equipment. Income from operations as a percentage of revenue was 28% during the first quarter of 2009 as compared with 34% in the fourth quarter of 2008. In our marine segment, revenue was $23.1 million and income from operations was $2.8 million. These represent sequential decreases of 39% in revenue and 78% in income from operations as compared to the most recent quarter. The decrease is primarily attributable to reduced demand as our fleet utilization in the first quarter was 48% as compared with 76% in the fourth quarter of 2008. Idle days increased significantly in the first quarter primarily due to less demand, poor weather in the Gulf of Mexico and an increase in vessel inspections. Based on business conditions and market values that existed at March 31, 2009, we concluded that no impairment loss was required. However, the market value of our common stock continues to be depressed and we continue to experience difficult economic environments in most of our markets. If, among other factors,
(1) our market capitalization falls below our equity value, (2) the fair value of our reporting units decline, or (3) the adverse impacts of economic or competitive factors are worse than anticipated, we could conclude in future periods that impairment losses are required in order to reduce the carrying value of our goodwill, equity-method investments and possibly long-lived assets. Depending on the severity of the changes in the key factors underlying the valuation of our reporting units, such losses could be significant. Comparison of the Results of Operations for the Three Months Ended March 31, 2009 and 2008
For the three months ended March 31, 2009, our revenues were $437.1 million, resulting in net income of $56.8 million, or $0.72 diluted earnings per share. Included in the results for the three months ended March 31, 2009 was a $3.2 million pre-tax net gain related to hedges in place for our equity-method investments. For the three months ended March 31, 2008, revenues were $441.4 million and net income was $99.5 million, or $1.21 diluted earnings per share. Included in the results for the three months ended March 31, 2008, were revenues of $55.1 million and income from operations of $64.6 million attributable to the operations of SPN Resources and the gain associated with the sale of 75% of our interest in that entity in March 2008. Revenue for the three months ended March 31, 2009 was higher in the well intervention segment primarily due to work related to a large-scale decommissioning project, which we expect to complete in the first half of 2010. Revenue decreased slightly in the rental tools segment due to decreased rentals of accommodations and stabilization equipment. During the three months ended March 31, 2009, revenue in our marine segment remained unchanged. No activity was recorded in our oil and gas segment for the three months ended March 31, 2009 as we sold 75% of our interest in SPN Resources on March 14, 2008.
The following table compares our operating results for the three months ended March 31, 2009 and 2008 (in thousands). Cost of services, rentals and sales excludes depreciation, depletion, amortization and accretion for each of our business segments. Oil and gas eliminations represent products and services provided to the oil and gas segment by our other segments.

                                    Revenue                                 Cost of Services, Rentals and Sales
                      2009           2008          Change          2009           %        2008           %       Change

Well
Intervention        $ 288,057      $ 234,115      $  53,942      $ 165,489       57%     $ 132,399       57%     $  33,090
Rental Tools          125,944        130,327         (4,383 )       42,036       33%        44,100       34%        (2,064 )
Marine                 23,108         23,089             19         14,940       65%        15,845       69%          (905 )
Oil and Gas                 -         55,072        (55,072 )            -      -           12,986       24%       (12,986 )
Less: Oil and
Gas Elim.                   -         (1,212 )        1,212              -      -           (1,212 )    -            1,212

Total               $ 437,109      $ 441,391      $  (4,282 )    $ 222,465       51%     $ 204,118       46%     $  18,347

The following provides a discussion of our results on a segment basis:
Well Intervention Segment
Revenue for our well intervention segment was $288.1 million for the three months ended March 31, 2009, as compared to $234.1 million for the same period in 2008, representing a 23% increase in revenue. Cost of services remained relatively constant at 57% of segment revenue for the three months ended March 31, 2009 and 2008. Our increase in revenue and profitability is primarily attributable to an increase in engineering and project management

services associated with a large-scale decommissioning project, which we expect to complete in the first half of 2010. The revenue increase is also attributable to work that began in January 2009 on a two-year contract to perform inspection, repair and maintenance work for a major international exploration and production company off the coast of Angola. These increases were partially offset by decreases in the land market related to coiled tubing and cased-hole wireline, snubbing and well control services. Accordingly, our largest geographic revenue growth in this segment came from the Gulf of Mexico, which increased 83% to approximately $191.2 million for the quarter ended March 31, 2009 over the same period of 2008.
Rental Tools Segment
Revenue for our rental tools segment for the three months ended March 31, 2009 was $125.9 million, a 3% decrease over the same period in 2008. Cost of rentals and sales percentage decreased slightly to 33% of segment revenue for the three months ended March 31, 2009 from 34% for the same period of 2008. The decrease in rental revenue is primarily related to a decrease in the rentals of our on-site accommodation units, specifically in the domestic land market. Rental revenue generated from the Gulf of Mexico and our international markets increased by 6% and 4%, respectively, for the quarter ended March 31, 2009 over the same period in of 2008.
Marine Segment
Our marine segment revenue for the three months ended March 31, 2009 remained constant at $23.1 million as compared to the same period in 2008. Our cost of services percentage decreased to 65% of segment revenue for the three months ended March 31, 2009 from 69% for the same period in 2008 primarily due to decreased liftboat maintenance costs and direct expenses. The fleet's average utilization slightly decreased to approximately 48% for the first quarter of 2009 from 49% in the same period in 2008. The utilization decrease was offset by an increase in the fleet's average dayrate, which increased 6% to approximately $17,000 in the first quarter of 2009 from $16,000 in the first quarter of 2008. Oil and Gas Segment
On March 14, 2008, we sold 75% of our interest in SPN Resources for approximately $167.2 million. SPN Resources represented substantially all of our operating oil and gas segment. Subsequent to March 14, 2008, we have accounted for our remaining interest in SPN Resources using the equity-method. Depreciation and Amortization
Depreciation and amortization increased to $49.9 million in the three months ended March 31, 2009 from $41.9 million in the same period in 2008. Depreciation and amortization expense related to our well intervention and rental segments for the three months ended March 31, 2009 increased approximately $10.4 million, or 28%, from the same period in 2008. The increase in depreciation and amortization expense for these segments is primarily attributable to our 2009 and 2008 capital expenditures. Depreciation expense related to the marine segment for the three months ended March 31, 2009 increased approximately $0.4 million, or 18%, from the same period in 2008. The increase in depreciation expense for the marine segment is primarily attributable to the delivery of one new vessel partially offset by the decrease in utilization. These increases were offset by the $2.8 million decrease in the oil and gas segment as we sold 75% of our interest in SPN Resources in March 2008. General and Administrative Expenses
General and administrative expenses decreased to $65.0 million for the three months ended March 31, 2009 from $69.6 million for the same period in 2008 primarily due to the sale of 75% of our interest in SPN Resources in March 2008. General and administrative expenses decreased slightly to 15% of revenue for the three months ended March 31, 2009, as compared to 16% of revenue for the same period in 2008.

Liquidity and Capital Resources
The recent and unprecedented disruption in the current credit markets has had a significant adverse impact on a number of financial institutions. At this point in time, our liquidity has not been impacted by the current credit environment. We will continue to closely monitor our liquidity and the overall health of the credit markets. However, we cannot predict with any certainty the impact of any further disruption in the credit environment.
In the three months ended March 31, 2009, we generated net cash from operating activities of $16.3 million as compared to $124.3 million in the same period of 2008. This decrease is primarily attributable to the increase in costs and estimated earnings in excess of billings related to the large-scale decommissioning contract in the Gulf of Mexico, which is currently scheduled to end in the first half of 2010. Included in other current assets is approximately $238.7 million at March 31, 2009 and $164.3 million at December 31, 2008 of costs and estimated earnings in excess of billings related to this project. Billings and subsequent receipts are based on the completion of milestones. We are working on several aspects of this project at the same time, so we continue to incur cost and recognize revenue in advance of completing milestones. Our primary liquidity needs are for working capital, capital expenditures, debt service and acquisitions. Our primary sources of liquidity are cash flows from operations and available borrowings under our revolving credit facility. We had cash and cash equivalents of $110.4 million at March 31, 2009 compared to $44.9 million at December 31, 2008.
We made $82.3 million of capital expenditures during the three months ended March 31, 2009. Approximately $42.5 million was used to expand and maintain our rental tool equipment inventory, approximately $12.2 million was spent on our marine segment and approximately $24.9 million was used to expand and maintain the asset base of our well intervention segment.
In April 2008, we contracted to purchase a 50% interest in four 265-foot class liftboats. The first two vessels have been delivered. At March 31, 2009, construction on the two remaining vessels has been suspended. We are currently negotiating arrangements to complete construction on these remaining vessels. In January 2009, the party owning the other 50% interest in the four liftboats notified us of its intention to exercise an option to require us to purchase its undivided 50% interest in the liftboats. The other party subsequently rescinded its option exercise and we are currently discussing potential scenarios regarding the joint ownership and operation of the four liftboats. We have a $250 million bank revolving credit facility. Any amounts outstanding under the revolving credit facility are due on June 14, 2011. At March 31, 2009, we had $133.4 million outstanding under the bank credit facility. We also had approximately $11.3 million of letters of credit outstanding, which reduces our borrowing capacity under this credit facility. The increase in the amount outstanding on the revolving credit facility is primarily due to increased working capital needs for our large-scale decommissioning project and tax payments. As of April 30, 2009, we had $69.3 million outstanding under the bank credit facility. Borrowings under the credit facility bear interest at a LIBOR rate plus margins that depend on our leverage ratio. Indebtedness under the credit facility is secured by substantially all of our assets, including the pledge of the stock of our principal subsidiaries. The credit facility contains customary events of default and requires that we satisfy various financial covenants. It also limits our ability to pay dividends or make other distributions, make acquisitions, create liens or incur additional indebtedness. We have $15.0 million outstanding at March 31, 2009 in U.S. Government guaranteed long-term financing under Title XI of the Merchant Marine Act of 1936, which is administered by the Maritime Administration (MARAD), for two 245-foot class liftboats. This debt bears an interest rate of 6.45% per annum and is payable in equal semi-annual installments of $405,000 on every June 3rd and December 3rd through the maturity date of June 3, 2027. Our obligations are secured by mortgages on the two liftboats. This MARAD financing also requires that we comply with certain covenants and restrictions, including the maintenance of minimum net worth, working capital and debt-to-equity requirements.
We have $300 million of 6 7/8% unsecured senior notes due 2014. The indenture governing the senior notes requires semi-annual interest payments on every June 1st and December 1st through the maturity date of June 1, 2014. The indenture contains certain covenants that, among other things, limit us from incurring additional debt, repurchasing capital stock, paying dividends or making other distributions, incurring liens, selling assets or entering into certain mergers or acquisitions.

We also have $400 million of 1.50% senior exchangeable notes due 2026. The exchangeable notes bear interest at a rate of 1.50% per annum and decrease to 1.25% per annum on December 15, 2011. Interest on the exchangeable notes is payable semi-annually in arrears on December 15thand June 15th of each year, beginning June 15, 2007. The exchangeable notes do not contain any restrictive financial covenants.
The Company's current long-term issuer credit rating is BB+ by Standard and Poor's and Ba3 by Moody's. Our credit rating may be impacted by the rating agencies' view of the cyclical nature of our industry sector.
Under certain circumstances, holders may exchange the notes for shares of our common stock. The initial exchange rate is 21.9414 shares of common stock per $1,000 principal amount of notes. This is equal to an initial exchange price of $45.58 per share. The exchange price represents a 35% premium over the closing share price at the date of issuance. The notes may be exchanged under the following circumstances:
• during any fiscal quarter (and only during such fiscal quarter), if the last reported sale price of our common stock is greater than or equal to 135% of the applicable exchange price of the notes for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter;

• prior to December 15, 2011, during the five business-day period after any ten consecutive trading-day period (the "measurement period") in which the trading price of $1,000 principal amount of notes for each trading day in the measurement period was less than 95% of the product of the last reported sale price of our common stock and the exchange rate on such trading day;

• if the notes have been called for redemption;

• upon the occurrence of specified corporate transactions; or

• at any time beginning on September 15, 2026, and ending at the close of business on the second business day immediately preceding the maturity date of December 15, 2026.

In connection with the issuance of the exchangeable notes, we entered into agreements with affiliates of the initial purchasers to purchase call options and sell warrants on our common stock. We may exercise the call options we purchased at any time to acquire approximately 8.8 million shares of our common stock at a strike price of $45.58 per share. The owners of the warrants may exercise the warrants to purchase from us approximately 8.8 million shares of our common stock at a price of $59.42 per share, subject to certain anti-dilution and other customary adjustments. The warrants may be settled in cash, in shares or in a combination of cash and shares, at our option. These transactions may potentially reduce the dilution of our common stock from the exchange of the notes by increasing the effective exchange price to $59.42 per share. Lehman Brothers OTC Derivatives, Inc. (LBOTC) is the counterparty to 50% of our call option and warrant transactions. In October 2008, LBOTC filed for bankruptcy protection, which is an event of default under the contracts relating to the call option and warrant transactions. We have not terminated these contracts and continue to carefully monitor the developments affecting LBOTC. Although we may not retain the benefit of the call option due to LBOTC's bankruptcy, we do not expect that there will be a material impact, if any, on the financial statements or results of operations. The call option and warrant transactions described above do not affect the terms of the outstanding exchangeable notes.

The following table summarizes our contractual cash obligations and commercial commitments at March 31, 2009 (amounts in thousands) for our long-term debt (including estimated interest payments), operating leases, contractual obligations and other long-term liabilities. We do not have any other material obligations or commitments.

                            Remaining
                              Nine
                             Months
Description                   2009          2010         2011          2012         2013         2014        Thereafter

Long-term debt,
including estimated
interest payments           $ 31,640     $ 32,671     $ 163,351     $ 27,231     $ 27,179     $ 316,814      $ 474,354
Operating leases              12,163       12,790         7,095        4,329        2,657         2,128          9,405
Other long-term
liabilities                        -       10,553         7,071        5,654        2,863           235         10,592

Total                       $ 43,803     $ 56,014     $ 177,517     $ 37,214     $ 32,699     $ 319,177      $ 494,351

We currently believe that we will spend approximately $185 to $195 million on capital expenditures, excluding acquisitions, during the remaining nine months of 2009. We believe that our current working capital, cash generated from our operations and availability under our revolving credit facility will provide sufficient funds for our identified capital projects.
We intend to continue implementing our growth strategy of increasing our scope of services through both internal growth and strategic acquisitions. We expect to continue to make the capital expenditures required to implement our growth strategy in amounts consistent with the amount of cash generated from operating activities, the availability of additional financing and our credit facility. Depending on the size of any future acquisitions, we may require additional equity or debt financing in excess of our current working capital and amounts available under our revolving credit facility. Off-Balance Sheet Financing Arrangements We have no off-balance sheet financing arrangements other than the potential additional consideration that may be payable as a result of the future operating performances of our acquisitions. At March 31, 2009, the maximum additional consideration payable for these acquisitions was approximately $26.6 million. These amounts are not classified as liabilities under current generally accepted accounting principles and are not reflected in our financial statements until the amounts are fixed and determinable. When amounts are determined, they are capitalized as part of the purchase price of the related acquisition. We do not have any other financing arrangements that are not required under generally accepted accounting principles to be reflected in our financial statements. Hedging Activities
During 2008, we entered into forward foreign exchange contracts to mitigate the impact of foreign currency fluctuations. The forward foreign exchange contracts we enter into generally have maturities ranging from one to eighteen months. We do not enter into forward foreign exchange contracts for trading purposes. During the quarter ended March 31, 2009, we held outstanding foreign currency forward contracts in order to hedge exposure to currency fluctuations between the British Pound Sterling and the Euro. These contracts were not accounted for as hedges and were marked to fair market value each period. As of March 31, 2009, we had no outstanding foreign currency forward contracts. New Accounting Pronouncements
On January 1, 2009, we adopted the Financial Accounting Standards Board's Staff Position APB No. 14-1 (FSP APB No. 14-1), "Accounting for Convertible Debt Instruments That May Be Settled Upon Conversion (Including Partial Cash Settlement)." FSP APB No. 14-1 requires the proceeds from the issuance of exchangeable debt instruments to be allocated between a liability component (issued at a discount) and an equity component. The resulting debt discount will be amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense (see note 2 of financial statements).

On January 1, 2009, we adopted Statement of Financial Accounting Standards No. 141 (R) (FAS No. 141 (R)), "Business Combinations (as amended)." FAS No. 141(R) requires an acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction and any noncontrolling interest in the acquiree at the acquisition date fair value. Additionally, contingent consideration and contractual contingencies shall be measured at acquisition date fair value. FAS No. 141(R) also requires an acquirer to disclose all of the information users may need to evaluate and understand the nature and financial effect of the business combination. FAS No. 141(R) applies prospectively to business combinations after January 1, 2009. The adoption of FAS No. 141 (R) did not have an impact on our results of operations and financial position.
On January 1, 2009, we adopted Statement of Financial Accounting Standards No. 160 (FAS No. 160), "Noncontrolling Interests in Consolidated Financial . . .