1999 SECOND QUARTER REPORT

1999 SECOND QUARTER REPORT

August 4, 1999

To Our Shareholders:

Late last year and throughout the first quarter of 1999 oil service investors were scared away by forecasts that oil would trade in a range of $12 - $15/BBL and gas from $1.60 - $1.80/MCF for at least the next decade. So much for industry gurus as commodity prices moved up throughout the second quarter and today we find oil above $20 and natural gas at the heady level of $2.60. Improving commodity prices spawned renewed investor interest in all oil service stocks , including CDIS. We were featured in the July 8 Wall Street Journal summary of the semiannual "Pros Versus Darts" stock-picking contest. CDIS increased 65% in value during the first half of 1999, easily winning the contest for analyst Paul Wendee. However, significantly higher commodity prices have not yet translated to higher levels of offshore completion and construction work. Our primary leading indicator, the offshore mobile rig count, is stuck in a range of 120 - 125 units in contrast to the 170 averaged during 1997. Rather than getting chopped and diced along with our competitors in the Gulf spot market, we aggressively shifted our marketing strategy to focus upon larger negotiated contracts, with the company functioning as prime contractor. In short, we made things happen in the second quarter as customers recognized the value which our specialized fleet of vessels and management can add to complicated projects.

Financial Highlights

Net income at 8% of revenues and cash flow margins (as defined by EBITDA) at 22% were impressive in a quarter when the cornerstone of our Deepwater fleet, the Uncle John, was out of service for six weeks.

	Second Quarter			Six Months
	1999	1998	Decrease	1999	1998	Decrease
Revenues	$34,104,000	$38,526,000	11%	$60,110,000	$71,683,000	16%
Net Income	2,641,000	5,954,000	56%	4,728,000	11,197,000	58%
Diluted Earnings Per Share	0.18	0.40	55%	0.32	0.75	57%

Revenues: The Cal Dive fleet generated the same dollar volume of revenues as it did during the second quarter last year (i.e. after removing $4 million in revenues from chartering Coflexip vessels) even though utilization of the CDI fleet declined 13%. Two large pipelay projects and the Sonat salvage contract combined to generate 45% of Subsea sales in the quarter.

Gross Profit: Margins of 17% reflect in part the competitive market but also high third party costs associated with the increased mix of work as prime contractor. For example, rental and third party costs are running 37% of Subsea revenues in contrast to the historical average of roughly 25%. In addition, ERT margins of 15% were not what they should have been.

SG&A: Administrative costs decreased to 7% of revenues in Q2 from 10% in the same period of 1998 due to lower people costs and improvements to our supply chain management system.

Liquidity: Cash balances dropped to $16 million at the end of the quarter as we purchased the Cal Dive Aker Dove. Exactly two years ago the CDI initial public offering (IPO) enabled the company to pay off all debt and still have $15 million of cash on hand. In other words, internally generated cash flow has enabled Cal Dive to fund $75 million of capital expenditures while remaining debt free throughout the period.

Operational Highlights

Pipelay Projects: Our first fast track full field development project for Santa Fe Snyder Corp. was completed during the quarter. The scope of work included installation of a subsea tree in 325 feet of water with a tieback to production facilities three miles to the southeast. CDI supplied all of the major components (i.e. FMC subsea tree, Konigsberg control system, an umbilical and 15,000 feet of 4.5 inch reeled flowline) from our Modular Development Package Stocking System. The entire project took only 105 days from contract signing to first production. CDI also participated in what we believe is another world first, deployment of a 15,000 psi tree at the TOPS (Total Offshore Production System) Gyrfalcon prospect. This work was done in the Green Canyon area in 900 – 1,000 fsw at what was formerly a Shell field called "Shorts." We subcontracted the laying of a 6 inch flowline while CDI vessels installed 15,000 feet of control umbilicals and a flexible riser.

Salvage Operations: CDI completed most of the Sonat turnkey contract which involved the removal of nine platforms, plugging and abandoning 24 wells and decommissioning 30 associated pipelines. In addition, Mitchell Energy engaged Cal Dive to decommission its last remaining offshore facility and we removed 26 structures for Chevron. CDI salvage assets and the subcontract of derrick and pipelay barges added $8 million to Q2 revenues, bringing the six month total to almost $11 million versus $2.5 million in the first half of 1998.

ERT: Second quarter sales of $4.6 million brought the year-to-date total to $7.3 million, up slightly from oil and gas revenues in the same period last year. Production increased by 55% during the quarter, which reflects the 20 blocks acquired during the first four months of 1999. Gross profit margins of 18% thus far in 1999 reflect high levels of amortization as through tubing and rig recompletion well work included in the acquisition economics was not completed until June and July. Operating margins suffered as we added people necessary to manage a three fold increase in the number of wells operated by ERT. A strategic plan now in place should substantially improve the bottom line contribution of our gas production business in the second half of the year.

Aquatica: Effective July 30, 1999 we issued 700,000 shares of Cal Dive common stock to acquire the 55% of Aquatica which we did not already own. In the past two years, Sonny Freeman and the Aquatica management team have proven the concept that a company can thrive in the shallow water market (from the beach to 300 fsw) with a singular focus upon customer service. Acquiring the balance of Aquatica will enable Cal Dive to consolidate all shallow water assets under Mr. Freeman’s leadership so that CDI management can continue to develop our Deepwater leadership position. Terms of the agreement with Aquatica require that the transaction be accretive to Cal Dive shareholders before considering any cost efficiencies which will be realized through the elimination of duplicate sales, administrative and logistical support facilities.

Deepwater: Two key components of our Deepwater strategy have recently fallen into place. We waited patiently for the depressed industry conditions to create an opportunity to acquire a Deepwater vessel in a distressed financial situation. Cal Dive moved quickly to acquire an interest in the Cal Dive Aker Dove, a transaction which took a total of three weeks to identify and close. The Dove gives your company everything we envisioned for the converted Sea Sorceress, at a lower price, while moving us further upstream into the high technology applications of pre-set moorings and suction pile anchoring. Most gratifying was the vote of the Board of Directors to commission construction of the Q4000, a sixth generation, semi-submersible multi service vessel which we believe will totally revolutionize the economics of Deepwater completion and construction operations. The $150 million vessel is expected to be christened in mid-2001, in time for the significant acceleration we forecast in the demand for Deepwater construction services.

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

CAL DIVE INTERNATIONAL, INC.

Comparative Consolidated Statements of Operations

			Three Months Ended June 30,		Six Months Ended June 30,
(000's omitted, except per share data)			1999	1998	1999	1998

Net Revenues			$34,104	$38,526	$60,110	$71,683
Cost of Sales			28,380	26,392	49,129	48,985
Gross Profit			5,724	12,134	10,981	22,698
	Selling and Administrative		2,455	3,698	5,028	6,537
	Equity in Earnings of Aquatica, Inc.		350	500	450	633
	Interest (Income), net & Other		(422)	(224)	(870)	(434)
Income Before Income Taxes			4,041	9,160	7,273	17,228
	Income Tax Provision		1,400	3,206	2,545	6,031
Net Income			$2,641	$5,954	$4,728	$11,197

Other Financial Data:
	EBITDA (1)		$7,511	$11,092	$13,055	$20,931

Weighted Avg. Shares Outstanding:
	Basic		14,685	14,545	14,651	14,540
	Diluted		15,075	14,997	14,994	14,992

Earnings Per Common Share:
	Basic		$0.18	$0.41	$0.32	$0.77
	Diluted		$0.18	$0.40	$0.32	$0.75

(1)	The Company calculates EBITDA as earnings before net interest expense, taxes, depreciation and amortization. EBITDA 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)		June 30, 1999	Dec. 31, 1998			June 30, 1999	Dec. 31, 1998

Current Assets:				Current Liabilities:
	Cash and cash equivalents	$15,939	$32,843	Accounts payable		$25,514	$15,949
	Accounts receivable	36,015	31,053	Accrued liabilities		5,947	10,020
	Other current assets	12,559	9,190	Income tax payable		750	1,201
Total Current Assets		64,513	73,086	Total Current Liabilities		32,211	27,170

Net Property & Equipment		116,643	79,159	Long-Term Debt		0	0
Restricted Cash Deposits		2,501	2,408	Deferred Income Taxes		15,409	13,539
Investment in Aquatica, Inc.		8,106	7,656	Decommissioning Liabilities		28,387	9,883
Other Assets		4,327	1,926	Shareholders' Equity		120,083	113,643
Total Assets		$196,090	$164,235	Total Liabilities & Equity		$196,090	$164,235

This report and press release include certain statements that may be deemed "forward looking statements" under applicable law. Forward looking statements are not statements of historical fact and such statements are not guarantees of future performance or events and 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.