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USA: Hercules Offshore Sells Domestic Liftboats to All Coast

All Coast, LLC, a newly formed company for the marine services industry founded by John Powers and John Nesser III, has completed the acquisition of Hercules Offshore’s domestic liftboat assets.

This $57.5 million acquisition includes 29 actively marketed liftboats ranging from class 105 to class 229, 10 inactive liftboats and additional related assets.

All Coast is a limited liability company, newly formed for this transaction, with John Powers and John Nesser III leading as Managers and Co-CEOs.

Powers and Nesser, All Coast managers and co-chief executive officers, each have more than 40 years of experience in the oil and gas, engineering and maritime industries.

Throughout his career, Powers has owned and operated numerous energy and marine services companies including Power Offshore Services, LLC; Reeled Tubing, LLC; Seatrax, LLC; and Coastal Drilling Co.

Previously, Nesser served as the executive vice president and chief operating officer for McDermott International, where he held executive positions for more than 10 years.

All Coast domestic operations will be led by Byron Allemand, vice president and chief operating officer, and the operations center will remain in Lafayette, La.

Nesser commented that “John and I have been looking for the opportunity to re-enter the liftboat industry as owners and operators for several years.

“We look forward to the challenge of serving the offshore market with the highest standards of service and safety,” Nesser further noted. “We expect to grow All Coast and expand our fleet with new acquisitions and new builds.”

Joining Powers and Nesser is The Fleming Corporation, a private equity investment firm that will provide capital and a long-term perspective on value creation. The new owners are committed to growing the fleet’s market-leading position. Financing for the acquisition and working capital has been provided by Whitney Bank.

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Hercules Offshore Buys More Shares in Discovery Offshore S.A.

Discovery Offshore S.A. announced today that Hercules Offshore Inc.  has on 8 August 2012 acquired 2,658,500 shares in Discovery Offshore at an average price of approximately NOK9.50 per share.

Following the acquisition, Hercules Offshore holds 21,012,834 shares in the Company, corresponding to 32.1% of the share capital. Two members of the Discovery Offshore Board are executives of Hercules Offshore. Discovery Offshore is a Luxembourg-based public limited liability company incorporated in January 2011 for the purpose of owning new ultra high specification jackup drilling rigs.

The Company’s main assets are two Keppel FELS Super A high specification harsh environment jackup rigs currently under construction, with delivery scheduled for the second quarter and fourth quarter of 2013, respectively.

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USA: Hercules Offshore Secures Contract for Newly Bought Rig

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Hercules Offshore, Inc. announced yesterday the execution of a definitive agreement to acquire the offshore drilling rig Ocean Columbia from Diamond Offshore Drilling, Inc.

The purchase price is $40 million in cash. Ocean Columbia is a LeTourneau Class 82 SD-C jack-up drilling rig registered and flagged in the Marshall Islands. Subject to customary closing conditions, the Company expects the acquisition to close in May 2012.

“Hercules approached us with an offer to acquire the Ocean Columbia, and we found the terms to be compelling,” said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. “We are principally a floater company, and this transaction will further augment our funds for potential investments in deepwater and ultra-deepwater assets.”

Saudi Aramco contract

Hercules Offshore also announced that it has entered into a three-year drilling contract with Saudi Aramco for the use of the Ocean Columbia. Over this three-year period, the Company expects to generate total revenues of $160.0 million, including a lump-sum mobilization fee, assuming a utilization rate of 98% for the rig. Under the drilling contract, Saudi Aramco has the option to extend the term for an additional one-year period. Prior to commencing work under the contract, the Company expects to spend approximately $45.0 million for repairs, upgrades and other contract specific refurbishments to the rig and to mobilize the rig from the Gulf of Mexico to the Middle East. The Company expects the rig to commence work under the contract in November 2012.

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Hercules sees more rigs in GOM

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Hercules Offshore expects to end the year with more rigs in the Gulf of Mexico, as the top shallow-water driller in the region looks to cash in on higher day rates, a report said.

News wires  26 January 2012 05:42 GMT

Day rates could rise further as oil majors ramp up spending in the Gulf of Mexico after the government eased up restrictions on drilling permits that were imposed following the Macondo oil spill, chief executive John Rynd told Reuters in an interview.

“As we exit 2012, we may be running 19 or 20 rigs versus the current 18 (in the Gulf of Mexico),” said Rynd, who joined Hercules in 2005 after working with peers like Rowan Co and the drilling unit of Noble Corp.

A total of about 40 shallow-water rigs are active in the region and all of them are contracted, he added.

Houston-based Hercules has been commanding day rates of about $55,000 on average. The cost of renting a rig by the day has risen about $20,000 in the last one year.

“The rates are stable… we have a positive outlook for 2012,” Rynd said.

Activity in Gulf of Mexico is picking up after the 2010 oil spill brought drilling there to a standstill and higher oil prices are boosting exploration work in the region.

Oilfield services leader Schlumberger expects rig count in the Gulf of Mexico to top the level seen prior to the BP disaster, later in the year.

Rynd said Hercules is still in talks with Petroleos Mexicanos regarding its jack-up rigs. The Mexican state oil company did not renew contracts for two Hercules rigs following an accident in 2008.

The company, which is valued at about $618 million, caters to Chevron and Apache in the US Gulf and Oil and Natural Gas Corporation Limited (ONGC) in India.

Hercules shares were trading up 2% at $4.57 on Wednesday afternoon on the Nasdaq.

The stock has gained nearly two-thirds of its value in the October-December quarter, outperforming the broader S&P Oil & Gas Drilling Sub-Industry Index, which has grown 21% during the period.

Published: 26 January 2012 05:42 GMT  | Last updated: 26 January 2012 05:45 GMT

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Fairstar FJELL to Carry Hercules 185 Jack-up Back to West Africa

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Fairstar Heavy Transport N.V. (FAIR) has been awarded a contract by Hercules Offshore to transport the jack-up drilling rig Hercules 185 from Pascagoula, Mississippi to West Africa in the First Quarter of 2012 on board Fairstar’s open stern, semi-submersible vessel FJELL.

The contract value is USD 2.6 million. The FJELL is currently underway to Malta where it will load the Northern Offshore rig ENERGY EXERTER in the Grand Harbour in January. After discharging the ENERGY EXERTER in Northern Europe, FJELL will sail to the Gulf of Mexico to load the Hercules 185.

Chris Muilwijk, Team Leader of Fairstar’s Client Services Group stated: “Fairstar is looking forward to work again with Jim Stevens of High Seas Maritime Services and the operations team at Hercules Offshore. The Hercules 185 was safely transported by the FJELL to Pascagoula earlier this year and our crew on board the FJELL is committed to returning the rig to West Africa in 2012 safely and securely.”

Philip Adkins, Fairstar’s CEO has updated Fairstar’s fleet utilization for 2012, stating: “Fleet utilization for 2012 continues to improve. FJORD will discharge the Oando rig RESPECT, sail to Angola to load the CLOV FPSO components for DSME and then commence its multi-voyage contract for Gorgon. FJELL is now fully booked for the First Quarter of 2012. The FJELL will still be available for work in Alaska in April through September under the terms of our agreement to transport the Agrium fertilizer plant modules to Nigeria. However, in the event we do not receive the first contract installment for FJELL in February, we intend to pursue other transportation options for the FJELL in that period. In October, FJELL will commence its multi-voyage contract for Gorgon, joining FJORD and FORTE on a series of voyages from Northern Asia to Barrow Island, Australia.”

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Shallow-water drilling companies warn of job losses

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by Gabe Gutierrez

HOUSTON – Shallow-water drilling companies are blasting the Obama administration for not extending their oil and gas drilling leases and they claim thousands of Houston jobs could be lost or delayed.

Last week, the federal government officially extended almost 1,400 deep-water drilling leases for a year to make up for the lost production during last year’s drilling moratorium following the BP oil spill in the Gulf of Mexico.

“Once again, the shallow-water operators are left out in the cold,” said Jim Noe, a spokesperson for Hercules Offshore who also leads a coalition of shallow-water companies. “It doesn’t make any sense. You can be for or against offshore drilling. I think most people — particularly in today’s environment — are for jobs.”

Noe estimates that thousands of Houston jobs would be in jeopardy if the leases were allowed to expire because many shallow-water companies have essentially lost a year’s worth of production and would be reluctant to rebid for leases in such an uncertain regulatory climate.

Almost 350 shallow-water leases are set to expire by the end of 2011, Noe said.

The federal government has told the shallow-water companies they don’t need the extension since they weren’t shut down during the drilling moratorium. But Noe said delays in the permitting process during that time effectively idled many of their workers.

Tim Caws moved to Houston from Australia six years ago to work for an energy industry contractor. He now worries his job making pipes for offshore companies could be in jeopardy.

“I think (the industry) does get a bad rap,” he said. “We rely on the oil industry so heavily. It’s such an important part of our lifestyle.”

Still, other Houstonians have a tough time sympathizing with the oil companies.

“It’s very hard to feel sorry for anybody that’s making the excessive profits,” said Keith Bolden.

“I think they should be investing time and money into alternative energy, so that way I don’t have to spend $70 to fill up my gas tank,” said Ryan Cabiya.

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USA: Hercules Offshore Posts USD 17 Million Loss in 3Q 2011

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Hercules Offshore, Inc. today reported a loss from continuing operations of $17.0 million, or $0.12 per diluted share, on revenue of $163.0 million for the third quarter 2011, compared with a loss from continuing operations of $16.1 million, or $0.14 per diluted share, on revenue of $157.6 million for the third quarter 2010.

John T. Rynd, Chief Executive Officer and President of Hercules Offshore stated, “Activity levels in the U.S. Gulf of Mexico Shelf are on the rise, as operators increasingly focus on liquids rich drilling opportunities. Concurrently, several jackup rigs have departed for international opportunities, resulting in a tight environment for rig availability in the region. Hercules Offshore has been the primary beneficiary of the improving fundamental trends in the shallow water U.S. Gulf of Mexico, which have accelerated during the third quarter. Average dayrates in our Domestic Offshore segment have increased by nearly $10,000 per day over the past year, with leading edge rates suggesting further upside for our domestic jackup fleet.

“Our International Offshore segment was recently successful at securing several contracts, including attractive, long term extensions for the Hercules 261 and Hercules 262 in the Middle East. These contracts are a testament to our strong performance and relationship with the customer, Saudi Aramco. Tempering our international success was the recently announced damage to the Hercules 185, where we are anticipating approximately six months of downtime for repairs.”

Offshore

Domestic Offshore revenue increased to $60.2 million in the third quarter 2011 from $25.1 million in the comparable period in 2010. Approximately 70% of the revenue increase is attributable to the acquisition of the Seahawk rigs, while higher utilization and dayrates on the legacy fleet contributed to the remaining revenue growth. Average revenue per rig per day increased by $9,722 per rig per day to $49,060 in the third quarter 2011 compared to $39,338 in the prior year period. Utilization in the third quarter 2011 increased to 74.2% from 62.9% in the third quarter 2010. However, operating days rose by more than 90%, largely as a result of the acquisition of the Seahawk rigs. Domestic Offshore operating expenses increased to $53.2 million in the third quarter 2011 from $38.7 million in the third quarter 2010, due to costs associated with the acquired Seahawk rigs. Domestic Offshore recorded an operating loss of $12.8 million in the third quarter 2011 compared to an operating loss of $32.1 million for the respective prior year quarter.

International Offshore revenue declined to $49.0 million in the third quarter 2011 from $74.4 million in the third quarter 2010. The decline was primarily driven by new contracts at lower market rates on the Hercules 208, Hercules 258, Hercules 260 and Rig 3, as well as the downtime related to transition between contracts. The reduction in revenue related to these aforementioned rigs was partially offset by the increased utilization on the Hercules 185. Overall, average revenue per rig per day declined to $96,388 in the third quarter 2011 from $138,344 in the third quarter 2010, and operating days declined to 508 days from 538 days, in the respective periods. Third quarter 2011 operating expenses were $29.1 million compared to $31.1 million in the third quarter 2010, as lower costs associated with new contract terms on the Hercules 258 and Hercules 260 were partially offset by higher costs on the Hercules 185. International Offshore general and administrative expenses during the third quarter 2011 include an $8.0 million benefit, compared to a $1.5 million benefit during the third quarter 2010, from the reversal of an allowance for doubtful accounts related to payments received from a customer in Angola. Operating income decreased to $12.9 million in the third quarter 2011 from $26.9 million in the third quarter 2010.

Inland

Inland revenue for the third quarter 2011 increased to $8.1 million from $5.7 million in the third quarter 2010, primarily driven by an increase in average revenue per rig per day to $31,008 in the third quarter 2011 from $21,357 in the third quarter 2010. Utilization of 94.9% during the third quarter 2011 is comparable to 97.5% for the prior year period. Third quarter 2011 operating expenses were $3.5 million, which includes approximately $2.6 million in gains for asset sales, compared to $8.3 million in the comparable period in 2010. Year ago results include an accrual of approximately $3.0 million related to a multi-year state sales and use tax audit. Inland recorded operating income of $0.9 million in the third quarter 2011 compared to an operating loss of $8.6 million in the third quarter 2010.

Liftboats

Domestic Liftboats generated revenue of $16.7 million in the third quarter 2011 compared to $24.6 million in the third quarter 2010. Year ago results were positively impacted by coastal remediation work related to the BP-Macondo incident. The absence of the BP-Macondo related work led to a decline in utilization to 69.8% during the third quarter 2011 from 91.6% for the prior year period. Average revenue per liftboat per day was down slightly to $7,443 in the third quarter 2011 compared to $7,684 in the third quarter 2010. Operating expenses were essentially flat at $11.4 million in the third quarter 2011. Operating income for Domestic Liftboats was $0.6 million in the third quarter 2011 compared to operating income of $9.4 million in the comparable prior year period.

International Liftboat revenue increased modestly to $28.9 million in the third quarter 2011 compared to $27.8 million in the third quarter 2010, largely due to higher utilization, which rose to 64.1% in the third quarter 2011 from 56.6% in the prior year period. This was partially offset by a decline in average revenue per liftboat per day to $21,325 from $23,176 in the same periods, respectively. Operating expenses increased to $14.1 million in the third quarter 2011 versus $13.0 million in the prior year period due to higher labor and maintenance costs. Operating income for International Liftboats was $8.5 million in the third quarter 2011, compared to $9.4 million in the same period of the prior year.

Discovery Offshore S.A. Investment

Since Hercules Offshore’s initial $10 million investment in Discovery Offshore S.A. (Oslo Axess: DISC), which gave the company an 8% ownership stake, the Company has completed several purchases of Discovery common stock, totaling approximately $24.2 million. The most recent purchase on September 13, 2011 increased Hercules’ holding in Discovery to 18.4 million shares, corresponding to 28.0% of Discovery’s share capital.

Additional Information

Headquartered in Houston, Hercules Offshore, Inc. operates a fleet of 49 jackup rigs, 17 barge rigs, 65 liftboats, two submersible rigs, and one platform rig. The Company offers a range of services to oil and gas producers to meet their needs during drilling, well service, platform inspection, maintenance, and decommissioning operations in several key shallow water provinces around the world. Hercules Offshore currently holds 28.0% of share capital in Discovery Offshore, a pure play, ultra-high specification jackup rig company.

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High-Spec Jackup Market: Hercules Offshore increases stake in Discovery Offshore

By gCaptain Staff On September 13, 2011

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Hercules Offshore Inc. (HERO) said its acquired an added 6.1 million shares of Discovery Offshore SA (DISC.OS), bringing the contract driller’s stake to 28% in the Luxembourg-based owner of ultra high-specification jackup rigs.

Hercules shares were down 6% at $3.78 in recent trading. The stock is up 60% in the past year.

Houston-based Hercules said it paid an average of 9.02 Norwegian kroner ($1.60) per Discovery Offshore share, bringing its total investment in the company to about $34.1 million.

The company is overseeing construction, marketing and operations of rigs owned by Discovery Offshore, as well as performing other administrative functions.

Hercules President and Chief Executive John T. Rynd said, “Since our initial investment in Discovery Offshore in January 2011, the fundamentals of the offshore drilling industry have strengthened, and demand for ultra high-specification jackup rigs remains exceptionally strong.”

Hercules, which has racked up more than three years of losses, became the biggest rig contractor in the Gulf of Mexico’s shallow waters when it closed on a deal in April to acquire the rigs of weakened rival Seahawk Drilling Inc.

-By Tess Stynes, Dow Jones Newswires

Original Article

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