CAL DIVE INTERNATIONAL INC - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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FORM 10-Q

(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the quarterly period ended March 31, 2003

( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from _____________to ______________

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Commission File Number: 0-22739

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Cal Dive International, Inc.
(Exact Name of Registrant as Specified in its Charter)

Minnesota 95-3409686
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)

400 N. Sam Houston Parkway E.
Suite 400
Houston, Texas 77060
(Address of Principal Executive Offices)

(281) 618-0400
(Registrant's telephone number,
including area code)

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Indicate by check whether the registrant: (1) has filed all reports
required to be filed by Section 13(b) or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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 whether the registrant is an accelerated filer (as defined in
Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]

At May 13, 2003 there were 37,629,052 shares of common stock, no par
value outstanding.

CAL DIVE INTERNATIONAL, INC.
INDEX

PART I. FINANCIAL STATEMENTS

Item 1. Financial Statements

CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)

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

1

CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

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

2

CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

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

3

CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1 - Basis of Presentation

The accompanying financial statements include the accounts of Cal Dive
International, Inc. (Cal Dive, CDI or the Company) and its majority owned
subsidiaries. The Company accounts for its 50% interest in Deepwater Gateway LLC
using the equity method of accounting as the Company does not have voting or
operational control of this entity. All significant intercompany accounts and
transactions have been eliminated. These financial statements are unaudited,
have been prepared pursuant to instructions for the Quarterly Report on Form
10-Q required to be filed with the Securities and Exchange Commission and do not
include all information and footnotes normally included in annual financial
statements prepared in accordance with generally accepted accounting principles.

Management has reflected all adjustments (which were normal recurring
adjustments) which it believes are necessary for a fair presentation of the
consolidated balance sheets, results of operations, and cash flows, as
applicable. Operating results for the period ended March 31, 2003, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003. The Company's balance sheet as of December 31, 2002 included
herein has been derived from the audited balance sheet as of December 31, 2002
included in the Company's 2002 Annual Report on Form 10-K/A. These financial
statements should be read in conjunction with the annual consolidated financial
statements and notes thereto included in the Company's 2002 Annual Report on
Form 10-K/A.

Certain reclassifications were made to previously reported amounts in
the consolidated financial statements and notes to make them consistent with the
current presentation format.

Note 2 - Accounting for Asset Retirement Obligations

On January 1, 2003, the Company adopted Statement of Financial
Accounting Standards (SFAS) 143, Accounting for Asset Retirement Obligations,
which addresses the financial accounting and reporting obligations and
retirement costs related to the retirement of tangible long-lived assets. Among
other things, SFAS 143 requires oil and gas companies to reflect decommissioning
liabilities on the face of the balance sheet at fair market value on a
discounted basis. Historically, the Company has reflected this liability on the
balance sheet on an undiscounted basis.

The adoption of SFAS 143 resulted in a cumulative effect adjustment as
of January 1, 2003 to record (i) a $33.1 million decrease in the carrying values
of proved properties, (ii) a $7.4 million decrease in accumulated depreciation,
depletion and amortization of property and equipment, (iii) a $26.5 million
decrease in decommissioning liabilities and (iv) a $0.3 million increase in
deferred income tax liabilities. The net impact of items (i) through (iv) was to
record a gain of $0.5 million, net of tax, as a cumulative effect adjustment of
a change in accounting principle in the Company's consolidated statements of
operations upon adoption on January 1, 2003. The Company has no assets that are
legally restricted for purposes of settling its decommissioning liabilities.

The pro forma effects of the application of SFAS 143 as if the
statement had been adopted on January 1, 2002 are presented below (in
thousands):

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The following table describes the changes in the Company's asset
retirement obligations for the first quarter of 2003 (in thousands):

Asset retirement obligation at December 31, 2002 $ 92,420
Cumulative effect adjustment (26,527)
--------
Asset retirement obligation at January 1, 2003 65,893
Liability incurred during the period 1,722
Liabilities settled during the period (1,907)
Accretion expense 887
--------
Asset retirement obligation at March 31, 2003 $ 66,595
========

The pro forma asset retirement obligation liability balances as if SFAS
143 had been adopted January 1, 2002 are as follows (in thousands):

Note 3 - Comprehensive Income

The components of total comprehensive income for the three months ended
March 31, 2003 are as follows (in thousands):

The components of accumulated other comprehensive loss as of March 31,
3003 are as follows (in thousands):

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Note 4 - Derivatives

The Company's price risk management activities involve the use of
derivative financial instruments to hedge the impact of market price risk
exposures primarily related to our oil and gas production. Under SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, all derivatives
are reflected in our balance sheet at their fair market value.

Under SFAS No. 133 there are two types of hedging activities: hedges of
cash flow exposure and hedges of fair value exposure. The Company engages
primarily in cash flow hedges. Hedges of cash flow exposure are entered into to
hedge a forecasted transaction or the variability of cash flows to be received
or paid related to a recognized asset or liability. Changes in the derivative
fair values that are designated as cash flow hedges are deferred to the extent
that they are effective and are recorded as a component of accumulated other
comprehensive income until the hedged transactions occur and are recognized in
earnings. The ineffective portion of a cash flow hedge's change in fair value is
recognized immediately in earnings in oil and gas production revenues.

As required by SFAS No. 133, we formally document all relationships
between hedging instruments and hedged items, as well as our risk management
objectives, strategies for undertaking various hedge transactions and our
methods for assessing and testing correlation and hedge ineffectiveness. All
hedging instruments are linked to the hedged asset, liability, firm commitment
or forecasted transaction. We also assess, both at the inception of the hedge
and on an on-going basis, whether the derivatives that are used in our hedging
transactions are highly effective in offsetting changes in cash flows of the
hedged items. We discontinue hedge accounting prospectively if we determine that
a derivative is no longer highly effective as a hedge.

The market value of hedging instruments reflects our best estimate and
is based upon exchange or over-the-counter quotations whenever they are
available. Quoted valuations may not be available due to location differences or
terms that extend beyond the period for which quotations are available. Where
quotes are not available, we utilize other valuation techniques or models to
estimate market values. These modeling techniques require us to make estimates
of future prices, price correlation and market volatility and liquidity. Our
actual results may differ from our estimates, and these differences can be
positive or negative.

During the second half of 2002 and first quarter of 2003, the Company
entered into various cash flow hedging swap contracts to fix cash flows relating
to a portion of the Company's oil and gas production. All of these qualify for
hedge accounting and none extend beyond a year. The aggregate fair market value
of the swaps was a liability of $6.7 million as of March 31, 2003. The Company
recorded $4.4 million of unrealized loss, net of taxes of $2.3 million, in other
comprehensive loss within shareholders' equity as these hedges were highly
effective. During the first quarter of 2003, the Company reclassified
approximately $7.5 million of losses from other comprehensive loss to oil and
gas production revenues upon settlement of contracts.

As of March 31, 2003, the Company has the following volumes under
derivative contracts related to its oil and gas producing activities:

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Note 5 - Foreign Currency

The functional currency for the Company's foreign subsidiary Well Ops
(U.K.) Limited is the applicable local currency (British Pound). Results of
operations for this subsidiary are translated into U.S. dollars using average
exchange rates during the period. Assets and liabilities of this foreign
subsidiary are translated into U.S. dollars using the exchange rate in effect at
the balance sheet date and the resulting translation adjustment, which was a
gain of $1.7 million, net of taxes of $900,000, in the first quarter of 2003 is
included as accumulated other comprehensive loss, a component of shareholders'
equity. All foreign currency transaction gains and losses are recognized
currently in the statements of operations. These amounts for the quarter ended
March 31, 2003 were not material to the Company's results of operations or cash
flows.

Canyon Offshore, the Company's ROV and robotics subsidiary, has
operations in the United Kingdom and Southeast Asia sectors. Canyon conducts the
majority of its affairs in these regions in U.S. dollars which it considers the
functional currency. When currencies other than the U.S. dollar are to be paid
or received the resulting gain or loss from translation is recognized in the
statements of operations. These amounts for the quarter ended March 31, 2003
were not material to the Company's results of operations or cash flows.

Note 6 - Earnings Per Share

The Company computes and presents earnings per share (EPS) in
accordance with SFAS No. 128, Earnings Per Share. SFAS 128 requires the
presentation of "basic" EPS and "diluted" EPS on the face of the statement of
operations. Basic EPS is computed by dividing the net income available to common
shareholders by the weighted-average shares of outstanding common stock. The
calculation of diluted EPS is similar to basic EPS except that the denominator
includes dilutive common stock equivalents and the income included in the
numerator excludes the effects of the impact of dilutive common stock
equivalents, if any. The computation of the basic and diluted per share amounts
for the Company's were as follows (thousands, except per share):

Stock options to purchase approximately 1.2 million shares for 2003 and
232,000 shares for 2002 were not dilutive and, therefore, were not included in
the computations of diluted income

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per common share amounts. In addition, approximately 1 million shares
attributable to the convertible preferred stock were excluded from the first
quarter of 2003 calculation of diluted EPS as the effect was antidilutive.

Note 7 - Stock Based Compensation Plans

In December 2002, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 148, Accounting for Stock-Based Compensation Transition and
Disclosure, to provide alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee
compensation. As permitted under SFAS No. 123, the Company continues to use the
intrinsic value method of accounting established by Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, to account for its
stock-based compensation programs. Accordingly, no compensation expense is
recognized when the exercise price of an employee stock option is equal to the
Common Share market price on the grant date. If SFAS No. 123 had been used for
the accounting of these plans, the Company's pro forma net income before
cumulative change in accounting principle for the three months ended March 31,
2003 and 2002 would have been $4.5 million and $1.7 million, respectively, and
the Company's pro forma diluted earnings per share before cumulative change in
accounting principle would have been $0.12 and $0.05, respectively. These pro
forma results exclude consideration of options granted prior to January 1, 1995,
and therefore may not be representative of that to be expected in future years.

For the purposes of pro forma disclosures, the fair value of each
option grant is estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions used: expected
dividend yields of 0 percent; expected lives ranging from three to ten years,
risk-free interest rate assumed to be 4.0 percent in 2002 and 3.8 percent in
2003, and expected volatility to be 59 percent in 2002 and in 2003. The fair
value of shares issued under the Employee Stock Purchase Plan was based on the
15% discount received by the employees. The weighted average per share fair
value of the options granted in the three months ended March 31, 2003 and 2002
was $12.43 and $15.42, respectively. The estimated fair value of the options is
amortized to pro forma expense over the vesting period.

Note 8 - Business Segment Information (in thousands)

During the first quarter of 2003 the Company changed the name of its
Subsea and Salvage segment to Marine Contracting. This change had no impact on
amounts reported.

During the quarter ended March 31, 2003 the Company derived $5.6
million of its revenues from the U.K. sector utilizing $12.1 million of its
total assets in this region. Additionally, $10.3 million and $4.9 million of
revenues were derived from the Latin America sector during the three months
ended March 31, 2003 and 2002, respectively. The majority of the remaining
revenues were generated in the U.S. Gulf of Mexico.

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Note 9 - Long-Term Financings

In August 2000, the Company closed a $138.5 million long-term financing
for construction of the Q4000. This U.S. Government guaranteed financing is
pursuant to Title XI of the Merchant Marine Act of 1936 which is administered by
the Maritime Administration ("MARAD Debt"). In January 2002, the Maritime
Administration agreed to expand the facility to $160 million to include the
modifications to the vessel which had been approved during 2001. To date the
Company has drawn $143.5 million on this facility, which approximates the
maximum of qualified expenditures. The MARAD Debt is payable in equal
semi-annual installments beginning in August 2002 and maturing 25 years from
such date. It is collateralized by the Q4000, with CDI guaranteeing 50% of the
debt, and bears interest at a rate which currently floats at a rate
approximating AAA Commercial Paper yields plus 20 basis points (approximately 2%
as of March 31, 2003). For a period up to ten years from delivery of the vessel
in April 2002, CDI has options to lock in a fixed rate. In accordance with the
MARAD Debt agreements, CDI is required to comply with certain covenants and
restrictions, including the maintenance of minimum net worth, working capital
and debt-to-equity requirements. As of March 31, 2003, the Company was in
compliance with these covenants.

The Company has a revolving credit facility which was increased from
$40 million to $70 million during 2002 and the term extended for three years.
This facility is collateralized by accounts receivable and certain of the
remaining vessel fleet, bears interest at LIBOR plus 125-250 basis points
depending on CDI leverage ratios (approximately 4.1% as of March 31, 2003) and,
among other restrictions, includes three financial covenants (cash flow
leverage, minimum interest coverage and fixed charge coverage). As of March 31,
2003, the Company had drawn $43.1 million under this revolving credit facility
and was in compliance with these covenants.

In November 2001, Energy Resource Technology, Inc. (a wholly owned
subsidiary, "ERT") (with a corporate guarantee by CDI) entered into a five-year
lease transaction with an entity owned by a third party to fund CDI's portion of
the construction costs ($67 million) of the spar for the Gunnison field. As of
June 30, 2002, the entity had drawn down $22.8 million on this facility. Accrued
interest cost on the outstanding balance is capitalized to the cost of the
facility during construction and is payable monthly thereafter. In August 2002,
CDI acquired 100% of the equity of the entity and converted the notes into a
term loan. The total commitment of the loan was reduced to $35 million and will
be payable in quarterly installments of $1.75 million for three years after
delivery of the spar with the remaining $15.75 million due at the end of the
three years. The facility bears interest at LIBOR plus 225-300 basis points
depending on CDI leverage ratios (approximately 4.3% as of March 31, 2003) and
includes, among other restrictions, three financial covenants (cash flow
leverage, minimum interest coverage and debt to total book capitalization). The
Company was in compliance with these covenants as of March 31, 2003. As of March
31, 2003 the Company has drawn down $31.9 million on the facility.

Scheduled maturities of Long-term Debt outstanding as of March 31, 2003
were as follows (in thousands):

9

During the three months ended March 31, 2003 and 2002, the Company made
cash payments for interest charges, net of capitalized interest, of $451,000 and
$0, respectively. The Company capitalized interest totaling $930,000 and $1.4
million during the quarters ended March 31, 2003 and 2002, respectively.

Note 10 - Litigation and Claims

The Company is involved in various routine legal proceedings primarily
involving claims for personal injury under the General Maritime Laws of the
United States and Jones Act as a result of alleged negligence. In addition, the
Company from time to time incurs other claims, such as contract disputes, in the
normal course of business. During 2002, the Company engaged in a large
construction project, and in late September, supports engineered by a
subcontractor failed resulting in over a month of downtime for two of CDI's
vessels. Management believes that under the terms of the contract the Company is
entitled to the contractual stand-by rate for the vessels during their downtime.
The customer is currently disputing these invoices along with certain other
change orders. CDI has billed approximately $33.5 million ($11.9 million of
which had not been collected as of March 31, 2003) for this project which
management believes it is due under the terms of the contract. However, due to
the size of the dispute, inherent uncertainties with respect to an arbitration
and relationship issues with the customer, CDI provided a reserve in the fourth
quarter of 2002 resulting in a loss for the Company on the project as a whole.
In another lengthy commercial dispute, EEX Corporation sued Cal Dive and others
alleging breach of fiduciary duty by a former EEX employee and damages resulting
from certain construction and property acquisition agreements. Cal Dive had
responded alleging EEX Corporation breached various provisions of the same
contracts. EEX's acquisition by Newfield during the fourth quarter 2002 enabled
CDI to enter meaningful settlement discussions prior to the trial date, which
was set for February 2003. This resulted in a settlement including CDI making a
cash payment, during the first quarter of 2003, and agreeing to provide work
credits for its services over the next three years. The total value of the
settlement was recorded in the Company's statement of operations for the year
ended December 31, 2002. This settlement combined with the reserves on the
project discussed above resulted in approximately $10 million of pre-tax charges
recorded in the statement of operations in the fourth quarter of 2002.

In 1998, one of our subsidiaries entered into a subcontract with Seacore
Marine Contractors Limited ("Seacore") to provide the Sea Sorceress to a
Coflexip subsidiary in Canada ("Coflexip"). Due to difficulties with respect to
the sea states and soil conditions the contract was terminated and an
arbitration to recover damages was commenced. A preliminary liability finding
has been made by the arbitrator against Seacore and in favor of the Coflexip
subsidiary. We were not a party to this arbitration proceeding. Seacore and
Coflexip settled this matter prior to the conclusion of the arbitration
proceeding with Seacore paying Coflexip $6.95 million (Canadian). Seacore has
now made demand on Cal Dive Offshore Ltd. ("CDO"), a subsidiary of Cal Dive, for
one-half this amount. Because only one of the grounds in the preliminary
findings by the arbitrator is applicable to CDO, and because CDO holds
substantial counterclaims against Seacore, management believes that in the event
Seacore continues to seek contribution from our subsidiary, which would require
another arbitration, it is anticipated that our subsidiary's exposure, if any,
should be less than $500,000.

Although the above discussed matters have the potential of significant
additional liability, the Company believes that the outcome of all such matters
and proceedings will not have a material adverse effect on its consolidated
financial position, results of operations or cash flows.

Note 11 - Canyon Offshore

In January 2002, CDI purchased Canyon, a supplier of remotely operated
vehicles (ROVs) and robotics to the offshore construction and telecommunications
industries. CDI purchased Canyon for cash of $52.8 million, the assumption of
$9.0 million of Canyon debt (offset

10

by $3.1 million of cash acquired), 181,000 shares of CDI common stock valued at
$4.3 million (143,000 shares of which we purchased as treasury shares during the
fourth quarter of 2001) and a commitment to purchase the redeemable stock in
Canyon at a price to be determined by Canyon's performance during the years 2002
through 2004 from continuing employees at a minimum purchase price of $13.53 per
share (or $7.5 million). The Company also agreed to make future payments
relating to the tax impact on the date of redemption, whether employment
continued or not. As they are employees, any share price paid in excess of the
$13.53 per share and related tax impact will be recorded as compensation
expense. These remaining shares have been classified as redeemable stock in
subsidiary in the accompanying balance sheet and will be adjusted to their
estimated redemption value at each reporting period based on Canyon's
performance. In April 2003, the Company purchased approximately one-third of the
redeemable shares at the minimum purchase price of $13.53 per share.
Consideration included approximately $350,000 of contingent consideration
relating to tax gross-up payments paid to the Canyon employees in accordance
with the purchase agreement. This amount will be recorded as goodwill in the
period paid (i.e., the second quarter of 2003).

Note 12 - Offshore Property Acquisitions

In March 2003, ERT acquired additional interests, ranging from 45% to
84%, in four fields acquired last year, enabling ERT to take over as operator of
one field. ERT paid $858,000 in cash and assumed Exxon/Mobil's pro-rata share of
the abandonment obligation for the acquired interests.

Note 13 - Convertible Preferred Stock

On January 8, 2003, CDI completed the private placement of $25 million
of a newly designated class of cumulative convertible preferred stock (Series
A-1 Cumulative Convertible Preferred Stock, par value $0.01 per share) that is
convertible into 833,334 shares of Cal Dive common stock at $30 per share. The
preferred stock was issued to a private investment firm. The preferred
stockholder has the right to purchase as much as $30 million in additional
preferred stock for a period of two years beginning in July 2003. The conversion
price of the additional preferred stock will equal 125% of the then prevailing
price of Cal Dive common stock, subject to a minimum conversion price of $30 per
common share.

The preferred stock has a minimum annual dividend rate of 4%, subject
to adjustment, payable quarterly in cash or common shares. CDI paid the first
quarter 2003 dividend on March 31, 2003 in cash. After the second anniversary,
the holder may redeem the value of its original investment in the preferred
shares to be settled in common stock at the then prevailing market price or cash
at the discretion of the Company. In the event the Company is unable to deliver
registered common shares, CDI could be required to redeem in cash. Under certain
conditions (the Company's stock price falling below $7.35 per share and the
occurrence of a restatement in the Company's earnings), the holder could redeem
its investment prior to the second anniversary.

The proceeds received from the sale of this stock, net of transaction
costs, have been classified outside of shareholders' equity on the balance sheet
below total liabilities. The transaction costs have been deferred, and are being
accreted through the statement of operations over two years. Prior to the
conversion, common shares issuable will be assessed for inclusion in the
weighted average shares outstanding for the Company's fully diluted earnings per
share using the if converted method based on the Company's common share price at
the beginning of the applicable period.

During the first quarter of 2003, the Company filed a registration
statement registering approximately 7.5 million shares of common stock relating
to this transaction, the maximum potential total number shares of common stock
redeemable under certain circumstances, subject to the Company's ability to
redeem with cash, under the terms of the agreement. The registration statement
became effective April 30, 2003.

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

FORWARD LOOKING STATEMENTS AND ASSUMPTIONS

This Quarterly Report on Form 10-Q includes or incorporates by
reference certain statements that may be deemed "forward looking statements"
under applicable law. Forward looking statements and assumptions in this Form
10-Q 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,
offshore weather conditions, 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.

RESULTS OF OPERATIONS

Comparison of Three Months Ended March 31, 2003 and 2002

Revenues. During the three months ended March 31, 2003, the Company's
revenues increased 65% to $88.9 million compared to $53.9 million for the three
months ended March 31, 2002. Of the overall $35.0 million increase, $25.1
million was generated by the Oil and Gas Production segment due to significantly
higher oil and gas prices and increased production. The balance of the increase
was due primarily to the addition of new Deepwater contracting assets, including
the Q4000, the Intrepid and the Seawell (acquired in the Well Ops (U.K.) Limited
transaction in July 2002). These assets contributed revenues of approximately
$16.9 million during the three months ended March 31, 2003, which more than
offset the $2.7 million decline in revenues from Canyon, our robotics
subsidiary, due to the decline in the telecom burial market as compared to the
prior year period.

Oil and Gas Production revenue for the three months ended March 31,
2003 increased $25.1 million, or 263%, to $34.7 million from $9.6 million during
the comparable prior year period. The increase was due to a 72% increase in
average realized commodity prices to $4.91 per Mcfe, net of hedges in place
($5.22 per Mcf of natural gas and $28.67 per barrel of oil) from $2.86 per Mcfe
($2.55 per Mcf of natural gas and $20.44 per barrel of oil) in the prior year
quarter. The 135% increase in production (6.8 Bcfe for the three months ended
March 31, 2003 compared to 2.9 Bcfe in the comparable prior year period) is a
result of the four significant property acquisitions completed last year.

Gross Profit. Gross profit of $19.2 million for the first quarter of
2003 represents a 73% increase compared to the $11.1 million recorded in the
comparable prior year period, with the Oil and Gas Production segment
contributing all of the increase. The Marine Contracting segment recognized no
gross profit for the three months ended March 31, 2003, declining $6.7 million
from the prior year period. The Seawell experienced low utilization in the North
Sea resulting in a loss for the first quarter of 2003 of $3.1 million. In
addition, gross profit from Canyon decreased $2.5 million due to the decline in
telecom burial work and to low utility (45%) of the two robotic support vessels,
the Merlin in the Gulf of Mexico and the Northern Canyon in the North Sea.
Offsetting these declines was a $14.8 million, or 332%, increase in Oil and Gas
Production gross profit due to the increases in the average realized commodity
prices and production noted above.

Gross margins remained relatively flat at 22% in the first quarter of
2003 as compared to the prior year period as the increase in the Oil and Gas
Production segment made up for the lack of contribution from Marine Contracting.
Oil and Gas Production gross margins increased to 55% for the three months ended
March 31, 2003 from 46% in the year ago quarter due to the aforementioned
increases in average realized commodity prices.

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Selling & Administrative Expenses. Selling and administrative expenses
of $9.0 million for the three months ended March 31, 2003 are $2.7 million
higher than the $6.3 million incurred in the first quarter of 2002 due primarily
to the addition of Well Ops (U.K.) Limited and increased bonus accruals for the
ERT subsidiary resulting from the increase in Oil and Gas Production earnings.
Notwithstanding the increase in dollar amounts we added two points to operating
margins as these expenses were 10% of revenues in the current quarter compared
to 12% of revenues in the prior year quarter.

Net Interest. The Company reported net interest expense and other of
$1.1 million for the three months ended March 31, 2003 compared to $196,000 for
the three months ended March 31, 2002. The increase between periods is due
primarily to the increase in our debt, as well as the lack of capitalized
interest expense as the Q4000 and Intrepid were in service in the first quarter
of 2003.

Income Taxes. Income taxes increased to $3.3 million for the three
months ended March 31, 2003 compared to $1.6 million in the comparable prior
year period due to increased profitability. The effective rate increased to 36%
in the first quarter of 2003 compared to 35% in 2002 due to provisions for
foreign taxes.

Net Income. Net income of $6.0 million for the three months ended March
31, 2003 was $3.0 million greater than the comparable period in 2002 as a result
of factors described above.

Cumulative Effect of Change in Accounting Principle. On January 1,
2003, the Company adopted Statement of Financial Accounting Standards (SFAS)
143, Accounting for Asset Retirement Obligations, which addresses the financial
accounting and reporting obligations and retirement costs related to the
retirement of tangible long-lived assets. Among other things, SFAS 143 requires
oil and gas companies to reflect decommissioning liabilities on the face of the
balance sheet at fair market value on a discounted basis. Historically, ERT has
reflected this liability on the balance sheet on an undiscounted basis.

The adoption of SFAS 143 resulted in a cumulative effect adjustment as
of January 1, 2003 to record (i) a $33.1 million decrease in the carrying values
of proved properties, (ii) a $7.4 million decrease in accumulated depreciation,
depletion and amortization of property, plant and equipment, (iii) a $26.5
million decrease in decommissioning liabilities and (iv) a $0.3 million increase
in deferred income tax liabilities. The net impact of items (i) through (iv) was
to record a gain of $0.5 million, net of tax, as a cumulative effect adjustment
of a change in accounting principle in the Company's consolidated statements of
operations upon adoption on January 1, 2003. The Company has no assets that are
legally restricted for purposes of settling its decommissioning liabilities.

LIQUIDITY AND CAPITAL RESOURCES

During the three years following our initial public offering in 1997,
internally generated cash flow funded approximately $164 million of capital
expenditures and enabled us to remain essentially debt-free. In August 2000, we
closed the long-term MARAD financing for construction of the Q4000. This U.S.
Government guaranteed financing is pursuant to Title XI of the Merchant Marine
Act of 1936 which is administered by the Maritime Administration. We refer to
this debt as MARAD Debt. In January 2002, the Maritime Administration agreed to
expand the facility to $160 million to include the modifications to the vessel
which had been approved during 2001. As of March 31, 2003, $140.8 million was
outstanding on this facility. In January 2002, we acquired Canyon Offshore,
Inc., in July 2002 we acquired the Well Operations Business Unit of
Technip-Coflexip and in August 2002, ERT made two significant property
acquisitions. These acquisitions significantly increased our debt to total book
capitalization ratio from 31% at December 31, 2001 to 40% at December 31, 2002.
Additionally, increased operations coupled with depressed market conditions
caused our working capital to decrease from $48.6 million at December 31, 2001
to

13

$14.3 million at December 31, 2002. In order to reduce this leverage, on January
8, 2003, CDI completed the private placement of $25 million of a newly
designated class of cumulative convertible preferred stock (Series A-1
Cumulative Convertible Preferred Stock, par value $0.01 per share) which is
convertible into 833,334 shares of Cal Dive common stock at $30 per share. As of
March 31, 2003 our debt to total book capitalization had declined to 37% and
working capital had increased to $29.3 million.

Derivative Activities. The Company's price risk management activities
involve the use of derivative financial instruments to hedge the impact of
market price risk exposures primarily related to our oil and gas production.
Under SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, all derivatives are reflected in our balance sheet at their fair
market value.

Under SFAS No. 133 there are two types of hedging activities: hedges of
cash flow exposure and hedges of fair value exposure. The Company engages
primarily in cash flow hedges. Hedges of cash flow exposure are entered into to
hedge a forecasted transaction or the variability of cash flows to be received
or paid related to a recognized asset or liability. Changes in the derivative
fair values that are designated as cash flow hedges are deferred to the extent
that they are effective and are recorded as a component of accumulated other
comprehensive income until the hedged transactions occur and are recognized in
earnings. The ineffective portion of a cash flow hedge's change in fair value is
recognized immediately in earnings in oil and gas production revenues.

As required by SFAS No. 133, we formally document all relationships
between hedging instruments and hedged items, as well as our risk management
objectives, strategies for undertaking various hedge transactions and our
methods for assessing and testing correlation and hedge ineffectiveness. All
hedging instruments are linked to the hedged asset, liability, firm commitment
or forecasted transaction. We also assess, both at the inception of the hedge
and on an on-going basis, whether the derivatives that are used in our hedging
transactions are highly effective in offsetting changes in cash flows of the
hedged items. We discontinue hedge accounting prospectively if we determine that
a derivative is no longer highly effective as a hedge.

The market value of hedging instruments reflects our best estimate and
is based upon exchange or over-the-counter quotations whenever they are
available. Quoted valuations may not be available due to location differences or
terms that extend beyond the period for which quotations are available. Where
quotes are not available, we utilize other valuation techniques or models to
estimate market values. These modeling techniques require us to make estimates
of future prices, price correlation and market volatility and liquidity. Our
actual results may differ from our estimates, and these differences can be
positive or negative.

During the second half of 2002 and first quarter of 2003, the Company
entered into various cash flow hedging swap contracts to fix cash flows relating
to a portion of the Company's oil and gas production. All of these qualify for
hedge accounting and none extend beyond a year. The aggregate fair market value
of the swaps was a liability of $6.7 million as of March 31, 2003. The Company
recorded $4.4 million of unrealized loss, net of taxes of $2.3 million, in other
comprehensive loss within shareholders' equity as these hedges were highly
effective. During the first quarter of 2003, the Company reclassified
approximately $7.5 million of losses from other comprehensive loss to oil and
gas production revenues upon settlement of contracts.

Operating Activities. Net cash provided by operating activities was
$1.6 million during the three months ended March 31, 2003, as compared to net
cash used in operating activities of $10.6 million during the first three months
of 2002. This increase was partly due to increased profitability and a $9.7
million increase in depreciation and amortization resulting from increased
production levels from ERT as well as depreciation on the three DP vessels
placed in service. Funding from accounts receivable collections decreased $18.8
million as receivables have grown as a result of the aforementioned increased
production levels and disputed invoices on a large

14

construction project (see Note 11 to the Consolidated Financial Statements
included in this report). This was offset by a $24.1 million increase in funding
from accounts payable and accrued liabilities resulting from timing of payments
on certain large construction projects and continued payments for the vessels
under construction in early 2002.

Investing Activities. Capital expenditures have consisted principally
of strategic asset acquisitions related to the purchase of DP vessels;
construction of the Q4000 and conversion of the Intrepid; acquisition of
Aquatica, Professional Divers, Canyon and Well Ops (UK) Limited improvements to
existing vessels and the acquisition of offshore natural gas and oil properties.
As a result of our anticipation of an acceleration in Deepwater demand over the
next several years, we incurred $316.4 million of capital expenditures
(including the acquisitions of Canyon and Well Ops (U.K.) Limited and
investments in the two Deepwater developments, Gunnison and Deepwater Gateway
L.L.C.) during 2002, $151.3 million during 2001 and $95.1 million during 2000.

We incurred $18.8 million of capital expenditures during the first
three months of 2003 compared to $35.7 million during the comparable prior year
period. Included in the capital expenditures during the first three months of
2003 was $7.1 million for the Canyon MSA with Technip/Coflexip, $3.0 million
related to an ERT offshore property acquisition (see discussion below) and
wellwork, $7.2 million related to Gunnison development costs, including the
spar, as well as regularly scheduled ERT well work. Included in the $35.7
million of capital expenditures in the first quarter of 2002 is $20.6 million
for the construction of the Q4000 and $7.8 million relating to the Intrepid DP
conversion and Eclipse upgrade.

In March 2003, ERT acquired additional interests, ranging from 45% to
84%, in four fields purchased from Williams last year, enabling us to take over
as operator of one field. ERT paid $858,000 in cash and assumed Exxon/Mobil's
pro-rata share of the abandonment obligation for the acquired interests.

In January 2002, CDI purchased Canyon, a supplier of remotely operated
vehicles (ROVs) and robotics to the offshore construction and telecommunications
industries. CDI purchased Canyon for cash of $52.8 million, the assumption of
$9.0 million of Canyon debt (offset by $3.1 million of cash acquired), 181,000
shares of CDI common stock (143,000 shares of which we purchased as treasury
shares during the fourth quarter of 2001) and a commitment to purchase the
redeemable stock in Canyon at a price to be determined by Canyon's performance
during the years 2002 through 2004 from continuing employees at a minimum
purchase price of $13.53 per share (or $7.5 million).

In early 2002 CDI, along with El Paso Energy Partners, formed Deepwater
Gateway L.L.C. (a 50/50 venture) to design, construct, install, own and operate
a tension leg platform ("TLP") production hub primarily for Anadarko Petroleum
Corporation's Marco Polo field discovery in the Deepwater Gulf of Mexico. Our
share of the construction costs is estimated to be approximately $110 million
(approximately $55 million of which had been incurred as of March 31, 2003). In
August 2002, the Company along with El Paso, completed a non-recourse project
financing for this venture, terms of which would include a minimum equity
investment for CDI of approximately $33 million, all of which has been paid as
of March 31, 2003 and is recorded as Investment in Deepwater Gateway L.L.C. in
the accompanying consolidated balance sheet. Terms of the financing also require
CDI to guarantee a balloon payment at the end of the financing term in 2008
(estimated to be $22.5 million). The Company has not recorded any liability for
this guarantee as management believes it is unlikely the Company will be
required to pay the balloon payment.

In April 2000, ERT acquired a 20% working interest in Gunnison, a
deepwater Gulf of Mexico project of Kerr-McGee Oil & Gas Corporation. Consistent
with CDI's philosophy of avoiding exploratory risk, financing for the
exploratory costs of approximately $20 million was provided by an investment
partnership (OKCD Investments, Ltd.), the investors of which are CDI

15

senior management, in exchange for an overriding royalty interest of 25% of
CDI's 20% working interest. CDI provided no guarantees to the investment
partnership. The Board of Directors established three criteria to determine a
commercial discovery and the commitment of Cal Dive funds: 75 million barrels
(gross) of reserves, total development costs of $500 million consistent with 75
MBOE, and a CDI estimated shareholder return of no less than 12%. Kerr-McGee,
the operator, drilled several exploration wells and sidetracks in 3,200 feet of
water at Garden Banks 667, 668 and 669 (the Gunnison prospect) and encountered
significant potential reserves resulting in the three criteria being achieved
during 2001. With the sanctioning of a commercial discovery, the Company is
funding ongoing development and production costs. Cal Dive's share of such
project development costs is estimated in a range of $100 million to $110
million ($70 million of which had been incurred by March 31, 2003) with over
half of that for construction of the spar. See footnote 10 to the Company's
Consolidated Financial Statements included herein for discussion of financing
relating to the spar construction.

Financing Activities. We have financed seasonal operating requirements
and capital expenditures with internally generated funds, borrowings under
credit facilities, the sale of equity and project financings. During 2001 and
2002, we borrowed $59.5 million and $43.9 million ($14.9 of which was in the
first quarter of 2002), respectively, under the MARAD debt bringing the total to
$142.1 million at December 31, 2002. We have not drawn on this facility in 2003.
The MARAD debt is payable in equal semi-annual installments beginning in August
2002 and maturing 25 years from such date. We made one such payment in the first
quarter of 2003 for $1.4 million. It is collateralized by the Q4000, with Cal
Dive guaranteeing 50% of the debt, and bears an interest rate which currently
floats at a rate approximating AAA Commercial Paper yields plus 20 basis points
(approximately 2% as of March 31, 2003). For a period up to ten years from
delivery of the vessel in April 2002, the Company has options to lock in a fixed
rate. In accordance with the MARAD debt agreements, we are required to comply
with certain covenants and restrictions, including the maintenance of minimum
net worth, working capital and debt-to-equity requirements. As of March 31,
2003, we were in compliance with these covenants.

The Company has a revolving credit facility which was increased from
$40 million to $70 million during 2002 and the term extended for three years.
This facility is collateralized by accounts receivable and most of the remaining
vessel fleet, bears interest at LIBOR plus 125-250 basis points depending on CDI
leverage ratios (approximately 4.1% as of March 31, 2003) and, among other
restrictions, includes three financial covenants (cash flow leverage, minimum
interest coverage and fixed charge coverage). As of March 31, 2003, the Company
had drawn $43.1 million (a $9.4 million reduction from December 31, 2002) under
the revolving credit facility and was in compliance with these covenants.

In November 2001, ERT entered into a five-year lease transaction with
an entity owned by a third party to fund CDI's portion of the construction costs
($67 million) of the spar for the Gunnison field. As of December 31, 2001 and
June 30, 2002, the entity had drawn down $5.6 million and $22.8 million,
respectively, on this facility. Accrued interest cost on the outstanding balance
is capitalized to the cost of the facility during construction and is payable
monthly thereafter. In August 2002, CDI acquired 100% of the equity of the
entity and converted the notes into a term loan ("Gunnison Term Loan"). The
total commitment of the loan was reduced to $35 million and will be payable in
quarterly installments of $1.75 million for three years after delivery of the
spar with the remaining $15.75 million due at the end of the three years. The
facility bears interest at LIBOR plus 225-300 basis points depending on CDI
leverage ratios (approximately 4.3% as of March 31, 2003) and includes, among
other restrictions, three financial covenants (cash flow leverage, minimum
interest coverage and debt to total book capitalization). The Company was in
compliance with these covenants as of March 31, 2003. We drew $2.6 million on
this facility in the first quarter of 2003 bringing the outstanding balance on
this facility to $31.9 million as of March 31, 2003.

On January 8, 2003, CDI completed the private placement of $25 million
of a newly designated class of cumulative convertible preferred stock (Series
A-1 Cumulative Convertible

16

Preferred Stock, par value $0.01 per share) that is convertible into 833,334
shares of Cal Dive common stock at $30 per share. The preferred stock was issued
to a private investment firm. The preferred stockholder has the right to
purchase as much as $30 million in additional preferred stock for a period of
two years beginning in July 2003. The conversion price of the additional
preferred stock will equal 125% of the then prevailing price of Cal Dive common
stock, subject to a minimum conversion price of $30 per common share. The
preferred stock has a minimum annual dividend rate of 4%, subject to adjustment,
payable quarterly in cash or common shares at Cal Dive's option. CDI paid the
first quarter 2003 dividend on March 31, 2003 in cash. After the second
anniversary, the holder may redeem the value of its original investment in the
preferred shares to be settled in common stock at the then prevailing market
price or cash at the discretion of the Company. Under certain conditions, the
holder could redeem its investment prior to the second anniversary. The proceeds
received from the sale of this stock, net of transaction costs, have been
classified outside of shareholders' equity on the March 31, 2003 balance sheet
below total liabilities. The transaction costs have been deferred, and are being
accreted through the statement of operations over two years. Prior to the
conversion, common shares issuable will be assessed for inclusion in the
weighted average shares outstanding for the Company's fully diluted earnings per
share using the converted method based on the Company's common share price at
the beginning of the applicable period. During the first quarter of 2003, the
Company filed a registration statement registering approximately 7.5 million
shares of common stock relating to this transaction, the maximum potential total
number shares of common stock redeemable under certain circumstances, subject to
the Company's ability to redeem with cash, under the terms of the agreement. The
registration statement became effective April 30, 2003.

During the first three months of 2003, we made payments of $367,000 on
capital leases assumed in the Canyon acquisition. The only other financing
activity during the three months ended March 31, 2003 and 2002 involved the
exercise of employee stock options.

The following table summarizes our contractual cash obligations as of
March 31, 2003 and the scheduled years in which the obligation are contractually
due:

(A) Excludes CDI guarantee of up to $22.5 million balloon payment due in 2008
on non-recourse project financing. Management believes it is unlikely the
Company will be required to pay the balloon payment.

In addition, in connection with our business strategy, we regularly
evaluate acquisition opportunities (including additional vessels as well as
interest in offshore natural gas and oil properties). We believe that
internally-generated cash flow, borrowings under existing credit facilities and
use of project financings along with other debt and equity alternatives will
provide the necessary capital to meet these obligations and achieve our planned
growth.

17

ITEM 3. Quantitative and qualitative disclosure about market risk

The Company is currently exposed to market risk in two major areas:
commodity prices and foreign currency. Because all of the Company's debt at
March 31, 2003 was based on floating rates, changes in interest would, assuming
all other things equal, have a minimal impact on the fair market value of the
debt instruments. Assuming March 31, 2003 debt levels, every 100 basis points
move in interest rates would result in $2.2 million of annualized interest
expense or savings, as the case may be, to the Company.

Commodity Price Risk

The Company has utilized derivative financial instruments with respect
to a portion of 2002 and 2003 oil and gas production to achieve a more
predictable cash flow by reducing its exposure to price fluctuations. The
Company does not enter into derivative or other financial instruments for
trading purposes.

As of March 31, 2003, the Company has the following volumes under
derivative contracts related to its oil and gas producing activities:

Changes in NYMEX oil and gas strip prices would, assuming all other
things being equal, cause the fair market value of these instruments to increase
or decrease.

Foreign Currency Exchange Rates

Because we operate in various oil and gas exploration and production
regions in the world, we conduct a portion of our business in currencies other
than the U.S. dollar (primarily with respect to Well Ops (U.K.) Limited). The
functional currency for Well Ops (U.K.) Limited is the applicable local
currency. Although the revenues are denominated in the local currency, the
effects of foreign currency fluctuations are partly mitigated because local
expenses of such foreign operations also generally are denominated in the same
currency. The impact of exchange rate fluctuations during the three months ended
March 31, 2003 did not have a material effect on reported amounts of revenues or
net income.

Assets and liabilities of Well Ops (U.K.) Limited are translated using
the exchange rates in effect at the balance sheet date, resulting in translation
adjustments that are reflected in accumulated other comprehensive loss in the
stockholders' equity section of our balance sheet. Approximately 19% of our net
assets are impacted by changes in foreign currencies in relation to the U.S.
dollar. We recorded a $1.7 million adjustment, net of taxes, to our equity
account for the three months ended March 31, 2003 to reflect the net impact of
the decline of the British Pound against the U.S. dollar.

Canyon Offshore, the Company's ROV subsidiary, has operations in the
United Kingdom and Southeast Asia sectors. Canyon conducts the majority of its
affairs in these regions in U.S. dollars which it considers the functional
currency. When currencies other than the U.S. dollar are

18

to be paid or received the resulting gain or loss from translation is recognized
in the statements of operations. These amounts for the three months ended March
31, 2003 were not material to the Company's results of operations or cash flows.

ITEM 4. CONTROLS AND PROCEDURES

As of March 31, 2003, an evaluation was performed under the supervision
and with the participation of the Company's management, including the CEO and
CFO, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures. Based on that evaluation, the Company's
management, including the CEO and CFO, concluded that the Company's disclosure
controls and procedures were effective as of March 31, 2003. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect internal controls subsequent to March 31, 2003.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I, Item I, Note 11 to Consolidated Financial Statements, which
is incorporated herein by reference.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits -

Exhibit 15.1 - Independent Accountants' Acknowledgment Letter

Exhibit 99.1 - Certification of Periodic Report by Chief Executive
Officer

Exhibit 99.2 - Certification of Periodic Report by Chief Financial
Officer

Exhibit 99.3 - Independent Accountants' Review Report

(b) Reports on Form 8-K -

Current Report on Form 8-K filed January 8, 2003 to disclose the
issuance of preferred stock convertible at $30 per common share.

Current Report on Form 8-K filed January 22, 2003 to disclose the
private placement of 25,000 shares of a new Series A-1 Cumulative
Convertible Preferred Stock at $1,000 per share.

Current Report on Form 8-K filed February 18, 2003 to report the
Company's 2002 fourth quarter financial results and its forecast
results for the quarter ending March 31, 2003.

Current Report on Form 8-K filed February 24, 2003 to report that
the Company increased its Board of Directors by two members.

19

SIGNATURES

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.

CAL DIVE INTERNATIONAL, INC.

Date: May 15, 2003 By:
------------------------------------
Owen Kratz, Chairman
and Chief Executive Officer

Date: May 15, 2003 By:
------------------------------------
A. Wade Pursell, Senior Vice
President and Chief Financial
Officer

20

CERTIFICATIONS

I, Owen Kratz, the Principal Executive Officer of Cal Dive International, Inc.,
certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cal Dive International,
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: May 15, 2003

/s/ Owen Kratz
------------------------------------
Owen Kratz
Chairman and Chief Executive Officer

21

I, A. Wade Pursell, the Principal Financial Officer of Cal Dive
International, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cal Dive International,
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: May 15, 2003

/s/ A. WADE PURSELL
-------------------------------------------------
A. Wade Pursell
Senior Vice President and Chief Financial Officer

22