U.S. offshore drilling contractor Hercules Offshore has reported a net loss of $57 million for the first quarter 2015, compared to net income of $19.9 million realized in the corresponding quarter of 2014. Revenue fell to $122.6 million versus $257.7 million a year ago.
These are challenging times for offshore drillers as the oil prices have fallen sharply from last year levels, which spurred the oil companies to scale back on exploration, thus decreasing demand for offshore drilling rigs. According to Hercules Offshore CEO John T. Rynd, the gloomy market conditions are going to get even worse.
Rynd said : “2015 is shaping up to be a very challenging year for our industry in general and our company in particular. Demand for jack-up rigs remains weak in every region of the world and the market is still scheduled to deliver a significant number of newbuild rigs over the next several years.”
He said that he was very pleased, considering the tough market environment, to have obtained a five year contract on the Hercules 260 jack-up rig in April, which will keep the rig working into 2020 with potential rise of dayrate.
“We expect continued weakness in rig utilization through the remainder of 2015, or at least until we see a meaningful improvement in commodity prices,” Rynd said.
“Additionally, our International Liftboat business continues to suffer low utilization, especially in Nigeria, which we expect to continue through this year. In response to these conditions, we have implemented a number of cost saving measures, including cold stacking several rigs, which have made a significant impact on our first quarter results and should show additional benefits in future quarters.”