Flexing its muscles, Hercules Offshore provides shallow-water drilling and liftboat services to major integrated energy companies and independent oil and natural gas exploration and production companies. It owns and operates a fleet of 43 jackup rigs, two submersible rigs and one platform rig as well as 63 self-propelled, self-elevating liftboats. Its Delta Towing business operates a fleet of 29 inland tugs, 10 offshore tugs, 34 crew boats, 46 deck barges, 17 shale barges, and five spud barges. About half of its jack up rigs are operating in the Gulf of Mexico. although the company works in other oil patches around the world.
The holding company generally contracts its jackup rigs and liftboats under short-term, daily rental agreements at fixed rental rates. Hercules looks to its diverse portfolio of vessels and range of services to help it ride out downturns in particular segments.
The global recession produced low commodity prices and a weakened demand for oil and gas activities, hurting the company's performance in 2009. In particular, Hercules' inland segment saw a nearly 90% drop in revenues as the result of a major decline in drilling in US transition zones (marshes, rivers, and lakes) across the industry.
In 2010, with the economy beginning to rebound, BP's Deepwater Horizon rig disaster led to a moratorium on deepwater drilling in the Gulf of Mexico and a slowdown in the issuing of new drilling permits for shallow water rigs, which took another major bite out of Hercules' contract drilling revenues. However, the company's liftboat and Delta Towing businesses benefitted from being engaged in the BP oil spill clean up.
Despite this, the company reported lower revenues and a bigger net loss in 2010 as reduced Gulf of Mexico drilling activity and weaker international offshore demand (due to increased competition and still-low day rates) suppressed revenues and led to increased property impairment and depreciation expenses.
Boosting its rig fleet, in 2011 the company acquired 20 jackup rigs from Seahawk Drilling for $25 million.
Hercules had been steadily acquiring rigs for a number of years. However, in 2007, it made a major move that took it into the big leagues. That year the company acquired rival TODCO (which had more than 60 rigs) for $2.4 billion, creating the largest jackup operator in the Gulf of Mexico and the fourth largest jackup provider in the world. – less