control and requires that the reporting entity allocate the reorganization
      value
      of the Company to its assets and liabilities in a manner similar to that which
      is required under Statement of Financial Accounting Standards (“SFAS”) No. 141,
“Business Combinations.” Under the provisions of fresh-start accounting, a new
      entity has been deemed created for financial reporting purposes.  References to the “Successor Company” in the unaudited condensed consolidated
      financial statements and the notes thereto refer to the Company on and after
      March 15, 2005, after giving effect to the provisions of the plan of
      reorganization (the “Plan”) and the application of fresh-start accounting.
      References to the “Predecessor Company” herein and therein refer to the Company
      prior to March 15, 2005. For further information on fresh-start accounting,
      see
      Note 3.





**2.**
            **Voluntary
                Reorganization under Chapter
                11**





The
      Company’s recurring losses and negative cash flows from operations in 2002
      through 2004 resulted in its reorganization proceedings. The Company emerged
      from Chapter 11 on March 15, 2005 and entered into a $75 million secured credit
      facility (the “U.S Credit Facility”).





The
      Debtors initiated their Chapter 11 cases on December 21, 2004 in accordance
      with
      the Bankruptcy Court’s special guidelines for “prepackaged” bankruptcy cases,
      pursuant to which the Debtors solicited and obtained the consent of their
      creditors to the terms of reorganization as set forth in the Plan prior to
      the
      filing of the Chapter 11 cases.





Pursuant
      to the Plan, the holders of the Senior Notes received, in exchange for their
      total claims (including principal and accrued but unpaid interest), 100% of
      the
      fully diluted new common stock of the reorganized Company (10,000,000 shares),
      before giving effect to (i) the potential exercise of approximately 1,000,000
      shares of warrants distributed or to be distributed to the Company’s holders of
      old common stock pursuant to the Plan, (ii) up to 750,000 options or restricted
      shares issued or to be issued under a new employee and director equity
      compensation plan, and (iii) 100,000 shares of stock issued to the financial
      advisors of the ad-hoc creditor committee on April 1, 2005.





6
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




On
      the
      Exit Date, holders of the Company’s old common stock became entitled to receive
      warrants to purchase new common stock. Each holder of old common stock received
      one Series A Warrant (representing the right to purchase one share of the
      Company’s new common stock for $18.75) and one Series B Warrant (representing
      the right to purchase one share of the Company’s new common stock for $25.00)
      for each 74 shares of old common stock owned. For further information on
      warrants, see Note 6. In addition, on the Exit Date, the Company issued
      approximately 698,000 stock options to employees and the Chairman of the Board
      of Directors with an exercise price of $11.00 per share, as well as an aggregate
      award of 30,000 shares of restricted stock to independent members of the
      Company’s Board of Directors.





**3.**
            **Fresh-start
                reporting:**





***Fresh-Start
      Adjustments***





In
      accordance with fresh-start accounting, the reorganization value of the Company
      as of the Exit Date is allocated based on the fair market values of the assets
      and liabilities. Any excess of fair value over reorganization value is treated
      as negative goodwill, and is applied to reduce the value of long-lived assets
      on
      a pro rata basis. Such fair values represented the Company’s best estimates
      based on internal and independent appraisals and valuations.





To
      facilitate the calculation of the reorganization value of the Successor Company,
      the Company developed a set of financial projections during 2004. Based on
      these
      financial projections, the reorganization value was determined by the Company,
      with the assistance of its financial advisors, using various valuation methods,
      including (i) a comparable company analysis which estimates the value of the
      Company based on the implied valuations of other similar companies that are
      publicly traded; (ii) a discounted cash flow analysis which estimates the value
      of the Company by determining the current value of estimated future cash flows
      to be generated; and (iii) a net operating loss carryforwards (“NOL”) valuation
      analysis which estimated the present value of the tax savings the NOLs would
      provide relative to the taxes the reorganized Debtors would pay absent the
      application of such NOLs. The future enterprise value is highly dependent upon
      achieving the projected financial results set forth in the projections as well
      as the realization of certain other assumptions which are beyond its control.
      As
      confirmed by the Bankruptcy Court, the estimated reorganization value of the
      Company was determined to be approximately $110 million.





As
      outlined in the table below, in applying fresh-start accounting, the Company
      recorded adjustments to reflect the fair value of assets and liabilities, on
      a
      net basis, and to write-off the Predecessor Company’s equity accounts. In
      addition, the excess of fair value of net assets over reorganization value
      (“negative goodwill”) was allocated on a pro-rata basis and reduced its
      non-current assets, with the exception of financial instruments, in accordance
      with SFAS No. 141. These fresh-start adjustments resulted in a charge of $219.0
      million. The restructuring of the Company’s capital structure and discharge of
      the Senior Notes and related accrued interest resulted in a gain of $166.5
      million. The charge for the revaluation of the assets and liabilities and the
      gain on the discharge of pre-petition debt are recorded in “Fresh-start
      adjustments” and “Gain on debt discharge,” respectively, in the unaudited
      condensed consolidated statement of operations.





7
 TRICO
          MARINE SERVICES, INC. AND
          SUBSIDIARIES **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




The
      following table reflects the reorganization adjustments to the Company’s
      condensed consolidated balance sheet as of March 15, 2005 (Unaudited) (in
      thousands):


**Predecessor**
            
            
            
            
            |
            **Successor****Company**
            
            
            
            
            |
            **Company****Balance
                Sheet**
            
            
            
            
            |
            **Balance
                Sheet****as
                of**
            
            **Reorganization**
            
            **Fresh
                Start**
            |
            **as
                of****March
                15, 2005**
            
            **Adjustments****(1)**
            
            **Adjustments****(2)**
            |
            **March
                15, 2005**ASSETS
            
            
            
            
            
            
            
            
            
            |Total
                current assets
            
            $
            57,504
            
            $
            -
            
            $
            -
            |
            $
            57,504|Property
                and equipment:
            
            
            
            
            
            
            
            
            
            |Land
                and buildings
            
            
            3,771
            
            
            -
            
            
            (1,949
            )|
            
            1,822Marine
                vessels
            
            
            657,780
            
            
            -
            
            
            (390,405
            )|
            
            267,375Transportation
                and other
            
            
            5,216
            
            
            -
            
            
            (4,029
            )|
            
            1,187Construction-in-progress
            
            
            100
            
            
            -
            
            
            (36
            )|
            
            64666,867
            
            
            -
            
            
            (396,419
            )|
            
            270,448Less
                accumulated depreciation and amortization
            
            
            215,338
            
            
            -
            
            
            (215,338
            )|
            
            -Net
                property and equipment
            
            
            451,529
            
            
            -
            
            
            (181,081
            )|
            
            270,448|Restricted
                cash - noncurrent
            
            
            6,454
            
            
            -
            
            
            -
            |
            
            6,454Other
                assets
            
            
            31,305
            
            
            -
            
            
            (20,720
            )|
            
            10,585Total
                assets
            
            $
            546,792
            
            $
            -
            
            $
            (201,801
            )|
            $
            344,991|LIABILITIES
                AND STOCKHOLDERS' EQUITY
            
            
            
            
            
            
            
            
            
            |Total
                current liabilities
            
            $
            86,435
            
            $
            -
            
            $
            -
            |
            $
            86,435|Liabilities
                subject to compromise:
            
            
            
            
            
            
            
            
            
            |Senior
                Notes
            
            
            250,000
            
            
            (250,000
            )
            
            -
            |
            
            -Accrued
                interest on Senior Notes
            
            
            25,179
            
            
            (25,179
            )
            
            -
            |
            
            -|Long-term
                debt, net of discounts
            
            
            85,479
            
            
            -
            
            
            547
            |
            
            86,026Deferred
                income taxes
            
            
            41,185
            
            
            -
            
            
            -
            |
            
            41,185Deferred
                revenues on unfavorable contracts (see Note 4)
            
            
            -
            
            
            -
            
            
            16,660
            |
            
            16,660Other
                liabilities
            
            
            4,685
            
            
            -
            
            
            -
            |
            
            4,685Total
                liabilities
            
            
            492,963
            
            
            (275,179
            )
            
            17,207
            |
            
            234,991|Commitments
                and contingencies
            
            
            
            
            
            
            
            
            
            |Stockholders'
                equity:
            
            
            
            
            
            
            
            
            
            |Preferred
                stock
            
            
            -
            
            
            -
            
            
            -
            |
            
            -Common
                stock, $.01 par value
            
            
            370
            
            
            (270
            )
            
            -
            |
            
            100Warrants
                - Series A
            
            
            -
            
            
            1,658
            
            
            -
            |
            
            1,658Warrants
                - Series B
            
            
            -
            
            
            637
            
            
            -
            |
            
            637Additional
                paid-in capital
            
            
            338,059
            
            
            (230,454
            )
            
            -
            |
            
            107,605Accumulated
                deficit
            
            
            (319,609
            )
            
            538,617
            
            
            (219,008
            )|
            
            -Unearned
                compensation
            
            
            (98
            )
            
            98
            
            
            -
            |
            
            -Cumulative
                foreign currency translation adjustment
            
            
            35,108
            
            
            (35,108
            )
            
            -
            |
            
            -Treasury
                stock, at par value
            
            
            (1
            )
            
            1
            
            
            -
            |
            
            -Total
                stockholders' equity
            
            
            53,829
            
            
            275,179
            
            
            (219,008
            )|
            
            110,000|Total
                liabilities and stockholders' equity
            
            $
            546,792
            
            $
            -
            
            $
            (201,801
            )|
            $
            344,991




(1)
      To
      record the conversion of liabilities subject to compromise into new common
      stock, the conversion of old common stock into warrants and the adjustment
      of
      other comprehensive income and unearned compensation.





(2)
      To
      adjust assets and liabilities to fair market value, and reflect the write-off
      of
      the Predecessor Company’s equity and the application of negative goodwill to
      long-lived assets.





8
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




***Changes
      to Significant Accounting Policies***





Fresh-start
      accounting requires the selection of appropriate accounting policies for the
      Successor Company, which includes the adoption of any newly issued standards
      required to be implemented within twelve months of the Company’s emergence from
      bankruptcy. The significant accounting policies disclosed in the Predecessor
      Company’s Annual Report on Form 10-K for the year ended December 31, 2004 will
      continue to be used by the Successor Company except for the policies related
      to
      equity-based compensation, marine inspection costs, deferred revenues on
      unfavorable contracts (described in Note 4) and depreciable lives of property,
      plant and equipment.





In
      accordance with SOP 90-7, the Company was required to adopt on March 15, 2005
      all applicable accounting guidance that will be effective within the twelve
      months following the Exit Date. Therefore, the Company adopted the revised
      version of SFAS No. 123, “Accounting for Stock-Based Compensation” entitled
“Share-Based Payment” (“SFAS No. 123R”) on the Exit Date. Among other things,
      this statement requires the fair-value based method of accounting for
      equity-based compensation to employees. Under this method, the Company is
      required to measure the fair value of equity-based awards issued to employees
      at
      the grant date and amortize the cost of that award over the period in which
      service is rendered. Previous standards allowed for a choice of methods to
      be
      used for equity-based compensation to employees. As a result of issuing stock
      options to employees and the non-executive chairman of the Board of Directors
      in
      connection with the emergence from bankruptcy, some of which were immediately
      vested, the Company recorded approximately $1.1 million of compensation expense
      related to the adoption of SFAS No. 123R during the period from March 15, 2005
      to June 30, 2005 and $1.1 million for the six months ended June 30, 2006. For
      further information on equity-based compensation, see Note 9.





The
      Company elected to change the method of accounting for marine inspection costs
      from the “defer and amortize” method to the “expense as incurred” method as of
      the Exit Date. The Company now expenses marine inspection costs in the period
      incurred rather than deferring and amortizing the costs over the period between
      marine inspections. Had this change in accounting method been followed in
      previous periods, it would have had the following effect on net loss and
      earnings per share for the periods indicated (in thousands, expect per share
      data):





**Period
                from****January
                1, 2005****through****March
                14, 2005**Net
                loss
            
            $
            (61,361
            )Add:
                Amortization of marine inspection costsincluded
                in reported net loss
            
            
            2,055Deduct:
                Expenditures for marine inspection costs determinedunder
                the "expense as incurred" method
            
            
            (1,277
            )Pro
                forma net loss
            
            $
            (60,583
            )Net
                loss per common share:Basic
                and Diluted - as reported
            
            $
            (1.66
            )Basic
                and Diluted - pro forma
            
            $
            (1.64
            )





Also,
      during fresh-start accounting, the Company’s long-lived assets were adjusted to
      fair market value and reduced by the amount of negative goodwill implied in
      the
      reorganization. New book values were determined for the Successors Company’s
      long-lived assets. On the Exit Date, the Company revised the useful lives of
      its
      long-lived assets to represent the estimated remaining useful lives at that
      date. Below is a table illustrating the depreciable lives for the Predecessor
      Company and the Successor Company:





9
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**


|**Predecessor**
            |
            **Successor****Company**
            |
            **Company**Buildings
                and improvements
            
            15-40
                years
            |
            7-33
                yearsMarine
                vessels
            
            15-30
                years
            |
            3-27
                yearsTransportation
                and other
            
            5-10
                years
            |
            1-9
                years




**4.**
            **Deferred
                revenue on unfavorable
                contracts:**





During
      the application of fresh-start accounting, the Company was required to refer
      to
      the guidance in SFAS No. 141 to determine the fair value of its assets and
      liabilities before the application of negative goodwill. SFAS No. 141 requires
      the Company to record all contracts that are in process at the Exit Date at
      fair
      market value based on estimated normal profit margins at that date. As such,
      an
      asset for favorable contracts or a liability for unfavorable contracts is
      required to be recorded. These assets or liabilities are then required to be
      amortized based on revenues recorded over the remaining contract lives,
      effectively resulting in the recognition of a normal profit margin on contract
      activity performed subsequent to the acquisition. As required, the Company
      performed an evaluation of its contracts and determined that, as a result of
      recent market improvements in the North Sea, several of its contracts were
      unfavorable compared to market conditions as of the Exit Date. As a result,
      the
      Company recorded deferred revenues of NOK 101.9 million ($16.7 million at March
      15, 2005) related to its charter hire contracts in the North Sea, representing
      the unfavorable contract amounts discounted to present values. Accordingly,
      the
      Company is required to amortize the deferred revenue on unfavorable contracts
      liability by increasing revenues related to the identified contracts over the
      remaining terms of the charters. Although no additional cash benefit is being
      recognized by the Company, the reversal of deferred revenue on unfavorable
      contracts will have a positive impact on the Company’s stated revenues,
      operating income, and net income during future periods, particularly the
      remainder of 2006. During the three months ended June 30, 2006 and June 30,
      2005, the Company recorded approximately NOK 8.2 million ($1.3 million) and
      NOK
      20.7 million ($3.2 million), respectively, of non-cash revenues related to
      the
      amortization of deferred contract revenues. During the six months ended June
      30,
      2006 and the period from March 15, 2005 to June 30, 2005, the Company recorded
      approximately NOK 16.6 million ($2.6 million) and NOK 24.4 million ($3.8
      million), respectively, of non-cash revenues related to the amortization of
      deferred contract revenues. The remaining liability of NOK 12.5 million ($3.2
      million) is included in “deferred revenues on unfavorable contracts” in the
      condensed consolidated balance sheet at June 30, 2006.





Although
      the amounts ultimately recorded will be impacted by changes in foreign exchange
      rates, the Company expects to record non-cash revenues related to the
      amortization of its unfavorable contract liability as follows (in
      thousands):





**Amortization****of
                non-cash****deferred****Period**
            
            **revenue**6
                months ending December 31, 2006
            
            $
            1,778Year
                ending December 31, 2007
            
            
            854Year
                ending December 31, 2008
            
            
            314Year
                ending December 31, 2009
            
            
            145Thereafter
            
            
            64$
            3,155





**5.**
            **Partial
                reimbursement of labor costs by the Norwegian
                government:**





Beginning
      in July 2003, the Norwegian government began partially reimbursing North Sea
      labor costs associated with the operations of our vessels. For the three months
      ended June 30, 2006 and 2005 reimbursements totaled $1.3 million and $1.2
      million, respectively. For the six months ended June 30, 2006, the period from
      March 15, 2005 through June 30, 2005 and the period from January 1, 2005 through
      March 14, 2005, these reimbursements totaled $2.8 million, $1.4 million and
      $1.4
      million, respectively. The Norwegian government annually reviews the partial
      reimbursement of labor costs.




10
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




**6.**
            **Warrants
                to purchase common stock:**





On
      the
      Exit Date, holders of the Company’s old common stock received warrants to
      purchase the Company’s new common stock. Each holder of old common stock
      received one Series A Warrant (representing the right to purchase one share
      of
      the Company’s new common stock for $18.75) and one Series B Warrant
      (representing the right to purchase one share of the Company’s new common stock
      for $25.00) for each 74 shares of old common stock owned. The Company issued
      499,429 Series A Warrants and 499,429 Series B Warrants on the Exit Date, of
      which 496,505 Series A Warrants and 497,305 Series B Warrants remain outstanding
      as of June 30, 2006. The Company has accounted for these warrants as equity
      instruments in accordance with EITF 00-19, “Accounting for Derivative Financial
      Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” since
      there is no option for cash or net-cash settlement when the warrants are
      exercised. Future exercises and forfeitures will reduce the amount of warrants.
      Exercises will increase the amount of common stock outstanding and additional
      paid in capital.





The
      aggregate fair value of the warrants at March 15, 2005 of $1.6 million and
      $0.6
      million for the Series A Warrants and the Series B Warrants, respectively,
      was
      estimated on the Exit Date using the Black-Scholes valuation method with the
      following weighted-average assumptions:





**Warrants****Series
                A**
            
            **Series
                B**Expected
                annual dividends
            
            $
            -
            
            $
            -Risk
                free interest rate
            
            
            4.12
            %
            
            3.96
            %Expected
                term (in years)
            
            
            5
            
            
            3Volatility
            
            
            46.7
            %
            
            46.7
            %





Summary
      of Series A Warrants and Series B Warrants exercised during the three months
      ended June 30, 2006 and 2005 is presented below.





**Three
                months ended****June
                30, 2006**
            
            **June
                30, 2005**Series
                A
            
            
            37
            
            
            2,568Series
                B
            
            
            15
            
            
            1,891





Summary
      of Series A Warrants and Series B Warrants exercised during the six months
      ended
      June 30, 2006 and the period from March 15, 2005 through June 30, 2005 is
      presented below.





**Period
                from****Six
                Months**
            
            **March
                15, 2005****Ended**
            
            **through****June
                30, 2006**
            
            **June
                30, 2005**Series
                A
            
            
            74
            
            
            2,568Series
                B
            
            
            133
            
            
            1,891





**7.**
            **Assets
                held for sale and sales of
                vessels:**





At
      June
      30, 2006 assets held for sale included one crew boat and our SWATH crew boat.





In
      an
      effort to reduce costs associated with cold-stacked vessels and to augment
      liquidity for operating or investing needs, the Company initiated the process
      to
      actively market five of its Gulf of Mexico cold-stacked supply vessels for
      sale.
      The Company sold three vessels during the fourth quarter of 2005 for total
      net
      proceeds of $2.5 million. In April 2006, the Company sold an additional
      cold-stacked vessel for net proceeds of approximately $0.8 million. After
      careful analysis, management decided to transfer the remaining cold-stacked
      vessel from held for sale and begin to destack the vessel for future use. The
      Company did not impair the cold-stacked vessel when transferred to held for
      sale, nor did the Company make any subsequent impairments.





11
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




The
      Company had three crew boats under charter with a customer in Mexico, each
      of
      which had a purchase option at the conclusion of its respective charter at
      fair
      market value. Two of the crew boats charters concluded in March 2006, and the
      customer exercised its purchase option with the Company at the agreed upon
      price
      of $0.6 million per vessel, which resulted in a gain of $0.7 million during
      the
      period. In the first quarter of 2006, the remaining crew boat was transferred
      to
      assets held for sale as the customer exercised the purchase option in March
      2006. The Company expects the sale of the crew boat to be completed during
      the
      third quarter of 2006.





In
      December 2005, management committed to a formal plan to sell the Stillwater
      River, a high speed SWATH crew boat. For assets held for sale, impairment
      charges are recorded when the carrying amount of the asset exceeds the estimated
      selling price of the asset less transaction costs. Based on the estimated
      selling price less transaction costs or commissions, the Company recorded an
      impairment charge of approximately $2.2 million on the vessel during the fourth
      quarter of 2005. The Company is currently pursuing offers from several potential
      buyers.





**8.**
            **Earnings
                per share:**





The
      following is a reconciliation of the numerators and denominators of the basic
      and diluted earnings per share (“EPS”) computations for the three month periods
      ending June 30, 2006 and 2005, (in thousands, except share and per share
      data).





**Three
                months**
            
            **Three
                months****ended**
            
            **ended****June
                30, 2006**
            
            **June
                30, 2005**Net
                income available to common shares (numerator)
            
            $
            12,139
            
            $
            3,565Weighted-average
                common shares outstanding (denominator)
            
            
            14,600,247
            
            
            10,224,348Basic
                EPS
            
            $
            0.83
            
            $
            0.35Net
                income available to common shares (numerator)
            
            $
            12,139
            
            $
            3,565Weighted-average
                common shares outstanding (denominator)
            
            
            14,600,247
            
            
            10,224,348Effect
                of dilutive securities
            
            
            570,290
            
            
            214,311Adjusted
                weighted-average shares
            
            
            15,170,537
            
            
            10,438,659Diluted
                EPS
            
            $
            0.80
            
            $
            0.34





For
      the
      three months ended June 30, 2006, options to purchase 49,500 shares of common
      stock at prices ranging from $27.13 and $33.75 were excluded from the
      computation of diluted earnings per share because the proceeds from exercise
      of
      these options, including the unrecognized compensation, exceeded the average
      stock price and inclusion of these shares would have been antidilutive. For
      the
      three month period ended June 30, 2005, 499,429 warrants to purchase shares
      of
      common stock were not included in the calculation of diluted earnings per share
      because the warrants’ exercise price of $25.00 was greater than the average
      market price of common shares for that period, (in thousands, except share
      and
      per share data).




12
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**


|
            **Predecessor****Successor
                Company**
            |
            **Company****Period
                from**
            |
            **Period
                from****Six
                months**
            
            **March
                15, 2005**
            |
            **January
                1, 2005****ended**
            
            **through**
            |
            **through****June
                30, 2006**
            
            **June
                30, 2005**
            |
            **March
                14, 2005**|Net
                income (loss) available to common shares (numerator)
            
            $
            24,517
            
            $
            3,671
            |
            $
            (61,361
            )|Weighted-average
                common shares outstanding (denominator)
            
            
            14,588,546
            
            
            10,203,623
            |
            
            36,908,505|Basic
                EPS
            
            $
            1.68
            
            $
            0.36
            |
            $
            (1.66
            )|Net
                income (loss) available to common shares (numerator)
            
            $
            24,517
            
            $
            3,671
            |
            $
            (61,361
            )|Weighted-average
                common shares outstanding (denominator)
            
            
            14,588,546
            
            
            10,203,623
            |
            
            36,908,505Effect
                of dilutive securities
            
            
            525,126
            
            
            186,988
            |
            
            -Adjusted
                weighted-average shares
            
            
            15,113,672
            
            
            10,390,611
            |
            
            36,908,505|Diluted
                EPS
            
            $
            1.62
            
            $
            0.35
            |
            $
            (1.66
            )





For
      the
      six months ended June 30, 2006, options to purchase 49,500 shares of common
      stock at prices ranging from $27.13 and $33.75 per share were excluded from
      the
      computation of diluted earnings per share because the proceeds from exercise
      of
      these options, including the unrecognized compensation, exceeded the average
      stock price and inclusion of these shares would have been antidilutive. For
      the
      period from March 15, 2005 to June 30, 2005, 998,858 warrants to purchase shares
      of common stock were not included in the calculation of diluted earnings per
      share because the warrants’ exercise prices of $25.00 and $18.75, respectively,
      were greater than the average market price of common shares for that period.
      For
      the period from January 1, 2005 to March 14, 2005, options to purchase 1,077,800
      shares of common stock at prices ranging from $2.05 to $23.13 and 53,333 shares
      of unvested restricted stock have been excluded from the computation of diluted
      earnings per share because inclusion of these shares would have been
      antidilutive.





**9.**
            **Equity-based
                compensation:**





On
      March
      15, 2005, the Company adopted the Trico Marine Services, Inc. 2004 Stock
      Incentive Plan (the “2004 Plan”). Please refer to the Company’s December 31,
      2005 Annual Report on Form 10-K for a description of the plan.





During
      the three and six months ended June 30, 2006, pursuant to the terms and
      conditions of the 2004 Plan, the Company granted 25,000 and 84,650 shares of
      restricted stock, respectively. The table below lists the shares and recipients
      of the restricted stock grants for the first six months of 2006:









**Restricted
                Stock Grants**March
                2006(1)
            
            April
                2006(2)
            
            June
                2006(1)
            
            **Total**Officers
            
            
            37,100
            
            
            -
            
            
            9,000
            
            
            **46,100**Employees
            
            
            22,550
            
            
            -
            
            
            2,000
            
            
            **24,550**Non-Executive
                Chairman of the Board
            
            
            -
            
            
            4,000
            
            
            -
            
            
            **4,000**Non-Employee
                Directors
            
            
            -
            
            
            10,000
            
            
            -
            
            
            **10,000**59,650
            
            
            14,000
            
            
            11,000
            
            
            **84,650**





(1)
      The forfeiture restrictions relating to the shares of restricted stock granted
      expire three years after date of grant.


(2)
      The forfeiture restrictions relating to the restricted stock lapsed one month
      after date of grant.





13
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




In
      connection with the annual incentive plan, the Company issued stock options
      to
      purchase 49,500 shares of the Company’s common stock. The table below lists the
      shares and recipients of the stock options granted for the first six months
      of
      2006:





**Stock
                Options Issued****Grant**
            
            **Exercise**
            
            **Shares****Date**
            
            **Price**
            
            **Issued****(1)**Officers
            
            
            March
                2006
            
            $
            27.13
            
            
            37,100Employees
            
            
            March
                2006
            
            $
            27.13
            
            
            3,400Officers
            
            
            June
                2006
            
            $
            33.75
            
            
            9,000





(1)
      The forfeiture restrictions relating to the shares of stock options issued
      vest
      ratably over three years beginning at the date of grant.





As
      of
      June 30, 2006 and 2005, the Company had approximately $2.9 million and less
      than
      $0.1 million respectively, in unrecognized compensation related to restricted
      stock grants, classified in additional paid-in-capital on the condensed
      consolidated balance sheet. The amortization expense for the unrecognized
      compensation for the three months ended June 30, 2006 and 2005 is approximately
      $0.8 million and $0.3 million, respectively. The amortization expense for the
      unrecognized compensation for the six months ended June 30, 2006, the period
      from March 15, 2005 through June 30, 2005 and the period from January 1, 2005
      through March 14, 2005 is approximately $0.9 million, $0.4 million, and zero,
      respectively. No net tax benefits were recorded for the grants since the Company
      provides for a full valuation allowance against its U.S. deferred tax assets.
      The Company expects to amortize the unrecognized compensation over the next
      three years related to restricted stock not yet vested as of June 30,
      2006.





During
      the three months ended June 30, 2006 and 2005, the Company recognized
      approximately $0.1 million each period in compensation costs related to stock
      option grants under the 2004 Plan. During the six months ended June 30, 2006,
      the period from March 15, 2005 through June 30, 2005 and the period from January
      1, 2005 through March 14, 2005, the Company recognized approximately $0.3
      million, $1.1 million, and zero respectively, in compensation costs related
      to
      stock option grants under the 2004 Plan. No net tax benefits were recorded
      for
      the options since the Company provides for a full valuation allowance against
      its U.S. deferred tax assets. The Company expects to recognize approximately
      $1.4 million in compensation expense over the next 2 1⁄2 years related to options
      that are outstanding but not yet vested as of June 30, 2006.





Prior
      to
      March 15, 2005, the Company accounted for stock incentive plans under the
      recognition and measurement principles of Accounting Principles Board (“APB”)
      Opinion No. 25, “Accounting for Stock Issued to Employees.” For restricted stock
      awards, the fair value at the date of the grant was expensed over the vesting
      period. For Director stock awards, compensation expense was recognized
      immediately since prior share grants were unrestricted at the time of grant.
      For
      stock options, no compensation cost was reflected in earnings, as all options
      granted under these plans had an exercise price equal to or greater than the
      market value of the underlying common stock on the grant date.





The
      following table illustrates the effect on net loss and net loss per share if
      the
      Company had applied the fair value recognition provisions of SFAS No. 123R
      to
      stock-based employee compensation during the period ended March 14, 2005 (in
      thousands, except per share data).


14
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**





**Predecessor
                Company****Period
                from****January
                1, 2005****through****March
                14, 2005**Net
                loss
            
            $
            (61,361
            )Add:
                Stock based compensation expense included inreported
                net loss, net of related tax effects
            
            
            9Deduct:
                Total stock-based compensation expensedetermined
                under fair value-based method, net of tax
            
            
            (40
            )Pro
                forma net loss
            
            $
            (61,392
            )Net
                loss per common share:Basic
                and Diluted as reported
            
            $
            (1.66
            )Basic
                and Diluted pro forma
            
            $
            (1.66
            )





The
      estimated weighted average fair value of options granted during 2006 and 2005
      was $10.77 and $5.06 per share, respectively. The fair value of each stock
      option granted is estimated on the date of grant using the Black-Scholes value
      method of option pricing with the following weighted-average
      assumptions:





**June
                30, 2006**
            
            **June
                30, 2005**Expected
                annual dividends
            
            $
            -
            
            $
            -Risk
                free interest rate
            
            
            4.63
            %
            
            4.12
            %Expected
                term (in years)
            
            
            5
            
            
            5Volatility
                (1)
            
            
            36.54
            %
            
            46.70
            %





(1)
      The
      volatility assumption is based on the average volatility of a peer
      group.





A
      summary
      of the changes to the Company’s stock options during the six months ended June
      30, 2006 is presented below:





**Six
                Months Ended****June
                30, 2006**Number
                of
            
            WeightedShares
            
            AverageUnderlying
            
            ExerciseOptions
            
            PricesOutstanding
                at December 31, 2005
            
            
            355,738
            
            $
            11.00Granted
            
            
            49,500
            
            $
            28.33Exercised
            
            
            (14,835
            )
            $
            11.00Expired/Forfeited
            
            
            (4,501
            )
            $
            11.00Outstanding
                at June 30, 2006
            
            
            385,902
            
            $
            13.22Exercisable
                at June 30, 2006
            
            
            116,404
            
            $
            11.00





During
      2006, options to purchase 14,835 shares of its new common stock with exercise
      prices of $11.00 per share and an aggregate intrinsic value of $0.3 million
      were
      exercised. The Company received $0.2 million related to these
      exercises.





15
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




The
      following table summarizes information about stock options outstanding at June
      30, 2006:





**Options
                Outstanding**
            
            **Options
                Exercisable****Weighted**
            
            **Weighted**
            
            **Aggregate**
            
            
            
            **Weighted**
            
            **Aggregate****Number**
            
            **Average**
            
            **Average**
            
            **Intrinsic**
            
            **Number**
            
            **Average**
            
            **Intrinsic****Range
                of**
            
            **Outstanding**
            
            **Remaining**
            
            **Exercise**
            
            **Value**
            
            **Exercisable**
            
            **Exercise**
            
            **Value****Exercise
                Prices**
            
            **at
                6/30/06**
            
            **Contract
                Life**
            
            **Price**
            
            ($000)
            
            **at
                6/30/06**
            
            **Price**
            
            ($000)$11.00
            
            
            336,402
            
            
            6.0
            
            $
            11.00
            
            $
            7,737
            
            
            116,404
            
            $
            11.00
            
            $
            2,677$27.13
            
            
            40,500
            
            
            7.0
            
            $
            27.13
            
            $
            278
            
            
            -
            
            $
            27.13
            
            $
            -$33.75
            
            
            9,000
            
            
            7.0
            
            $
            33.75
            
            $
            2
            
            
            -
            
            $
            33.75
            
            $
            -385,902
            
            
            5.8
            
            $
            13.22
            
            $
            8,017
            
            
            116,404
            
            $
            11.00
            
            $
            2,677





A
      summary
      of the changes to the Company’s restricted stock during the six months ended
      June 30, 2006 is presented below:





**Six
                Months Ended****June
                30, 2006**Number
                of
            
            WeightedShares
            
            Average
            
            WeightedUnderlying
            
            Stock
                Price
            
            AverageShares
            
            at
                Date of Grant
            
            LifeOutstanding
                at December 31, 2005
            
            
            65,000
            
            $
            23.71
            
            
            3.4Granted
            
            
            84,650
            
            $
            29.01
            
            
            2.1Vested
            
            
            (15,700
            )
            $
            31.77
            
            
            -Outstanding
                at June 30, 2006
            
            
            133,950
            
            $
            25.35
            
            
            2.5





**10.**
            **Taxes:**





The
      Company’s income tax for the three months ended June 30, 2006 and 2005 is
      comprised of income tax expenses of $8.1 million and $3.0 million, respectively.
      The Company’s income tax expense for the six months ended June 30, 2006, and the
      period from March 15, 2005 and June 30, 2005 and the period from January 1,
      2005
      through March 14, 2005, is $15.0 million, $3.7 million and $1.0 million,
      respectively. The income tax expense or benefit from each period is primarily
      associated with the Company’s Norwegian and U.S. operations. The Company’s June
      30, 2006 effective tax rate of 38% differs slightly from the statutory rate
      primarily due to state and foreign taxes. In accordance with SOP 90-7 related
      to
      fresh-start accounting, the Company is providing no tax benefit from the
      utilization of pre-reorganization net operating loss (“NOL”) carryforwards for
      which a valuation allowance had previously been established. The Company’s June
      30, 2005 effective rate varied from the statutory rate primarily due to the
      valuation allowance on U.S. net operating losses and deferred tax assets, lack
      of deductibility of costs associated with the financial restructuring and,
      to a
      lesser extent, income contributed by the Company’s Norwegian subsidiary for
      which income taxes were provided at the Norwegian statutory rate of 28%.





As
      of
      December 31, 2005, the Company had approximately $325 million in
      pre-reorganization NOL carryforwards that were scheduled to expire at various
      periods through 2024. Upon reorganization, the Company realized cancellation
      of
      debt income (“COD Income”) of approximately $166.5 million when the Senior Notes
      were converted into equity. On January 1, 2006, as required by the Internal
      Revenue Code, the Company reduced its tax attributes by the amount of COD
      Income.





16
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




In
      addition, as of the Exit Date, the Company incurred a change of control, as
      defined by the Internal Revenue Code, which will limit the ability to utilize
      the NOLs and other pre-reorganization built-in losses to reduce taxes in future
      periods. Management believes that prior NOLs and certain other tax benefits
      that
      would be available to offset future taxable income may be limited to
      approximately $4.7 million per year. The Company does have the option to forego
      the annual NOL limitation by reducing the NOL carryforward by the amount of
      interest paid or accrued over the past three years by the predecessor
      corporation on indebtedness that was converted to equity, provided no change
      of
      control occurs within two years of the Exit Date. However, if there is another
      ownership change within a two year period beginning with the emergence from
      bankruptcy, the Company loses all of the NOLs carried forward from
      pre-bankruptcy. The Company is currently studying this option and will make
      a
      timely decision on the best course of action prior to filing its 2005 income
      tax
      return. The Company has based its tax provision on the assumption that the
      annual limitation will not apply. Based upon present estimates of taxable income
      for the year, there would be an increase of approximately $10.3 million in
      current income taxes payable as of June 30, 2006 if the annual limitation
      applies. The Company has reserved for any future benefits that might be derived
      from its NOL carryforwards and other deferred tax assets to the extent they
      exceed its domestic deferred tax liabilities as of June 30, 2006.





A
      valuation allowance was provided against the Company's U.S. net deferred tax
      asset as of the reorganization date. To date, the Company has released $9.3
      million of the valuation allowance from the pre-confirmation of deferred tax
      assets, which has increased the Company’s additional paid-in capital
      account.  If the net deferred tax asset is used to offset taxable income in
      the future, the reduction in the valuation allowance will be recorded as noted
      above and the utilization of the deferred tax asset will be reflected as an
      increase to deferred income tax expense.





On
      March
      22, 2002, the Company’s Brazilian subsidiary received a tax assessment from a
      Brazilian State tax authority for approximately 25.1 million Reais ($11.6
      million at June 30, 2006). The tax assessment is based on the premise that
      certain services provided in Brazilian federal waters are considered taxable
      by
      certain Brazilian states as transportation services. The Company had filed
      a
      timely defense at the time of the assessment. In September 2003, an
      administrative court upheld the assessment. In response, the Company filed
      an
      administrative appeal in the Rio de Janeiro administrative tax court during
      October 2003. In November 2005, the Company’s appeal was submitted to the
      Brazilian State attorneys for their response. The Company is currently waiting
      for a ruling on its appeal and is under no obligation to pay the assessment
      unless and until such time as all appropriate appeals are exhausted. The Company
      intends to vigorously challenge the imposition of this tax. Broader industry
      actions have been taken against the tax in the form of a suit filed at the
      Brazilian federal supreme court seeking a declaration that the state statute
      attempting to tax the industry’s activities is unconstitutional.




During
      the third quarter of 2004, the Company received a separate tax assessment from
      the same Brazilian State tax authority for approximately 2.7 million Reais
      ($1.2
      million at June 30, 2006). This tax assessment is based on the same premise
      as
      noted above. The Company filed a timely defense during October 2004. In January
      2005, an administrative court upheld the assessment. In response, the Company
      filed an administrative appeal in the Rio de Janeiro administrative tax court
      during February 2006. The Company has not accrued for the assessment of the
      liability as it is not considered “probable” as defined by SFAS No. 5.





If
      the
      Company’s challenges to the imposition of these taxes (which may include
      litigation at the Rio de Janeiro state court) prove unsuccessful, current
      contract provisions and other factors could potentially mitigate the Company’s
      tax exposure. Nonetheless, an unfavorable outcome with respect to some or all
      of
      the Company’s Brazilian tax assessments could have a material adverse affect on
      the Company’s financial position and results of operations if the potentially
      mitigating factors also prove unsuccessful.





The
      Company’s Norwegian subsidiary is a member of the Norwegian shipping tax regime,
      which enables the indefinite deferral of the payment of income taxes as long
      as
      certain criteria are met. If the Company fails to meet these criteria, the
      subsidiary may be deemed to have exited the shipping tax regime and, as a
      result, a portion of the deferred tax liability may become due and payable.
      The
      Company currently believes that it is in good standing with the Norwegian
      shipping tax regime.





**11.**
            **Debt:**





The
      Company’s debt consists of the following at June 30, 2006 and December 31, 2005
      (in thousands):




17
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




**June
                30, 2006**
            
            **December
                31, 2005**NOK
                Revolver, bearing interest at NIBOR (Norwegian InterbankOffered
                Rate) plus a margin (weighted average interest rate of
                5.0%at
                June 30, 2006) and collateralized by certain marine vessels. Thisfacility's
                current availability reduces in 13 semi-annual installments of NOK40
                million ($6.4 million) beginning March 2003 with balance of thecommitment
                expiring September 2009.
            
            $
            20,894
            
            $
            16,310NOK
                Term loan, bearing interest at NIBOR (Norwegian Interbank Offered
                Rate)plus
                a margin (5.0% at June 30, 2006), collateralized by two
                marinevessels,
                reducing in 5 semi-annual installments beginning June 30,
                2004by
                NOK 7.5 million ($1.2 million) with the balance of the commitmentexpiring
                June 2006.
            
            
            -
            
            
            17,7926.11%
                Notes, bearing interest at 6.11%, principal and interest due in30
                semi-annual installments, maturing April 2014, collateralized bytwo
                marine vessels.
            
            
            10,061
            
            
            10,6906.08%
                Notes, bearing interest at 6.08%, principal and interest due in16
                semi-annual installments, maturing September 2006, collateralizedby
                a marine vessel.
            
            
            625
            
            
            1,250Fresh-start
                debt premium
            
            
            462
            
            
            49632,042
            
            
            46,538Less
                current maturities
            
            
            22,777
            
            
            36,610Long-term
                debt
            
            $
            9,265
            
            $
            9,928





Maturities
      on debt during the six month period ending December 31, 2006, the next five
      subsequent years and thereafter are as follows (in thousands):





**Period**
            
            **Amount**6
                Months ending December 31, 2006
            
            $
            22,14812
                months ending December 31, 2007
            
            
            1,25812
                months ending December 31, 2008
            
            
            1,25812
                months ending December 31, 2009
            
            
            1,25812
                months ending December 31, 2010
            
            
            1,25812
                months ending December 31, 2011
            
            
            1,258Thereafter
            
            
            3,142$
            31,580Fresh-start
                debt premium (1)
            
            
            462$
            32,042





(1)
      During the application of fresh-start accounting, the Company recorded a
      fair-value adjustment to its fixed rate 6.11% Notes and 6.08% Notes of
      approximately $0.5 million as a result of current interest rates being
      lower than the Company’s stated interest rates on its fixed-rate debt. Fair
      value was determined using discounted future cash flows based on quoted market
      prices, where available, on its current incremental borrowing rates for similar
      types of borrowing arrangements as of the Exit Date. This premium will be
      amortized over the remaining life of the debt using the effective interest
      rate
      method, which will lower future interest expense.





On
      June
      26, 2003, the Company entered into the NOK Term Loan payable in Norwegian Kroner
      (“NOK”) in the amount of NOK 150.0 million ($24.1 million at June 30, 2006).
      Amounts borrowed under the NOK Term Loan bear interest at NIBOR plus 2.0% (5.0%
      at June 30, 2006). The NOK Term Loan is required to be repaid in five
      semi-annual repayments of NOK 7.5 million ($1.2 million), with the first payment
      having occurred on September 30, 2004, and a final payment of NOK 112.5 million
      ($18.1 million) on June 30, 2006. The Company paid the final payment of NOK
      112.5 million ($18.1 million) on June 30, 2006.





18
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




In
      April
      2002, the Company amended the NOK 650 million ($104.5 million) NOK Revolver
      by
      increasing the capacity to NOK 800 million ($128.6 million) and revising
      reductions to the facility amount to provide for NOK 40 million ($6.4 million)
      reductions every six months starting in March 2003. The NOK Revolver provides
      for a NOK 280 million ($45.0 million) balloon payment in September of 2009.
      The
      amended credit facility is collateralized by mortgages on 11 North Sea class
      vessels. The amended bank facility contains covenants that require the North
      Sea
      operating unit to maintain certain financial ratios and places limits on the
      operating unit’s ability to create liens, or merge or consolidate with other
      entities. Since the facility has both a subjective acceleration clause (material
      adverse change clause) and the facility replaces short-term advances with other
      short-term advances, the entire outstanding balance of the credit facility
      is
      classified as a current liability in accordance with SFAS No. 6. In connection
      with the sale of two PSV vessels described in 2005, with the consent of its
      lenders under its U.S. Credit Facility, the Company reduced the availability
      of
      the NOK Revolver by NOK 20 million ($3.2 million) on May 12, 2005. The Company
      further reduced the availability of the NOK Revolver by NOK 34 million ($5.5
      million) on June 30, 2006 when it sold two AHTS vessels and two PSV vessels
      its
      minority owned consolidated subsidiary, Eastern Marine Services Limited or
      (“EMSL”). At June 30, 2006, the Company had NOK 130 million ($20.9 million)
      outstanding under this facility.




In
      1998,
      Trico Marine International, Inc., the Company’s special-purpose subsidiary,
      issued $10.0 million of 6.08% notes due 2006 (the “6.08% Notes”), to finance the
      construction of the SWATH crew boat, of which $0.6 million is outstanding
      at  June
      30,
      2006. The Company will be required to repay the outstanding portion of the
      6.08%
      notes if the SWATH crew boat, which is currently held for sale, is sold. In
      1999, the subsidiary issued $18.9 million of 6.11% notes due 2014 (the “6.11%
      Notes”), two finance the construction of two supply vessels, of which $10.1
      million is outstanding at June 30, 2006. The special-purpose subsidiary is
      100%
      owned by a subsidiary of the Company and is consolidated in the Company’s
      condensed consolidated financial statements. Both notes are guaranteed by the
      Company and the U.S. Maritime Administration and secured by first preferred
      mortgages on three vessels.





**12.**
            **Employee
                benefit plans:**





Substantially
      all of the Company’s Norwegian and United Kingdom employees are covered by a
      number of non-contributory, defined benefit pension plans. Benefits are based
      primarily on participants’ compensation and years of credited service. The
      Company uses an October 31 measurement date for Norwegian pension plans. The
      Company’s policy is to fund contributions to the plans based upon actuarial
      computations. The United Kingdom employees are covered by a non-contributory
      multi-employer defined benefit plan.





The
      Company made funding contributions as follows for the three months ended June
      30, 2006 and 2005 (in thousands):





**Three
                months ended****June
                30, 2006**
            
            **June
                30, 2005**Norwegian
                Pension Plan
            
            $
            262
            
            $
            206United
                Kingdom Defined Benefit Plan
            
            
            65
            
            
            119Total
                Contributions
            
            $
            327
            
            $
            325





The
      Company made funding contributions as follows for the six months ended June
      30,
      2006, the period from March 14, 2005 through June 30, 2005 and the period from
      January 1, 2005 through March 14, 2005 (in thousands):





**Successor**
              |
              **Predecessor****Company**
              |
              **Company****Period
                  from**
              |
              **Period
                  from****Six
                  months**
              
              **March
                  15, 2005**
              |
              **January
                  1, 2005****ended**
              
              **through**
              |
              **through****June
                  30, 2006**
              
              **June
                  30, 2005**
              |
              **March
                  14, 2005**Norwegian
                  Pension Plan
              
              $
              423
              
              $
              206
              |
              $
              188United
                  Kingdom Defined Benefit Plan
              
              
              103
              
              
              119
              |
              
              127Total
                  Contributions
              
              $
              526
              
              $
              325
              |
              $
              315





The
      remainder of 2006 estimated funding contributions for the Norwegian Pension
      Plan
      and the United Kingdom Defined Benefits are approximately $0.9 million and
      $0.1
      million, respectively.




19
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




Components
      of net periodic benefit cost are as follows for the three months ended June
      30,
      2006 and 2005 (in thousands):





**Three
                months ended****June
                30, 2006**
            
            **June
                30, 2005**Service
                cost
            
            $
            259
            
            $
            95Interest
                cost
            
            
            40
            
            
            33Return
                on plan assets
            
            
            (69
            )
            
            (55
            )Social
                security contributions
            
            
            15
            
            
            15Recognized
                net actuarial loss
            
            
            3
            
            
            2Net
                periodic benefit cost
            
            $
            248
            
            $
            90





Components
      of net periodic benefit cost are as follows for the six months ended June 30,
      2006, the period from March 15, 2005 through June 30, 2005 and the period from
      January 1, 2005 through March 14, 2005 (in thousands):





**Successor**
            |
            **Predecessor****Company**
            |
            **Company****Period
                from**
            |
            **Period
                from****Six
                months**
            
            **March
                15, 2005**
            |
            **January
                1, 2005****ended**
            
            **through**
            |
            **through****June
                30, 2006**
            
            **June
                30, 2005**
            |
            **March
                14, 2005**||Service
                cost
            
            $
            509
            
            $
            113
            |
            $
            76Interest
                cost
            
            
            79
            
            
            39
            |
            
            27Return
                on plan assets
            
            
            (136
            )
            
            (65
            )|
            
            (44
            )Social
                security contributions
            
            
            29
            
            
            18
            |
            
            12Recognized
                net actuarial loss
            
            
            5
            
            
            2
            |
            
            2Net
                periodic benefit cost
            
            $
            486
            
            $
            107
            |
            $
            73





**13.**
            **Contingent
                litigation:**





On
      December 21, 2004 (the “Commencement Date”), Trico Marine Services, Inc. and two
      of its U.S. subsidiaries, Trico Marine Assets, Inc. and Trico Marine Operators,
      Inc., (collectively, the “Debtors”) filed “prepackaged” voluntary petitions for
      reorganization under Chapter 11 of the Bankruptcy Code in the United States
      Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”)
      under case numbers 04-17985 through 04-17987. The reorganization was being
      jointly administered under the caption “In re Trico Marine Services, Inc., et
      al., Case No. 04-17985.” On March 15, 2005, we satisfied all conditions to the
      effectiveness of the plan of reorganization and emerged from protection of
      Chapter 11. In July 2005, Steven and Gloria Salsberg, two holders of our
      warrants to purchase common stock, commenced an adversary proceeding against
      the
      Debtors in the Bankruptcy Court under proceeding number 05-02313 seeking
      revocation of the Debtors’ confirmed and substantially consummated plan of
      reorganization. The basis of their complaint was that the plan was approved
      based on inaccurate information provided by the Company. On January 6, 2006,
      the
      Bankruptcy Court granted our motion to dismiss the adversary proceeding. The
      Bankruptcy Court did grant the plaintiffs leave to amend their complaint to
      assert claims that do not seek revocation of the plan of reorganization. On
      January 23, 2006, plaintiffs filed additional pleadings asking the Bankruptcy
      Court to reconsider its dismissal of the proceedings. The Debtors filed their
      response on February 6, 2006. The Bankruptcy Court declined to vacate its order
      of dismissal while it deliberated on the plaintiffs’ request for
      reconsideration.





20
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**




On
      May 5,
      2006, the court reaffirmed its prior ruling dismissing the adversary complaint
      and allowing plaintiffs to file an amended complaint. On June 5, 2006,
      plaintiffs filed an amended complaint and on June 16, 2006, plaintiffs moved
      to
      amend their amended complaint. On July 10, 2006, the Debtors filed an opposition
      to plaintiff’s motion to amend. The motion will be heard on August 10,
      2006.





We
      believe that plaintiffs' allegations are without merit, and we intend to defend
      the action vigorously.





**14.**
            **Segment
                and geographic
                information:**





The
      Company is a provider of marine vessels and related services to the oil and
      gas
      industry. Substantially all revenues result from the charter of vessels owned
      by
      the Company. The Company’s reportable segments are based on criteria provided by
      SFAS No. 131, “Disclosures about Segments of an Enterprise and Related
      Information” (“SFAS No. 131”). The accounting policies of the segments are the
      same as those described in the summary of significant accounting policies (read
      the Company’s December 31, 2005 Annual Report on Form 10-K for a description of
      the significant policies) except for purposes of income taxes and intercompany
      transactions and balances. Additionally, segment data includes intersegment
      revenues, receivables and payables, and investments in consolidated
      subsidiaries. The Company evaluates performance based on operating income
      (loss). The U.S. segment represents the domestic operations; the North Sea
      segment includes operations in Norway and the United Kingdom, and the Other
      segment includes primarily the Company’s operations in West Africa, Mexico and
      Brazil, which are currently combined for operating purposes.





During
      the second quarter of 2005, the Company determined it analyzes its segments
      based upon operating income (loss) and has presented all periods accordingly.
      Previously, the Company utilized a measure of net income (loss) in analyzing
      the
      results of each segment.





Financial
      information for the three months ended June 30, 2006 and 2005 by segment is
      as
      follows (in thousands):





**Three
                months ended June 30, 2006**
            
            **U.S.**
            
            **North
                Sea**
            
            
            
            **Other**
            
            **Totals**Revenues
                from external customers
            
            $
            26,980
            
            $
            24,979
            
            
            (1
            )
            $
            9,497
            
            $
            61,456Intersegment
                revenues
            
            
            454
            
            
            -
            
            
            
            
            
            -
            
            
            454Operating
                income
            
            
            12,351
            
            
            6,872
            
            
            (1
            )
            
            1,026
            
            
            20,249Segment
                total assets (at end of period)
            
            
            236,822
            
            
            245,549
            
            
            
            
            
            57,396
            
            
            539,767**Three
                months ended June 30, 2005**
            
            
            **U.S.**
            
            
            **North
                Sea**
            
            
            
            
            
            **Other**
            
            
            **Totals**Revenues
                from external customers
            
            $
            11,531
            
            $
            24,786
            
            
            
            
            $
            7,273
            
            $
            43,590Intersegment
                revenues
            
            
            -
            
            
            -
            
            
            
            
            
            (433
            )
            
            (433
            )Operating
                (loss) income
            
            
            (1,828
            )
            
            10,462
            
            
            
            
            
            420
            
            
            9,054Segment
                total assets (at end of period)
            
            
            172,339
            
            
            206,374
            
            
            
            
            
            27,222
            
            
            405,935(1)
                Includes amortization of non-cash deferred revenues of $1.3 million
                and
                $3.2 million for the three months ended June 30, 2006 and 2005,
                respectively.





Financial
      information for the six months ended June 30, 2006, the period ended March
      15,
      2005 through June 30, 2006 and the period ended January 1, 2005 through March
      14, 2005 by segment is as follows (in thousands):




21
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**


**Six
                months ended June 30, 2006**
            
            **U.S.**
            
            **North
                Sea**
            
            
            
            **Other**
            
            **Totals**Revenues
                from external customers
            
            $
            51,005
            
            $
            44,999
            
            
            (1
            )
            $
            17,284
            
            $
            113,288Intersegment
                revenues
            
            
            967
            
            
            -
            
            
            
            
            
            -
            
            
            967Operating
                income
            
            
            22,462
            
            
            14,316
            
            
            (1
            )
            
            3,024
            
            
            39,802**Period
                from March 15, 2005 through June 30, 2005**
            
            
            **U.S.**
            
            
            **North
                Sea**
            
            
            
            
            
            **Other**
            
            
            **Totals**Revenues
                from external customers
            
            $
            13,310
            
            $
            30,031
            
            
            (1
            )
            $
            8,523
            
            $
            51,864Intersegment
                revenues
            
            
            -
            
            
            -
            
            
            
            
            
            (497
            )
            
            (497
            )Operating
                (loss) income
            
            
            (3,872
            )
            
            13,511
            
            
            (1
            )
            
            526
            
            
            10,165**Predecessor
                Company****Period
                from January 1, 2005 through March 14, 2005**
            
            
            **U.S.**
            
            
            **North
                Sea**
            
            
            
            
            
            **Other**
            
            
            **Totals**Revenues
                from external customers
            
            $
            8,171
            
            $
            16,528
            
            
            
            
            $
            5,187
            
            $
            29,886Intersegment
                revenues
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            -Operating
                (loss) income
            
            
            (2,996
            )
            
            4,220
            
            
            
            
            
            (345
            )
            
            879(1)
                Includes amortization of non-cash deferred revenues of $2.6 million
                and
                $3.8 million for the six months ended June 30, 2006 and the period
                from
                March 15, 2005 through June 30, 2005,
                respectively.





A
      reconciliation of segment data to consolidated data as of June 30, 2006 and
      2005
      is as follows (in thousands):





**June
                30, 2006**
            
            **June
                30, 2005**Total
                assets for reportable segments
            
            $
            539,767
            
            $
            405,935Elimination
                of intersegment receivables
            
            
            (30,055
            )
            
            (10,083
            )Elimination
                of investment in subsidiaries
            
            
            (107,565
            )
            
            (72,112
            )Total
                consolidated assets
            
            $
            402,147
            
            $
            323,740





**15.**
            **New
                accounting standards:**





In
      May
      2005, the FASB issued FAS No. 154, “Accounting Changes and Error
      Corrections - a replacement of APB Opinion No. 20 and FAS No. 3.” This
      statement replaces APB Opinion No. 20, Accounting Changes, and FASB
      Statement No. 3, Reporting Accounting Changes in Interim Financial
      Statements, and changes the requirements for the accounting for and reporting
      of
      a change in accounting principle. This statement requires retrospective
      application to prior periods’ financial statements of changes in accounting
      principle, unless it is impracticable to determine either the period-specific
      effects or the cumulative effect of the change. Retrospective application is
      defined as reporting results as if that principle had always been used or as
      the
      adjustment of previously issued financial statements to reflect a change in
      the
      reporting entity. This statement shall be effective for accounting changes
      and
      corrections of errors made in fiscal years beginning December 15, 2005 and
      after. The adoption of this statement does not have a material impact on the
      Company’s financial statements or results of operations unless a future change
      in accounting principle is made.





In
      July
      2006, FASB affirmed its previous decision to make the recognition provisions
      of
      its proposed standard, Employers' Accounting for Defined Benefit Pension and
      Other Postretirement Plans, an amendment of FASB Statements No 87, 88, 106
      and
      132(R), effective for fiscal years ending after December 15, 2006. This will
      require the Company to apply the new standard to its 2006 year-end financial
      statements and recognize the funded status of pension and other postretirement
      benefit plans of the balance sheet. The Company is currently analyzing the
      requirements of this standard, but does not anticipate a material impact on
      the
      financial statements.





In
      July 2006, the FASB issued Financial Interpretation No. 48 “Accounting for
      Uncertainty in Income Taxes” (“FIN 48”), which clarifies the accounting and
      disclosures for uncertain tax positions recognized in a company’s financial
      statements in accordance with SFAS No. 109 “Accounting for Income Taxes”. FIN 48
      provides guidance on recognizing, measuring, presenting and disclosing in the
      financial statements uncertain tax positions that a company has taken or expects
      to take on a tax return. FIN 48 is effective for the Company as of January
      1,
      2007. The Company is currently assessing the impact, if any, of FIN 48 on its
      results of operations or financial position.





22
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**


**16.**
            **Commitments:**





At
      March
      31, 2006, the Company entered into a contract to construct a Marin Teknikk
      Design MT6009 MKII platform supply vessel for a total cost of approximately
      NOK
      167 million ($26.8 million as of June 30, 2006). This vessel will incorporate
      Dynamic Positioning 2 (DP-2 certification) and Clean and Comfort Class and
      will
      have large carrying capacity anticipated to be 3,300 deadweight tons. The
      vessel’s estimated completion and expected delivery date will be the in fourth
      quarter of 2007. Under the terms of the contract, the Company placed an initial
      20% deposit in April 2006 and will pay the remaining 80% at delivery date.
      The
      initial 20% deposit of NOK 33.4 million ($5.4 million as of June 30, 2006)
      and
      related capitalized interest of NOK 0.4 million ($0.1 as of June 30, 2006)
      is
      currently classified on the condensed consolidated balance sheet as
      construction-in-progress. The purchase price is subject to certain adjustments
      based on the timing of delivery and the vessel’s specifications upon delivery.
      The following table sets forth adjustments to the purchase price with respect
      to
      delivery of the vessel:





Delivery
                Date - 11/30/2007
            Adjustments
                to the Purchase Price1st
                - 15th day after Delivery Date
            No
                reduction in Purchase Price16th
                - 45th day after Delivery Date
            NOK
                20,000 per day reduction in Purchase Price46th
                - 180th day after Delivery Date
            NOK
                25,000 per day reduction in Purchase PriceEarlier
                than Delivery Date
            NOK
                20,000 increase in Purchase Price for every day Vessel is delivered
                earlier than Delivery Date





As
      part
      of the contract, the Company will have the option to purchase a second vessel
      at
      a later date. We plan to fund the construction of the vessel from cash and
      cash
      flows from operations.





**17.**
            **Minority
                owned consolidated
                subsidiary:**





On
      June
      30, 2006, the Company entered into a long term shareholders agreement with
      a
      wholly owned subsidiary of China Oilfield Services Limited (“COSL”) for the
      purpose of providing marine transportation services for offshore oil and gas
      exploration, production and related construction and pipeline projects mainly
      in
      Southeast Asia. As a result of this agreement, the companies formed a limited
      liability company, Eastern Marine Services Limited ("EMSL") located in Hong
      Kong. The Company owns a 49% interest in EMSL and COSL owns a 51% interest.




EMSL
      will
      be managed pursuant to the terms of its shareholders agreement which provides
      for equal representation on the board and management. In exchange for its 49%
      interest in EMSL, the Company agreed to contribute fourteen vessels. Ten of
      these vessels were contributed in the first closing on June 30, 2006. During
      the
      second closing, scheduled to occur in January 2008, the Company will contribute
      the remaining four supply vessels. COSL made a capital contribution to EMSL
      of
      approximately $20.9 million in cash in exchange for its 51% interest. In
      exchange for the Company’s contribution of 14 vessels EMSL paid the Company
      approximately $17.9 million, $3.5 million of which is held in escrow until
      the
      second closing. Of the initial fleet of ten vessels, five Gulf class supply
      vessels will be operating in China under bareboat arrangements between COSL
      and
      EMSL and the Company will bareboat the remaining five vessels from EMSL until
      the later of December 31, 2007 or the expiry of any then existing contracts
      for
      such vessels. Upon the second closing, another two Gulf class supply vessels
      will be operating in China under bareboat arrangements between COSL and EMSL
      and
      the remaining two vessels in EMSL's fleet will be targeted for operations
      in  Southeast Asia markets. Upon expiry of bareboat arrangements with the
      Company, those five vessels will also be targeted for operations
      in Southeast Asia markets by EMSL.





The
      Company followed the guidance in FASB issued Interpretation No. 46R (revised
      December 2003), Consolidation of Variable Interest Entities” (“FIN 46R”) and has
      determined that EMSL should be consolidated by the Company. The focus of FIN
      46R
      is on controlling financial interests that may be achieved through arrangements
      that do not involve voting interests. FIN 46R concludes that in the absence
      of
      clear control through voting interest, a company’s exposure (variable interest)
      to the economic risks and potential rewards from the variable interest entity
      are the best evidence of control. The entity that holds the majority interest
      in
      the variable interest entity is considered the primary beneficiary and is
      required to consolidate the variable interest entity.





23
 **TRICO
            MARINE SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2006**
 **(Unaudited)**


The
      Company has determined that EMSL is a variable interest entity and has concluded
      that at inception it was the primary beneficiary based on terms in the
      shareholders agreement and the potential to provide subordinated financial
      support as required per the shareholders agreement to fund, in proportion to
      the
      shareholders' respective ownership percentages, project start-up costs
      associated with the development and establishment of EMSL to the extent they
      exceed the working capital of EMSL.




The
      Company contributed marine vessels and other assets to EMSL with a historical
      book value of $30.9 million because the entities are under common control.
      COSL
      contributed $20.9 million, of which $17.9 million was then paid to Trico. The
      total assets of EMSL totaled $33.9 million. A $3.6 million gain was generated
      by
      the Company based on the difference between the cash proceeds of $20.9 million
      and 51 % of the book value of the EMSL assets. The Company has determined that
      gain recognition would be inappropriate based on the guidance in SAB Topic
      5H
      and SAB 84 and as a result has recorded the $3.6 million as additional
      paid-in-capital and decreased the non-controlling interest on the condensed
      consolidated balance sheet.





The
      following table shows the impact to the Condensed Consolidated Balance Sheet
      as
      of June 30, 2006:





*(in
                thousands)*
            
            **June
                30, 2006**Cash
            
            $
            17,442Restricted
                cash
            
            
            3,468**Total
                assets**
            
            **$**
            **20,910**Non-controlling
                interest
            
            $
            17,295Additional
                paid-in-capital
            
            
            3,615**Total
                liabilities and shareholder’s equity**
            
            **$**
            **20,910**





As
      of
      June 30, 2006, EMSL had approximately $3.0 million in cash available for working
      capital.




**18.**
            **Subsequent
                Events:**





On
      July
      6, 2006, the Company announced the appointment of Robert V. O’Connor as Senior
      Vice President of Business and Strategic Development. As part of Mr. O’Connor’s
      employment agreement, he will receive 10,000 shares of restricted stock with
      forfeiture restrictions that will lapse 100% on the third anniversary of the
      date of grant; and options to purchase 10,000 shares of the Company’s common
      stock, vesting ratably over three years beginning on the first anniversary
      of
      the date of grant.


24


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





**Primary
      Factors Affecting our Results of Operations**





Our
      financial condition and results of operations are impacted primarily by “day
      rates” and “vessel utilization”. Typically, marine support vessels are priced to
      the customer on the basis of a daily rate, or “day rate,” regardless of whether
      a charter contract is for several days or several years. The “average day rate”
of a vessel, or class of vessel, is calculated by dividing its revenues by
      the
      total number of days such vessel was under contract during a given period.
      A
      vessel’s utilization is the number of days in a period the vessel is under
      contract as a percentage of the total number of days in such
      period.





*Day
      Rates and Utilization.* Our
      results of operations are affected primarily by our day rates and fleet
      utilization. Day rates and utilization are primarily driven by:





·
            demand
                for our vessels;


·
            customer
                requirements;


·
            our
                available vessels; and


·
            competition.





The
      level
      of offshore oil and gas drilling activity primarily determines the demand for
      our vessels, which is typically influenced by exploration and development
      budgets of oil and gas companies. The number of drilling rigs in our market
      areas is a leading indicator of drilling activity. In addition, construction
      and
      repair activity in the Gulf of Mexico resulting from the two major hurricanes
      in
      the third quarter of 2005 has been a significant driver of rates and utilization
      increases in that market.





Overall,
      the size, configuration, age and capabilities of our fleet, relative to our
      competitors and customer requirements, determine our day rates and utilization.
      In the case of supply vessels and platform
      supply vessels or (“PSVs”),
      their deck space and liquid mud and dry bulk cement capacities are important
      attributes. In certain markets and for certain customers, horsepower, dynamic
      positioning systems, and fire-fighting systems are also important requirements.
      For crew boats, size and speed are important factors.





Our
      industry is highly competitive and our day rates and utilization are also
      affected by the supply of other vessels with similar configurations and
      capabilities available in a given market area. Competition in the marine support
      services industry primarily involves:





·
            price,
                service and reputation of vessel operators, safety record and crews;
                and


·
            the
                age, quality and availability of vessels of the type and size required
                by
                the customer.





*Operating
      Costs.* Our
      operating costs are primarily a function of the active fleet size, which
      excludes our cold-stacked vessels. The most significant direct operating costs
      are wages paid to vessel crews, maintenance and repairs, marine inspection
      costs, supplies and marine insurance. When we charter vessels, we are typically
      responsible for normal operating expenses, repairs, wages and insurance, while
      our customers are typically responsible for mobilization expenses, including
      fuel costs.





**Management’s
      Outlook**





The
      oil
      and gas industry continues to experience strong growth due to increased demand
      for energy commodities worldwide. We believe the following trends should benefit
      our operations and have a positive impact on our earnings:





·
            sustained
                higher oil and gas prices, continuing construction and repair activity,
                driven by the global economic
                environment;


·
            increasing
                demand from West Africa, Southeast Asia and other emerging markets;
                and


·
            increasing
                awareness of threats to the reliability of supply in major oil producing
                nations such as the United States, the Middle East and
                Nigeria.


·
            increasing
                demand for vessels due to increased activity in areas ancillary to
                existing markets, including, but not limited to, the Barents Sea





The
      markets in which we operate have responded to the increase in oil and gas
      activity, resulting in higher utilization and day rates. We expect international
      drilling and domestic production and repair activity will continue at a robust
      pace for 2006, which should continue to enable us to maintain current day rates
      and productive utilization levels for our vessels.





25




To
      facilitate our expansion into emerging markets, we entered into a partnership
      in
      Southeast Asia, EMSL, during June 2006. This partnership will lower the cost
      of
      entry into this region and leverage the relationships and experience of the
      leading oilfield services provider in offshore Southeast Asia. We also mobilized
      two additional vessels during the second quarter of 2006 into West Africa.
      We
      believe that these two initiatives will allow us to effectively deploy a portion
      of our currently operating and stacked vessels into growing regions and
      strategically reduce our vessel count in more mature markets.





In
      the
      future, we expect that emerging international markets such as West Africa and
      Southeast Asia, among other regions, will command a higher percentage of
      worldwide oil and gas exploration, development, production and related spending
      and will result in greater demand for our vessels. To capitalize on these
      long-term growth opportunities, we intend to deploy existing active and stacked
      vessels as well as new vessels to these regions. During July, we implemented
      organizational changes to our management structure to help us realize these
      potential growth opportunities.





**Results
      of Operations**





The
      table
      below sets forth by vessel class, the average day rates and utilization for
      our
      vessels and the average number of vessels we operated during the periods
      indicated. Average day rates are calculated before the effect of amortization
      of
      deferred revenue on unfavorable contracts.





**Three
                months ended**
            
            **Six
                months ended****Month
                of**
            
            **June
                30,**
            
            **June
                30, 2005****July
                2006**
            
            **2006**
            
            **2005**
            
            **2006**
            
            **2005**(4)Average
                Day Rates:(1)PSV/AHTS
                (North Sea class)
            
            $
            22,676
            
            $
            19,245
            
            $
            16,147
            
            $
            17,531
            
            $
            15,956Supply
                (Gulf class)
            
            
            11,779
            
            
            11,665
            
            
            5,727
            
            
            10,940
            
            
            5,474Crew/line
                handling
            
            
            5,397
            
            
            5,217
            
            
            2,208
            
            
            4,150
            
            
            2,215Utilization:(2)(3)PSV/AHTS
                (North Sea class)
            
            
            95
            %
            
            93
            %
            
            89
            %
            
            94
            %
            
            89
            %Supply
                (Gulf class)
            
            
            69
            %
            
            65
            %
            
            58
            %
            
            64
            %
            
            55
            %Crew/line
                handling
            
            
            85
            %
            
            88
            %
            
            89
            %
            
            87
            %
            
            90
            %Average
                number of Vessels:PSV/AHTS
                (North Sea class)
            
            
            16.0
            
            
            16.0
            
            
            17.2
            
            
            16.0
            
            
            17.6Supply
                (Gulf class)
            
            
            44.0
            
            
            44.2
            
            
            48.0
            
            
            44.6
            
            
            48.0Crew/line
                handling
            
            
            8.0
            
            
            8.0
            
            
            17.0
            
            
            9.5
            
            
            17.0





(1)
            Average
                vessel day rate is calculated by dividing a vessel’s total revenues in a
                period by the total number of days such vessel was under contract
                during
                such period.


(2)
            Average
                vessel utilization is calculated by dividing the total number of
                days for
                which a vessel is under contract in a period by the total number
                of days
                in such period.


(3)
            Stacked
                vessels for the Gulf of Mexico supply vessel class are included in
                the
                average number of vessels and the calculation of utilization. Excluding
                stacked vessels, our utilization was ---92%, 87%, 93%, 87% and 90%
                for the
                month of July 2006, the three month periods ended June 30, 2006 and
                2005
                and the six months ended June 30, 2006 and 2005,
                respectively.


(4)
            Includes
                periods of both the Successor and Predecessor companies, before and
                after
                our reorganization.





**Comparison
      of day rates and utilization during the three and six months ended June 30,
      2006
      and 2005**





For
      our
      North Sea class PSVs and AHTSs, average day rates increased 19% and 10% and
      utilization increased 4% and 6% for the three and six months ended June 30,
      2006, respectively, compared to the same periods in 2005. The increased average
      day rates can be attributed to increased demand for North Sea vessels during
      2006 caused by shortages in the supply of vessels and increased exploration
      and
      production activities worldwide due to more attractive oil and gas prices.
      The
      impact of very strong market conditions in the North Sea during 2006 was
      partially offset by the fact that we have a majority of our North Sea vessels
      under medium or long-term contracts at day rates below current market
      prices.


26




For
      the
      Gulf class supply vessels, average day rates increased 104% and 100% and
      utilization increased 12% and 16% for the three and six months ended June 30,
      2006, respectively, compared to the same periods in 2005. The increase in both
      day rates and utilization is a result of the increased demand due to increased
      drilling activities and construction work, more attractive oil and gas prices
      and increased work related to repairs from hurricane damage in September of
      2005.





For
      our
      Crew/line handlers average day rates increased 136% and 87% for the three and
      six months ended June 30, 2006, respectively, compared to the same periods
      in
      2005. Utilization during the three and six month period ended June 30, 2006
      remained relatively flat compared to the same periods in 2005. The increased
      day
      rates are primarily attributed to the sale of the three crew boats and the
      transfer of one crew boat to held for sale that were operated under a bareboat
      agreement. Under a bareboat agreement, the customer receives a significantly
      reduced day rate, and in return, the customer is responsible for crewing and
      other provisions for the vessel. In prior periods, day rates for our crew boats
      and line handler may not be comparable to those of our competitors because
      three
      to four of our vessels were under bareboat charter contracts, which
      significantly reduced the average day rate for the class.





**Comparison
      of the Results for the Quarter Ended June 30, 2006 to the Quarter Ended June
      30,
      2005**





*(in
                thousands)*
            
            **For
                the Three Months Ended June 30,****2006**
            
            **2005**
            
            **Variance**
            
            **%
                Change****Revenues:**Charter
                hire
            
            $
            59,897
            
            $
            39,945
            
            $
            19,952
            
            
            50
            %Amortization
                of non-cash deferred revenues
            
            
            1,313
            
            
            3,168
            
            
            (1,855
            )
            
            (59
            )%Other
                vessel income
            
            
            246
            
            
            44
            
            
            202
            
            
            459
            %Total
                revenues
            
            
            61,456
            
            
            43,157
            
            
            18,299
            
            
            42
            %**Operating
                expenses:**Direct
                vessel operating expenses and other
            
            
            29,019
            
            
            22,959
            
            
            6,060
            
            
            26
            %General
                and administrative
            
            
            6,717
            
            
            5,062
            
            
            1,655
            
            
            33
            %Depreciation
                and amortization expense
            
            
            6,426
            
            
            6,360
            
            
            66
            
            
            1
            %Insurance
                recovery from a loss on assets held for sale
            
            
            (605
            )
            
            -
            
            
            (605)
            
            
            (100)
            %Gain
                on sales of assets
            
            
            (350
            )
            
            (278
            )
            
            (72
            )
            
            26
            %Total
                operating expenses
            
            
            41,207
            
            
            34,103
            
            
            7,104
            
            
            21
            %Operating
                income
            
            
            20,249
            
            
            9,054
            
            
            11,195
            
            
            124
            %Interest
                expense
            
            
            (403
            )
            
            (2,186
            )
            
            1,783
            
            
            (82
            )%Amortization
                of deferred financing costs
            
            
            (46
            )
            
            (94
            )
            
            48
            
            
            (51
            )%Other
                income (loss) , net
            
            
            426
            
            
            (165
            )
            
            591
            
            
            (358
            )%Income
                before income taxes
            
            
            20,226
            
            
            6,609
            
            
            13,617
            
            
            206
            %Income
                tax expense
            
            
            8,087
            
            
            3,044
            
            
            5,043
            
            
            166
            %Net
                income
            
            $
            12,139
            
            $
            3,565
            
            $
            8,574
            
            
            241
            %





*Charter
      Hire Revenues* .
      Charter
      hire revenue increased $20.0 million primarily due to increased day rates and
      utilization discussed previously above and a weaker U.S. dollar relative to
      the
      Norwegian Kroner, which caused a $0.7 million positive impact on
      revenues.





*Amortization
      of Non-Cash Deferred Revenues* .
      The
      amortization of non-cash deferred revenue decreased $1.9 million primarily
      due
      to a decrease in revenues related to the deemed unfavorable contracts recorded
      at the Exit Date. This amortization was required after several of our contracts
      were deemed to be unfavorable compared to market conditions on the Exit Date,
      thus creating a liability required to be amortized as revenue over the remaining
      contract periods.





27


*Direct
      Vessel Operating Expenses.* Direct
      vessel operating expenses increased $6.1 million primarily due to:


·
            increased
                marine inspection costs of $3.5 million due to the timing and mix
                of
                regulatory dry docks. During the quarter we completed maintenance
                and
                classification work on nine vessels, including five North Sea class
                vessels. Generally, work on our larger North Sea class vessels is
                more
                costly than on our Gulf class vessels, so the impact of mix can be
                more
                significant than the number of vessels dry docked. As result of our
                accounting policy to expense maintenance and classification costs
                as
                incurred, the timing of a vessel’s regulatory dry docking and the class of
                vessels undergoing regulatory dry docking may result in fluctuations
                in
                direct vessel operating expenses when compared to prior
                periods;


·
            increased
                mobilization costs of $1.1 million which includes the related labor
                expenses, maintenance and repairs expenses and supplies and miscellaneous
                expenses related to the mobilization of two vessels into West Africa;


·
            increased
                labor costs of $0.8 million as a result of increased utilization
                and an
                increase in the average pay rate for our Gulf of Mexico crew members;


·
            increased
                insurance costs of $0.6 million due to our quarterly insurance analysis,
                which resulted in an adjustment to increase our insurance provision;
                and


·
            a
                weaker U.S. dollar relative to the Norwegian Kroner resulting in
                a $0.4
                million increase in direct operating
                expenses.





*General
      and Administrative Expenses* .
      General
      and administrative expenses increased $1.7 million primarily due
      to:


·
            increased
                accrued personnel costs of $0.5 million resulting from the adoption
                of an
                annual incentive awards plan in the fourth quarter of 2005 and increased
                salary expense related to new senior
                management;


·
            increased
                stock compensation expenses of $0.6 million as a result of vesting
                of
                restricted stock grants;


·
            increased
                infrastructure costs of $0.2 million in West Africa;
                and


·
            increased
                professional fees of $0.3 million necessary to consummate the Southeast
                Asia partnership and to recruit and retain senior management.





*Insurance
      recovery from a loss on assets held for sale.* The
      Company recognized $0.6 million in insurance recoveries as a result of greater
      than anticipated insurance recoveries on assets that were that were damaged
      in
      2005 and impaired and transferred to held for sale in the fourth quarter of
      2005.





*Gain
      on Sale of Assets.* The
      $0.3
      million gain on sale of assets during the second quarter of 2006 is primarily
      due to the sale of a cold stacked supply vessel.





*Interest
      Expense.* Interest
      expense decreased $1.8 million primarily due to the repayment of our U.S. Credit
      Facility in the fourth quarter of 2005 and a decrease in our average debt
      outstanding, which was partially offset by higher Norwegian variable interest
      rates on our Norwegian debt.





*Other
      Income.* Other
      income increased $0.6 million primarily due to increased interest income due
      to
      an increase in cash equivalents.





*Income
      Tax Expense.* We
      recorded a consolidated income tax expense in the second quarter of 2006 of
      $8.1
      million, which is primarily related to the income generated by our U.S and
      Norwegian operations. The Company’s June 30, 2006 effective tax rate of 40%
      differs slightly from the statutory rate of 35% primarily due to state and
      foreign taxes. Included in the $8.1 million of income tax expense in the second
      quarter of 2006 is a $4.8 million tax charge with an offset to additional
      paid-in-capital from the utilization of fresh-start NOL’s. We recorded income
      tax expense in the second quarter of 2005 of $3.0 million primarily related
      to
      our Norwegian operations. In 2006 and 2005, we recognized a full valuation
      allowance against our net deferred tax asset.





**Comparison
      of the Results for the Six Months Ended June 30, 2006 to the Six Months Ended
      June 30, 2005**





The
      following financial information and discussion reflects the Predecessor and
      Successor companies’ combined financial statements for the six months ended June
      30, 2006 compared to the same period in 2005 (in thousands). The combined
      results for the six months ended June 30, 2005 represent a non-GAAP financial
      measure due to our reorganization; however, we find combining the Predecessor
      and Successor Companies’ results for the two periods to be useful when analyzing
      fluctuations. For those line items that are not comparable, we have included
      additional analysis so that the discussion is complete. The following income
      statement line items are not comparable to prior years due to our reorganization
      and fresh-start adjustments, or due to the election to change accounting
      policies upon our emergence from bankruptcy:





28


·
            Amortization
                of non-cash deferred revenues;


·
            Total
                revenues;


·
            Direct
                vessel operating expenses and other;


·
            General
                and administrative;


·
            Amortization
                of marine inspection costs;


·
            Depreciation
                and amortization expense;


·
            Total
                operating expenses;


·
            Operating
                income (loss);


·
            Income
                (loss) before income taxes; and


·
            Net
                income (loss).





|
            **Predecessor****Successor
                Company**
            |
            **Company**
            
            **Non-GAAP****Period
                from**
            |
            **Period
                from**
            
            **Combined****Six
                months**
            
            **March
                15, 2005**
            |
            **January
                1, 2005**
            
            **Results
                for the****ended**
            
            **through**
            |
            **through**
            
            **Six
                Months Ended****June
                30, 2006**
            
            **June
                30, 2005**
            |
            **March
                14, 2005**
            
            **June
                30, 2005**
            
            **Variance**
            
            **%
                Change**Revenues:
            
            
            
            
            |Charter
                hire
            
            $
            110,379
            
            $
            47,475
            |
            $
            29,869
            
            $
            77,344
            
            $
            33,035
            
            
            43
            %Amortization
                of non-cash deferred revenues
            
            
            2,582
            
            
            3,837
            |
            
            -
            
            
            3,837
            
            
            (1,255
            )
            
            (33
            )%Other
                vessel income
            
            
            327
            
            
            55
            |
            
            17
            
            
            72
            
            
            255
            
            
            354
            %Total
                revenues
            
            
            113,288
            
            
            51,367
            |
            
            29,886
            
            
            81,253
            
            
            32,035
            
            
            39
            %|Operating
                expenses:
            
            
            
            
            
            
            |Direct
                vessel operating expenses and other
            
            
            50,221
            
            
            26,962
            |
            
            16,217
            
            
            43,179
            
            
            7,042
            
            
            16
            %General
                and administrative
            
            
            12,459
            
            
            7,021
            |
            
            4,030
            
            
            11,051
            
            
            1,408
            
            
            13
            %Amortization
                of marine inspection costs
            
            
            -
            
            
            -
            |
            
            2,055
            
            
            2,055
            
            
            (2,055
            )
            
            (100
            )%Depreciation
                and amortization expense
            
            
            12,528
            
            
            7,497
            |
            
            6,703
            
            
            14,200
            
            
            (1,672
            )
            
            (12
            )%Insurance
                recovery from a loss on assets held for sale
            
            
            (605
            )
            
            -
            |
            
            -
            
            
            -
            
            
            (605
            )
            
            (100)
            %Loss
                (gain) on sales of assets
            
            
            (1,117
            )
            
            (278
            )|
            
            2
            
            
            (276
            )
            
            (842
            )
            
            305
            %Total
                operating expenses
            
            
            73,486
            
            
            41,202
            |
            
            29,007
            
            
            70,209
            
            
            3,277
            
            
            5
            %|Operating
                income
            
            
            39,802
            
            
            10,165
            |
            
            879
            
            
            11,044
            
            
            28,758
            
            
            260
            %|Reorganization
                costs
            
            
            -
            
            
            -
            |
            
            (6,659
            )
            
            (6,659
            )
            
            6,659
            
            
            (100
            )%Gain
                on debt discharge
            
            
            -
            
            
            -
            |
            
            166,459
            
            
            166,459
            
            
            (166,459
            )
            
            (100
            )%Fresh-start
                adjustments
            
            
            -
            
            
            -
            |
            
            (219,008
            )
            
            (219,008
            )
            
            219,008
            
            
            (100
            )%Interest
                expense
            
            
            (884
            )
            
            (2,680
            )|
            
            (1,940
            )
            
            (4,620
            )
            
            3,736
            
            
            (81
            )%Amortization
                of deferred financing costs
            
            
            (96
            )
            
            (112
            )|
            
            (50
            )
            
            (162
            )
            
            66
            
            
            (41
            )%Other
                income (loss), net
            
            
            659
            
            
            (10
            )|
            
            5
            
            
            (5
            )
            
            664
            
            
            (13,280
            )%Income
                (loss) before income taxes
            
            
            39,481
            
            
            7,363
            |
            
            (60,314
            )
            
            (52,951
            )
            
            92,432
            
            
            (175
            )%|Income
                tax expense
            
            
            14,964
            
            
            3,692
            |
            
            1,047
            
            
            4,739
            
            
            10,225
            
            
            (216
            )%





*Charter
      Hire Revenues*.
      Charter
      hire revenues increased $33.0 million primarily due to increased day rates
      and
      utilization discussed above. Increased charter hire revenue was partially offset
      by a stronger U.S. dollar relative to the Norwegian Kroner, which caused a
      $0.8
      million negative impact on revenues for the six months ended June 30, 2006.





*Amortization
      of Non-Cash Deferred Revenues.* The
      amortization of non-cash deferred revenue decreased $1.3 million primarily
      due
      to a decrease in revenues related to the deemed unfavorable contracts recorded
      at the Exit Date. This amortization was required after several of our contracts
      were deemed to be unfavorable compared to market conditions on the Exit Date,
      thus creating a liability required to be amortized as revenue over the remaining
      contract periods.





29




*Direct
      Vessel Operating Expenses.* Direct
      vessel operating expenses increased $7.0 million primarily due to:


·
            increased
                marine inspection costs of $6.3 million as a result of a change in
                accounting policy in 2005 (described in Note 3). As result of our
                accounting policy to expense maintenance and classification costs
                as
                incurred, the timing of a vessel’s regulatory dry docking and the class of
                vessels undergoing regulatory dry dockings may result in fluctuations
                in
                direct vessel operating expenses when compared to prior
                periods;


·
            increased
                mobilization costs of $1.1 million which includes the related labor
                expenses, maintenance and repairs expenses and supplies and miscellaneous
                expenses related to the mobilization of two vessels into West Africa;


·
            increased
                labor costs of $0.7 million as a result of higher vessel utilization;
                and
                increases in crew labor rates in the Gulf of
                Mexico





The
      above
      increases were partially offset by decreased supplies and miscellaneous expense
      $0.9 million as a result of a reduction in our fleet and a $0.4 million decrease
      in operating expenses due to a stronger U.S. dollar relative to the Norwegian
      Kroner.





*General
      and Administrative Expenses* .
      General
      and administrative expenses increased $1.4 million primarily due
      to:


·
            increased
                accrued personnel costs of $0.9 million resulting from the adoption
                of an
                annual incentive awards plan in the fourth quarter of 2005 and increased
                salary expense related to new senior
                management;


·
            increased
                infrastructure costs of $0.3 million in West Africa;
                and


·
            increased
                professional fees of $0.7 million necessary to consummate the Southeast
                Asia partnership, recruit and retain senior management, for Sarbanes-Oxley
                compliance and technological upgrades.





The
      above
      increases were partially offset by decreased general and administrative costs
      of
      $0.4 million in Brazil due to decreased operations.





*Depreciation
      and Amortization Expense.* Depreciation and amortization expense decreased $1.7 million. The decreased
      depreciation is a result of the overall reduction in the net book value of
      our
      long-lived assets which was recorded when the negative goodwill was allocated
      to
      our long-lived assets during fresh-start accounting on March 15, 2005.





*Insurance
      recovery from a loss on assets held for sale.* The
      Company recognized $0.6 million in insurance recoveries as a result of greater
      than anticipated insurance recoveries on assets that were that were damaged
      in
      2005 and impaired and transferred to held for sale in the fourth quarter of
      2005.





*Gain
      on Sale of Assets.* We
      recognized a $1.1 million gain on sale of assets primarily due to the sale
      of
      two crew boats in the first quarter of 2006, the sale of a cold stacked supply
      vessel in the second quarter of 2006





*Reorganization
      Costs* .
      Since
      April 2004, we have incurred expenses associated with our reorganization effort,
      primarily comprised of fees to legal and financial advisors. During the first
      quarter of 2005, we expensed $6.7 million in fees related to our reorganization
      effort. Now that the reorganization is completed, these costs are no longer
      being incurred.




*Interest
      Expense.* Interest
      expense decreased $3.7 million. The decrease in interest expense is primarily
      due to the repayment of our U.S. Credit Facility in the fourth quarter of 2005
      and a lower average debt balance in Norway, which was partially offset by higher
      variable interest rates.





*Other
      Income.* Other
      income increased $0.7 million primarily due to increased interest income due
      to
      an increase in cash equivalents.





*Income
      Tax Expense.* We
      recorded a consolidated income tax expense for the six months ended June 30,
      2006 of $15.0 million, which is primarily related to the income generated by
      our
      U.S and Norwegian operations. The Company’s June 30, 2006 effective tax rate of
      38% differs slightly from the statutory rate of 35% primarily due to state
      and
      foreign taxes. Included in the $15.0 million of income tax expense for the
      six
      months ended June 30, 2006 is an $8.9 million tax charge with an offset to
      additional paid-in-capital from the utilization of fresh-start NOL’s. We
      recorded income tax expense in first six months of 2005 of $4.7 million
      primarily related to our Norwegian operations. In 2006 and 2005, we recognized
      a
      full valuation allowance against our net deferred tax asset.





30




**Our
      Liquidity and Capital Resources**





***Description
      of Indebtedness***





*NOK
      Term Loan*





On
      June
      26, 2003, we entered into the NOK Term Loan in the amount of NOK 150.0 million
      ($24.1 million at June 30, 2006). Amounts borrowed under the NOK Term Loan
      bore
      interest at NIBOR (Norwegian Interbank Offered Rate) plus 2% (5% at June 30,
      2006). The NOK Term Loan was required to be repaid in five semi-annual
      repayments of NOK 7.5 million ($1.2 million at June 30, 2006), with the first
      payment having occurred on June 30, 2004. The final payment of NOK 112.5
      million ($18.1 million) was made on June 30, 2006.




During
      December 2004, we and our Norwegian lender agreed on terms to amend several
      covenants of the NOK Revolver to exclude intercompany notes from the
      definition of funded debt, and to increase the maximum ratio of funded debt
      to
      operating income plus depreciation and amortization from 5.0 to 5.5. These
      covenant modifications increased our ability at that time to repatriate cash
      from Norway. As a result of the modifications, our effective interest rate
      increased 1% on our NOK Revolver. These covenant modifications were
      effective as of December 31, 2004.




*NOK
      Revolver*





We
      entered into the NOK Revolver in June 1998. In April 2002, we amended the NOK
      650.0 million ($104.5 million at June 30, 2006) credit facility by increasing
      the capacity to NOK 800.0 million ($128.6 million at June 30, 2006) and revising
      reductions to the facility amount to provide for NOK 40.0 million ($6.4 million
      at June 30, 2006) reductions every six months starting in March 2003. The NOK
      Revolver provides for a final reduction of NOK 280.0 million ($45.0 million
      at
      June 30, 2006) on September of 2009. Amounts borrowed under the NOK Revolver
      bear interest at NIBOR plus 2% (5% at June 30, 2006). At June 30, 2006, we
      had
      NOK 130.0 million ($20.9 million) outstanding under this facility.





The
      NOK
      Revolver is collateralized by mortgages on 11 North Sea class vessels and
      contains covenants that require the North Sea operating unit to maintain certain
      financial ratios and places limits on the operating unit’s ability to create
      liens, or merge or consolidate with other entities. Our NOK Revolver provides
      for other covenants, including affirmative and negative covenants with respect
      to furnishing financial information, insuring our vessels, maintaining the
      class
      of our vessels, mortgaging or selling our vessels, borrowing or guaranteeing
      loans, complying with certain safety and pollution codes, paying dividends,
      managing our vessels, transacting with affiliates, flagging our vessels and
      depositing, assigning or pledging our earnings .
      In
      connection with the sale of two PSV vessels described in 2005, with the consent
      of our lenders under the U.S. Credit Facility, we reduced the availability
      of
      the NOK Revolver by NOK 20 million ($3.2 million) on May 12, 2005. We further
      reduced the availability of the NOK Revolver by NOK 34 million ($5.5 million)
      on
      June 30, 2006 when we sold two AHTS vessels and two PSV vessels to the EMSL. We
      are
      currently in compliance with the financial covenants in the NOK
      Revolver.





***Our
      Capital Requirements***





Our
      ongoing capital requirements arise primarily from our need to service debt,
      maintain or improve equipment, invest in new vessels and provide working capital
      to support our operating activities.





At
      June
      30, 2006, we had approximately $88.9 million in cash and $12.2 million in
      restricted cash. Of the approximately $88.9 million in cash, $3.0 million is
      internally restricted to fund the operations of EMSL. Per the shareholders
      agreement, to the extent that start-up costs exceed EMSL’s available cash, the
      Company will be required to fund start-up in accordance with its equity
      ownership. Over the next eighteen months, we will continue to retain the benefit
      of operating five vessels under the bareboat agreement and will begin to share
      in any operating profits from EMSL. Currently, we intend to reinvest any of
      EMSL’s operating profits back into the subsidiary to expand business
      operations.





31




In
      addition to cash on hand, our NOK Revolver has a total facility amount of NOK
      486 million ($78.2 million) of which NOK 130 million ($20.9 million) was
      outstanding as of June 30, 2006. However, due to liquidity and other
      restrictions, we had NOK 356 million ($57.2 million) of remaining available
      capacity under the NOK Revolver at June 30, 2006. We are not currently
      restricted by our financial covenant restricting funded debt to 5.5 times the
      level of operating income plus depreciation and amortization of our North Sea
      operations on a trailing twelve month basis. The NOK Revolver availability
      reduces by NOK 40 million ($6.4 million) every March and September. If earnings
      were to decrease on a rolling twelve month basis, the facility’s availability
      would be further restricted.




Although
      we do not expect to be required to repatriate cash from our Norwegian subsidiary
      in 2006, we are preparing to reduce the paid-in-capital in one of our Norwegian
      subsidiaries in order to provide us with the flexibility to repatriate cash
      from
      Norway if required. In general, in order to repatriate funds from Norway to
      the
      U.S. in a tax-efficient manner, we would be required to reduce the
      paid-in-capital in one of our Norwegian subsidiaries and put an intercompany
      note in place. As of June 30, 2006, we have not effectuated a reduction of
      paid-in-capital and therefore are unable to repatriate funds in a tax efficient
      manner. Our ability to complete this reduction in paid-in-capital, which is
      anticipated to be completed in 2006, depends on a number of factors, including:





·
            The
                consent of our Norwegian bank
                syndicate;


·
            The
                ability to complete the reduction without the incurrence of tax or
                other
                consequences by state and national regulating and taxing authorities
                in
                Norway;


·
            The
                ability to complete the reduction without the incurrence of tax or
                other
                consequences by state and federal regulating and taxing authorities
                in the
                United States;


·
            The
                availability of cash at the Norwegian subsidiary, or availability
                under
                the NOK Revolver in order to generate funds for the transfer;
                and


·
            The
                ability to comply with the funded debt to operating income plus
                depreciation and amortization covenant ratios in the NOK Term Loan
                and NOK
                Revolver following completion of the
                reduction.





All
      of
      these factors will be required to be completed or resolved to enable us to
      repatriate funds from Norway in a tax efficient manner.





In
      accordance with U.S. generally accepted accounting principles, or GAAP, we
      have
      classified the NOK Revolver as a current liability in the June 30, 2006 and
      December 31, 2005 consolidated balance sheets. For future cash flow planning
      purposes, we consider the NOK Revolver to be a long-term source of funds since
      advances can be re-financed until the facility reduces over time, concluding
      in
      September 2009. As long as we are in compliance with the covenants of the NOK
      Revolver, and the lender does not exercise the subjective acceleration clause,
      we are not obligated to repay and retire any amounts outstanding under the
      facility during the next twelve months. We had NOK 130 million ($20.9 million)
      and NOK 110 million ($16.8 million) outstanding under this facility as of June
      30, 2006 and December 31, 2005, respectively. The NOK Revolver has a final
      maturity of September 2009. One of our Norwegian subsidiaries, Trico Shipping
      AS, is the borrower under this facility





The
      following financial information and discussion reflects the Predecessor and
      Successor Companies’ actual combined statements of cash flows for the six months
      ended June 30, 2006 compared to the same period ended 2005 (in thousands).
      The
      combined results for the six months ended June 30, 2005 represent a non-GAAP
      financial measure due to our reorganization; however, we find combining the
      Predecessor and Successor Companies’ cash flow for the two periods to be useful
      when analyzing fluctuations. For those line items that are not comparable,
      we
      have included additional analysis so that the discussion is complete. The
      following cash flow line items are not comparable to prior years due to our
      reorganization and fresh-start adjustments, or due to the election to change
      accounting policies upon our emergence from bankruptcy:





·
            Net
                income (loss);


·
            Depreciation
                and amortization;


·
            Amortization
                of non-cash deferred revenue;


·
            Deferred
                marine inspection costs; and


·
            Stock
                based compensation.


32


|
            **Predecessor****Successor
                Company**
            |
            **Company**
            
            **Non-GAAP****Period
                from**
            |
            **Period
                from**
            
            **Combined****Six
                months**
            
            **March
                15, 2005**
            |
            **January
                1, 2005**
            
            **Results
                for the****ended**
            
            **through**
            |
            **through**
            
            **Six
                Months Ended****June
                30, 2006**
            
            **June
                30, 2005**
            |
            **March
                14, 2005**
            
            **June
                30, 2005**
            
            **Variance**|Cash
                and cash equivalents at beginning of period
            
            $
            51,218
            
            $
            19,154
            |
            $
            13,170
            
            $
            13,170
            
            $
            38,048|Cash
                flow provided by (used in)
            
            
            
            
            
            
            |Operating
                activities
            
            
            42,298
            
            
            (57
            )|
            
            9,168
            
            
            9,111
            
            
            33,187Investing
                activities
            
            
            (9,428
            )
            
            (125
            )|
            
            (650
            )
            
            (775
            )
            
            (8,653
            )Financing
                activities
            
            
            4,329
            
            
            (7,675
            )|
            
            (2,596
            )
            
            (10,271
            )
            
            14,600Effect
                of exchange rate changes on cash and cash equivalents
            
            
            523
            
            
            (459
            )|
            
            62
            
            
            (397
            )
            
            920Net
                increase (decrease in cash and cash equivalents)
            
            
            37,722
            
            
            (8,316
            )|
            
            5,984
            
            
            (2,332
            )
            
            40,054|Cash
                and cash equivalents at end of period
            
            $
            88,940
            
            $
            10,838
            |
            $
            19,154
            
            $
            10,838
            
            $
            78,102




Operating
      cash flows increased by $33.2 million, primarily due to an $82.3 million
      reduction in net loss primarily due to increased charter hire revenues,
      partially offset by changes in working capital. The working capital changes
      primarily relate to increased accounts receivable from revenue increases and
      timing differences in accounts payable and accrued expenses.





Cash
      flows used by investing activities increased $9.4 million primarily due to
      the
      20% down payment of approximately NOK 33.4 million ($5.4 million as of June
      30,2006) on the new vessel build in the North Sea and $3.5 million received
      in
      restricted cash from the EMSL to secure the transfer of vessels upon the second
      closing date. The above uses of cash from investing activities were partially
      offset by increased proceeds received from the sale of assets of approximately
      $0.6 million.





Cash
      flows provided by financing activities increased $14.6 million primarily due
      to
      the non-controlling interest’s cash contribution of $20.9 million to EMSL, which
      was partially offset by net debt payments of $16.7 million in the first six
      months of 2006 compared to net debt payments of $11.7 million in the first
      six
      months 2005. During 2005, we refinanced $54.6 million of our outstanding debt
      on
      January 19, 2005, which was later refinanced on the Exit Date. In the aggregate,
      this is presented as both repayments of and proceeds from debt of $109.1
      million.





The
      following table summarizes our contractual commitments as of June 30, 2006
      for
      the periods ending (in thousands):





**Six
                Months - ended**
            
            **Year-ended**
            
            **Year-ended**
            
            **Year-ended**
            
            **Year-ended**
            
            **Year-ended****Description**
            
            
            **2006**
            
            
            **2007**
            
            
            **2008**
            
            
            **2009**
            
            
            **2010**
            
            
            **2011**
            
            
            **Thereafter**
            
            
            **Total**Debt
                (1)
            
            $
            1,254
            
            $
            1,258
            
            $
            1,258
            
            $
            22,152
            
            $
            1,258
            
            $
            1,258
            
            $
            3,142
            
            $
            31,580Interest
                on fixed rate debt (2)
            
            
            330
            
            
            544
            
            
            467
            
            
            391
            
            
            314
            
            
            237
            
            
            256
            
            
            2,539Interest
                on variable rate debt (3)
            
            
            518
            
            
            1,036
            
            
            1,036
            
            
            777
            
            
            -
            
            
            -
            
            
            -
            
            
            3,367Construction
                contracts
            
            
            -
            
            
            21,459
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            21,459Operating
                leases
            
            
            746
            
            
            1,478
            
            
            1,410
            
            
            1,406
            
            
            1,395
            
            
            1,356
            
            
            1,873
            
            
            9,664Pension
                obligations
            
            
            637
            
            
            680
            
            
            714
            
            
            749
            
            
            787
            
            
            826
            
            
            866
            
            
            5,259Total
            
            $
            3,485
            
            $
            26,455
            
            $
            4,885
            
            $
            25,475
            
            $
            3,754
            
            $
            3,677
            
            $
            6,137
            
            $
            73,868





(1)
      Excludes fresh-start debt premium. We consider the NOK Revolver to be a
      long-term source of funds since advances can be refinanced until the facility
      reduces over time, concluding in September 2009; therefore, the above table
      shows the NOK Revolver being repaid in its final year of maturity in September
      of 2009.


(2)
      Calculated at the rate applicable at June 30, 2006. Although the NOK Revolver
      is
      classified as current in accordance with GAAP requirements, we have projected
      the interest on the facility until full its maturity of 2009.





33




We
        have
        issued standby letters of credit totaling $7.7 million as of June 30, 2006.
        As a
        result of the provisions within the letter of credit agreements and the
        refinancing of our  $50 million
        secured revolving credit facility in February 2004 ,
        we
        posted the entire balance of standby letters of credit plus 5% ($8.1 million)
        into an escrow account. In addition, we deposited $1.7 million cash with
        General
        Electric Capital Corporation, or GECC, in June 2004, which is included in
“Other
        assets.”


At
      March
      31, 2006, we entered into a contract to construct a Marin Teknikk Design MT6009
      MKII platform supply vessel for a total cost of approximately NOK 167 million
      ($26.8 million as of June 30, 2006). This vessel will incorporate Dynamic
      Positioning 2 (DP-2 certification) and Clean and Comfort Class and will have
      large carrying capacity anticipated to be 3,300 deadweight tons. The vessel’s
      estimated completion and expected delivery date will be the in fourth quarter
      of
      2007. Under the terms of the contract, the Company placed an initial 20% deposit
      in April 2006 and will pay the remaining 80% at delivery date. The purchase
      price is subject to certain adjustments based on the timing of delivery and
      the
      vessel’s specifications upon delivery. The following table sets forth
      adjustments to the purchase price with respect to delivery of the
      vessel:




**Delivery
                Date - 11/30/2007**
            **Adjustments
                to the Purchase Price**1st-
                15thday after Delivery Date
            No
                reduction in Purchase Price16th-
                45thday after Delivery Date
            NOK
                20,000 per day reduction in Purchase Price46th-
                180thday after Delivery Date
            NOK
                25,000 per day reduction in Purchase PriceEarlier
                than Delivery Date
            NOK
                20,000 increase in Purchase Price for every day Vessel is delivered
                earlier than Delivery Date





As
      part
      of the contract, we will have the option to purchase a second vessel at a later
      date. We plan to fund the construction of the vessel from cash and cash flows
      from operations.




Our
      remaining planned capital expenditures to be incurred during the reminder of
      2006 are approximately $3.0 million to fund vessel improvements and other
      capital expenditures. In addition, we anticipate spending approximately $10.5
      million to fund upcoming vessel marine inspections during the remainder of
      2006.
      Marine inspection costs are included in operating expenses in all periods after
      our Reorganization.





**Our
      Critical Accounting Policies:**





Our
      discussion and analysis of our financial condition and results of operations
      are
      based upon our condensed consolidated financial statements, which have been
      prepared in accordance with accounting principles generally accepted in the
      United States. The preparation of these financial statements requires us to
      make
      estimates and judgments that affect the reported amounts of assets, liabilities,
      revenues and expenses, and related disclosures of contingent assets and
      liabilities. On an ongoing basis, we evaluate our estimates, including those
      related to bad debts, fixed assets, deferred expenses, inventories, income
      taxes, pension liabilities, contingencies and litigation. We base our estimates
      on historical experience and on various other assumptions that are believed
      to
      be reasonable under the circumstances, the results of which form the basis
      for
      making judgments about the carrying values of assets and liabilities that are
      not readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.





We
      consider certain accounting policies to be critical policies due to the
      significant judgment, estimation processes and uncertainty involved for each
      in
      the preparation of our condensed consolidated financial statements. There
      have been no material changes in our critical accounting policies from those
      disclosed in our Annual Report on Form 10-K for the year ended December 31,
      2005. We
      believe the following represent our critical accounting policies.





*·*
            *Financial
                reporting by entities in reorganization.*





*·*
            *Revenue
                recognition.*





*·*
            *Accounting
                for long-lived assets.*





*·*
            *Impairment
                of long-lived assets other than goodwill.*




*·*
            *Restricted
                cash.*





34


*·*
            *Losses
                on insured claims.*





*·*
            *Deferred
                tax valuation allowance.*





*·*
            *Marine
                inspection costs.*





*·*
            *Equity-based
                compensation.*





**New
      Accounting Standards:**





In
      May
      2005, the FASB issued FAS No. 154, “Accounting Changes and Error
      Corrections - a replacement of APB Opinion No. 20 and FAS No. 3.” This
      statement replaces APB Opinion No. 20, Accounting Changes, and FASB
      Statement No. 3, Reporting Accounting Changes in Interim Financial
      Statements, and changes the requirements for the accounting for and reporting
      of
      a change in accounting principle. This statement requires retrospective
      application to prior periods’ financial statements of changes in accounting
      principle, unless it is impracticable to determine either the period-specific
      effects or the cumulative effect of the change. Retrospective application is
      defined as reporting results as if that principle had always been used or as
      the
      adjustment of previously issued financial statements to reflect a change in
      the
      reporting entity. This statement shall be effective for accounting changes
      and
      corrections of errors made in fiscal years beginning after December 15,
      2005. The adoption of this statement is not expected to have a material impact
      on the Company’s financial statements or results of operations unless a future
      change in accounting principle is made.





In
      July
      2006, FASB affirmed its previous decision to make the recognition provisions
      of
      its proposed standard, Employers' Accounting for Defined Benefit Pension and
      Other Postretirement Plans, an amendment of FASB Statements No 87, 88, 106
      and
      132(R), effective for fiscal years ending after December 15, 2006. This will
      require the Company to apply the new standard to its 2006 year-end financial
      statements and recognize the funded status of pension and other postretirement
      benefit plans of the balance sheet. The Company is currently analyzing the
      requirements of this standard, but does not anticipate a material impact on
      the
      financial statements.





In
      July 2006, the FASB issued Financial Interpretation No. 48 “Accounting for
      Uncertainty in Income Taxes” (“FIN 48”), which clarifies the accounting and
      disclosures for uncertain tax positions recognized in a company’s financial
      statements in accordance with SFAS No. 109 “Accounting for Income Taxes”. FIN 48
      provides guidance on recognizing, measuring, presenting and disclosing in the
      financial statements uncertain tax positions that a company has taken or expects
      to take on a tax return. FIN 48 is effective for the Company as of January
      1,
      2007. The Company is currently assessing the impact, if any, of FIN 48 on its
      results of operations or financial position.





**CAUTIONARY
      STATEMENTS**





Certain
      statements made in this Quarterly Report that are not historical facts are
      “forward-looking statements” within the meaning of Section 21E of the Securities
      Exchange Act of 1934. Such forward-looking statements may include statements
      that relate to:





·
            our
                objectives, business plans or strategies, and projected or anticipated
                benefits or other consequences of such plans or
                strategies;


·
            the
                results, timing, outcome or effect of pending or potential litigation
                and
                our intentions or expectations of prevailing with respect thereto
                and the
                availability of insurance coverage in connection therewith;


·
            our
                ability to repatriate cash from foreign operations if and when
                needed;


·
            projected
                or anticipated benefits from future or past acquisitions and partnerships;


·
            projections
                involving revenues, operating results or cash provided from operations
                and
                available borrowings, or our anticipated capital expenditures or
                other
                capital projects; and


·
            future
                expectations and outlook and any other statements regarding future
                growth,
                cash needs, operations, business plans and financial results and
                any other
                statements which are not historical facts.





You
      can
      generally identify forward-looking statements by such terminology as “may,”
“will,” “expect,” “believe,” “anticipate,” “project,” “estimate” or similar
      expressions. We caution you that such statements are only predictions and not
      guarantees of future performance or events. We disclaim any intent or obligation
      to update the forward-looking statements contained in this Quarterly Report,
      whether as a result of receiving new information, the occurrence of future
      events or otherwise, other than as required by law. We caution investors not
      to
      place undue reliance on forward-looking statements.





35




All
      phases of our operations are subject to a number of uncertainties, risks and
      other influences, many of which are beyond our ability to control or predict.
      Any one of such influences, or a combination, could materially affect the
      results of our operations and the accuracy of forward-looking statements made
      by
      us.





Important
      risk factors that could cause actual results to differ materially from the
      anticipated results or other expectations expressed in our forward-looking
      statements include the following:





***Risks
      Relating to our Operations***





*·*
            *Our
                fleet includes many older vessels that require increased levels of
                maintenance and capital expenditures to maintain them in good operating
                condition and the fleet may be subject to a higher likelihood of
                mechanical failure, inability to economically return to service or
                requirement to be scrapped.*




*·*
            *Our
                inability to upgrade our fleet successfully could adversely affect
                our
                financial condition and results of
                operations.*





*·*
            *Increases
                in size, quality and quantity of the offshore vessel fleet in areas
                where
                we operate could increase competition for charters and lower day
                rates
                and/or utilization, which would adversely affect our revenues and
                profitability.*





*·*
            *Operating
                internationally poses uncertain hazards that increase our operating
                expenses.*





*·*
            *As
                a U.S. corporation, we are subject to the Foreign Corrupt Practices
                Act,
                and any violation of this act may affect our business and operations
                adversely.*





*·*
            *Our
                marine operations are seasonal and depend, in part, on weather conditions.
                As a result, our results of operations will vary throughout the year.*





*·*
            *Our
                operations are subject to operating hazards and unforeseen interruptions
                for which we may not be adequately insured.*





*·*
            *Our
                operations are subject to federal, state, local and other laws and
                regulations that could require us to make substantial expenditures.*





*·*
            *Our
                U.S. employees are covered by federal laws that may subject us to
                job-related claims in addition to those provided by state laws.*





*·*
            *The
                loss of a key customer could have an adverse impact on our financial
                results.*





*·*
            *We
                are exposed to the credit risks of our key customers, and nonpayment
                by
                our customers could adversely affect our financial condition or results
                of
                operations.*





*·*
            *The
                loss of key personnel may reduce operational efficiency and negatively
                impact our results of operations.*





*·*
            *The
                loss of crewmembers without replacements in a timely manner may reduce
                operational efficiency and negatively impact our results of
                operations.*





*·*
            *Unionization
                efforts could increase our costs, limit our flexibility or increase
                the
                risk of a work stoppage.*





*·*
            *The
                removal or reduction of the partial reimbursement of labor costs
                by the
                Norwegian government may adversely affect our costs to operate our
                vessels
                in the North Sea.*





*·*
            *Upon
                completion of hurricane related repair and construction activity
                in the
                Gulf of Mexico, demand for our vessels and services could decrease.*


·
            ***Management
                decisions needed to successfully operate EMSL, our 49% partnership,
                are
                subject to the majority owner’s approval. If our management team is unable
                to reach a consensus with the majority owner on material matters,
                we may
                not be able to successfully operate EMSL and our results of operations
                may
                be negatively
                affected.***





36







***Risks
      Relating to our Industry***





*·*
            *We
                are dependent on the oil and gas industry. Changes in the level of
                exploration and production expenditures and in oil and gas prices
                and
                industry perceptions about future oil and gas prices could materially
                decrease our cash flows and reduce our ability to service our credit
                facilities.*





*·*
            *If
                our competitors are able to supply services to our customers at a
                lower
                price, then we may have to reduce our day rates, which would reduce
                our
                revenues.*





***Risks
      Relating to our Capital Structure***





*·*
            *Our
                business is highly cyclical in nature due to our dependency on the
                levels
                of offshore oil and gas drilling activity. If we are unable to stabilize
                our cash flow during depressed markets, we may not be able to meet
                our
                obligations under credit facilities and we may not be able to secure
                financing or have sufficient capital to support our operations.*





*·*
            *We
                may not be able to repatriate funds from Norway to the U.S., which
                could
                negatively impact our operational flexibility.*





*·*
            *We
                may face material tax consequences or assessments in countries in
                which we
                operate. If we are required to pay material tax assessments, our
                financial
                condition may be materially adversely
                affected.*





*·*
            *Our
                ability to utilize certain net operating loss carryforwards or investment
                tax credits may be limited by certain events which could have an
                adverse
                impact on our financial
                position.*





*·*
            *Our
                business segments have been capitalized and are financed on a stand-alone
                basis, which may hinder efficient utilization of available financial
                resources.*





·
            *Financial
                statements for periods subsequent to our emergence from bankruptcy
                will
                not be comparable to those of prior periods, which will make it difficult
                for stockholders to assess our performance in relation to prior
                periods*.





*·*
            *Currency
                fluctuations could adversely affect our financial condition and results
                of
                operations.*





*·*
            *Our
                ability to issue primary shares in the equity capital markets for
                our
                benefit could be limited by the terms of our registration rights
                agreement
                with certain of our existing common stockholders. Additionally, these
                stockholders may sell a large number of shares of common stock in
                the
                public market, which may depress the market price of our stock.*





***Risks
      Relating to the Ownership of our Common Stock***





*·*
            *Our
                charter documents include provisions limiting the rights of foreign
                owners
                of our capital stock.*




*·*
            *Some
                anti-takeover provisions contained in our charter could hinder a
                takeover
                attempt.*





**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk.**





There
      have been no material changes in the Company’s exposure to market risk during
      the first six months of 2006. For a complete discussion of the Company’s
      exposure to market risk, read Item 7A, Quantitative and Qualitative Disclosures
      about Market Risk contained in the Company’s 2005 Annual Report on Form 10-K in
      conjunction with the information contained in this Report.





37




**Item
      4.    Controls and Procedures.**




Our
      management, under the supervision of and with the participation of our Chief
      Executive Officer and Chief Financial Officer, has evaluated the effectiveness
      of Trico Marine Services, Inc.’s disclosure controls and procedures, as such
      term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
      Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered
      by this report. Based on such evaluation, our Chief Executive Officer and Chief
      Financial Officer have concluded that, as of the end of such period, our
      disclosure controls and procedures were effective to provide reasonable
      assurance that all material information relating to us required to be included
      in our reports filed or submitted under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in the rules and
      forms
      of the Securities and Exchange Commission.





There
      have not been any changes in our internal control over financial reporting,
      as
      such term is defined in the Exchange Act Rules 13a-15(f) and 15d-15(f) under
      the
      Exchange Act during our fiscal quarter ended June 30, 2006 that have materially
      affected, or are reasonably likely to materially affect, our internal control
      over financial reporting.





**PART
      II - OTHER INFORMATION**





**Item
      1. Legal Proceedings.**





As
        reported in our Form 10-Q for the quarter ended March 31, 2006, on December
        21,
        2004 (the “Commencement Date”), Trico Marine Services, Inc. and two of its U.S.
        subsidiaries, Trico Marine Assets, Inc. and Trico Marine Operators, Inc.,
        (collectively, the “Debtors”) filed “prepackaged” voluntary petitions for
        reorganization under Chapter 11 of the Bankruptcy Code in the United States
        Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”)
        under case numbers 04-17985 through 04-17987. The reorganization was being
        jointly administered under the caption “In re Trico Marine Services, Inc., et
        al., Case No. 04-17985.” On March 15, 2005, we satisfied all conditions to the
        effectiveness of the plan of reorganization and emerged from protection of
        Chapter 11. In July 2005, Steven and Gloria Salsberg, two holders of our
        warrants to purchase common stock, commenced an adversary proceeding against
        the
        Debtors in the Bankruptcy Court under proceeding number 05-02313 seeking
        revocation of the Debtors’ confirmed and substantially consummated plan of
        reorganization. The basis of their complaint was that the plan was approved
        based on inaccurate information provided by the Company. On January 6, 2006,
        the
        Bankruptcy Court granted our motion to dismiss the adversary proceeding.
        The
        Bankruptcy Court did grant the plaintiffs leave to amend their complaint
        to
        assert claims that do not seek revocation of the plan of reorganization.
        On
        January 23, 2006, plaintiffs filed additional pleadings asking the Bankruptcy
        Court to reconsider its dismissal of the proceedings. The Debtors filed their
        response on February 6, 2006. The Bankruptcy Court declined to vacate its
        order
        of dismissal while it deliberated on the plaintiffs’ request for
        reconsideration.





On
      May 5,
      2006, the court reaffirmed its prior ruling dismissing the adversary complaint
      and allowing plaintiffs to file an amended complaint. On June 5, 2006,
      plaintiffs filed an amended complaint and on June 16, 2006, plaintiffs moved
      to
      amend their amended complaint. On July 10, 2006, the Debtors filed an opposition
      to plaintiff’s motion to amend. The motion will be heard on August 10,
      2006.





We
      believe that plaintiffs' allegations are without merit, and we intend to defend
      the action vigorously.





In
      addition, we are party to routine litigation incidental to our business, which
      primarily involves other employment matters or claims for damages. Many of
      the
      other lawsuits to which we are a party are covered by insurance and are being
      defended by our insurance carriers. We have established accruals for these
      other
      matters and it is management’s opinion that the resolution of such litigation
      will not have a material adverse effect on our consolidated financial position.
      However, a substantial settlement payment or judgment in excess of our cash
      accruals could have a material adverse effect on our consolidated results of
      operations or cash flows.





**Item
      1A. Risk Factors.**





Other
      than the risk factors described below, there have been no material changes
      in
      our risk factors from those disclosed in our Annual Report on Form 10-K for
      the year ended December 31, 2005. The following new risk factor relates to
      our
      minority owned consolidated subsidiary:




·
            ***Management
                decisions needed to successfully operate EMSL, our 49% partnership
                are
                subject to the majority owner’s approval. If our management team is unable
                to reach a consensus with the majority owner on material matters,
                we may
                not be able to successfully operate EMSL and our results of operations
                may
                be negatively affected.*** 
 On
        June
        30, 2006, we entered into a partnership with COSL. We hold a 49% equity interest
        in the partnership, EMSL, and COSL holds the remaining equity interest of
        51%.
        Our management may want to explore business opportunities and enter into
        material agreements for the benefit of EMSL, which are subject to COSL’s
        approval. If COSL and our management team are unable to reach a consensus,
        it
        could materially hinder our ability to successfully operate the
        partnership.





38




In
      addition to the new risk factor set forth above, the risk factor below was
      disclosed in our Annual Report on Form 10-K for the year ended December 31,
      2005
      and has been updated to elaborate on the risks involving the Norwegian shipping
      tax regime:





·
            ***We
                may face material tax consequences or assessments in countries in
                which we
                operate. If we are required to pay material tax assessments, our
                financial
                condition may be materially adversely
                affected.***





We
      have
      received tax assessments in Brazil during the past three years, and may receive
      additional assessments in the future. Our Brazilian subsidiary received tax
      assessments from Brazilian state tax authorities totaling approximately 27.8
      million Reais ($11.9 million at December 31, 2005) in the aggregate. The tax
      assessments are based on the premise that certain services provided in Brazilian
      federal waters are considered taxable by certain Brazilian states as
      transportation services and are subject to a state tax. If the courts in these
      jurisdictions uphold the assessments, it would have a material adverse affect
      on
      our net income, liquidity and operating results. We do not believe any liability
      in connection with these matters is probable and, accordingly have not accrued
      for these assessments or any potential interest charges for the potential
      liabilities.




In
      addition, our Norwegian subsidiary is a member of the Norwegian shipping tax
      regime, which enables the indefinite deferral of the payment of income taxes
      as
      long as certain criteria are met. If we fail to meet these criteria, or if
      the
      shipping tax regime is abolished by the Norwegian government, we may be deemed
      to have exited the shipping tax regime and, as a result, a portion of the
      deferred tax liability may become due and payable. This could have a material
      adverse affect on our financial condition. As of December 31, 2005, our
      Norwegian Shipping tax regime subsidiary has a deferred income tax liability
      of
      NOK 311 million ($46.1 million).




**Item 2.********
            **Unregistered
                Sales of Equity Securities and Use of
                Proceeds**




None.





**Item 3.********
            **Defaults
                upon Senior Securities**




None.





**Item 4.********
            **Submission
                of Matters to a vote of Security
                Holders**




(a)
            The
                annual meeting of stockholders of the Company (the “Annual Meeting”) was
                held on June 13, 2006.





(b)
            At
                the Annual Meeting, Joseph S. Compofelice and Trevor Turbidy were
                re-elected to serve until the annual meeting of stockholders for
                the year
                2009. In addition to the directors elected at the Annual Meeting,
                the
                terms of Richard A. Bachmann, Kenneth M. Burke, Myles W. Scoggins,
                Edward
                C. Hutcheson, Jr., and Per Staehr continued after the Annual
                Meeting.





(c)
            At
                the Annual Meeting, holders of shares of the Company’s common stock
                elected Messrs. Compofelice and Turbidy with the number of votes
                cast for
                and withheld for such nominees as set forth
                below:





Name     For   Withheld





Joseph
      S.
      Compofelice   13,114,786  168,217





Trevor
      Turbidy    13,114,786  168,217





(d)
            At
                the Annual Meeting, holders of shares of the Company’s common stock
                approved an amendment to the Trico Marine Services, Inc. 2004 Stock
                Incentive Plan to increase the number of shares of common stock authorized
                to be issued thereunder from 750,000 to 1,500,000, an increase of
                750,000
                shares, with the number of votes cast for, against and abstained
                for such
                amendment as set forth below:





For    Against    Abstain





8,797,986   1,160,369   1,050





39


(e)
            At
                the Annual Meeting, holders of shares of the Company’s common stock also
                ratified the appointment of PricewaterhouseCoopers LLP, independent
                registered public accounting firm, as the Company’s independent auditors
                for the fiscal year ending December 31, 2006, with the number of
                votes
                cast as set forth below:





For   Withheld  Abstain   Broker
      Non-Votes





13,280,403  —   2,600    —








**Item 5.********
            **Other
                Information**




None.




40


**Item
      6. Exhibits.**





(a)
      Exhibits:





Exhibit
              Number10.1
            Shipbuilding
                Contract 2000, by and between Trico Shipping AS and Solstrand AS
                (incorporated by reference to Exhibit 1.1 to our Current Report on
                Form
                8-K dated April 6, 2006).10.2
            Employment
                Agreement effective as of May 8, 2006, between Trico Marine Services,
                Inc.
                and Larry D. Francois (incorporated by reference to Exhibit 10.1
                to our
                Current Report on Form 8-K dated May 22, 2006).10.3
            Shareholders
                Agreement of Eastern Marine (incorporated by reference to Exhibit
                10.1 to
                our Current Report on Form 8-K dated July 6, 2006).10.4
            Amendment
                to the Shareholders Agreement dated June 29, 2006, by and among Trico
                HK,
                COSL HK and Eastern Marine (incorporated by reference to Exhibit
                10.2 to
                our Current Report on Form 8-K dated July 6, 2006).10.5
            Amended
                and Restated Employment Agreement, effective as of July 1, 2006,
                by and
                between Trico Marine Services, Inc. and Rishi Varma (incorporated
                by
                reference to Exhibit 10.3 to our Current Report on Form 8-K dated
                July 6,
                2006).10.6
            Employment
                Agreement, effective as of July 5, 2006, by and between Trico Marine
                Services, Inc. and Robert V. O’Connor (incorporated by reference to
                Exhibit 10.4 to our Current Report on Form 8-K dated July 6,
                2006).31.1
            Chief
                Executive Officer’s Certification under Section 302 of the Sarbanes-Oxley
                Act of 2002. (1)31.2
            Chief
                Financial Officer’s Certification under Section 302 of the Sarbanes-Oxley
                Act of 2002. (1)32.1
            Officers’
                certifications pursuant to Section 906 of the Sarbanes-Oxley Act
                of 2002.
                (1)


_________________





(1)
            Filed
                herewith




41


**SIGNATURE**





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











TRICO
                MARINE SERVICES, INC.By:
                /s/ Geoff Jones**Geoff
                Jones****Chief
                Financial Officer**(Authorized
                Signatory and Principal Financial Officer)Date:
                August 8, 2006






42