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Hercules Offshore Announces First Quarter 2013 Results



            Hercules Offshore Announces First Quarter 2013 Results

PR Newswire

HOUSTON, April 25, 2013

HOUSTON, April 25, 2013 /PRNewswire/ -- Hercules Offshore, Inc. (Nasdaq: HERO)
today reported net income of $35.2 million, or $0.22 per diluted share, on
revenue of $205.3 million for the first quarter 2013, compared with a net loss
of $38.3 million, or $0.28 per diluted share, on revenue of $143.3 million for
the first quarter 2012. First quarter 2013 results include a non-cash tax gain
of $37.7 million, or $0.24 per diluted share, relating to the Seahawk
acquisition which was completed in April 2011.  

John T. Rynd, Chief Executive Officer and President of Hercules Offshore
stated, "Market conditions in the U.S. Gulf of Mexico remain strong, as
dayrates continue to trend higher and contract backlog stays near record
levels.   Our first rig reactivation, the Hercules 209, is nearing completion,
and we are assessing market demand for a second reactivation. Internationally,
we continue to add scale and upgrade our global fleet.  We recently commenced
operations on the Hercules 266 under its long term contract, and closed on the
acquisitions of the Hercules 267 (formerly Ben Avon) and the White Shark
(formerly Titan 2).  These acquisitions demonstrate our ability to
successfully deploy capital toward high return opportunities, while de-risking
the investments with assets that have strong long term demand prospects and
through long term contracts. We continue to look for acquisition opportunities
to enhance our international footprint and high-grade our asset base."

Offshore

Revenue generated from Domestic Offshore for the first quarter 2013 increased
by approximately 47.1% to $121.1 million from $82.3 million in the first
quarter 2012 bolstered by higher dayrates and improved utilization.  Average
revenue per rig per day increased by approximately 39.8% to $78,240 in the
first quarter 2013 from $55,961 in the comparable 2012 period.  Utilization
increased to 95.6% in the first quarter 2013 from 89.8% in the first quarter
2012, due to less shipyard downtime primarily on the Hercules 214 related to
regulatory survey requirements.  Operating expenses increased to $61.1 million
in the first quarter 2013 compared to $59.9 million in the first quarter 2012,
primarily due to higher labor costs.  Domestic Offshore generated operating
income of $39.5 million in the first quarter 2013 compared to operating income
of $1.8 million in the first quarter 2012.

International Offshore generated revenue of $31.8 million in the first quarter
2013 as compared to $18.0 million in the first quarter 2012.  Average revenue
per rig per day for the first quarter 2013 increased to $118,119 from $73,069
in the first quarter 2012, primarily due to higher rebillable items and the
absence of Platform Rig 3, which was previously contracted at a below fleet
average rate and sold in August 2012.  Utilization increased to 59.8% from
38.8% due to the recommencement of operations for the Hercules 208, Hercules
261 and Hercules 262, as these rigs incurred downtime for contract preparation
work during the first quarter 2012, partially offset by greater downtime on
the Hercules 260, as it underwent repairs and regulatory survey requirements
during the first quarter 2013.  Operating expenses for the first quarter 2013
increased to $31.9 million from $24.1 million in the respective 2012 period.
First quarter 2013 operating expenses include approximately $5.7 million for
repairs for the spudcan damage on the Hercules 260. International Offshore
recorded an operating loss of $12.2 million in the first quarter 2013 compared
to an operating loss of $20.8 million in the prior year period.

Inland

Inland revenue during the first quarter 2013 of $4.3 million was flat with
first quarter 2012 levels, as higher dayrates were offset by lower
utilization. First quarter 2013 average revenue per rig per day increased by
8.2% to $34,236 from $31,628 in the first quarter 2012, while utilization
declined to 47.0% compared to 50.2% in the prior year period.  Operating
expenses decreased to $4.6 million in the first quarter 2013 compared to $5.7
million in the first quarter 2012.  Gains from asset sales reduced operating
expenses by $1.9 million in the first quarter 2013. Inland recorded an
operating loss of $3.5 million in the first quarter 2013 compared to an
operating loss of $4.6 million in the respective prior year period. 

Liftboats

Domestic Liftboats revenue increased to $14.8 million in the first quarter
2013 from $10.4 million in the first quarter 2012.  Average revenue per
liftboat per day increased by 16.0% to $9,015 in the first quarter 2013 from
$7,773 in the first quarter 2012, with pricing gains achieved on all active
vessel classes. Utilization increased to 60.7% in the first quarter 2013 from
43.4% in the comparable 2012 period.  First quarter 2013 operating expenses
were $10.7 million compared to first quarter 2012 operating expenses of $8.5
million.  Operating expenses during the first quarter 2012 benefitted from an
insurance gain of $1.8 million. Domestic Liftboats recorded an operating loss
of $99,000 in the first quarter 2013 compared to an operating loss of $2.3
million in the first quarter 2012.

International Liftboats revenue increased to $33.3 million in the first
quarter 2013 from $28.2 million in the prior year period.  Average revenue per
liftboat per day decreased slightly to $22,970 in the first quarter 2013 from
$23,452 in the first quarter 2012, while utilization increased to 72.1% from
65.5% in the same periods, respectively, on increased activity levels in West
Africa.  Operating expenses during the first quarter 2013 were $22.3 million,
which include a $2.6 million write-down of a cold stacked vessel in West
Africa, compared to $13.1 million in the first quarter 2012, which benefitted
from an insurance gain of $1.6 million.  The increase in operating expenses
was primarily driven by higher labor and repair and maintenance costs. 
International Liftboats recorded operating income of $5.2 million in the first
quarter 2013 compared to operating income of $8.6 million in the first quarter
2012.

Income Tax

First quarter 2013 results include a non-cash tax gain of $37.7 million
relating to the Seahawk acquisition which was completed in April 2011.
Initially, the Seahawk acquisition was recorded assuming that the transaction
would be characterized as a purchase of assets for income tax purposes.
However, in the first quarter 2013, certain distributions were made to
Seahawk's former equity holders, that, taken together with other aspects of
the acquisition, changed the tax treatment and caused this acquisition to be
characterized as a reorganization for tax purposes. Therefore, for tax
purposes, we recorded a carryover basis in the former Seahawk assets and other
tax attributes which, based on the Company's current tax position, produced
additional deferred tax assets. 

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 net income (loss) 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 for, or superior to, net income (loss), 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. Please see the attached
Reconciliation of GAAP to Non-GAAP Financial Measures for a complete
description of the adjustments made to Operating Loss, Net Income (Loss) and
Diluted Income (Loss) per Share.

Conference Call Information

Hercules Offshore will conduct a conference call at 10:00 a.m. CDT (11:00 a.m.
EDT) on April 25, 2013, to discuss its first quarter 2013 financial results.
To participate in the call, dial 877-280-4958 (domestic) or 857-244-7315
(international) and reference access code 60388722 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 April 25,
2013, beginning at 12:00 p.m. CDT (1:00 p.m. EDT), through May 3, 2013. The
phone number for the conference call replay is 888-286-8010 (domestic) or
617-801-6888 (international) with access code 77899979. Additionally, the
recorded conference call will be accessible through our website at
http://www.herculesoffshore.com for 7 days after the conference call.

Additional Information

Headquartered in Houston, Hercules Offshore, Inc. operates a fleet of 38
jackup rigs, 13 barge rigs and 64 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
several key shallow water provinces around the world. Hercules Offshore
currently holds 32.1% of share capital in Discovery Offshore S.A., a pure
play, ultra-high specification jackup rig company.  For more information,
please visit our website 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 website at http://www.sec.gov or the Company's website 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)
                                            March 31,         December 31,

                                            2013              2012
                                            (Unaudited)
ASSETS
 Current Assets:
  Cash and Cash Equivalents                 $       169,415   $       259,193
  Restricted Cash                           2,027             2,027
  Accounts Receivable, Net                  159,227           167,936
  Prepaids                                  8,696             16,135
  Current Deferred Tax Asset                -                 21,125
  Other                                     28,044            12,191
                                            367,409           478,607
 Property and Equipment, Net                1,560,747         1,462,755
 Equity Investment                          37,905            38,191
 Other Assets, Net                          36,018            37,077
                                            $    2,002,079    $    2,016,630
LIABILITIES AND STOCKHOLDERS' EQUITY
 Current Liabilities:
  Short-term Debt and Current Portion of    $         67,812  $         67,054
  Long-term Debt
  Accounts Payable                          72,366            58,615
  Accrued Liabilities                       69,436            82,781
  Interest Payable                          36,267            17,367
  Insurance Notes Payable                   -                 9,123
  Other Current Liabilities                 22,711            26,483
                                            268,592           261,423
 Long-term Debt, Net of Current Portion     798,234           798,013
 Deferred Income Taxes                      -                 56,821
 Other Liabilities                          15,670            17,611
 Commitments and Contingencies
 Stockholders' Equity                       919,583           882,762
                                            $    2,002,079    $    2,016,630

 

 

HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
                                                                             Three Months Ended
                                                                             March 31,
                                                                             2013      2012
Revenue                                                                      $         $
                                                                              205,327   143,319
Costs and
Expenses:                                                                  
                        Operating Expenses                                   130,637   111,237
                        Depreciation and Amortization                        40,815    42,978
                        General and Administrative                           19,781    17,674
                                                                             191,233   171,889
Operating Income (Loss)                                                      14,094    (28,570)
Other Income (Expense):
                        Interest Expense                                     (18,488)  (19,669)
                        Other, Net                                           196       1,009
Loss Before Income Taxes                                                     (4,198)   (47,230)
Income Tax Benefit                                                           39,360    8,888
Net Income (Loss)                                                            $         $  
                                                                              35,162   (38,342)
Earnings (Loss) Per Share:
                        Basic                                                $         $    
                                                                             0.22       (0.28)
                        Diluted                                              $         $    
                                                                             0.22       (0.28)
Weighted Average Shares Outstanding:
                        Basic                                                158,931   139,208
                        Diluted                                              161,125   139,208

 

 

HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                                  Three Months Ended March 31,
                                                  2013           2012
Cash Flows from Operating Activities:
  Net Income (Loss)                               $    35,162    $   (38,342)
  Adjustments to Reconcile Net Income (Loss) to
  Net Cash Provided by (Used in)
  Operating Activities:
  Depreciation and Amortization                   40,815         42,978
  Stock-Based Compensation Expense                2,737          1,487
  Deferred Income Taxes                           (36,616)       (16,872)
  Amortization of Deferred Financing Fees         723            993
  Amortization of Original Issue Discount         979            1,183
  Gain on Insurance Settlement                    -              (3,400)
  Other                                           245            (28)
  Net Change in Operating Assets and Liabilities  4,634          10,105
  Net Cash Provided by (Used in) Operating        48,679         (1,896)
  Activities
Cash Flows from Investing Activities:
  Acquisition of Assets                           (97,000)       (40,000)
  Additions of Property and Equipment             (41,890)       (16,573)
  Deferred Drydocking Expenditures                (3,083)        (3,213)
  Insurance Proceeds Received                     -              13,139
  Other                                           2,748          (316)
  Net Cash Used in Investing Activities           (139,225)      (46,963)
Cash Flows from Financing Activities:
  Long-term Debt Repayments                       -              (17,571)
  Common Stock Issuance                           -              97,102
  Other                                           768            34
  Net Cash Provided by Financing Activities       768            79,565
Net Increase (Decrease) in Cash and Cash          (89,778)       30,706
Equivalents
Cash and Cash Equivalents at Beginning of Period  259,193        134,351
Cash and Cash Equivalents at End of Period        $  169,415     $  165,057

 

 

HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA
(Dollars in thousands, except per day amounts)
(Unaudited)
                                                          Three Months Ended
                                                          March 31,
                                                          2013       2012
Domestic
Offshore:                                             
       Number of rigs (as of end of period)               29         36
       Revenue                                            $          $        
                                                            121,115     82,318
       Operating expenses                                 61,146     59,871
       Depreciation and amortization expense              18,953     18,018
       General and administrative expenses                1,565      2,652
                                                          $          $        
       Operating income                                                 
                                                          39,451      1,777
International Offshore:
       Number of rigs (as of end of period)               9          10
                                                          $          $        
       Revenue                                                          18,048
                                                          31,774
       Operating expenses                                 31,911     24,127
       Depreciation and amortization expense              10,020     12,341
       General and administrative expenses                2,012      2,429
                                                          $          $        
       Operating loss                                                 (20,849)
                                                          (12,169)
Inland:
       Number of barges (as of end of period)             13         17
                                                          $          $        
       Revenue                                                          
                                                          4,348       4,333
       Operating expenses                                 4,563      5,679
       Depreciation and amortization expense              3,110      3,209
       General and administrative expenses                165        43
                                                          $          $        
       Operating loss                                                 
                                                          (3,490)     (4,598)
Domestic Liftboats:
       Number of liftboats (as of end of period)          39         40
                                                          $          $        
       Revenue                                                          10,431
                                                          14,784
       Operating expenses                                 10,725     8,480
       Depreciation and amortization expense              3,658      3,787
       General and administrative expenses                500        486
                                                          $          $        
       Operating loss                                                 
                                                           (99)       (2,322)
International Liftboats:
       Number of liftboats (as of end of period)          25         23
                                                          $          $        
       Revenue                                                          28,189
                                                          33,306
       Operating expenses                                 22,292     13,080
       Depreciation and amortization expense              4,352      4,990
       General and administrative expenses                1,510      1,550
                                                          $          $        
       Operating income                                                 
                                                          5,152       8,569
Total Company:
       Revenue                                            $          $        
                                                            205,327   143,319
       Operating expenses                                 130,637    111,237
       Depreciation and amortization expense              40,815     42,978
       General and administrative expenses                19,781     17,674
       Operating income (loss)                            14,094     (28,570)
            Interest expense                              (18,488)   (19,669)
            Other, net                                    196        1,009
       Loss before income taxes                           (4,198)    (47,230)
            Income tax benefit                            39,360     8,888
                                                          $          $        
       Net income (loss)                                              (38,342)
                                                          35,162

 

 

HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA - (Continued)
(Dollars in thousands, except per day amounts)
(Unaudited)
                        Three Months Ended March 31, 2013
                                                           Average   Average
                        Operating  Available  Utilization  Revenue   Operating
                        Days       Days       (1)          per       Expense
                                                           Day (2)   per
                                                                     Day (3)
 Domestic Offshore      1,548      1,620      95.6%        $         $      
                                                             78,240   37,744
 International Offshore 269        450        59.8%        118,119   70,913
 Inland                 127        270        47.0%        34,236    16,900
 Domestic Liftboats     1,640      2,703      60.7%        9,015     3,968
 International          1,450      2,011      72.1%        22,970    11,085
 Liftboats
                        Three Months Ended March 31, 2012
                                                           Average   Average
                        Operating  Available  Utilization  Revenue   Operating
                        Days       Days       (1)          per       Expense
                                                           Day (2)   per
                                                                     Day (3)
 Domestic Offshore      1,471      1,638      89.8%        $         $      
                                                             55,961   36,551
 International Offshore 247        637        38.8%        73,069    37,876
 Inland                 137        273        50.2%        31,628    20,802
 Domestic Liftboats     1,342      3,094      43.4%        7,773     2,741
 International          1,202      1,836      65.5%        23,452    7,124
 Liftboats

    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
(1) during which our rigs and liftboats were undergoing major refurbishments,
    upgrades or construction, and days during which our rigs and liftboats are
    cold stacked, 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. 
    Average revenue per rig or liftboat per day is defined as revenue earned
(2) 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.
    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
(3) 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.

 

 

Hercules Offshore, Inc. and Subsidiaries
 Reconciliation of GAAP to Non-GAAP Financial Measures
 (Unaudited)
 (In thousands, except per share data)
We report our financial results in accordance with generally accepted
accounting principles (GAAP). However, management believes that certain
non-GAAP performance measures and ratios may provide users of this financial
information additional meaningful comparisons between current results and
results in prior operating periods. Non-GAAP financial measures we may present
from time to time are operating income, net income or diluted earnings per
share excluding certain charges or amounts. These adjusted income amounts are
not a measure of financial performance under GAAP. Accordingly, they should
not be considered as a substitute for operating income, net income, earnings
per share or other income data prepared in accordance with GAAP. See the table
below for supplemental financial data and corresponding reconciliations to
GAAP financial measures for the three months ended March 31, 2013. Non-GAAP
financial measures should be viewed in addition to, and not as an alternative
for, the Company's reported results prepared in accordance with GAAP. The
non-GAAP measures included in this press release have been reconciled to the
nearest GAAP measure in the following table:

                                                            Three Months
                                                            Ended
                                                            March 31,

                                                            2013
    Operating Income:
      GAAP Operating Income                                 $            
                                                                   14,094
      Adjustment                                            -
      Non-GAAP Operating                                    $            
Income                                                             14,094
    Other Expense:
      GAAP Other Expense                                    $            
                                                                 (18,292)
      Adjustment                                            -
      Non-GAAP Other Expense                                $            
                                                                 (18,292)
   Benefit for Income Taxes:
      GAAP Benefit for Income Taxes                         $            
                                                                   39,360
      Tax Adjustment                                        (37,729)       (a)
      Non-GAAP Benefit for Income Taxes                     $            
                                                                     1,631
    Net Income (Loss):
      GAAP Net Income                                       $            
                                                                   35,162
      Total Adjustment                                      (37,729)
      Non-GAAP Net Loss                                     $            
                                                                   (2,567)
    Diluted Earnings (Loss) per Share:
                                                            $            
      GAAP Diluted Earnings per Share                                
                                                             0.22
      Adjustment per Share                                  (0.24)
                                                            $            
      Non-GAAP Diluted Loss per Share                              
                                                             (0.02)

    This amount represents a tax benefit recognized of $37.7 million related
(a) to the change in characterization of the Seahawk acquisition for tax
    purposes from a purchase of assets to a reorganization.

 

SOURCE Hercules Offshore, Inc.

Website: http://www.herculesoffshore.com
Contact: Son P. Vann, CFA, Vice President Investor Relations and Planning,
Hercules Offshore, Inc., 713-350-8508
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