Shares in Hercules Offshore (NASDAQ:HERO) popped 6% this morning after the company’s CEO and President John Rynd stated that the company had noticed a “pick p in permit issuances for new wells” in recent weeks, giving the company “measured confidence” that BOEMRE (the Bureau of Ocean Energy Management, Regulation, and Enforcement) and the oil and gas industry were gaining common ground on compliance with new regulations enacted on offshore domestic drilling in the United States in the wake of the BP’s oil spill in the Gulf of Mexico.
The comments from Rynd were made in today’s third quarter results from Hercules Offshore. The company reported revenues of US$168.5 million, up from US$159.3 million in Q3 2009, and a loss on continuing operations of US$15.1 million, or 13 cents per diluted share, down from a loss of $37.2 million (38 cents) in Q3 2009.
"In spite of the continuing uncertainty surrounding the permit approval process, we credit our customers and marketing group for finding opportunities to keep our Domestic Offshore segment relatively busy during what has been a very challenging regulatory environment for the shallow water drilling industry in the third quarter,” Rynd stated this morning.
Rynd also added that the company’s Domestic Liftboat operation also benefited from spill remediation related work throughout the quarter and looking ahead would be busy with plug and abandonment and decommissioning work.
Hercules Domestic Offshore division generated revenues of US$25 million, up from $19 million a year ago, while utilization rates climbed to 62.9% from 41.9%, but average revenue per rig fell to $39,338 from $44,715 in Q3 2009. Domestic Offshore recorded an operating loss of $32.1 million, an improvement on Q3 2009 when it chalked up a operating loss of $35.3 million.
Revenues generated from International Offshore for the third quarter 2010 were $74.4 million, a $15.6 million decrease over the comparable 2009 period, due to a decline in operating days to 538 from 768 in the same periods, respectively, Hercules reported.
“Lower activity was partially offset by an increase in average revenue per rig per day, which increased to $138,344 in the third quarter 2010 from $117,241 in the third quarter 2009.”
The Inland division generated revenues of $5.7 million in the third quarter 2010, while Domestic Liftboats generated revenues of $24.6 million and International Liftboats revenues increased 24% to $27.8 million.
At September 30, 2010, the Company had unrestricted cash and cash equivalents totaling $134.6 million and total debt of $859.5 million.
Hercules Offshore operates a fleet of 30 jackup rigs, 17 barge rigs, 65 liftboats, three submersible rigs, one platform rig and a fleet of marine support vessels.
Disclosure: No Positions