17 1998 ANNUAL REPORT [LOGO]
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Stolt Comex Seaway S.A.("the Company" or "SCS") is one of the largest subsea contractors in the world with
services covering all phases of subsea offshore oil and gas operations from exploration to decommissioning. The
Company operates in more than 60 countries worldwide and maintains regional offices in the U.K., Norway,
Asia Pacific, Southern Europe, Africa and the Middle East ("SEAME"), South America, and North America.
In August 1998, SCS acquired the Ceanic Corporation ("Ceanic"), in a strategic move to secure a major position
in the growing and important Gulf of Mexico market. The acquisition gives SCS an established base in Houston
from where major U.S. customers direct their worldwide business. With Ceanic, SCS took ownership of a
substantial fleet of ships, remotely operated vehicles ("ROV's"), and other related technologies. Following the
acquisition, SCS will become the largest subsea contractor in the Gulf of Mexico.
The market for the Company's services is dependent upon the success of exploration and the level of
development and production expenditures in the oil and gas industry. Such expenditures are cyclical in nature and
influenced by prevailing and anticipated oil and gas prices.
The price of oil fell dramatically in the latter part of 1998. This affects different segments of the industry in
different ways. New field developments in shallow water can be turned on or off at relatively short notice.
However, new developments in deeper water, SCS's core business, are more complex, have longer lead times,
and require a greater length of time for the planning and installation phases. Management believes the major oil
companies will remain committed to these deepwater developments while exploration and production budgets
elsewhere may be reduced. Producing oil and gas fields require regular inspection and maintenance services. The