31/07/2006 15:08:44 CET
HOUSTON, July 31 /PRNewswire/ --
Hercules Offshore, Inc. (Nasdaq: HERO) today reported net income of US$22.9 million, or US$0.70 per diluted share, on operating revenues of US$76.3 million for the second quarter of 2006, compared to net income of US$8.2 million, or US$0.34 per diluted share, on operating revenues of US$37.0 million for the second quarter of 2005. Net income was US$53.8 million, or US$1.68 per diluted share, on operating revenues of US$132.4 million for the six months ended June 30, 2006, compared to net income of US$19.6 million, or US$0.81 per diluted share, on operating revenues of US$71.1 million for the six months ended June 30, 2005. The results for the six months ended June 30, 2006 include a gain recognized in the first quarter of 2006 of US$18.6 million (US$0.59 per diluted share), net of tax of US$11.0 million, related to the settlement of the Company's insurance claim on the loss of Rig 25 in Hurricane Katrina. Excluding the effect of this item, net income was US$35.2 million, or US$1.09 per diluted share. The results for the six months ended June 30, 2005 include a charge of US$2.8 million (US$0.12 diluted share) related to the early retirement of debt.
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At June 30, 2006, the Company's balance sheet reflected total assets of US$492.3 million, including cash balances of US$64.6 million, total debt of US$94.0 million and stockholders' equity of US$326.5 million.
Randy Stilley, Chief Executive Officer and President of Hercules Offshore, Inc., commented on the results and outlook: "Our growth in earnings during the second quarter is a result of a number of factors, including strong market conditions in each of our business segments, our disciplined and focused acquisition strategy and our ability to execute on major shipyard projects in a timely and cost-efficient manner."
"Looking forward, the Gulf of Mexico drilling market appears to be entering a period of potential weakness driven by a confluence of factors including: weak U.S. natural gas prices, the onset of hurricane season, and the decision by contractors with high-specification jackups that are scheduled to leave the U.S. Gulf of Mexico to secure lower risk jobs in the shallow water until the rigs depart. We believe the supply and demand balance in the U.S. Gulf will tighten as we exit hurricane season in the fourth quarter and as a result of the number of jackup rigs scheduled to depart the region. We believe we have largely mitigated the impact to the company from this potential weakness as we have contracted seven of our eight available jackups rigs into 2007. Furthermore, we continue to see strong demand for our liftboat fleet, largely driven by hurricane related repair and well-intervention work, which we expect to continue into 2007."
Contract Drilling Services Highlights
During the second quarter of 2006, revenues from Domestic Contract Drilling Services were US$38.3 million, compared to revenues of US$26.3 million in the second quarter of 2005. Operating income increased to US$22.4 million in the second quarter of 2006 from US$11.2 million in the second quarter of 2005 despite the fact that operating days declined to 494 from 602 days in the respective periods. Operating days declined primarily as a result of the loss of Rig 25 during Hurricane Katrina and shipyard time for repairs to Rig 21 and for an upgrade to Rig 22. Both rigs are now out of the shipyard and under contract. The average daily revenue per rig in the segment increased to US$77,513 in the second quarter of 2006, compared to US$43,653 in the second quarter of 2005.
International Contract Drilling Services revenues and operating income, which reflect the start-up of Rig 16's operations in Qatar, were US$4.3 million and US$1.9 million, respectively, in the second quarter of 2006. The second quarter revenues include standby revenues of approximately US$2.0 million earned for a timely departure of the rig from the shipyard in the second quarter of 2006. The average daily revenue per rig was US$129,577 in the second quarter of 2006, which includes the contract dayrate of US$69,500 per day and the standby revenues of US$2.0 million. Utilization was 89.2%. Our average daily revenue per rig is calculated by dividing the total revenue by the number of operating days in the period.
Marine Services Highlights
Domestic Marine Services revenues were US$30.1 million in the second quarter of 2006, up from US$10.8 million in the second quarter of 2005. Operating income increased to US$14.0 million in the second quarter of 2006 from US$3.0 million in the second quarter of 2005. The average daily revenue per liftboat increased to US$10,765 in the second quarter of 2006 from US$6,109 in the second quarter of 2005. Utilization for the Company's domestic liftboats increased to 75.8% in the second quarter of 2006 from 73.8% in the second quarter of 2005. The total number of operating days increased to 2,802 from 1,766, which reflected the acquisitions of additional liftboats.
International Marine Services revenues and operating income, which reflect the operation of four liftboats in Nigeria acquired in November 2005, were US$3.6 million and US$1.1 million, respectively, during the second quarter of 2006. The average daily revenue per liftboat was US$10,047 in the second quarter, and utilization was 98.0%.
Update on Recent Events
As previously announced, on June 1, 2006 the Company acquired five liftboats from Laborde Marine Lifts, Inc. The Company assumed construction of an additional liftboat pursuant to a construction agreement assigned to the Company by Laborde at the closing. The total purchase price in connection with the transaction was US$52.0 million. The purchase price paid at closing was reduced by US$2.7 million, the total amount remaining due under the construction agreement as of the closing date. Construction of the 200' class liftboat is now completed and the vessel entered service on July 22, 2006. The six liftboats have leg lengths ranging from 105 feet to 200 feet and are currently located in the Gulf of Mexico.
In April 2006, the Company completed a public offering of 9,200,000 shares of common stock at US$36.00 per share. The Company issued 1,600,000 shares of common stock, while the remaining 7,600,000 shares were sold by certain selling stockholders. The Company received approximately US$54.2 million of proceeds from the offering, net of underwriter discounts and commissions and estimated expenses. The Company is using the net proceeds from the 1,600,000 shares it sold for general corporate purposes.
Headquartered in Houston, Hercules Offshore, Inc. owns a fleet of nine jackup drilling rigs and 51 liftboats. 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 shallow waters.
The Company is providing net income before the gain on the insurance settlement of Rig 25 because management believes that this measure better reflects the normal operations of the Company as it excludes a significant gain realized on the loss of a rig in a recent hurricane.
For more information, please visit our website at http://www.herculesoffshore.com.
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