I recently visited the Hercules Offshore web site and discovered they were hiring a number of people for work in the North Sea. Hercules recently signed a deal with Maersk, but the deal is for a high spec rig that’s under construction and won’t be delivered for quite awhile. That said, they appear to be actively recruiting personnel to man the Hercules Triumph which is either already in the North Sea or is in route there. Their latest rig status report didn’t indicate that they were under contract yet, but with an aggressive hiring campaign, they sure must be close to inking a deal.
Historical day rates for this rig have been in the $215K/Day range which should alleviate concerns by some investors over rig idle time. This translates to a $78M contribution toward annual sales; which should help the firm stay solvent through the decline of today’s oil prices.
The Hercules Triumph can withstand incredibly austere conditions and can drill in up to 400 feet of water, making it very attractive to North Sea drillers. Energy companies have had to withstand a prohibitively high tax system in the North Sea, but apparently the English parliament is going to grant (at least) some relief in the ensuing months.
The big question is…. Does Hercules have an active drilling contract in the North Sea, or are they close to inking a deal? Based on their active recruiting campaign, we think they’re at least close. Time will tell, but the prospects are looking good.
HERO stock is trading at near 4 year lows, so lets hope this gets them moving in the right direction.