Hercules Offshore Announces First Quarter 2010 Results

HERCULES OFFSHORE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

March 31,

December 31,

2010

2009

(Unaudited)

ASSETS

Current Assets:

Cash and Cash Equivalents

$    130,797

$        140,828

Restricted Cash

7,028

3,658

Accounts Receivable, Net

136,196

133,662

Prepaids

5,958

13,706

Current Deferred Tax Asset

21,766

22,885

Other

15,080

6,675

316,825

321,414

Property and Equipment, Net

1,881,958

1,923,603

Other Assets, Net

30,796

32,459

$ 2,229,579

$     2,277,476

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Short-term Debt and Current Portion of Long-term Debt

$        4,931

$            4,952

Insurance Notes Payable

760

5,484

Accounts Payable

47,791

51,868

Accrued Liabilities

58,921

67,773

Interest Payable

23,179

6,624

Taxes Payable

-

5,671

Other Current Liabilities

35,164

34,229

170,746

176,601

Long-term Debt, Net of Current Portion

855,728

856,755

Other Liabilities

15,053

19,809

Deferred Income Taxes

223,934

245,799

Commitments and Contingencies

Stockholders' Equity

964,118

978,512

$ 2,229,579

$     2,277,476

HERCULES OFFSHORE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended
March 31,

2010

2009

Revenues

$ 150,849

$ 223,491

Costs and Expenses:

Operating Expenses

108,636

149,244

Depreciation and Amortization

50,254

48,846

General and Administrative

12,303

16,292

171,193

214,382

Operating Income (Loss)

(20,344)

9,109

Other Income (Expense):

Interest Expense

(21,739)

(15,789)

Other, Net

(14)

(656)

Loss Before Income Taxes

(42,097)

(7,336)

Income Tax Benefit

26,141

2,825

Loss from Continuing Operations

(15,956)

(4,511)

Loss from Discontinued Operation, Net of Taxes

-

(433)

Net Loss

$ (15,956)

$   (4,944)

Basic Loss Per Share:

Loss from Continuing Operations

$     (0.14)

$     (0.05)

Loss from Discontinued Operation

-

(0.01)

Net Loss

$     (0.14)

$     (0.06)

Diluted Loss Per Share:

Loss from Continuing Operations

$     (0.14)

$     (0.05)

Loss from Discontinued Operation

-

(0.01)

Net Loss

$     (0.14)

$     (0.06)

Weighted Average Shares Outstanding:

Basic

114,696

88,002

Diluted

114,696

88,002

HERCULES OFFSHORE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended March 31,

2010

2009

Cash Flows from Operating Activities:

Net Loss

$ (15,956)

$   (4,944)

Adjustments to Reconcile Net Loss to Net Cash Provided by

Operating Activities:

Depreciation and Amortization

50,254

48,846

Stock-Based Compensation Expense

156

1,965

Deferred Income Taxes

(22,657)

(7,529)

Provision (Benefit) for Doubtful Accounts Receivable

(1,472)

507

Amortization of Deferred Financing Fees

873

1,058

Amortization of Original Issue Discount

1,002

1,315

Non-Cash Loss on Derivatives

3,561

-

Gain on Insurance Settlement

-

(8,700)

(Gain) Loss on Disposal of Assets

(3,013)

216

Excess Tax Benefits from Stock-Based Arrangements

(374)

(3,202)

Net Change in Operating Assets and Liabilities

(12,042)

47,922

Net Cash Provided by Operating Activities

332

77,454

Cash Flows from Investing Activities:

Additions of Property and Equipment

(4,546)

(32,568)

Deferred Drydocking Expenditures

(4,396)

(4,009)

Insurance Proceeds Received

-

8,709

Proceeds from Sale of Assets, Net

3,616

1,960

Increase in Restricted Cash

(3,370)

-

Net Cash Used in Investing Activities

(8,696)

(25,908)

Cash Flows from Financing Activities:

Short-term Debt Repayments

-

(2,455)

Long-term Debt Repayments

(2,050)

-

Excess Tax Benefits from Stock-Based Arrangements

374

3,202

Other

9

(11)

Net Cash Provided by (Used in) Financing Activities

(1,667)

736

Net Increase (Decrease) in Cash and Cash Equivalents

(10,031)

52,282

Cash and Cash Equivalents at Beginning of Period

140,828

106,455

Cash and Cash Equivalents at End of Period

$ 130,797

$ 158,737

HERCULES OFFSHORE, INC. AND SUBSIDIARIES

SELECTED FINANCIAL AND OPERATING DATA

(Dollars in thousands, except per day amounts)

(Unaudited)

Three Months Ended
March 31,

2010

2009

Domestic Offshore:

Number of rigs (as of end of period)

25

23

Revenues

$           28,962

$         59,181

Operating expenses

39,152

54,413

Depreciation and amortization expense

16,539

15,040

General and administrative expenses

3,397

1,668

Operating loss

$          (30,126)

$       (11,940)

International Offshore:

Number of rigs (as of end of period)

9

12

Revenues

$           73,442

$       103,452

Operating expenses

34,719

44,141

Depreciation and amortization expense

14,931

15,184

General and administrative expenses

1,306

1,242

Operating income

$           22,486

$         42,885

Inland:

Number of barges (as of end of period)

17

17

Revenues

$             4,751

$         12,913

Operating expenses

5,717

20,264

Depreciation and amortization expense

7,506

7,993

General and administrative expenses

(3,165)

900

Operating loss

$            (5,307)

$       (16,244)

Domestic Liftboats:

Number of liftboats (as of end of period)

41

45

Revenues

$           11,443

$         22,610

Operating expenses

9,314

14,134

Depreciation and amortization expense

4,200

5,049

General and administrative expenses

495

408

Operating income (loss)

$            (2,566)

$           3,019

HERCULES OFFSHORE, INC. AND SUBSIDIARIES

SELECTED FINANCIAL AND OPERATING DATA - (Continued)

(Dollars in thousands, except per day amounts)

(Unaudited)

Three Months Ended
March 31,

2010

2009

International Liftboats:

Number of liftboats (as of end of period)

24

20

Revenues

$           25,962

$         18,642

Operating expenses

14,462

8,107

Depreciation and amortization expense

4,691

2,384

General and administrative expenses

1,506

1,291

Operating income

$             5,303

$           6,860

Delta Towing:

Revenues

$             6,289

$           6,693

Operating expenses

5,272

8,185

Depreciation and amortization expense

1,590

2,284

General and administrative expenses

368

481

Operating loss

$               (941)

$         (4,257)

Total Company:

Revenues

$         150,849

$       223,491

Operating expenses

108,636

149,244

Depreciation and amortization

50,254

48,846

General and administrative

12,303

16,292

Operating income (loss)

(20,344)

9,109

    Interest expense

(21,739)

(15,789)

    Other, net

(14)

(656)

Loss before income taxes

(42,097)

(7,336)

    Income tax benefit

26,141

2,825

Loss from continuing operations

(15,956)

(4,511)

Loss from discontinued operation, net of taxes

-

(433)

Net Loss

$          (15,956)

$         (4,944)

HERCULES OFFSHORE, INC. AND SUBSIDIARIES

SELECTED FINANCIAL AND OPERATING DATA - (Continued)

(Dollars in thousands, except per day amounts)

(Unaudited)

Three Months Ended March 31, 2010

Operating Days

Available Days

Utilization (1)

Average

Revenue per

Day (2)

Average
Operating

Expense per
Day (3)

Domestic Offshore

823

990

83.1%

$     35,191

$        39,547

International Offshore

527

869

60.6%

139,359

39,953

Inland

240

270

88.9%

19,796

21,174

Domestic Liftboats

1,727

3,420

50.5%

6,626

2,723

International Liftboats

1,174

2,160

54.4%

22,114

6,695

Three Months Ended March 31, 2009

Operating Days

Available Days

Utilization (1)

Average
Revenue per
Day (2)

Average
Operating
Expense per
Day (3)

Domestic Offshore

864

1,384

62.4%

$     68,497

$        39,316

International Offshore

795

847

93.9%

130,128

52,115

Inland

298

723

41.2%

43,332

28,028

Domestic Liftboats

2,439

3,870

63.0%

9,270

3,652

International Liftboats

918

1,710

53.7%

20,307

4,741

(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.  Included in International Offshore revenue is a total of $3.6 million and $3.8 million related to amortization of deferred mobilization revenue for the three months ended March 31, 2010 and 2009, respectively. Included in International Liftboats revenue is a total of $0.1 million related to amortization of deferred mobilization revenue for both the three months ended March 31, 2010 and 2009.  

(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.  Included in International Offshore operating expense is a total of $0.2 million and $0.7 million related to amortization of deferred mobilization expenses for the three months ended March 31, 2010 and 2009, respectively. Included in International Liftboats operating expense is a total of $0.7 million related to amortization of deferred mobilization expenses for the three months ended March 31, 2010. There was no such operating expense for the three months ended March 31, 2009.