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This is my first Letter to Shareholdersand I am pleased to report that we achievedrecord EPS in 2011. I am grateful for theOceaneering team that continues to exceland make previous records history.Letter to ShareholdersM. Kevin McEvoyOur performance was largely attributable to ourglobal focus on deepwater and subsea completionactivity, and capability to supply a wide range of theservices and products required to support the safe efforts ofour customers. We are committed to our customers’ successand our results reflect their recognition of our ability toprovide value to them.Our results were highlighted by best ever operatingincome from our RemotelyOperated Vehicles (ROV) andSubsea Products segments.Compared to 2010, ROVresults improved on higherinternational demand forour services and the expansion of our fleet. Subsea Productsgrowth was broad-based, led by better umbilical plantthroughput, higher Installation and Workover Control Systemservices, and growth in demand for our subsea hardwareand tooling.In May we initiated a regular quarterly dividend of$0.15 per common share to return a portion of our earningsto our shareholders. This underscores our confidence inOceaneering’s financial strength and future businessprospects. We believe this will not compromise our abilityto pursue organic growth and acquisition opportunities toexpand Oceaneering’s asset base and earnings capability.In fact, during the year we continued to fund theseopportunities at a record-setting pace. Our 2011 capitalexpenditures of $527 million were almost two-and-a-halftimes the average we invested during the previous five years.Our investment in acquisitions of $292 million was threetimes what we spent in total on acquisitions during the 2006through 2010 period.Our acquisitions included $220 million in late Decemberto purchase AGR Field Operations Holdings AS, a providerof asset integrity, maintenance, subsea engineering, and fieldoperations services, primarily to the oil and gas industry.This acquisition will significantly increase our Asset Integritybusiness, particularly in Norway, and provides us subseainspection tooling to offer in other geographic markets. Ourorganic growth investments in 2011 included upgrading andexpanding our ROV fleet, as we placed 24 new vehicles intoservice during the year, and completing the conversion ofthe Ocean Patriot to a dynamically positioned saturationdiving vessel.In addition to our capital expenditures, during 2011we repurchased 500,000 shares of our common stock for$17.5 million and paid $48.7 millionof cash dividends. Our balance sheetremained conservatively capitalized.At year end, we had approximately$100 million of cash, $120 million ofdebt, $180 million available underour revolving credit facility, and $1.6 billion of equity.2 Oceaneering International, Inc.
In December we secured a three-year field supportvessel services contract from BP for work offshore Angola,commencing in February 2012. Under the contract, projectmanagement, engineering, and two chartered vessels, eachequipped with two Oceaneering work class ROVs andassociated tooling, will be supplied. This contractrepresents a significant geographic expansion withconsiderable backlog for our Subsea Projects business.For 2012 our EPS guidance range is $2.45 to $2.65,as we expect another record earnings year. For our servicesand products, we anticipate continued internationaldemand growth and a moderate rebound in overallactivity in the U.S. Gulf of Mexico. Compared to 2011,we anticipate all of our operating business segmentswill achieve higher operating income.Looking beyond 2012, our belief that the oil andgas industry will continue to invest in deepwater remainsunchanged. A recentindustry report forecaststotal annual worldwideexploration and productionspending to grow nearly50% by 2015, while capitalexpenditures on deepwater projects are projected to morethan double.Deepwater remains one of the best frontiers for addinglarge hydrocarbon reserves with high production flowrates at relatively low finding and development costs.Therefore, we anticipate that demand for our deepwaterservices and products will continue to rise and believe ourbusiness prospects for the next several years are promising.Given our outlook, we plan to expand our ability toparticipate in the deepwater market by continuing to groworganically and making additional acquisitions. For 2012we forecast generating over $550 million of earningsbefore interest, taxes, depreciation and amortization(EBITDA). Our projected cash flow and our balance sheetprovide us with ample resources to invest in Oceaneering’sgrowth. Our capital expenditure estimate for 2012,excluding acquisitions, is $200 million to $225 million.We intend to look at acquisitions within our market nichesand would particularly like to expand our Subsea Productssegment offerings, especially where we can add a servicescomponent.This is an exciting time for Oceaneering. I recognize andthank our employees who accomplished our record results.Their commitment to safely providehigh-quality solutions to ourcustomers’ needs is the foundationfor our continued success. Duringthe year our workforce grew byabout 1,400 people, or 17%. We arelooking forward to the contribution they will make to ouroperations and growth.In recognition of our record financial performance,actions we took to enhance shareholder value, and ourfuture business prospects, the price of Oceaneering’s stockrose by 25% during the year. Our share price percentageincrease was larger than any of theother companies in the Oil ServiceSector Index (OSX), which bycomparison declined 12%. Ourannual share price percentage changehas outperformed the OSX in eightof the past ten years. Over this decade our stock price hasincreased on average 32% per year, twice that of the OSX.During 2011 our market capitalization reached $5 billion.I was appointed to my current position in May afterserving Oceaneering for over 30 years in various capacities.I thank my predecessor, T. Jay Collins, for the greatcondition of our company at the time of my appointment.Jay remains on our Board of Directors and we look forwardto his continued contributions.I am looking forward to leading Oceaneering toanother record year in 2012.M. Kevin McEvoyPresident and Chief Executive Officer2011 Annual Report 3
Page 3: Financial Highlights($ in thousands
Page 7: 2011 Financial SectionOceaneering I
Page 10 and 11: Oceaneering Common StockOur common
Page 12 and 13: Management's Discussion and Analysi
Page 14 and 15: Critical Accounting Policies and Es
Page 16 and 17: We establish valuation allowances t
Page 18 and 19: In 2009, we used $162 million in in
Page 20 and 21: For 2011, our ROV revenue and opera
Page 22 and 23: We earn equity income from our 50%
Page 24 and 25: Controls and ProceduresDisclosure C
Page 26 and 27: In our opinion, Oceaneering Interna
Page 28 and 29: OCEANEERING INTERNATIONAL, INC. AND
Page 34 and 35: for marine services equipment (such
Page 36 and 37: segment and its Australian assets a
Page 38 and 39: Revenue in Excess of Amounts Billed
Page 40 and 41: elationship and, if it is, the type
Page 42 and 43: December 31,(in thousands) 2011 201
Page 44 and 45: in entities or jurisdictions that h
Page 46 and 47: 4. SELECTED BALANCE SHEET AND INCOM
Page 48 and 49: On January 6, 2012, we entered into
Page 50 and 51: Financial Instruments and Risk Conc
Page 52 and 53: The table that follows presents Rev
Page 54 and 55:
The following table presents Assets
Page 56 and 57:
Geographic Operating AreasThe follo
Page 58 and 59:
equirements. The Compensation Commi
Page 60 and 61:
in 2011, 2010 and 2009 were subject
Page 62 and 63:
Forward-Looking StatementsAll state
Page 64:
Oceaneering International, Inc.1191
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