Hercules Offshore has reported a loss from continuing operations of $37.2 million, or $0.38 per diluted share on revenues of $159.3 million for the third quarter 2009, excluding the effects of non-recurring items, compared with income from continuing operations of $31.9 million, or $0.36 per diluted share on revenues of $315.7 million for the third quarter 2008.
John Rynd, Chief Executive Officer and President of Hercules Offshore stated, "Our third quarter operating results reflect the full brunt of one of the most severe declines in U.S. exploration and production capital spending in memory as domestic offshore and inland industry-wide activity levels reached new lows. Our results were also hindered by downtime on two of our international offshore rigs."
"However, a number of factors including the gradual improvement in the capital markets, strong oil prices and a constructive forward curve for natural gas, have led to a sharp uptick in domestic drilling bidding activity and recent contract awards. Our Domestic Offshore average days of backlog per rig have recently increased to 88 from just 19 on August 20. While it is still too early to know what 2010 will hold as we have yet to see our customers' spending plans, and the environment could remain weak for some time, we believe the worst of the cyclical downturn may be behind us."
Mr. Rynd continued, "Furthermore, I am extremely pleased with our continued progress in strengthening our capital structure. Since September 30, 2008, we have retired approximately $280 million in total indebtedness. Additionally, our recent issuance of $300 million in senior secured notes due 2017 has further improved our debt maturity profile."
During the third quarter 2009, revenues from Domestic Offshore were $19.0 million compared to $112.7 million in the third quarter 2008 as a result of a sharp decline in industry activity. Operating days for the third quarter 2009 declined by 75% to 424 days from 1,673 days in the third quarter 2008 while average revenue per day per rig decreased to $44,715 from $67,384 for the comparable periods, respectively. Operating costs were reduced by $26.4 million in response to the weak activity levels. The segment generated an operating loss of $35.3 million in the third quarter 2009 versus income of $31.3 million in the third quarter 2008.
International Offshore generated revenues of $90.0 million in the third quarter 2009 compared with revenues of $95.3 million for the same period of 2008. Average revenue per rig per day decreased to $117,241 in the quarter ended September 30, 2009, from $130,704 in the comparable quarter of 2008 primarily as a result of lower dayrates on two of our rigs working in Mexico, fewer operating days on the Hercules 260 and no operating days on the Hercules 156, both of which had above average dayrates in the third quarter 2008. Utilization for the third quarter 2009 declined to 76.3% from 94.3% in the third quarter 2008. The Hercules 156 which was not on contract during the third quarter 2009, coupled with the Hercules 170 which completed its contract early in the quarter, as well as downtime on the Hercules 208 and Hercules 260, adversely impacted utilization. Operating income declined to $26.7 million in the third quarter 2009 compared to $34.2 million in the prior year period.
Inland generated revenues of $2.4 million in the third quarter 2009 versus $44.4 million in the third quarter 2008. Demand was weak industry-wide and resulted in a significant decline in operating days to 116 versus 1,142 in the previous year. Average revenue per day per rig declined to $21,009 from $38,911 for the respective periods. Operating costs were reduced by 78% over the comparable period, or by approximately $26.0 million. The Inland segment recorded an operating loss of $13.5 million in the third quarter 2009 compared with an operating loss of $1.2 million in the third quarter 2008.
Domestic Liftboats recorded revenues of $19.3 million in the third quarter 2009, a reduction of approximately $6.1 million from the third quarter 2008. Average revenue per day per liftboat decreased to $7,813 in the third quarter 2009 versus $8,094 in the third quarter 2008 while utilization decreased to 68.6% from 81.1% in the same periods, respectively. Third quarter 2008 utilization benefitted from demand related to hurricanes Gustav and Ike. Operating income declined to $1.0 million in the third quarter 2009 compared with $5.8 million in the same quarter of 2008. Four domestic liftboats were transferred to the International Liftboats segment during the quarter as they prepared for their mobilization to West Africa, which is currently underway.
International Liftboats generated third quarter 2009 revenues of $22.3 million, a slight increase from $20.3 million in the third quarter 2008 due largely to the addition of the Whale Shark, which commenced operations in the Middle East during the third quarter 2009. Average revenue per day per liftboat for the third quarter was $19,426 versus $17,780 in the third quarter 2008, stemming mainly from the addition of our Middle East operations. Operating income for the period was $2.6 million, a decrease from $5.1 million in the third quarter 2008, resulting from contract preparation expenses in our Middle East operations and preparation costs related to the fourth quarter 2009 transfer of four vessels to West Africa.
Balance Sheet and Cash Flow
At September 30, 2009, the Company had cash and cash equivalents totaling $219.9 million and unused capacity of $165.0 million under its revolving credit facility. As of September 30, 2009, the Company's balance sheet reflects total debt of $951.7 million. Cash flow provided by operations was $32.7 million and capital expenditures and deferred drydocking expenditures were $13.4 million during the three months ended September 30, 2009.
During September, the Company completed the issuance of 17.5 million shares of common stock for net proceeds of $82.3 million. During October 2009, the Company received additional net proceeds of $6.3 million related to the issuance of 1.3 million shares of common stock from the partial exercise of the underwriter's overallotment option. The Company also completed a private placement of $300.0 million of 10.5% Senior Secured Notes due 2017 in October 2009. Net proceeds from the Senior Notes offering of $284.4 million, coupled with an additional $97.4 million in cash were used to repay indebtedness outstanding under the company's term loan. These payments have reduced the balance on the term loan facility to $484.1 million, resulting in a decline of 2.5% in the interest rate margin on the term loan.
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