Hercules Offshore, Inc. : Hercules Offshore Announces First Quarter 2012 Results
04/26/2012| 07:35am US/Eastern
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HOUSTON, April 26, 2012 /PRNewswire/ -- Hercules Offshore, Inc. (Nasdaq: HERO) today reported a loss from continuing operations of $38.3 million, or $0.28 per diluted share, on revenue of $143.3 million for the first quarter 2012, compared with a loss from continuing operations of $13.6 million, or $0.12 per diluted share, on revenue of $159.4 million for the first quarter 2011.
John T. Rynd, Chief Executive Officer and President of Hercules Offshore stated, "This year has started off with the completion of several positive transactions, beginning with our acquisition and concurrent long-term contracting of the Hercules 266, followed shortly thereafter by our debt refinancing and capital raise. The strategic importance of these achievements cannot be overstated, as they add a sizable and stable source of earnings and cash flow to our international drilling operations, strengthen our relationship with a key international client, and improve our balance sheet by effectively extending our debt maturity schedule well into 2017 and allowing greater flexibility to pursue strategic investments.
"Operationally, Domestic Offshore continues to experience the positive uptrend in drilling activity and dayrates, which we expect will continue as the year progresses. Recently, this has been offset by downtime in International Offshore, mainly related to previously announced shipyard projects for contract specific items that impacted four of our six contracted rigs during the first quarter 2012. While a portion of this downtime will extend into the second quarter, we expect utilization will rebound sharply from the lows experienced in the first quarter, positioning our international rig fleet, and the Company, for substantially better performance during the second half of 2012."
Offshore
Revenue generated from Domestic Offshore for the first quarter 2012 increased by 144% to $82.3 million from $33.8 million in the same period in 2011, due to an improvement in dayrates and the acquisition of the Seahawk rigs. Average revenue per rig per day increased by 30% to $55,961 for the first quarter 2012 compared to $42,892 in the respective 2011 period. Operating days increased to 1,471 in the first quarter 2012 from 788 in the first quarter 2011, due to the addition of the Seahawk rigs as well as higher utilization from the Company's legacy rigs. Operating expenses increased to $59.9 million in the first quarter 2012 from $41.0 million in the respective 2011 period, due to the addition of the Seahawk rigs. Domestic Offshore generated operating income of $1.8 million in the first quarter 2012 versus an operating loss of $25.1 million in the first quarter 2011.
International Offshore revenue declined to $18.0 million in the first quarter 2012 from $77.1 million in the first quarter 2011, primarily due to significant scheduled shipyard downtime. Operating days declined to 247 days in the first quarter 2012 from 582 in the first quarter 2011, due to downtime incurred on the Hercules 185, which was undergoing repairs, Hercules 208, which was mobilizing to a job in Indonesia from Vietnam, Hercules 261 and Hercules 262 related largely to contract preparation work, and Hercules 258, which concluded its previous contract in early January 2012. Average revenue per rig per day decreased to $73,069 in the first quarter 2012 from $132,507 in the comparable prior year period. This is due to current contract rates on our working international rigs which were signed at various points in 2011 when market rates were considerably lower than previously contracted rates in 2008. Operating expenses declined to $24.1 million in the first quarter 2012 from $33.8 million in prior year period, primarily due to lower costs associated with rigs that were either idle or in the shipyard during the first quarter 2012 undergoing contract preparation and repair work. International Offshore recorded an operating loss of $20.8 million in the first quarter 2012, versus operating income of $32.7 million in the comparable period during 2011. First quarter 2011 general and administrative expenses and operating income include a $5.0 million benefit from the reversal of an allowance for doubtful accounts related to a payment received from a customer in Angola.
Inland
During the first quarter 2012, Inland generated revenue of $4.3 million compared to revenue of $5.5 million in the prior year period, as a result of lower utilization partially offset by higher dayrates. Average revenue per rig per day rose to $31,628 during the first quarter 2012, from $26,839 during the first quarter 2011, while utilization declined to 50.2%, from 75.9% during the same periods, respectively. First quarter 2012 operating expenses decreased to $5.7 million from $7.0 million in the first quarter 2011, primarily on lower labor, worker compensation and equipment rental costs. Inland recorded an operating loss of $4.6 million in the first quarter 2012 compared to an operating loss of $6.4 million in the first quarter 2011.
Liftboats
Domestic Liftboats revenue was relatively flat at $10.4 million in the first quarter 2012 compared to $10.6 million in the first quarter 2011. Average revenue per liftboat per day was $7,773 with 1,342 operating days in the first quarter 2012, compared to average revenue per day of $7,993 and 1,330 operating days during the same period of 2011. First quarter 2012 operating expenses of $8.5 million include a $1.8 million gain from the insurance claim on the Starfish, and compares to operating expense of $9.9 million during the first quarter 2011. Domestic Liftboats recorded an operating loss of $2.3 million in the first quarter 2012 compared to an operating loss of $3.4 million in the first quarter 2011.
International Liftboats generated revenue of $28.2 million in the first quarter 2012 compared to $32.3 million in the first quarter 2011. Operating days declined to 1,202 in the first quarter 2012, from 1,395 operating days in the first quarter 2011. This was partially offset by a modest improvement in revenue per day which averaged $23,452 in the first quarter 2012, compared to $23,173 in the same period in 2011. First quarter 2012 operating expenses of $13.1 million include a $1.6 million gain from the insurance claim on the Mako, and compares to operating expense of $14.7 million during the first quarter 2011. International Liftboats recorded operating income of $8.6 million in the first quarter 2012 compared to operating income of $11.6 million in the prior year period.
Liquidity and Capitalization
At March 31, 2012, the Company had unrestricted cash and cash equivalents totaling $165.1 million. The Company's balance sheet reflects total debt of $823.9 million.
During March, the Company completed the issuance of 20.0 million shares of common stock for net proceeds of approximately $96.7 million. A portion of the net proceeds were used, together with cash on hand, to acquire the Hercules 266 for $40.0 million.
During April, the Company also completed the private placement of $300.0 million of 7.125% Senior Secured Notes due 2017 and $200.0 million of 10.25% Senior Notes due 2019 for net proceeds of approximately $489.5 million. Concurrently, the Company repaid $435.3 million in indebtedness outstanding under the Company's term loan and terminated its $140.0 million revolving credit facility which was scheduled to mature in July 2012. The Company entered into a $75.0 million five year revolving credit facility with a syndicate of financial institutions. The facility is currently unfunded.
Conference Call Information
Hercules Offshore will conduct a conference call at 10:00 a.m. CDT (11:00 a.m. EDT) on April 26, 2012, to discuss its first quarter 2012 financial results. To participate in the call, dial 866-362-5158 (domestic) or 617-597-5397 (international) and reference access code 31545030 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 26, 2012, beginning at 12:00 p.m. CDT (1:00 p.m. EDT), through May 3, 2012. The phone number for the conference call replay is 888-286-8010 (domestic) or 617-801-6888 (international) with access code 13212310. Additionally, the recorded conference call will be accessible through our Web site at http://www.herculesoffshore.com for 7 days after the conference call.
Additional Information
Headquartered in Houston, Hercules Offshore, Inc. operates a fleet of 43 jackup rigs, 17 barge rigs, 63 liftboats, two submersible rigs, and one platform rig. 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 28.0% of share capital in Discovery Offshore, 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,
2012 2011
---- ----
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $165,057 $134,351
Restricted Cash 13,261 9,633
Accounts Receivable, Net 139,256 153,688
Prepaids 8,516 16,352
Current Deferred Tax Asset 15,543 15,543
Other 30,747 20,435
------ ------
372,380 350,002
Property and
Equipment, Net 1,600,530 1,591,791
Equity Investment 34,645 34,735
Other Assets, Net 33,767 30,176
$2,041,322 $2,006,704
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Liabilities:
Short-term Debt and Current
Portion of Long-term Debt $52,886 $22,130
Accounts Payable 58,635 49,370
Accrued Liabilities 60,248 70,421
Interest Payable 18,546 9,899
Insurance Notes Payable - 5,218
Other Current Liabilities 25,849 18,366
------ ------
216,164 175,404
Long-term Debt,
Net of Current
Portion 771,002 818,146
Deferred Income
Taxes 67,605 83,503
Other Liabilities 20,028 21,098
Commitments and
Contingencies
Stockholders'
Equity 966,523 908,553
$2,041,322 $2,006,704
========== ==========
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
---------
2012 2011
---- ----
Revenue $143,319 $159,378
Costs and Expenses:
Operating Expenses 111,237 106,381
Depreciation and Amortization 42,978 41,793
General and Administrative 17,674 12,826
171,889 161,000
------- -------
Operating Loss (28,570) (1,622)
Other Income (Expense):
Interest Expense (19,669) (18,506)
Other, Net 1,009 (194)
Loss Before Income Taxes (47,230) (20,322)
Income Tax Benefit 8,888 6,679
----- -----
Loss from Continuing Operations (38,342) (13,643)
Loss from Discontinued Operations,
Net of Taxes - (576)
--- ----
Net Loss $(38,342) $(14,219)
======== ========
Basic and Diluted Loss Per Share:
Loss from Continuing Operations $(0.28) $(0.12)
Loss from Discontinued Operations - -
Net Loss $(0.28) $(0.12)
Basic and Diluted Weighted Average
Shares Outstanding 139,208 114,906
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
---------
2012 2011
---- ----
Cash Flows from Operating Activities:
Net Loss $(38,342) $(14,219)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in)
Operating Activities:
Depreciation and Amortization 42,978 42,911
Stock-Based Compensation Expense 1,487 1,158
Deferred Income Taxes (16,872) (18,027)
Provision (Benefit) for Doubtful Accounts
Receivable 1,218 (5,021)
Amortization of Deferred Financing Fees 993 874
Amortization of Original Issue Discount 1,183 1,089
Gain on Insurance Settlement (3,400) -
Gain on Disposal of Assets (274) (702)
Other (972) 238
Net Change in Operating Assets and
Liabilities 10,105 40,811
Net Cash Provided by (Used in) Operating
Activities (1,896) 49,112
Cash Flows from Investing Activities:
Acquisition of Assets (40,000) -
Additions of Property and Equipment (16,573) (10,277)
Deferred Drydocking Expenditures (3,213) (4,124)
Cash Paid for Equity Investment - (10,000)
Insurance Proceeds Received 13,139 -
Proceeds from Sale of Assets, Net 3,312 3,421
Increase in Restricted Cash (3,628) (1)
Net Cash Used in Investing Activities (46,963) (20,981)
Cash Flows from Financing Activities:
Long-term Debt Repayments (17,571) -
Common Stock Issuance 97,102 -
Other 34 (1,831)
Net Cash Provided by (Used in) Financing
Activities 79,565 (1,831)
Net Increase in Cash and Cash Equivalents 30,706 26,300
Cash and Cash Equivalents at Beginning of
Period 134,351 136,666
Cash and Cash Equivalents at End of Period $165,057 $162,966
======== ========
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA
(Dollars in thousands, except per day amounts)
(Unaudited)
Three Months Ended
March 31,
---------
2012 2011
---- ----
Domestic Offshore:
Number of rigs (as of end of
period) 36 25
Revenue $82,318 $33,799
Operating expenses 59,871 41,002
Depreciation and amortization
expense 18,018 15,082
General and administrative
expenses 2,652 2,845
Operating income (loss) $1,777 $(25,130)
International
Offshore:
Number of rigs (as of end of
period) 10 9
Revenue $18,048 $77,119
Operating expenses 24,127 33,828
Depreciation and amortization
expense 12,341 13,300
General and administrative
expenses 2,429 (2,683)
Operating income (loss) $(20,849) $32,674
Inland:
Number of barges (as of end of
period) 17 17
Revenue $4,333 $5,502
Operating expenses 5,679 7,030
Depreciation and amortization
expense 3,209 4,621
General and administrative
expenses 43 230
Operating loss $(4,598) $(6,379)
Domestic
Liftboats:
Number of liftboats (as of end of
period) 40 41
Revenue $10,431 $10,631
Operating expenses 8,480 9,864
Depreciation and amortization
expense 3,787 3,641
General and administrative
expenses 486 495
Operating loss $(2,322) $(3,369)
International
Liftboats:
Number of liftboats (as of end of
period) 23 24
Revenue $28,189 $32,327
Operating expenses 13,080 14,657
Depreciation and amortization
expense 4,990 4,498
General and administrative
expenses 1,550 1,571
Operating income $8,569 $11,601
Total Company:
Revenue $143,319 $159,378
Operating expenses 111,237 106,381
Depreciation and amortization
expense 42,978 41,793
General and administrative
expenses 17,674 12,826
Operating loss (28,570) (1,622)
Interest expense (19,669) (18,506)
Other, net 1,009 (194)
Loss before income taxes (47,230) (20,322)
Income tax benefit 8,888 6,679
Loss from continuing operations (38,342) (13,643)
Loss from discontinued operations,
net of taxes - (576)
Net loss $(38,342) $(14,219)
HERCULES OFFSHORE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING DATA - (Continued)
(Dollars in thousands, except per day amounts)
(Unaudited)
Three Months Ended March 31, 2012
---------------------------------
Operating Days Available Days Utilization (1) Average Average
Revenue per Operating
Day (2) Expense 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 Liftboats 1,202 1,836 65.5% 23,452 7,124
Three Months Ended March 31, 2011
---------------------------------
Operating Days Available Days Utilization (1) Average Average
Revenue per Operating
Day (2) Expense per
Day (3)
------
Domestic Offshore 788 990 79.6% $42,892 $41,416
International Offshore 582 720 80.8% 132,507 46,983
Inland 205 270 75.9% 26,839 26,037
Domestic Liftboats 1,330 3,420 38.9% 7,993 2,884
International Liftboats 1,395 2,070 67.4% 23,173 7,081
(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, 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.
(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.
SOURCE Hercules Offshore, Inc.
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