Hercules Offshore Announces First Quarter 2006 Earnings (y 3)

    
                  HERCULES OFFSHORE, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
                                (Unaudited)
    
                                                Three Months Ended March 31,
                                                     2006              2005
    
    CASH FLOWS FROM OPERATING ACTIVITIES
        Net income                                  $30,912          $11,402
        Adjustments to reconcile net income to
         net cash provided by operating
         activities
        Depreciation and amortization                 5,934            2,462
        Stock based compensation expense                703               -
        Deferred income taxes                        13,075               -
        Amortization of deferred financing fees         160              246
        Gain on disposal of asset                   (29,580)              -
        (Increase) decrease in operating assets
          Increase in accounts receivable            (1,438)          (9,387)
          Increase in insurance claims receivable    (7,673)                -
          (Increase) decrease in prepaid expenses
            and other                                    (2)             853
        Increase (decrease) in operating liabilities
          Decrease in accounts payable               (2,988)             (57)
          Increase in other current liabilities       9,721            1,541
          Decrease in other liabilities              (1,797)            (512)
             Net cash provided by operating
              activities                             17,027            6,548
    CASH FLOWS FROM INVESTING ACTIVITIES
        Purchase of property and equipment          (42,690)         (42,326)
        Deferred drydocking expenditures             (2,704)            (623)
        Decrease (increase) in deposits                 (18)           2,000
             Net cash used in investing activities  (45,412)         (40,949)
    CASH FLOWS FROM FINANCING ACTIVITIES
        Proceeds from borrowings                          -           25,000
        Payment of debt                                (350)              -
        Payment of debt issuance costs                 (193)            (841)
        (Distributions to) contributions from
          members                                    (3,732)           4,329
             Net cash (used in) provided by  
              financing activities                   (4,275)          28,488
    NET DECREASE IN CASH AND CASH EQUIVALENTS       (32,660)          (5,913)
    CASH AND CASH EQUIVALENTS AT BEGINNING
     OF PERIOD                                       47,575           14,460
    CASH AND CASH EQUIVALENTS AT END OF PERIOD      $14,915           $8,547

    
                  HERCULES OFFSHORE, INC. AND SUBSIDIARIES
                   SELECTED FINANCIAL AND OPERATING DATA
              (Dollars in thousands, except per day amounts)
                               (Unaudited)
    
                                                 Three Months Ended March 31,
                                                     2006               2005
    Contract Drilling Services Segment:
       Number of rigs (as of end of period)              9                 7
       Operating days                                  382               610
       Available days                                  450               614
       Utilization (1)                                84.9%             99.3%
       Average revenue per rig per day (2)         $70,673           $40,833
       Average operating expense per rig
        per day (3)                                $24,682           $18,309
       Revenues                                    $26,997           $24,891
       Operating expenses, excluding
        depreciation and amortization              $11,107           $11,241
       Depreciation and amortization                $1,652            $1,292
       General and administrative expenses,
        excluding depreciation and
        amortization (4)                            $1,821            $1,183
       Operating income                            $12,417           $11,175
    
    Domestic Marine Services Segment:
       Number of liftboats (as of end of period)        42                22
       Operating days                                2,850             1,452
       Available days                                3,458             1,980
       Utilization (1)                                82.4%             73.3%
       Average revenue per liftboat per day (2)     $8,981            $6,311
       Average operating expense per liftboat
        per day (3)                                 $2,659            $2,313
       Revenues                                    $25,597            $9,164
       Operating expenses, excluding depreciation
        and amortization                            $9,193            $4,580
       Depreciation and amortization                $3,978            $1,167
       General and administrative expenses,
        excluding depreciation and amortization       $745              $441
       Operating income                            $11,681            $2,976
    
    International Marine Services Segment:
       Number of liftboats (as of end of period)         4                 -
       Operating days                                  357                 -
       Available days                                  360                 -
       Utilization (1)                                99.0%                -
       Average revenue per liftboat per day (2)     $9,913                 -
       Average operating expense per liftboat
        per day (3)                                 $4,544                 -
       Revenues                                     $3,539                 -
       Operating expenses, excluding depreciation
        and amortization                            $1,636                 -
       Depreciation and amortization                  $279                 -
       General and administrative expenses,
        excluding depreciation and amortization       $761                 -
       Operating income                               $863                 -
    
    Total Company:
       Revenues                                    $56,133           $34,055
       Operating expenses, excluding depreciation
        and amortization                           $21,936           $15,821
       Depreciation and amortization                $5,934            $2,462
       General and administrative expenses,
        excluding depreciation and amortization     $6,586            $2,201
       Operating income                            $21,677           $13,571
       Interest expense                             $2,086            $2,303
       Gain on disposal of asset                   $29,580              $ -
       Other income                                   $303              $134
       Income before income taxes                  $49,474           $11,402
       Income tax expense                          $18,562              $ -
       Net income                                  $30,912           $11,402
    
    (1) Utilization is defined as the total number of days our rigs or        
        liftboats, as applicable, were under contract, known as operating
        days, in the period as a percentage of the total number of available
        days in the period. Days during which our rigs and liftboats were
        undergoing major refurbishments, upgrades or construction, which
        included Rig 16, Rig 21, Rig 26 and Rig 31, or cold-stacked units,
        which included three of our liftboats, are not counted as available
        days. Days during which our liftboats are in the shipyard undergoing
        drydocking or inspection are considered available days for the
        purposes of calculating utilization.
    (2) Average revenue per rig or liftboat per day is defined as revenue      
        earned by our rigs or liftboats, as applicable, in the period divided    
        by the total number of operating days for our rigs or liftboats, as      
        applicable, in the period.
    (3) Average operating expense per rig or liftboat per day is defined as      
        operating expenses, excluding depreciation and amortization, incurred    
        by our rigs or liftboats, as applicable, in the period divided by the    
        total number of available days in the period. We use available days
        to calculate average operating expense per rig or liftboat per day
        rather than operating days, which are used to calculate average
        revenue per rig or liftboat per day, because we incur operating
        expenses on our rigs and liftboats even when they are not under
        contract and earning a dayrate. In addition, the operating expenses
        we incur on our rigs and liftboats per day when they are not under
        contract are typically lower than the per-day expenses we incur when
        they are under contract.
    (4) Effective with our first quarter 2006 Form 10-Q, we will report two      
        Contract Drilling Services segments, Domestic and International. Our    
        International Contract Drilling Services segment is comprised of
        three jackup drilling rigs undergoing refurbishment and upgrade that
        were not generating revenue as of March 31, 2006. Our International
        Contract Drilling Services segment incurred US$30,390 of general and          
        administrative expense, excluding depreciation and amortization, in
        the first quarter of 2006.

Web site: http://www.herculesoffshore.com

Stephen M. Butz, Director of Corporate Development of Hercules Offshore, Inc., +1-713-979-9832; Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20050601/DAW092LOGO, AP Archive: http://photoarchive.ap.org, PRN Photo Desk, photodesk@prnewswire.com