Hercules Offshore: Fleet Status As Of January 22 And Commentary
- Hercules Offshore released its January status yesterday. I noticed eight changes, including four small new contract extensions totaling 384 days averaging $73k/d, however, nothing exciting.
- Hercules liftboats revenue increased 2.5% from December with a total amount of $7.442 million.
- Hercules Offshore indicated four new rigs cold stacked bringing the total cold stacked rigs at 14. HERO has 11 working units out of 33 total.
- One disappointment is that the Hercules Triumph and the Hercules Resilience have not been contracted. The Hercules 260 is now, available in Gabon shipyard as well.
Hercules Offshore: Downgraded To Reduce By Global Hunter And Commentary
- Hercules Offshore has been recently downgraded by Global Hunter Securities to Reduce, with a price target of 0.80.
- Hercules Offshore is in a difficult situation due to a concerning and collapsing oil price, which cannot find any support yet.
- HERO has lost roughly 80% of its market cap in a few months, and keeps sinking to new lows. Is there any hope left?
Hercules Offshore: Can The Company Fund Itself In 2015?
- Only six jackups are currently contracted past January 2015.
- Interest expenses will exceed $100 million.
- Capital expenditures are slated at $120-130 million.
Hercules Offshore: Complete Fleet Analysis As Of December 16 And Commentary
- Hercules Offshore released its new fleet status on December 16. It appears that the company is really struggling in this challenging oil environment.
- Hercules Offshore has now 10 rigs cold stacked and 15 working units. The lifeboats segment is relatively stable with only a slight decrease of 3.4% in day rate average.
- HERO has breached its support at 1.40/1.50 recently, and has fallen to 1 dollar now. Can we call it a support?
- Hercules Offshore has declined by 80% in YTD14 and the stock still remains unattractive.
- Weak contract coverage for 2015 in difficult market conditions casts doubt on the company's operating cash flow generating capability.
- Hercules Offshore needs more long-term contracts for firm revenue and cash flow visibility.
- While the company's balance will not be strained further, debt servicing can be an issue if cash flow generation remains weak on lower oil prices in 2015.
- Ocean Rig and Ensco are among the relatively attractive offshore drillers for investors considering exposure to the beaten down sector.
Hercules Offshore: Complete Fleet Analysis And Commentary
- Hercules offshore released its new fleet status in November 18. A few bright spots despite a challenging environment.
- Hercules offshore has now 10 rigs cold stacked and 15 working units. The liftboats' segment is firming up with an increase of 6% in day rate average.
- HERO is trading under replacement value now and is oversold with support around 1.45/1.50. With oil price so depressed I recommend HERO as a HOLD.
Hercules Offshore: Fleet Analysis As Of October 23 And Q3 Results
- Hercules released its third-quarter results. The Company has a total revenue of 221.88 million, and an EPS of -0.55, due to a non-cash impairment charge of $82.5 million.
- Hercule results were not a surprise in this offshore drilling uncertainty. If we look at the fleet status released Friday we see a mixed bag.
- HERO has lost almost 70% of its market cap valuation in few months and I believe it is trading now at a discount to its fair value.
Hercules Offshore: Fleet Status Analysis As Of September 17, Where Is The Bottom?
- Hercules is a mid-tier offshore drilling company with a large jackup fleet and liftboat vessels, both in the USA and Internationally.
- Hercules released its rig fleet status on September 17 and the street was not impressed at all. The stock price took a turn for the worse.
- The stock has lost a whopping 64% since January and it seems that many have given up on the company. Is there any bottom in sight?
Current Conditions Present Good Opportunity To Accumulate Hercules Offshore
- The investor community has punished the common equity of Hercules Offshore so severely in this cyclical industry downturn that it now trades below fair value.
- While Hercules' debt is high is it not in the range where a liquidity or credit event is even a remote possibility. The common equity is not going to zero.
- The worst case industry views are that downturn will last 24 months, at which time Hercules should trade 100% higher than today.
- Hercules Offshore has dropped over 25% since it released its September fleet status report.
- The offshore drilling market should pick up in the GOM after hurricane season ends in late November.
- Hercules Offshore is positioned for a strong bounce back off its 3-year low.
- Hercules Offshore is down 60% over the past 12 months.
- The September fleet status report had very little good news.
- While the bad news has been building up for the company, the stock is beginning to enter deep value territory.
Hercules Offshore: Short-Term Pain For Long-Term Gain
- An average analyst price target of $5.02 is 51% higher than today's price.
- Hercules Offshore is at 2 year lows.
- Weakness is expected to continue though 3Q2014, but set the company up for strong contract activity in 4Q2014 and 1Q2015.
Hercules Offshore: Is It Time To Buy This Beaten-Down Offshore Driller?
- During Q2-14, owners' equity improved $29.8M from previous quarter to $853.5M from $823.7M.
- Second-quarter revenue improved to $242.9M from $211.4M compared to the same period in 2013.
- Net Income was $6.6M, or $.04 per share, after a $5.3M write-off related to lift boat business.
- Improving Gulf activity late in 2014.
- Shares now over sold near 52-week lows and relative strength below 30. Market cap at $545M with mixed insider activity is well below book value of $853.2M.
Hercules Offshore: Fleet Analysis As Of July 23 And Recent Second Quarter Results
- Hercules is a profitable mid-tier offshore drilling company with a large jackup fleet and liftboat vessels, both in the USA and Internationally.
- On July 23 the company released its fleet status in July and indicated its second quarter results. The street was disappointed by the weak results and the stock tanked 7%.
- The company is struggling to find its footing now, however, the next few quarters may show some improvement along with the whole sector. Let's look at the situation honestly.
Hercules' Recent Haircut: Fleet Analysis And Commentary
- Hercules is a profitable mid-tier offshore drilling company with a large jackup fleet and liftboat vessels, both in the USA and Internationally.
- On June 19th, 2014, the company indicated that two rig contracts in Angola were canceled with an estimated backlog loss of $91.8 million. The stock price tumbled on June 20th.
- The question for us, investors, is to know if this negative news is a temporary financial event or a definitive red flag?
Hercules Offshore - Becoming A Market Leader In HPHT Drilling
- HERO transforming from legacy commodity rig operator to high end Ultra HPHT player.
- $420 Million Ultra HPHT Maersk deal is the 2nd largest contract in jackup history outside of Norway.
- New 3D seismic acquisition could lead to revival in the Shallow waters of the Gulf of Mexico.
- HERO fleet less likely to be impacted by new Jackups deliveries.
- Shallow water day rates at historic highs; riskier deep water rates dropping.
- Hercules Offshore dominates the Gulf of Mexico; grows internationally.
- Russia may push oil rig operators to record valuations.
Fri, Jan. 23, 7:51 AM
- Hercules Offshore (NASDAQ:HERO) discloses that it has stacked five more Gulf of Mexico jack-ups as the plunge in crude oil prices has worsened the already weak market for rigs.
- HERO is removing the rigs from its marketable assets into its non-marketable assets, as it does not reasonably expect to market these rigs in the foreseeable future.
- HERO expects to record a related non-cash impairment charge of ~$117M during Q4.
Sun, Jan. 4, 3:49 PM
- The following stocks were the Russell 2000's worst performers in 2014:
- KWK -93.5%. WLT -91.7%. AMZG -89.5%. PHMD -88.2%. EXXI -88%. RGDO -86.8%. REN -85.4%. HERO -84.7%. EOX -84.3%. MCP -94.3%. CVEO -84.2%. BPZ -84.1%. FWM -82.6%. MILL -82.2%. NADL -81.6%. VRNG -81.4%. CYTX -81%. SALT -80.5%. PRKR -80%. MBII -79.7%. NTLS -79.2%. COVS -78.9%. KEG -78.9%. MM 78 MPO -77%. ANR -76.6%. EXEL -76.5%. SZYM -76.3%. CONN -76.2%. ANV -75.5%. GALT -75.5%. ZQK -74.8%. ARO -74.5%. REXX -74.1%. GDP -74%. FUEL -73.8%. QRHC -73.7%. VTG -73.4%. RLOC -73%. XONE -72.2%.
Dec. 23, 2014, 6:19 PM
- Although the energy sector led today's stock advance, a raft of companies downgraded by Global Hunter mostly took it on the chin - none more so than Key Energy (NYSE:KEG), which plunged 15% after shares were cut to Reduce from Neutral with a $1.50 price target that was reduced from $2.50.
- Also downgraded to Reduce were HERO -6.1%, NBR -3.2%, DO +1.3%.
- Lowered to Neutral were HAL +0.5%, GEOS -8.9%, HP -2.9%, BAS -2.5%, PKD -2.5%, BHI +0.6%, BBEP -0.2%, MEP +0.1%.
- Downgraded to Accumulate: PES -3.5%, PTEN -1.1%, NGLS +2.9%.
- The firm upgraded five stocks - ATW, NOV, OII, RES and SPN - all of which gained in today's trading.
Dec. 23, 2014, 5:42 PM
- Three of the five worst performers in the S&P 500 this year are offshore rig contractors Transocean (NYSE:RIG), Noble Corp. (NYSE:NE) and Ensco (NYSE:ESV) - plus non-S&P company Hercules Offshore (NASDAQ:HERO), the largest provider of shallow-water rigs in the Gulf of Mexico, has plunged 84% YTD - and analysts say next year may be worse with “grievous” cuts coming for exploration plans.
- Earnings for the world’s five biggest offshore rig contractors are expected to fall an average of 18%, and only Seadrill (NYSE:SDRL) is seen increasing profit in 2015, since 75% of its rigs are backed by contracts next year, highest among the five.
- To preserve cash, rig owners already have begun scrapping older rigs to balance supply and demand; Bloomberg says ~140 older rigs would need to be culled to make way for new vessels scheduled for delivery by 2020, double the number scrapped in the previous six years.
- If the industry is to return to a healthy state, older rigs will have to be scrapped, not spun off into separate companies as has been the case, SDRL CEO Per Wullf says.
Nov. 11, 2014, 7:55 AM
Nov. 3, 2014, 3:23 PM
- Hercules Offshore (HERO -6%) is laying off more than 300 employees by year's end due to the anticipated closure of four rigs in the Gulf of Mexico, the company told the Texas Workforce Commission today.
- As of Dec. 31, HERO's workforce totaled ~2,200; all of the employees to be released work on offshore rigs in the Gulf, disembarking for travel to the rigs from the company's docks in Louisiana and Texas.
Oct. 23, 2014, 7:38 AM| Comment!
Oct. 22, 2014, 5:30 PM
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Oct. 7, 2014, 5:40 PM
Sep. 20, 2014, 8:25 AM
- Deutsche Bank analysts say they came away encouraged after hosting a series of one-on-one meetings with top energy companies; despite recent negative sentiment on the group, it paints an optimistic outlook for oil service companies, which see continued strength in the overall spending outlook from customers, even with the move down in commodity prices.
- Among the firm's top Buy-rated stocks in the group is Schlumberger (NYSE:SLB), down 12.5% since July 1; despite a slowdown from Libya, Iraq and Russia, the DB team likes the outlook for Latin America, with a recent contract win in Brazil in wireline and better pricing in its drilling contract, and eyeing start-up work in Mexico.
- DB also likes Hercules Offshore (NASDAQ:HERO), which has cratered 63% YTD; the company expects slow going in the Gulf of Mexico until the end of this year’s hurricane season, but opportunities look much brighter in 2015.
- Rounding out the firm's favorites: BHI, BAS, EXH, FET, PES.
Sep. 18, 2014, 5:36 PM
Sep. 18, 2014, 2:19 PM
- Hercules Offshore (HERO -12.5%) plunges to its lowest intraday price in almost three years after disclosing it had idled another vessel, the sixth out of its fleet of 18 in the Gulf of Mexico.
- HERO likely will park two more rigs in the region next week as they roll off contract, Cowen analyst J.B. Lowe says, adding that the drop-off in Gulf of Mexico demand has been worse than expected and activity is set to stay depressed through end of hurricane season; he cuts HERO's stock price target to $4 from $6.
- As recently as May, HERO had 15 of its rigs working with another three out of service for regular inspections or upgrades.
Sep. 10, 2014, 7:37 PM
- The offshore drilling market could continue to deteriorate next year due to weak demand and a flood of new vessels, according to Seadrill (NYSE:SDRL) CFO Rune Magnus Lundetrae and other industry execs.
- "The market is going to be bad this year, it is going to be worse next year, then it will be stabilizing," Lundetrae says.
- Day rates for the most advanced ultra-deepwater rigs peaked at ~$650K last year and are now down to $375K-$500K, though contracting activity by oil firms is so slow that it is hard to establish the actual market rate, execs say.
- Lundetrae says the market could need another 24 months to bottom out, though rates already are near the bottom for older assets.
- Offshore drillers have been among the worst performing shares this year, with SDRL -18% YTD, RIG -25%, ESV -18%, RDC -19%, ATW -14%, DO -27%, PKD -24%, HERO -51%.
Aug. 21, 2014, 2:29 PM
- The latest fleet status reports from Diamond Offshore (DO -0.2%) and Hercules Offshore (HERO -3.8%), released after yesterday's close, appear to provide another sign that offshore drilling likely will get worse before it gets better.
- Raymond James analysts explain that DO's negative fleet status included a lower than expected dayrate on the ultra-deepwater rig Ocean Monarch for one year at $425K, below the firm's estimated 2015 rate of ~$450K; a convertible option to alter the contract to an 18-month term also was below expectations.
- HERO's August fleet status included a contract termination; Raymond James had expected choppiness in the coming months through hurricane season, but says the termination and increase in potential rigs available is cause for further caution.
- Also: SDRL -0.7%, RIG -0.5%, ESV -0.2%, HP -1.3%, RDC -0.7%, ATW -1%.
Jul. 24, 2014, 12:34 PM
- Diamond Offshore (DO -5.9%) is sharply lower despite reporting better than expected Q2 earnings and revenues, as shares appear to be reacting more to the fleet status report that was released last night.
- DO's newbuild Ocean BlackRhino secured a contract, but only because it will take over the contract the Ocean Confidence was set to begin in April 2015, suggesting the BlackRhino could not secure its own contract in its delivery window; the customer has the option to extend the original $550K/day contract to a three-year contract at a $485K dayrate, a step down from recent three-year contracts in the $550K-$600K range - which Cowen analysts say is a reminder that the trend in ultra-deepwater dayrates remains firmly down.
- Other offshore drillers also are lower: SDRL -1.2%, RIG -2%, NE -1.9%, ESV -1.8%, ATW -1.6%, HERO -2.2%, RDC -0.8%.
Jul. 23, 2014, 2:34 PM
- Hercules Offshore (HERO -5.8%) takes a beating after reporting a surprise Q2 loss of $0.04/share, trailing analyst expectations of a $0.02 profit, hurt by a slowdown in drilling activity and the transfer of properties in the Gulf of Mexico.
- HERO expects Q3 results will remain impacted by current operational challenges but conditions should improve toward year end; meanwhile, the lease rate for its fleet of rigs remains solid for its Gulf assets, and relatively stable crude oil prices are supporting the company's bottom line.
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