Hercules Offshore Sells Jackup at 94% Loss

Struggling drilling contractor Hercules Offshore Inc. will sell the Hercules 267 (250’ ILC) to an undisclosed buyer for $3.16 million, a 94 percent decrease from the $55 million the company spent to buy the rig in 2013.

The Houston-based company originally acquired the rig, formerly called the Ben Avon, in March 2013 from a KCA Deutag subsidiary. The sale is expected to close imminently, Hercules said in a July 11 press statement.

Hercules has taken several hits during the global oil price downturn, which prompted oil and gas companies to scale back spending and drilling plans amid an oversupplied rig market. In May, Hercules said it would file for prepackaged Chapter 11 bankruptcy a second time, six months after emerging from bankruptcy protection. Last month, the company reported it would lay off 60 employees at its Houston headquarters.

The rig sale marks the second one this year for Hercules. Last month, Maersk Drilling acquired a harsh environment jackup originally built for Hercules, the Hercules Highlander (400’ ILC), for approximately $190 million.

Evercore-ISI analyst James West told Rigzone the global shallow water market continues to weaken globally, particularly in Asia. The Gulf of Mexico shallow water market has been weak for several years. Evercore-ISI does expect to see some stabilization in 2017.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com

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