Hercules Offshore Announces Second Quarter 2006 Earnings (y 3)

    
                    HERCULES OFFSHORE, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                     (In thousands of US$, except par value)
                                   (Unaudited)
    
                                                   June 30,      December 31,
                                                     2006             2005
    
    ASSETS
      CURRENT ASSETS
        Cash and cash equivalents                  $64,570           $47,575
        Accounts receivable, net                    59,257            38,484
        Deposits                                        51                33
        Assets held for sale                         2,040             2,040
        Insurance claims receivable                 13,166             5,919
        Prepaid expenses and other                   3,839             6,160
        Total current assets                       142,923           100,211
    
      PROPERTY AND EQUIPMENT, net                  339,336           247,443
      OTHER ASSETS                                  10,045             7,171
    
      Total assets                                $492,304          $354,825
    
    LIABILITIES AND STOCKHOLDERS' EQUITY
      CURRENT LIABILITIES
        Current portion of long-term debt           $1,400            $1,400
        Accounts payable                            21,157            13,281
        Accrued liabilities                         12,065            11,165
        Taxes payable                                2,051               122
        Interest payable                             1,928             1,759
        Other current liabilities                      750             2,401
        Total current liabilities                   39,351            30,128
    
      LONG-TERM DEBT, net of current    
       portion                                      92,550            93,250
      DEFERRED INCOME TAXES                         33,311            15,504
      OTHER LIABILITIES                                625               -
    
      STOCKHOLDERS' EQUITY                         326,467           215,943
    
        Total liabilities and            
         stockholders' equity                     $492,304          $354,825

                     HERCULES OFFSHORE, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        (In thousands, except share data)
                                   (Unaudited)
    
                                  Three Months Ended      Six Months Ended
                                       June 30,                June 30,
                                   2006        2005        2006        2005
    
    REVENUES
       Contract drilling      
        services                  $42,567     $26,288     $69,564    $51,179
       Marine services             33,730      10,787      62,866     19,951
                                   76,297      37,075     132,430     71,130
    
    COSTS AND EXPENSES
       Operating expenses for
        contract drilling    
        services,
           excluding          
            depreciation and  
            amortization           13,822      12,095      24,929     23,336
       Operating expenses for
        marine services,      
        excluding
           depreciation and  
            amortization           12,438       5,847      23,267     10,427
       Depreciation and      
        amortization                7,551       2,860      13,485      5,322
       General and            
        administrative,      
        excluding depreciation
           and amortization         6,601       2,904      13,187      5,105
                                   40,412      23,706      74,868     44,190
    
    OPERATING INCOME               35,885      13,369      57,562     26,940
    
    OTHER INCOME (EXPENSE)
       Interest expense           (2,163)     (2,534)     (4,249)     (4,837)
       Gain on disposal of    
        asset                         -           -       29,580         -
       Loss on early          
        retirement of debt           -        (2,786)        -        (2,786)
       Other, net                  1,520         101       1,823         235
    
    INCOME BEFORE INCOME TAXES    35,242       8,150      84,716      19,552
    INCOME TAX PROVISION
       Current income tax         (8,005)        -       (13,492)        -
       Deferred income tax        (4,304)        -       (17,379)        -
    
    NET INCOME                   $22,933      $8,150     $53,845     $19,552
    
    
    EARNINGS PER SHARE:
       Basic                       $0.73       $0.34       $1.74       $0.82
       Diluted                     $0.70       $0.34       $1.68       $0.81
    WEIGHTED AVERAGE SHARES  
     OUTSTANDING:
       Basic                  31,570,354  23,922,850  30,909,517  23,821,044
       Diluted                32,829,076  24,243,180  32,126,429  24,020,647

                    HERCULES OFFSHORE, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
    
                                                   Six Months Ended June 30,
                                                     2006              2005
    CASH FLOWS FROM OPERATING ACTIVITIES
        Net income                                 $53,845           $19,552
        Adjustments to reconcile net    
         income to net cash provided by
        operating activities
        Depreciation and amortization               13,485             5,322
        Stock based compensation expense             1,461               -
        Deferred income taxes                       17,379               -
        Amortization of deferred        
         financing fees                                327               492
        Provision for bad debts                        160               319
        Loss on early retirement of debt               -               2,786
        Gain on disposal of asset                  (29,580)              -
        (Increase) decrease in operating assets
          Increase in accounts receivable          (20,933)           (8,707)
          Increase in insurance claims receivable   (8,892)                -
          Decrease in prepaid expenses and other     1,455             1,659
        Increase (decrease) in operating liabilities
          Increase in accounts payable               7,876             1,713
          Increase in other current        
           liabilities                               5,829             2,949
          Increase in other liabilities                625               -
            Net cash provided by operating  
             activities                             43,037            26,085
    CASH FLOWS FROM INVESTING ACTIVITIES
        Purchase of property and equipment        (118,936)          (87,374)
        Deferred drydocking expenditures            (6,534)           (2,230)
        Insurance proceeds received                 50,090               -
        Decrease (increase) in deposits                (18)            1,750
          Net cash used in investing activities    (75,398)          (87,854)
    CASH FLOWS FROM FINANCING ACTIVITIES
        Proceeds from borrowings                       -             185,000
        Payment of debt                               (700)         (101,000)
        Proceeds from issuance of common stock      54,199               -
        Proceeds from exercise of stock options        221               -
        Payment of debt issuance costs                (632)           (5,636)
        (Distributions to) contributions
         from members                               (3,732)            4,329
          Net cash provided by financing  
           activities                               49,356            82,693
    NET INCREASE IN CASH AND CASH EQUIVALENTS       16,995            20,924
    CASH AND CASH EQUIVALENTS AT
     BEGINNING OF PERIOD                            47,575            14,460
    CASH AND CASH EQUIVALENTS AT END OF PERIOD     $64,570           $35,384

                     HERCULES OFFSHORE, INC. AND SUBSIDIARIES
                      SELECTED FINANCIAL AND OPERATING DATA
                  (Dollars in thousands, except per day amounts)
                                   (Unaudited)
    
                                        Three Months Ended   Six Months Ended  
                                                June 30,           June 30,
                                             2006     2005      2006     2005
    
    Domestic Contract Drilling Services
     Segment:
       Number of rigs (as of end of period)     7        8         7        8
       Operating days                         494      602       876    1,212
       Available days                         524      637       974    1,251
       Utilization (1)                      94.3%    94.5%     89.9%    96.9%
       Average revenue per rig
        per day (2)                       $77,513  $43,653   $74,530  $42,234
       Average operating expense per rig
        per day (3)                       $23,318  $18,988   $23,949  $18,654
       Revenues                           $38,291  $26,288   $65,288  $51,179
       Operating expenses, excluding    
        depreciation and
         amortization                     $12,219  $12,095   $23,326  $23,336
       Depreciation and amortization       $2,089   $1,318    $3,741   $2,610
       General and administrative      
        expenses, excluding
         depreciation and amortization     $1,587   $1,682    $3,373   $2,865
       Operating income                   $22,396  $11,193   $34,848  $22,368
    
    International Contract Drilling    
     Services Segment:
       Number of rigs (as of end of    
        period)                                 2      -           2      -
       Operating days                          33      -          33      -
       Available days                          37      -          37      -
       Utilization (1)                       89.2%     -        89.2%     -
       Average revenue per rig
        per day (2)                      $129,577      -    $129,577      -
       Average operating expense per rig
        per day (3)                       $43,320      -     $43,320      -
       Revenues                            $4,276      -      $4,276      -
       Operating expenses, excluding    
        depreciation and amortization      $1,603      -      $1,603      -
       Depreciation and amortization         $251      -        $251      -
       General and administrative      
        expenses, excluding depreciation
        and amortization                     $472      -        $507      -
       Operating income                    $1,950      -      $1,915      -
    
    Domestic Marine Services Segment:
       Number of liftboats (as of end of
        period)                                47       39        47       39
       Operating days                       2,802    1,766     5,652    3,218
       Available days                       3,699    2,392     7,157    4,372
       Utilization (1)                      75.8%    73.8%     79.0%    73.6%
       Average revenue per liftboat per
        day (2)                           $10,765   $6,109    $9,865   $6,200
       Average operating expense per    
        liftboat per day (3)               $2,935   $2,444    $2,801   $2,385
       Revenues                           $30,163  $10,787   $55,760  $19,951
       Operating expenses, excluding    
        depreciation and
         amortization                     $10,857   $5,847   $20,050  $10,427
       Depreciation and amortization       $4,910   $1,534    $8,888   $2,701
       General and administrative      
        expenses, excluding
        depreciation and amortization        $417     $380    $1,162     $821
       Operating income                   $13,979   $3,026   $25,660   $6,002
    
    International Marine Services Segment:
       Number of liftboats (as of end of
        period)                                 4      -           4      -
       Operating days                         355      -         712      -
       Available days                         364      -         724      -
       Utilization (1)                       98.0%     -        98.0%     -
       Average revenue per liftboat per
        day (2)                           $10,047      -      $9,980      -
       Average operating expense per    
        liftboat per day (3)               $4,346      -      $4,445      -
       Revenues                            $3,567      -      $7,106      -
       Operating expenses, excluding    
        depreciation and amortization      $1,581      -      $3,217      -
       Depreciation and amortization         $274      -        $553      -
       General and administrative      
        expenses, excluding
        depreciation and amortization        $593      -      $1,354      -
       Operating income                    $1,119      -      $1,982      -
    
    Total Company:
       Revenues                           $76,297  $37,075  $132,430  $71,130
       Operating expenses, excluding    
        depreciation and amortization     $26,260  $17,942   $48,196  $33,763
       Depreciation and amortization       $7,551   $2,860   $13,485   $5,322
       General and administrative      
        expenses, excluding
         depreciation and amortization     $6,601   $2,904   $13,187   $5,105
       Operating income                   $35,885  $13,369   $57,562  $26,940
       Interest expense                    $2,163   $2,534    $4,249   $4,837
       Loss on early retirement of debt      $-     $2,786      $-     $2,786
       Gain on disposal of asset             $-       $-     $29,580     $-
       Other income                        $1,520     $101    $1,823     $235
       Income before income taxes         $35,242   $8,150   $84,716  $19,552
       Income tax expense                 $12,309     $-     $30,871     $-
       Net income                         $22,933   $8,150   $53,845  $19,552
    
    (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.

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