Situation Remains Tricky For Hercules Offshore Inc. (NASDAQ:HERO)


In its 1Q2016 scorecard, Hercules Offshore Inc. (NASDAQ: HERO) reported some operational improvements since exiting Chapter 11 restructuring. However, management said that the business environment remains tricky although crude oil prices have tended to recover in the recent months.

Out of the Chapter 11, Hercules adopted a fresh start to financial report with the restructured entity being referred to as the Successor and the pre-Chapter 11 one being referred to as the Predecessor. Although the financials for the Successor and the Predecessor are not comparable because of the transformation that occurred during Chapter 11, the 1Q report still tried to bring out some comparison mainly to highlight the progress and improvements in the new reporting entity.

1Q2016 financials for Hercules Offshore Inc. (NASDAQ: HERO)

For 1Q2016, the now restructured Hercules Offshore Inc. (NASDAQ: HERO) generated revenue of $50.9 million compared to revenue of $122.6 million a year ago before the Chapter 11 process. The new entity logged a net loss of $26.9 million or $1.35 per share compared to a net loss of $57.1 million or $0.35 per share in the year ago period before Chapter 11.

Areas of improvement

Although it might seem like Hercules Offshore Inc. (NASDAQ: HERO) plunged deeper into losses in 1Q2016 when you look at the EPS loss for the quarter and for the year ago quarter, there are areas in which the company registered remarkable improvements in financial performance. For example, in the domestic offshore operation, operating expenses in 1Q2016 were only $11.7 million while the year ago operating expenses were nearly triple at $36 million. Additionally, Hercules posted a net loss of $2 million in the domestic offshore operation in the latest quarter compared to a net loss of $3.8 million in the corresponding quarter a year ago.

International offshore operations

Hercules Offshore Inc. (NASDAQ: HERO) also registered improvements in its international offshore operations where operating expenses declined 53% to $23.4 million from a year earlier and operating loss improved significantly to just $0.2 million compared to $20.9 million in the year ago quarter.

Tricky situation

According to Hercules Offshore, Inc. (NASDAQ: HERO)’s CEO, John T. Rynd, demand for the company’s services is yet to pick up even with the recent rebound in crude oil prices. The reason for the weak demand is that customers have remained cautious and on cost-reduction mode.


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