1999 FIRST QUARTER REPORT

2000 FIRST QUARTER REPORT

May 2, 2000

To Our Shareholders:

The first year of the 21^st Century is shaping up to be very similar to 1999, with the exception that we can now see a very large light at the end of the tunnel: Deepwater construction demand in the year 2001. What is similar is many of our Gulf of Mexico competitors reporting losses in Q1 and bidding at what appears to be cash cost while waiting for the pendulum to swing. Swing it will, and soon contractors will hike rates, fulfilling market expectations, while oil producers cite these rising costs for their diminishing returns – and the cycle will be renewed. We at CDI believe there has to be a better way, one which enables both the oil producer and service company to achieve desired returns without one doing so to the disadvantage of the other. Our recently announced collaborative effort with Kerr McGee on the Gunnison prospect represents a first step towards a new industry model, one which focuses upon maximizing overall reservoir economics.

Financial Highlights

While many in the market are already discounting the significance of 2000 earnings, the year will be an important barometer in determining those contractors truly positioned for long-term sustainable growth. Our ability to increase top line revenues by 54% in Q1 and convert that to a like improvement at the bottom line is a dramatic example of CDI’s ability to excel in difficult market conditions.

	First Quarter
	2000	1999	Increase
Revenues	$40,109,000	26,006,000	54%
Net Income	3,214,000	2,087,000	54%
Diluted Earnings Per Share	0.20	0.14	43%

Revenues: $5.2 million of the $14.1 million improvement relates to new assets (i.e. Aquatica and the Cal Dive Aker Dove), with the balance due to the strong performance of Energy Resource Technology and to the completion of the Cooper decommissioning project. This improvement again points out our ability to create demand while GOM competitors seek to derive demand from the spot market.

Margins: 21% is basically constant with Q1 last year as a slight decline in Subsea margins was offset by ERT gross profit improving 9 points, from 24% to 33% this year.

SG&A: An increase of $1.7 million over Q1 a year ago includes the consolidation of Aquatica ($600,000), the impact of the ERT Incentive Program and the salaries of new, experienced personnel added to our Deepwater group.

Financial Condition: Through the end of April 2000 we have funded $50 million, or one third of the estimated $150 million cost of our newbuild Q4000. Having now received the formal financing commitment letter from MARAD, CDI expects to recover a substantial portion of the internally funded vessel cost when the transaction closes on or about July 1.

Operational Highlights

Cooper: 22% of Q1 revenues were derived from the completion of this first ever Deepwater decommissioning project. In the fourth quarter last year we encountered a number of unanticipated downhole problems on the first well in the P&A phase. The good news is that we moved rapidly up the learning curve in plugging the remaining four wells during Q1 while benefiting from higher extra work rates. This improved performance is also a tribute to the effectiveness of the new personnel added to our Deepwater well intervention group. In summary, we successfully completed the largest contract ever in Cal Dive history while realizing margins consistent with existing market conditions.

Diana: Work performed by a number of CDI vessels at the Diana/Hoover project for ExxonMobil generated $4 million of revenues this quarter. The Uncle John mobilized in late February to install jumper spools in 4,840 feet of water, a project which ran through the end of April. A double-drum winch eliminated the tendency for the jumper spools to spin on descent, allowing minute adjustments in elevation, thereby reducing average installation time. In addition, the Witch Queen provided logistical and ROV support and the Aker Dove installed suction piles for the mooring system at the Diana platform.

Regulatory Inspections: Q1 was a very active period for U.S. Coast Guard and ABS inspection work as we had six vessels out of service for a total of 210 days. We historically have tried to schedule most of our regulatory work in this period given rough weather in the Gulf and, this year, the lack of demand. The Uncle John will be out of service an estimated six weeks in Q2 as we install new Caterpillar engines, an activity delayed by the vessel being almost 100% utilized since she came out of drydock last June 1.

ERT: Revenues of $9.8 million were up $7 million or 250% over oil and gas sales in the first quarter of 1999. Five weeks of production and contract management fees related to the newly acquired and newly managed EEX properties added $1.9 million to Q1 revenues. Production of 3.3 BCFe was 150% more than the year ago quarter due to the EEX purchase and the aggressive steps taken last year (i.e. four property acquisitions and the 1999 well exploitation program). Commodity prices were also strong in the quarter. We realized an average gas price of $2.73 per mcf in Q1, an increase of $1.02 or 60% over 1999 levels. Oil and condensate represented 37% of ERT revenues this year in contrast to only 11% in Q1 of 1999.

People: Lyle Kuntz, President of ERT, retired effective March 31. Lyle gave us a five-year commitment when he agreed to help us launch ERT in 1992, a time horizon which was extended given the significant growth of ERT in recent years. Johnny Edwards has moved up to take Lyle’s position as President of ERT. CDI has been able to add industry-respected personnel to our Subsea Group in a period when shortages of qualified personnel are beginning to hamper the activities of many energy companies. Andy Scott, Vice President – Life of Field Services, comes to us from EEX where he was Vice President of Gulf of Mexico Operations. Ian Collie is our Well Intervention Manager; Ian was formerly at Coflexip Stena Offshore (CSO). Dick Elliot, Deepwater Business Development Manager; was Vice President of International Sales and Marketing at the CSO Perry Tritech unit. Dave Pope has also joined our Deepwater group as Business Development Manager, coming from Kvaerner Oil and Gas. John Mooney and Jeremy Woulds are new Project Managers having previously been with Advanced Marine and Global Industries, respectively. Wayne Seelbach is Vice President – Operational Safety; Wayne was formerly at ETPM and before that with Statoil. The addition of Wayne will enable Jack Reedy, former Vice President – Safety, to focus full-time efforts on claims management.

Respectfully submitted,

Owen E. Kratz
Chairman
Chief Executive Officer

Martin R. Ferron
President
Chief Operating Officer

S. James Nelson, Jr.
Executive Vice President
Chief Financial Officer

Comparative Consolidated Statements of Operations
(000's omitted, except per share data)
		Three Months Ended March 31,
		2000	1999

Net Revenues:
	Subsea and Salvage	$30,338	$23,255
	Natural Gas and Oil Production	9,771	2,751
	Total Revenues	40,109	26,006
Cost of Sales		31,712	20,749
Gross Profit		8,397	5,257
	Selling and Administrative	4,296	2,573
	Interest (Income), net & Other	(200)	(548)
Income Before Income Taxes		4,301	3,232
	Income Tax Provision	1,505	1,145
	Minority Interest	(418)	0
Net Income		$3,214	$2,087

Other Financial Data:
	Depreciation and Amortization:
	Subsea and Salvage	$2,784	$1,905
	Natural Gas and Oil Production	2,686	843
	EBITDA (1)	9,845	5,544

Weighted Avg. Shares Outstanding:
	Basic	15,610	14,617
	Diluted	16,007	14,995

Earnings Per Common Share:
	Basic	$0.21	$0.14
	Diluted	$0.20	$0.14

(1) EBITDA: Earnings before net interest expense, taxes, depreciation and amortization is a supplemental financial measurement used by the Company and investors in the marine construction industry in the evaluation of its business.

Comparative Consolidated Balance Sheets

ASSETS			LIABILITIES & SHAREHOLDERS' EQUITY
(000'S omitted)	March 31, 2000	Dec. 31, 1999		March 31, 2000	Dec. 31, 1999

Current Assets:			Current Liabilities:
Cash and cash equivalents	$14,481	$19,996	Accounts payable	$23,443	$31,834
Accounts receivable	30,183	51,621	Accrued liabilities	13,746	17,223
Other current assets	19,808	16,327	Income tax payable	140	0
Total Current Assets	64,472	87,944	Total Current Liabilities	37,329	49,057

			Long-Term Debt	0	0
Net Property & Equipment	152,523	134,657	Deferred Income Taxes	16,980	16,837
Goodwill	13,644	13,792	Decommissioning Liabilities	30,368	26,956
Other Assets	10,274	7,329	Shareholders' Equity	156,236	150,872
Total Assets	$240,913	$243,722	Total Liabilities & Equity	$240,913	$243,722

This report and press release include certain statements that may be deemed "forward looking statements" under applicable law. Forward looking statements that are not statements of historical fact involve risks and assumptions that could cause actual results to vary materially from those predicted, including among other things, unexpected delays and operational issues associated with turnkey projects, the price of crude oil and natural gas, weather conditions in offshore markets, change in site conditions, and capital expenditures by customers. The Company strongly encourages readers to note that some or all of the assumptions upon which such forward looking statements are based are beyond the Company's ability to control or estimate precisely and may in some cases be subject to rapid and material change.