8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): October 31, 2006

OCEANEERING INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-10945	95-2628227
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

11911 FM 529 Houston, TX	77041
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (713) 329-4500

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On October 31, 2006, we issued a press release announcing our earnings for the third quarter of 2006. A copy of that press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

Item 9.01. Financial Statements and Exhibits.

The following is being furnished as an exhibit to this report.

Exhibit 99.1     Press Release of Oceaneering International, Inc., dated October 31, 2006

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 hereunto duly authorized.

OCEANEERING INTERNATIONAL, INC.
By:	/s/ MARVIN J. MIGURA
	Marvin J. Migura
	Senior Vice President and
	Chief Financial Officer
	(Principal Financial Officer)

Date: October 31, 2006

Exhibit Index

Exhibit No.	Description
99.1	Press Release issued by Oceaneering International, Inc. on October 31, 2006.

EX-99.1

Exhibit 99.1

Oceaneering Announces Record Quarterly Earnings

—Earnings More Than Double Year-Over-Year

—Earnings Increase Over 25% Sequentially

—2007 EPS Guidance of $2.60 - $2.90 Initiated

October 31, 2006 – Houston, Texas – Oceaneering International, Inc. (NYSE:OII) today reported record quarterly earnings for the sixth consecutive quarter. For the quarter ended September 30, 2006, on revenue of $337 million, Oceaneering earned net income of $38.5 million, or $0.70 per share. During the corresponding period in 2005, Oceaneering reported revenue of $263 million and net income of $17.7 million, or $0.33 per share. Historical per share figures have been adjusted for the two-for-one stock split effected in June 2006.

The year-over-year growth in quarterly earnings of more than 100% was mainly attributable to improvements in Remotely Operated Vehicles (ROV), Subsea Products, and Subsea Projects operating profits. The ROV and Subsea Products improvements reflect Oceaneering’s strategic focus on deepwater and subsea completion activity. The Subsea Projects increase was primarily attributable to a higher level of work associated with Gulf of Mexico infrastructure damage caused by hurricanes in 2005.

Summary of Results

(in thousands, except per share amounts)

	Three months ended						Nine months ended September 30,
	September 30,				June 30, 2006
	2006		2005				2006		2005
Revenue	$	337,263	$	263,111	$	311,063	$	937,835	$	709,818
Gross Margin	$	88,225	$	49,334	$	71,957	$	220,499	$	123,104
Operating Income	$	60,591	$	28,335	$	47,899	$	146,454	$	63,488
Net Income	$	38,547	$	17,714	$	30,601	$	94,650	$	42,979
Diluted Earnings Per Share	$	0.70	$	0.33	$	0.56	$	1.72	$	0.81
Weighted Average Number of Diluted Shares		55,283		53,842		55,088		55,049		53,342

For the second quarter of 2006, Oceaneering reported revenue of $311 million and net income of $30.6 million, or $0.56 per share. The 26% sequential improvement in quarterly net income was primarily due to operating income increases from our ROV and Subsea Products segments and a reduction in Unallocated Expenses.

- more -

T. Jay Collins, President and Chief Executive Officer, stated, “We are very pleased with this quarter’s record results as demand for our subsea services and products remained at very high levels. Year to date we have earned more net income than in all of 2005 and are on track to nearly double EPS for the year 2006 over 2005.

“ROVs achieved record quarterly operating income as our average revenue per day-on-hire surpassed the $7,500 mark. Our year-to-date ROV pricing is up over 15% and the number of ROV days on hire has increased by more than 10% compared to the first three quarters of 2005.

“Subsea Products had a record quarter as operating income improved on higher umbilical manufacturing throughput and strong demand for our specialty subsea products. Products backlog at the end of September was $281 million, up from $245 million at the end of last quarter and $181 million a year ago.

“Unallocated Expenses for the quarter were sequentially lower as we had anticipated, due to a reduction in restricted stock expense.

“Since our last quarterly financial press release, our earnings assessment for 2006 has improved and we now expect to achieve record EPS in the range of $2.25 to $2.30. For the fourth quarter, we are forecasting EPS of $0.53 to $0.58 in anticipation of normal seasonal declines in our Inspection and Subsea Projects operations, the dry docking of two of our deepwater vessels, a drop in production throughput at the Medusa Spar, and an increase in Unallocated Expenses.

“We are forecasting EPS for 2007 in the range of $2.60 to $2.90. The 2007 growth in EPS is anticipated to be led by profit improvements from ROVs, due to higher average pricing and an increase in average fleet size, and Subsea Products, particularly our umbilical manufacturing operations. The operating income contribution from our Subsea Projects segment is projected to be about the same as in 2006 as we believe there will be continued demand for hurricane damage work and an escalation in deepwater inspection, repair, and maintenance activity.”

Statements in this press release that express a belief, expectation or intention, as well as those that are not historical fact, are forward looking. The forward-looking statements in this press release include the statements concerning Oceaneering’s: expectation of achieving the estimated record EPS range in 2006; forecasted fourth quarter 2006 EPS range and the factors anticipated to impact the fourth quarter 2006 EPS; expectations of additional EPS growth in 2007 and achieving the estimated record EPS range in 2007; anticipation that 2007 earnings growth will be led by ROV and Subsea Products profit improvements and the factors expected to result in those improvements; and projection that Subsea Projects operating income in 2007 will be about the same as in 2006. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on current information and expectations of Oceaneering that involve a number of risks, uncertainties, and assumptions. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: industry conditions; prices of crude oil and natural gas; Oceaneering’s ability to obtain and the timing of new projects; and changes in competitive factors. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated. These and other risks are more fully described in Oceaneering’s latest annual report on Form 10-K and its other periodic filings with the Securities and Exchange Commission.

Oceaneering is a global oilfield provider of engineered services and products primarily to the offshore oil and gas industry, with a focus on deepwater applications. Through the use of its applied technology expertise, Oceaneering also serves the defense and aerospace industries.

For further information, please contact Jack Jurkoshek, Director Investor Relations, Oceaneering International, Inc., 11911 FM 529, Houston, Texas 77041; Telephone 713-329-4670; Fax 713-329-4653; www.oceaneering.com. A live webcast of the Company’s earnings release conference call, scheduled for November 1, 2006 at 10:00 a.m. Central Time, can be heard at www.companyboardroom.com (enter ticker OII).

PR 963

- Tables follow on next page -

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	Sept. 30, 2006		Dec. 31, 2005
	(in thousands)
ASSETS
Current Assets (including cash and cash equivalents of $33,664 and $26,308)	$	518,925	$	394,233
Net Property and Equipment		482,661		409,201
Other Assets		192,294		186,134
TOTAL ASSETS	$	1,193,880	$	989,568
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities	$	276,717	$	222,667
Long-term Debt		200,000		174,000
Other Long-term Liabilities		64,867		56,783
Shareholders’ Equity		652,296		536,118
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,193,880	$	989,568

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	For the Three Months Ended									For the Nine Months Ended September 30,
	Sept. 30, 2006			Sept. 30, 2005			June 30, 2006
										2006			2005
	(in thousands, except per share amounts)
Revenue	$	337,263		$	263,111		$	311,063		$	937,835		$	709,818
Cost of Services and Products		249,038			213,777			239,106			717,336			586,714
Gross Margin		88,225			49,334			71,957			220,499			123,104
Selling, General and Administrative Expense		27,634			20,999			24,058			74,045			59,616
Income from Operations		60,591			28,335			47,899			146,454			63,488
Interest Income		130			181			62			260			335
Interest Expense		(3,528	)		(2,655	)		(3,131	)		(9,450	)		(7,070	)
Equity earnings of unconsolidated affiliates, net		2,482			1,829			3,879			10,715			9,877
Other Income (Expense), net		(1,213	)		(225	)		(1,192	)		(2,400	)		5
Income before income taxes		58,462			27,465			47,517			145,579			66,635
Provision for Income Taxes		19,915			9,751			16,916			50,929			23,656
Net Income	$	38,547		$	17,714		$	30,601		$	94,650		$	42,979
Diluted Earnings per Share	$	0.70		$	0.33		$	0.56		$	1.72		$	0.81
Weighted average number of common shares and equivalents		55,283			53,842			55,088			55,049			53,342

The above Condensed Consolidated Balance Sheets and Consolidated Statements of Income should be read in conjunction with the Company’s latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

SEGMENT INFORMATION

	For the Three Months Ended									For the Nine Months Ended
	Sept. 30, 2006			Sept. 30, 2005			June 30, 2006			Sept. 30, 2006			Sept. 30, 2005
	($ in thousands)
Remotely Operated Vehicles
Revenue	$	108,801		$	85,749		$	98,641		$	296,389		$	228,972
Gross margin	$	35,224		$	27,948		$	31,856		$	93,664		$	65,704
Gross margin %		32	%		33	%		32	%		32	%		29	%
Operating income	$	30,160		$	24,061		$	27,270		$	79,635		$	54,643
Days available		16,921			15,923			16,384			49,160			46,166
Utilization		86	%		88	%		85	%		85	%		82	%
Subsea Products
Revenue	$	98,993		$	65,430		$	81,815		$	265,326		$	155,146
Gross margin	$	22,801		$	10,522		$	17,126		$	58,717		$	18,868
Gross margin %		23	%		16	%		21	%		22	%		12	%
Operating income	$	15,422		$	4,020		$	10,407		$	38,390		$	2,305
Backlog	$	281,000		$	181,000		$	245,000		$	281,000		$	181,000
Subsea Projects
Revenue	$	38,410		$	30,023		$	42,989		$	122,519		$	77,965
Gross margin	$	18,182		$	8,327		$	22,130		$	53,642		$	17,510
Gross margin %		47	%		28	%		51	%		44	%		22	%
Operating income	$	16,790		$	7,176		$	20,800		$	49,528		$	13,944
Mobile Offshore Production Systems
Revenue	$	12,767		$	12,898		$	12,355		$	38,454		$	37,008
Gross margin	$	4,055		$	4,323		$	3,499		$	11,756		$	13,230
Gross margin %		32	%		34	%		28	%		31	%		36	%
Operating income	$	3,727		$	4,019		$	3,260		$	10,971		$	12,016
Inspection
Revenue	$	45,526		$	39,972		$	42,545		$	121,494		$	120,367
Gross margin	$	8,304		$	6,058		$	8,055		$	21,720		$	17,627
Gross margin %		18	%		15	%		19	%		18	%		15	%
Operating income	$	4,828		$	3,085		$	4,780		$	11,797		$	7,712
Advanced Technologies
Revenue	$	32,766		$	29,039		$	32,718		$	93,653		$	90,360
Gross margin	$	5,028		$	4,636		$	5,233		$	13,800		$	17,045
Gross margin %		15	%		16	%		16	%		15	%		19	%
Operating income	$	3,185		$	2,779		$	3,003		$	7,799		$	11,108
Unallocated Expenses
Gross margin	$	(5,369	)	$	(12,480	)	$	(15,942	)	$	(32,800	)	$	(26,880	)
Operating income	$	(13,521	)	$	(16,805	)	$	(21,621	)	$	(51,666	)	$	(38,240	)
TOTAL
Revenue	$	337,263		$	263,111		$	311,063		$	937,835		$	709,818
Gross margin	$	88,225		$	49,334		$	71,957		$	220,499		$	123,104
Gross margin %		26	%		19	%		23	%		24	%		17	%
Operating income	$	60,591		$	28,335		$	47,899		$	146,454		$	63,488
SELECTED CASH FLOW INFORMATION
Capital expenditures, including acquisitions	$	43,824		$	12,258		$	44,318		$	134,346		$	96,124
Depreciation and amortization	$	20,594		$	18,683		$	18,750		$	58,939		$	54,873