~~Table of Contents~~UNITED STATES

~~UNITED~~SECURITIES AND ~~STATES~~EXCHANGE COMMISSION

~~SECURITIES~~Washington, D.C. ~~AND EXCHANGE COMMISSION~~ 20549

~~Washington, D.C. 20549~~ FORM 10-K

~~FORM 10-K~~ (Mark One)

~~(Mark~~x ~~One~~ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

xFor the ~~ANNUAL~~fiscal ~~REPORT~~year ~~PURSUANT~~ended TODecember ~~SECTION~~31, ~~13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~2008

~~For the fiscal year ended December 31, 2005~~ OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨For the ~~TRANSITION~~transition ~~REPORT~~period ~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~from to

~~For~~Commission file ~~the~~number ~~transition period from to~~ 1-11953

~~Commission file number 1-11953~~Willbros Group, Inc.

~~Willbros~~(Exact ~~Group,~~name ~~Inc.~~of registrant as specified in its charter)

(Exact name of registrant as specified in its charter)

Republic of Panama		98-0160660
(Jurisdiction of incorporation)		(I.R.S. Employer Identification Number)

Republic of Panama		98-0160660
(Jurisdiction of incorporation)		(I.R.S. Employer Identification Number)

Plaza 2000 Building

~~Plaza~~50th Street, ~~2000~~8th ~~Building~~ Floor

~~50th~~P.O. Box ~~Street, 8th Floor~~ 0816-01098

~~P.O.~~Panama, Republic ~~Box~~of ~~0816-01098~~ Panama

~~Panama,~~Telephone No.: + ~~Republic of Panama~~ 50-7-213-0947

~~Telephone~~(Address, ~~No.:~~including +zip ~~50-7-213-0947~~code, and telephone number, including

~~(Address, including zip~~ area code, ~~and~~of ~~telephone~~principal ~~number,~~executive ~~including~~offices of registrant)

~~area~~Securities registered ~~code,~~pursuant ofto ~~principal~~Section ~~executive~~12(b) ~~offices~~ of ~~registrant)~~the Act:

Securities registered pursuant to Section 12(b) of the Act:

		Name of each exchange
Title of each class		on which registered
Common Stock, $.05 Par Value		New York Stock Exchange
Preferred Share Purchase Rights		New York Stock Exchange

Title of each class		Name of each exchange on which registered
Common Stock, $.05 Par Value		New York Stock Exchange
Preferred Share Purchase Rights		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

~~Securities~~Indicate ~~registered~~by ~~pursuant~~check tomark ~~Section 12(g)~~if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:. Yes ~~None~~¨ No x

Indicate by check mark if the Registrant is anot ~~well-known~~required ~~seasoned~~to ~~issuer,~~file asreports ~~defined~~pursuant into ~~Rule~~Section ~~405~~13 or Section 15(d) of the ~~Securities~~Exchange Act. ~~Yes~~ Yes ¨ No x x

Indicate by check mark ifwhether the Registrant ~~registrant~~(1) ishas ~~not required~~filed toall ~~file~~ reports ~~pursuant~~required to be filed by Section 13 or ~~Section~~ 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~¨ No~~ x No ¨

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~registrant~~of ~~(1) has~~delinquent ~~filed~~filers ~~all~~pursuant ~~reports required~~ to beItem ~~filed~~405 byof ~~Section 13~~Regulation orS-K ~~15(d)~~is ofnot ~~the~~contained herein, ~~Securities~~and ~~Exchange~~will ~~Act~~not ofbe ~~1934~~contained, ~~during~~to the ~~preceding~~best 12of ~~months~~Registrant’s ~~(or~~knowledge, ~~for~~in definitive ~~such~~proxy ~~shorter~~or ~~period~~information ~~that~~statements ~~the~~incorporated ~~Registrant~~by ~~was~~reference ~~required~~in toPart ~~file such reports), and~~III ~~(2) has~~of ~~been~~this ~~subject~~Form to10-K ~~such~~or ~~filing~~any ~~requirements~~amendment ~~for~~to ~~the~~this ~~past~~Form ~~90 days~~10-K. ~~Yes ¨ No x~~ ¨

Indicate by check mark ifwhether ~~disclosure of delinquent~~the ~~filers~~Registrant ~~pursuant~~is toa ~~Item 405~~large ofaccelerated ~~Regulation~~filer, ~~S-K~~an isaccelerated ~~not contained herein~~filer, ~~and~~a ~~will~~non-accelerated filer ~~not~~or bea ~~contained,~~smaller toreporting ~~the~~company. ~~best~~See definition of ~~Registrant’s~~“large ~~knowledge~~accelerated filer”, in“accelerated ~~definitive~~filer” ~~proxy~~and or“smaller ~~information~~reporting ~~statements~~company” ~~incorporated by reference~~ in ~~Part~~Rule ~~III~~12b-2 of ~~this Form 10-K~~the orExchange ~~any amendment to this Form 10-K~~Act. x

~~Indicate by check mark whether the Registrant is a~~Large ~~large~~ accelerated filer, anx Accelerated ~~accelerated~~ filer~~, or a non~~ ¨ Non-accelerated filer. ~~See~~¨ Smaller reporting ~~definition~~company ~~of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.~~ o

~~Large~~Indicate ~~accelerated~~by ~~filer ¨ Accelerated~~check mark whether the ~~filer x Non~~Registrant is a shell company (as defined in Rule 12b-~~accelerated~~2 ~~filer ¨~~of the Exchange Act).

~~Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).~~ Yes ¨ No x x

The aggregate market value of the Registrant’s Common Stock held by non-affiliates of the Registrant on the last business day of the Registrant’s most recently completed second fiscal quarter (based on the closing sales price on the New York Stock Exchange on June 30, ~~2005~~ 2008) was $~~308~~1,~~483~~690,~~044~~445,256.

The number of shares of the Registrant’s common stock outstanding at ~~May 1~~February 20, ~~2006~~2009 was 21 39,~~723~~134,~~015~~208.

~~Documents~~DOCUMENTS INCORPORATED ~~incorporated~~BY ~~by reference: None~~ REFERENCE

~~Table~~Portions of ~~Contents~~the Registrant’s 2009 Proxy Statement for the Annual Meeting of Stockholders to be held on May 27, 2009 are incorporated by reference into Part III of this Form 10-K.

WILLBROS GROUP, INC.

FORM 10-K

YEAR ENDED DECEMBER 31, ~~2005~~ 2008

TABLE OF CONTENTS

			Page	~~Page~~
~~PART I~~		PART I
Items 1.
Items	1. and 2. Business and Properties		4
and 2.		Business and Properties		5
Item	1A.	Risk Factors	23
Item 1A.		Risk Factors		27
Item	1B.	Unresolved Staff Comments	33
Item 1B.		Unresolved Staff Comments		35
Item	3.	Legal Proceedings	34
Item 3.		Legal Proceedings		36
Item	4.	Submission of Matters to a Vote of Security Holders	34
Item 4.		Submission of Matters to a Vote of Security Holders		38
Item	4A.	Executive Officers of the Registrant	34
~~PART II~~		PART II
Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		39
Item	5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	36
Item 6.		Selected Financial Data		40
Item	6.	Selected Financial Data	37
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		41
Item	7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk		56
Item	7A.	Quantitative and Qualitative Disclosures About Market Risk	56
Item 8.		Financial Statements and Supplementary Data		57
Item	8.	Financial Statements and Supplementary Data	57
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		102
Item	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	102
Item 9A.		Controls and Procedures		102
Item	9A.	Controls and Procedures	102
Item 9B.		Other Information		103
Item	9B.	Other Information	102
~~PART III~~		PART III
Item 10.		Directors and Executive Officers of the Registrant		104
Item	10.	Directors, Executive Officers and Corporate Governance	103
Item 11.		Executive Compensation		108
Item	11.	Executive Compensation	103
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		114
Item	12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	103
Item 13.		Certain Relationships and Related Transactions		118
Item	13.	Certain Relationships and Related Transactions, and Director Independence	103
Item 14.		Principal Accountant Fees and Services		119
Item	14.	Principal Accounting Fees and Services	103
~~PART IV~~		PART IV
Item 15.		Exhibits and Financial Statement Schedules		120
Item	15.	Exhibits and Financial Statement Schedules	104
~~Signatures~~		Signatures	109	~~123~~

2 1

~~Table of Contents~~FORWARD-LOOKING STATEMENTS

~~Forward~~This Annual Report on Form 10-~~Looking~~K ~~Statements~~includes “forward-looking statements.” All statements, other than statements of historical facts, included or incorporated by reference in this Annual Report that address activities, events or developments which we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), oil, gas, gas liquids and power prices, demand for our services, the amount and nature of future investments by governments, expansion and other development trends of the oil, gas, power, refining and petrochemical industries, business strategy, expansion and growth of our business and operations, the outcome of government investigations and legal proceedings and other such matters are forward-looking statements. These forward-looking statements are based on assumptions and analyses we made in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties. As a result, actual results could differ materially from our expectations. Factors that could cause actual results to differ from those contemplated by our forward-looking statements include, but are not limited to, the following:

~~This~~· ~~Form~~curtailment ~~10-K includes “forward-looking statements” within the meaning~~ of ~~Section 27A~~capital ofexpenditures ~~the Securities Act of 1933, as amended,~~ and ~~Section 21E~~ of the ~~Securities~~unavailability ~~Exchange Act~~ of ~~1934,~~project asfunding ~~amended. All statements, other than statements of historical facts, included~~ in ~~this Form 10-K that address activities, events or developments which we expect or anticipate will or may occur in~~ the ~~future, including such things as future capital expenditures (including the amount and nature thereof),~~ oil, gas, ~~gas liquids and~~ power ~~prices~~, ~~demand~~refining ~~for our services, the amount~~ and ~~nature~~petrochemical ~~of future investments by governments, expansion and other development trends of the oil, gas and power~~ industries, business strategy, expansion and growth of our business and operations, the outcome of government investigations and legal proceedings and other such matters are forward-looking statements. These forward-looking statements are based on assumptions and analyses we made in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties. As a result, actual results could differ materially from our expectations. Factors that could cause actual results to differ from those contemplated by our forward-looking statements include, but are not limited to, the following: ;

•· ~~the~~reduction ~~results~~ of ~~government~~services ~~investigations~~to ~~into~~existing ~~the actions of the Company~~ and ofprospective ~~current~~clients ~~and~~as ~~former~~they ~~employees~~bring ofhistorically ~~the~~out-sourced ~~Company,~~services ~~including~~back J.in-house ~~Kenneth~~to ~~Tillery,~~preserve ~~the~~intellectual ~~former~~capital ~~President~~and ofminimize ~~Willbros International, Inc.~~layoffs;

•· ~~the~~increased ~~consequences~~capacity ofand ~~the~~decreased ~~Company~~demand ~~entering~~for ~~into~~our aservices ~~criminal~~in ~~plea agreement or a deferred prosecution agreement, including~~ the ~~imposition~~more ofcompetitive ~~civil~~industry orsegments ~~criminal fines, penalties, monitoring arrangements, or other sanctions~~ that ~~might~~we ~~be imposed as a result of government investigations~~serve;

•· ~~difficulties~~reduced wecreditworthiness ~~may~~of ~~encounter~~our incustomer ~~obtaining~~base ~~new business, retaining existing business~~ and~~/or~~ ~~collecting~~higher ~~receivables~~risk ~~in Nigeria and elsewhere because~~ of ~~the~~non-payment ~~severance~~ of ~~long-term relationships with consultants and other individuals~~receivables;

•· ~~adverse~~inability ~~results~~to ~~that~~lower weour ~~could~~cost ~~suffer~~structure into ~~civil~~remain ~~litigation~~competitive ~~involving~~in ~~or arising from~~ the ~~actions of former employees and officers of the Company~~market;

•· inability of the ~~assertion~~energy byservice ~~parties~~sector to ~~contracts~~reduce ~~with~~costs usin ~~that~~ the ~~actions~~short ofterm ~~former~~to ~~employees~~a oflevel ~~the~~where ~~Company~~our ~~were~~customer’s ~~improper~~project ~~which~~economics ~~constitutes~~support a ~~breach~~reasonable level of, ordevelopment ~~otherwise give rise to claims under, contracts to which we are a party~~work;

•· ~~determination~~inability ~~that~~to predict the ~~actions~~length ofand ~~former~~breadth ~~employees~~ of the ~~Company~~current ~~caused~~economic ~~us to breach our credit agreements or debt instruments~~downturn, which ~~could~~results ~~result~~ in ~~the~~staffing ~~lack~~below ofthe ~~access~~level torequired ~~our~~when ~~credit facilities and~~ the ~~requirement~~market ~~to cash collateralize our existing letters of credit~~recovers;

•· the ~~commencement~~consequences bywe ~~foreign~~may ~~governmental~~encounter ~~authorities~~if ofwe ~~investigations~~fail ~~into~~to comply with the ~~actions~~terms and conditions of ~~current~~our ~~and~~final ~~former~~settlements ~~employees~~with the Department of Justice (“DOJ”) and the ~~Company,~~Securities and Exchange Commission (“SEC”), including the ~~determination~~imposition of civil or criminal fines, penalties, enhanced monitoring arrangements, or other sanctions that ~~such~~might ~~actions~~be ~~constituted~~imposed ~~violations~~by ofthe ~~foreign~~DOJ ~~law~~and SEC;

•· the ~~dishonesty~~issues we may encounter upon the appointment of ~~employees~~the ~~and/or~~federal ~~other~~monitor ~~representatives~~as orprovided ~~their~~for ~~refusal~~in toour ~~abide~~Deferred byProsecution ~~applicable~~Agreement ~~laws~~with the DOJ and ~~the~~any ~~Company’s~~changes ~~established~~in ~~policies~~our ~~and~~business ~~rules~~practices which the monitor may require;

•· ~~curtailment~~the ofcommencement ~~capital~~by ~~expenditures~~foreign ingovernmental authorities of investigations into the ~~oil,~~actions ~~gas~~of our current and former employees, and ~~power~~the ~~industries~~determination that such actions constituted violations of foreign law;

•· ~~political~~difficulties orwe ~~social~~may ~~circumstances~~encounter ~~impeding~~in connection with the ~~progress~~previous sale and disposition of our ~~work~~Nigeria assets and ~~increasing~~Nigeria based operations, including obtaining indemnification for any losses we may experience if, due to the ~~cost~~non-performance of ~~performance~~the purchaser of these assets, claims are made against any parent company guarantees we provided, to the extent those guarantees may be determined to have continued validity;

•· ~~failure~~the dishonesty of employees and/or other representatives or their refusal to ~~obtain~~abide ~~the~~by ~~timely~~applicable ~~award~~laws ofand ~~one~~our orestablished ~~more~~policies ~~projects~~and rules;

•· ~~cancellation~~adverse ofweather ~~projects,~~conditions innot ~~whole~~anticipated or in ~~part~~bids and estimates;

•· ~~inclement~~project ~~weather~~cost overruns, unforeseen schedule delays, and the application of liquidated damages;

•· ~~project~~the ~~cost~~occurrence ~~overruns~~during the course of our operations of accidents and injuries to our personnel, ~~unforeseen~~as ~~schedule~~well ~~delays~~as to third parties, that negatively affect our safety record, which is a factor used by many clients to pre-qualify and ~~the~~otherwise ~~application~~award ofwork ~~liquidated~~to ~~damages~~contractors in our industry;

~~• failing to realize cost recoveries from projects completed or in progress within a reasonable period after completion of the relevant project;~~2

•· ~~inability~~cancellation toof ~~identify~~projects, ~~and~~in ~~acquire~~whole ~~suitable~~or ~~acquisition~~in ~~targets on reasonable terms~~part;

•· ~~inability~~failing to ~~obtain~~realize ~~adequate~~cost ~~financing~~recoveries on claims or change orders from projects completed or in progress within a reasonable period after completion of the relevant project;

•· ~~loss~~political ofor social circumstances impeding the ~~services~~progress of ~~key~~our ~~management~~work ~~personnel~~and increasing the cost of performance;

3· failure to obtain the timely award of one or more projects;

~~Table~~· ofinability ~~Contents~~to identify and acquire suitable acquisition targets on reasonable terms;

•· ~~the~~inability ~~demand~~to ~~for~~hire ~~energy~~and ~~moderating~~retain orsufficient ~~diminishing~~skilled labor to execute our current work, our work in backlog and future work we have not yet been awarded;

•· ~~downturns~~inability into ~~general~~execute ~~economic~~cost-reimbursable projects within the target cost, ~~market~~thus oreroding ~~business~~contract ~~conditions~~margin inand, ~~our~~potentially ~~target~~contract ~~markets~~income on any such project;

•· ~~changes~~inability into ~~the~~obtain ~~effective~~sufficient ~~tax~~surety ~~rate~~bonds inor ~~countries~~letters ~~where~~of ~~our work will be performed~~credit;

•· ~~changes~~inability into ~~applicable~~obtain ~~laws~~adequate ~~or regulations, or changed interpretations thereof~~financing;

•· ~~changes~~loss inof the ~~scope~~services of ~~our~~key ~~expected~~management ~~insurance coverage~~personnel;

•· ~~inability~~the todemand ~~manage~~for ~~insurable~~energy ~~risk~~moderating ator ~~an affordable cost~~diminishing;

•· ~~the~~downturns ~~occurrence~~in ofgeneral ~~the~~economic, ~~risk~~market ~~factors~~or ~~listed~~business ~~under~~conditions ~~Item 1A of this Form 10-K and~~ in our ~~other~~target ~~filings with the Securities and Exchange Commission from time to time~~markets; ~~and~~

•· ~~other~~changes ~~factors,~~in ~~most~~and interpretation of ~~which~~U.S. ~~are~~and ~~beyond~~foreign ~~our~~tax ~~control.~~laws that impact the Company’s worldwide provision for income taxes and effective income tax rate;

~~Consequently,~~· ~~all of~~ the ~~forward-looking~~potential ~~statements~~adverse ~~made~~effects inon ~~this~~our ~~Form~~operating ~~10-K are qualified by these cautionary statements and there can be no assurance that the actual~~ results ~~or developments we anticipate will be realized or, even~~ if ~~substantially~~ ~~realized, that they will have the consequences for, or effects on,~~ our ~~business or operations that we anticipate today. We assume no obligation to update publicly any such forward~~non-~~looking statements, whether as a result of new information, future events or otherwise~~U.S. ~~For~~operations abecame ~~more~~taxable ~~complete~~in ~~description of~~ the ~~circumstances~~United ~~surrounding the actions of the current and former employees of the Company, see the Risk Factors included in this Form 10-K beginning on page 27.~~ States;

~~Unless~~· ~~the~~changes ~~context otherwise requires, all references~~ in ~~this~~applicable ~~Form~~laws ~~10-K~~or ~~to “Willbros”~~regulations, ~~the~~or ~~“Company”, “we”,~~changed ~~“us”~~interpretations ~~and “our” refer to Willbros Group, Inc., its consolidated subsidiaries and their predecessors.~~ thereof;

4· changes in the scope of our expected insurance coverage;

~~Table~~· ofinability ~~Contents~~to manage insurable risk at an affordable cost;

~~PART~~· Ienforceable claims for which we are not fully insured;

~~Items~~· 1incurrence ~~and~~of 2.insurable ~~Business~~claims ~~and~~in ~~Properties~~excess of our insurance coverage;

~~Website~~· ~~Access~~the tooccurrence ~~Reports~~of the risk factors listed elsewhere or incorporated by reference in this Annual Report; and

~~Our~~· ~~public~~other ~~internet~~factors, ~~site~~most ~~is http://www.willbros.com/. We make available free~~ of ~~charge~~which ~~through~~are ~~our~~beyond ~~internet site, via a link to Edgar Online,~~ our ~~annual~~ reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commissioncontrol.

~~In addition~~Consequently, all weof ~~currently~~the ~~make~~forward-looking ~~available~~statements onmade ~~http://www.willbros.com/~~or ~~our~~incorporated ~~annual~~by ~~reports~~reference toin ~~stockholders.~~this Annual ~~You~~Report ~~will~~are ~~need~~qualified toby ~~have~~these cautionary statements and there can be no assurance that the ~~Adobe~~actual ~~Acrobat~~results ~~Reader~~or ~~software~~developments onwe ~~your~~anticipate ~~computer~~will tobe ~~view~~realized or, ~~these~~even ~~documents~~if substantially realized, ~~which~~that ~~are~~they inwill have the ~~.PDF~~consequences ~~format.~~for, Ifor effects ~~you~~on, ~~do not~~our ~~have~~business ~~Adobe~~or ~~Acrobat,~~operations athat ~~link~~we anticipate today. We assume no obligation to ~~Adobe~~update ~~Systems~~publicly ~~Incorporated’s~~any ~~internet~~such ~~site~~forward-looking statements, ~~from~~whether ~~which~~as ~~you~~a result ~~can~~of ~~download~~new ~~the software~~information, isfuture ~~provided.~~events or otherwise.

~~Restatement~~Unless the context otherwise requires, all references in this Annual Report to “Willbros,” the “Company,” “we,” “us” and “our” refer to Willbros Group, Inc., its consolidated subsidiaries and their predecessors. Unless the context otherwise requires, all references in this Annual Report to dollar amounts, except share and per share amounts, are expressed in thousands.

Throughout 2005, Willbros was engaged in investigations into the misconduct of a former senior executive and some other former employees, a process that disrupted the Company’s operations, reduced its productivity and added significant non-operating costs. As a result of an internal investigation, completed in 2005 and more fully described in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Restatement” of this Form 10-K, the Company’s financial results for the years ended December 31, 2001, 2002, and 2003, and the first three quarters of 2004 were restated in the Company’s annual report on Form 10-K for the year ended December 31, 2004. All financial results presented in this report for these periods reflect the restatement. 3

~~General~~ PART I

~~We are an independent~~Items ~~international~~1 ~~contractor serving the oil, gas~~ and ~~power industries and government entities worldwide~~2. Business ~~We currently operate our business in two segments: the United States~~ and Canada (which we refer to as “United States & Canada”) and all other countries outside of the United States & Canada (which we refer to as “International”). We provide construction, engineering and specialty services to industry and governmental entities worldwide, specializing in pipelines and associated facilities for onshore, coastal and offshore locations. We are also actively involved in asset development, ownership and operations as an extension of our portfolio of industry services. We place particular emphasis on projects in countries where we believe our experience gives us a competitive advantage, including several developing countries. Properties

~~Our construction services include, among others, the building, fabrication, installation, assembly, maintenance and replacement of:~~ General

•We ~~major~~are ~~cross~~an independent ~~country~~international ~~pipelines~~contractor serving the oil, gas and power industries, governmental entities, and the refinery and petrochemical industries. We provide engineering; construction; engineering, procurement and construction (“EPC”) and specialty services to industry and governmental entities worldwide, specializing in pipelines and associated facilities for onshore and coastal locations. For the downstream oil and gas markets, primarily refineries, we provide turnaround services, tank services, heater services, construction services and safety services. We also manufacture specialty items for refinery and petrochemical process units. We place particular emphasis on achieving the best risk-adjusted returns. Depending upon market conditions, we may work in developing countries and we believe our experience gives us a competitive advantage in frontier areas where experience in dealing with project logistics is an important consideration for project award and execution. We also believe our engineering and planning and project management expertise, as it relates to optimizing the structure and execution of a project, provides us with a competitive advantage in all the markets we address.

•We ~~offshore~~are incorporated ~~pipelines~~in the Republic of Panama and maintain our headquarters at Plaza 2000 Building, 50th Street, 8th Floor, P.O. Box 0816-01098, Panama, Republic of Panama; our telephone number is +50-7-213-0947. Panama’s General Corporation Law is substantially modeled on the New York and Delaware corporate laws as they existed in 1932. Panama does not tax income derived from activities conducted outside Panama. All significant operations are carried out by the following material direct or indirect subsidiaries:

•· ~~gathering~~Willbros ~~systems~~USA, Inc.;

•· ~~flow~~Willbros ~~stations~~Construction (U.S.), LLC;

•· ~~pump~~Willbros ~~stations~~Canada Holdings ULC;

•· ~~meter~~Integrated ~~stations~~Service Company LLC;

•· ~~gas~~Willbros ~~compressor~~Engineers ~~stations~~(U.S.), LLC;

•· ~~gas~~Willbros ~~processing~~Project ~~facilities~~Services (U.S.), LLC;

•· ~~oil~~Willbros ~~and~~Midstream ~~gas~~Services ~~production~~(U.S.), ~~facilities~~LLC;

•· ~~subsea~~Willbros ~~facilities~~Construction Services (Canada) L.P.;

•· ~~offshore~~Willbros ~~jackets~~Midwest ~~and~~Pipeline ~~decks~~Construction (Canada) L.P.;

•· ~~modular~~Willbros ~~processing~~Government ~~facilities~~Services (U.S.), LLC;

•· ~~piers~~Willbros Middle East, Ltd.; and

•· ~~pressure~~The ~~vessels;~~Oman Construction Company (TOCO) L.L.C.

•The Willbros ~~dock~~corporate ~~facilities;~~structure is designed to comply with jurisdictional and registration requirements associated with work bid and performed and to reduce worldwide taxation of operating income. Additional subsidiaries may be formed in specific work countries where necessary or useful for compliance with local laws or tax objectives. Administrative services are provided by Willbros USA, Inc., whose administrative headquarters are located at 4400 Post Oak Parkway, Suite 1000, Houston, Texas 77027, telephone number (713) 403-8000.

~~• bridges.~~4

5Our public internet site is http://www.willbros.com/. We make available free of charge through our internet site, via a link to Edgar Online, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. Our common stock is traded on the New York Stock Exchange under the symbol “WG.”

~~Table~~In addition, ofwe ~~Contents~~currently make available on http://www.willbros.com/ our annual reports to stockholders. You will need to have the Adobe Acrobat Reader software on your computer to view these documents, which are in the .PDF format. If you do not have Adobe Acrobat, a link to Adobe Systems Incorporated’s internet site, from which you can download the software, is provided.

~~Construction services are provided utilizing a large fleet of company-owned and leased equipment that~~Recent includes marine vessels, barges, dredges, pipelaying equipment, heavy construction equipment, transportation equipment and camp equipment. Our equipment fleet is supported by an extensive inventory of spare parts and tools, which we strategically position and maintain throughout the world to maximize availability and minimize cost. We also own fabrication facilities in Canada, Nigeria, the United States, and Venezuela. Through our construction resources, we also provide specialty services, including asset development and operations. Our asset development and operations (also referred to as “facility operations”) include assets developed under “Build, Own and Operate” contracts, such as the fueling facilities operated for the Defense Energy Support Center, an agency of the U.S. government, and a 10 percent ownership in a water injection facility in Venezuela. During 2004 and 2005, we owned a gas processing plant (“TXP-4 Plant”) in the Opal, Wyoming area. The TXP-4 Plant was sold in January 2006 to Williams Field Services Company (See Note 18 to the Consolidated Financial Statements included in this Form 10-K). Developments

~~Our~~At ~~engineering~~a special ~~services~~meeting ~~include~~of our stockholders held on February 2, ~~among~~2009, ~~others~~our stockholders approved a proposed merger for the purpose of reorganizing our company. As a result of the merger, Willbros Group, Inc. will become a direct, wholly-owned subsidiary of a newly formed Delaware corporation also named Willbros Group, Inc. and each of our stockholders will become a stockholder of the new Delaware corporation. We believe the merger will facilitate our business strategies, improve our access to U.S. capital markets and funding, improve our strategic flexibility, expand our access to U.S. government and private sector contracts, and enhance our operational focus. We intend to complete the merger as soon as practicable.

~~• feasibility studies;~~Business Segments

•Our segments ~~conceptual~~are ~~engineering~~strategic business units that are defined by the industry segments served and are managed separately as each has different operational requirements and strategies. We operate through three business segments: Upstream Oil & Gas, Downstream Oil & Gas and Engineering. These segments currently operate primarily in the United States, Canada, and Oman. Management evaluates the performance of each operating segment based on operating income. Our corporate operations include the executive management, general, administrative, and financing functions of the organization. The costs to provide these services; are allocated, as are certain other corporate assets, between the three operating segments.

•We provide ~~detailed~~our ~~design~~ services;, as the scope of work requires, through professional engineering, technical, construction management and craft personnel utilizing engineering systems, hardware and software and a large fleet of company-owned and leased equipment that includes pipe laying equipment, heavy construction equipment, transportation equipment, camp equipment and specialty tools. An inventory of spare parts and tools, which we strategically position and maintain to maximize availability and minimize cost, supports our equipment fleet. Over the years, we have been employed by more than 400 clients to carry out work in 60 countries. Within the past ten years, we have worked in North America, the Middle East, Africa, Australia and South America. We currently have a steady base of operations in the United States, Canada, and Oman.

•Private sector ~~route/site~~clients ~~selection;~~have historically accounted for the majority of our revenue. Governmental entities and agencies have accounted for the remainder. Our top ten clients were responsible for 65 percent of our continuing revenue in 2008 (73 percent in 2007 and 61 percent in 2006).

•See ~~construction~~Note 14 ~~management;~~– Segment Information to the Consolidated Financial Statements included in Item 8 of this Form 10-K for more information on our operating segments.

~~• turnkey engineer, procure, and construct, or “EPC” arrangements;~~Services Provided

•The Company ~~alliance~~provides ~~arrangements;~~engineering, construction, maintenance and EPC services, including development activities, in the business segments described above. We also have experience in the operation of the types of facilities we design and build. We may make equity investments in some projects to enhance our competitive position for the work assignments associated with the project. In other instances, our experience enables us to understand and manage project completion risk, and in these cases we may elect to develop and own a complete facility which will provide attractive internal rates of return over an extended period of time.

~~• material procurement;~~5

•· ~~overall~~Engineering ~~project management;~~Services

•We provide ~~permitting~~project management, engineering, and material procurement services; to the oil, gas, power and refining industries and government agencies. We specialize in providing engineering services to assist clients in constructing or expanding pipeline systems, compressor stations, pump stations, fuel storage facilities, and field gathering and production facilities. Over the years, we have developed expertise in addressing the unique engineering challenges involved with pipeline systems and associated facilities. We provide our engineering services through engineering resources located at the project site or at our offices in Tulsa, Oklahoma and Kansas City, Missouri.

•Specifically, our ~~commissioning/startup;~~engineering ~~and~~services include, among others:

•· ~~bid~~feasibility ~~support for other Willbros subsidiaries.~~studies;

We· ~~provide our~~conceptual engineering services ~~through engineering resources located in Salt Lake City (Murray), Utah~~; ~~Tulsa, Oklahoma and Houston, Texas.~~

~~To complement~~· ~~our~~detailed ~~engineering~~design services~~, Willbros also provides a full range of field services, including:~~ ;

•· ~~surveying~~route/site selection;

•· ~~right~~construction ~~of way acquisition~~management;

•· ~~material~~turnkey ~~receiving~~EPC ~~and control~~arrangements;

•· ~~construction~~alliance ~~management~~arrangements;

•· ~~facilities~~material ~~startup assistance~~procurement; ~~and~~

•· ~~operation~~planning and management of ~~facilities.~~maintenance programs;

~~Finally,~~· ~~Willbros~~overall ~~provides specialty~~project ~~service capabilities, including, among others:~~ management;

•· ~~dredging~~planning and management of system integrity services;

•· ~~pipe~~permitting ~~corrosion coating~~services;

•· ~~concrete weight coating~~commissioning/startup; and

•· ~~pipe~~bid ~~double~~support ~~jointing;~~for other Willbros subsidiaries.

•To complement ~~piling;~~our engineering services, we also provide a full range of field services, including:

•· ~~pressure vessels~~surveying;

•· ~~marine~~right-of-way ~~repair/heavy lift services~~acquisition;

•· ~~transport~~material ofreceiving ~~dry~~ and ~~liquid cargo~~control;

•· ~~rig~~construction ~~moves~~inspection;

•· ~~maintenance~~facility ~~and~~startup ~~repair services~~assistance; and

6· facility operations.

~~Table~~These services are furnished to a number of ~~Contents~~oil, gas, power, refining and government clients on a stand-alone basis and are also provided as part of EPC contracts undertaken by us.

•The ~~operation~~buying ~~and~~process ~~development~~of our customers includes close scrutiny of ~~facilities;~~our experience and capabilities with respect to project requirements. Some of those requirements may involve:

•Climatic ~~building~~Constraints. In the design of pipelines and associated facilities to be installed in harsh environments, ~~owning~~special provisions for metallurgy of materials and ~~operating~~foundation design ~~military~~must ~~fueling~~be ~~facilities~~addressed. We are experienced in designing pipelines for arctic conditions (where permafrost and extremely low temperatures are prevalent), desert conditions, mountainous terrain, swamps and offshore.

WeEnvironmental ~~trace~~Impact ~~our roots to the construction business~~ of ~~Williams Brothers Company, founded in 1908~~River Crossings/Wetlands. We ~~Through successors to that business, we~~ have ~~completed~~considerable ~~many~~capability ~~landmark~~in designing ~~projects~~pipeline ~~around~~crossings ~~the~~of ~~world~~rivers, ~~including~~streams ~~the “Big Inch”~~ and ~~“Little~~ ~~Big~~wetlands ~~Inch”~~in ~~War~~such ~~Emergency~~a ~~Pipelines~~way ~~(1942-44),~~as ~~the~~to minimize ~~Mid-America~~environmental ~~Pipeline~~impact. ~~(1960),~~We ~~the~~possess ~~TransNiger~~expertise ~~Pipeline~~to ~~(1962-64),~~determine the ~~Trans-Ecuadorian~~optimal crossing ~~Pipeline (1970-72)~~techniques, ~~the~~such ~~northernmost~~as ~~portion~~open ~~of the Trans-Alaska Pipeline System (1974-76)~~cut, ~~the All~~directionally-~~American~~drilled ~~Pipeline~~or ~~System (1984-86)~~overhead, ~~Colombia’s~~and ~~Alto~~to develop ~~Magdalena Pipeline System (1989~~site-~~90),~~specific aconstruction ~~portion~~methods ofto ~~the~~minimize ~~Pacific~~bank ~~Gas Transmission System expansion (1992-93)~~erosion, sedimentation and ~~through~~other aenvironmental ~~joint venture led by a subsidiary of ours, the Chad-Cameroon Pipeline (2000-2003)~~impacts.

~~Over~~Seismic ~~the~~Design ~~years,~~and weStress Analysis. Our ~~have~~engineers ~~been~~are ~~employed~~experienced ~~by more than 400 clients to carry out work~~ in ~~55 countries.~~seismic ~~Within~~design ~~the~~of ~~past~~pipeline ~~ten~~crossings ~~years,~~of weactive ~~have~~faults ~~worked~~and inareas ~~Africa,~~where ~~Asia,~~liquefaction ~~Australia,~~or ~~the~~slope instability ~~Middle~~may ~~East,~~occur ~~North~~due ~~America~~to ~~and~~seismic ~~South America~~events. WeOur ~~have~~engineers ~~historically~~also ~~had~~carry aout specialized ~~steady~~stress ~~base~~analyses of ~~operations~~piping insystems ~~the~~that ~~United~~are ~~States,~~subjected ~~Canada,~~to ~~Nigeria, Oman,~~ expansion and ~~Venezuela,~~contraction ~~which~~due ~~has~~to ~~been~~temperature ~~complemented by major projects in Australia~~changes, ~~Bolivia,~~as ~~Cameroon,~~well ~~Chad,~~as ~~Colombia,~~loads ~~Ecuador,~~from ~~Egypt,~~equipment ~~Gabon, Indonesia, Ivory Coast, Kuwait, Mexico~~ and other ~~Pakistan~~sources.

~~Private~~Hazardous Materials. Special ~~sector~~care ~~clients~~must ~~have~~be ~~historically~~taken ~~accounted~~in ~~for~~ the ~~majority~~design of pipeline ~~our~~systems ~~revenue.~~transporting ~~Government~~sour ~~entities and agencies have accounted for the remainder~~gas. ~~Our~~Sour ~~top~~gas ~~ten~~not ~~clients~~only ~~were~~presents ~~responsible~~challenges regarding ~~for~~personnel 73safety ~~percent~~since ofhydrogen ~~our~~sulfide ~~total~~leaks ~~revenue~~can inbe ~~2005 (64~~extremely ~~percent~~hazardous, inbut ~~2004~~also ~~and~~requires 75that ~~percent~~material inbe ~~2003).~~specified Into ~~2005,~~withstand ~~operating~~highly corrosive ~~units~~conditions. ofOur ~~Royal~~engineers ~~Dutch/Shell~~have ~~Group~~extensive ~~and~~natural ~~Exxon~~gas ~~Mobil~~experience ~~accounted~~which includes ~~for~~design ~~32 percent and 11 percent~~ of ~~our~~sour ~~total~~gas ~~revenue, respectively~~systems.

~~Corporate Structure~~ 6

WeHydraulics ~~are~~Analysis ~~incorporated~~for Fluid Flow in ~~the~~Piping ~~Republic~~Systems. We ofemploy ~~Panama~~engineers ~~and~~with ~~maintain~~the ~~our~~specialized knowledge ~~headquarters~~necessary ~~at Plaza~~to ~~2000~~address ~~Building,~~properly ~~50th~~the ~~Street,~~effects ~~8th~~of ~~Floor,~~both ~~P.O.~~steady ~~Box~~state ~~0816-01098,~~and transient ~~Panama,~~flow ~~Republic~~conditions offor ~~Panama;~~a ~~our~~wide ~~telephone~~variety ~~number~~of isfluids ~~+50-7-213-0947.~~transported ~~Panama’s~~by ~~General~~pipelines, including ~~Corporation~~natural ~~Law~~gas, iscrude ~~substantially~~oil, ~~modeled~~refined onpetroleum ~~the~~products, ~~New~~natural ~~York~~gas liquids, carbon dioxide and ~~Delaware~~water. ~~corporate~~This ~~laws~~expertise asis ~~they existed~~important in ~~1932.~~optimizing ~~Panama~~the capital ~~does~~costs ~~not~~of ~~tax~~pipeline ~~income~~projects ~~derived~~where ~~from~~pipe ~~activities~~material ~~conducted~~costs ~~outside~~typically ~~Panama.~~represent a ~~The~~significant ~~principal~~portion ~~subsidiaries~~ of ~~Willbros~~total ~~Group,~~project ~~Inc.~~capital ~~are:~~ costs.

•We ~~Willbros~~have ~~International,~~developed ~~Inc.;~~significant ~~and~~expertise with respect to each of the following:

•Natural ~~Willbros~~Gas ~~USA~~Transmission Systems. The expansion of the natural gas transportation network in the United States in recent years has been a major contributor to our engineering business. We believe we have established a strong position as a leading supplier of project management and engineering services to natural gas pipeline transmission companies in the United States. Since 1988, ~~Inc~~we have provided engineering services for over 20 major natural gas projects in the United States, including the Gulfstream Natural Gas System project, completed in 2002, and the Guardian Pipeline Project, both Phase I, completed in 2004 and Phase II, nearing completion at the end of 2008.

AtLiquids ~~the~~Pipelines ~~beginning~~and Storage Facility Design. We have engineered a number of ~~2004~~crude oil and refined petroleum products systems throughout the world, ~~100~~and ~~percent~~have become recognized for ~~ownership~~our expertise in the engineering of systems for the ~~Willbros~~storage ~~RPI,~~and ~~Inc.~~transportation of petroleum products and ~~Willbros~~crude Mtoil. ~~West~~In 2001, ~~Inc.~~we ~~subsidiaries~~provided ~~was~~engineering ~~transferred~~and tofield services ~~Willbros~~for ~~USA~~conversion of a natural gas system in the mid-western United States, ~~Inc~~involving over 797 miles of 24-inch to 26-inch diameter pipeline to serve the upper Midwest with refined petroleum products. ~~Willbros~~In ~~USA~~2003, ~~Inc~~we completed EPC services for the expansion of a petroleum products pipeline to the Midwest involving 12 new pump stations, modifications to another 13 pump stations and additional storage. In ~~now~~2007 ~~owns~~we ~~all~~began an EPC project to expand mainline capacity of a crude oil pipeline system in the southern United States through ~~subsidiaries~~the installation of ~~the~~additional ~~Company~~pump stations and storage. This project was nearing completion at the end of 2008.

~~All~~U.S. ~~significant~~Government Services. Since ~~International~~1981, ~~operations~~we ~~are~~have ~~carried~~established ~~out~~our byposition ~~material~~with U.S. ~~direct~~government oragencies ~~indirect~~as ~~subsidiaries~~a ofleading ~~Willbros~~engineering ~~International~~contractor for jet fuel storage as well as aircraft fueling facilities, ~~Inc~~having performed the engineering for major projects at eight U.S. military bases, ~~which~~including isthree air bases ~~also~~outside athe ~~Panamanian~~United ~~corporation~~States. ~~Such~~The ~~material~~award ~~subsidiaries~~of ~~include:~~these projects was based largely on contractor experience and personnel qualifications. Also, in the past ten years we have won five so-called “Design-Build-Own-Operate-Maintain” projects to provide fueling facilities at military bases in the United States for the U.S. Defense Energy Support Center. From time to time we add additional features to these facilities such as tanks and pumps for alternative fuels.

•Design ~~Willbros~~of ~~Middle~~Peripheral Systems. Our ~~East~~expertise extends to the engineering of a wide range of project peripherals, ~~Inc~~including various types of support buildings and utility systems, power generation and electrical transmission, communications systems, fire protection, water and sewage treatment, water transmission, roads and railroad sidings.;

•Procurement. Because procurement ~~Willbros~~plays ~~West~~such ~~Africa~~a critical part in the success of any project, ~~Inc~~we maintain an experienced staff to carry out the procurement of all materials and services.; Procurement services are provided to clients as a complement to the engineering services performed for a project. Material and services procurement is especially critical to the timely completion of construction on the EPC contracts we undertake. We maintain a computer-based material procurement, tracking and control system, which utilizes software enhanced to meet our specific requirements.

•Pipeline ~~Willbros~~Integrity ~~(Nigeria)~~Testing, Management ~~Limited;~~& Maintenance. In response to the increase in regulatory oversight and aging pipeline infrastructure, we developed state-of-the-art pipeline inspection and testing methods to complement our pipeline maintenance and construction capabilities. We can assist our clients with all aspects of their pipeline testing, maintenance and operating requirements as well as assist in the evaluation, design and costing of network expansion projects.

•· ~~Willbros~~Upstream ~~(Offshore)~~Oil ~~Nigeria~~& ~~Limited;~~Gas - Construction Services

•We ~~Constructora~~are ~~CAMSA~~one of the most experienced contractors serving the oil, Cgas and power industries.A. Our construction capabilities include the expertise to construct and replace large-diameter cross-country pipelines; to fabricate engineered structures, process modules and facilities; to construct oil and gas production facilities, pump stations, flow stations, gas compressor stations, gas processing facilities and other related facilities.

~~• The Oman Construction Company LLC; and~~7

•Pipeline ~~Willbros~~Construction. ~~Transandina~~World demand for pipelines results from the need to move millions of barrels of crude oil and petroleum products and billions of cubic feet of natural gas to refiners, Sprocessors and consumers each day.A Pipeline construction is capital-intensive, and we own, lease, operate and maintain a fleet of specialized equipment necessary for operations in the pipeline construction business. We focus on pipeline construction activity for large diameter cross-country pipelines in remote areas and harsh climates where we believe our experience gives us a competitive advantage. In our history, we have performed work in 60 countries and constructed over 124,000 miles of pipeline, which we believe positions us in the top tier of pipeline contractors in the world. To mitigate tight labor markets, since 2004, we have developed the expertise to employ automatic welding processes in the onshore construction of large-diameter (greater than 30-inch) natural gas pipelines and have constructed over 400 miles of such pipelines using automatic welding processes in the United States, Canada, and Oman.

~~All~~The ~~significant~~construction ~~operations~~of ina cross-country pipeline involves a number of sequential operations along the ~~United~~designated pipeline ~~States &~~right-of-way. ~~Canada~~These operations are ~~carried~~virtually ~~out~~the bysame ~~material~~for ~~direct~~all oroverland pipelines, ~~indirect~~but ~~subsidiaries~~personnel and equipment may vary widely depending upon such factors as the time required for completion, general climatic conditions, seasonal weather patterns, the number of ~~Willbros~~road ~~Group~~crossings, ~~Inc.~~the ~~Such~~number ~~material~~and ~~subsidiaries~~size ~~include:~~of river crossings, terrain considerations, extent of rock formations, density of heavy timber and amount of swamp.

•Onshore ~~Willbros~~construction ~~RPI,~~often ~~Inc.;~~involves separate crews to perform the following different functions:

•· ~~Willbros~~clear ~~MSI~~the ~~Canada Inc.~~right-of-way;

•· ~~Willbros~~grade ~~Mt.~~the ~~West, Inc.~~right-of-way;

•· ~~Willbros~~excavate ~~Engineers,~~a ~~Inc.~~trench in which to bury the pipe;

•· ~~Willbros~~haul ~~Project~~pipe ~~Services,~~to ~~Inc.~~intermediate stockpiles from which stringing trucks carry pipe and place individual lengths (joints) of pipe alongside the ditch;

7· bend pipe joints to conform to changes of direction and elevation;

~~Table~~· ofclean ~~Contents~~pipe ends and line up the succeeding joint;

•· ~~Willbros~~perform ~~Midstream~~various ~~Services~~welding ~~LLC~~operations; ~~and~~

•· ~~Willbros~~inspect ~~Government~~welds ~~Services, Inc.~~non-destructively;

~~The~~· ~~Willbros corporate~~clean ~~structure~~pipe ~~is designed to comply with jurisdictional~~ and ~~registration~~apply requirements associated with work bid and performed and to reduce worldwide taxation of operating income. Additional subsidiaries may be formed in specific work countries where necessary or useful for compliance with local laws or tax objectives. Administrative services are provided by Willbros USA, Inc., whose administrative headquarters are located at 4400 Post Oak Parkway, Suite 1000, Houston, Texas 77027, telephone number (713) 403anti-~~8000.~~corrosion coatings;

~~Current~~· ~~Market~~lower ~~Conditions~~pipe into the ditch;

We· ~~believe~~backfill the fundamentals supporting the demand for engineering and construction services for the energy industry will continue to be strong for the next two to five years. Our operations for the three-month period ended December 31, 2005 generated better margins than the prior period (ended September 30, 2005) but margins for the year ended December 31, 2005 were lower than expected due to interruptions of work in progress in the United States by Hurricanes Katrina and Rita, low margin projects in Nigeria and unresolved change orders, which are expected to be resolved in future periods, in both Nigeria and North America. We continue to believe the outlook for our business is strong. The fundamentals supporting the demand for engineering and construction services for the oil, gas and power industries indicate that the market for our services will be strong in 2006 and 2007. Many positive developments reinforce our view. Capital spending for the exploration and production sector of the energy industry is expected to exceed $235 billion in 2006, a 15 percent increase over comparable expenditures in 2005. In the oil sands region of western Canada forecast capital expenditures on new bitumen production and processing facilities are expected to exceed C$100 billion through 2015, as production levels are increased from approximately one million barrels per day presently to more than three million barrels per day in 2015. We also believe new initiatives announced by the Mexican government to increase production and to expand pipeline infrastructure make that market attractive for our engineering and construction services after the 2006 national elections are conducted. In the United States, new gas production in the Rocky Mountain region has generated new plans for gas pipelines to the West, Midwest and East Coast. The move towards liquefied natural gas (“LNG”) is also expected to bring more opportunities to Willbros, both in North America and in other producing/exporting countries. ditch;

~~The~~· ~~engineering~~bore ~~market in North America has become capacity constrained~~ and weinstall ~~are~~highway ~~being more selective, accepting assignments that offer higher margins~~ and ~~position~~railroad us for EPC assignments. We believe this heightened engineering activity is the precursor to higher levels of construction activity in North America. Our discussions with potential customers regarding pipeline and station construction projects in North America, coupled with the increase in engineering assignments, support our belief that activity in North America should increase in 2006 and 2007. crossings;

We· ~~expect demand in the United States & Canada market~~drill, ~~which~~excavate ~~led~~or ~~the~~dredge ~~improvement in backlog in 2005, to continue to be strong~~ and weinstall ~~expect~~pipeline ~~the~~river International market to also continue to exhibit strong demand as new energy infrastructure developments are contemplated in North and West Africa and the Middle East. The following factors have caused the short-term outlook for our business to strengthen: crossings;

•· ~~Increased~~tie ~~demand~~ in ~~North~~all ~~America~~crossings ~~for~~to ~~natural gas has resulted in~~ the siting, permitting and approval of new LNG regasification terminals in addition to multiple proposals for additional facilities, principally regasification terminals and connecting pipelines in North America.pipeline;

•· ~~Increased~~install ~~demand~~mainline ~~for~~valve natural gas worldwide has also resulted in new LNG liquefaction facilities and expansion of existing facilities to meet the higher demand levels. These new facilities require additional pipeline capacity to transport the feed gas for liquefaction.stations;

•· ~~Improved~~conduct ~~global~~pressure ~~economic conditions have increased demand for oil, gas, and power resulting in an increase in the expected number of oil, gas and power projects.~~testing;

•· ~~The~~install ~~increasing~~cathodic ~~use~~protection ofsystem; ~~the EPC contract model should allow us to improve our market share in North America.~~and

•· ~~In West Africa, we have major energy infrastructure projects under contract and underway and believe there are opportunities for us to~~ perform ~~multiple~~final ~~phases~~clean ~~of follow-on work on these projects under improved contract terms and conditions~~up.

•Special ~~New~~equipment ~~holders~~and techniques are required to construct pipelines across wetlands and offshore. We have used swamp pipe laying methods extensively in Nigeria, where a significant portion of ~~North~~our construction ~~American~~operations ~~pipeline~~were ~~assets~~carried ~~acquired~~out in the ~~past~~Niger ~~three~~River ~~years~~Delta. ~~through~~This expertise ~~merger~~is orapplicable ~~outright~~in ~~purchase~~wetland ~~are~~regions ~~now~~elsewhere ~~implementing~~and ~~plans~~can toprovide ~~expand~~a competitive oradvantage ~~upgrade~~for ~~those~~projects ~~assets~~in such venues as south Louisiana, where we expect to see additional work opportunities.

8Fabrication. Fabrication services can be a more efficient means of delivering engineered, major process or production equipment with improved schedule certainty and quality. We provide fabrication services and are capable of fabricating such diverse deliverables as process modules, station headers, valve stations, and flare pipes and tips. We currently operate two fabrication facilities in Alberta, Canada, allowing us the opportunity to provide process modules and other fabricated assemblies to the heavy oil market in northern Alberta. We also have one fabrication facility in the United States.

~~Table~~Station Construction. Oil and gas companies require various facilities in the course of ~~Contents~~producing, processing, storing and moving oil and gas. We are experienced in and capable of constructing facilities such as pump stations, flow stations, gas processing facilities, gas compressor stations and metering stations. We can provide a full range of services for the engineering, design, procurement and construction of processing, pumping, compression, and metering facilities. We are capable of building such facilities onshore, offshore in shallow water or in swamp locations. The construction of station facilities, while not as capital-intensive as pipeline construction, is generally characterized by complex logistics and scheduling, particularly on projects in locations where seasonal weather patterns limit construction options, and in countries where the importation process is difficult. Our capabilities have been enhanced by our experience in dealing with such challenges in numerous countries around the world.

~~• Major customers are benefiting from high discretionary cash flow, which should enable them to implement expanded capital construction programs.~~8

As· aDownstream ~~result~~Oil of& ~~these~~Gas ~~factors,~~– weConstruction ~~expect our revenue in 2006 to increase from the 2005 level.~~ Services

InOur ~~the~~Downstream ~~mid~~Oil to& ~~long-term,~~Gas weunit is ~~believe~~a ~~several~~fully ~~factors~~integrated ~~influencing~~solutions provider of turnaround, maintenance and capital projects for the ~~global~~refinery ~~energy~~and ~~markets~~petrochemical ~~will~~industries, ~~result~~with ina ~~increased~~customer ~~activity~~base including ~~across~~major ~~our~~integrated ~~primary~~oil ~~lines~~companies, ofindependent refineries and marketers, ~~business.~~marketing ~~The~~and ~~fundamental~~pipeline ~~factors~~terminals ~~that~~and wepetrochemical ~~expect~~companies. ~~will~~We ~~lead~~now provide services to ~~higher~~select ~~levels~~EPC offirms, ~~energy-related~~independent ~~capital~~power ~~expenditures~~producers, specialty process facilities and ammonia and fertilizer manufacturing plants and facilities. Our principal downstream oil and gas construction services include:

•· ~~Efforts~~turnkey toproject ~~establish~~services ~~new~~through ~~oil~~program management and ~~gas~~EPC ~~production~~project ~~in more politically secure regions of the world~~services;

•· ~~Rising~~construction ~~global~~and ~~energy~~turnaround ~~demand~~services ~~resulting~~which ~~from~~include ~~economic~~turnaround ~~growth~~services for fluid catalytic cracking units, the main gasoline producing unit in ~~developing~~a ~~countries~~refinery, which have three to five year required maintenance intervals in order to maintain production efficiency;

•· ~~The~~manufacturing ~~need~~services for ~~larger~~process ~~oil~~heaters, ~~and~~heater ~~gas~~coils, ~~transportation~~alloy ~~infrastructures~~piping, inspecialty acomponents ~~number~~and ofother ~~developing~~equipment ~~countries~~for installation in oil refineries;

•· ~~Some~~heater ~~state-controlled~~services ~~oil~~including design, manufacture and ~~gas~~installation ~~companies~~of ~~seeking~~fired ~~foreign~~heaters ~~investment~~in refining and process plants;

•· ~~The~~tank ~~increasing~~services ~~role~~for ofconstruction, ~~natural~~maintenance ~~gas~~or asrepair aof ~~fuel~~petroleum ~~for~~storage ~~power~~tanks, ~~generation~~typically ~~and~~located ~~other~~at ~~uses~~pipeline interminals ~~producing~~and ~~countries~~refineries; and

•· ~~The~~safety ~~international~~services ~~effort~~for tosupplementing ~~stabilize~~a ~~Iraq~~refinery’s safety personnel and ~~restore~~permitting ~~Iraqi~~and ~~oil~~providing ~~production;~~safety equipment.

•Turnkey ~~Decline~~Project inServices. ~~existing~~The refining ~~producing~~and ~~reservoirs~~process ~~which~~industries ~~will~~endeavor ~~require~~to ~~additional~~minimize ~~investment~~costs through operating efficiencies and hiring experienced process engineering as needed. Often it is more cost effective to ~~stabilize~~engage a contractor to oversee and manage the planning, engineering, procurement, installation and commissioning of new capacity additions, revamps or ~~reverse~~new process units to support the ~~decline~~need to meet new refining or manufacturing specifications. Our experience and capability covers the breadth of all process units in ~~production;~~a refinery where we offer clients a single source solution for accomplishing expansion and revamp programs. We seek to do this in the most efficient, competitive manner and supply both our own personnel and supplemental services of other contractors as needed.

•Construction, ~~Initiatives~~Turnaround and Specialty Welding Services. When performing a construction and maintenance project as part of a refinery turnaround, detailed planning and execution to ~~reduce~~minimize ~~natural~~the ~~gas~~length ~~flaring~~of ~~worldwide;~~the outage, which can cost owners millions of dollars in downtime, is demanded. Our experience includes successful turnaround execution on the largest, most complex fluid catalytic cracking (“FCC”) units, the major process unit in a refinery. Our record in providing a construction-driven approach with attention to planning, schedule and safety places us at the forefront of qualified bidders in North America for work on FCC units, and that recognition enables us to qualify to bid for most turnaround projects of interest to us. These services include refractory related projects, furnace re-tube and revamp projects, stainless and alloy welding services and heavy rigging and equipment setting. The skills and experience imparted from our turnaround experience apply equally to less schedule-sensitive new construction, and we can provide construction services for new units or expansion and revamp projects.

•Manufacturing Services. ~~The~~We ~~aging~~have manufacturing facilities located on two sites in the Tulsa, Oklahoma area, with easy access to truck, rail, air and river barge transportation through the inland most ice-free port in the United States, the Kerr-McClellan Navigation System. Specialty equipment that can be fabricated includes FCC components, reactors and regenerators, refractory, process heater coils and components, process piping spools (alloy and carbon steel), specialty welding, and plate cutting and rolling. Our Mohawk facility consists of 150,000 ~~energy~~square ~~infrastructure~~feet of manufacturing space, which includes significant convection section fabricator capacity and which also allows us to fabricate heater and furnace components. We believe our ability to combine the quality fabrication and timely manufacturing of these components is complementary to other services we provide and offers a competitive advantage for us.

AHeater ~~February 2006 industry survey of pipeline construction suggests that planned worldwide pipeline construction expenditures will be higher in 2006 than in 2005~~Services. ~~For~~We ~~2006~~are ~~only,~~a vertically ~~operators~~integrated ~~plan~~provider ~~to build more than 11,500 miles~~ of ~~oil~~process ~~and~~heater ~~gas~~services ~~pipelines~~in ~~worldwide~~North atAmerica awhich ~~cost~~can ofperform ~~$27.6~~engineering ~~billion.~~studies; ~~For 2005 only~~process, ~~companies had expected to build more than 13~~mechanical,~~000~~ ~~miles at a cost of more than $18 billion. For projects completed after 2006~~structural, ~~companies~~and instrumentation ~~plan~~and toelectrical ~~lay~~design; ~~more~~fabrication ~~than 50,000 miles of land~~ and ~~marine~~manufacture; ~~pipelines~~ and ~~spend~~ ~~more~~installation ~~than~~and ~~$116~~erection ~~billion. This compares to 45,000 miles~~ of ~~line~~fired ~~and~~heaters ~~$69 billion~~ in ~~expenditures~~a ~~expected~~one-stop ~~in the prior year’s industry survey~~shop. We also ~~expect~~specialize ~~more~~in ~~than~~modifications $9to ~~billion~~existing offired ~~these~~heaters ~~projects~~for toexpanded ~~meet~~service or ~~our~~process ~~bidding~~improvement. Our ~~criteria~~senior inmanagers ~~2006~~each ~~and~~have ~~through mid-2007,~~over ~~and~~30 weyears of ~~expect~~experience toin ~~aggressively~~this ~~pursue~~specialized ~~these opportunities~~service.

~~Partially offsetting these positive factors is the potential for political and social unrest in some countries in which we operate:~~ 9

•Tank InServices. ~~Nigeria,~~We ~~attacks~~provide services onto ~~oil installations and~~ the ~~kidnapping~~aboveground ofstorage ~~oil~~tank ~~workers~~industry. Areas inwe ~~the~~address include: ~~Niger~~American ~~Delta~~Petroleum ~~have~~Institute ~~escalated with the emergence of a group calling itself the Movement for the Emancipation of the Niger Delta~~ (“~~MEND~~API”). ~~The~~compliant ~~crux~~tank ofmaintenance ~~the~~and repair; ~~Niger~~floating ~~Delta~~roof ~~conflict~~seals; isfloating ~~the~~roof ~~escalation~~installations ~~of a longstanding troubled relationship between the Federal Government of Nigeria~~ and ~~the~~repairs; ~~oil~~secondary containment ~~producing communities in the Niger Delta region~~bottoms, ~~with~~cone ~~the~~roof ~~latter~~and ~~asserting~~structure ~~that~~replacements; ~~historically there has been inequitable sharing of Niger Delta oil revenue. Some production operations in the Western Delta area are now shut in, having had the combined effect of elevating oil prices~~ and ~~interrupting~~new orAPI ~~delaying~~compliant aboveground ~~projects~~storage ~~we have underway in that market~~tanks. We ~~are~~provide ~~in negotiations with our clients in Nigeria to address~~ these ~~heightened~~services ~~security~~as ~~concerns~~stand-alone or ~~and to mitigate the commercial impacts on us of these recent events~~ in ~~Nigeria. While our clients have demonstrated an appreciation of our problems and a willingness to work with us on this~~ combination ~~of security concerns and commercial issues~~, ~~the~~including ~~outcome~~EPC ~~of those negotiations is still uncertain as is their ultimate effect on our revenue, operating results and cash flow~~solutions.

•Safety ~~Continuing~~Services. ~~unrest~~We provide both safety services and ~~security~~equipment ~~concerns~~to insupport the ~~Middle~~safety ~~East~~and ~~have~~quality requirements ~~created~~of ~~greater~~our ~~than~~clients. We ~~normal~~can ~~uncertainty~~provide insafety ~~the~~supervisors, confined ~~global~~space ~~oil~~and ~~markets.~~fire ~~This~~watch ~~uncertainty~~services, ~~continues~~confined tospace ~~cause~~rescue ~~caution~~and ~~among~~training, safety ~~oil~~planning ~~and~~services, ~~gas~~technicians, ~~producers~~training, ~~with~~drug ~~respect~~screening toand ~~their~~medical personnel. Our ~~planned~~safety ~~capital~~services ~~expenditure~~also ~~programs.~~include ~~This~~safety ~~caution~~service isvehicles to ~~despite~~support the ~~high~~services ~~levels~~offered ~~for~~and ~~oil~~to ~~and~~provide ~~gas~~necessary ~~prices~~equipment ~~enjoyed~~including first byaid ~~producers~~equipment, ~~over~~fire ~~the~~retardant ~~past~~clothing, ~~two~~fall ~~years~~protection equipment, fresh air equipment, gas detectors and ~~may~~breathing ~~also~~air ~~stem~~supply ~~from~~trailers. We are ~~skepticism~~an asauthorized todealer ~~the~~for ~~sustainability~~fire-retardant ofand ~~current~~Nomex ~~energy~~safety ~~prices~~clothing and a variety of equipment lines.

•· ~~Policies~~EPC ~~of populist governments in some South American countries have caused foreign investment in certain sectors, including energy, to decrease.~~Services

•EPC ~~The~~projects ~~political~~often ~~situation~~yield inprofit ~~Bolivia~~margins on the engineering and ~~Venezuela~~construction ~~remains~~components ~~uncertain~~consistent with stand-alone contracts for similar services. Our benefits in the EPC offering include the overall income associated with project management and ~~projects~~the income we capture on the procurement component of the contract. Both of these income generating activities are relatively low risk compared with the construction aspect of the project. In performing EPC contracts, we participate in ~~both~~numerous aspects ~~countries~~of ~~continue~~a project. We are therefore able to bedetermine ~~delayed~~the most efficient design, permitting, procurement and construction sequence for a project in connection with making engineering and constructability decisions. ~~Because~~EPC contracts enable us to deploy our resources more efficiently and capture those efficiencies in the ~~governments~~form of ~~both~~improved ~~countries~~margins ~~continue~~on tothe ~~pursue~~engineering anand ~~agenda~~construction components of these projects, at the same time optimizing the overall project solution and execution for the client. While EPC contracts carry lower margins for the procurement component, which ~~includes~~can ~~nationalization~~be a significant portion of the total contract value, we believe the increased control over all aspects of the project, coupled with higher margins for engineering and~~/or~~ ~~renegotiation~~construction portions, makes these types of contracts attractive to us and our customers. EPC projects are managed and reported by the segment and business unit best qualified to provide the identified scope of work. We intend to capitalize on our experience as a service company with ~~foreign~~the ~~investors~~ability to integrate engineering, ~~Willbros~~procurement, ~~views~~and construction ~~these~~services ~~markets~~into asan ~~having~~EPC ~~limited~~format ~~opportunities~~for the benefit of our clients and plan to use this capability in ~~the~~order ~~near~~to ~~term~~capture more of this business.

9· Specialty Services

~~Table~~We utilize the skill sets and resources from our engineering, construction and EPC services to provide a wide range of support ~~Contents~~and ancillary services related to the construction, operation, repair and rehabilitation of pipelines and other hydrocarbon processing facilities. Frequently, such services require the utilization of specialized equipment, which is costly and requires operating expertise. Due to the initial equipment cost and operating expertise required, many client companies hire us to perform these services. We own and operate a variety of specialized equipment that is used to support construction projects and to provide a wide range of oilfield services. We provide the following primary types of specialty services:

~~Business~~· ~~Strategy~~transport of dry and liquid cargo;

We· ~~seek~~pipe ~~to maximize stockholder value through our business strategy. The core elements of this strategy are to:~~ double-jointing;

•· ~~Concentrate~~rig ~~on projects and prospects in areas where we can be most competitive and obtain the highest profit margins consistent with the appropriate level of contractual and geo-political risk~~moves;

•· ~~Pursue~~maintenance ~~EPC contracts with vigor because they can often yield higher profit margins on the engineering~~ and ~~construction~~repair ~~components of the contract than stand-alone contracts for similar~~ services;

•· ~~Focus~~operation ~~on performance~~ and ~~project~~development ~~execution~~of incustomer ~~order to maximize the profit potential on each contract awarded~~facilities;

•· ~~Place~~building, anowning ~~increased focus on our commitments to safety~~ and ~~quality~~operating ~~because~~military ~~these~~fueling ~~elements of performance measurement are increasingly important as differentiators from our competitors~~facilities; and

•· ~~Develop~~rigging ~~alliances with other service providers who will enhance our capabilities~~ and ~~competitiveness~~heavy inlift ~~markets throughout the world;~~services.

~~• Pursue asset development and operation opportunities to leverage our expertise in design and construction, and to provide a more predictable stream of revenue and cash flow;~~10

•Current Market ~~Endeavor to maintain a strong balance sheet, which balances business risk with financial risk, and keep operating and overhead costs commensurate with anticipated levels of revenue;~~Conditions

•We continue ~~Pursue~~to ~~alliances~~believe that long term fundamentals support increasing demand for our services to the energy industry. However, the global financial and ~~equity~~economic environment is limiting visibility in our business beyond our current backlog as many energy industry participants consider scaling back projects, delaying investment ~~opportunities~~in planned projects or asking for revised bids on previously awarded work to obtain lower prices. Declining demand for both natural gas and crude oil and an associated decrease in commodity energy prices, coupled with ~~clients~~limited access to ~~secure~~capital ~~long-term~~markets, ~~contracts~~are ~~which~~driving ~~provide~~decisions ~~greater~~by some ~~stability~~potential customers to scale back capital budgets relative to 2008 expenditure levels. Currently, expenditure levels anticipated in 2009, while diminished from 2008, remain at high levels and are expected to exceed expenditure levels from 2006. As a result we expect continued demand for our services. ~~future~~However, ~~revenue~~we also believe market conditions will increasingly reflect the historical pattern of shorter intervals from project award to execution and therefore, ~~cash~~contract ~~flow~~backlog ~~streams;~~would also remain on the books for shorter periods of time. Additionally, our recent contract awards, coupled with the increase in caution by our customers, lead us to believe that contract terms and conditions will reflect a more competitive bid and risk allocation environment. However, demand for our services remains above historical levels, and we expect many of our new business initiatives related to expansion of government services and capabilities in the Middle East and North Africa will provide new growth opportunities.

•We believe ~~Pursue~~that ~~growth~~despite ~~through~~the ~~expansion~~near-term ~~and~~market ~~acquisitions~~uncertainty, several factors influencing the global energy markets will result in ~~complementary~~increased ~~business~~activity across our primary lines of business. The fundamental factors that we expect will lead to higher levels of energy-related capital expenditures include:

In· ~~pursuing~~efforts ~~this~~to ~~strategy,~~establish wenew ~~rely~~oil ~~on the competitive advantage gained from our experience in completing logistically complex~~ and ~~technically~~gas ~~difficult~~production ~~projects~~ in ~~remote~~more ~~areas~~politically ~~with~~secure ~~difficult~~regions ~~terrain~~of and harsh climatic conditions, our longstanding customer relationships, and our experienced multinational employee base. Recognizing our employees as key to our competitive advantage, we continue to invest in them to ensure that they have the ~~training and tools needed to be successful in today’s challenging environment.~~ world;

In· ~~carrying~~rising ~~out~~global ~~the~~energy ~~core~~demand ~~elements~~resulting offrom ~~our~~economic ~~long-term~~growth ~~strategies,~~in ~~we build~~developing ~~from the following:~~ countries;

~~Geographic~~· ~~Focus.~~the ~~Our~~need ~~objective~~for islarger tooil ~~maintain~~ and ~~enhance~~gas ~~our~~transportation ~~presence~~infrastructure in ~~regions where we have developed~~ a strong base of operations, such as Africa, the Middle East and North America by capitalizing on our local experience, established contacts with local customers and suppliers, and familiarity with local working conditions. In pursuing this strategy, we seek to identify a limited number of ~~long-term~~developing niche markets in which we can outperform the competition and establish an advantageous position. In 2001, to establish our presence in Canada, we acquired Willbros MSI Canada Inc. (formerly MSI Energy Services Inc.), a Canadian contractor active in the oil sands producing area of northern Alberta. We also seek to establish or enhance our presence in other strategically important areas. countries;

~~EPC~~· ~~Contracts. We will continue to pursue EPC contracts because they can often yield higher profit margins on~~ the ~~engineering~~increasing ~~and~~role ~~construction components~~ of ~~the~~natural ~~contract~~gas ~~compared~~as ~~to stand-alone contracts for similar services. In performing EPC contracts, we participate in numerous aspects of~~ a ~~project.~~fuel ~~We are therefore able to determine the most efficient design, permitting, procurement and construction sequence~~ for apower ~~project~~generation ~~in connection with making engineering decisions. EPC contracts enable us to deploy our resources more efficiently~~ and ~~capture~~other ~~those~~uses ~~efficiencies~~ in ~~the~~producing form of improved margins on the engineering and construction components of these projects. We intend to capitalize on being one of the few pipeline construction companies worldwide with the ability to provide the full range of EPC services in order to capture more of this business. countries;

~~Focus~~· ondecline ~~Superior Project Execution. We will continue to focus on performance and project execution~~ in ~~order~~existing toproducing ~~maximize~~reservoirs ~~customer~~which ~~satisfaction~~will ~~and the~~require ~~profit~~additional ~~potential~~investment on each contract awarded. Our work force benefits from and integrates feedback from complementary activities conducted by our engineering and construction organizations. Our global experience enables our engineering teams to ~~incorporate~~ ~~best~~stabilize ~~practice for any geographic region, terrain~~ or ~~climate.~~reverse ~~New~~the ~~technologies~~decline ~~and designs introduced first~~ in engineering studies and project management tools are leveraged to increase productivity and maximize asset utilization in capital intensive construction activities. By doing so, we improve our competitive position and we also enhance our potential for repeat business and/or add-on engineering or specialty services. production;

10· initiatives to reduce natural gas flaring worldwide; and

~~Table~~· the aging of ~~Contents~~energy infrastructure.

~~Safety~~Long ~~and~~term global ~~Quality~~demand ~~Improvements.~~for ~~Our~~energy ~~Health,~~is ~~Safety~~expected ~~and~~to ~~Environmental~~continue ~~(“HSE”)~~to ~~program~~grow, with the Energy ~~enhances~~Information ~~our~~Administration ~~ability~~forecasting 2030 demand to ~~meet~~be ~~the~~50% ~~specific~~higher ~~requirements~~than of2005 levels. This ~~our~~growth ~~customers~~will ~~through~~require ~~continuous~~new ~~improvements~~infrastructure to ~~all~~align ~~our~~primary reserve, ~~business~~production ~~processes~~and demand centers. ~~The~~Development ~~HSE~~of ~~program~~new isenergy asources, ~~systems-based~~often in ~~approach~~increasingly ~~that~~remote ~~follows~~locations, as well as ongoing replacement and maintenance of aging infrastructure, will require ongoing investment in both the ~~API~~immediate and ~~9100~~longer ~~guidelines~~terms. ~~These~~Geopolitical ~~guidelines~~considerations are ~~based~~also ~~on regulatory~~likely ~~laws~~to ~~and~~impact investment ~~best~~decisions ~~practices~~as ~~that~~many ~~include~~governments ~~general~~seek ~~standards,~~to ~~construction~~secure ~~activities~~more ~~and~~stable ~~maintenance~~access ~~operations~~to resources. inIn the ~~oil~~United ~~services industry~~States, ~~and~~we ~~focus~~believe onthis ~~management~~may ~~leadership~~drive inongoing investment in the ~~safety~~development ~~process.~~of ~~HSE~~gas ~~goals~~shale ~~and~~plays, ~~objectives~~as ~~are~~well anas ~~integral~~Alaskan resources, and may ~~part~~ultimately ofimpact ~~our~~development ~~business~~of ~~strategy,~~natural ~~aimed~~gas toand ~~promote~~oil ~~continuous~~sands ~~improvement~~reserves in ~~safety~~Canada. Environmental ~~performance~~considerations ~~through~~are ~~management~~also ~~commitment~~likely ~~and~~to ~~visibility.~~be ~~Our~~a ~~HSE~~key ~~program~~factor ~~includes~~in ~~specific~~future ~~training,~~energy investment ~~audits,~~decisions ~~recognition~~in ~~and~~North ~~accountability,~~America ~~action~~and ~~plans~~globally, ~~and~~potentially driving ~~pre-planning~~increased asincentives ~~proactive~~for ~~measures.~~production of cleaner burning fuels such as natural gas.

~~Strategic~~While ~~Alliances.~~the market Weuncertainty ~~seek~~and tomore ~~establish~~cautious ~~strategic~~spending ~~alliances~~programs ~~with~~of ~~companies~~our ~~whose~~customers ~~resources,~~will ~~skills~~also likely impact our downstream oil and ~~strategies~~gas ~~are~~business, ~~complementary~~we believe that many of our customers will continue to spend on maintenance and repair programs which account for a significant portion of our downstream oil and gas services. Following the recent period of sustained high utilization rates at refineries and other downstream oil and gas processing facilities, which was not conducive to significant shutdowns, we believe these maintenance expenditures are ~~likely~~particularly critical. Additionally, despite more limited capital spending in the near term, we believe that long term market dynamics will continue to ~~enhance~~support future growth for our ~~business~~downstream ~~opportunities~~oil and gas services. We ~~currently~~expect ~~have~~our ~~alliances~~customers to ~~pursue~~continue orto ~~perform~~make ~~work~~investments in ~~Abu~~upgrades ~~Dhabi,~~to handle ~~Algeria,~~lower ~~Australia,~~quality ~~Canada~~inputs, ~~China,~~increase ~~Libya,~~efficiencies ~~Saudi~~and ~~Arabia~~comply with environmental standards. Environmental regulations, particularly with respect to sulfur and benzene content in refined products will continue to drive the need for additional upgrades at processing facilities. Industry data indicate that the market in the United States. for capital maintenance, repair and overhaul (“MRO”) refinery projects to be in the $6 billion range in 2009.

Acquisitions. We seek to identify, evaluate and acquire companies that offer growth opportunities and that complement our resources and capabilities. Consistent with this strategy, in October 2001, we acquired Willbros MSI Canada, Inc. (formerly MSI Energy Services, Inc.), a Canadian contractor active in the oil sands producing area of northern Alberta. 11

~~Asset~~Upstream ~~Development~~Oil ~~and~~& Operations. We may decide to make an equity investment in a project in order to enhance our competitive position and/or maximize project returns. In 1998, this strategy led to our Venezuelan subsidiary taking a 10 percent equity interest in a joint venture which was awarded a 16-year contract to operate, maintain and refurbish water injection facilities in Lake Maracaibo, Venezuela. Also, since 1998, we have owned and operated fueling facilities for an agency of the U.S. Government. In 2003, we entered into an agreement with a U.S. natural gas processor to design, construct and own the TXP-4 Plant near Opal, Wyoming to process gas production from nearby fields for an annual processing fee plus a share of sales of natural gas liquids extracted. The TXP-4 Plant was completed in early 2004 and is currently in commercial operation. We sold this facility in January 2006 to the Williams Field Services Company, the owner and operator of the major Opal Plant facilities. Gas

~~Conservative~~Ongoing development ~~Financial~~of ~~Management~~existing hydrocarbon reserves, as well as development of significant new reserves, particularly throughout North America, will continue to drive the need for hydrocarbon transportation infrastructure. WeWhile ~~emphasize~~we believe the ~~maintenance~~size and attractive geographic location of athese ~~strong~~new ~~balance~~reserves ~~sheet~~will create significant investment in ~~financing~~North American pipelines, the ~~development~~current global economic conditions, resulting in lower near term energy demand and ~~growth~~declining commodity ofprices, ~~our~~have ~~business~~created uncertainty with respect to the timing of these investments. We ~~also~~believe ~~seek~~that tothe ~~obtain~~level ~~contracts~~of infrastructure development activity will be significant and that ~~are~~Willbros ~~likely~~is towell ~~result~~positioned to participate in ~~recurring~~this ~~revenue~~infrastructure build out when it occurs. Development of gas reserves in ~~order~~the tounconventional ~~partially~~gas ~~mitigate~~developments, including the ~~cyclical~~Haynesville, ~~nature~~Marcellus, Barnett, ofWoodford ~~our~~and ~~construction~~Fayetteville ~~and~~shales, ~~engineering~~has ~~businesses.~~created ~~Additionally,~~the ~~whenever~~need ~~possible~~for wenew ~~act~~mainline pipeline infrastructure to ~~minimize~~transport ~~our~~natural ~~exposure~~gas to ~~currency~~high ~~fluctuations~~value ~~through~~markets in the eastern ~~use~~United ~~of U~~States.S. Projects ~~dollar-denominated~~in ~~contracts~~the United States and Canada byinclude natural gas, crude oil and product pipelines. We ~~limiting~~believe ~~payments~~the ongoing drilling of highly productive horizontal wells in ~~local~~the ~~currency~~shale plays in North America will continue to ~~approximately~~provide select opportunities, but with the ~~amount~~anticipated slowing of ~~local~~drilling ~~currency~~activity, ~~expense.~~we Weexpect ~~may~~to ~~seek~~see ~~new~~more ~~financing,~~competition for available projects in the ~~form~~near ofterm. We ~~either~~also ~~debt~~believe orour opportunity ~~equity,~~to asprovide ~~market~~total ~~conditions~~project ~~allow~~solutions with respect to pipeline system maintenance and integrity remediation will expand as ~~business~~owners ~~opportunities~~of pipeline systems look for ways to decrease the cost of maintenance and ~~capital~~integrity ~~equipment~~activities ~~requirements~~and ~~may~~consider ~~dictate.~~outsourcing such activities to service providers such as ourselves.

~~Our~~Downstream ~~short–term~~Oil focus will be on execution of the record backlog generated in 2005, continued emphasis on maintaining a balanced portfolio of work with the objective of achieving a fifty-fifty balance between United States & ~~Canada and International, returning general and administrative cost levels to 6-8 percent of revenue, and supporting and seeking closure on SEC, DOJ and OFAC investigations.~~ Gas

~~Willbros~~Decreasing ~~Background~~demand for motor fuels and declining commodity prices have caused certain refinery expansion and routine maintenance plans to be delayed. Other major expansions such as the BP Whiting Refinery and the Motiva expansion in Port Arthur, Texas are proceeding, but at a more measured and cautious pace as owners attempt to capture the cost savings implied by falling steel and other material prices and a more competitive contracting market for engineering and construction services. Lack of visibility both for our customers and the refinery and petrochemical industries generally has slowed the pace of activity in the near term. We believe that longer term, the supply of light and medium sweet crude in the United States is declining and that this results in the need to process heavier, more sour crude streams such as those from the Canadian Oil Sands. Many of the existing refineries require upgrading in order to process this lower quality crude supply. Tighter environmental standards relative to sulfur content in motor fuels should continue to drive additional upgrades to existing refineries. These upgrades, and the more complex units required, should result in more extensive maintenance activities and expenditures. Industry data indicate that the market in the United States for MRO projects will continue to exceed $6 billion per year.

We are the successor to the pipeline construction business of Williams Brothers Company, which was started in 1908 by Miller and David Williams. In 1949, the business was reconstituted and acquired by the next generation of the Williams family. The resulting enterprise eventually became The Williams Companies, Inc., a major U.S. energy and interstate natural gas and petroleum products transportation company (“Williams”). Engineering

InThe engineering ~~1975,~~market ~~Williams~~in ~~elected~~the toNorth ~~discontinue~~American ~~its~~energy ~~pipeline~~sector ~~construction~~is ~~activities~~being ~~and,~~impacted by the reduction in ~~December~~capital ~~1975,~~budgets ~~sold substantially~~and ~~all~~delays ofto ~~the~~planned ~~non-U.S.~~projects ~~assets~~brought ~~and~~on ~~international~~by ~~entities~~the economic ~~comprising~~and ~~its~~credit ~~pipeline~~conditions ~~construction~~currently ~~division~~affecting toboth aend ~~newly~~markets ~~formed,~~and ~~independently~~capital markets. We ~~owned~~expect ~~Panama~~to ~~corporation.~~see ~~The~~increasing ~~new~~competition ~~company~~for ~~(eventually~~engineering projects ~~renamed~~as ~~Willbros~~potential ~~Group,~~clients ~~Inc.)~~seek ~~implemented~~more afavorable ~~new~~pricing terms. We ~~management~~have ~~structure~~managed ~~and~~our ~~commenced~~engineering aheadcount ~~new~~to ~~era~~maintain inmanpower ~~the~~levels ~~Company’s~~which ~~history.~~will optimize Inboth ~~1979,~~our ~~Willbros~~breadth ~~Group,~~of ~~Inc.~~service ~~retired~~offering ~~its~~and ~~debt~~our ~~incurred~~profitability in ~~the~~this segment. We ~~acquisition~~continue byto ~~selling~~believe athat 60our ~~percent~~engineering ~~equity~~services differentiate ~~interest~~us tofrom ~~Heerema~~our ~~Holding~~primary ~~Construction,~~pipeline ~~Inc.~~contractor competitors and can ~~(“Heerema”).~~position Inus ~~1986,~~for ~~Heerema~~EPC ~~acquired~~assignments. ~~the~~Our ~~balance~~engineering ofoperations ~~Willbros~~in ~~Group,~~Kansas ~~Inc.~~City, Missouri are focused on pipeline integrity services which ~~then~~we ~~operated~~believe asis a growing ~~wholly-owned~~market ~~subsidiary~~in ofthe ~~Heerema~~current ~~until~~economic ~~April 1992~~environment.

11 Our Strategy

~~Table~~We ofapply ~~Contents~~our core value system to everything we do; and those values provide the foundation for our strategy and execution. Our core values are:

In· ~~April 1992~~Safety, Heerema sold Willbros Group, Inc. to a corporation formed on December 31, 1991 in the Republic of Panama by members of the Company’s management at the time, certain other investors, and Heerema. Subsequently, the original Willbros Group, Inc. was dissolved into the acquiring corporation which was renamed “Willbros Group, Inc.” In August 1996, we completed an initial public offering of common stock in which Heerema sold all of its shares of common stock; and in October 1997, we completed a secondary offering in which the other investors sold substantially all of their shares of common stock. In May 2002, we completed a third public offering of common stock, which was used to repay debt and to provide cash for general corporate purposes.

~~Willbros~~· ~~Milestones~~Honesty & integrity,

~~The~~· ~~following~~Our ~~are selected milestones which we have achieved:~~ people,

1915		Began pipeline work in the United States.
1939		Began international pipeline work in Venezuela.
1942-44		Served as principal contractor on the “Big Inch” and “Little Big Inch” War Emergency Pipelines in the United States which delivered Gulf Coast crude oil to the Eastern Seaboard.
1947-48		Built the 370-mile (600-kilometer) Camiri to Sucre and Cochabamba crude oil pipeline in Bolivia.
1951		Completed the 400-mile (645-kilometer) western segment of the Trans-Arabian Pipeline System in Jordan, Syria and Lebanon.
1954-55		Built Alaska’s first major pipeline system, consisting of 625 miles (1,000 kilometers) of petroleum products pipeline, housing, communications, two tank farms, five pump stations, and marine dock and loading facilities.
1956-57		Led a joint venture which constructed the 335-mile (535-kilometer) southern section of the Trans-Iranian Pipeline, a products pipeline system extending from Abadan to Tehran.
1958		Constructed pipelines and related facilities for the world’s largest oil export terminal at Kharg Island, Iran.
1960		Built the first major liquefied petroleum gas pipeline system, the 2,175-mile (3,480-kilometer) Mid-America Pipeline in the United States, including six delivery terminals, two operating terminals, 13 pump stations, communications and cavern storage.
1962		Began operations in Nigeria with the commencement of construction of the TransNiger Pipeline, a 170-mile (275-kilometer) crude oil pipeline.
1964-65		Built the 390-mile (625-kilometer) Santa Cruz to Sica Sica crude oil pipeline in Bolivia. The highest altitude reached by this line is 14,760 feet (4,500 meters) above sea level, which management believes is higher than the altitude of any other pipeline in the world.
1965		Began operations in Oman with the commencement of construction of the 175-mile (280-kilometer) Fahud to Muscat crude oil pipeline system.
1967-68		Built the 190-mile (310-kilometer) Orito to Tumaco crude oil pipeline in Colombia, one of five Willbros crossings of the Andes Mountains, a project notable for the use of helicopters in high-altitude construction.
1969		Completed a gas gathering system and 105 miles (170 kilometers) of 42-inch trunkline for the Iranian Gas Trunkline Project (IGAT) in Iran to supply gas to the USSR.
1970-72		Built the Trans-Ecuadorian Pipeline, crossing the Andes Mountains, consisting of 315 miles (505 kilometers) of 20-inch and 26-inch pipeline, seven pump stations, four pressure-reducing stations and six storage tanks. Considered the most logistically difficult pipeline project ever completed at the time.

Our customers,

12· Superior financial performance,

~~Table~~· ofVision ~~Contents~~& innovation, and

1974-76		Led a joint venture which built the northernmost 225 miles (365 kilometers) of the Trans Alaska Pipeline System.
1974-76		Led a joint venture which constructed 290 miles (465 kilometers) of pipeline and two pump stations in the difficult to access western Amazon basin of Peru; another logistics challenge which required lightering from shipping on the Amazon River.
1974-79		Designed and engineered the 500-mile (795-kilometer) Sarakhs-Neka gas transmission line in northeastern Iran.
1982-83		Built the Cortez carbon dioxide pipeline system in the southwestern United States, consisting of 505 miles (815 kilometers) of 30-inch pipeline.
1984-86		Constructed, through a joint venture, the All-American Pipeline System, a 1,240-mile (1,995-kilometer), 30-inch heated pipeline, including 23 pump stations, in the United States.
1984-95		Developed and furnished a rapid deployment fuel pipeline distribution and storage system for the U.S. Army which was used extensively and successfully in Saudi Arabia during Operation Desert Shield/Desert Storm in 1990/1991, in Somalia during 1993 and in Iraq in 2003.
1985-86		Built a 185-mile (300-kilometer), 24-inch crude oil pipeline from Ayacucho to Covenas in Colombia, another Andean challenge.
1987		Rebuilt 25 miles (40 kilometers) of the Trans-Ecuadorian crude oil pipeline, mobilizing to Ecuador in two weeks and completing work within six months after major portions were destroyed by an earthquake.
1988-92		Performed project management, engineering, procurement and field support services to expand the Great Lakes Gas Transmission System in the northern United States. The expansion involved modifications to 13 compressor stations and the addition of 660 miles (1,060 kilometers) of 36-inch pipeline in 50 separate loops.
1989-92		Provided pipeline engineering and field support services for the Kern River Gas Transmission System, a 36-inch pipeline project extending over 685 miles (1,100 kilometers) of desert and mountains from Wyoming to California.
1992-93		Rebuilt oil field gathering systems in Kuwait as part of the post-war reconstruction effort.
1996		Listed shares upon completion of an initial public offering of common stock on the New York Stock Exchange under the symbol “WG.”
1996-97		Achieved ISO Certification for seven operating companies.
1996-98		Performed an EPC contract with Asamera (Overseas) Limited to design and construct pipelines, flowlines and related facilities for the Corridor Block Gas Project located in southern Sumatra, Indonesia.
1997-98		Carried out a contract for the construction of 120 miles (200 kilometers) each of 36-inch and 20-inch pipelines in the Zuata Region of the Orinoco Belt in Venezuela.
1997-98		Completed an EPC contract for El Paso Natural Gas Company and Gasoductos de Chihuahua, a joint venture between El Paso and PEMEX, to construct a 45-mile (75-kilometer) gas pipeline system in Texas and Mexico.
1999-00		Carried out a contract through a joint venture to construct a 492-mile (792-kilometer), 18-inch gas pipeline in Australia.
2000		Acquired Rogers & Phillips, Inc., a United States pipeline construction company.

Effective communication.

13We work diligently to apply these values every day and use them to guide us in the execution of our strategy. We believe by allowing our values to drive the execution of our strategic goals we will increase stockholder value by leveraging our competitive strengths to focus on positioning ourselves for sustained long-term earnings growth. Key elements of our strategy are as follows:

~~Table of Contents~~12

~~2000~~Focus Relocated the Willbros USA, Inc. administrative headquarters from Tulsa, Oklahoma to Houston, Texas. 2001 Acquired MSI Energy Services Inc., an Alberta, Canada based contractor working in the oil sands area, and established a presence in Canada. 2001 Ended year with record backlog of $407.6 million. 2002 Acquired the Mt. West Group to enhance presence in the western United States and to improve our service capabilities worldwide. 2002 Completed engineering and project management of the Gulfstream project, a $1.6 billion natural gas pipeline system from Mobile, Alabama crossing the Gulf of Mexico and serving markets in central and southern Florida. 2002 Elected Michael F. Curran CEO, succeeding Larry J. Bump, who retired after 22 years as Willbros CEO. 2002 Completed the Centennial Pipeline Project: FERC application support, engineering, procurement, construction and construction management of new-build and conversion to refined products service of a natural gas system from Gulf Coast to mid-western United States, 797 miles (1,275 kilometers) of 24-inch and 26-inch pipelines and facilities. 2003 Completed work on the Explorer Pipeline Mainline expansion project, adding 12 new pump stations and additional storage to this products pipeline from the Gulf Coast to central Illinois. 2003 Completed an EPC contract for the 665-mile (1,070-kilometer), 30-inch crude oil Chad–Cameroon Pipeline Project, through a joint venture with another international contractor. 2003 Completed construction of the GASYRG natural gas pipeline in Bolivia, 144 miles (230 kilometers) of 32-inch pipeline from the San Alberto gas field to connect with export facilities to Brazil. 2004 Completed construction and began commercial operation of the Opal Gas Plant with nominal capacity of 350 million standard cubic feet per day. 2004 Began work on the Eastern Gas Gathering System (“EGGS”) project, an 83-kilometer 40-inch feed gas pipeline to the Bonny Island LNG facilities in Nigeria. 2004 Awarded the contract for the onshore portions of the West Africa Gas Pipeline project, to transport natural gas from Nigeria to end users in Ghana, Togo and Benin. 2004 Began work on a field upgrade East Area Platforms Retrofit and Wellhead Tie-ins Project (“EPC-IV”), offshore Nigeria, for a major exploration and production company. 2004 Completed pipeline rehabilitation and replacement project in Iraq. 2004 Ended year with record backlog of $660.9 million. 2005 Generated record backlog of $985 million at September 30, 2005.Managing Risk

14We have implemented a core set of business conduct, practices and policies which have fundamentally improved our risk profile. Examples of our risk management execution include increasing our activity levels in lower risk countries, diversifying our service offerings and end markets, practicing rigorous financial management and limiting contract execution risk. Risk management is emphasized throughout all levels of the organization and covers all aspects of a project from strategic planning and bidding to contract management and financial reporting.

~~Table~~· Focus resources in markets with the highest risk-adjusted return. We believe North America continues to offer us highly attractive risk-adjusted returns and the majority of ~~Contents~~our resources are focused on North America. In spite of the current economic dislocation, we believe targeted areas in North America will provide significant opportunities. More specifically, the monetization of previously developed oil and gas reserves requires connectivity to primary demand end markets; and the ongoing development of unconventional shale gas plays is expected to provide new work opportunities. Even though we are heavily concentrated in North America, we continue to seek international opportunities which can provide superior, more diversified risk-adjusted returns and believe our extensive international experience is a competitive advantage. We relocated our President of International Operations to Muscat, Oman to expand our Middle East operations into UAE and Saudi Arabia. Additionally, we have opened an office in Libya. We believe that markets in North Africa and the Middle East may offer attractive opportunities for us in the future given mid- and long-term industry trends.

~~Business~~· ~~Segments~~Maintain a conservative contract portfolio. While we will continue to pursue a balanced contract portfolio, current market dynamics suggest our U.S. pipeline operations may be entering a period of increased fixed price contracting opportunities. We believe our fixed price execution experience, our current efforts to realign our cost structure to the rapidly changing market and our improved systems and our focus on risk management provide us a competitive advantage versus many of our competitors.

Historically, the Company reported in one operating segment offering three integrated services: engineering, construction, and specialty. In mid-2004, the Company restructured its operating segments to includeLeverage ~~Engineering~~Industry ~~and~~Position ~~Construction~~ and ~~Facilities~~Reputation ~~Development and Operations. Beginning in the fourth quarter of 2004, the Company restructured its business~~ into ~~two~~a ~~operating~~Broader ~~segments,~~Service ~~International and United States & Canada. All periods presented reflect this most recent change in segments.~~ Offering

~~The Company’s segments are strategic business units that are managed~~We ~~separately~~believe asthe ~~each~~global ~~segment~~energy ~~has~~infrastructure ~~different~~market ~~operational~~will ~~requirements~~continue ~~and~~to ~~marketing strategies~~provide opportunities. To ~~Management~~take ~~believes,~~advantage ~~due to the composition~~ of ~~current~~these ~~work and potential work~~ opportunities, ~~and~~we ~~the~~expect ~~nuances of the geographic markets the Company serves,~~to ~~that~~expand ~~the~~our ~~organization~~core ~~should~~capabilities bebeyond ~~viewed~~our oncurrent aofferings ~~geographic~~and ~~basis. Consequently~~markets, ~~the businesses have been restructured~~ and we are ~~reporting~~selectively onevaluating ~~the~~these ~~basis~~prospects. ofOur ~~two~~established ~~operating~~platform ~~segments: International~~ and ~~United States & Canada. The~~track ~~International~~record ~~segment~~position ~~consists~~us ofto ~~all~~expand ~~construction,~~our ~~engineering~~expertise ~~and~~into ~~facilities~~a ~~development~~broader ~~operations~~range inof ~~countries~~related service ~~other than the United States and Canada~~offerings. ~~Currently~~We ~~such~~intend ~~operations~~to ~~are~~leverage inour ~~Africa,~~project ~~the Middle East~~management, ~~and~~engineering ~~South America. The~~and ~~United~~construction ~~States &~~skills ~~Canada~~to ~~segment~~establish ~~consists~~additional ofservice ~~all construction~~offerings, ~~engineering~~such ~~and~~as downstream ~~facilities~~engineering, ~~development~~instrumentation ~~operations in the United States~~ and ~~Canada.~~electrical ~~The~~services, ~~Company’s~~turbo-machinery services, ~~corporate~~environmental ~~operations~~services ~~include the general~~ and ~~administrative~~pipeline ~~and financing~~system ~~functions~~integrity ~~of the organization~~services. ~~The~~We believe ~~costs~~that ofover ~~these~~time, ~~functions~~a ~~are~~more ~~allocated~~balanced ~~between~~mix ~~the~~of ~~two~~recurring ~~operating~~services, ~~segments.~~such ~~The~~as program ~~Company’s~~management ~~corporate~~and ~~operations~~maintenance ~~also~~services, ~~include~~and ~~various~~capital ~~other~~projects ~~assets~~will ~~that are allocated between~~ enhance the ~~two~~earnings ~~operating~~profile ~~segments. Inter-segment~~of ~~revenue~~our ~~and revenue between geographic areas are not material~~business.

~~See~~Additionally, we ~~Footnote~~intend 14to pursue selective strategic acquisitions to ~~the~~complement ~~Consolidated~~our ~~Financial~~organic expansion ~~Statements~~strategies and to minimize our dependence on the cyclical ~~included~~large-diameter cross-country pipeline construction market. We began this process in ~~Item 8~~2007 with the InServ and Midwest acquisitions that expanded our service offerings as well as the geographies where we deliver those services. Our November 2007 acquisition of ~~this~~InServ ~~Form~~complemented ~~10-K~~our ~~for~~service ~~more~~offerings ~~information~~to onour traditional market of engineering and construction services in the midstream hydrocarbon transportation industry. Our July 2007 acquisition of Midwest significantly enhanced our ~~operating~~presence ~~segments~~in mainline pipeline construction in Western Canada. We believe that companies with strong balance sheets and liquidity positions will have opportunities to acquire assets and companies in today’s uncertain market.

~~Services Provided~~ 13

~~The~~Maintain ~~Company provides engineering, construction, specialty services and development activities in each of the geographic segments described above. We also~~Financial have experience in the operation of the types of facilities we design and build. We may make equity investments in some projects to enhance our competitive position for the work assignments associated with the project. In other instances, our experience enables us to understand and manage project completion risk and in these cases we may elect to develop and own a complete facility which will provide attractive internal rates of return over an extended period of time. Flexibility

~~Engineering~~Maintaining the ~~Services~~financial flexibility to meet the material, equipment and personnel needs to support our project commitments, as well as the ability to pursue our expansion and diversification objectives is critical to our growth. We view financial strength and flexibility as a fundamental requirement to fulfilling our strategy. As of December 31, 2008, we had liquidity of $257,864 comprised of cash and cash equivalents of $207,864 and unutilized cash borrowing capacity of $50,000 under our revolving credit facility to address our current capital requirements with no short-term borrowings or commercial paper outstanding. For the year ended December 31, 2008, we increased our working capital position, for continuing operations, by $82,944 (41.7 percent) to $282,059 from $199,115 at December 31, 2007. In addition, our $150,000 senior secured revolving credit facility (the “Credit Facility”) provides us additional financial flexibility in the form of $50,000 in cash borrowing capacity to pursue our growth strategy. The combination of our strong cash position, the availability under our existing Credit Facility, and our future cash flow from operations will allow us to focus on the highest return projects available during uncertain economic times as well as pursue our strategy of diversification as opportunities present themselves. The limited availability of credit in the market has not affected our credit facility; nor do we believe that it will impact our ability to access surety bonding in the future.

~~We provide project~~Leverage ~~management,~~Core ~~engineering,~~Service ~~and~~Expertise ~~material~~into ~~procurement~~Additional ~~services~~Full toEPC the oil, gas and power industries and government agencies. We specialize in providing engineering services to assist clients in constructing or expanding pipeline systems, compressor stations, pump stations, fuel storage facilities, and field gathering and production facilities. Over the years, we have developed expertise in addressing the unique engineering challenges involved with pipeline systems and associated facilities. Contracts

ToOur ~~complement~~core expertise and service offerings allow us to provide our customers with a single source EPC solution which creates greater efficiencies to the benefit of both our customers and our company. As one of the few pipeline constructors with engineering ~~services~~capabilities, we ~~also~~believe we are uniquely positioned to provide this integrated service to our customers. In performing integrated EPC contracts, we establish ourselves as overall project managers from the earliest stages of project inception and are therefore better able to efficiently determine the design, permitting, procurement and construction sequence for a ~~full~~project ~~range~~in connection with making engineering decisions. Our customers benefit from a more seamless execution; while for us, these contracts often yield higher profit margins on the engineering and construction components of ~~field~~the contract compared to stand-alone contracts for similar services. Additionally, ~~including:~~this contract structure allows us to deploy our resources more efficiently and capture the engineering, procurement and construction components of these projects.

~~• surveying;~~14

~~• right-of-way acquisition;~~Willbros Background

•We ~~material~~are ~~receiving~~the successor to the pipeline construction business of Williams Brothers Company, which was started in 1908 by Miller and ~~control;~~David Williams and eventually became The Williams Companies, Inc., a major U.S. energy and interstate natural gas and petroleum products transportation company (“Williams”).

•In December 1975, Williams elected to discontinue its pipeline construction ~~inspection;~~activities and sold substantially all of the non-U.S. assets and international entities comprising its pipeline construction division to a newly formed, independently owned Panamanian corporation. Ownership of the new privately-held company (eventually renamed Willbros Group, Inc.) changed infrequently during the 1980’s and 1990’s until an initial public offering of common stock was completed in August 1996.

•Having ~~facilities~~been ~~startup~~in ~~assistance;~~business ~~and~~for 100 years, we have achieved many milestones, which are summarized as follows:

•1915 ~~facilities~~Began ~~operations~~pipeline work in the United States.

~~These~~1923 ~~services~~First ~~are~~project ~~furnished~~outside tothe ~~a number~~United ofStates ~~oil,~~performed ~~gas,~~in ~~power and government clients on a stand-alone basis and are also provided as part of EPC contracts undertaken by us~~Canada.

~~The~~1939 ~~buying~~Began ~~process~~pipeline ofwork ~~our~~in ~~customers~~Venezuela, ~~includes~~first ~~close scrutiny of our experience and capabilities with respect to~~ project ~~requirements.~~outside ~~Some~~North ~~of those requirements involve:~~ America.

~~Climatic~~1942-44 ~~Constraints.~~Served Inas ~~the~~principal ~~design~~contractor ofon ~~pipelines~~the ~~and~~“Big ~~associated~~Inch” ~~facilities to be installed in harsh environments, special provisions for metallurgy of materials~~ and ~~foundation~~“Little ~~design~~Big ~~must~~Inch” beWar ~~addressed.~~Emergency WePipelines ~~are experienced~~ in ~~designing~~the ~~pipelines~~United ~~for~~States ~~arctic~~which ~~conditions~~delivered ~~(where~~Gulf ~~permafrost~~Coast ~~and~~crude ~~extremely~~oil ~~low~~to ~~temperatures~~the ~~are~~Eastern ~~prevalent), desert conditions, mountainous terrain, swamps and offshore~~Seaboard.

151954-55 Built Alaska’s first major pipeline system, consisting of 625 miles of petroleum products pipeline, housing, communications, two tank farms, five pump stations, and marine dock and loading facilities.

~~Table~~1960 ofBuilt ~~Contents~~the first major liquefied petroleum gas pipeline system, the 2,175-mile Mid-America Pipeline in the United States, including six delivery terminals, two operating terminals, 13 pump stations, communications and cavern storage.

~~Environmental~~1962 ~~Impact~~Began ofoperations ~~River~~in ~~Crossings/Wetlands.~~Nigeria Wewith ~~have~~the ~~considerable~~commencement ~~capability~~of inconstruction ~~designing pipeline crossings~~ of ~~rivers, streams and wetlands in such a way as to minimize environmental impact. We possess expertise to determine~~ the ~~optimal~~TransNiger ~~crossing techniques~~Pipeline, ~~such~~a ~~as open cut, directionally~~170-~~drilled~~mile orcrude ~~overhead,~~oil ~~and to develop site-specific construction methods to minimize bank erosion, sedimentation and other environmental impacts~~pipeline.

~~Seismic~~1964-65 ~~Design~~Built ~~and~~the ~~Stress Analysis.~~390-mile ~~Our~~Santa ~~engineers~~Cruz ~~are~~to ~~experienced~~Sica inSica ~~seismic~~crude ~~design~~oil of pipeline ~~crossings~~in ~~of active faults and areas where liquefaction or slope instability may occur due to seismic events~~Bolivia. ~~Our~~The ~~engineers~~highest ~~also~~altitude ~~carry~~reached ~~out~~by ~~specialized~~this ~~stress~~line ~~analyses~~is ~~of piping~~14,760 ~~systems~~feet ~~that are subjected to expansion and contraction due to temperature changes~~(4,500 asmeters) ~~well~~above assea ~~loads from equipment and other sources~~level.

~~Hazardous~~1965 ~~Materials.~~Began ~~Special~~operations ~~care~~in ~~must~~Oman bewith ~~taken in~~ the ~~design~~commencement of ~~pipeline~~construction ~~systems~~of ~~transporting~~the ~~sour~~175-mile ~~gas.~~Fahud ~~Sour gas not only presents challenges regarding personnel safety since hydrogen sulfide leaks can be extremely hazardous, but also requires that material be specified~~ to ~~withstand~~Muscat ~~highly~~crude ~~corrosive~~oil ~~conditions.~~pipeline ~~Our engineers have extensive natural gas experience which includes design of sour gas systems~~system.

~~Hydraulics~~1970-72 ~~Analysis~~Built ~~for~~the ~~Fluid~~Trans-Ecuadorian ~~Flow~~Pipeline, incrossing ~~Piping Systems. We employ engineers with~~ the ~~specialized~~Andes ~~knowledge~~Mountains, ~~necessary~~consisting toof ~~address~~315 ~~properly~~miles ~~the effects~~ of ~~both~~20-inch ~~steady state~~ and ~~transient~~26-inch ~~flow conditions for a wide variety of fluids transported by pipelines~~pipeline, ~~including~~seven ~~natural~~pump ~~gas~~stations, ~~crude~~four ~~oil,~~pressure-reducing ~~refined~~stations ~~petroleum~~and ~~products,~~six ~~natural~~storage ~~gas liquids, carbon dioxide and water~~tanks. ~~This~~Considered ~~expertise is important in optimizing~~ the ~~capital~~most ~~costs~~logistically ofdifficult pipeline ~~projects~~project ~~where~~ever ~~pipe~~completed ~~material~~at ~~costs~~the ~~typically represent a significant portion of total project capital costs~~time.

We1974-76 ~~have~~Led ~~developed~~a ~~significant~~joint ~~expertise~~venture ~~with~~which ~~respect~~built tothe ~~each~~northernmost 225 miles of the ~~following:~~Trans Alaska Pipeline System.

~~Natural~~1984-86 ~~Gas~~Constructed, ~~Transmission Systems.~~through ~~The~~a ~~expansion~~joint ofventure, the ~~natural~~All-American ~~gas~~Pipeline ~~transportation~~System, ~~network in the United States in recent years has been~~ a ~~major~~1,240-mile ~~contributor to our engineering business. We believe we have established a strong position as a leading supplier~~ of ~~project management~~30-inch ~~and~~heated ~~engineering services to natural gas~~ pipeline, ~~transmission~~including ~~companies~~23 inpump ~~the United States. Since 1988~~stations, ~~we have provided engineering services for over 19 major natural gas pipeline projects~~ in the United States~~, totaling more than 7,000 miles (11,200 kilometers) of large diameter pipe for new systems and expansions of existing systems~~. ~~During this same period, we were also the engineering contractor for over 80 compressor stations, including new stations and additions to existing stations for 17 clients.~~

~~Liquids~~1988-92 ~~Pipelines~~Performed ~~and~~project ~~Storage Facility Design. We have engineered a number of crude oil and refined petroleum products systems throughout the world~~management, ~~and have become recognized for our expertise in the~~ engineering ~~of systems for the storage and transportation of petroleum products and crude oil. In 2001~~, weprocurement ~~provided engineering~~ and field support services ~~for~~ ~~conversion~~to ofexpand athe ~~natural~~Great ~~gas~~Lakes ~~system~~Gas Transmission System in the ~~mid-western~~northern United States,. ~~involving~~The ~~over~~expansion ~~797~~involved ~~miles~~modifications ~~(1,275 kilometers) of 24-inch~~ to ~~26-inch~~13 ~~diameter~~compressor ~~pipeline~~stations toand ~~serve~~ the ~~upper~~addition ~~Midwest~~of ~~with~~660 ~~refined~~miles ~~petroleum products. In 2003, we completed EPC services for the expansion~~ of ~~another~~36-inch ~~petroleum products~~ pipeline toin ~~the~~50 ~~Midwest~~separate ~~involving 12 new pump stations, modifications to another 13 pump stations and additional storage~~loops.

~~U.S.~~1992-93 ~~Government~~Rebuilt ~~Services.~~oil ~~Since~~field ~~1981,~~gathering wesystems ~~have~~in ~~established~~Kuwait ~~our position with U.S. government agencies~~ as apart leading engineering contractor for jet fuel storage as well as aircraft fueling facilities, having performed the engineering for major projects at eight U.S. military bases including three air bases outside the United States. The award of ~~these projects was based largely on contractor experience and personnel qualifications. Also, in~~ the ~~past seven years we have won five of ten so~~post-~~called~~war ~~“Design-Build-Own-Operate-Maintain”~~reconstruction ~~projects to provide fueling facilities at military bases in the United States for the U~~effort.~~S. Defense Energy Support Center.~~

~~Design~~1996 ofListed ~~Peripheral~~shares ~~Systems.~~upon ~~Our~~completion ~~expertise extends to the engineering~~ of aan ~~wide~~initial ~~range~~public ofoffering ~~project peripherals, including various types~~ of ~~support~~common ~~buildings~~stock ~~and~~on ~~utility~~the ~~systems,~~New ~~power~~York ~~generation~~Stock ~~and~~Exchange ~~electrical~~under ~~transmission,~~the ~~communications~~symbol ~~systems, fire protection, water and sewage treatment, water transmission, roads and railroad sidings~~“WG. ”

~~Material~~2002 ~~Procurement.~~Completed ~~Because~~engineering ~~material~~and ~~procurement~~project ~~plays~~management ~~such~~of ~~a critical part in~~ the ~~success~~Gulfstream ~~of any~~ project, wea ~~maintain an experienced staff to carry out material procurement activities~~$1.6 ~~Material~~billion ~~procurement~~natural ~~services~~gas ~~are~~pipeline ~~provided~~system tofrom ~~clients~~Mobile, asAlabama acrossing ~~complement to~~ the ~~engineering~~Gulf ~~services performed for a project. Material procurement is especially critical to the timely completion~~ of ~~construction~~Mexico onand ~~the~~serving ~~EPC~~markets ~~contracts~~in wecentral ~~undertake. We maintain a computer-based material procurement, tracking~~ and ~~control~~southern ~~system, which utilizes software enhanced to meet our specific requirements~~Florida.

162003 Completed an EPC contract for the 665-mile of 30-inch crude oil Chad–Cameroon Pipeline Project, through a joint venture with another international contractor.

~~Table of Contents~~15

~~Construction~~2007 ~~Services~~Completed the sale of our Nigerian interests in February 2007. Acquired Midwest in July 2007 and InServ in November 2007.

We2008 ~~are~~Completed ~~one~~two of36-inch ~~the~~loops ~~most~~in ~~experienced~~Northern ~~contractors~~Alberta ~~serving~~for ~~the~~Trans ~~oil, gas and power industries~~Canada. ~~Our~~First ~~construction~~major ~~capabilities~~project ~~include~~following ~~the~~Midwest expertise to construct and replace large-diameter cross-country and offshore pipelines; to fabricate engineered structures, process modules and facilities; to construct oil and gas production facilities, pump stations, flow stations, gas compressor stations, gas processing facilities and other related facilities; and to construct offshore platforms, subsea facilities, piers, docks and bridgesacquisition.

~~Pipeline Construction. World demand for pipelines~~Completed ~~results~~approximately ~~from~~190 ~~the~~miles ~~need to move millions~~ of ~~barrels~~the ofSoutheast ~~crude~~Supply ~~oil and petroleum products and billions of cubic feet of natural gas to refiners~~Header, ~~processors~~LLC ~~and~~("SESH") ~~consumers each day. Pipeline construction is capital-intensive, and we own, lease, operate~~project ~~and~~that ~~maintain~~connects athe ~~fleet~~Perryville ofHub ~~specialized~~in ~~equipment~~northeast ~~necessary~~Louisiana ~~for~~with ~~operations in~~ the ~~pipeline~~Gulfstream Natural ~~construction~~Gas ~~business~~System, L.L.C. ~~We focus on~~ pipeline ~~construction activity~~ in ~~remote~~Mobile ~~areas and harsh climates where we believe our experience gives us a competitive~~County, ~~advantage~~Alabama. ~~We believe that we have constructed more miles of pipeline than any other private sector company.~~

~~The construction of a~~GEOGRAPHIC cross-country pipeline involves a number of sequential operations along the designated pipeline right-of-way. These operations are virtually the same for all overland pipelines, but personnel and equipment may vary widely depending upon such factors as the time required for completion, general climatic conditions, seasonal weather patterns, the number of road crossings, the number and size of river crossings, terrain considerations, extent of rock formations, density of heavy timber and amount of swamp. REGIONS

~~Onshore~~We ~~construction~~operate ~~often~~globally ~~involves~~but ~~separate~~have ~~crews~~refocused our tooperations ~~perform~~in recent years on certain markets in North America and the Middle ~~following~~East. ~~different~~Our ~~functions:~~continuing operations contract revenue by geographic region for recent years is shown in the following table:

• clear the right-of-way;

	Year Ended December 31,
	2008					2007					2006
	Amount		Percent			Amount		Percent			Amount		Percent

Contract Revenue
United States	$	1,440,239		75.4	%	$	612,647		64.7	%	$	312,121		57.5	%
Canada		387,498		20.2	%		244,806		25.8	%		161,924		29.8	%
Oman		84,967		4.4	%		90,238		9.5	%		69,214		12.7	%
Total	$	1,912,704		100.0	%	$	947,691		100.0	%	$	543,259		100.0	%

~~• grade the right-of-way;~~United States

•We believe ~~excavate~~that the United States will continue to be an important market for our services. While current economic and financial conditions are creating uncertainty around the timing of many capital projects, longer term capacity additions are expected to be significant. The February 2009 Oil & Gas Journal survey of planned worldwide pipeline construction indicates additional planned projects, for 2009 and beyond, in the United States and Canada, of nearly 25,000 miles, an increase of approximately 20 percent over 2008. In the current environment, energy producers appear to be focusing development budget spending on exploiting more cost effective reserves in the newer shale plays in the United States and Canada. Many of the most significant shales, particularly the Marcellus, Haynesville and Fayetteville, require substantial gathering and takeaway infrastructure which we believe will create opportunities for our engineering and construction services. Alaska also holds significant reserves requiring potentially greater levels of infrastructure investment. Liquefied natural gas (“LNG”) will likely play a ~~trench~~meaningful role in satisfying North American energy needs in the future, creating additional opportunities for our services, but we expect greater near term focus to be placed on the development of reserves in the United States. Additionally, deregulation of the electric power and natural gas pipeline industries in the United States has led to the consolidation and reconfiguration of existing pipeline infrastructure and the establishment of new energy transport systems, which we expect will result in continued demand for our services in the mid to long-term. Environmental ~~bury~~concerns will likely continue to require careful, thorough and specialized professional engineering and planning for all new facilities within the ~~pipe;~~oil, gas and power sectors. Furthermore, the demand for replacement and rehabilitation of pipelines is expected to increase as pipeline systems in the United States approach the end of their design lives and population trends influence overall energy needs. We are recognized as an industry leader in the United States for providing project management, engineering, and procurement and construction services. We maintain a staff of experienced management, construction, engineering and support personnel in the United States. We provide these services through engineering offices located in Tulsa, Oklahoma and Kansas City, Missouri. Construction operations based in Houston, Texas provide the majority of construction services in the United States.

~~• haul pipe to intermediate stockpiles from which stringing trucks carry pipe and place individual lengths (joints) of pipe alongside the ditch;~~16

•The United ~~bend~~States ~~pipe~~remains ~~joints~~the primary market for our downstream oil and gas services. With a nationwide reach, we have experience serving 91 of the 149 operable refineries in the country. While capital budget reductions among our customers are likely to ~~conform~~impact spending on some capital construction projects of the type performed by our Downstream Oil & Gas segment, many of our services are less dependent upon capital expenditures. In particular, turnaround and maintenance projects are performed routinely and are typically less susceptible to ~~changes~~fluctuations in hydrocarbon prices. With the Clean Air Act of ~~direction~~1990 pushing the refining industry to meet stringent limitations on the sulfur content in gasoline fuels, Downstream Oil & Gas benefited from the influx of Clean Fuels projects from 2000 to 2005. Over the next few years, refiners will be required to meet other mandates by the Environmental Protection Agency (“EPA”), including reducing the sulfur content level in diesel fuels and ~~elevation;~~reducing the benzene content in other motor fuels. To comply with this mandate, refiners are required to modify and/or expand existing distillate hydro treating or hydro cracking capacity. Additionally, with refineries until recently operating at near capacity as a result of strong demand for gasoline, many U.S. operators have delayed their maintenance and turnaround projects to minimize loss time, implying more intensive maintenance and turnaround projects in the near term.

•We ~~clean~~have ~~pipe~~also ~~ends~~provided significant engineering and ~~line~~facility upmanagement services to U.S. government agencies during the ~~succeeding~~past ~~joint;~~25 years, particularly in fuel storage and distribution systems and aircraft fueling facilities.

~~• perform various welding operations;~~Canada

•Rapid ~~inspect~~declines ~~welds~~in ~~non-destructively;~~global oil prices since mid 2008 have increased uncertainty regarding the near term economic viability of many investments in the oil sands region of northern Alberta, Canada. As a result, a number of key participants in the region have reduced capital expenditure plans for 2009 and, in some cases, delayed significant capital projects. However, the Canadian Energy Research Institute (CERI) still projects over Cdn $200 billion to be invested by the end of 2020. Installed capacity combined with ongoing investment offers prospective fabrication and installation work as well as maintenance opportunities. Additionally, several options are under consideration with respect to transporting processed crude oil or unrefined bitumen, to markets in the United States and Asia via export pipelines from the region. The need for additional process fuel for the oil sands also is driving the development of new pipeline infrastructure from the Mackenzie Delta region. Construction, fabrication and maintenance services in Canada are provided primarily through facilities and resources located in Ft. McMurray and Edmonton, Alberta, where we maintain fabrication facilities, including capabilities for chrome carbide overlay (“CCO”), which is high in demand, to reduce erosion in transmission piping. CCO is a process of treating pipe to withstand the highly abrasive bitumen sand slurry transported from mining sites to separation facilities.

~~• clean pipe and apply anti-corrosion coatings;~~Middle East

•Our ~~lower~~operations ~~pipe~~in the Middle East date back to 1948. We have worked in most of the countries in the region, with particularly heavy involvement in Kuwait, Oman and Saudi Arabia. Currently, we have ongoing operations in Oman, where we have been active continuously for more than 40 years. We maintain a fully staffed facility in Oman with equipment repair facilities and spare parts on site and offer construction expertise, repair and maintenance services, engineering support, oil field transport services, materials procurement and a variety of related services to our clients. We believe our presence in Oman and our experience there and in other Middle Eastern countries will enable us to successfully win and perform projects in this region. We have evaluated the opportunities in the Middle East and determined that we should focus our efforts on continued development of our operations in Oman and the extension of that expertise and capability into the markets ~~ditch;~~in the United Arab Emirates and Saudi Arabia. In Saudi Arabia, we have an existing joint venture relationship that allows us to monitor and pursue opportunities.

~~• backfill the ditch;~~Africa

•Africa ~~bore~~has been an important strategic market for us and ~~install~~may ~~highway~~remain so, despite our decision to exit Nigeria in 2006. There are large, potentially exploitable hydrocarbon reserves in North Africa. Depending upon the world market for oil and ~~railroad~~natural ~~crossings;~~gas and the availability of financing, the amount of potential new work could be substantial. Currently, we are monitoring or bidding on major work prospects in Libya.

~~• drill, excavate or dredge and install pipeline river crossings;~~South America

•The ~~tie~~political situation in ~~all~~several South ~~crossings~~American countries remains uncertain and projects in these countries continue to be delayed. Because the ~~pipeline;~~governments of these countries continue to pursue agendas which include nationalization and/or renegotiation of contracts with foreign investors, we view these markets as having limited opportunities.

~~• install mainline valve stations;~~17

~~• conduct pressure testing;~~Backlog

~~• install cathodic protection system; and~~Backlog

•In ~~perform~~our ~~final~~industry, ~~clean~~backlog upis considered an indicator of potential future performance because it represents a portion of the future revenue stream. Our strategy is not focused solely on backlog additions but, capturing quality backlog with margins commensurate with the risks associated with a given project.

~~Special~~Backlog ~~equipment~~consists ~~and techniques are required to construct pipelines across wetlands and offshore. We use swamp pipelaying methods extensively in Nigeria, where a significant portion~~ of ~~our~~anticipated ~~construction~~revenue from ~~operations are carried out in~~ the ~~Niger~~uncompleted ~~River~~portions ~~Delta.~~of Inexisting ~~addition~~contracts ~~to our primary offshore~~ and ~~swamp~~contracts ~~equipment~~whose ~~such~~award as lay barges, dredges and swamp backhoes, we have a substantial investment in support vessels, including tugboats, barges, supply boats and houseboats, which are required in order to maintain and support ouris ~~capabilities~~reasonably ~~in offshore and swamp pipeline construction~~assured.

~~Fabrication.~~We ~~Fabrication~~believe ~~services~~the ~~can~~backlog befigures aare firm, ~~more~~subject ~~efficient~~only ~~means~~to ofthe cancellation and modification provisions contained in ~~delivering~~various ~~engineered~~contracts. Additionally, ~~major~~due ~~process~~to orthe ~~production~~short ~~equipment~~duration of many jobs, revenue associated with ~~improved~~jobs ~~schedule~~performed ~~certainty~~within ~~and~~a ~~quality~~reporting period will not be reflected in quarterly backlog reports. We ~~provide~~generate ~~fabrication~~revenue ~~services~~from innumerous ~~both~~sources, including ~~the~~contracts ~~International~~of ~~and~~long ~~United~~or ~~States &~~short ~~Canada~~duration ~~segments~~entered ~~and~~into ~~are~~during ~~capable~~a ofyear as well ~~fabricating~~as ~~such~~from ~~diverse~~various ~~deliverables~~contractual asprocesses, ~~process~~including ~~modules~~change orders, ~~subsea~~extra ~~templates~~work, variations ~~flare~~in ~~piles~~the ~~and~~scope ~~tips~~of work and ~~offshore~~the ~~jackets~~effect ~~and~~of ~~decks~~escalation or currency fluctuation formulas. ~~The~~These ~~deepwater~~revenue ~~projects~~sources ~~being~~are ~~developed~~not ~~offshore~~added ~~West~~to ~~Africa~~backlog ~~offer~~until realization ~~significant~~is ~~opportunities~~assured. ~~for~~For discussion of backlog, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

17The following table shows our backlog from continuing operations by operating segment and geographic location as of December 31, 2008 and 2007:

	Year Ended December 31,
	2008					2007
	Amount		Percent			Amount		Percent

Upstream Oil & Gas	$	439,019		67.0	%	$	941,301		72.1	%
Downstream Oil & Gas		171,426		26.1	%		199,646		15.3	%
Engineering		45,049		6.9	%		164,494		12.6	%
Total backlog	$	655,494		100.0	%	$	1,305,441		100.0	%

fabrication services and we completed initial projects in 2004 which establish Willbros as a qualified provider of these services. We are one of the few qualified companies able to offer local content and meet stringent quality requirements. Additional emphasis by the host government on local content has the effect of making our service capabilities more attractive to project developers. These developers are required by the government to demonstrate that their projects meet certain levels of local content. Also, Willbros MSI Canada Inc. (“Willbros MSI”) purchased an additional 90,000 square foot fabrication facility in Edmonton, Alberta. This facility has expanded Willbros MSI fabrication capability to provide process modules to the burgeoning heavy oil market in northern Alberta. Including the new facility in Edmonton, Willbros MSI currently operates three fabrication facilities in Ft. McMurray and Edmonton, Alberta, Canada.

	December 31, 2008					December 31, 2007
	Amount		Percent			Amount		Percent
Geographic Region
United States	$	492,621		75.2	%	$	1,014,351		77.7	%
Canada		128,692		19.6	%		215,527		16.5	%
Oman		34,181		5.2	%		75,563		5.8	%
Total backlog	$	655,494		100.0	%	$	1,305,441		100.0	%

Station Construction. Oil and gas companies require various facilities in the course of producing, processing, storing and moving oil and gas. We are experienced in and capable of constructing facilities such as pump stations, flow stations, gas processing facilities, gas compressor stations and metering stations. We can provide a full range of services for the engineering, design, procurement and construction of processing, pumping, compression, and metering facilities. We are capable of building such facilities onshore, offshore in shallow water or in swamp locations. The construction of station facilities, while not nearly as capital-intensive as pipeline construction, is generally characterized by complex logistics and scheduling, particularly on projects in locations where seasonal weather patterns limit construction options, and in countries where the importation process is difficult. Our capabilities have been enhanced by our experience in dealing with such challenges in numerous countries around the world.

	Year Ended December 31,
	2008		2007		2006		2005		2004
Total Backlog	$	655,494	$	1,305,441	$	602,272	$	240,373	$	73,343

Marine Construction. Our marine construction equipment, including conventional combination derrick/pipelay barges, pile driving barges, tugs and support vessels, service the Lake Maracaibo and near shore areas in Venezuela and offshore West Africa. In Lake Maracaibo and near shore locations, we construct and install fixed drilling and production platforms, berthing docks, jetties and mooring facilities. Offshore West Africa, the primary construction vessels we own and operate are the combination derrick/pipelay barge WB 318, the hook up/support barge WB 82, and the multi-purpose motor vessel Eros III. We also operate the shallow water pipelay barge LB 41. The WB 318 size of 300’ x 90’, lift capacity of 250 tons and center slot pipelay make the vessel ideal for the West Africa offshore projects involving platform installation, removal and pipelay for up to 24-inch pipe in water depths up to 200 feet. The hook up barge WB 82, measuring 256’ x 69’ with quarters for 150 persons and a 100-ton crane, is well suited for the platform and facilities retrofit and maintenance projects in the area. The 3,200 horsepower M/V Eros III, measuring 150’ x 36’, with quarters for 42 and a four–point mooring system, is well suited for construction support, platform survey, dive support and survey projects. The LB 41, a 180’ x 54’ shallow water pipelay vessel, is well suited for the shallow water pipelay market for offshore West Africa. Competition

~~Specialty~~We operate in a highly competitive ~~Services~~environment. We compete against government-owned or supported companies and other companies that have financial and other resources substantially in excess of those available to us. In certain markets, we compete against national and regional firms against which we may not be price competitive. We have different competitors in different markets.

WeIn ~~provide a wide range of support and ancillary services related to~~ the ~~construction,~~United ~~operation~~States, ~~repair~~our ~~and~~primary ~~rehabilitation~~upstream ofoil ~~pipelines. Frequently, such services require the utilization of specialized equipment, which is costly~~ and ~~requires~~gas ~~operating~~construction ~~expertise.~~competitors ~~Due~~on toa ~~the~~national ~~initial~~basis ~~equipment~~include Associated ~~cost~~Pipeline ~~and~~Contractors, ~~operating~~Price ~~expertise~~Gregory ~~required~~Services, ~~many~~Sheehan ~~client companies hire~~Pipeline usConstruction, ~~to perform these services~~U.S. WePipeline ~~own~~ and ~~operate~~Welded aConstruction. ~~variety~~In ofaddition, ~~specialized~~there ~~equipment~~are ~~that is used to support construction projects and to provide~~ a number ~~wide range~~ of ~~oilfield~~regional ~~services.~~competitors, Wesuch ~~provide~~as ~~the~~Sunland, ~~following~~Dyess, ~~primary~~Flint, ~~types of specialty services:~~and Jomax.

~~• Dredging;~~18

•Our ~~Pipe~~primary ~~Coating;~~competitors in the downstream oil and gas market include AltairStrickland, JV Industrial Companies, Plant Performance Services, KBR, Chicago Bridge & Iron and Matrix Services.

•Our ~~Concrete~~primary ~~Weight~~competitors ~~Coating;~~in the engineering market include CH2M Hill, Gulf Interstate, Universal Ensco, Trigon, Mustang Engineering and ENGlobal Engineering.

•Our ~~Pipe~~primary ~~Double~~competitors for international onshore construction projects in developing countries include Technip (France), CCC (Lebanon), Saipem (Italy), Spie-~~Jointing;~~Capag (France), Techint (Argentina), Bechtel (U.S.), Stroytransgaz (Russia), Tekfen (Turkey), and Nacap (Netherlands). In Canada, competitors for onshore pipeline construction assignments include North American Energy Services, Flint Energy Services and OJ Pipelines. As a result, we may be more cost effective than our competitors in certain instances or offer a superior value proposition.

•In ~~Piling~~Oman, competitors in oil field transport services include Ofsat and TruckOman, both Omani companies; and in construction and the installation of flow lines and mechanical services, we compete with Gulf Petrochemical Services (Oman), CCC (Lebanon), Dodsal (India), Saipem (Italy), Special Technical Services (Oman) and Galfar (Oman).

•Contract Provisions ~~Pressure~~and ~~Vessels;~~Subcontracting

•Most ~~Marine~~of ~~Heavy~~our ~~Lift~~revenue ~~Services;~~is derived from engineering, construction and EPC contracts. The majority of our contracts fall into the following basic categories:

•· ~~Transport~~firm fixed-price or lump sum fixed-price contracts, providing for a single price for the total amount of ~~Dry~~work ~~and~~or ~~Liquid~~for ~~Cargo~~a number of fixed lump sums for the various work elements comprising the total price;

•· ~~Rig~~cost ~~Moves;~~plus ~~and~~fixed fee contracts under which income is earned solely from the fee received. Bidding cost plus fixed fee contracts has been the focus of our large pipeline construction project efforts in 2008, but we anticipate this will decrease in 2009;

•· ~~Maintenance~~unit-price ~~and~~contracts, ~~Repair~~which ~~Services.~~specify a price for each unit of work performed;

18· time and materials contracts, under which personnel and equipment are provided under an agreed schedule of daily rates with other direct costs being reimbursable; and

~~Table~~· a combination of ~~Contents~~the above (such as lump sums for certain items and unit rates for others).

~~Facilities~~Changes ~~Development~~in scope of work are subject to change orders to be agreed upon by both parties. Change orders not agreed to in either scope or price result in claims to be resolved in a dispute resolution process. These change orders and ~~Operations~~claims can affect our contract revenue either positively or negatively.

~~Our~~We ~~workforce~~usually ~~has~~obtain ~~significant~~contracts ~~experience~~through competitive inbidding ~~the~~or ~~operation~~through ofnegotiations ~~the~~with ~~types~~long-standing ~~of facilities we design and build~~clients. InWe ~~some~~are typically ~~instances,~~invited weto ~~make~~bid ~~equity~~on ~~investments in~~ projects toundertaken ~~enhance~~by our ~~competitive~~clients ~~position~~who ~~for~~maintain approved ~~the~~bidder ~~work assignments associated with the project~~lists. InBidders ~~other~~are ~~instances,~~pre-qualified ~~our~~by ~~experience~~virtue ~~enables~~of ustheir toprior performance ~~understand~~for ~~and~~such ~~manage project completion risk~~clients, ~~and~~as inwell ~~these~~as ~~cases~~their weexperience, ~~may~~reputation ~~elect to develop and own a~~for ~~complete~~quality, ~~facility~~safety ~~which~~record, ~~will~~financial ~~provide~~strength ~~attractive~~and ~~internal~~bonding ~~rates of return over an extended period of time~~capacity.

~~Opal~~In ~~Gas~~evaluating ~~Plant.~~bid ~~We designed~~opportunities, ~~built~~we consider ~~and~~such ~~owned~~factors aas ~~turbo-expander~~the ~~plant~~client, ~~which~~the ~~processes~~geographic ~~gas~~location, ~~produced~~the ~~from~~difficulty of the ~~Pinedale anticline. The TXP-4 Plant is located near Opal~~work, ~~Wyoming~~our incurrent ~~southwestern Wyoming~~ and isprojected ~~designed~~workload, tothe ~~process~~likelihood ~~volumes in excess~~ of ~~350 million~~additional work, ~~standard~~the ~~cubic~~project’s ~~feet~~cost ~~per~~and ~~day~~profitability ofestimates, ~~natural~~and ~~gas,~~our ~~producing~~competitive ~~7,000~~advantage relative to ~~11,000~~other ~~barrels~~likely ~~per day of natural gas liquids at various operating conditions~~bidders. We ~~received~~give ancareful ~~annual~~thought ~~processing fee~~ and ~~shared~~consideration in to the ~~proceeds~~political ~~from~~and ~~the~~financial ~~sales~~stability of ~~natural~~the ~~gas~~country ~~liquids extracted.~~or ~~The~~region ~~TXP-4~~where ~~Plant~~the ~~began~~work ~~commercial~~is to ~~natural~~be ~~gas~~performed. ~~processing~~The ~~activity~~bid inestimate forms the ~~first~~basis ~~quarter~~ of ~~2004.~~a Weproject ~~sold~~budget ~~this~~against which ~~facility~~performance inis ~~January~~tracked ~~2006~~through toa ~~Williams~~project ~~Field~~control ~~Services Company~~system, ~~the~~enabling management ~~owner~~to ~~and~~monitor ~~operator~~projects ~~of the major Opal Plant facilities~~effectively.

All U.S. ~~Defense~~government ~~Energy~~contracts ~~Support~~and ~~Center.~~many of ~~Since~~our ~~1998,~~other wecontracts ~~have~~provide ~~constructed~~for ~~five~~termination ~~fueling~~of ~~facilities for~~ the ~~U.S.~~contract ~~Defense~~for ~~Energy Support~~the ~~Center.~~convenience ~~Currently,~~of wethe ~~own and operate two fueling facilities at Ft~~client. ~~Bragg, North Carolina, which were constructed by us in 1998 and a similar facility completed in 2000 at Twenty-nine Palms Marine Corps Base in California.~~ In ~~2001~~addition, wesome ~~were awarded~~ contracts ~~for~~are ~~similar~~subject ~~facilities~~to atcertain completion ~~Ft.~~schedule ~~Stewart,~~requirements ~~Georgia~~that ~~and~~require ~~Ft.~~us ~~Gordon,~~to ~~Georgia;~~pay ~~these~~liquidated ~~facilities~~damages ~~were completed and operational~~ in the ~~2002.~~event Inschedules ~~2005,~~are wenot ~~were~~met ~~awarded~~as athe ~~contract~~result ~~for~~of ~~another~~circumstances ~~such~~within ~~facility at Ft~~our control. ~~Campbell, Kentucky.~~

We act as prime contractor on a majority of the construction projects we undertake. In our ~~International~~capacity ~~segment~~as inprime contractor ~~1998,~~and ~~through~~when ~~our~~acting ~~Venezuelan~~as ~~subsidiary~~a subcontractor, we ~~took~~perform amost 10of ~~percent~~the ~~equity~~work ~~interest~~on our inprojects awith ~~joint~~our ~~venture~~own ~~which~~resources ~~was~~and ~~awarded~~typically subcontract only such aspecialized ~~16-year~~activities ~~contract~~as tohazardous ~~operate~~waste removal, ~~maintain~~horizontal directional drills, non-destructive inspection, and ~~refurbish~~catering ~~water~~and ~~injection~~security. ~~facilities~~In onthe construction ~~Lake~~industry, ~~Maracaibo~~the inprime ~~Venezuela~~contractor is normally responsible for the performance of the entire contract, including subcontract work. Thus, when acting as a prime contractor, we are subject to the risk associated with the failure of one or more subcontractors to perform as anticipated.

~~Geographic Regions~~ 19

Under a fixed-price contract, we agree on the price that we will receive for the entire project, based upon specific assumptions and project criteria. If our estimates of our own costs to complete the project are below the actual costs that we may incur, our margins will decrease, and we may incur a loss. The ~~Company~~revenue, ~~has~~cost ~~operated~~and ~~worldwide~~gross ~~but~~profit ~~has~~realized on ~~focused~~a ~~its~~fixed-price ~~operations~~contract will often vary from the estimated amounts because of unforeseen conditions or changes in ~~recent~~job ~~years~~conditions onand ~~certain~~variations ~~markets~~in labor and equipment productivity over the term of the contract. If we are unsuccessful in mitigating ~~North~~these ~~America~~risks, ~~South~~we ~~America~~may realize gross profits that are different from those originally estimated and may incur losses on projects. Depending on the size of a project, ~~West~~these ~~Africa~~variations from estimated contract performance could have a significant effect on our operating results for any quarter or year. In some cases, we are able to recover additional costs and profits from the client ~~Middle~~through ~~East~~the change order process. In general, turnkey contracts to be performed on a fixed-price basis involve an increased risk of significant variations. This is a result of the long-term nature of these contracts and the inherent difficulties in estimating costs, and of the interrelationship of the integrated services to be provided under these contracts whereby unanticipated costs or delays in performing part of the contract can have compounding effects by increasing costs of performing other parts of the contract. Our accounting policy related to contract ~~revenue~~variations ~~for~~and ~~2005~~claims requires recognition of all costs as incurred. Revenue from change orders, ~~2004~~extra work and ~~2003~~variations ~~for~~in the scope ~~International~~of work is recognized when an agreement is reached with the client as to the scope of work and ~~United~~when ~~States &~~it ~~Canada~~is ~~operating~~probable ~~segments~~that the cost of such work will be recovered in a change in contract price. Profit on change orders, extra work and variations in the scope of work are ~~shown~~recognized when realization is assured beyond a reasonable doubt. Also included in contract costs and recognized income not yet billed on uncompleted contracts are amounts we seek or will seek to collect from customers or others for errors or changes in contract specifications or design, contract change orders in dispute or unapproved as to both scope and price, or other customer-related causes of unanticipated additional contract costs (unapproved change orders). These amounts are recorded at their estimated net realizable value when realization is probable and can be reasonably estimated. Unapproved change orders and claims also involve the ~~following~~use of ~~table~~estimates, and it is reasonably possible that revisions to the estimated recoverable amounts of recorded unapproved change orders may be made in the near term. If we do not successfully resolve these matters, a net expense (recorded as a reduction in revenues), may be required, in addition to amounts that have been previously provided.

	Year Ended December 31,
	2005				2004				2003
	Amount		Percent		Amount		Percent		Amount		Percent
	(Dollar amounts in thousands)
Contract Revenue
International	$	412,761	58.4	%	$	290,524	60.1	%	$	262,241	63.0	%
United States & Canada		293,761	41.6			192,794	39.9			154,332	37.0
Total	$	706,522	100.0	%	$	483,318	100.0	%	$	416,573	100.0	%

Employees

~~International~~At December 31, 2008, we employed directly a multi-national work force of 6,512 persons, of which approximately 85.5 percent were citizens of the respective countries in which they work. Although the level of activity varies from year to year, we have maintained an average work force of approximately 4,310 over the past five years. The minimum employment during that period has been 3,282 and the maximum was 6,512. At December 31, 2008, approximately 20.7 percent of our employees were covered by collective bargaining agreements. We believe relations with our employees are satisfactory. The following table sets forth the location of employees by work countries as of December 31, 2008:

Africa

	Number of Employees		Percent
U.S. Upstream Oil & Gas		2,252		34.6	%
U.S. Downstream Oil & Gas		1,151		17.6	%
U.S. Engineering		418		6.4	%
U.S. Administration		119		1.8	%
Canada		1,079		16.6	%
Oman		1,489		22.9	%
Other		4		.1	%
Total		6,512		100.0	%

Africa has been an important strategic market for us. There are large, potentially exploitable reserves of natural gas in West Africa, extending from the Ivory Coast to Angola. Depending upon the world market for natural gas and the availability of financing, the amount of potential new work could be substantial. We intend to maintain our presence in Africa and seek to increase our share of available work. Currently, we are monitoring or bidding on major work prospects in Algeria, Angola, Egypt, Gabon, Libya, Nigeria and Tunisia. Equipment

~~Over~~We ~~the past 50 years~~own, welease ~~have~~and ~~completed~~maintain ~~major projects in~~ a ~~number~~fleet of generally ~~African~~standardized ~~countries including Algeria~~construction, ~~Cameroon,~~transportation ~~Chad,~~and ~~Egypt,~~support ~~Gabon,~~equipment. ~~Ivory Coast,~~In ~~Libya,~~2008 ~~Morocco~~ and ~~Nigeria. We have management staff resident in Africa~~2007, ~~assisted~~expenditures byfor ~~engineers,~~capital ~~managers~~equipment ~~and~~were ~~craftsmen~~approximately ~~with extensive African experience~~$53,000 ~~who are capable of providing construction expertise, fabrication services, repair~~ and ~~maintenance services~~$74, ~~dredging operations~~500, ~~pipe coating and engineering support~~respectively. ~~Strong~~At ~~local~~December ~~relationships~~31, ~~have~~2008, ~~enabled us to satisfy~~ the ~~varied~~net ~~needs~~book value of our ~~clientele~~property, plant, inand ~~this~~equipment ~~region.~~was approximately $150,000.

19 20

~~Table~~We are constantly evaluating the availability of ~~Contents~~equipment and in recent years have leased equipment to ensure its availability to support projects. We entered into various capital leases in 2008 and 2007 adding approximately $66,300 of equipment during these periods. We continue to evaluate expected equipment utilization, given anticipated market conditions, and may buy or lease new equipment and dispose of underutilized equipment from time to time. All equipment is subject to scheduled maintenance to maximize fleet readiness. We have maintenance facilities at Azaiba, Oman; Ft. McMurray, Alberta, Canada; and Houston, Texas, United States, as well as temporary site facilities on major jobs to minimize downtime. In 2006, we decided to consolidate our equipment yards and equipment maintenance activities in the United States and sold our Channelview, Texas facility in 2007 and bought at auction additional property adjoining our Houston equipment yard and building.

We have maintained a continuous presence in Nigeria since 1962. Our activities in Nigeria are directed from a fully staffed operational base near Port Harcourt. This 150-acre site includes office and living facilities, equipment and vehicle repair shops, a marine jetty, warehouses, fabrication and lay-down areas for both the client’s and our materials and spare parts. We have diversified our range of services by adding additional pipe coating expertise, drydock facilities, and, in 2004, fabrication services. The deepwater projects being developed offshore West Africa offer significant opportunities for fabrication services, and we completed deepwater projects in 2004 which establish Willbros as a qualified provider of these services. We are one of the few qualified companies able to offer local content and meet stringent quality requirements. Additional emphasis by the host government on local content has the effect of making our service capabilities more attractive to project developers. These developers are required by the government to demonstrate that their projects meet certain levels of local content. Having diverse yet complementary capabilities has often given us a competitive advantage on projects that contain several distinct work elements within a project’s scope of work. For example, we believe that we are currently among only a few contractors operating in the Nigerian oil and gas sector capable, with our own resources, of executing EPC projects for pipelines and related facilities for onshore, swamp, and offshore locations. Facilities

~~Since~~The ~~our~~principal ~~purchase~~facilities ofthat ~~the WB 318 combination derrick/pipelay barge in 1998 and the WB 82 hook-up/support barge in 2001,~~ we ~~have successfully completed~~ ~~several~~utilize ~~offshore~~to ~~projects,~~operate including repair and maintenance, installation of decks and other production facilities on offshore platforms, multiple offshore pipeline construction projects, the installation of a single-point mooring, and various other services for our ~~clients.~~business are:

In Nigeria, attacks on oil installations and the kidnapping of oil workers in the Niger Delta have escalated with the emergence of a group calling itself MEND. The crux of the Niger Delta conflict is the escalation of a longstanding troubled relationship between the Federal Government of Nigeria and the oil producing communities in the Niger Delta region, with the latter asserting that historically there has been inequitable sharing of Niger Delta oil revenues. Some production operations in the Western Delta area are now shut in, having had the combined effect of elevating oil prices and interrupting or delaying projects we have underway in that market. We are in negotiations with our clients in Nigeria to address these heightened security concerns and to mitigate the commercial impacts on us of these recent events in Nigeria. While our clients have demonstrated an appreciation of our problems and a willingness to work with us on this combination of security concerns and commercial issues, the outcome of those negotiations is still uncertain, as is their ultimate effect on our revenue, operating results and cash flow.

Principal Facilities
Business Unit	Location	Size	Description	Ownership
U.S. Upstream Oil & Gas	Houston, TX	20 acres,	Equipment yard and maintenance facility	Own
		35,022 sq. ft.	Warehouse and office

	Houston, TX	14 acres 100,000 sq. ft.	Manufacturing and general warehousing	Leased
U.S. Downstream Oil & Gas	Catoosa, OK	30 acres 125,000 sq. ft.	Manufacturing, general warehousing and office space	Own
	Tulsa, OK	73 acres, 163,000 sq. ft.	Manufacturing, general warehousing and office space	Own
U.S. Engineering	Tulsa, OK	27,610 sq. ft.	Office space	Leased
	Tulsa, OK	100,000 sq. ft.	Office space	Own
	Kansas City, MO	14,437 sq. ft.	Office space	Leased
U.S. Administration	Houston, TX	43,034 sq. ft.	Office space	Leased
Canada	Edmonton, Alberta, Canada	22.75 acres 25,000 sq. ft.	Fabrication	Own
	Ft. McMurray, Alberta, Canada	3.93 acres 10,200 sq. ft.	Fabrication	Own
	Acheson, Alberta Canada	10.25 acres 17,000 sq. ft.	Office space and equipment yard	Own
	Edmonton, Alberta, Canada	25,000 sq. ft.	Office space	Leased
Oman	Oman	31,000 sq. ft.	Office space, fabrication, and maintenance facility	Leased
Headquarters	Panama	400 sq. ft.	Office space	Leased

~~Middle~~We ~~East~~lease other facilities used in our operations, primarily sales/shop offices, equipment sites and expatriate housing units in the United States, Canada and Oman. Rent expense for all leased facilities was approximately $3,000 in 2008 and $1,600 in 2007.

Hostilities in the Middle East continued during 2005 and caused the short-term outlook for projects in the region to remain very limited. However, we continue to believe that increased exploration and production activity in the Middle East will be the primary factor influencing the construction of new energy transportation systems in the region. The majority of future transportation projects in the region are expected to be centered around natural gas due to increased regional demand, governments’ recognition of gas as an important asset and an underdeveloped gas transportation infrastructure throughout the region. In April 2003, we were awarded an EPC contract for a natural gas pipeline system in Oman and completed that project in 2004. In October 2003, we were awarded work as a subcontractor to repair damaged pipelines in northern Iraq. This work was completed in late 2004. Projects delayed in the region by uncertainty associated with the hostilities in Iraq are now being tendered and awarded. We believe the Middle East in general will present opportunities to provide an increased level of services through 2006 and into 2007. In Qatar, investment in oil and gas infrastructure is expected to exceed $75 billion in the next five to seven years. We continue to monitor project opportunities throughout the Middle East and are currently investigating prospects in Abu Dhabi, Jordan, Kuwait, Oman, Qatar, Saudi Arabia and Yemen. 21

~~Our operations in the Middle East date back to 1948. We have worked in most of the countries in the region, with particularly heavy involvement in Iran,~~Insurance ~~Kuwait, Oman~~ and Saudi Arabia. Currently, we have ongoing operations in Oman, where we have been active continuously for more than 40 years. We maintain a fully staffed facility in Oman with equipment repair facilities and spare parts on site and offer construction expertise, repair and maintenance services, engineering support, oil field transport services, materials procurement and a variety of related services to our clients. In 2004, we were awarded a new five-year contract by Oman LNG for general maintenance services. We believe our presence in Oman and our experience there and in other Middle Eastern countries will enable us to successfully win and perform projects in this region. Bonding

20Operational risks are analyzed and categorized by our risk management department and are insured through major international insurance brokers under a comprehensive insurance program, which includes commercial insurance policies, consisting of the types and amounts typically carried by companies engaged in the worldwide engineering and construction industry. We maintain worldwide master policies written mostly through highly-rated insurers. These policies cover our property, plant, equipment and cargo against all normally insurable risks, including war risk, political risk and terrorism in third-world countries. Other policies cover our workers and liabilities arising out of our operations. Primary and excess liability insurance limits are consistent with the level of our asset base. Risks of loss or damage to project works and materials are often insured on our behalf by our clients. On other projects, “builders all risk insurance” is purchased when deemed necessary. Substantially all insurance is purchased and maintained at the corporate level, other than certain basic insurance, which must be purchased in some countries in order to comply with local insurance laws.

~~Table~~The insurance protection we maintain may not be sufficient or effective under all circumstances or against all hazards to which we may be subject. An enforceable claim for which we are not fully insured could have a material adverse effect on our results of ~~Contents~~operations. In the future, our ability to maintain insurance, which may not be available or at rates we consider reasonable, may be affected by events over which we have no control, such as those that occurred on September 11, 2001. In 2008 we were not constrained by our ability to bond new projects, nor have we been negatively impacted in early 2009.

~~South America~~ 22

We have been active in South America since 1939. The medium to long-term market outlook has not changed, but in the short-term, the markets in Venezuela and Bolivia have been disrupted by political instability. We expect gas transportationItem ~~projects in Bolivia, Brazil, Chile, Peru and Venezuela to continue to evolve to meet increasing demand for gas for industrial and power usage in the rapidly growing urban areas~~1A. ~~In Venezuela and Ecuador, crude oil transportation systems will likely~~ Risk need to be built and/or upgraded so that the vast crude reserves in these countries can be efficiently exported to the world market. While we are not focused on South America as a regional market, we are selectively pursuing business opportunities in South America. Factors

The nature ~~political~~of ~~situation~~our inbusiness ~~Bolivia~~ and ~~Venezuela~~operations ~~remains~~subjects ~~uncertain~~us ~~and projects in both countries continue~~ to ~~be delayed.~~a ~~Because~~number ~~the governments~~ of ~~both countries continue to pursue an agenda which includes nationalization~~ uncertainties and~~/or~~ ~~renegotiation of contracts with foreign investors, Willbros views these markets as having limited opportunities in the near term~~risks.

~~We have performed numerous major projects in South America, where our accomplishments include the construction of five major pipeline~~RISKS ~~crossings~~RELATED ofTO ~~the~~OUR Andes Mountains and the world altitude record for constructing a pipeline. Most recently, we completed, in an alliance with another international contractor, a 144-mile (230-kilometer) 32-inch natural gas pipeline in Bolivia for the Transierra consortium. This project was completed in the first half of 2003, and resolution and settlement of contract variations was finalized in 2004. BUSINESS

~~Venezuela~~Our business is ~~the~~highly ~~largest~~dependent ~~oil~~upon ~~producer~~the inlevel ~~South~~of ~~America~~capital ~~and~~expenditures ~~conservative~~by ~~estimates place proven reserves at more than 77 billion barrels of~~ oil, ~~and 146 trillion cubic feet of natural~~ gas~~. The government of Venezuela,~~ ~~under Presidente Hugo Chavez, is moving toward more state control of energy projects. New hydrocarbon laws~~ and ~~the~~power ~~reopening and renegotiation of production services contracts and royalty agreements have added perceived political risk to investment decisions by international production~~ companies. ~~This~~on ~~has resulted in more deliberate and slower project development~~infrastructure. ~~We believe the large reserves and favorable location of Venezuela to the U.S. market will continue to attract investment but expect the process to be slower and more cautious.~~

InOur revenue ~~Venezuela,~~and wecash ~~maintain~~flow anare ~~operating~~primarily ~~facility~~dependent ~~including~~upon ~~offices,~~major ~~equipment,~~engineering ~~yard~~ and ~~dock~~ ~~facilities~~construction onprojects. aThe ~~15-acre~~availability ~~waterfront~~of ~~site~~these ontypes ~~Lake~~of ~~Maracaibo.~~projects Weis ~~provide~~dependent upon ~~services~~the ~~for~~economic ~~both~~condition ~~onshore~~of ~~and~~the ~~offshore~~oil, ~~projects.~~gas ~~Services~~and ~~include~~power ~~pipeline~~industries, ~~construction~~specifically, the ~~repair~~level ~~and~~of ~~maintenance~~capital ~~services~~expenditures of oil, ~~fabrication~~gas and ~~installation~~power ofcompanies ~~concrete~~on infrastructure. ~~piles~~The current credit crisis and ~~platforms,~~ ~~marine-~~related ~~services,~~turmoil ~~engineering~~in ~~support~~the ~~and~~global financial ~~other~~system, ~~needed~~including ~~services.~~capital ~~In 1998~~markets, as well as a ~~joint~~global ~~venture~~recession, inmay have ~~which~~an weadverse ~~hold~~impact aon 10the ~~percent~~level ~~equity~~of ~~interest~~capital ~~was~~expenditures ~~awarded~~of aoil, ~~16-year~~gas ~~contract~~and power ~~valued~~companies atand/or ~~$785~~their ~~million~~ability to ~~operate,~~finance ~~maintain~~these expenditures. Our ~~and~~failure ~~refurbish~~to obtain major projects, the delay in ~~Lake~~awards ~~Maracaibo~~of ~~water~~major ~~injection~~projects, ~~program~~the ~~for~~cancellation ~~PDVSA~~of ~~Gas.~~major Inprojects ~~2002,~~or delays in completion aof ~~joint~~contracts ~~contract~~are ~~with~~factors athat ~~Venezuelan~~could ~~company~~result in the under-utilization of our resources, wewhich ~~were~~would ~~awarded~~have aan ~~project~~adverse ~~for~~impact ~~the~~on ~~engineering,~~our ~~procurement~~revenue and ~~construction~~cash flow. ofThere aare ~~marine~~numerous ~~loading~~factors ~~terminal~~beyond ~~for~~our ~~Petrolera~~control ~~Ameriven,~~that ainfluence ~~joint~~the level of ~~venture~~capital expenditures of ~~ConocoPhillips~~oil, ~~ChevronTexaco~~gas and ~~PDVSA.~~power ~~This~~companies, ~~project was completed in 2004.~~ including:

~~Mexico~~· current and projected oil, gas and power prices as well as refining margins;

We· ~~have operated in Mexico for many years, completing several projects, including~~ the ~~Samalayuca~~demand Gas Pipeline project from Texas into Mexico in 1998. We believe the government-owned oil company, Petroleos de Mexico (“PEMEX”), will spend in excess of $13.1 billion in 2006 to expand and modify production facilities both onshore and offshore Mexico. We expect this market to be attractive for ~~our~~ ~~engineering and construction services after the 2006 national elections are completed.~~ electricity;

~~Asia~~· the abilities of oil, gas and ~~Australia~~power companies to generate, access and deploy capital;

~~Markets~~· ~~in Asia and Australia continue to be of interest due to the relative abundance of undeveloped natural gas resources and the strong growth rates in energy demand. That abundance~~exploration, ~~and~~production ~~environmental concerns, favor the use of natural gas for power generation~~ and ~~industrial~~transportation ~~and residential usage in Asia and Australia. We are selectively conducting marketing and business development activities in these markets.~~ costs;

~~United~~· ~~States &~~the ~~Canada~~discovery rate of new oil and gas reserves;

We· ~~have~~the ~~provided~~sale ~~services~~and toexpiration ~~the~~dates ~~U.S.~~of oil and gas ~~industry~~leases ~~for~~and more than 90 years. We believe that the United States will continue to be an important market for our services. Market conditions for the short-term are expected to show more improvement in 2006, as many of the energy transportation companies improve concessions;

21· regulatory restraints on the rates that power companies may charge their customers;

~~Table~~· oflocal ~~Contents~~and international political and economic conditions;

~~their~~· financial condition and focus on core businesses. To improve their liquidity, some of our traditional clients sold pipeline assets; in some cases, to new industry participants. These new owners are beginning to develop and implement their capital budgets for these newly acquired assets, as they have completed their evaluation of the ~~newly~~ability ~~acquired~~or ~~assets~~willingness ~~and are finalizing their strategies for maximizing the return on their investments in these assets. Deregulation~~ of ~~the~~host ~~electric~~country ~~power~~government ~~and~~entities ~~natural gas pipeline industries in the United States has led~~ to ~~the~~fund consolidation and reconfiguration of existing pipeline infrastructure and the establishment of new energy transport systems, which we expect will result in continued demand for our services in the mid to long-term. The demand for natural gas for industrial and power usage in the United States should increase the demand for additional new natural gas transportation infrastructure. We anticipate that additional supply to satisfy such market demand for natural gas will come from existing and new production in the North Slope of Alaska, the Mackenzie Delta in northern Canada, western Canada, the Rocky Mountain region, the Gulf of Mexico, and newly proposed and permitted liquefied natural gas (“LNG”) regasification terminals along the Gulf Coast. Environmental concerns will likely continue to require careful, thorough and specialized professional engineering and planning for all new facilities within the oil, gas and power sectors. Furthermore, the demand for replacement and rehabilitation of pipelines is expected to increase as pipeline systems in the United States approach the end of their ~~design~~budgetary ~~lives~~commitments; and ~~population trends influence overall energy needs.~~

~~Prevailing~~· ~~oil~~technological and gas prices at higher than historical averages have increased industry interest, investment and development in the oil sands region of northern Alberta, Canada, where industry estimates expect over C$100 billion to be invested in the next 10 yearsadvances. New process plant developments offer prospective fabrication and installation work as well as maintenance opportunities, and the anticipated increase in crude oil volumes to be shipped to markets in the United States and Asia has resulted in proposals for several major crude oil export pipelines from this region. The need for additional process fuel for the oil sands also is driving the development of new pipeline infrastructure from the Mackenzie Delta region. In early 2005, Willbros MSI purchased a 90,000 square foot fabrication facility in the Edmonton, Alberta area. This facility has expanded Willbros MSI’s fabrication capability to provide process modules to the burgeoning heavy oil market in northern Alberta.

WeOur ~~are~~final ~~recognized~~settlements aswith ~~an industry leader in~~ the ~~United States for providing project management,~~DOJ ~~engineering, procurement~~ and ~~construction~~the ~~services. We maintain a staff of experienced management~~SEC, ~~construction, engineering~~ and ~~support personnel in~~ the ~~United~~prosecution ~~States.~~of Weformer ~~provide~~employees ~~these~~that ~~services~~will ~~through engineering offices located in Tulsa~~follow, ~~Oklahoma~~may ~~and~~negatively ~~Salt~~impact ~~Lake~~our ~~City~~ongoing ~~(Murray), Utah. Construction~~ operations ~~based in Houston, Texas, (Willbros RPI); Fruita, Colorado (Willbros Mt~~. ~~West); and Ft. McMurray and Edmonton, Alberta (Willbros MSI) provide the majority of construction services in North America.~~

WeAs ~~have~~a result ~~also~~of ~~provided~~our ~~significant~~final ~~engineering~~settlements ~~services~~with the DOJ and the SEC resolving their investigations of violations of the Foreign Corrupt Practices Act and other provisions of the federal securities laws, which are more fully described in Notes 8 and 15 of our Notes to ~~U.S.~~Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K, we are subject to ongoing review and regulation of our business operations, including the review of our operations and compliance program by a government ~~agencies~~approved ~~during~~independent monitor. The activities of the ~~past~~independent 24monitor ~~years,~~will ~~particularly~~have a cost to us and may cause a change in ~~fuel~~our ~~storage~~processes and ~~distribution~~operations, ~~systems~~the outcome of which we are unable to predict. In addition, the settlements, and ~~aircraft~~the ~~fueling~~prosecution ~~facilities~~of former employees that will likely follow, may impact our operations or result in legal actions against us in countries that are the subject of the settlements. The final settlements could also result in third-party claims against us, which may include claims for special, indirect, derivative or consequential damages.

~~Backlog~~Our failure to comply with the terms of settlement agreements with the DOJ and SEC would have a negative impact on our ongoing operations.

InUnder our final ~~industry~~settlements with the DOJ and SEC, ~~backlog~~we isare ~~considered~~subject anto ~~indicator~~a ofthree-year ~~potential~~deferred prosecution ~~future~~agreement ~~performance~~and ~~because~~permanently itenjoined ~~represents~~from acommitting ~~portion~~any future violations of the ~~future~~federal ~~revenue~~securities ~~stream~~laws. Our failure to comply with the terms ~~strategy~~of isthe ~~not~~settlements ~~focused~~with ~~solely~~the onDOJ ~~backlog~~and ~~additions~~SEC ~~but~~could result in resumed prosecution and other regulatory sanctions, ~~rather~~and could otherwise negatively affect our operations. In addition, onif ~~capturing~~we ~~quality~~fail ~~backlog~~to ~~with~~make ~~margins~~timely ~~commensurate~~payment ~~with~~of the ~~risks~~penalty amounts ~~associated~~due ~~with~~to athe ~~given~~DOJ ~~project~~and/or the disgorgement amounts specified in the SEC settlement, the DOJ and/or the SEC will have the right to accelerate payment, and demand that the entire balance be paid immediately. Our ability to comply with the terms of the settlements is dependent on the success of our ongoing compliance program, including:

Backlog consists of anticipated revenue from the uncompleted portions of existing contracts and contracts whose award is reasonably assured. At December 31, 2005, backlog was $816.4 million with an estimated embedded margin of 15.5%, compared to $660.9 million with an estimated embedded margin of 21.6% at December 31, 2004. If the December 31, 2004 backlog data is reduced for the backlog associated with the TXP-4 Plant, the backlog would have been $640.2 million with an embedded margin of 19.1%. We believe the backlog figures are firm, subject only to the cancellation and modification provisions contained in various contracts. We expect that approximately $673 million or about 82%, of our existing backlog at December 31, 2005, will be recognized in revenue during 2006. Historically, a substantial amount of our revenue in a given year has not been in our backlog at the beginning of that year. Additionally, due to the short duration of many jobs, revenue associated with jobs performed within a reporting period will not be reflected in backlog. We generate revenue from numerous sources, including contracts of long or short duration entered into during a year as well as from various contractual processes, including change orders, extra work, variations in the scope of work and the effect of escalation or currency fluctuation formulas. These revenue sources are not added to backlog until realization is assured. 23

22· our supervision, training and retention of competent employees;

~~Table~~· the efforts of ~~Contents~~our employees to comply with applicable law and our Foreign Corrupt Practices Act Compliance Manual and Code of Business Conduct and Ethics; and

~~The~~· ~~following table shows~~ our ~~backlog~~continuing bymanagement ~~operating segment and geographic region as~~ of ~~December 31, 2005~~our agents and ~~2004:~~business partners.

	2005				2004
	Amount		Percent		Amount		Percent
	(Dollar amounts in thousands)
Backlog
International
Africa	$	564,343	69	%	$	554,692	84	%
South America		11,639	1			12,211	2
Middle East		47,196	6			2,500	<1
Subtotal International		623,178	76			569,403	86
United States & Canada
United States		36,242	5			68,926	10
Canada		156,935	19			22,603	4
Subtotal United States & Canada		193,177	24			91,529	14
Total	$	816,355	100	%	$	660,932	100	%

We may continue to experience losses associated with our prior Nigeria based operations.

~~Competition~~In February 2007, we completed the sale of our Nigerian operations. In August 2007, we and our subsidiary, Willbros International Services (Nigeria) Limited, entered into a Global Settlement Agreement (the “Global Settlement Agreement”) with Ascot Offshore Nigeria Limited (“Ascot”), the purchaser of our Nigerian operations and Berkeley Group Plc, the purchaser’s parent company. Among the other matters, the Global Settlement Agreement provided for the payment of an amount in full and final settlement of all disputes between Ascot and us related to the working capital adjustment to the closing purchase price under the February 2007 share purchase agreement. In connection with the sale of our Nigerian operations, we also entered into a Transition Services Agreement (the “Transition Services Agreement”), and Ascot delivered a promissory note in favor of us.

WeThe Global ~~operate~~Settlement inAgreement provided for a ~~highly~~settlement ~~competitive~~in ~~environment.~~the Weamount ~~compete~~of ~~against~~$25.0 million, ~~government-owned~~the oramount ~~supported~~by ~~companies~~which we and ~~other~~Ascot ~~companies~~agreed ~~that~~to ~~have~~adjust ~~financial~~the closing purchase price downward (the “Settlement Amount”). Under the Global Settlement Agreement, we retained approximately $13.9 million of the Settlement Amount and ~~other~~credited this ~~resources~~amount ~~substantially~~to inthe ~~excess~~account of ~~those~~Ascot ~~available~~for amounts which were due to us under the Transition Services Agreement and promissory note. Our payment of the balance of Inthe ~~certain~~Settlement ~~markets,~~Amount wesettled ~~compete~~(i) ~~against~~any ~~national~~and all obligations and ~~regional~~disputes ~~firms~~between Ascot ~~against~~and ~~which~~us wein ~~may~~relation ~~not~~to bethe adjustment to the closing purchase price ~~competitive.~~under the share purchase agreement and (ii) all of the parties’ respective rights and obligations under the indemnification provisions of the share purchase agreement, except as provided in the Global Settlement Agreement.

~~Our~~As partial ~~primary~~consideration ~~competitors~~ for ~~International~~the ~~onshore~~parties’ ~~construction~~agreement ~~projects~~on inthe ~~developing~~Settlement ~~countries include Technip (France)~~Amount, ~~CCC~~Ascot secured ~~(Lebanon),~~with ~~Saipem~~a ~~(Italy),~~non-Nigerian ~~AMEC~~bank ~~Spie-Capag~~supplemental ~~(UK),~~backstop ~~Techint~~letters ~~(Argentina),~~of ~~Bechtel~~credit totaling (Uapproximately $20.~~S.),~~3 ~~Stroytransgaz (Russia)~~million, ~~Tekfen~~which ~~(Turkey),~~backstopped ~~and~~corresponding ~~Nacap~~letter of ~~(Netherlands).~~credit Weobligations ~~believe~~ that we ~~are~~had ~~one~~under ofvarious ~~the~~contracts ~~few~~taken ~~companies~~over ~~among~~by Ascot. In ~~our competitors possessing~~ the ~~ability~~third toquarter ~~carry~~of ~~out large projects in developing countries on a turnkey basis (engineering~~2008, ~~procurement~~substantially ~~and~~all ~~construction),~~of ~~without~~our ~~subcontracting~~letters ~~major elements~~ of ~~the~~credit ~~work.~~related Asto aour ~~result,~~former weoperations ~~may~~in beNigeria ~~more~~expired, ~~cost~~with ~~effective~~only ~~than~~one $123,000 ~~our~~of ~~competitors~~letter inof ~~certain~~credit ~~instances~~remaining ~~or offer a superior value proposition~~outstanding.

We have different competitors in different markets. In Nigeria, we compete for pipe coating work with ShawCor Ltd. (Canada), while our dredging competitors include Bos Kalis Westminster (Netherlands), DredgingOn ~~International~~February ~~(Belgium)~~7, ~~Bilfinger + Berger (Germany)~~2009, ~~Nigerian~~the ~~Dredging &~~Transition ~~Marine~~Services ~~(Netherlands)~~Agreement ~~and Ham Dredging (Netherlands). In offshore West Africa, we compete~~ with ~~SaiBos~~Ascot ~~(Italy),~~expired ~~Stolt Offshore (United Kingdom), Global Industries,~~according ~~Ltd.~~to ~~(United~~its ~~States), and Adamac Group (Nigeria)~~terms. InWe ~~Oman~~may, ~~competitors in oil field transport services include Desert Line~~however, Alcontinue ~~Ahram,~~to ~~Hamdam~~experience ~~and~~losses ~~TruckOman,~~or ~~all~~incur ~~Omani~~expenses subsequent ~~companies;~~to ~~and~~the insale ~~construction~~ and ~~the~~disposition ~~installation~~ of ~~flowlines~~our ~~and~~operations ~~mechanical services, we compete with Taylor Woodrow Towell (UK), CCC (Lebanon), Dodsal (India), Saipem (Italy), Desert Line (Oman)~~ and ~~Galfar~~the ~~(Oman). In Venezuela, competitors in marine support services include Raymond de Venezuela, Petrolago, and Siemogas,~~Global ~~all~~Settlement ~~Venezuelan companies~~Agreement. In ~~the Southern Cone of South America, major competitors include Techint (Argentina), Conduto (Brazil), Odebrecht (Brazil), and Contreras Hermanos (Argentina).~~ particular:

In· ~~the~~The ~~United~~same ~~States,~~difficulties which led to our ~~primary~~leaving ~~construction~~Nigeria ~~competitors~~continue onto aexist ~~national~~for ~~basis~~Ascot, ~~include~~as ~~Associated~~well ~~Pipeline~~as ~~Contractors~~additional challenges, ~~Gregory &~~including ~~Cook,~~various H.financial ~~C. Price,~~difficulties ~~Sheehan~~that ~~Pipeline~~we ~~Construction,~~understand UAscot may from time to time be experiencing.S. ~~Pipeline~~Accordingly, Ascot’s continued willingness and ~~Welded~~ability ~~Construction.~~to Inperform ~~addition,~~our ~~there~~former ~~are~~projects ain ~~number~~West ofAfrica ~~regional~~continue ~~competitors,~~to ~~such~~be asimportant ~~Sunland,~~factors ~~Dyess,~~to ~~Flint,~~further reducing our risk profile in Nigeria and ~~Jomax.~~elsewhere in West Africa.

~~Primary~~· ~~competitors~~We issued parent company guarantees to our former clients in connection with the performance of some of our contracts in Nigeria and nearby West Africa locations. Although Ascot is now responsible for ~~engineering~~completing ~~services~~these projects, our parent company guarantees may remain in force in varying degrees until the projects are completed. Indemnities are in place pursuant to which Ascot and its parent company are obligated to indemnify us for any losses we incur under these parent company guarantees. However, we can provide no assurance that we will be successful in enforcing our indemnity rights. The guarantees include: five projects under which we estimated that, at February 7, 2007, there was aggregate remaining contract revenue of approximately $352.1 million and aggregate cost to complete of approximately $293.6 million.

~~• Alliance Engineering;~~24

•· ~~Bechtel;~~In early 2008, we received our first notification asserting various rights under one of our outstanding parent guarantees. On February 1, 2008, WWAI, the Ascot company performing the West African Gas Pipeline (“WAGP”) contract, received a letter from West African Gas Pipeline Company Limited (“WAPCo”), the owner of WAGP, wherein WAPCo gave written notice alleging that WWAI was in default under the WAGP contract, as amended, and giving WWAI a brief cure period to remedy the alleged default. We understand that WWAI responded by denying being in breach of its WAGP contract obligations, and apparently also advised WAPCo that WWAI “...requires a further $55 million, without which it will not be able to complete the work which it had previously undertaken to perform.” We understand that, on February 27, 2008, WAPCo terminated the WAGP contract for the alleged continuing non-performance of WWAI.

•· ~~Colt~~On ~~Engineering;~~February 1, 2008, we received a letter from WAPCo reminding us of our parent guarantee on the WAGP contract and requesting that we remedy WWAI’s default under that contract, as amended. Approximately on February 17, 2009, we received another letter from WAPCo formally demanding that we pay all sums payable in consequence of the non-performance by Ascot with WAPCo stating that quantification of that amount would be provided sometime in the future when the work was completed. On previous occasions, we have advised WAPCo that, for a variety of legal, contractual, and other reasons, we did not consider our prior WAGP contract parent guarantee to have continued application, and we reiterated that position to WAPCo in our response to its February 1, 2008 letter. We will again reiterate our position in response to their February 17, 2009 letter. WAPCo disputes our position that we are no longer bound by the terms of our prior parent guarantee of the WAGP contract and has reserved all its rights in that regard. Currently, the WAGP project is yet to be completed for a variety of technical and commercial reasons unrelated to WAPCo’s termination of the WAGP contract.

•· ~~Fluor;~~We anticipate that this developing dispute with WAPCo may result in a lengthy arbitration proceeding between WAPCo and WWAI in the London Court of International Arbitration to determine the validity of the alleged default notice issued by WAPCo to WWAI, including any resulting damage award, in combination with a lawsuit between WAPCo and us in the English Courts under English law to determine the enforceability, in whole or in part, of our parent guarantee, which we expect to be a lengthy process.

•· ~~Gulf~~We ~~Interstate;~~currently have no employees working in Nigeria and we have no intention of returning to Nigeria. If ultimately it is determined by an English Court that we are liable, in whole or in part, for damages that WAPCo may establish against WWAI for WWAI’s alleged non-performance of the WAGP contract, or if WAPCo is able to establish liability against us directly under our parent company guarantee, and, in either case, we are unable to enforce our rights under the indemnity agreement entered into with Ascot in connection with the WAGP contract, we may experience substantial losses. However, management cannot, at this time, predict the outcome of any arbitration or litigation which may ensue in this developing WAGP contract dispute, or be certain of the degree to which the indemnity agreement given in our favor by Ascot will protect us. Based upon our current knowledge of the relevant facts and circumstances, we do not expect that the outcome of the dispute will have a material adverse effect on our financial condition or results of operations.

•Our management ~~Jacobs~~has ~~Engineering;~~concluded that we did not maintain effective internal control over financial reporting as of December 31, 2007, 2006, 2005 and 2004. Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007 identified a new material weakness and confirmed that a previously disclosed material weakness in our internal control over financial reporting continued to exist. We believe that these material weaknesses were successfully remediated as of June 30, 2008. We believe that the other material weaknesses reported as of December 31, 2006 were eliminated in February 2007 as a result of the sale of our Nigerian assets and operations. However, our inability to remediate these material weaknesses prior to February 2007, our inability to remediate our most recent material weaknesses identified or existing as of December 31, 2007 prior to June 30, 2008, and any other control deficiencies that we may discover in the future, could adversely affect our ability to report our financial condition and results of operations accurately and on a timely basis. As a result, our business, operating results and liquidity could be harmed.

~~• KBR;~~25

23As disclosed in our Annual Reports on Form 10-K for 2007, 2006, 2005 and 2004, management’s assessment of our internal control over financial reporting identified several material weaknesses. These material weaknesses led to the restatement of our previously issued consolidated financial statements for fiscal years 2002 and 2003 and the first three quarters of 2004. Although we made progress in executing our remediation plans during 2005 and 2006, including the remediation of three material weaknesses, as of December 31, 2006, management concluded that we did not maintain effective internal control over financial reporting due to the following remaining material weaknesses in internal controls:

~~Table~~· Nigeria accounting: During the fourth quarter of ~~Contents~~2006, we determined that a material weakness in our internal control over financial reporting existed related to the Company’s management control environment over the accounting for our Nigeria operations. This weakness in management control led to the inability to adequately perform various control functions including supervision over and consistency of: inventory management; petty cash disbursements; accounts payable disbursement approvals; account reconciliations; and review of timekeeping records. This material weakness resulted primarily from our inability to maintain a consistent and stable internal control environment over our Nigeria operations in the fourth quarter of 2006.

•· ~~Mustang~~Nigeria ~~Engineering;~~project controls—estimate to complete: A material weakness existed related to controls over the Nigeria project reporting. This weakness existed throughout 2006 and is a continuation of a material weakness reported in our 2005 Form 10-K. The weakness primarily impacted one large Nigeria project with a total contract value of approximately $165.0 million, for which cost estimates were not updated timely in the fourth quarter of 2006 due to insufficient measures being taken to independently verify and update reliable cost estimates. This material weakness specifically resulted in material changes to revenue and cost of sales during the preparation of our year-end financial statements by our accounting staff prior to their issuance.

•Moreover, management’s ~~Paragon~~assessment ~~Engineering;~~of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007 identified a new material weakness and confirmed that a material weakness in our internal control over financial reporting previously identified on November 13, 2007 continued to exist. The newly identified material weakness and the previously identified material weakness have both been successfully remediated as of June 30, 2008. The newly identified material weakness related to a lack of proper control over the update and renewal of the worker’s compensation insurance rate master file. The previously identified material weakness related to management’s review of subcontract cost calculations for a project in Canada.

•The remediation ~~Snamprogetti;~~plan for the material weakness relating to the lack of proper control over the update and review of the worker’s compensation insurance rate master file consisted of developing additional documented control procedures to ensure the worker’s compensation insurance rate master file is accurately updated in a timely manner and the worker’s compensation insurance cost calculations are performed accurately using the updated master file data. The remediation plan for the previously identified material weakness relating to management review of subcontract cost calculations began in the fourth quarter of 2007 and consisted of:

•· ~~Technip~~hiring an additional project controller;

•· ~~Trigon~~enhancing ~~Sheehan~~the management review process; and

•· ~~Universal~~introducing ~~Ensco~~system upgrades to automate certain processes, which management believes will prevent the omission of previously identified costs, such as those described above.

~~Joint~~We believe ~~Ventures~~that our most recent material weaknesses identified or existing as of December 31, 2007 were successfully remediated as of June 30, 2008. We also believe that our reported material weaknesses at December 31, 2006 were eliminated in February 2007 upon the sale of our Nigeria assets and operations since those material weaknesses related solely to our operations in that country. However, our inability to remediate these material weaknesses prior to February 2007, our inability to remediate our most recent material weaknesses prior to June 30, 2008 and any other control deficiencies we identify in the future, could adversely affect our ability to report our financial results on a timely and accurate basis, which could result in a loss of investor confidence in our financial reports or have a material adverse effect on our ability to operate our business or access sources of liquidity. Furthermore, because of the inherent limitations of any system of internal control over financial reporting, including the possibility of human error, the circumvention or overriding of controls and fraud, even effective internal controls may not prevent or detect all misstatements.

From time to time in the ordinary course of our business, we enter into joint venture agreements with other contractors for the performance of specific projects. Typically, we seek one or more joint venture partners when a project requires local content, equipment, manpower or other resources beyond those we have available to complete work in a timely and efficient manner or when we wish to share risk on a particularly large project. Our joint venture agreements identify the work to be performed by each party, the procedures for managing the joint venture work, the manner in which profits and losses will be shared by the parties, the equipment, personnel or other assets that each party will make available to the joint venture and the means by which any disputes will be resolved. We completed the construction of the onshore pipeline for the Chad Development Project in Chad and Cameroon, in such a joint venture with Spie-Capag (Jersey) Ltd. in 2003. 26

~~Contract~~Our international ~~Provisions~~operations are subject to political and ~~Subcontracting~~economic risks of developing countries.

~~Most~~Although we ofsold our ~~revenue~~operations isin ~~derived~~Nigeria ~~from~~and ~~engineering~~Venezuela, ~~and~~we ~~construction~~have ~~contracts.~~operations Wein ~~enter~~the Middle ~~into~~East ~~four~~(Oman) ~~basic~~and ~~types~~anticipate that a portion of ~~construction~~our contract revenue will be derived from, and ~~specialty~~a ~~service~~portion of our long-lived assets will be located in, ~~contracts:~~developing countries.

•Conducting operations ~~firm~~in ~~fixed-price~~developing orcountries ~~lump~~presents ~~sum~~significant ~~fixed-price~~commercial ~~contracts,~~challenges for ~~providing~~our ~~for~~business. aA ~~single~~disruption ~~price~~of ~~for~~activities, ~~the~~or ~~total~~loss ~~amount~~of use of ~~work~~equipment or installations, ~~for~~at any location in which we have significant assets or operations, could have a ~~number~~material adverse effect on our financial condition and results of ~~fixed~~operations. ~~lump~~Accordingly, ~~sums~~we ~~for~~are ~~the~~subject ~~various~~to ~~work~~risks ~~elements~~that ~~comprising~~ordinarily would not be expected to exist to the ~~total~~same ~~price;~~extent in the United States, Canada, Japan or Western Europe. Some of these risks include:

•· ~~unit-price~~civil ~~contracts~~uprisings, terrorism, riots and war, which ~~specify~~can amake ~~price~~it ~~for~~impractical ~~each~~to ~~unit~~continue ofoperations, ~~work~~adversely ~~performed~~affect both budgets and schedules and expose us to losses;

•· ~~time~~repatriating ~~and~~foreign ~~materials~~currency ~~contracts,~~received ~~under~~in ~~which~~excess ~~personnel~~of ~~and~~local ~~equipment~~currency ~~are~~requirements ~~provided~~and ~~under~~converting anit ~~agreed~~into ~~schedule~~dollars ofor ~~daily rates with~~ other ~~direct~~fungible ~~costs being reimbursable~~currency; ~~and~~

•· aexchange ~~combination~~rate offluctuations, ~~the~~which ~~above~~can ~~(such~~reduce asthe ~~lump~~purchasing ~~sums~~power ~~for~~of ~~certain~~local ~~items~~currencies and ~~unit~~cause ~~rates~~our ~~for~~costs ~~others).~~to exceed our budget, reducing our operating margin in the affected country;

We· ~~generally~~expropriation ~~enter~~of ~~into~~assets, ~~three~~by ~~types~~either ofa ~~engineering~~recognized ~~contracts:~~or unrecognized foreign government, which can disrupt our business activities and create delays and corresponding losses;

•· ~~firm~~availability ~~fixed-price~~of suitable personnel and equipment, which can be affected by government policy, or ~~lump~~changes ~~sum~~in ~~fixed-price~~policy, ~~contracts~~which limit the importation of skilled craftsmen or specialized equipment in areas where local resources are insufficient;

•· ~~time~~governmental ~~and~~instability, ~~materials~~which ~~contracts~~can ~~pursuant~~cause toinvestment ~~which~~in ~~engineering~~capital ~~services~~projects ~~are~~by ~~provided~~our ~~under~~potential ancustomers ~~agreed~~to ~~schedule~~be ofwithdrawn ~~hourly~~or ~~rates~~delayed, ~~for~~reducing ~~different~~or ~~categories~~eliminating ofthe ~~personnel,~~viability ~~and~~of ~~materials~~some ~~and~~markets ~~other~~for ~~direct~~our ~~costs are reimbursable~~services; and

•· ~~cost-plus-fee~~decrees, ~~contracts~~laws, ~~common~~regulations, ~~with~~interpretations ~~U.S.~~and ~~government~~court ~~entities~~decisions ~~and~~under ~~agencies~~legal ~~under~~systems, which ~~income~~are isnot ~~earned~~always ~~solely~~fully ~~from~~developed ~~the~~and ~~fee~~which ~~received.~~may ~~Cost-plus-fee~~be ~~contracts~~retroactively ~~are~~applied ~~often~~and ~~used~~cause ~~for~~us ~~material~~to ~~procurement~~incur ~~services~~unanticipated and/or unrecoverable costs as well as delays which may result in real or opportunity costs.

~~Changes~~Our operations in ~~scope~~developing ofcountries ~~work~~may ~~are~~be ~~subject~~adversely toaffected ~~change~~in ~~orders~~the toevent beany governmental ~~agreed~~agencies toin bythese ~~both~~countries ~~parties.~~interpret ~~Change~~laws, regulations or court ~~orders~~decisions ~~not~~in ~~agreed~~a tomanner which might be considered inconsistent or inequitable in the ~~either~~United ~~scope~~States, Canada, Japan or ~~price~~Western ~~result~~Europe. inWe ~~claims~~may be subject to unanticipated betaxes, ~~resolved~~including inincome ataxes, ~~dispute~~excise ~~resolution~~duties, ~~process.~~import ~~These~~taxes, ~~changes~~export taxes, ~~and~~sales ~~claims~~taxes ~~can~~or ~~affect~~other governmental assessments which could have a material adverse effect on our ~~contract~~results ~~revenue~~of ~~either~~operations ~~positively~~for orany ~~negatively.~~quarter or year.

WeThese risks ~~usually~~may ~~obtain~~result ~~contracts~~in ~~through~~a ~~competitive~~material ~~bidding~~adverse oreffect ~~through negotiations with long-standing clients. We are typically invited to bid~~ on ~~projects undertaken by~~ our ~~clients~~results ~~who maintain approved bidder lists. Bidders are pre-qualified by virtue~~ of ~~their prior performance for such clients, as well as their experience, reputation for quality, safety record, financial strength and bonding~~ ~~capacity~~operations.

In evaluating bid opportunities, we consider such factors as the client, the geographic location, the difficulty of the work, our current and projected workload, the likelihood of additional work, the project’s cost and profitability estimates, and our competitive advantage relative to other likely bidders. We ~~give careful thought and consideration to the political~~ ~~and~~may ~~financial stability of the country or region where the work is to~~ be ~~performed.~~adversely ~~The~~affected ~~bid~~by ~~estimate~~a ~~forms~~concentration ~~the basis~~ of abusiness ~~project~~in ~~budget against which performance is tracked through~~ a ~~project control system, enabling management to monitor projects~~particular ~~effectively~~country.

~~All~~Due ~~U.S.~~to ~~government~~a limited ~~contracts~~number ~~and~~of ~~many~~major ofprojects ~~our~~worldwide, ~~other~~we ~~contracts~~expect ~~provide~~to ~~for~~have ~~termination~~a substantial portion of ~~the~~our ~~contract~~resources ~~for~~dedicated ~~the~~to ~~convenience~~projects ~~of the~~located ~~client.~~in Ina ~~addition~~few countries. Therefore, ~~many~~our ~~contracts~~results of operations are ~~subject~~susceptible to ~~certain~~adverse ~~completion~~events ~~schedule~~beyond our ~~requirements~~control that ~~require~~may usoccur toin ~~pay~~a ~~liquidated~~particular ~~damages~~country in ~~the~~which ~~event~~our ~~schedules~~business ~~are~~may ~~not~~be concentrated ~~met~~at asthat ~~the~~time. ~~result~~Economic ofdownturns ~~circumstances~~in ~~within~~such countries could also have an adverse impact on our ~~control~~operations.

24Special risks associated with doing business in highly corrupt environments may adversely affect our business.

~~Table~~Although we have completed the sale of ~~Contents~~our Nigeria operations, our international business operations may continue to include projects in countries where corruption is prevalent. Since the anti-bribery restrictions of the FCPA make it illegal for us to give anything of value to foreign officials in order to obtain or retain any business or other advantage, we may be subject to competitive disadvantages to the extent that our competitors are able to secure business, licenses or other preferential treatment by making payments to government officials and others in positions of influence.

We act as prime contractor on a majority of the construction projects we undertake. In our capacity as prime contractor and when acting as a subcontractor, we perform most of the work on our projects with our own resources and typically subcontract only such specialized activities as hazardous waste removal, non-destructive inspection, tank erection, catering and security. In the construction industry, the prime contractor is normally responsible for the performance of the entire contract, including subcontract work. Thus, when acting as a prime contractor, we are subject to the risk associated with the failure of one or more subcontractors to perform as anticipated. 27

A substantial portion of our projects are currently performed on a fixed-price basis. Under a fixed-price contract, we agree on the price that we will receive for the entire project, based upon specific assumptions and project criteria. If our estimates of our own costs to complete the project are below the actual costs that we may incur, our margins will decrease, and we may incur a loss. The revenue, cost and gross profit realized on a fixed-price contract will often vary from the estimated amounts because of unforeseen conditions or changes in job conditions and variations in labor and equipment productivity over the term of the contract. If we are unsuccessful in mitigating these risks, we may realize gross profits that are different from those originally estimated and may incur losses on projects. Depending on the size of a project, these variations from estimated contract performance could have a significant effect on our operating results for any quarter or year. In some cases, we are able to recover additional costs and profits from the client through the change order process. In general, turnkey contracts to be performed on a fixed-price basis involve an increased risk of significant variations. This is a result of the long-term nature of these contracts and the inherent difficulties in estimating costs and of the interrelationship of the integrated services to be provided under these contracts whereby unanticipated costs or delays in performing part of the contract can have compounding effects by increasing costs of performing other parts of the contract. Our ~~accounting policy related to contract variations and claims requires recognition of all costs as incurred. Revenue from change orders, extra work and variations in the scope of work is recognized when~~ anbacklog ~~agreement~~ is ~~reached~~subject ~~with the client as~~ to ~~the~~unexpected ~~scope~~adjustments ~~of work~~ and ~~when~~cancellations ~~it is probable that the cost of such work will be recovered in a change in contract price. Profit on change orders, extra work~~ and ~~variations in the scope of work~~ is recognized when realization is assured beyond a reasonable doubt. Also included in contract costs and recognized income not yet billed on uncompleted contracts are amounts the Company seeks or will seek to collect from customers or others for errors or changes in contract specifications or design, contract change orders in dispute or unapproved as to both scope and price, or other customer-related causes of unanticipated additional contract costs (unapproved change orders). These amounts are recorded at ~~their estimated net realizable value when realization is probable and can be reasonably estimated. Unapproved change orders and claims also involve the use of estimates~~therefore, ~~and~~an ituncertain isindicator ~~reasonably possible that revisions to the estimated recoverable amounts~~ of ~~recorded~~our ~~unapproved~~future ~~change orders may be made in the near-term~~earnings. ~~If the Company does not successfully resolve these matters, a net expense (recorded as a reduction in revenues), may be required, in addition to amounts that have been previously provided for.~~

~~Employees~~We cannot guarantee that the revenue projected in our backlog will be realized or profitable. Projects may remain in our backlog for an extended period of time. In addition, project cancellations, terminations, or scope adjustments may occur, from time to time, with respect to contracts reflected in our backlog and could reduce the dollar amount of our backlog and the revenue and profits that we actually earn. Many of our contracts have termination for convenience provisions in them, in some cases without any provision for penalties or lost profits. Therefore, project terminations, suspensions or scope adjustments may occur from time to time with respect to contracts in our backlog. Finally, poor project or contract performance could also impact our backlog and profits.

AtOur ~~December 31,~~failure ~~2005,~~to werecover ~~employed~~adequately ~~directly~~on aclaims ~~multi-national~~against ~~work~~project ~~force~~owners offor ~~approximately~~payment ~~4,870 persons, of which approximately 79 percent were citizens of the respective countries in which they work. Although the level of activity varies from year~~could ~~to year, we~~ have ~~maintained~~a anmaterial ~~average~~adverse ~~work~~effect ~~force~~on ~~of approximately 4,066 over the past five years~~us. The minimum employment during that period has been 2,194 and the maximum was 4,870. At December 31, 2005, approximately 39 percent of our employees were covered by collective bargaining agreements. We believe our relations with our employees are satisfactory.

~~The~~We occasionally ~~following~~bring claims against project owners for additional costs exceeding ~~table~~the ~~sets~~contract ~~forth~~price or for amounts not included in the ~~location~~original contract price. These types of ~~employees~~claims byoccur ~~work~~due ~~countries~~to matters such as owner-caused delays or changes from the initial project scope, which result in additional costs, both direct and indirect. These claims can be the subject of ~~December 31~~lengthy arbitration or litigation proceedings, ~~2005:~~and it is often difficult to accurately predict when these claims will be fully resolved. When these types of events occur and unresolved claims are pending, we may invest significant working capital in projects to cover cost overruns pending the resolution of the relevant claims. A failure to promptly recover on these types of claims could have a material adverse impact on our liquidity and financial condition.

	Number of Employees	Percent
Nigeria	2,351	48	%
U.S. Construction	952	20
Oman	811	17
Canada	293	6
U.S. Engineering	265	5
U.S. Administration	180	4
Other	18	—
Total	4,870	100	%

Our business is dependent on a limited number of key clients.

25We operate primarily in the oil, gas, power and refinery industries, providing construction, engineering and facilities development and operations services to a limited number of clients. Much of our success depends on developing and maintaining relationships with our major clients and obtaining a share of contracts from these clients. The loss of any of our major clients could have a material adverse effect on our operations. Three substantial clients were responsible for 61.3 percent of our backlog at December 31, 2008.

~~Table~~Our use of ~~Contents~~fixed-price contracts could adversely affect our operating results.

~~Equipment~~A portion of our projects is currently performed on a fixed-price basis. Under a fixed-price contract, we agree on the price that we will receive for the entire project, based upon a defined scope, which includes specific assumptions and project criteria. If our estimates of our own costs to complete the project are below the actual costs that we may incur, our margins will decrease, and we may incur a loss. The revenue, cost and gross profit realized on a fixed-price contract will often vary from the estimated amounts because of unforeseen conditions or changes in job conditions and variations in labor and equipment productivity over the term of the contract. If we are unsuccessful in mitigating these risks, we may realize gross profits that are different from those originally estimated and incur reduced profitability or losses on projects. Depending on the size of a project, these variations from estimated contract performance could have a significant effect on our operating results for any quarter or year. In general, turnkey contracts to be performed on a fixed-price basis involve an increased risk of significant variations. This is a result of the long-term nature of these contracts and the inherent difficulties in estimating costs and of the interrelationship of the integrated services to be provided under these contracts, whereby unanticipated costs or delays in performing part of the contract can have compounding effects by increasing costs of performing other parts of the contract.

WePercentage-of-completion method ~~own, lease, and maintain a fleet~~ of ~~generally~~accounting ~~standardized construction, transportation and support equipment. In 2005 and 2004, expenditures~~ for ~~capital~~contract ~~equipment~~revenue ~~were~~may ~~$38.9~~result ~~million~~in ~~and~~material ~~$38.5 million, respectively. At December 31,~~adjustments ~~2005,~~that ~~the~~would ~~net~~adversely ~~book~~affect ~~value of~~ our ~~property,~~operating ~~plant, equipment was $116~~results.~~3 million.~~

~~Historically,~~We recognize wecontract ~~have~~revenue ~~elected~~using tothe ~~own~~percentage-of-completion ~~rather~~method ~~than lease~~on ~~equipment~~long-term tofixed ~~ensure~~price ~~the~~contracts. ~~required~~Under ~~equipment~~this ismethod, ~~available~~estimated ascontract ~~needed.~~revenue is Weaccrued ~~believe~~based ~~this~~generally ~~has~~on ~~resulted~~the inpercentage ~~lower~~that ~~equipment~~ costs. Weto ~~are~~date ~~constantly~~bear ~~evaluating~~to ~~the~~total estimated ~~availability~~costs, oftaking ~~equipment~~into ~~and~~consideration ~~may~~physical ~~from~~completion. ~~time~~Estimated contract tolosses ~~time~~are ~~pursue~~recognized ~~the~~in ~~leasing~~full ofwhen ~~equipment~~determined. toAccordingly, ~~support~~contract ~~projects.~~revenue Inand ~~recent~~total ~~years,~~cost ~~the~~estimates ~~leasing~~are ~~market~~reviewed ~~for~~and ~~heavy~~revised ~~construction~~periodically ~~equipment~~as inthe work ~~international~~progresses ~~locales~~and ~~has~~as ~~become~~change ~~much~~orders ~~more~~are ~~competitive.~~approved, Asand aadjustments ~~result,~~based weupon the ~~have~~percentage-of-completion ~~recently~~are ~~made~~reflected ~~more~~in ~~significant~~contract ~~use~~revenue ofin ~~leasing~~the toperiod when ~~support~~these ~~our~~estimates ~~project~~are ~~equipment requirements~~revised. WeThese ~~continue~~estimates toare ~~evaluate~~based ~~expected~~on ~~equipment~~management’s reasonable ~~utilization,~~assumptions ~~given~~and ~~anticipated~~our ~~market~~historical ~~conditions~~experience, and ~~may~~are ~~dispose~~only estimates. Variation of ~~underutilized~~actual ~~equipment~~results from ~~time~~these toassumptions ~~time.~~or ~~All~~our ~~equipment~~historical isexperience could ~~subject~~be ~~to scheduled maintenance to maximize fleet readiness~~material. We ~~have~~To ~~maintenance~~the ~~facilities~~extent atthat ~~Azaiba,~~these ~~Oman;~~adjustments ~~Channelview,~~result ~~Texas;~~in ~~Fruita,~~an ~~Colorado; Ft. McMurray~~increase, ~~Alberta,~~a reduction ~~Canada;~~or ~~Houston,~~an ~~Texas;~~elimination ~~Maracaibo,~~of ~~Venezuela;~~previously ~~and~~reported ~~Port~~contract ~~Harcourt~~revenue, ~~Nigeria,~~we aswould recognize ~~well~~a ascredit ~~temporary~~or ~~site~~a ~~facilities~~charge onagainst ~~major~~current ~~jobs~~earnings, towhich ~~minimize~~could be ~~downtime~~material.

~~Facilities~~ 28

~~In Channelview,~~Terrorist ~~Texas,~~attacks ~~near Houston, we own a 20-acre equipment~~ and ~~maintenance~~war ~~facility,~~or ~~which~~risk includes an office and maintenance shop building. In Houston, we own a 10-acre equipment yard and maintenance facility which includes an 8,500 square foot maintenance/warehouse building and an office building totaling approximately 8,200 square feet. Also, in Tulsa, Oklahoma we own a 100,000 square foot office building. In Canada, we own a 10,000 square foot fabrication shop on three acres of ~~land~~war ~~in Ft.~~may ~~McMurray,~~adversely ~~Alberta,~~affect ~~and another 10,000 square foot facility in Edmonton, Alberta, Canada. In 2005, we purchased an additional 90,000 square foot fabrication facility in the Edmonton area. In Venezuela,~~ our ~~offices~~results ~~and construction facilities are located on 15 acres~~ of ~~land~~operations, our ~~which~~ability weto ~~own,~~raise oncapital ~~the~~or ~~shores~~secure ~~of Lake Maracaibo. We own an office/shop/warehouse facility in Gillette~~insurance, ~~Wyoming,~~or ~~which consists of a 50 foot by 150 foot building on a 4.5-acre site. We lease all other facilities used in~~ our ~~operations,~~ including corporate offices in Panama; administrative, procurement and engineering offices in Houston, Texas; Fruita, Colorado; Salt Lake City (Murray), Utah and various office facilities, equipment sites and expatriate housing units infuture ~~the United States, Bolivia, Canada, England, Nigeria, Oman, and Venezuela~~growth. ~~Rent expense for these facilities was $2.3 million in 2005 and $1.8 million in 2004.~~

~~Insurance~~The continued threat of terrorism and ~~Bonding~~the impact of military and other action, including U.S. military operations in Iraq, will likely lead to continued volatility in prices for crude oil and natural gas and could affect the markets for our operations. In addition, future acts of terrorism could be directed against companies operating both outside and inside the United States. Further, the U.S. government has issued public warnings that indicate that pipelines and other energy assets might be specific targets of terrorist organizations. These developments may subject our operations to increased risks and, depending on their ultimate magnitude, could have a material adverse effect on our business.

~~Operational~~Our operations ~~risks~~ are ~~analyzed~~subject ~~and~~to ~~categorized by our risk management department and are insured through major international insurance brokers under~~ a ~~comprehensive~~number ~~insurance program, which includes commercial insurance policies, consisting~~ of ~~the~~operational types and amounts typically carried by companies engaged in the worldwide engineering and construction industry. We maintain worldwide master policies written mostly through highly-rated insurers. These policies cover our land and marine property, plant, equipment and cargo against all normally insurable risks~~, including war risk, political risk and terrorism, in third-world countries~~. Other policies cover our workers and liabilities arising out of our operations. Primary and excess liability insurance limits are consistent with the level of our asset base. Risks of loss or damage to project works and materials are often insured on our behalf by our clients. On other projects, “builders all risk insurance” is purchased when deemed necessary. Substantially all insurance is purchased and maintained at the corporate level, other than certain basic insurance, which must be purchased in some countries in order to comply with local insurance laws.

~~The~~Our business ~~insurance~~operations ~~protection~~include wepipeline ~~maintain~~construction, ~~may~~fabrication, ~~not~~pipeline rehabilitation beservices ~~sufficient~~and orconstruction ~~effective~~and ~~under~~turnaround ~~all~~and ~~circumstances~~maintenance orservices to ~~against~~refiners ~~all~~and ~~hazards~~petrochemical tofacilities. ~~which~~These weoperations ~~may~~involve bea ~~subject.~~high Andegree of ~~enforceable~~operational ~~claim~~risk. ~~for~~Natural ~~which~~disasters, weadverse ~~are~~weather ~~not~~conditions, ~~fully~~collisions and ~~insured~~operator error could ~~have~~cause apersonal ~~material~~injury ~~adverse~~or ~~effect on~~loss ~~our~~of ~~results~~life, ofsevere ~~operations.~~damage Into and ~~the~~destruction ~~future~~of property, ~~our~~equipment ~~ability~~and tothe ~~maintain insurance~~environment, ~~which~~and ~~may~~suspension ~~not~~of operations. beIn ~~available~~locations orwhere atwe ~~rates~~perform wework ~~consider~~with ~~reasonable,~~equipment ~~may~~that beis ~~affected~~owned by others, ~~events~~our ~~over~~continued ~~which~~use weof ~~have~~the noequipment ~~control,~~can ~~such~~be assubject ~~those~~to ~~that~~unexpected ~~occurred~~or arbitrary oninterruption ~~September 11, 2001.~~or termination.

~~We often are required to provide surety bonds guaranteeing our performance and/or financial obligations.~~ The occurrence ~~amount~~ of ~~bonding available~~any toof usthese ~~depends~~events ~~upon~~could ~~our~~result ~~experience and reputation~~ in ~~the~~work ~~industry~~stoppage, ~~financial~~loss ~~condition~~of revenue, ~~backlog~~casualty ~~and management expertise~~loss, ~~among~~increased ~~other~~costs ~~factors.~~and Wesignificant ~~also~~liability ~~use letters of credit issued under our credit facility in lieu of bonds~~ to ~~satisfy~~third ~~performance and financial guarantees on some projects when required~~parties.

26The insurance protection we maintain may not be sufficient or effective under all circumstances or against all hazards to which we may be subject. An enforceable claim for which we are not fully insured could have a material adverse effect on our financial condition and results of operations. Moreover, we may not be able to maintain adequate insurance in the future at rates that we consider reasonable.

~~Table~~We may become liable for the obligations of ~~Contents~~our joint ventures and our subcontractors.

Some of ~~Item 1A~~our projects are performed through joint ventures with other parties. ~~Risk~~In addition ~~Factors~~to the usual liability of contractors for the completion of contracts and the warranty of our work, where work is performed through a joint venture, we also have potential liability for the work performed by our joint ventures. In these projects, even if we satisfactorily complete our project responsibilities within budget, we may incur additional unforeseen costs due to the failure of our joint ventures to perform or complete work in accordance with contract specifications.

~~The~~We ~~nature~~act as prime contractor on a majority of the construction projects we undertake. In our capacity ~~business~~as prime contractor and ~~operations~~when ~~subjects~~acting usas a subcontractor, we perform most of the work on our projects with our own resources and typically subcontract only such specialized activities as hazardous waste removal, nondestructive inspection and catering and security. However, with respect to EPC and other contracts, we may choose to subcontract a ~~number~~substantial portion of ~~uncertainties~~the project. In ~~and~~the ~~risks~~construction industry, the prime contractor is normally responsible for the performance of the entire contract, including subcontract work. Thus, when acting as a prime contractor, we are subject to the risk associated with the failure of one or more subcontractors to perform as anticipated.

Governmental investigations into the activities of the Company, J. Kenneth Tillery, the former President of our principal international subsidiary, and other current and former employees of the Company could adversely affect us. 29

~~In late December 2004, we learned that~~Governmental ~~tax~~regulations ~~authorities~~could inadversely ~~Bolivia~~affect ~~had charged~~ our ~~Bolivian subsidiary with failure to pay taxes owed, filing improper tax returns and the falsification of tax documents~~business. As a result of the Company’s investigation, we determined that J. Kenneth Tillery, then President of Willbros International, Inc. (“WII”) and the individual principally responsible at that time for the Company’s international operations outside of the United States and Canada, was aware of the circumstances that led to the Bolivian charges. Mr. Tillery resigned from the Company on January 6, 2005. Based on our preliminary investigation, we determined that our Bolivian subsidiary had also failed to properly withhold taxes on payments made in Bolivia and had failed to file tax returns related to those withholding taxes. We reported this information to the Bolivian government. In March, 2005, we paid approximately $3.3 million to resolve outstanding assessments with the Bolivian tax authorities.

OnMany aspects ~~January 18~~of our operations are subject to governmental regulations in the countries in which we operate, ~~2005~~including those relating to currency conversion and repatriation, taxation of our earnings and earnings of our personnel, the increasing ~~Company’s~~requirement ~~Audit~~in ~~Committee~~some ~~engaged~~countries ~~independent~~to ~~outside~~make ~~legal~~greater ~~counsel~~use of local employees and suppliers, including, in some jurisdictions, mandates that provide for greater local participation in the ~~purpose~~ownership and control of certain local ~~conducting~~business anassets. ~~investigation~~In ~~into~~addition, we depend on the ~~circumstances~~demand ~~surrounding~~for our services from the oil, ~~Bolivian~~gas ~~tax~~and ~~assessment~~power asindustries, ~~well~~and, astherefore, ~~other~~our ~~activities~~business ~~which~~is ~~were~~affected ~~previously~~by changing ~~under~~taxes, price controls, and laws and regulations relating to the ~~control~~oil, gas ofand Mrpower industries generally. ~~Tillery.~~ The ~~independent~~adoption ~~counsel~~of ~~retained~~laws ~~forensic~~and ~~accountants~~regulations toby ~~assist~~the countries ~~with~~or the states in which we operate that are intended to curtail exploration and development drilling for oil and gas or the ~~investigation.~~development of power generation facilities for economic and other policy reasons, could adversely affect our operations by limiting demand for our services.

~~The investigations conducted by the Audit Committee and senior management have revealed information indicating that~~Our ~~Mr. Tillery,~~operations ~~and~~are ~~others~~also ~~who~~subject ~~directly~~to orthe ~~indirectly~~risk ~~reported~~of tochanges ~~him, engaged~~ in ~~activities~~laws ~~that were~~ and ~~are specifically contrary to established Company~~ policies ~~and~~which may ~~possibly~~impose ~~the~~restrictions ~~laws~~on ofour ~~several countries~~business, including ~~the~~trade ~~United~~restrictions, ~~States. A summary~~which ~~description~~could ~~of the activities carried out by Mr. Tillery and others that may~~ have ~~damaged~~a ~~the~~material ~~Company~~adverse oreffect ~~that~~on ~~may~~our ~~cause~~operations. ~~such~~Other ~~damage~~types ~~in the future is provided in the risk factor below entitled “The actions~~ of ~~Mr. Tillery and others~~ ~~have~~governmental ~~harmed~~regulation ~~the~~which ~~Company~~could, ~~and~~if ~~may~~enacted ~~harm~~or ~~the~~implemented, ~~Company~~adversely inaffect our ~~the~~operations ~~future.” Our investigations determined the following~~include:

•· ~~Under~~expropriation ~~the~~or ~~direction~~nationalization ~~of Mr. Tillery and others acting under his direction, the Company’s Bolivian subsidiary filed incorrect tax returns, failed to file required tax returns and failed to pay taxes owed.~~decrees;

•· ~~Mr.~~confiscatory Tillery and other employees or consultants of WII or its subsidiaries may have made or caused others to make payments directly or indirectly to government officials in connection with the submission of incorrect tax ~~information.~~systems;

•· ~~Mr.~~primary ~~Tillery and other employees~~ or ~~consultants~~secondary ofboycotts ~~WII~~directed orat ~~its~~specific ~~subsidiaries~~countries ~~may have made~~ or caused others to make payments directly or indirectly to government officials and client representatives in connection with the award and retention of business in Nigeria, the reduction of Nigerian tax obligations, the facilitation of Nigerian customs clearances and the disposition of Nigerian legal proceedings.companies;

•· Mr. Tillery and other employees or consultants of WII or its subsidiaries have made or caused others to make payments directly or indirectly to government officials in connection with attempts to obtain and/or retain business in Ecuador.embargoes;

•· ~~Mr.~~extensive ~~Tillery~~import ~~and~~restrictions ~~other employees~~ or ~~consultants~~other oftrade ~~WII or its subsidiaries usurped corporate opportunities and owned undisclosed interests in enterprises with which the Company had material relationships.~~barriers;

•· ~~Mr.~~mandatory ~~Tillery~~sourcing and ~~other~~local ~~employees~~participation or consultants of WII or its subsidiaries may have engaged in discussions or entered into arrangements with competitors of the Company regarding bidding strategies for projects outside the United States.rules;

•· ~~Mr.~~oil, ~~Tillery~~gas ~~may have acquiesced to~~ or ~~approved~~power aprice ~~prior~~regulation; ~~commitment by another to make an improper future payment in Mexico.~~and

•· ~~Mr.~~unrealistically ~~Tillery~~high ~~and~~labor ~~other~~rate ~~employees of WII or its subsidiaries may have received kickbacks, payments~~ and~~/or~~ ~~other~~fuel ~~improper~~price ~~benefits from Company consultants, suppliers and/or competitors or may otherwise have benefited personally as a result of the activities described above~~regulation.

27Our future operations and earnings may be adversely affected by new legislation, new regulations or changes in, or new interpretations of, existing regulations, and the impact of these changes could be material.

~~Table~~Our strategic plan relies in part on acquisitions to sustain our growth. Acquisitions of ~~Contents~~other companies present certain risks and uncertainties.

•Our strategic ~~Mr.~~plan ~~Tillery~~involves ~~and~~growth ~~other~~through, ~~employees~~among orother ~~consultants~~things, ~~of WII or its subsidiaries may have intentionally mischaracterized Company expenditures resulting in~~ the ~~Company’s~~acquisition ~~books~~of other ~~not~~companies. ~~accurately~~Such ~~reflecting~~growth ~~the~~involves ~~true~~a ~~nature~~number of ~~such~~risks, ~~expenditures.~~including:

•· ~~Acts~~inherent ~~carried~~difficulties ~~out~~relating ~~by Mr. Tillery and others acting under his direction with respect~~ to acombining ~~bid~~previously ~~for~~separate ~~work in Sudan may constitute facilitation efforts prohibited by U.S. law, a violation of U.S. trade sanctions and the unauthorized export of technical information.~~businesses;

•· ~~Some~~diversion of ~~the~~management’s ~~actions~~attention offrom ~~Mr.~~ongoing ~~Tillery and other employees or consultants of WII or its subsidiaries may have caused the Company~~ day-to-day ~~violate U.S. securities laws, including the Foreign Corrupt Practices Act (“FCPA”), and/or other U.S. and foreign laws.~~operations;

•· ~~Following~~the ~~Mr.~~assumption ~~Tillery’s~~of ~~resignation,~~liabilities ~~other employees~~ of ~~WII~~an oracquired ~~its~~business, ~~subsidiaries~~including ~~may~~both ~~have~~foreseen ~~continued~~and tounforeseen carry out improper activities previously initiated by Mr. Tillery. Those employees may have made payments directly to certain government officials or to third party consultants with the understanding that such payments would be paid to government officials.liabilities;

We· ~~have~~failure ~~voluntarily reported the results of our investigations~~ to ~~both~~realize ~~the~~anticipated United States Securities and Exchange Commission (“SEC”) and the United States Department of Justice (“DOJ”). We have also voluntarily reported the potentially improper facilitation and export activities to the United States Department of Treasury’s Office of Foreign Assets Control (“OFAC”)benefits, and to the DOJ and to the SEC. OFAC is commencing an investigation of the reported facilitation and export activities. The SEC and the DOJ are each conducting their own investigations of other actions taken by the Company and its employees and representatives that may constitute violations of U.S. law. We are cooperating fully with all such ~~investigations.~~as Ifcost ~~the~~savings ~~Company or one of its subsidiaries is found to have violated the U.S. securities laws (including the FCPA), that entity could be subject to civil penalties of up to $650,000 per violation,~~ and ~~criminal~~revenue penalties of up to the greater of $2 million per violation or twice the gross pecuniary gain resulting from the improper conduct and other sanctions. If the Company or one of its subsidiaries is found to have violated U.S. trade sanctions or U.S. export restrictions that entity could be subject to civil penalties of up to $11,000 per violation and criminal penalties of up to $250,000 per violation. In each case there could be multiple violations. The Company and its subsidiaries could also be barred from participating in future U.S. government contracts and from participating in certain U.S. export transactions. It is also possible that governmental agencies could require that we enter into a criminal plea agreement or a deferred prosecution agreement which could include fines, penalties, monitoring arrangements and other sanctions. There may be other penalties that could apply under other U.S. laws or the laws of foreign jurisdictions. The Company cannot predict the outcome of the investigations being conducted by the SEC, the DOJ and OFAC, including the Company’s exposure to civil or criminal fines or penalties, or other regulatory action which could have a material adverse effect on the Company’s business, financial condition and results of operations. enhancements;

~~The~~· ~~Company has terminated employment relationships and commercial and/or consulting arrangements with multiple entities and individuals by whom, through whom and to whom~~ potentially ~~improper~~substantial ~~payments~~transaction ~~may~~costs ~~have~~associated been made in Bolivia, Nigeria and Ecuador. In at least two instances, we have received claims that such terminations are unjustified and may constitute a breach of contract. There can be no assurance that the severance of long term relationships with ~~influential consultants and other individuals will not adversely impact the Company’s ability to retain~~ business ~~it currently has, its ability to collect receivables currently outstanding or its ability to collect receivables from new business, particularly in Nigeria.~~ combinations;

~~The~~· ~~actions~~difficulties ofrelating ~~Mr. Tillery~~to assimilating the personnel, services and ~~others~~systems ~~have~~of ~~harmed~~an ~~the~~acquired ~~Company~~business and ~~may~~to ~~harm~~integrating ~~the~~marketing, ~~Company~~contracting, incommercial ~~the~~and ~~future.~~other operational disciplines; and

~~Mr. Tillery~~· ~~became~~difficulties ~~the Managing Director of the Company’s affiliate~~ in ~~Nigeria~~applying inand ~~1995.~~integrating ~~Evidence that arose from~~ our ~~investigations~~system ~~indicates that~~of ~~Mr. Tillery~~internal ~~thereafter~~controls ~~acquired interests in, or began exercising some control over, several entities that did business with the Company and did not disclose such interests and relationships~~ to ~~the Company. Mr. Tillery authorized and directed numerous transactions between Company subsidiaries and entities in which he owned~~ an ~~interest~~acquired ~~or over which he exercised control~~business. That practice continued until his resignation from the Company. Mr. Tillery obtained significant personal benefit from such dealings and such benefit should have been made available to the Company. In some cases, the Company may still be acquiring goods or services from entities in which Mr. Tillery has an interest because suitable alternatives have not yet been found or legal constraints prevent the immediate termination of those relationships. However, the Company has discontinued all payments to all such entities that it believes might constitute a violation of law. During the course of his employment with various subsidiaries of the

28In addition, we can provide no assurance that we will continue to locate suitable acquisition targets or that we will be able to consummate any such transactions on terms and conditions acceptable to us. Acquisitions may bring us into businesses we have not previously conducted and expose us to additional business risks that are different than those we have traditionally experienced.

~~Table of Contents~~30

~~Company, Mr. Tillery submitted numerous certifications disclaiming any related party interests or transactions with~~Our ~~the~~operations ~~Company~~expose orus ~~its subsidiaries. His failure~~ to ~~disclose~~potential ~~his~~environmental ~~interests was a violation of the Company’s written policies and may have caused the Company to violate rules or laws related to the public disclosure of such information~~liabilities. ~~See Note 17 of our “Notes to Consolidated Financial Statements” included in Item 8 of this Form 10-K for additional information regarding related party transactions.~~

~~Although~~Our noU.S. and ~~Company~~Candadian ~~official~~operations isare ~~authorized~~subject to donumerous soenvironmental protection laws and regulations which are complex and stringent. We regularly perform work in and around sensitive environmental areas, Mrsuch as rivers, lakes and wetlands. ~~Tillery~~ Significant ~~used~~fines ~~the~~and ~~apparent~~penalties ~~authority~~may ofbe ~~his~~imposed ~~positions~~for non-compliance with environmental ~~Company~~laws ~~subsidiaries~~and regulations, and ~~affiliates~~some toenvironmental ~~personally~~laws ~~make~~provide for joint and several strict liability for remediation of releases of hazardous substances, rendering a person liable for environmental damage, without regard to negligence or ~~cause~~fault on the part of such person. In addition to potential liabilities that may be ~~made~~incurred ~~numerous~~in ~~unauthorized~~satisfying these requirements, we may be ~~payments~~subject ~~from~~to ~~the~~claims ~~Company’s~~alleging ~~bank~~personal ~~accounts~~injury ~~and~~or ~~cash~~property ~~reserves.~~damage ~~Some~~as ~~such~~a ~~payments~~result ~~were~~of alleged ~~significant~~exposure to hazardous substances. These laws and ~~were~~regulations ~~used~~may expose us to liability arising out of the conduct of operations or conditions caused by others, or for ~~among~~our ~~other~~acts ~~purposes:~~which were in compliance with all applicable laws at the time these acts were performed.

•We own and operate several properties in the United States and Canada that have been used for a number of years for the storage and maintenance of equipment and upon which hydrocarbons or other wastes may have been disposed or released. Any release of substances by us or by third parties who previously operated on these properties may be subject to ~~influence~~the ~~various~~Comprehensive ~~officials~~Environmental Response Compensation and ~~judicial~~Liability ~~authorities~~Act (“CERCLA”), the Resource Compensation and Recovery Act (“RCRA”), and analogous state or local laws. CERCLA imposes joint and several liability, without regard to fault or the legality of the original conduct, on certain classes of persons who are considered to be responsible for the release of hazardous substances into the ~~purpose~~environment, while RCRA governs the generation, storage, transfer and disposal of ~~reducing~~hazardous ~~tax~~wastes. ~~obligations;~~Under such laws, we could be required to remove or remediate previously disposed wastes and clean up contaminated property. This could have a significant impact on our future results.

•Our operations tooutside ~~dispose~~ of ~~lawsuits~~the ~~and/or~~United ~~influence~~States aare ~~variety~~oftentimes ofpotentially ~~legal~~subject ~~matters;~~to similar governmental or provincial controls and restrictions relating to the environment.

•Our industry tois ~~facilitate~~highly ~~actions~~competitive, bywhich ~~customs~~could ~~officials~~impede inour ~~connection with the importation and exportation of materials and equipment~~growth.

~~Mr. Tillery~~We operate ~~and~~in ~~other~~a ~~employees~~highly ofcompetitive ~~WII~~environment. orA ~~its subsidiaries also caused~~ substantial ~~payments~~number toof ~~be made from Company funds for~~ the ~~nominal~~major ~~purpose~~projects ofthat ~~obtaining~~we ~~consulting~~pursue orare ~~advisory~~awarded ~~services~~based ~~when~~on ~~the~~bid ~~actual~~proposals. ~~purpose~~We ofcompete atfor ~~least~~these projects aagainst ~~portion of the amounts paid was to fund payments to~~ government-owned or ~~client~~supported ~~officials~~companies ~~for~~and ~~the~~other ~~purpose of obtaining or retaining Company business. Some of these~~companies ~~payments~~that ~~appear to~~ have ~~benefited~~substantially ~~Mr. Tillery’s~~greater ~~own~~financial ~~personal~~and ~~interests~~other asresources ~~well~~than aswe ~~those~~do. ofIn some ~~others~~markets, ~~who~~there ~~cooperated with him. There~~ is acompetition ~~significant~~from ~~probability~~national ~~that such activities constituted violations of U.S.~~ and ~~other~~regional ~~laws.~~firms ~~See the risk~~against ~~factor~~which ~~above~~we ~~entitled~~may ~~“Governmental~~not ~~investigations~~be ~~into~~able ~~the~~to ~~activities~~compete ofon ~~the Company, J~~price. ~~Kenneth~~Our ~~Tillery,~~growth ~~the~~may ~~former~~be ~~President~~impacted ofto ~~our~~the extent ~~principal~~that ~~international~~we ~~subsidiary,~~are ~~and~~unable ~~other~~to ~~current~~successfully ~~and~~bid ~~former~~against ~~employees of the Company could adversely~~these ~~affect us”~~companies.

Our operating ~~reputation~~results ~~and~~could ~~our ability to do business may~~ be ~~impaired~~adversely byaffected ~~the~~if ~~corrupt~~our ~~behavior of Mr~~non-U. ~~Tillery~~S. ~~and~~operations ~~other employees~~became oftaxable ~~WII~~in orthe ~~its~~United ~~subsidiaries~~States.

WeIf ~~are~~any income ~~committed~~earned, tocurrently ~~conducting~~or ~~business~~historically, ~~worldwide~~by inWillbros aGroup, ~~legal and ethical manner~~Inc. ~~Many~~or ~~of our clients~~its ~~make compliance with applicable laws and ethical conduct a condition to their business relationships~~non-U. ~~The actions of Mr~~S. ~~Tillery~~ ~~and other employees of WII or its~~ subsidiaries ~~may~~from ~~cause~~operations usoutside tothe beUnited ~~disqualified~~States ~~from~~constituted income ~~some~~effectively ~~business~~connected ~~opportunities~~ with ~~clients~~a ~~and~~U.S. ~~others~~trade ~~who~~or ~~require their~~ business ~~partners to maintain high ethical standards. In addition~~, ~~certain of the actions already taken by Mr. Tillery~~ and ~~others~~as ~~may~~a ~~continue to impose serious obstacles to implementation of the~~result ~~enhanced~~became ~~compliance~~taxable ~~controls procedures we are now striving to implement, particularly~~ in ~~Nigeria. Some individuals who received~~ the ~~improper~~United ~~payments~~States, ~~may threaten the personal safety of~~ our ~~employees~~consolidated ~~and~~operating ~~may~~results ~~seek~~could ~~to bar us from continuing to win or~~be ~~carry~~materially ~~out~~and ~~business~~adversely ~~with entities that are subject to their influence~~affected. ~~In addition, those individuals may seek to cause such entities to stop or delay payments that are due us.~~

~~Special~~We are ~~risks~~dependent ~~associated~~upon ~~with~~the ~~doing~~services ~~business~~of ~~in highly corrupt environments may adversely affect~~ our ~~business.~~executive management.

Our success ~~international~~depends ~~business~~heavily ~~operations~~on ~~include~~the ~~projects~~continued inservices ~~countries~~of ~~where~~our ~~corruption~~executive ~~is prevalent~~management. Our ~~Since~~management ~~the~~team ~~anti-bribery~~is ~~restrictions~~the nexus of ~~the~~our ~~FCPA~~operational ~~make~~experience itand ~~illegal~~customer relationships. ~~for~~Our usability to ~~give~~manage ~~anything~~business ofrisk ~~value~~and tosatisfy ~~foreign~~the ~~officials~~expectations inof ~~order~~our toclients, ~~obtain~~stockholders orand ~~retain~~other ~~any~~stakeholders ~~business~~is ordependent ~~other~~upon ~~advantage,~~the collective weexperience ~~may~~and berelationships ~~subject~~of toour ~~competitive~~management ~~disadvantages~~team. toIn ~~the~~addition, ~~extent~~we do ~~that~~not ~~our~~maintain ~~competitors~~key ~~are~~man ~~able~~life toinsurance ~~secure~~for ~~business,~~these ~~licenses~~individuals. The loss or interruption ~~other~~of ~~preferential~~services ~~treatment~~provided by ~~making~~one ~~payments~~or tomore ~~government officials~~of ~~and~~our ~~others~~senior inofficers ~~positions~~could adversely affect our results of ~~influence~~operations.

~~Investors are seeking to recover damages from us because of the actions of Mr. Tillery and others.~~ 31

~~Several lawsuits have been brought against the Company and certain of our current and former officers and~~Our ~~directors, asserting~~goodwill ~~violations of federal securities laws. We cannot predict the outcome of these lawsuits. While the Company maintains insurance that~~ may ~~cover~~become the defense of those lawsuits and damages or other monetary remedies assessed against us or our current and former officers and directors, such insurance may not cover all claims or may not be adequate to cover all costs, damages and assessmentsimpaired. Substantial, uninsured damages or other monetary remedies assessed against us could have a material adverse effect on our business, results of operations, financial condition and cash flows. See Item 3 “Legal Proceedings” of this Form 10-K for a discussion of the various lawsuits.

29We have a substantial amount of goodwill following our acquisitions of Inserv and Midwest. At least annually, we evaluate our goodwill for impairment based on the fair value of each operating unit. This estimated fair value could change if there were future changes in our capital structure, cost of debt, interest rates, capital expenditure levels or ability to perform at levels that were forecasted. These changes could result in an impairment that would require a material non-cash charge to our results of operations. A significant decrease in expected cash flows or changes in market conditions may indicate potential impairment of recorded goodwill. Sustained adverse equity market conditions and the resulting decline in market multiples and the Company’s stock price which in turn regarded as an indicator of an adverse change in the business climate, led to non-cash, pre-tax charge of $62,295 in the fourth quarter of 2008. The Company will continue to monitor the carrying value of its goodwill.

~~Table~~RISKS RELATED ofTO ~~Contents~~OUR COMMON STOCK

Our common ~~business~~stock, which is ~~highly~~listed ~~dependent~~on ~~upon~~ the ~~level~~New ofYork ~~capital~~Stock ~~expenditures~~Exchange, byhas ~~oil,~~from ~~gas~~time to time experienced significant price and ~~power~~volume ~~companies~~fluctuations. onThese fluctuations ~~infrastructure.~~are likely to continue in the future, and you may not be able to resell your shares of common stock at or above the purchase price paid by you.

~~Our revenue and cash flow are primarily dependent upon major engineering and construction projects.~~ The ~~availability~~market ofprice ~~these types~~ of ~~projects~~our iscommon ~~dependent~~stock ~~upon~~may ~~the~~change ~~condition~~significantly ofin ~~the~~response ~~oil, gas and power industries, and, specifically, the level of capital expenditures of oil, gas and power companies on infrastructure. Our failure~~ to ~~obtain major~~various ~~projects, the delay in awards of major projects, the cancellation of major projects or delays in completion of contracts are~~ factors ~~that could result in the under-utilization of our resources, which would have an adverse impact on our revenue~~ and ~~cash~~ ~~flow.~~events ~~There are numerous factors~~ beyond our control, ~~that~~including ~~influence~~ the ~~level of capital expenditures of oil, gas and power companies, including~~following:

•· ~~current~~the ~~and~~risk ~~projected~~factors ~~oil,~~described ~~gas~~in ~~and~~this ~~power~~Item ~~prices~~1A.;

•· ~~the~~a ~~demand~~shortfall ~~for~~in ~~electricity~~operating revenue or net income from that expected by securities analysts and investors;

•· ~~the~~changes ~~abilities~~in securities analysts’ estimates of ~~oil,~~our ~~gas~~financial ~~and~~performance ~~power~~or ~~companies~~the tofinancial ~~generate,~~performance ~~access~~of ~~and~~our ~~deploy~~competitors ~~capital~~or companies in our industry generally;

•· ~~exploration,~~general ~~production~~conditions ~~and~~in ~~transportation~~our ~~costs~~customers’ industries; and

•· ~~the~~general ~~discovery~~conditions ~~rate~~in ofthe ~~new~~securities ~~oil and gas reserves;~~markets.

•Our certificate ~~the~~of ~~sale~~incorporation and ~~expiration~~bylaws ~~dates~~may ofinhibit ~~oil~~a ~~and~~takeover, ~~gas~~which ~~leases~~may adversely ~~and~~affect ~~concessions;~~the performance of our stock.

•Our certificate ~~regulatory~~of ~~restraints~~incorporation onand bylaws may discourage unsolicited takeover proposals or make it more difficult for a third party to acquire us, which may adversely affect the ~~rates~~price that ~~power~~investors ~~companies~~might ~~may~~be ~~charge~~willing ~~their~~to ~~customers;~~pay for our common stock. For example, our certificate of incorporation and bylaws:

•· ~~local~~provide ~~and~~for ~~international~~a ~~political~~classified ~~and~~board ~~economic~~of ~~conditions~~directors, which allows only one-third of our directors to be elected each year;

•· restrict the ability ~~or willingness~~ of ~~host~~stockholders ~~country government entities~~ to ~~fund~~take ~~their~~action ~~budgetary~~by ~~commitments;~~written ~~and~~consent;

•· ~~technological~~establish ~~advances.~~advance notice requirements for nominations for election to our Board of Directors; and

If· weauthorize ~~are~~our ~~not~~Board ~~able~~of toDirectors ~~obtain a new credit facility~~ to ~~replace~~designate the ~~2004~~terms ~~Credit~~of ~~Facility,~~and ~~our~~issue ~~ability~~new toseries ~~operate~~of ~~may~~preferred ~~be significantly restricted~~stock.

~~Our ability to obtain new~~Future ~~contracts~~sales ~~and retain existing contracts, primarily for our International operating segment, is in part dependent on our access to a credit facility under which we can issue letters~~ of ~~credit. Our inability to issue letters of credit could negatively affect~~ our ~~ability~~common tostock ~~take~~may ondepress ~~new work or bid additional work where letters of credit are required by~~ our ~~customers.~~stock ~~We have begun discussions to obtain a new credit facility to replace the 2004 Credit Facility that expires in March 2007~~price. However, we cannot provide assurance that we will be successful in obtaining a new credit facility. Should we fail to obtain a new credit facility, our ability to operate may be significantly restricted.

IfSales weof a ~~are~~substantial ~~not~~number ~~able~~of toshares ~~renegotiate~~of our ~~surety~~common ~~bond~~stock ~~lines~~in the public market or otherwise, either by us, a member of management or a major stockholder, or the perception that these sales could occur, may depress the market price of our common stock and impair our ability to ~~operate~~raise ~~may~~capital bethrough ~~significantly~~the ~~restricted.~~sale of additional equity securities.

~~We are currently negotiating with major surety bonding companies to obtain new surety bonding facilities. An inability to obtain surety bonds could~~In ~~negatively affect our opportunities to take on new work or bid additional work where performance surety bonds are required by our customers, in~~ the event ~~other~~we ~~forms~~issue ofstock ~~performance guarantees such~~ as ~~letters~~consideration offor ~~credit~~certain oracquisitions, ~~parent guarantees are deemed insufficient or unacceptable. Should~~ we ~~fail to obtain new surety bonding facilities, our ability to generate significant new work~~ may dilute beshare ~~restricted~~ownership.

~~Our~~We ~~significant~~grow our ~~international~~business ~~operations~~organically ~~are~~as ~~subject~~well toas ~~political~~through ~~and~~acquisitions. ~~economic~~One ~~risks~~method of acquiring ~~developing~~companies ~~countries~~or otherwise funding our corporate activities is through the issuance of additional equity securities. If we do issue additional equity securities, such issuances may have the effect of diluting our earnings per share as well as our existing stockholders’ individual ownership percentages in our company.

We have substantial operations and/or assets in Africa (Nigeria and Offshore West Africa), the Middle East (Oman) and South America (Venezuela). Approximately 58 percent of our contract revenue for 2005 was derived from activities outside of North America, and approximately 57 percent of our long-lived assets as of December 31, 2005 were located outside of North America. For a list of revenue and assets by country, see Note 14 of our “Notes to Consolidated Financial Statements” included in Item 8 of this Form 10-K. 32

~~Each of these locations is presently a unique commercial and political environment for our~~Our ~~business.~~prior Asale ~~disruption~~ of ~~activities,~~common ~~or loss of use of the equipment or installations~~stock, atwarrants ~~any of these locations could have a material adverse effect on our financial condition~~ and ~~results~~convertible ~~of operations. In particular~~notes, ~~Nigeria~~ and ~~West~~our ~~Africa have~~outstanding ~~represented~~warrants and ~~are~~convertible ~~expected~~notes tomay ~~continue~~lead to ~~represent~~further adilution ~~significant percentage~~ of our ~~assets,~~issued ~~backlog~~ and ~~revenue. These areas have experienced periods of extreme political instability in recent years. Accordingly, we are subject to risks which~~ ~~ordinarily~~outstanding ~~would not be expected to exist to the same extent in the United States, Canada, Japan or Western Europe~~stock. ~~Some of these risks include:~~

•On November ~~repatriating~~20, ~~foreign~~2007, ~~currency~~we ~~received~~completed an underwritten public offering of 7,906,250 shares of our common stock. In October 2006, we sold 3,722,360 shares of our common stock and warrants to purchase an additional 558,354 shares (of which, warrants to purchase 536,925 shares of common stock remained outstanding at December 31, 2008). The recent issuance of warrants and the prior issuance of $70.0 million in ~~excess~~aggregate principal amount of ~~local~~our ~~currency~~2.75% ~~requirements~~Convertible Senior Notes due 2024 (the “2.75% Notes”) and $84.5 million of our 6.5% Senior Convertible Notes due 2012 (the “6.5% Notes”) may cause a significant increase in the number of shares of common stock currently outstanding. In May 2007, we induced the conversion of approximately $52.5 million in aggregate principal amount of our outstanding 6.5% Notes into a total of 2,987,582 shares of our common stock. In addition, certain holders have exercised their right to convert the 2.75% Notes, converting itapproximately $10.6 million in aggregate principal amount of the 2.75% Notes into ~~dollars~~546,633 shares of our common stock as of December 31, 2008. As of December 31, 2008, 3,048,641 shares of common stock are issuable upon conversion of approximately $59.4 million in aggregate principal amount of the 2.75% Notes and 1,825,587 shares of common stock are issuable upon conversion of approximately $32.1 million in aggregate principal amount of the 6.5% Notes. If we elect to induce the conversion of additional convertible notes or ~~other~~holders ~~fungible~~elect ~~currency;~~to convert additional convertible notes, there may be a significant increase in the number of shares of our common stock outstanding.

30Our authorized shares of common stock consist of 70 million shares. The issuance of additional common stock or securities convertible into our common stock would result in further dilution of the ownership interest in us held by existing stockholders. We are authorized to issue, without stockholder approval, one million shares of preferred stock, which may give other stockholders dividend, conversion, voting and liquidation rights, among other rights, which may be superior to the rights of holders of our common stock. While our Board of Directors has no present intention of issuing any such preferred stock, it reserves the right to do so in the future.

~~Table~~Item of1B. ~~Contents~~Unresolved Staff Comments

~~• exchange rate fluctuations, which can reduce the purchasing power of local currencies and cause our costs to exceed our budget, reducing our operating margin in the affected country;~~None.

~~• expropriation of assets, by either a recognized or unrecognized foreign government, which can disrupt our business activities and create delays and corresponding losses;~~33

•Item ~~civil~~3. ~~uprisings,~~Legal ~~riots and war, which can make it impractical to continue operations, adversely affect both budgets and schedules and expose us to losses;~~Proceedings

•We ~~availability~~are a party to a number of ~~suitable~~legal ~~personnel~~proceedings. We believe that the nature and ~~equipment,~~number ~~which~~of these ~~can~~proceedings beare ~~affected~~typical byfor ~~government~~a ~~policy,~~company orof ~~changes~~our size engaged in ~~policy,~~our ~~which~~type ~~limit~~of business ~~the~~and ~~importation~~that none of ~~skilled~~these ~~craftsmen~~proceedings orwill ~~specialized~~result ~~equipment~~ in ~~areas~~a ~~where~~material ~~local~~adverse effect ~~resources~~on ~~are~~our ~~insufficient;~~business, results of operations or financial condition.

•Item ~~government~~4. ~~instability,~~Submission ~~which~~of ~~can~~Matters ~~cause investment in capital projects by our potential customers~~ to bea ~~withdrawn~~Vote ~~or delayed, reducing or eliminating the viability~~ of ~~some~~Security ~~markets for our services;~~Holders

•No ~~decrees,~~matter was ~~laws,~~submitted ~~regulations,~~to ~~interpretations~~a ~~and~~vote ~~court~~of ~~decisions~~security ~~under~~holders ~~legal~~during ~~systems,~~the ~~which~~fourth ~~are~~quarter ~~not~~of ~~always~~2008 through ~~fully~~the ~~developed~~solicitation ~~and~~of ~~which~~proxies ~~may be retroactively applied and cause us to incur unanticipated and/~~or ~~unrecoverable costs as well as delays which may result in real or opportunity costs; and~~otherwise.

•Item ~~terrorist~~4A. ~~attacks~~Executive ~~such~~Officers asof ~~those which occurred on September 11, 2001 in~~ the ~~United States, which could impact insurance rates, insurance coverages and the level of economic activity, and produce instability in financial markets.~~Registrant

~~Our~~The ~~operations~~following intable ~~developing~~sets ~~countries may be adversely affected in~~forth ~~the~~information ~~event~~regarding ~~any governmental agencies in these countries interpret laws, regulations or court decisions in a manner which might be considered inconsistent or inequitable in~~ the ~~United~~Company’s ~~States,~~executive ~~Canada, Japan or Western Europe~~officers. Officers ~~We may be subject to~~are ~~unanticipated~~elected ~~taxes,~~annually ~~including income taxes~~by, ~~excise~~and ~~duties,~~serve ~~import~~at ~~taxes,~~the ~~export~~discretion ~~taxes~~of, ~~sales taxes or other governmental assessments which could have a material adverse effect on~~ our ~~results~~Board of ~~operations for any quarter or year~~ Directors.

These risks may result in a loss of business which could have a material adverse effect on our results of operations.

Name	Age	Position(s)

Robert R. Harl	58	Director, President, Chief Executive Officer and Chief Operating Officer

John T. Dalton	57	Senior Vice President and General Counsel

Van A. Welch	53	Senior Vice President and Chief Financial Officer

Arlo B. DeKraai	60	Director, President (Downstream Oil & Gas), Integrated Service Company, LLC

Jerritt Coward	40	President (Upstream Oil & Gas), Oil & Gas of Willbros USA, Inc.

WeRobert ~~may~~R. beHarl ~~adversely~~was ~~affected~~elected byto the Board of Directors and as President and Chief Operating Officer of Willbros Group, Inc. in January 2006, and as Chief Executive Officer in January 2007. Mr. Harl has over 30 years experience working with Kellogg Brown & Root (“KBR”), a ~~concentration~~global engineering, construction and services company, and its subsidiaries in a variety of officer capacities, serving as President of several of the KBR business inunits. Mr. Harl’s experience includes executive management responsibilities for units serving both upstream and downstream oil and gas sectors as well as power, government and infrastructure sectors. He was President and Chief Executive Officer of KBR from March 2001 until July 2004 when he was appointed Chairman, a ~~particular~~position ~~country~~he held until January 2005. Mr. Harl was engaged as a consultant to Willbros from August 2005 until he became an executive officer and director of Willbros in January 2006.

~~Due~~John toT. aDalton ~~limited~~joined Willbros ~~number~~in ofNovember ~~major~~2002 ~~projects~~and ~~worldwide,~~was weelected ~~currently~~Senior ~~have,~~Vice President and ~~expect~~General Counsel ~~that~~of weWillbros ~~will~~Group, ~~continue~~Inc. Mr. toDalton ~~have,~~has aover ~~substantial~~33 ~~portion~~years of ~~our resources~~oil ~~dedicated~~and togas ~~projects~~industry ~~located~~experience inhaving aworked ~~few~~in ~~countries.~~both ~~Therefore,~~the ~~our~~owner ~~results~~and ofcontractor regimes. ~~operations~~From ~~are~~1993 ~~susceptible~~ to ~~adverse~~November ~~events~~2002, ~~beyond~~Mr. ~~our~~Dalton ~~control~~served ~~that~~as ~~may~~outside ~~occur~~counsel into Willbros aadvising ~~particular~~on ~~country~~contracts. Between in1980 ~~which~~and ~~our~~1993, Mr. Dalton ~~business~~was ~~may~~employed beby ~~concentrated~~Occidental atPetroleum ~~that~~Corporation ~~time. Economic~~("Occidental") ~~downturns~~where inhe ~~such~~served ~~countries~~as ~~could also have~~ an ~~adverse~~officer ~~impact~~and ~~our~~chief ~~operations.~~legal Atcounsel ~~December 31,~~to ~~2005,~~various ~~our~~business ~~property,~~units in ~~plant,~~Occidental's ~~equipment~~oil and ~~spare~~gas ~~parts~~division, ~~were~~both ~~located~~domestically and in ~~Nigeria~~Colombia, Pakistan and the United ~~States,~~Kingdom. Before ~~Canada,~~entering ~~Offshore~~private ~~West~~practice ~~Africa~~in 1993, ~~South~~Mr. ~~America~~Dalton's ~~and~~last ~~the Middle~~position ~~East~~with ~~and~~Occidental ~~69 percent of our backlog~~ was ~~located~~Vice inPresident ~~Nigeria~~ and ~~Offshore~~General Counsel ~~West~~of ~~Africa.~~Island ~~Our~~Creek ~~operations~~Corporation ~~and assets are subject to various risks inherent~~ in ~~conducting~~Lexington, ~~business in these countries and regions~~Kentucky.

~~For~~Van ~~example,~~A. Welch joined Willbros in ~~Nigeria,~~2006 aas ~~spate~~Senior ofVice ~~attacks~~President, onChief ~~oil~~Financial ~~installations~~Officer and ~~the~~Treasurer ~~kidnapping~~ of ~~oil workers in the Niger Delta have escalated with the emergence~~ ofWillbros aGroup, ~~group calling itself MEND~~Inc.; Mr. ~~The~~Welch ~~crux~~served ofas ~~the~~Treasurer ~~Niger~~until ~~Delta~~September ~~conflict~~2007. Mr. isWelch ~~the~~has over ~~escalation~~29 ofyears ~~a longstanding troubled relationship between the Federal Government~~ of ~~Nigeria~~experience ~~and the oil producing communities~~ in ~~the~~project ~~Niger Delta region~~controls, ~~with~~administrative ~~the~~and ~~latter~~finance ~~asserting~~positions ~~that~~with ~~historically~~KBR, ~~there has been inequitable sharing of Niger Delta oil revenues~~Inc. ~~Some~~(formerly ~~production~~known ~~operations~~as inKellogg ~~the~~Brown ~~Western~~& ~~Delta~~Root), ~~area~~a ~~are now shut in~~global engineering, ~~having~~construction ~~had~~and ~~the~~services ~~combined~~company, ~~effect of elevating oil prices~~ and ~~interrupting~~its orsubsidiaries, ~~delaying projects~~serving ~~we have underway~~ in his ~~that~~last ~~market.~~position Weas ~~are~~Vice inPresident ~~negotiations~~– ~~with~~Finance ~~our~~and ~~clients~~Investor inRelations ~~Nigeria to address these heightened security concerns~~ and toas ~~mitigate~~a member ~~the commercial impacts on us~~ of ~~these~~KBR's ~~recent~~executive ~~events~~leadership ~~in Nigeria~~team. From ~~While~~1998 ~~our~~to ~~clients~~2006, ~~have~~Mr. ~~demonstrated~~Welch anheld ~~appreciation~~various ofother ~~our~~positions ~~problems~~with ~~and~~KBR aincluding ~~willingness~~Vice toPresident, ~~work~~Accounting and ~~with~~Finance ~~us on this combination~~ of ~~security~~the ~~concerns~~Engineering and ~~commercial~~Construction ~~issues~~Division, ~~the~~Vice ~~outcome of those negotiations is still uncertain as is their ultimate effect on our revenue~~President, ~~operating~~ ~~results~~Accounting and ~~cash~~Finance ~~flow.~~of ~~However,~~Onshore toOperations ~~date~~and ~~these~~Senior ~~events~~Vice ~~have~~President ~~had~~of aShared Services. Mr. ~~negative~~Welch ~~impact on our revenue, operating results and cash flow, and it~~ is ~~likely~~a ~~this~~Certified ~~negative impact will continue in the near term~~Public Accountant.

~~Our business is dependent on a limited number of key clients.~~ 34

WeArlo ~~operate~~B. ~~primarily~~DeKraai was elected to the Board of Directors in November 2007, and serves as President of our Downstream Oil & Gas business segment ("InServ"), which we acquired in November 2007. Prior to the ~~oil~~acquisition, ~~gas~~he had been Chairman, President and ~~power~~Chief ~~industries~~Executive Officer of InServ, ~~providing~~a downstream oil and gas construction, ~~engineering~~turnaround, maintenance and ~~facilities~~turnkey ~~development~~projects company, since 1994 when he founded the company as Cust-O-Fab Service Co. Mr. DeKraai has over 35 years experience working in the downstream oil and ~~operations~~gas ~~services~~construction, toturnaround aand ~~limited~~maintenance industries. He ~~number~~began ofhis ~~clients~~career working for Texaco Inc. ~~Much~~in its refining operations. He entered the construction and turnaround business in various capacities and ultimately was the founder and President of Midwest ~~our~~Industrial ~~success~~Contractors ~~depends~~in on1983, as a provider of construction and ~~developing~~maintenance services for the refinery and ~~maintaining~~petrochemical sector. Mr. DeKraai ~~relationships~~was ~~with~~named ~~our~~Distinguished ~~major~~Engineer ~~clients~~of South Dakota State University ("SDSU") in 2005, and ~~obtaining~~serves aon ~~share~~the Board of ~~contracts~~Governors of ~~from~~The Enterprise Institute, an affiliate of SDSU.

31Jerrit M. Coward joined Willbros in 2002 as a Project Manager. Mr. Coward has served the Company in various management positions, most recently as the Managing Director of Willbros Nigeria. After he completed the transition of Willbros Nigeria to the new owners, he became President of the Upstream Oil and Gas segment. Mr. Coward previously worked for Global Industries serving as Project Manager, Operation Manager and Commercial manager. He has held foreign assignment in Nigeria and Mexico as well as executing international projects in various countries. He graduated from Texas A&M at Galveston with a Bachelor of Science in Maritime Systems Engineering

~~Table of Contents~~35

~~these clients. The loss of any of our major clients could have a material adverse effect on our operations. Our 10~~PART largest clients were responsible for 73 percent of our revenue in 2005 (64 percent in 2004 and 75 percent in 2003). Operating units of Royal Dutch Shell Group and Exxon Mobil accounted for 32 percent and 11 percent, respectively, of our total revenue in 2005. II

~~Our~~Item ~~dependence~~5. ~~upon~~Market ~~fixed-price~~for ~~contracts~~Registrant’s ~~could~~Common ~~adversely~~Equity, ~~affect~~Related ~~our~~Stockholder ~~operating~~Matters ~~results.~~and Issuer Purchases of Equity Securities

AOur ~~substantial~~common ~~portion~~stock ofcommenced ~~our~~trading ~~projects are currently performed~~ on the aNew ~~fixed-price~~York ~~basis.~~Stock ~~Under~~Exchange ~~a fixed-price contract, we agree~~ on ~~the~~August ~~price that we will receive for the entire project~~15, ~~based upon a defined scope~~1996, ~~which~~under ~~includes specific assumptions and project criteria. If our estimates of our own costs to complete~~ the ~~project~~symbol ~~are below the actual costs that we may incur, our margins will decrease, and we may incur a loss~~“WG.” The revenue, cost and gross profit realized on a fixed-price contract will often vary from the estimated amounts because of unforeseen conditions or changes in job conditions and variations in labor and equipment ~~productivity~~following ~~over~~table ~~the~~sets ~~term~~forth of the ~~contract.~~high ~~If we are unsuccessful in mitigating these risks, we may realize gross profits that are different from those originally estimated~~ and ~~incur~~low ~~reduced~~sale ~~profitability~~prices orper ~~losses~~share ~~on projects. Depending on the size~~ of ~~a project, these variations from estimated contract performance could have a significant effect on~~ our ~~operating results for any quarter or year. In general, turnkey contracts to be performed on a fixed-price basis involve an increased risk~~common ofstock ~~significant~~as ~~variations.~~reported ~~This~~by ~~is a result of~~ the ~~long-term~~New ~~nature~~York ofStock ~~these~~Exchange ~~contracts~~for ~~and~~ the ~~inherent difficulties in estimating costs and of the interrelationship of the integrated services to be provided under these contracts whereby~~periods ~~unanticipated costs or delays in performing part of the contract can have compounding effects by increasing costs of performing other parts of the contract.~~ indicated:

Percentage-of-completion method of accounting for contract revenue may result in material adjustments that would adversely affect our operating results.

	High		Low
For the year ended December 31, 2008:
First Quarter	$	39.97	$	27.85
Second Quarter		47.93		30.29
Third Quarter		44.30		22.25
Fourth Quarter		26.25		5.38

For the year ended December 31, 2007:
First Quarter	$	23.13	$	17.88
Second Quarter		30.63		21.86
Third Quarter		34.48		22.96
Fourth Quarter		43.53		31.81

WeSubstantially ~~recognize~~all ~~contract revenue using the percentage-~~of~~-completion~~ ~~method~~our ~~on long-term fixed price contracts. Under this method, estimated contract revenue~~stockholders ismaintain ~~accrued~~their ~~based~~shares ~~generally on the percentage that costs to date bear to total estimated costs, taking into consideration physical completion. Estimated contract losses are recognized~~ in ~~full~~“street ~~when~~name” ~~determined.~~accounts ~~Accordingly, contract revenue~~ and ~~total cost estimates~~ are ~~reviewed~~not, ~~and revised periodically as the work progresses and as change orders are approved~~individually, stockholders ~~and adjustments based upon the percentage-~~of~~-completion~~ ~~are reflected in contract revenue in the period when these estimates are revised~~record. ~~These~~ As ~~estimates~~of ~~are~~February ~~based~~20, ~~on management’s reasonable assumptions and our historical experience~~2009, ~~and are only estimates. Variation of actual results from these assumptions or~~ our ~~historical~~common ~~experience~~stock ~~could be material. To the extent that these~~was ~~adjustments~~held ~~result~~by in128 anholders ~~increase,~~of arecord ~~reduction~~and or an ~~elimination~~estimated ~~of previously reported contract revenue~~8,300 ~~we would recognize a credit or a charge against current earnings, which could be material~~beneficial owners.

~~Terrorist attacks and war or risk of war may adversely affect our results of operations, our ability to raise capital or secure insurance or our future growth.~~Dividend Policy

~~The~~Since ~~continued~~1991, ~~threat~~we ofhave ~~terrorism~~not ~~and~~paid ~~the~~any ~~impact~~cash dividends ofon ~~military~~our ~~and~~capital ~~other action~~stock, ~~including~~except ~~U.S.~~dividends ~~military operations~~ in ~~Iraq,~~1996 ~~will likely~~on ~~lead to continued volatility in prices for crude oil and natural gas and could affect the markets for~~ our ~~operations.~~outstanding shares ~~In addition, future acts~~ of ~~terrorism~~preferred ~~could~~stock, bewhich ~~directed~~were ~~against~~converted ~~companies~~into ~~operating~~shares ~~both~~of ~~outside~~common ~~and~~stock ~~inside the United~~on ~~States.~~July ~~Further~~15, ~~the U~~1996.S. We ~~government~~anticipate ~~has~~that ~~issued~~we ~~public~~will ~~warnings~~retain ~~that~~earnings ~~indicate~~to ~~that~~support operations ~~pipelines~~ and ~~other~~to ~~energy~~finance ~~assets~~the ~~might~~growth beand ~~specific~~development ~~targets~~ of ~~terrorist organizations~~our business. Therefore, ~~These~~we ~~developments~~do ~~have~~not ~~subjected~~expect ~~our~~to ~~operations~~pay tocash ~~increased~~dividends ~~risks~~in ~~and,~~the ~~depending~~foreseeable onfuture. Our ~~their~~senior ~~ultimate~~secured ~~magnitude,~~credit ~~could~~facility ~~have~~prohibits aus from ~~material~~paying ~~adverse~~cash ~~effect~~dividends on our ~~business.~~common stock.

~~Our~~Issuer Purchases ~~operations are subject to a number~~ of ~~operational risks.~~Equity Securities

~~Our~~The ~~business~~following ~~operations~~table ~~include pipeline construction, dredging, fabrication pipeline rehabilitation services, marine~~provides ~~support~~information ~~services~~about ~~and~~purchases ~~the operation~~ of ~~vessels~~our ~~and~~common ~~heavy~~stock equipment. These operations involve a high degree of operational risk. Natural disasters, adverse weather conditions, collisions and operator or navigational error could cause personal injury or loss of life, severe damage to and destruction of property, equipment and the environment and suspension of operations. In locations where we perform work with equipment that is owned by ~~others,~~us ~~our~~during ~~continued use of~~ the ~~equipment~~fourth ~~can be subject~~quarter ~~to unexpected or arbitrary interruption or termination. The occurrence~~ of ~~any of these events could result in work stoppage, loss of revenue, casualty loss, increased costs and significant liability to third parties.~~ 2008:

The insurance protection we maintain may not be sufficient or effective under all circumstances or against all hazards to which we may be subject. An enforceable claim for which we are not fully insured could have a material adverse effect on our financial condition and results of operations. Moreover, we may not be able to maintain adequate insurance in the future at rates that we consider reasonable.

	Total Number of Shares Purchased (1)		Average Price Paid Per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs

October 1, 2008 – October 31, 2008		661	$	14.41		-		-
November 1, 2008 – November 30, 2008		-		-		-		-
December 1, 2008 – December 31, 2008		2,257		8.12		-		-
Total		2,918	$	9.54		-		-

32(1) Represents shares of common stock acquired from certain of our officers and key employees under the share withholding provisions of our 1996 Stock Plan for the payment of taxes associated with the vesting of shares of restricted stock granted under such plan.

~~Table~~(2) The price paid per common share represents the closing sales price of ~~Contents~~a share of our common stock as reported by the New York Stock Exchange on the day that the stock was acquired by us.

~~We may become liable for the obligations of our joint ventures and our subcontractors.~~ 36

~~Some~~Item ~~of our projects are performed through joint ventures with other parties~~6. InSelected ~~addition~~Financial to the usual liability of contractors for the completion of contracts and the warranty of our work, where work is performed through a joint venture, we also have potential liability for the work performed by our joint ventures. In these projects, even if we satisfactorily complete our project responsibilities within budget, we may incur additional unforeseen costs due to the failure of our joint ventures to perform or complete work in accordance with contract specifications. Data

~~We act as prime contractor on a majority of the construction projects we undertake. In our capacity as prime contractor and when acting as a~~SELECTED ~~subcontractor,~~CONSOLIDATED weFINANCIAL ~~perform~~AND ~~most~~OTHER of the work on our projects with our own resources and typically subcontract only such specialized activities as hazardous waste removal, nondestructive inspection, tank erection, catering and security. In the construction industry, the prime contractor is normally responsible for the performance of the entire contract, including subcontract work. Thus, when acting as a prime contractor, we are subject to the risk associated with the failure of one or more subcontractors to perform as anticipated. DATA

~~Governmental~~(Dollar amounts ~~regulations~~in ~~could~~thousands, ~~adversely~~except ~~affect~~per ~~our~~share ~~business.~~ data)

Many aspects of our operations are subject to governmental regulations in the countries in which we operate, including those relating to currency conversion and repatriation, taxation of our earnings and earnings of our personnel, the increasing requirement in some countries to make greater use of local employees and suppliers, including, in some jurisdictions, mandates that provide for greater local participation in the ownership and control of certain local business assets. For example, in Nigeria, the Ministry of Transport is charged with enforcement of the Cabotage Act, a relatively new piece of legislation, still without implementing regulations, that requires local ownership and operation of certain marine vessels operating in Nigerian waters, subject to phased-in application procedures and discretionary waivers under certain circumstances. In addition, we depend on the demand for our services from the oil, gas and power industries, and, therefore, our business is affected by changing taxes, price controls and laws and regulations relating to the oil, gas and power industries generally. The adoption of laws and regulations by the countries or the states in which we operate that are intended to curtail exploration and development drilling for oil and gas or the development of power generation facilities for economic and other policy reasons, could adversely affect our operations by limiting demand for our services.

	Year Ended December 31,
	2008			2007			2006			2005(1)			2004(1)(2)
Statement of Operations Data:
Contract revenue	$	1,912,704		$	947,691		$	543,259		$	294,479		$	272,794
Operating expenses:
Contract (3)		1,651,822			847,918			497,236			273,273			229,344
Amortization of intangibles(3)		10,420			794			-			-			-
General and administrative(3)		120,031			68,071			58,054			46,837			35,314
Goodwill impairment		62,295			-			-			-			-
Government fines		-			22,000			-			-			-
Operating income (loss)		68,136			8,908			(12,031	)		(25,631	)		8,136
Interest expense, net		(6,347	)		(3,103	)		(8,265	)		(3,904	)		(2,480	)
Other income (expense)		7,883			(3,477	)		569			742			(387	)
Loss on early extinguishment of debt		-			(15,375	)		-			-			-
Income (loss) from continuing operations before income taxes		69,672			(13,047	)		(19,727	)		(28,793	)		5,269
Provision (benefit) for income taxes		25,942			14,503			2,308			1,668			(1,027	)
Net income (loss) from continuing operations		43,730			(27,550	)		(22,035	)		(30,461	)		6,296
Net income (loss) from discontinued operations net of provision for income taxes		2,757			(21,414	)		(83,402	)		(8,319	)		(27,111	)
Net income (loss)	$	46,487		$	(48,964	)	$	(105,437	)	$	(38,780	)	$	(20,815	)
Basic income (loss) per share:
Continuing operations	$	1.14		$	(0.94	)	$	(0.98	)	$	(1.43	)	$	0.30
Discontinued operations		0.07			(0.73	)		(3.72	)		(0.39	)		(1.29	)
Net income (loss)	$	1.21		$	(1.67	)	$	(4.70	)	$	(1.82	)	$	(0.99	)

Diluted income (loss) per share:
Continuing operations	$	1.11		$	(0.94	)	$	(0.98	)	$	(1.43	)	$	0.30
Discontinued operations		0.06			(0.73	)		(3.72	)		(0.39	)		(1.29	)
Net income (loss)	$	1.17		$	(1.67	)	$	(4.70	)	$	(1.82	)	$	(0.99	)

Cash Flow Data:
Cash provided by (used in):
Operating activities	$	190,164		$	(17,812	)	$	(103,352	)	$	(37,117	)	$	37,410
Investing activities		(11,725	)		(150,601	)		33,373			(36,964	)		(36,751	)
Financing activities		(58,460	)		221,359			51,550			56,830			54,362
Effect of exchange rate changes		(5,001	)		2,297			139			17			(829	)
Balance Sheet Data (at period end):
Cash and cash equivalents	$	207,864		$	92,886		$	37,643		$	55,933		$	73,167
Working capital		284,136			201,348			170,825			204,960			108,643
Total assets		788,245			779,413			589,982			498,885			417,110
Total liabilities		348,590			383,312			490,323			353,651			237,066
Total debt		127,371			152,346			167,139			138,020			73,495
Stockholders’ equity		439,655			396,101			91,562			145,234			180,044
Other Financial Data (excluding
discontinued operations):
Backlog (at period end) (4)	$	655,494		$	1,305,441		$	602,272		$	240,373		$	73,343
Capital expenditures, excluding acquisitions		53,048			74,548			23,481			18,706			15,733
EBITDA (5)		183,217			10,731			968			(13,201	)		17,525

Number of employees (at period end):		6,512			5,475			4,156			2,519			1,381

Our operations are also subject to the risk of changes in laws and policies which may impose restrictions on our business, including trade restrictions, which could have a material adverse effect on our operations. Other types of governmental regulation which could, if enacted or implemented, adversely affect our operations include: 37

•(1) ~~expropriation~~These oramounts ~~nationalization~~have ~~decrees;~~been changed retrospectively to reflect the classification of discontinued operations as filed in the Form 8-K on December 12, 2006.

•(2) ~~confiscatory~~These ~~tax~~amounts ~~systems;~~are presented as restated in the 2004 Form 10-K.

•(3) ~~primary~~Historically, orthe ~~secondary~~Company ~~boycotts~~has ~~directed~~shown atdepreciation ~~specific~~and ~~countries~~amortization oras ~~companies;~~a separate line item on its Consolidated Statements of Operations. Effective for the fiscal year ended December 31, 2007, Depreciation and amortization related to operating activities is included in Contract and Depreciation and amortization related to general and administrative activities is included General and Administrative (“G&A”). This change in presentation was made to bring the Company’s presentation of financial results in line with its peers and provide greater comparability of its results within the industry.

•(4) ~~embargoes;~~Backlog is anticipated contract revenue from uncompleted portions of existing contracts and contracts whose award is reasonably assured.

•(5) ~~extensive~~EBITDA ~~import~~from ~~restrictions~~continuing operations represents earnings from continuing operations before net interest, income taxes, depreciation and amortization and impairment of intangible assets. EBITDA from continuing operations is not intended to represent cash flows for the respective period, nor has it been presented as an alternative to operating income from continuing operations as an indicator of operating performance. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States. See our Consolidated Statements of Cash Flows in our Consolidated Financial Statements included elsewhere in this Form 10-K. EBITDA from continuing operations is included in this Form 10-K because it is one of the measures through which we assess our financial performance. EBITDA from continuing operations as presented may not be comparable to other ~~trade~~similarly ~~barriers;~~titled measures used by other companies. A reconciliation of EBITDA from continuing operations to GAAP financial information is provided in the table below.

• mandatory sourcing and local participation rules;

	Year Ended December 31,
	2008		2007			2006			2005			2004
Reconciliation of non-GAAP financial measure:
Net income (loss) from continuing operations	$	43,730	$	(27,550	)	$	(22,035	)	$	(30,461	)	$	6,296
Interest, net		6,347		3,103			8,265			3,904			2,480
Provision (benefit) for income taxes		25,942		14,503			2,308			1,668			(1,027	)
Depreciation and amortization		44,903		20,675			12,430			11,688			9,776
Goodwill impairment		62,295		-			-			-			-
EBITDA from continuing operations	$	183,217	$	10,731		$	968		$	(13,201	)	$	17,525

~~• oil, gas or power price regulation; and~~38

•Item ~~unrealistically~~7. ~~high~~Management’s ~~labor~~Discussion ~~rate~~and Analysis of Financial Condition and ~~fuel~~Results ~~price~~of ~~regulation.~~Operations (In thousands, except share and per share amounts or unless otherwise noted)

~~Our~~The following ~~future~~discussion ~~operations~~should ~~and~~be ~~earnings~~read ~~may~~in beconjunction ~~adversely~~with ~~affected~~the byconsolidated financial ~~new~~statements ~~legislation,~~for ~~new~~the ~~regulations~~years orended ~~changes~~December in31, or2008, ~~new interpretations of~~2007, ~~existing~~and ~~regulations~~2006, included ~~and~~in ~~the~~Item ~~impact~~8 of ~~these~~this ~~changes~~Form ~~could be material~~10-K.

~~Our operations expose us to potential environmental liabilities.~~ OVERVIEW

Our United States operations are subject to numerous environmental protection laws and regulations which are complex and stringent. We regularly perform work in and around sensitive environmental areas such as rivers,2008 lakes and wetlands. Significant fines and penalties may be imposed for non-compliance with environmental laws and regulations, and some environmental laws provide for joint and several strict liability for remediation of releases of hazardous substances, rendering a person liable for environmental damage, without regard to negligence or fault on the part of such person. In addition to potential liabilities that may be incurred in satisfying these requirements, we may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances. These laws and regulations may expose us to liability arising out of the conduct of operations or conditions caused by others, or for our acts which were in compliance with all applicable laws at the time these acts were performed. Summary

33The year 2008 was a record year for us in many ways. The financial results are highlighted by:

~~Table~~· $1,912,704 of ~~Contents~~revenue.

We· ~~own~~$46,487 ~~and operate several properties~~ in ~~the~~net ~~United~~income ~~States that have been used for a number of years for the storage~~ and ~~maintenance~~earnings ofper ~~equipment~~share ~~and upon which hydrocarbons or other wastes may have been disposed or released. Any release~~ of substances by us or by third-parties who previously operated on these properties may be subject to the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”), the Resource Compensation and Recovery Act (“RCRA”), and analogous state laws$1. ~~CERCLA imposes joint and several liability~~21, ~~without~~after ~~regard~~giving toeffect ~~fault or the legality of the original conduct, on certain classes of persons who are considered~~ to bea ~~responsible~~pre-tax ~~for the release of hazardous substances into the environment~~$62,295 ~~while~~goodwill ~~RCRA governs the generation, storage, transfer, and disposal of hazardous wastes~~impairment. ~~Under~~See ~~such~~Note ~~laws,~~- we6 ~~could~~Goodwill ~~be required to remove or remediate previously disposed wastes~~ and ~~clean~~Other upIntangible ~~contaminated property~~Assets. ~~This could have a significant impact on our future results.~~

· Our ~~operations~~year-end ~~outside~~2008 ofcash ~~the~~balance ~~United~~of ~~States~~$207,864 ~~are~~contributed ~~oftentimes potentially subject~~ to ~~similar~~$186,959 ~~governmental~~of ~~controls~~cash ~~and~~provided ~~restrictions~~by ~~relating~~continuing tooperating ~~the environment~~activities.

~~Our~~We achieved ~~industry~~these issuccesses ~~highly~~as ~~competitive,~~a ~~which~~result ~~could~~of ~~impede~~building a new management team over the past two years, leveraging our ~~growth~~2007 acquisitions, and successfully executing on two large diameter cross country pipeline construction projects and one significant EPC project in the U.S. Over the past two years, we have created $348,093 of stockholder’s equity. These accomplishments reinforce our commitment to deliver value to our stockholders as well as our customers.

WeOur ~~operate~~CEO, Randy Harl, joined Willbros in aJanuary ~~highly~~2006; ~~competitive~~followed ~~environment~~shortly thereafter in August 2006, by our CFO, Van Welch. AThis ~~substantial~~was ~~number~~the starting point of enhancing the management ~~major~~team ~~projects~~to ~~that~~make weit ~~pursue~~more ~~are~~scalable ~~awarded~~as ~~based~~the onCompany ~~bid~~grew ~~proposals.~~from Werevenue ~~compete~~of ~~for~~$543,259 ~~these~~during ~~projects~~2006 ~~against~~to ~~government-owned~~$1,912,704 orduring ~~supported~~2008; ~~companies~~over ~~and~~3 ~~other~~½ ~~companies~~times ~~that~~the ~~have~~2006 ~~substantially~~level. After ~~greater~~strengthening the Company’s financial position in late 2006 through a private equity offering of $48,748 and ~~other~~amending ~~resources~~the ~~than~~existing wecredit dofacility, 2007 became a year of transition. InNoteworthy ~~some~~2007 ~~markets,~~transition ~~there~~events isinclude ~~competition~~the sale ~~from~~of ~~national~~the Nigeria assets and ~~regional~~operations ~~firms~~in ~~against~~February; ~~which~~completing wethe ~~may~~negotiations ~~not~~leading beto ~~able~~the tofinal ~~compete~~May on2008 ~~price.~~settlement ~~Our~~with ~~growth~~the ~~may~~DOJ beand ~~impacted~~SEC; tothe acquisitions of Midwest in July and InServ in November; and the ~~extent~~creation ~~that~~of a wemore ~~are~~robust, ~~unable~~less toexpensive ~~successfully~~credit ~~bid~~facility ~~against~~in ~~these~~November. ~~companies~~The new management team was successful in removing uncertainties associated with past irregularities in Nigeria and building a scalable foundation for growth in 2008. At the end of 2007, backlog was at a record level of $1,305,341.

~~Our~~In July ~~operating~~2007, ~~results~~we ~~could~~acquired beMidwest ~~adversely~~to ~~affected~~provide ifan ~~our~~entry ~~non-U~~point into the Canada large diameter pipeline construction market.S. During 2008, the Canada Pipeline operations ~~became~~provided ~~taxable~~$182,037 of revenue and are positioned to take advantage of additional work in ~~the~~2009. ~~United~~In ~~States~~November 2007, we acquired InServ and formed a new Downstream Oil & Gas business segment. Downstream Oil & Gas’ 2008 revenues were $367,075. Downstream Oil & Gas continues to perform as expected and is the catalyst for our shift to a company more focused on providing services.

IfIn ~~any~~our legacy ~~income earned~~business, ~~currently~~ orwe ~~historically,~~had bythree ~~Willbros~~significant ~~Group,~~projects ~~Inc~~in 2008. orTwo ~~its~~cost reimbursable ~~non-U.S.~~plus ~~subsidiaries~~fixed ~~from~~fee ~~operations~~contract ~~outside~~types ~~the~~and ~~United~~one ~~States~~lump ~~constituted~~sum ~~income~~EPC ~~effectively~~project. ~~connected~~The Southeast toSupply aHeader ~~United~~(“SESH”) ~~States~~Project ~~trade~~commenced orin ~~business~~late 2007. As of December 31, ~~and~~2008, astotal aproject ~~result~~revenue ~~became~~was ~~taxable~~$423,604; $358,830 was recognized in 2008. Another large diameter pipeline project, the ~~United~~MidContinent Express Project ~~States~~(“MEP”), ~~our~~contributed ~~consolidated~~$145,820 ~~operating~~of ~~results~~revenue ~~could~~in be2008. ~~materially~~The Guardian Expansion and Extension ~~adversely~~Project ~~affected.~~(“Guardian”) was our largest lump sum EPC contract in 2008, generating $137,780 of revenue with an appropriate risk-adjusted margin.

We2009 - ~~are~~Our ~~dependent~~Current ~~upon the services of our executive management.~~ Challenge

~~Our~~Continuing to ~~success~~deliver ~~depends~~value ~~heavily~~to onour ~~the~~stockholders ~~continued~~and ~~services~~our ofcustomers ~~our~~in ~~executive~~2009 ~~management~~will be very challenging. ~~Our~~We ~~management~~find ~~team~~ourselves isin the ~~nexus~~midst of ~~our~~ ~~operational~~a ~~experience~~significant ~~and~~economic dislocation, ~~customer~~the ~~relationships.~~impacts ~~Our~~of ~~ability~~which toare ~~manage~~already ~~business~~observable ~~risk~~in ~~and~~severe ~~satisfy~~commodity price ~~the~~declines. ~~expectations~~Oil oftraded ~~our~~at ~~clients~~$137.11, ~~stockholders~~an ~~and~~all ~~other~~time ~~stakeholders~~high isin ~~dependent~~July ~~upon~~2008. ~~the~~As ~~collective~~of February 2009, oil ~~experience~~was ~~and~~at ~~relationships~~$38.94, ofa ~~our management team~~71.6% Indecline ~~addition,~~from wethe do2008 ~~not~~high point. ~~maintain~~The ~~key~~result ~~man~~has ~~life~~been ~~insurance~~a ~~for~~rapid ~~these~~decline ~~individuals.~~in ~~The~~the ~~loss~~North orAmerican ~~interruption~~rig ofcounts ~~services~~and capital ~~provided~~budget reductions by ~~one~~many orE&P, ~~more~~midstream, ofand ~~our~~downstream ~~senior~~oil ~~officers~~and ~~could~~gas companies. ~~adversely~~The ~~affect~~shrinking ~~our~~market ~~results~~will ofpresent ~~operations.~~new challenges and opportunities for us.

~~Our Stockholder Rights Plan, Articles of Incorporation and By-Laws may inhibit a takeover, which may adversely affect the performance of our stock.~~ 39

~~Our~~We ~~Stockholder~~are positioned ~~Rights~~to ~~Plan~~capitalize on the opportunities because of the organizational and process ~~provisions~~changes that we have made over the past two years. Early in the fourth quarter of 2008, our ~~Articles~~Engineering ofbusiness ~~Incorporation~~segment began ~~and~~to ~~By-Laws~~experience ~~may~~the ~~discourage~~effects ~~unsolicited~~a ~~takeover~~reduction in market demand. Engineering has generally ~~proposals~~been ora ~~make~~leading itindicator ~~more~~of ~~difficult~~engineering ~~for~~and construction market changes. As a ~~third-party~~result toof ~~acquire~~Engineering’s usfourth quarter decline, ~~which~~we ~~may~~took ~~adversely~~steps ~~affect~~to ~~the~~right-size ~~price~~our business segments and develop a strategy to realign our cost structure such that ~~investors~~we ~~might~~could be ~~willing~~responsive to ~~pay~~our customers’ ~~for~~needs ~~our~~in ~~common~~a ~~stock~~down-cycle market. ~~For~~We ~~example~~reduced annual Engineering segment and Corporate G&A costs by $6,337 ~~our~~and ~~Articles~~$2,414, respectively. A charge of approximately ~~Incorporation~~$1,700 ~~and~~was ~~By-Laws:~~recorded as the cost of making these changes.

•We continue ~~provide~~to ~~for~~monitor, ~~restrictions~~identify onand ~~the~~take ~~transfer~~action ofon any ~~shares~~non-productive ofcosts ~~common~~that would ~~stock~~adversely impact our liquidity and ability to ~~prevent~~execute usour ~~from~~development strategies. ~~becoming~~However, our primary objective is to develop a ~~“controlled~~cost ~~foreign~~structure ~~corporation”~~that is ~~under~~compatible ~~United~~with ~~States~~our ~~tax~~customers’ ~~law;~~needs such that we can continue to develop our business in a different economic environment as compared to the past two years. We have completed or are in the process of completing the following:

•· ~~provide~~Internally ~~for~~shifting apeople ~~classified~~and ~~board~~assets ofamong ~~directors, which allows only one-third of~~ our ~~directors~~business segments to beaddress ~~elected~~the ~~each~~shifting ~~year~~customer demands;

•· ~~restrict~~Working ~~the~~with ~~ability~~our ofprimary ~~stockholders~~material suppliers and subcontractors to ~~take~~jointly ~~action~~develop bya ~~written~~lower ~~consent~~cost structure;

•· ~~establish~~Identifying ~~advance~~and ~~notice~~reducing ~~requirements~~labor ~~for~~cost ~~nominations~~escalations ~~for~~that ~~election~~occurred toas ~~our~~a ~~board~~result of ~~directors;~~the ~~and~~previous energy construction market imbalance where demand was exceeding supply;

•· ~~authorize~~Continuing to pursue our ~~board~~business strategy and leverage a strong balance sheet and cash position. As of ~~directors~~December to31, ~~designate~~2008, ~~the~~we ~~terms~~have $207,864 of ~~and~~cash, ~~issue~~cash ~~new~~equivalents, ~~series~~and $50,000 of ~~preferred~~capacity ~~stock~~under our revolving loan facility. This liquidity will allow us to continue our pursuit of:

~~The~~o ~~Stockholder~~Growing ~~Rights Plan gives holders of~~ our ~~common~~pipeline ~~stock~~manage ~~the~~and ~~right~~maintain toservice purchase additional shares of our capital stock if a potential acquirer purchases or announces a tender or exchange offer to purchase 15 percent or more of our outstanding common stock. The rights issued under the Stockholder Rights Plan would cause substantial dilution to a person or group that attempts to acquire us on terms not approved in advance by our board of directors. area,

34o Expanding our Downstream Oil & Gas service offering in Canada,

~~Table~~o ofTargeting ~~Contents~~risk-adjusted opportunities in the Middle East and North Africa, and

Ito ~~may~~Increasing beour ~~difficult~~government tocontracting ~~enforce judgments which are predicated on the federal securities laws of the United States against us~~focus.

We believe ~~are~~there awill ~~corporation~~be ~~organized~~opportunities ~~under~~in today’s market for the ~~laws~~companies ofwho can respond quickly to their customers’ needs for a price point more consistent with the ~~Republic~~price of ~~Panama.~~oil ~~Accordingly:~~and gas in today’s market.

~~• because a substantial amount of our assets are located outside the United States, any judgment obtained against us in the United States may not be fully collectible in the United States; and~~Our Strategy

•We weapply ~~have~~our ~~been~~core ~~advised~~value ~~that~~system ~~courts~~to everything inwe ~~the~~do; ~~Republic~~and ofthose ~~Panama~~values ~~will~~provide ~~not~~the ~~enforce~~foundation ~~liabilities~~for inour ~~original~~strategy ~~actions~~and execution. ~~predicated~~Our ~~solely~~core onvalues ~~the United States federal securities laws.~~are:

~~These~~· factors mean that it may be more costly and difficult for you to recover fully any alleged damages that you may claim to have suffered due to alleged violations of federal securities laws by us or our management than it would otherwise be in the case of a United States corporation. Safety,

~~Item 1B.~~· ~~Unresolved~~Honesty ~~Staff~~& ~~Comments~~ integrity,

~~None.~~· Our people,

35· Our customers,

~~Table~~· ofSuperior ~~Contents~~financial performance,

~~Item 3.~~· ~~Legal~~Vision ~~Proceedings~~& innovation, and

In· ~~late~~Effective December 2004, senior management of Willbros learned that tax authorities in Bolivia had charged its Bolivian subsidiary with failure to pay taxes owed, filing improper tax returns and the falsification of tax documentscommunication. As a result of the Company’s investigation, it was determined that J. Kenneth Tillery, then President of Willbros International, Inc. and the individual principally responsible at that time for the Company’s international operations outside of North America, was aware of the circumstances that led to the Bolivian charges. Mr. Tillery resigned from the Company on January 6, 2005. Willbros promptly reported this information to the Bolivian government and in March, 2005 paid approximately $3.3 million to resolve all outstanding assessments with the Bolivian tax authorities.

OnWe ~~January 18,~~work diligently ~~2005,~~to ~~the~~apply ~~Company’s~~these ~~Audit~~values ~~Committee~~everyday ~~engaged~~and ~~independent~~use ~~outside~~them ~~legal~~to ~~counsel~~guide ~~for~~us in the ~~purpose~~execution of ~~conducting~~our anstrategy. ~~investigation~~We ~~into~~believe ~~the~~by ~~circumstances~~allowing ~~surrounding~~our ~~the~~values ~~Bolivian~~to ~~tax~~drive ~~assessment~~the achievement asof ~~well~~our asstrategic ~~other~~goals, ~~international~~we ~~activities~~will ~~under~~increase ~~Mr. Tillery’s~~stockholder ~~control.~~value ~~The independent counsel retained forensic accountants to assist~~by ~~with~~leveraging ~~the~~our ~~investigation.~~competitive ~~Willbros~~strengths ~~voluntarily reported the initiation of its investigation~~ to ~~the~~focus ~~U.S.~~on ~~Department~~positioning ofourselves ~~Justice~~for sustained ~~(“DOJ”)~~long-term ~~and~~earnings ~~the U~~growth.S. ~~Securities~~Key ~~and~~elements ~~Exchange~~of ~~Commission~~our ~~(“SEC”).~~strategy are as follows:

~~On May 16, 2005, Willbros announced that it had substantially completed its investigation. The investigation revealed information indicating that~~Focus Mr. Tillery, and others who directly or indirectly reported to him, engaged in a pattern of activity over a number of years that was and is specifically contrary to established Willbros policies and possibly the laws of several countries, including the United States. A description of the activities carried out by Mr. Tillery and others that may have damaged Willbros, or that may cause such damage in the future, is provided in the risk factor entitled “The actions of Mr. Tillery and others have harmed the Company and may harm the Company in the future” set forth in Item 1A on ~~page~~Managing ~~27 of this Form 10-K.~~ Risk

~~The~~We ~~DOJ~~have implemented isa ~~currently~~core ~~conducting~~set anof ~~investigation~~business ~~concerning~~conduct, ~~possible~~practices ~~violations~~and policies which have fundamentally improved our risk profile. Examples of ~~the~~our ~~FCPA~~risk management execution include increasing our activity levels in lower risk countries, diversifying our service offerings and ~~other~~end ~~applicable~~markets, ~~U.S.~~practicing ~~laws~~rigorous financial management and limiting contract execution risk. Risk management is emphasized throughout all levels of the organization and covers all aspects of a project from strategic planning and bidding to contract management and financial reporting.

The SEC is currently conducting a formal non-public investigation into whether the Company and others may have violated various provisions of the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). 40

· Focus resources in markets with the highest risk-adjusted return. We ~~have~~believe ~~also~~North ~~voluntarily~~America ~~reported~~continues to ~~OFAC~~offer us highly attractive risk-adjusted returns and the ~~substance~~majority of ~~certain activities~~our ~~conducted~~resources byare ~~certain~~focused ~~employees~~on ~~that~~North ~~may~~America. ~~constitute~~In aspite ~~violation~~ of ~~U.S.~~the ~~trade~~current ~~sanctions~~economic ~~administered~~dislocation, ~~and~~we ~~enforced~~believe bytargeted areas in North America will provide significant opportunities. More specifically, the ~~Department~~monetization of ~~Treasury~~previously developed oil and ~~U.S.~~gas ~~export~~reserves ~~restrictions~~requires ~~administered~~connectivity byto the ~~Department~~end markets; and the ongoing development of ~~Commerce.~~unconventional ~~OFAC~~shale gas plays is ~~currently investigating~~expected ~~the~~to ~~information~~provide new work in 2009 and beyond. Even though we ~~have~~are ~~provided~~heavily concentrated in North America, we continue to seek international opportunities which can provide superior, more diversified risk-adjusted returns and ~~could~~believe ~~conclude~~our ~~that~~extensive international experience is a competitive advantage. We relocated our President of International Operations to Muscat, Oman to expand our Middle East operations into UAE and Saudi Arabia. Additionally, we have ~~violated~~opened ~~the~~an ~~Sudanese~~office ~~Sanctions~~in ~~Regulations~~Libya. We believe that markets in North Africa and the Middle East, may offer attractive opportunities for us in the future given mid and long-term industry trends.

~~The~~· ~~Company~~Maintain ~~is cooperating~~a ~~fully~~conservative ~~with~~contract ~~all of these investigations~~portfolio. ~~Any~~While ~~violations~~we ~~could~~will ~~result~~continue into ~~civil~~pursue ora ~~criminal~~balanced ~~charges~~contract portfolio, ~~penalties~~current ormarket ~~other~~dynamics ~~actions~~suggest ~~including~~we ~~deferred~~may ~~adjudication~~be orentering ~~other~~a ~~long~~period ~~term~~of ~~sanctions~~increased orfixed ~~remedial~~price ~~actions,~~contracting ~~that~~opportunities. ~~may~~We ~~adversely~~believe ~~impact~~ our ~~ability~~ tofixed ~~continue~~price orexecution ~~undertake~~experience, ~~operations~~our incurrent ~~some~~efforts ~~countries.~~to ~~The~~realign ~~Company~~our ~~cannot~~cost ~~predict~~structure ~~the~~to ~~outcome of~~ the ~~investigations~~rapidly ~~being~~changing ~~conducted~~market, byour ~~the~~improved ~~SEC~~systems, ~~the DOJ~~ and ~~OFAC,~~focus ~~including~~on ~~the~~risk ~~Company’s exposure to civil or criminal fines or penalties~~management, or ~~other~~provide ~~regulatory~~us ~~action which could have~~ a ~~material~~competitive ~~adverse~~advantage ~~effect~~versus onmany ~~the Company’s business, financial condition and results~~ of ~~operations.~~our competitors.

~~For~~Leverage Industry aPosition ~~further discussion of the potential adverse impact on our business, financial condition~~ and ~~results~~Reputation ~~of operations related to these investigations, see the risk factor contained in Items 1 and 2 of this Form 10-K entitled “Governmental investigations~~ into ~~the~~a ~~activities~~Broader ofService ~~the Company, J. Kenneth Tillery, the former President of our principal international subsidiary, and other current and former employees of the Company could adversely affect us.”~~ Offering

OnWe believe ~~May 18,~~the ~~2005~~global aenergy ~~securities~~infrastructure ~~class-action~~market ~~lawsuit,~~will ~~captioned~~continue ~~Legion~~to ~~Partners,~~provide opportunities. ~~LLP~~The ~~v. Willbros~~challenge ~~Group,~~will ~~Inc.~~be etto ~~al.,~~identify ~~was~~and ~~filed~~focus inon the ~~United~~critical ~~States~~few projects ~~District~~with ~~Court~~a ~~for~~high ~~the~~probability ~~Southern District~~ of ~~Texas~~moving ~~against~~forward in the ~~Company~~near ~~and~~term. ~~certain~~We ofbelieve our ~~its~~core ~~present~~capabilities ~~and~~can ~~former~~be ~~officers~~expanded beyond our current offerings and ~~directors. Thereafter,~~markets; and ~~three~~we ~~nearly~~are ~~identical~~selectively ~~lawsuits~~evaluating ~~were filed~~these prospects. ~~Plaintiffs~~ ~~purport~~Our toestablished ~~represent~~platform aand track ~~class~~record ~~composed~~position ofus ~~all~~to ~~persons~~expand ~~who~~our ~~purchased~~expertise orinto ~~otherwise~~a ~~acquired~~broader ~~Willbros~~range ~~Group,~~of ~~Inc~~related service offerings. ~~common~~We ~~stock~~intend ~~and/or~~to ~~other~~leverage ~~securities~~our ~~between~~project ~~May 6~~management, ~~2002~~engineering and ~~May 16, 2005, inclusive. These~~ ~~complaints~~construction ~~generally~~skills ~~allege~~to ~~violations~~establish byadditional ~~the~~service ~~defendants~~offerings, ofsuch ~~Section 10(b)~~as instrumentation ofand ~~the~~electrical ~~Exchange Act~~services, ~~Rule 10b~~turbo-5machinery ~~under~~services, ~~the~~environmental services ~~Exchange Act~~ and ~~Section 20(a)~~pipeline ofsystem ~~the~~integrity ~~Exchange~~services. ~~Act~~We ~~and~~believe ~~allege,~~that ~~among~~over ~~other things~~time, ~~that~~a more ~~defendants~~balanced ~~made~~mix ~~false~~of orrecurring ~~misleading statements~~services, ofsuch ~~material~~as ~~fact~~program ~~about~~management ~~the~~and maintenance ~~Company’s~~services, ~~financial~~and ~~statements. The~~capital ~~plaintiffs~~projects ~~seek~~will ~~unspecified~~enhance ~~monetary~~the ~~damages~~earnings ~~and~~profile ~~other~~of our ~~relief~~business. On

36Additionally, we intend to pursue selective strategic acquisitions to complement our organic expansion strategies and to minimize our dependence on the cyclical large-diameter cross-country pipeline construction market. We began this process in 2007 with the InServ and Midwest acquisitions that expanded our service offerings as well as the geographies where we deliver those services. Our November 2007 acquisition of InServ complemented our service offerings in the midstream market. Our July 2007 acquisition of Midwest significantly enhanced our presence in mainline pipeline construction in Western Canada. We believe that companies with strong balance sheets and liquidity positions will have opportunities to acquire assets and companies in today’s uncertain market.

~~Table~~Maintain Financial ~~of Contents~~Flexibility

~~October 17,~~Maintaining the ~~2005,~~financial ~~the~~flexibility ~~Court~~to ~~ordered~~meet ~~these~~the ~~actions~~material, ~~consolidated~~equipment and ~~appointed~~personnel ~~ADAR~~needs ~~Investments~~to support our project commitments, ~~LLC~~as well as ~~Lead~~the ~~Plaintiff~~ability to pursue our expansion and ~~Bernstein~~diversification ~~Liebhard &~~objectives ~~Lifshitz~~is ofcritical ~~New~~to ~~York~~our asgrowth. ~~Lead~~We ~~Plaintiff’s~~view ~~counsel. As~~financial strength ~~ordered~~and byflexibility ~~the~~as ~~Court,~~a ~~the~~fundamental ~~plaintiff~~requirement ~~filed~~to afulfilling ~~consolidated~~our strategy. ~~amended~~As ~~complaint~~of onDecember ~~January 9~~31, ~~2006. The~~2008, ~~Consolidated~~we ~~Amended~~had ~~Complaint~~cash, ~~alleges~~cash ~~that WGI~~equivalents and ~~certain~~borrowing capacity of ~~its~~$257,864 ~~present~~comprised ~~and~~of ~~former~~cash ~~officers~~ and ~~directors,~~cash ~~including~~equivalents ~~Michael~~of ~~Curran~~$207,864 ~~Warren~~and unutilized ~~Williams,~~cash ~~and~~borrowing J.capacity ~~Kenneth~~of ~~Tillery~~$50,000 ~~violated~~under ~~the~~our ~~Securities~~revolving ~~Exchange~~credit facility ~~Act~~to ofaddress ~~1934~~our ~~through~~current acapital ~~series~~requirements ofwith ~~false~~no ~~and~~short-term borrowings ~~misleading~~or ~~statements~~commercial ~~and~~paper aoutstanding. ~~“scheme to~~For ~~defraud.”~~the ~~The~~year ~~alleged~~ended ~~misrepresentations~~December ~~and~~31, 2008, ~~scheme~~we toincreased ~~defraud~~our ~~relate~~working tocapital ~~the~~position, ~~activities~~for ofcontinuing Mroperations, by $82,944 (41.7 ~~Tillery~~percent) into ~~Nigeria~~$282,059 ~~and~~from ~~Bolivia~~$199,115 ~~certain~~at ~~alleged~~December ~~accounting errors~~31, ~~the~~2007. ~~restatement~~In addition, ofour ~~past financial results~~$150,000 ~~and~~senior ~~alleged~~secured ~~Foreign~~revolving ~~Corrupt Practices~~credit ~~Act~~facility ~~violations. The~~(the ~~plaintiffs~~“Credit Facility”) ~~seek~~provides tous ~~recover~~additional ~~damages~~financial onflexibility ~~behalf~~in ofthe ~~all~~form ~~purchasers~~ of ~~WGI~~$50,000 in ~~common~~cash ~~stock~~borrowing ~~during~~capacity ~~the~~to ~~purported~~pursue ~~class~~our ~~period~~growth strategy. The ~~complaint~~combination ~~seeks~~of ~~unspecified~~our strong ~~monetary~~cash ~~damages~~position, ~~and~~the ~~other~~borrowing ~~relief. WGI~~availability ~~filed~~under aour ~~motion~~existing Credit toFacility, ~~dismiss~~and ~~the~~our ~~complaint~~future oncash ~~March 9,~~flow ~~2006,~~from ~~and~~operations ~~briefing~~will onallow ~~that~~us ~~motion~~to ~~was~~focus ~~completed~~ on ~~June 14,~~the highest ~~2006.~~return ~~The~~projects ~~Court~~available ~~has~~during ~~not~~uncertain ~~indicated~~economic ~~whether~~times itas ~~will~~well ~~hear~~as pursue ~~oral~~our ~~argument~~strategy onof ~~the~~diversification ~~motion~~as ~~and/or~~opportunities ~~when~~present itthemselves. ~~will~~The limited ~~decide~~availability ~~the~~of ~~motion.~~credit ~~While~~in the ~~outcome~~market ~~of such~~has ~~lawsuits~~not ~~cannot~~affected beour ~~predicted~~credit facility; ~~with~~nor ~~certainty,~~do ~~the~~we ~~Company~~believe ~~believes~~ that it ~~has~~will ~~meritorious~~impact ~~defenses~~our ~~and~~ability isto ~~defending~~access ~~itself~~surety bonding ~~vigorously.~~in the future.

In addition to the matters discussed above, we are a party to a number of other legal proceedings. We believe that the nature and number of these proceedings are typical for a company of our size engaged in our type of business and that none of these proceedings will result in a material adverse effect on our business, results of operations or financial condition. 41

37Leverage Core Service Expertise into Additional Full EPC Contracts

~~Table~~Our core expertise and service offerings allow us to provide our customers with a single source EPC solution which creates greater efficiencies to the benefit of ~~Contents~~both our customers and our company. As one of the few pipeline constructors with engineering capabilities, we believe we are uniquely positioned to provide this integrated service to our customers. In performing integrated EPC contracts, we establish ourselves as overall project managers from the earliest stages of project inception and are therefore better able to efficiently determine the design, permitting, procurement and construction sequence for a project in connection with making engineering decisions. Our customers benefit from a more seamless execution; while for us, these contracts often yield higher profit margins on the engineering and construction components of the contract compared to stand-alone contracts for similar services. Additionally, this contract structure allows us to deploy our resources more efficiently and capture the engineering, procurement and construction components of these projects.

Significant ~~Item 4.~~Business ~~Submission of Matters to a Vote of Security Holders~~ Developments

NoIn ~~matter~~2008, we ~~was~~made ~~submitted~~significant progress to further position Willbros as a ~~vote~~leader ofin ~~security~~the ~~holders~~engineering ~~during~~and ~~the~~construction ~~fourth~~industry, ~~quarter~~and ofcontinue ~~2005~~to ~~through~~do ~~the~~so. ~~solicitation~~A recap of ~~proxies~~recent initiatives orinclude ~~otherwise.~~the following:

38· The quality of our execution on one of our largest pipeline construction projects in Canada has positioned us to negotiate potential additional work with this customer.

~~Table~~· ofAdditionally ~~Contents~~in Canada we are leveraging our strong in-country presence in combination with our downstream oil and gas capabilities to more actively pursue downstream oil and gas opportunities, including above ground storage tanks and process heaters.

~~PART~~· IIWe have added experienced senior operating and business development resources to our pipeline manage and maintain business and restructured the group to increase coordination amongst our engineering, program management and construction capabilities to provide our customers a more integrated service solution.

~~Item 5.~~· ~~Market~~Our ~~for~~efforts ~~Registrant’s~~to ~~Common~~pursue ~~Equity,~~new ~~Related~~business ~~Stockholder~~in ~~Matters~~the Middle East and ~~Issuer~~North ~~Purchaser~~Africa are expected to result in the award of ~~Equity~~our ~~Securities~~first contract in Libya.

~~Our~~· ~~common~~We ~~stock~~significantly ~~commenced~~increased ~~trading~~our onability ~~the~~to ~~New~~pursue ~~York~~and ~~Stock~~execute ~~Exchange~~government oncontracts ~~August 15,~~with ~~1996, under~~ the ~~symbol~~addition ~~“WG.”~~of ~~The~~more ~~following~~operating ~~table~~level ~~sets~~leadership ~~forth the high~~ and ~~low~~greater ~~sale~~cross ~~prices~~utilization ~~per share~~ of our ~~common~~existing ~~stock,~~construction ~~as reported~~and inprogram ~~the~~management ~~New York Stock Exchange composite transactions, for the periods indicated:~~ capabilities.

	High		Low
2004:
First Quarter	$	16.08	$	11.80
Second Quarter		15.70		13.05
Third Quarter		15.38		12.72
Fourth Quarter		23.60		13.87
2005:
First Quarter	$	24.52	$	18.68
Second Quarter		20.66		10.15
Third Quarter		17.80		14.14
Fourth Quarter		17.73		14.13

While individually these business initiatives were relatively modest contributors to our 2008 results, we believe that the groundwork is in place for each of these expanded service lines to enhance our future performance.

~~Substantially~~In addition ~~all~~to ofputting ~~our~~in ~~stockholders~~place ~~maintain~~important ~~their~~capabilities ~~shares~~to inexpand ~~“street~~and ~~name” accounts~~support growth, we also made substantial progress towards operational and ~~are~~financial improvements ~~not,~~to ~~individually~~our business model, ~~stockholders~~preparing us for the challenges of ~~record~~the current market environment. AsWe have worked diligently to stay ahead of ~~May 19~~the curve, ~~2006,~~staying ~~our~~focused ~~common~~on ~~stock~~important ~~was~~process ~~held~~and bysystem 81improvements ~~holders~~designed ofto keep ~~record~~the ~~and~~business anbest ~~estimated~~positioned ~~2,253~~for ~~beneficial~~prevailing ~~owners~~market conditions. These actions include:

In· ~~order~~Improving ~~to fund the development and growth of~~ our ~~business,~~strategic weplanning ~~intend~~process to ~~retain~~better ~~our~~align ~~earnings rather than pay dividends in the foreseeable future. Since 1991, we have not paid any dividends, except dividends in 1996 on~~ our ~~outstanding~~resources ~~shares~~with ofboth ~~preferred~~current ~~stock,~~opportunities which were converted into shares of common stock on July 15, 1996. Subject to restrictions under credit arrangements, the payment of any future dividends will be at the discretion of our Board of Directors and ~~will~~long ~~depend~~term ~~upon,~~growth among other things, our financial condition, cash flow from operations, the level of our capital expenditures and our future business prospects. Our present credit agreement prohibits us from paying cash dividends on our common stock. objectives;

On· ~~October 12,~~Redirecting ~~2005, an aggregate of 13,750 shares of~~ our ~~common~~sales ~~stock~~process ~~were~~to ~~issued~~most toefficiently atarget ~~former~~the ~~employee~~right ~~in connection~~customers with the ~~exercise~~right ofopportunities ~~stock~~for ~~options~~Willbros atto andeliver ~~average~~integrated ~~exercise price of $5.35 per share. The issuance of such shares was exempt from registration under Section 4(2) of Securities Act of 1933~~solutions, aswhich ~~amended~~we ~~(the~~believe ~~“Securities~~offer ~~Act”). The~~our ~~former~~customers ~~employee~~superior ~~was an accredited investor (as defined under Rule 506 of Regulation D under the Securities Act).~~ value;

39· Investing in system and process improvements to increase the value we deliver to our customers including:

~~Table of Contents~~42

~~Item 6.~~o ~~Selected~~Delivering ~~Financial~~lower ~~Data~~costs through improved procurement processes and procedures,

~~SELECTED~~o ~~CONSOLIDATED~~Reinforcing ~~FINANCIAL~~our ~~AND~~project ~~OTHER~~execution ~~DATA~~skills, particularly as we begin to see a shift toward more fixed price contracts,

~~(Dollar~~· ~~amounts~~Reduced inour ~~thousands,~~effective ~~except~~tax ~~per~~rate ~~share~~to ~~data)~~37.2%; and

	Year Ended December 31,
	2005			2004			2003			2002(1)			2001(2)
Statement of Operations Data:
Contract revenue	$	706,522		$	483,318		$	416,573		$	582,829		$	389,761
Operating expense (income):
Contract cost		624,556			417,671			374,442			494,318			325,265
Termination of benefit plans		—			—			—			—			(9,204	)
Depreciation and amortization		21,586			16,747			15,570			16,627			13,389
General and administrative		75,430			46,614			36,300			34,046			29,975
Other operating costs		1,084			3,571			2,314			3,076			1,510
Operating income (loss)		(16,134	)		(1,285	)		(12,053	)		34,762			28,826
Net interest income (expense)		(3,856	)		(2,534	)		(721	)		(1,185	)		(2,588	)
Other income (expense)		(482	)		(6,932	)		(1,444	)		(1,786	)		(711	)
Income (loss) before income taxes		(20,472	)		(10,751	)		(14,218	)		31,791			25,527
Provision (benefit) for income taxes		18,308			10,064			(3,301	)		6,885			10,362
Net income (loss)	$	(38,780	)	$	(20,815	)	$	(10,917	)	$	24,906		$	15,165
Net income (loss) per share:
Basic	$	(1.82	)	$	(0.99	)	$	(.53	)	$	1.36		$	1.05
Diluted		(1.82	)	$	(0.99	)		(.53	)		1.33			1.01
Cash Flow Data:
Cash provided by (used in):
Operating activities	$	(33,022	)	$	40,969		$	(14,324	)	$	21,014		$	17,867
Investing activities		(36,964	)		(36,751	)		(32,589	)		(23,998	)		(29,251	)
Financing activities		56,830			54,362			17,794			33,100			18,373
Effect of exchange rate changes		17			(829	)		631			52			362
Other Data:
EBITDA (3)	$	4,970		$	8,530		$	2,073		$	49,603		$	41,504
Capital expenditures, excluding acquisitions	$	38,888		$	38,479		$	33,984		$	22,601		$	22,003
Backlog (at period end) (4)	$	816,355		$	660,932		$	223,531		$	216,988		$	407,683
Number of employees (at period end) (5)		4,870			3,766			3,282			4,620			3,790
Balance Sheet Data (at period end):
Cash and cash equivalents	$	65,581		$	78,720		$	20,969		$	49,457		$	19,289
Working capital		116,713			108,643			83,728			92,640			51,830
Total assets		498,981			417,110			304,694			295,035			224,905
Total liabilities		353,747			237,066			110,167			92,418			128,678
Total debt		138,020			73,495			18,322			1,171			39,284
Stockholders’ equity		145,234			180,044			194,527			202,617			96,227

Initiating the reorganization of the Company from a Panama holding company structure to a Delaware holding company structure which was approved by the stockholders on February 2, 2009.

~~(1)~~Significant Subsequent WeProject acquired Mt. West Group, comprised of four companies providing design-build services to the western U.S. energy industry, on October 23, 2002. Accordingly, its results of operations since that date are consolidated with our results of operations.Awards

~~(2)~~During the Wefirst ~~acquired~~quarter ~~MSI~~of ~~Energy~~2009 ~~Services~~we ~~Inc.,~~have abeen ~~general~~awarded ~~contractor~~two insignificant ~~Alberta,~~projects ~~Canada,~~that will onadd ~~October~~approximately 12$180,600 ~~2001~~to our backlog. ~~Accordingly,~~The ~~its~~Texas ~~results~~Independence Pipeline (“TIPS”) is approximately 143 miles of ~~operations~~42” ~~since~~pipeline ~~that~~and ~~date~~construction and will commence in early March. In addition to TIPS, we have verbal commitment and are in ~~consolidated~~the final negotiations with NCRA to extend our ~~results~~current contract for program management services associated with portions of ~~operations~~the planned Heavy Crude Expansion Project and related major capital projects for NCRA in McPherson, Kansas.

(3) EBITDA represents earnings before net interest, income taxes, depreciation and amortization. EBITDA is not intended to represent cash flows for the respective period, nor has it been presented as an alternative to operating income as an indicator of operating performance. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States. See our Consolidated Statements of Cash Flows in our Consolidated Financial Statements included elsewhere in this Form 10-K. EBITDA is included in this Form 10-K because it is one of the measures through which we assess our financial performance. EBITDA as presented may not be comparable to other similarly titled measures used by other companies. A reconciliation of EBITDA to GAAP financial information is provided in the table below.Goodwill Impairment

	Year Ended December 31,
	2005			2004			2003			2002		2001
Reconciliation of non-GAAP financial measure:
Net income (loss)	$	(38,780	)	$	(20,815	)	$	(10,917	)	$	24,906	$	15,165
Interest, net		3,856			2,534			721			1,185		2,588
Provision (benefit) for income taxes		18,308			10,064			(3,301	)		6,885		10,362
Depreciation and amortization		21,586			16,747			15,570			16,627		13,389
EBITDA	$	4,970		$	8,530		$	2,073		$	49,603	$	41,504

In the fourth quarter of 2008, we recorded a non-cash charge totaling $62,295 for our Downstream Oil & Gas segment for the impairment of goodwill. In accordance with SFAS No. 142 – Goodwill and Other Intangible Assets, we performed our required annual impairment test for goodwill using a discounted cash flow analysis supported by comparative market multiples to determine the fair values of our businesses versus their book values. The test indicated that the book value for Downstream Oil & Gas goodwill exceeded its fair value. The impairment charge was primarily driven by sustained adverse conditions in the equity markets, which negatively impacted the market capitalization of almost all public companies, including our own, and is in turn, regarded as an indicator of an adverse change in the business climate. Our stock reached a low of $5.38 per share in the fourth quarter of 2008 as compared to a high of $44.30 in the preceding quarter, a $38.92 decrease (88%). The charge reduces goodwill recorded in connection with the acquisition of InServ in November 2007 and does not impact the company’s business operations.

~~(4)~~We believe ~~Backlog~~this isimpairment ~~anticipated~~does ~~contract~~not ~~revenue~~represent ~~from~~a ~~uncompleted~~decrease ~~portions~~in the operational value of ~~existing~~our ~~contracts~~Downstream Oil & Gas segment. Excluding the goodwill impairment, Downstream Oil & Gas’s operational and ~~contracts~~financial ~~whose~~performance ~~award~~has ismet ~~reasonably~~or ~~assured~~exceeded our pre-acquisition expectations, and we expect this to be the case in 2009 and beyond. Downstream Oil & Gas continues to allow us to provide a more diverse service offering and reduces our dependence on large diameter cross country pipeline construction activity.

~~(5) Includes employees of joint ventures in 2002 and 2001.~~Financial Summary

40Results and Financial Position

~~Table~~In 2008, we completed our most profitable year in history. We delivered a net income from continuing operations of ~~Contents~~$43,730 or $1.14 per basic and $1.11 per diluted share on revenue of $1,912,704. This compares to a net loss from continuing operations of $27,550 or $0.94 per share on revenue of $947,691 for the year ended December 31, 2007.

~~Item 7.~~Revenue ~~Management’s~~for ~~Discussion~~2008 ~~and~~increased ~~Analysis~~$965,013 (101.8 ofpercent) ~~Financial~~to ~~Condition~~$1,912,704 ~~and~~from ~~Results of Operations (In thousands~~$947,691 ~~except~~in ~~share~~2007. ~~and~~Following ~~per~~are ~~share~~the ~~amounts~~key components orof ~~unless~~the ~~noted~~increase ~~otherwise)~~in revenue:

~~The~~· ~~following~~Commencement ~~discussion~~of ~~should~~work beon ~~read~~new inengineering ~~conjunction~~and ~~with~~pipeline construction projects in the ~~consolidated~~United ~~financial~~States ~~statements~~in ~~for~~addition to the ~~years~~carryover ~~ended~~of ~~December 31,~~existing ~~2005,~~projects ~~2004~~commencing ~~and 2003,~~late ~~included~~ in ~~Item 8~~2007 ofand ~~this~~during ~~Form~~the ~~10-K.~~first quarter of 2008; and

~~OVERVIEW~~· Revenue of $367,075 in 2008 from the Downstream Oil & Gas segment.

~~Restatement~~Operating income for 2008 increased $59,228 (664.9 percent) to $68,136 from $8,908 in 2007, and operating margin increased 2.6 percent to 3.6 percent in 2008 from an operating margin of 0.9 percent in 2007. The operating income increase is a result of the increase in contract income of $161,109 (161.5 percent) as compared to 2007, partially offset by the increase in general and administrative (“G&A”) expenses of $92,205 (including goodwill impairment charge) and the increase in amortization of intangibles of $9,626.

In late December of 2004, the Company became aware of improprieties in the Company’s Bolivian subsidiary related to assessment of certain Bolivian taxes and allegations that the subsidiary had filed improper tax returns. Upon learning of the tax assessment and alleged improprieties, the Company commenced an initial investigation into the matter and notified the Audit Committee of the Board of Directors, which retained independent counsel, who in turn retained forensic accountants, and began an independent investigation. Concurrent with the Audit Committee’s investigation, the Company initiated its own review of the Company’s accounting. This review focused primarily on the Company’s international activities supervised by the former President of Willbros International, Inc. (“WII”), the primary international subsidiary of the Company, but also included other areas of the Company’s accounting activities. 43

~~As a result of the investigations~~Other, ~~and~~net ~~the~~improved ~~Company’s accounting review~~$23,491 ~~the~~(107.0 ~~Company~~percent) ~~determined~~during ~~that~~2008 ~~several~~as ~~members~~compared ~~of the senior management of WII and its subsidiaries collaborated~~ to ~~misappropriate assets from the Company and cover up such activity~~2007. ItThis ~~was determined that the~~net ~~Bolivian~~change ~~subsidiary~~from ~~had~~an expense in ~~fact~~2007 ~~filed improper tax returns, or failed~~ to ~~file~~income ~~returns,~~in at2008 ~~the~~was ~~direction~~primarily ofdriven ~~Mr. Tillery,~~by ~~the former President of WII. The investigation also determined that Mr. Tillery~~a $7,694 ingain ~~collusion~~recognized ~~with~~as ~~several~~a ~~members~~result of ~~the~~ ~~management~~selling ofone ~~the international subsidiaries, was involved in a pattern~~ of ~~improper~~our ~~activities,~~fabrication ~~primarily~~ facilities in ~~the~~Canada ~~Company’s~~during ~~Nigerian~~2008 ~~subsidiaries,~~and ~~which~~a ~~was~~loss ~~specifically~~on ~~contrary~~early toextinguishment ~~established~~of ~~Company~~debt ~~policies, internal controls and possibly the laws~~ of ~~several countries~~$15,375 related ~~including~~to the ~~United~~induced ~~States.~~conversion ~~These improper activities significantly impacted the Company’s previously issued consolidated financial statements, resulting in the restatement~~ of ~~such consolidated financial statements as December 31~~$52,450 ~~2003 and for the years ended December 31, 2003 and 2002 and for the first, second and third fiscal quarters~~ of ~~2004~~our ~~and 2003~~6.5% ~~These~~convertible ~~restated~~notes ~~financial statements were included~~ in ~~the Company’s consolidated~~ ~~financial statements filed with the annual report on Form 10-K for 2004~~2007.

~~Financial statement adjustments resulting from the misconduct of~~The ~~certain~~provision ~~members~~for ofincome ~~the~~taxes ~~international~~for ~~subsidiaries~~2008 ~~management~~increased ~~had~~$11,439 a(78.9 ~~negative~~percent) ~~impact~~to $25,942 on ~~the~~income ~~Company’s~~from ~~consolidated~~continuing ~~cumulative~~operations ~~earnings~~before ~~(loss)~~income ~~through~~taxes ~~December 31, 2003~~ of ~~approximately (~~$1369,~~307).~~672 ~~The~~as ~~impact~~compared to ona ~~the~~provision ~~Company’s~~for ~~consolidated cumulative~~income ~~earnings~~taxes ~~(loss)~~of ~~through December 31~~$14,503 ~~2003~~on ~~for~~a ~~other~~loss ~~accounting~~from ~~errors~~continuing ~~noted~~operations before ~~above~~income ~~decreased~~taxes ~~earnings~~of by$13,047 ~~approximately~~in ~~($5)~~2007. The ~~total~~increase ~~impact~~in on the ~~Company’s~~provision ~~consolidated~~for ~~cumulative~~income taxes ~~earnings~~is ~~(loss)~~due ofto ~~all~~improved ~~financial~~operating ~~statement adjustments~~results ~~through December 31~~globally, ~~2003~~thereby ~~was~~generating ~~approximately~~more taxable ~~($13,312).~~income ~~The~~in ~~total~~2008 ~~impact~~as oncompared ~~the~~to ~~Company’s~~2007. ~~consolidated~~The ~~earnings~~increase ~~(loss) for the first three fiscal quarters of 2004~~ was ~~approximately~~partially ~~($6,077),~~offset ~~with the impact attributable to~~by ~~misconduct in~~ the ~~international~~non-cash ~~operations~~goodwill ~~being~~impairment ~~approximately~~charge ~~($6,629)~~ of ~~the total~~$62,295.

~~2005~~Working capital ~~General~~at December 31, 2008, excluding discontinued operations, increased $82,944 (41.7 percent) to $282,059 from $199,115 at December 31, 2007. The increase in working capital was primarily driven by an increase in cash and cash equivalents of $114,978, an increase in contract cost and recognized income not yet billed of $15,266; offset by a decrease in accounts receivable of $61,778.

WeOur ~~derive~~debt to ~~our~~equity ~~revenue~~ratio ~~from~~at ~~providing~~December ~~engineering~~31, ~~construction~~2008, ~~specialty~~decreased ~~services~~to ~~and~~0.29:1 ~~development~~from ~~activities~~0.38:1 toat December ~~the oil~~31, ~~gas~~2007. ~~and~~Our ~~power industries and~~aggregate ~~government~~outstanding ~~entities~~debt ~~worldwide.~~decreased ~~In 2005~~$24,975 ~~our~~to ~~revenue~~$127,371 ~~was~~at ~~primarily~~December ~~generated~~31, 2008 from $152,346 ~~operations~~at inDecember ~~Canada~~31, ~~Nigeria~~2007, ~~Oman,~~while ~~and~~we ~~the~~have ~~United~~increased ~~States. We obtain contracts for~~ our ~~work~~stockholders’ ~~primarily by competitive bidding or through negotiations with long-standing~~equity or$43,554 ~~prospective~~to ~~clients.~~$439,655 ~~Our~~at ~~contracts~~December ~~have~~31, ~~durations~~2008 from a$396,101 ~~few~~at ~~weeks~~December ~~to several months or in some cases more than a year~~31, 2007.

~~We continue to~~Consolidated ~~believe~~cash ~~the~~flows ~~fundamentals~~provided ~~supporting~~in ~~the~~2008, ~~demand~~including ~~for~~discontinued ~~engineering~~operations, ~~and~~increased $59,735 ~~construction~~(108.1 percent) ~~services~~to ~~for the oil~~$114,978 ~~gas~~from ~~and~~cash ~~power~~provided ~~industries~~of ~~indicate~~$55,243 ~~that~~in ~~the~~2007. Cash ~~market~~from ~~for~~operating ~~our~~activities ~~services~~increased ~~will~~in be2008 ~~strong~~by ~~for~~$207,976 ~~the next two to five years~~(1,167.6 ~~Many positive developments~~percent) ~~reinforce~~to ~~our~~$190,164 ~~view.~~as ~~Capital~~compared ~~spending~~to cash ~~for~~provided ~~the~~from ~~exploration~~$17,812 ~~and~~cash ~~production~~used ~~sector~~in of2007. Cash ~~the~~used ~~energy~~in ~~industry~~investing isactivities ~~expected~~in to2008 ~~exceed~~decreased $~~235~~138,876 ~~billion~~(92.2 inpercent) ~~2006~~to $11,725 afrom 15cash ~~percent~~used ~~increase~~of ~~over~~$150,601 ~~comparable expenditures~~ in ~~2005~~2007. InCash ~~the~~flows ~~oil~~from ~~sands~~financing ~~region of western Canada~~activities ~~forecast~~in ~~capital~~2008 ~~expenditures~~decreased on$279,819 ~~new~~(126.4 ~~bitumen~~percent) ~~production and processing facilities are expected~~ to ~~exceed~~cash ~~C$100~~used ~~billion~~of ~~through 2015~~$58,460 ~~as production levels are increased~~ from ~~approximately one million barrels per day presently to more than three~~cash ~~million~~provided ~~barrels~~of ~~per~~$221,359 ~~day~~ in ~~2015~~2007. WeCash ~~also~~decreased ~~believe~~from ~~new initiatives announced by~~ the ~~Mexican~~effect ~~government~~of toCanadian exchange ~~increase~~rates ~~production~~in ~~and~~2008 toby ~~expand~~$7,298, ~~pipeline~~changing ~~infrastructure~~from ~~make~~$2,297 ~~that~~cash ~~market~~provided ~~attractive~~in ~~for~~2007 ~~our engineering and construction services after the~~to ~~2006~~$5,001 ~~national~~cash ~~elections~~used ~~are~~in ~~completed~~2008. ~~In the United States,~~

41Other Financial Measures

~~Table of Contents~~Backlog

~~new~~In ~~gas~~our industry, ~~production~~backlog inis ~~the~~considered ~~Rocky~~an ~~Mountain~~indicator ~~region~~of ~~has~~potential ~~generated~~future ~~new~~performance because ~~plans~~it ~~for~~represents ~~gas~~a ~~pipelines~~portion toof the ~~West,~~future ~~Midwest~~revenue ~~and East Coast~~stream. ~~The~~Our ~~move~~strategy ~~towards LNG~~ is focused ~~also~~on ~~expected~~capturing toquality ~~bring~~backlog ~~more~~with ~~opportunities~~margins tocommensurate ~~Willbros,~~with ~~both~~the inrisks associated ~~North~~with ~~America~~a ~~and~~given ~~in other producing/exporting countries~~project.

~~The~~Backlog consists ~~engineering~~of ~~market~~anticipated inrevenue ~~North~~from ~~America~~the ~~has~~uncompleted ~~become~~portions ~~capacity~~of ~~constrained,~~existing contracts and wecontracts ~~are~~whose ~~being~~award ~~more~~is ~~selective~~reasonably assured. At December 31, ~~accepting~~2008, total ~~assignments~~backlog ~~that~~from ~~offer~~continuing ~~higher~~operations ~~margins~~decreased ~~and~~$649,947 ~~position~~(49.8 uspercent) to $655,494 from $1,305,441 at December 31, 2007. There are three primary reasons for ~~EPC~~the ~~assignments~~lower backlog on December 31, 2008. WeThe ~~believe~~cancellation ~~this~~of ~~heightened~~$159,846 of ~~engineering~~backlog ~~activity~~related isto the ~~precursor~~MidContinent toExpress ~~higher~~Project ~~levels~~(“MEP”) caused a significant one-time decrease. This was a partial termination of ~~construction~~the ~~activity~~scope inof ~~North~~work ~~America~~for this project. ~~Our~~The ~~discussions~~fee associated with a ~~potential~~cancelled ~~customers~~portion ~~regarding~~of ~~pipeline~~this ~~and~~project ~~station~~was contractually ~~construction~~due ~~projects~~and remains in ~~North~~backlog. ~~America,~~For ~~coupled~~additional ~~with~~information regarding the ~~increase~~MEP ~~in engineering~~backlog ~~assignments~~reduction, ~~support~~see ~~our~~Note ~~belief~~15 ~~that~~– ~~activity~~Contingencies, Commitments and Other Circumstances in ~~North~~Item ~~America~~8 ~~should~~of ~~increase~~this inForm ~~2006~~10-K – Financial Statements and Supplemental ~~2007~~Data.

InThe ~~Nigeria, attacks on oil~~other ~~installations~~two ~~and~~reasons for the ~~kidnapping~~backlog ofreduction ~~oil~~relate ~~workers~~to in the ~~Niger~~changing ~~Delta~~business environment. ~~have~~Our ~~escalated~~pipeline ~~with~~construction ~~the~~services ~~emergence~~contracting ofhas experienced a return ~~group~~to ~~calling~~a ~~itself~~historical ~~MEND.~~North ~~The~~America ~~crux~~contracting ofmodel ~~the~~that ~~Niger~~is ~~Delta~~characterized ~~conflict~~by competitive isfixed ~~the~~price ~~escalation~~bids ofand ashort ~~longstanding~~time ~~troubled~~periods ~~relationship~~from ~~between~~project ~~the~~bid ~~Federal~~to ~~Government~~execution; ofthe ~~Nigeria~~exception ~~and~~would be the ~~oil~~large ~~producing~~EPC ~~communities~~contracts inthat ~~the~~can ~~Niger~~span ~~Delta~~more than ~~region,~~one ~~with~~year. ~~the~~The ~~latter~~last ~~asserting~~two ~~that~~years ~~historically~~have ~~there has~~ been ~~inequitable~~somewhat ~~sharing~~ of ~~Niger~~an ~~Delta oil revenues~~anomaly. ~~Some~~During ~~production operations in the Western Delta area are~~this ~~now shut in~~period, ~~having~~we ~~had~~have ~~the~~seen ~~combined~~a ~~effect~~substantial ofincrease ~~elevating~~in ~~oil~~our ~~prices~~backlog and ~~interrupting~~a orshift ~~delaying~~to cost-reimbursable ~~projects~~type wecontracts ~~have~~as ~~underway~~our incustomers ~~that~~sought ~~market.~~to Weensure ~~are~~capacity in advance ~~negotiations~~of ~~with~~commencing ~~our~~scheduled ~~clients~~projects. inOur ~~Nigeria~~record tobacklog ~~address~~as ~~these~~of ~~heightened~~December ~~security concerns and to~~31, ~~mitigate~~2007 ~~the~~benefitted ~~commercial~~from ~~impacts~~North onAmerica uscustomers oflocking ~~these~~in ~~recent~~construction ~~events~~capacity well in ~~Nigeria~~advance. ~~While~~For ~~our~~example, ~~clients~~the ~~have~~MEP ~~demonstrated~~contract anwas ~~appreciation~~negotiated ofin ~~our~~July ~~problems~~2007 and included ain ~~willingness~~the tothird ~~work~~quarter ~~with~~of us2007 onbacklog. ~~this~~Work ~~combination~~on ofMEP ~~security~~actually ~~concerns~~started ~~and commercial issues, the~~over ~~outcome~~one ofyear ~~those~~later. ~~negotiations~~With isthe ~~still~~return ~~uncertain,~~to asnormalcy isin ~~their~~the ~~ultimate~~contracting ~~effect on our revenue~~environment, ~~operating~~we expect ~~results and cash flow. However,~~ to ~~date~~experience ~~these~~lower ~~events~~backlog ~~have~~numbers ~~had~~partially as a ~~negative~~result ~~impact~~of oneliminating the ~~our~~much ~~revenue,~~longer ~~operating~~lead ~~results~~times ~~and~~between ~~cash~~bidding ~~flow,~~ and itexecuting ~~is likely~~a ~~this negative impact will continue in the near term~~project.

Given the risk profiles in some of our major markets, such as Latin America and West Africa, combined with the expanding opportunities in many of our other markets and the increased capital requirements the Company believes will be required to participate in the major expansion of the U.S. and international pipeline grid, the Company continues to engage investment bankers to assist in the evaluation of the Company’s strategic alternatives. These alternatives could include equity or debt financings as well as transactions that could result in strategic acquisition(s) and/or the sale of all or a portion of the Company. 44

~~Financial~~The ~~Summary~~third reason relates to the decline in the demand for our engineering services. Preliminary engineering work for customers has resulted in obtaining several significant EPC projects over the past two years. This activity has dramatically slowed down. Over the past five months, several new EPC projects that were actively being developed by our Engineering business segment, have been delayed by customers to allow additional time to evaluate the changes in the market.

~~For~~Cost reimbursable ~~the~~contracts ~~year~~comprised ~~ended~~84.0 percent of backlog at December 31, ~~2005,~~2008 versus we74.9 ~~had~~percent aof ~~net~~backlog ~~loss~~at ofDecember ~~$(38~~31,~~780)~~ ~~or $(1~~2007.~~82)~~ ~~per~~We ~~share~~expect onthat approximately ~~revenue of~~ $~~706~~599,~~522.~~785 ~~This~~or ~~compares~~about to91.5 ~~revenue~~percent, of ~~$483,318~~our inexisting ~~2004~~total ~~with~~backlog ~~net~~at December ~~loss~~31, ~~of $(20~~2008,~~815)~~ orwill ~~$(0.99)~~be ~~per~~recognized ~~share~~in revenue during 2009.

~~Our~~There ~~2005 revenue~~ was ~~up 46.2 percent from 2004, primarily driven by improving market conditions in both the International and~~ ~~United~~no ~~States &~~backlog ~~Canada business segments. (See Note 14 of the “Notes to Consolidated Financial Statements” included in Item 8 of this Form 10-K~~ for ~~additional~~discontinued ~~information~~operations ~~regarding~~at ~~segment~~December ~~reporting).~~31, ~~The~~2008 ~~increase~~and inDecember 31, ~~revenue~~2007, ~~is attributable to the following:~~ respectively.

•We believe ~~Increased~~the ~~construction~~backlog ~~activity~~figures inare ~~Nigeria~~firm, onsubject ~~four~~only ~~large~~to ~~EPC~~the cancellation and modification provisions contained in various contracts. Additionally, due to the short duration of many jobs, revenue associated with ~~major~~jobs ~~oil~~performed ~~companies~~within ~~partially~~a reporting ~~offset~~period bywill ~~work~~not ~~completed~~be reflected in ~~2004~~quarterly inbacklog ~~Iraq~~reports. We generate revenue from numerous sources, ~~Venezuela~~including contracts of long or short duration entered into during a year as well as from various contractual processes, including ~~Oman~~change orders, ~~Bolivia~~extra work, variations in the scope of work and ~~Ecuador;~~the effect of escalation or currency fluctuation formulas. These revenue sources are not added to backlog until realization is assured.

•The following ~~Commencement~~table ofshows ~~work~~our onbacklog ~~new~~by ~~engineering~~operating ~~and~~segment ~~pipeline~~as ~~construction~~of ~~projects~~December in31, ~~the United States;~~ 2008 and 2007:

• Continuation of work relating to maintenance and fabrication contracts in the Canadian oil sands.

	Year Ended December 31,
	2008					2007
	Amount		Percent			Amount		Percent

Upstream Oil & Gas	$	439,019		67.0	%	$	941,301		72.1	%
Downstream Oil & Gas		171,426		26.1	%		199,646		15.3	%
Engineering		45,049		6.9	%		164,494		12.6	%
Total backlog	$	655,494		100.0	%	$	1,305,441		100.0	%

~~Contract income for 2005 increased $16,319 to $81,966~~ EBITDA from ~~$65,647~~Continuing in 2004; however, contract margin decreased to 11.6 percent in 2005 from 13.6 percent in 2004. Contract income increased due primarily to increased revenue as discussed above. Our operations for 2005 generated lower contract margin than expected due to unresolved change orders which are expected to be resolved in future periods, low margin projects in Nigeria, start-up costs and cost overruns in Canada and interruptions of work in progress in the United States by Hurricanes Katrina and Rita. These lower contract margins were partially offset by higher contract margins on certain engineering and pipeline construction projects in the United States. Operations

~~General~~We ~~and~~have updated ~~Administrative~~our definition of EBITDA (~~“G&A”~~earnings before net interest, income taxes, depreciation, amortization, and impairment of intangible assets) ~~expense~~to include ~~increased~~impairment of intangible assets as part of our overall assessment of financial performance by comparing EBITDA between reporting periods. We believe that EBITDA is used by the financial community as a method of measuring our performance and of evaluating the market value of companies considered to be in businesses similar to ours. EBITDA from continuing operations for 2008 increased $28172,~~816~~486 to $75183,~~430~~217 ~~in 2005~~ from $4610,~~614~~731 in ~~2004~~2007. The increase in ~~G&A~~EBITDA ~~included~~during ~~increases~~2008 inis primarily ~~external~~a ~~legal~~result ~~and~~of ~~accounting~~increased ~~costs~~net ~~related~~income. ~~primarily~~The toprimary ~~the~~factor ~~ongoing~~driving ~~support~~increased net ~~for~~income ~~the~~is ~~class~~increased ~~action~~contract ~~lawsuits~~income of $173,416 (excluding depreciation) resulting from the ~~DOJ~~growth ~~and~~of ~~SEC~~our ~~investigations,~~project activity level and the ~~audit~~execution of those projects. The increase in contract income (excluding depreciation) reflects an increase in contract margin of 2.9 percentage points to 15.1 percent at December 31, 2008, from 12.2 percent at December 31, 2007. The $11,439 increase in the ~~2004~~provision ~~financial~~for ~~statements~~income ~~including~~taxes is primarily due to our improved operating results in the ~~restatement~~U.S. thereby resulting in more taxable income during 2008. The increase in depreciation and amortization is primarily a result of capital ~~the~~additions ~~first~~and ~~three~~capital ~~quarters~~expenditures in late 2007 and through 2008 to support the growth of ~~2004~~our business and ~~prior~~project ~~years~~activity levels. ~~G&A~~Additionally, 2008 ~~expense~~includes ~~was~~$10,420 ~~also~~of ~~higher~~amortization inof ~~Nigeria~~other intangible assets and ~~Canada~~a ~~due~~$62,295 goodwill impairment charge related to ~~increased~~our ~~activity~~acquisition of InServ in ~~those~~the ~~markets.~~fourth quarter

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