(Dow Jones Newswires), Apr. 5, 2011
Texas oil rig operator Hercules Offshore won bankruptcy court approval to buy a smaller rival, Seahawk Drilling, and its fleet of shallow-water drilling rigs.
U.S. Bankruptcy Judge Richard S. Schmidt approved the sale at a hearing Tuesday morning in a Corpus Christi, Texas, courtroom, fulfilling a plan that Seahawk Drilling first proposed when it filed for Chapter 11 bankruptcy protection in February.
That plan never met major resistance, and rival bids didn't emerge during the two months that followed Seahawk's proposal.
But the value of the deal--estimated now at $176.8 million--grew since the sale announcement. Hercules agreed to pay $25 million in cash and 22.3 million of its shares, which have crested on higher gas prices and closed Monday at $6.80 a share. The day that Seahawk filed for bankruptcy protection, Hercules's shares closed at $3.62, putting the deal's original value at $105 million.
Seahawk blamed its financial hardship on the global financial crisis that took hold shortly after it was formed in August 2009. Company officials also blamed the company's financial woes on tighter environmental regulations that followed the BP PLC (BP, BP.LN) oil spill, the largest U.S. offshore spill in the petroleum industry's history. The incident's deadly explosion aboard the rig Deepwater Horizon led oil to bleed into the Gulf of Mexico for three months starting in April 2010.
Drilling in shallow water wasn't affected by the moratorium that followed, but the process slowed. In the filing, company officials said they have been "unable to obtain drilling permits in a timely manner."
Seahawk's roughly 500 workers look for pools of oil in water depths of up to 300 feet, according to its website.
Copyright (c) 2011 Dow Jones & Company, Inc.
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