Offshore drilling contractor Hercules Offshore, which in November last year emerged from Chapter 11 bankruptcy, posted a net loss for the quarter as well as lower revenues.
The drilling contractor reported a net loss of $26.9 million, on revenue of $50.9 million for the first quarter 2016, compared to Predecessor net loss of $57.1 million, on revenue of $122.6 million for the first quarter 2015.
Upon emergence from Chapter 11 bankruptcy on November 6, Hercules adopted fresh start accounting, which resulted in the company becoming a new entity for financial reporting purposes.
References to “Predecessor” refer to the financial position of Hercules as of and prior to November 6, 2015 and the results of operations through November 6, 2015.
References to “Successor” relate to the financial position of the reorganized Hercules as of and subsequent to November 6, 2015 and the results of operations and statement of cash flows for the corresponding periods presented, which were subsequent to November 6, 2015.
As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the financial statements on or after November 6, 2015 are not comparable with the financial statements prior to that date.
John T. Rynd, Chief Executive Officer and President of Hercules Offshore stated, “First quarter results reflect continued weakness in the operating conditions across our drilling and liftboat markets. The rebound in oil prices over the past few months, while encouraging, have yet to translate to a material improvement in business prospects, as customers remain extremely cautious. Further cost reduction measures have been implemented in response to the weak environment.”
‘Hercules Highlander’ case
Sembcorp Marine’s Jurong Shipyard in Singapore recently gave Hercules a deadline to take delivery and pay for the jack-up rig the shipyard built for Hercules.
The newbuild jack-up rig Hercules Highlander is scheduled to work on Maersk Oil’s Culzean field in the UK North Sea in mid-2016, under a five-year drilling contract agreed in May 2014.
Regarding the issue with the newbuild jack-up, in the company’s 1Q 2016 report, Hercules CEO said: “As previously disclosed, the company has entered into a Forbearance Agreement with certain of our lenders. During the forbearance period, the company and our advisors have been actively working with various parties to negotiate an agreement with respect to a potential recapitalization, business combination or other alternative strategic transaction, including a potential divestiture of the Hercules Highlander and restructuring of the company’s term loan.”
Offshore Energy Today Staff