REGISTRATION RIGHTS AGREEMENT

between

GULF ISLAND FABRICATION, INC.

and

GULF MARINE FABRICATORS

Dated as of January 31, 2006

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this Agreement), dated and effective as of January 31, 2006, is by and between Gulf Island Fabrication, Inc., a Louisiana corporation (the Company), and Gulf Marine Fabricators, a Texas general partnership (the Investor).

A. The Company and the Investor, among others, are parties to that certain Asset Purchase and Sale Agreement, dated as of December 20, 2005 (the Purchase Agreement), pursuant to which the Company has agreed to purchase from the Investor, and the Investor has agreed to sell to the Company, substantially all of the assets used in the business of the Investor. Capitalized terms used but not defined herein shall have the meanings given to them in the Purchase Agreement.

B. Contemporaneously herewith and pursuant to the Purchase Agreement, the Company and the Investor have executed and delivered a Lock-Up Agreement pursuant to which the Investor has agreed, for a period specified therein, not to sell or otherwise transfer the shares of the common stock, no par value per share, of the Company (the Common Stock) issuable to the Investor pursuant to the Purchase Agreement.

C. The Company and the Investor have agreed to execute and deliver this Agreement pursuant to Sections 2.9(a) and 2.9(b) of the Purchase Agreement with respect to the registration of such shares of Common Stock following the termination of the restrictions on resale contained in the Lock-Up Agreement.

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein and in reliance upon the undertakings, representations, warranties and indemnities contained herein, each of the parties hereto agree as follows:

Section 1. Definitions. As used in this Agreement, the following terms shall have the following meanings:

Commission means the Securities and Exchange Commission, or any other federal agency then administering the Securities Act.

Common Stock shall have the meaning assigned to such term in the recitals hereof, as constituted on the date hereof, and any shares into which such Common Stock shall have been changed or any shares resulting from any reclassification of such Common Stock.

Controlling Person shall have the meaning given to such term in Section 6(a).

Demand Notice shall have the meaning given to such term in Section 2(a).

Demand Registration shall have the meaning given to such term in Section 2(a).

Exchange Act means the Securities Exchange Act of 1934, as amended, or any similar Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

1

Holders means the Investor and its permitted successors or assigns who as of such date own outstanding shares of Registrable Securities.

Indemnified Party shall have the meaning given to such term in Section 6(c).

Indemnifying Party shall have the meaning given to such term in Section 6(c).

Lock-Up Period is defined in the Lock-Up Agreement.

Losses means all losses, claims, damages or liabilities (other than consequential damages or incidental lost profits) and all costs and expenses related thereto, including, without limitation, the reasonable fees and disbursements of counsel.

NASD means the National Association of Securities Dealers, Inc.

Person shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or agency or political subdivision thereof.

Proceeding means any claim, suit, action or proceeding, including any governmental investigation or inquiry.

Registrable Securities means (a) the shares of Common Stock issuable to the Investor pursuant to the Purchase Agreement and (b) any additional shares of Common Stock or other securities issued or distributed by the Company after the date hereof to any Holder with respect to such shares of Common Stock by means of exchange, reclassification, dividend, distribution, split-up, combination, subdivision, recapitalization, merger, spin-off, reorganization or otherwise. As to any particular Registrable Securities, once issued such securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale of such securities has become effective under the Securities Act and such securities have been disposed of in accordance with such registration statement, (ii) they have become eligible for resale pursuant to Rule 144(k) under the Securities Act or (iii) they shall cease to be outstanding.

Requesting Holders shall have the meaning given to such term in Section 2(a).

Securities Act means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

Section 2. Demand Registration.

(a) Commencing upon expiration of the Lock-Up Period, Holders holding at least fifty percent (50%) of the then outstanding Registrable Securities (the Requesting Holders) may make a written request (a Demand Notice) for registration under the Securities Act on Form S-3 (or a successor form or, if Form S-3 or such successor form is not available for use by the Company, on such other form as the Commission may prescribe) covering an offering of an amount of Registrable Securities not less than the lesser of (i) Registrable Securities having an estimated aggregate offering price of at least $6 million (as determined as of the trading day

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