Oct. 28, 2009 (PR Newswire) --
HOUSTON, Oct. 28 /PRNewswire-FirstCall/ -- Hercules Offshore, Inc. (Nasdaq: HERO) today reported a loss from continuing operations of $37.2 million, or $0.38 per diluted share on revenues of $159.3 million for the third quarter 2009, excluding the effects of non-recurring items, compared with income from continuing operations of $31.9 million, or $0.36 per diluted share on revenues of $315.7 million for the third quarter 2008.
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When including the effect of non-recurring items, the Company reported a loss from continuing operations of $47.0 million, or $0.48 per diluted share for the third quarter 2009. The third quarter 2009 results include a $15.1 million charge related to the write-off of previously deferred unamortized debt issuance costs and the payment of certain third-party fees in connection with the amendment of our Credit Agreement. On an after-tax basis, these adjustments approximated $9.8 million, or $0.10 per diluted share.
John Rynd, Chief Executive Officer and President of Hercules Offshore stated, "Our third quarter operating results reflect the full brunt of one of the most severe declines in U.S. exploration and production capital spending in memory as domestic offshore and inland industry-wide activity levels reached new lows. Our results were also hindered by downtime on two of our international offshore rigs."
"However, a number of factors including the gradual improvement in the capital markets, strong oil prices and a constructive forward curve for natural gas, have led to a sharp uptick in domestic drilling bidding activity and recent contract awards. Our Domestic Offshore average days of backlog per rig have recently increased to 88 from just 19 on August 20. While it is still too early to know what 2010 will hold as we have yet to see our customers' spending plans, and the environment could remain weak for some time, we believe the worst of the cyclical downturn may be behind us."
Mr. Rynd continued, "Furthermore, I am extremely pleased with our continued progress in strengthening our capital structure. Since September 30, 2008, we have retired approximately $280 million in total indebtedness. Additionally, our recent issuance of $300 million in senior secured notes due 2017 has further improved our debt maturity profile."
Offshore
During the third quarter 2009, revenues from Domestic Offshore were $19.0 million compared to $112.7 million in the third quarter 2008 as a result of a sharp decline in industry activity. Operating days for the third quarter 2009 declined by 75% to 424 days from 1,673 days in the third quarter 2008 while average revenue per day per rig decreased to $44,715 from $67,384 for the comparable periods, respectively. Operating costs were reduced by $26.4 million in response to the weak activity levels. The segment generated an operating loss of $35.3 million in the third quarter 2009 versus income of $31.3 million in the third quarter 2008.
International Offshore generated revenues of $90.0 million in the third quarter 2009 compared with revenues of $95.3 million for the same period of 2008. Average revenue per rig per day decreased to $117,241 in the quarter ended September 30, 2009, from $130,704 in the comparable quarter of 2008 primarily as a result of lower dayrates on two of our rigs working in Mexico, fewer operating days on the Hercules 260 and no operating days on the Hercules 156, both of which had above average dayrates in the third quarter 2008. Utilization for the third quarter 2009 declined to 76.3% from 94.3% in the third quarter 2008. The Hercules 156 which was not on contract during the third quarter 2009, coupled with the Hercules 170 which completed its contract early in the quarter, as well as downtime on the Hercules 208 and Hercules 260, adversely impacted utilization. Operating income declined to $26.7 million in the third quarter 2009 compared to $34.2 million in the prior year period.
Inland
Inland generated revenues of $2.4 million in the third quarter 2009 versus $44.4 million in the third quarter 2008. Demand was weak industry-wide and resulted in a significant decline in operating days to 116 versus 1,142 in the previous year. Average revenue per day per rig declined to $21,009 from $38,911 for the respective periods. Operating costs were reduced by 78% over the comparable period, or by approximately $26.0 million. The Inland segment recorded an operating loss of $13.5 million in the third quarter 2009 compared with an operating loss of $1.2 million in the third quarter 2008.
Liftboats
Domestic Liftboats recorded revenues of $19.3 million in the third quarter 2009, a reduction of approximately $6.1 million from the third quarter 2008. Average revenue per day per liftboat decreased to $7,813 in the third quarter 2009 versus $8,094 in the third quarter 2008 while utilization decreased to 68.6% from 81.1% in the same periods, respectively. Third quarter 2008 utilization benefitted from demand related to hurricanes Gustav and Ike. Operating income declined to $1.0 million in the third quarter 2009 compared with $5.8 million in the same quarter of 2008. Four domestic liftboats were transferred to the International Liftboats segment during the quarter as they prepared for their mobilization to West Africa, which is currently underway.
International Liftboats generated third quarter 2009 revenues of $22.3 million, a slight increase from $20.3 million in the third quarter 2008 due largely to the addition of the Whale Shark, which commenced operations in the Middle East during the third quarter 2009. Average revenue per day per liftboat for the third quarter was $19,426 versus $17,780 in the third quarter 2008, stemming mainly from the addition of our Middle East operations. Operating income for the period was $2.6 million, a decrease from $5.1 million in the third quarter 2008, resulting from contract preparation expenses in our Middle East operations and preparation costs related to the fourth quarter 2009 transfer of four vessels to West Africa.
Balance Sheet and Cash Flow
At September 30, 2009, the Company had cash and cash equivalents totaling $219.9 million and unused capacity of $165.0 million under its revolving credit facility. As of September 30, 2009, the Company's balance sheet reflects total debt of $951.7 million. Cash flow provided by operations was $32.7 million and capital expenditures and deferred drydocking expenditures were $13.4 million during the three months ended September 30, 2009.
During September, the Company completed the issuance of 17.5 million shares of common stock for net proceeds of $82.3 million. During October 2009, the Company received additional net proceeds of $6.3 million related to the issuance of 1.3 million shares of common stock from the partial exercise of the underwriter's overallotment option. The Company also completed a private placement of $300.0 million of 10.5% Senior Secured Notes due 2017 in October 2009. Net proceeds from the Senior Notes offering of $284.4 million, coupled with an additional $97.4 million in cash were used to repay indebtedness outstanding under the company's term loan. These payments have reduced the balance on the term loan facility to $484.1 million, resulting in a decline of 2.5% in the interest rate margin on the term loan.
Non-GAAP
Certain non-GAAP performance measures and corresponding reconciliations to GAAP financial measures for the company have been provided for meaningful comparisons between current results and prior operating periods. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. In order to fully assess the financial operating results, management believes that the adjusted income from continuing operations figures included in this release are appropriate measures of the continuing and normal operations of the company. However, these measures should be considered in addition to, and not as a substitute, or superior to, income (loss) from continuing operations, operating income (loss), cash flows from operations, or other measures of financial performance prepared in accordance with GAAP. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure in the table that follows the financial statements.
Conference Call Information
Hercules Offshore will conduct a conference call at 10:00 a.m. CDT (11:00 a.m. EDT) on Wednesday, October 28, 2009, to discuss its third quarter 2009 financial results. To participate in the call, dial 866-788-0547 (domestic) or 857-350-1685 (international) and reference access code 58884642 approximately 10 minutes prior to the start of the call. The conference call will also be broadcast live via the Internet at http://www.herculesoffshore.com.
A replay of the conference call will be available by telephone on Wednesday, October 28, 2009, beginning at 1:00 p.m. CDT (2:00 p.m. EDT), through Wednesday, November 4, 2009. The phone number for the conference call replay is 888-286-8010 (domestic) or 617-801-6888 (international) with reference code 15875122. Additionally, the recorded conference call will be accessible through our Web site at http://www.herculesoffshore.com for 28 days after the conference call.
Additional Information
Headquartered in Houston, Hercules Offshore, Inc. operates a fleet of 30 jackup rigs, 17 barge rigs, 65 liftboats, three submersible rigs, one platform rig and a fleet of marine support vessels, and has operations in nine different countries on three continents. 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.
For more information, please visit our Web site at http://www.herculesoffshore.com.
The news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are subject to a number of risks, uncertainties and assumptions, including the factors described in Hercules Offshore's most recent periodic reports and other documents filed with the Securities and Exchange Commission, which are available free of charge at the SEC's Web site at http://www.sec.gov or the company's Web site at http://www.herculesoffshore.com. Hercules Offshore cautions you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements.
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2009 2008
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(Unaudited) (As Adjusted)
ASSETS
Current Assets:
Cash and Cash Equivalents $219,898 $106,455
Restricted Cash 3,657 -
Accounts Receivable, Net 192,967 293,089
Prepaids 26,234 23,033
Current Deferred Tax Asset 18,766 17,379
Assets Held for Sale - 39,623
Other 17,405 19,946
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478,927 499,525
Property and Equipment, Net 1,975,534 2,049,030
Other Assets, Net 42,658 42,340
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$2,497,119 $2,590,895
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term Debt and Current
Portion of Long-term Debt $9,000 $11,455
Insurance Note Payable 14,838 11,126
Accounts Payable 68,472 99,823
Accrued Liabilities 78,968 83,424
Interest Payable 13,923 506
Taxes Payable 32,616 32,440
Other Current Liabilities 37,410 35,966
------ ------
255,227 274,740
Long-term Debt, Net of Current
Portion 942,727 1,015,764
Other Liabilities 27,435 35,529
Deferred Income Taxes 278,080 339,547
Commitments and Contingencies
Stockholders' Equity 993,650 925,315
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$2,497,119 $2,590,895
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HERCULES OFFSHORE, INC.
