GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

     Our operating costs are primarily a function of fleet configuration and utilization levels. The most significant direct operating costs are wages paid to vessel crews, maintenance and repairs, and marine insurance. Generally, fluctuations in vessel utilization have little effect on direct operating costs in the short term. As a result, direct operating costs as a percentage of revenues may vary substantially due to changes in day rates and utilization.

     In addition to direct operating costs, we incur fixed charges related to the depreciation of our fleet and costs for routine drydock inspections, maintenance and repairs designed to ensure compliance with applicable regulations and maintaining certifications for our vessels with various international classification societies. Marine inspection amortization charges are generally determined by the aggregate number of drydockings and other repairs undertaken in a given period. Costs incurred for drydock inspection and regulatory compliance are capitalized and amortized over 30 months, which approximates the period between drydockings.

     Under applicable maritime regulations, vessels must be drydocked twice in a five-year period for inspection and routine maintenance and repair. The total expenditures for drydockings may vary from quarter to quarter based on the number of drydockings undertaken and the complexity of the work to be performed. Expenditures for drydockings totaled $2.7 million during the three months ended March 31, 2004 compared to $2.2 million during the same period in 2003. Amortization expense related to drydocks was $1.8 million and $2.1 million for the 2004 and 2003 periods, respectively.

     The table below sets forth, by region, the average day rates and utilization for our vessels and the average number of vessels owned or chartered during the periods indicated. These vessels generate substantially all of our revenues and operating profit. We use the information that follows to evaluate the performance of the business.

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(a)  Includes all owned or bareboat chartered vessels.

     There have been no changes to the critical accounting policies used in our reporting of results of operations and financial position. For a discussion of our critical accounting policies see

Management's Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K.

     For the quarter ended March 31, 2004, we incurred a net loss of $3.9 million, or $0.19 per diluted share, on revenues of $31.6 million. The net loss during the same period in 2003 was $3.3 million or $0.16 per diluted share on revenues of $28.3 million.

     The increase of $3.3 million in revenues compared to the same quarter a year ago was mainly due to an increase in capacity of $2.4 million principally due to additions to our fleet and the addition of one calendar day in the 2004 quarter, including the full quarter effect of the Highland Eagle, Highland Monarch, Highland Valour and Highland Endurance. We also experienced a favorable variance in day rate of $3.8 million, mainly attributable to a positive exchange rate fluctuation. Partially offsetting these increases was a decrease in utilization of $2.9 million, stemming mainly from the mobilization during the quarter of several ships to different areas.

     North Sea revenues, reflecting the increase in fleet size, increased $1.6 million to $22.6 million in the first quarter of 2004 from $21.0 million in the prior year quarter. An increase in capacity due to the vessel additions and an additional calendar day in the 2004 quarter when compared to the same 2003 quarter accounted for an increase of $2.0 million. Partially offsetting these increases, utilization in the region decreased to 73.8% in the first quarter of 2004 from 76.7% in the first quarter of 2003 and accounted for approximately $3.7 million of revenue decrease. The average day rate declined to $10,400 in the first quarter of 2004 from $10,679 in the same quarter one year ago; however, a strengthening of both the GBP and NOK exchange rates against the U.S. Dollar was partially responsible for an increase in revenue for the region.

     Revenues for our Southeast Asia based fleet increased 26%, from $3.6 million in the first quarter of 2003 to $4.6 million in the first quarter of 2004. The $1.0 million increase was primarily attributable to an increase in utilization, from 66.5% in the first quarter of 2003 to 86.5% in the first quarter of 2004.

     Our Brazilian revenues increased 22% from $3.6 million in the first quarter of 2003 to $4.4 million in the first quarter of 2004. The $0.8 million increase was primarily the result of the mobilization of the North Crusader from the North Sea in April 2003. The North Crusader is working as a front-runner to our Brazilian newbuild, scheduled to be delivered in the third quarter of this year. An increase in day rate from $10,449 in the first quarter of 2003 to $12,600 in the same 2004 quarter contributed $0.4 million to the revenue increase. The improvement in average day rate reflects the addition of higher specification vessels as well as rate increases on each of the vessels remaining on the market. Partially offsetting this effect was the return of the Leopard Bay, one of our bareboat chartered vessels, to its owner during the second quarter of 2003.

     Operating income increased to $0.8 million in the first quarter of 2004 from $0.4 million for the same quarter one year ago. This increase reflected the revenue increases discussed above, $3.3 million, and a decrease of $1.6 million in bareboat charter expense due to the return of 2 bareboat chartered vessels in the second and third quarters of 2003. Offsetting this increase was higher operating costs associated with the fleet expansion, $2.7 million, increased depreciation and amortization expense primarily related to the increased size of the fleet, $1.5 million, and higher general and administrative expense, $0.3 million.

     In the quarter ended March 31, 2004, other expenses of $4.2 million included a $0.7 million increase in interest expense when compared to the first quarter of 2003, mainly attributable to a larger outstanding balance on our line of credit than in the same period last year. Other expenses of $0.1 million included a benefit of $0.8 million related to a reversal of liability associated with the termination of indemnification for tax and legal liabilities of our predecessor relating to periods prior to May 1, 1997. Partially offsetting this benefit was an expense primarily related to the translation of GBP denominated debt on our Norwegian subsidiary as the GBP strengthened against the NOK in the period.

     Our income tax provision for the first quarter of 2004 was $0.5 million compared to a benefit of $0.2 million for the same 2003 quarter. The tax rate in the 2004 period reflected pre-tax losses in our lower tax rate jurisdictions of the North Sea and pre-tax profit in the higher tax rate jurisdictions of Brazil and Southeast Asia.

     Our ongoing liquidity requirements are generally associated with our need to service debt, fund working capital, acquire or improve equipment and make other investments. Since inception, we have been active in the acquisition of additional vessels through both the resale market and new construction. Bank financing, equity capital and internally generated funds have historically provided funding for these activities.

     At March 31, 2004, we had total debt of $244.3 million, consisting of approximately $129.8 million of Senior Notes, $25.5 million related to certain vessel mortgages, and $89.0 million under our credit facility.

     Net working capital for the first quarter of 2004 was $21.0 million, including $12.8 million in cash and cash equivalents. Net cash provided by operating activities decreased by $2.6 million to $9.7 million for the three month period ended March 31, 2004. This decrease was mainly due to working capital changes, partially offset by increased depreciation charges.

     Net cash used in investing activities was $3.3 million and $18.9 million for the three months ended March 31, 2004 and 2003, respectively. The 2004 period reflects the proceeds of $0.7 million from the disposition of a vessel. The 2003 period reflects the final payment for the Highland Eagle, as well as other progress payments under the newbuild program and expenditures associated with modifications performed on the North Crusader related to its contract in Brazil.

     As of March 31, 2004, total outstanding under out $100 million credit facility was $89 million. The weighted average interest rate of our credit facility as of March 31, 2004 was 5.3%. No repayments or

drawdowns were made on the credit facility during the quarter.

     Expenditures related to the vessels under construction in Brazil and Singapore are expected to be approximately $23.5 million during the remainder of 2004, including the final payment for the newbuild UT729-2 Austral Abrolhos which is scheduled for delivery in the third quarter of 2004 and further progress payments on the Singapore newbuilds. Drydocking expenditures for the remainder of 2004 are expected to be approximately $6.0 million.

     Substantially all of our tax provision is for deferred taxes. The tonnage tax regimes in both Norway and the U.K. reduces the cash required for taxes in each of these regions. In other regions, accelerated depreciation has minimized the cash requirements for income taxes.

     We believe that our current level of cash and short-term investments, cash flows from operations and access to various credit arrangements will provide sufficient resources to finance our operating requirements. Our ability to fund working capital, capital expenditures and debt service in excess of cash on hand will be dependent upon the success of our operations. To the extent that existing sources are insufficient to meet those cash requirements, we would seek other debt or equity financing; however, we can give no assurances that such debt or equity financing would be available on acceptable terms.

     In areas where currency risks are potentially high, we normally accept only a small percentage of charter hire in local currency. The remainder is paid in U.S. Dollars.

     Substantially all of our operations are international; therefore we are exposed to currency fluctuations and exchange rate risks. Charters for vessels in the North Sea fleet are primarily denominated in British Pound Sterling ("GBP") with a portion denominated in Norwegian Kroner ("NOK"). Operating costs are substantially denominated in the same currency as charter hire in order to reduce the risk of currency fluctuations. For the three months ended March 31, 2004, currency fluctuations in GBP and NOK did not have a material impact on the results of our operations. For the quarter ended March 31, 2004, the average NOK/U.S. Dollar exchange rate was 1 USD = NOK 6.91, while the average GBP/U.S. Dollar exchange rate was 1 GBP = $1.84. The average exchange rates in the comparable 2003 period were 1 USD = 7.09 NOK and 1 GBP=$1.60. Our North Sea based fleet generated $22.6 million in revenues and $1.8 million in operating loss for the three mon ths ended March 31, 2004.

     Reflected in the accompanying balance sheet as of March 31, 2004, is a $54.5 million cumulative translation adjustment which fluctuates based on differences in GBP and NOK exchange rates as of each balance sheet date compared to the exchange rates when we invested capital in these markets. Changes in the cumulative translation adjustment are non-cash items that are primarily attributable to investments in vessels and dollar based capitalization between the parent company and its foreign subsidiaries.

     During the fourth quarter of 2003, we converted the outstanding balance on our credit facility to GBP in order to match the primary currency of the revenue stream for the collateral vessels. The

majority of the remaining debt is denominated in U.S. Dollars. After evaluating the remaining U.S. Dollar debt, we have determined that it is in our best interest not to use any financial instruments to hedge this exposure under present conditions. Our decision is based on a number of factors, including among others:

- The cost of using hedging instruments in relation to the risks of currency fluctuations,
- - The propensity for adjustments in GBP denominated vessel day rates over time to compensate for
   changes in the purchasing power of GBP as measured in U.S. Dollars,
- - The level of U.S. Dollar denominated borrowings available to us, and
- - The conditions in our U.S. Dollar generating regional markets.

     One or more of these factors may change and we, in response, may choose to use financial instruments to hedge risks of currency fluctuations.

     To date, general inflationary trends have not had a material effect on our operating revenues or expenses.

     This Form 10-Q contains certain forward-looking statements and other statements that are not historical facts concerning, among other things, market conditions, the demand for marine support services and future capital expenditures. These statements are subject to certain risks, uncertainties and assumptions, including, without limitation:

     We cannot assure you that we have accurately identified and properly weighed all of the factors which affect market conditions and demand for our vessels, that the information upon which we have relied is accurate or complete, that our analysis of the market and demand for our vessels is correct, or that the strategy based on that analysis will be successful.

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Our financial instruments that are potentially sensitive to changes in interest rates include the Senior Notes Offering. As of March 31, 2004, the fair value of these notes, based on quoted market prices, was approximately $133.9 million compared to a carrying amount of $129.8 million.

     We operate in a number of international areas and are involved in transactions denominated in currencies other than U.S. Dollars, which exposes us to foreign currency exchange risk. At various times we may utilize forward exchange contracts, local currency borrowings and the payment structure of customer contracts to selectively hedge exposure to exchange rate fluctuations in connection with monetary assets, liabilities and cash flows denominated in certain foreign currency. We do not hold or issue forward exchange contracts or other derivative financial instruments for speculative purposes.

     Other information required under Item 3 has been incorporated into Management's Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 4.     CONTROLS AND PROCEDURES

(a)     Evaluation of disclosure controls and procedures. Based on their evaluation of our disclosure controls and procedures as of the end of the period covered by this report, our Chief Operating Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are effective in ensuring that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

(b)     Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II   OTHER INFORMATION

ITEM 6.      Exhibits and Reports on Form 8-K.

(a)  Exhibits

      See Exhibit Index for list of Exhibits filed herewith

(b)  Reports on Form 8-K.

     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.

                                                                            GulfMark Offshore, Inc.
                                                                            (Registrant)

                                                                  By:     /s/ Edward A. Guthrie
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                                                                            Edward A. Guthrie
                                                                            Executive Vice President and
                                                                            Chief Financial Officer
Date:   May 07, 2004