Hercules Offshore, Inc. (HERO) Posts Wider than Expected Q3 Loss

Hercules Offshore, Inc. (NASDAQ: HERO) reported Q3 EPS of ($0.07), $0.02 worse than the analyst estimate of ($0.05). Revenue for the quarter came in at $221.9 million versus the consensus estimate of $217.89 million.

John T. Rynd, Chief Executive Officer and President of Hercules Offshore stated, "Third quarter results reflect the slowdown in U.S. Gulf of Mexico drilling activity, idle time across various international rigs, and weak operating conditions in West Africa for our international liftboat fleet. In the U.S. Gulf of Mexico, while we have recently seen some activity improvement with a portion of our customer base, this has been offset by further pullback from some of the larger customers in the region. As a result, we expect the overall environment to remain relatively soft at least through early 2015. Given these market conditions, we are executing on cost saving measures, including the cold stacking of four domestic rigs. We currently believe that this is an appropriate step to better balance the market and support utilization on our marketed rigs. However, should we see indicators of stronger demand, we will respond timely to these signals to protect our market leading position within the region.

"In International Offshore, the recent contract signing for the Hercules 267 will partially offset expected idle time on the Hercules Triumph and Hercules Resilience during the fourth quarter. Preparations are underway for the Hercules Triumph to mobilize to the North Sea, while the Hercules Resilience concluded its drilling program in the Congo earlier this month. We are in discussions with various customers to contract these rigs. As for International Liftboats, delays in Nigerian activity continue to hamper utilization, which we expect could continue well into 2015."

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