1131227--3/1/2007--HORNBECK_OFFSHORE_SERVICES_INC

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{gas, price, oil}

{cost, regulation, environmental}

{cost, contract, operation}

{debt, indebtedness, cash}

{competitive, industry, competition}

{stock, price, share}

{personnel, key, retain}

{operation, international, foreign}

{interest, director, officer}

{provision, law, control}

{loss, insurance, financial}

{acquisition, growth, future}

{property, intellectual, protect}

{financial, litigation, operation}

{capital, credit, financial}

{condition, economic, financial}

The Market for New Generation OSVs The Tug and Tank Barge Industry Our Tug and Tank Barge Business Customers and Charter Terms Environmental and Other Governmental Regulation Demand for our OSV services substantially depends on the level of activity in offshore oil and gas exploration, development and production. We expect levels of oil and gas exploration, development and production activity to continue to be volatile and affect the demand for our OSVs. Increases in the supply of vessels could decrease dayrates. Intense competition in our industry could reduce our profitability and market share. The failure to successfully complete construction or conversion of our vessels or repairs, maintenance and routine drydockings on schedule and on budget and to utilize such vessels and the other vessels in our fleet at profitable levels could adversely affect our financial condition and results of operations. If we are unable to acquire additional vessels or businesses and successfully integrate them into our operations, our ability to grow may be limited. Revenues from our TTB business could be adversely affected by a decline in demand for domestic refined petroleum products and crude oil or a change in existing methods of delivery in response to insufficient availability of TTB services and other conditions. The early termination of contracts on our vessels could have an adverse effect on our operations. We are subject to complex laws and regulations, including environmental regulations, that can adversely affect the cost, manner or feasibility of doing business. Our business involves many operating risks that may disrupt our business or otherwise result in substantial losses, and insurance may be unavailable or inadequate to protect us against these risks. Our expansion into international markets subjects us to risks inherent in conducting business internationally. Future results of operations depend on the long-term financial stability of our customers. We may be unable to attract and retain qualified, skilled employees necessary to operate our business. Our employees are covered by federal laws that may subject us to job-related claims in addition to those provided by state laws. Our success depends on key members of our management, the loss of whom could disrupt our business operations. Restrictions contained in the indenture governing our 6.125% Senior Notes due 2014 and in the agreement governing our revolving credit facility may limit our ability to obtain additional financing and to pursue other business opportunities. We have high levels of fixed costs that will be incurred regardless of our level of business activity. If we are required to retire our existing single-hulled tank barges earlier than anticipated due to either regulatory or other requirements, it could adversely affect our business. We may not have the ability to raise the funds necessary to settle conversion of the 1.625% convertible senior notes or to purchase such notes upon a fundamental change or on other purchase dates as defined in the agreement, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of shares. Our revenues and operating results may vary significantly from quarter to quarter due to a number of factors such as volatility in our vessel dayrates, changes in utilization, vessel incidents and other unforeseen matters. Many of these factors that may cause our actual financial results to vary from our publicly disclosed earnings guidance and forecasts are outside of our control. We are susceptible to unexpected increases in operating expenses such as materials and supplies, crew wages, maintenance and repairs, and insurance costs. The convertible note hedge and warrant transactions may affect the value of our common stock. The fundamental change purchase feature of the 1.625% convertible senior notes and provisions of our certificate of incorporation, bylaws, stockholder rights plan and Delaware law may delay or prevent an otherwise beneficial takeover attempt of our company. Conversion of the 1.625% convertible senior notes or exercise of the warrants issued in the warrant transactions may dilute the ownership interest of existing stockholders. Availability of Reports, Certain Committee Charters and Other Information

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1131227--3/1/2007--HORNBECK_OFFSHORE_SERVICES_INC_/LA