Hercules Offshore posts $88.3 million loss
http://fuelfix.com/blog/2015/07/23/hercules-offshore-posts-88-3-million-loss-amid-tough-oil-price-environment/#29969101=0
Hercules Offshore posted a $88.3 million loss in the second quarter amid a lingering crude slump that’s hammered the offshore oil services industry.
The Houston-based shallow-water driller Thursday reported a net loss in earnings of $88.3 million, or 55 cents per diluted share, during the three-month period ending June 30. That’s down from a $6.6 million profit, or 4 cents per diluted share, during the same period last year.
“Second quarter results reflect the weak operating operations across the offshore services sector as well as the impact of our resolution with Saudi Aramco for our three rigs in the Middle East,” CEO and President John T. Rynd said in a statement. “The latest pullback in the price of oil is likely to delay any improvement in worldwide activity levels well into 2016.”
The firm made “retroactive dayrate concessions” to Saudi Aramco on existing contracts on three rigs, resulting in a $13.4 million adjustment.
The company also saw a dramatic pullback in domestic offshore activity as it operated fewer rigs, for less time and less money than the same time a year ago. Its average revenue per rig per day day plunged to $92,538 from $108,237 in the second quarter of last year.
The tough environment spurred the Houston-based firm, which contracts jack-up rigs mostly in the shallow waters of the Gulf of Mexico, to restructure its finances earlier this year. The company reached an agreement with its debt holders to convert $1.2 billion in senior debt into new equity, giving them almost 97 perent of the company’s shares. Rynd said he expects the plan to get full approval in late October.
Offshore services companies have been particularly hard hit by the downturn in crude prices. Hercules slashed 40 percent of its 1,800 employees and cold-stacked 11 of its 20 Gulf rigs earlier this year, and Rynd said Thursday that the firm continues to “aggressively reduce costs.”
“By controlling costs and establishing a stronger balance sheet, we will be better positioned to weather the protracted downturn and possibly capitalize on opportunities that may arise in such industry conditions,” he wrote.
Oceaneering International profit falls 40 percent in second quarter
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Oceaneering International’s profit fell 40 percent in the second quarter as its fleet of more than 300 underwater robots found less work at offshore oil-industry projects compared to last year.
The Houston company, which deploys remotely operated vehicles to deep-sea oil-drilling sites, wrote down the value of its inventory of oil field equipment by $9 million after it chose to stop manufacturing control systems for blowout preventers, the emergency valves that guard against oil spills thousands of feet in the ocean. It also took a $6 million loss on foreign currency exchange fluctuations.
Oceaneering’s net income was $65 million, or 66 a share, in the second quarter, down from $110 million, or $1.02 a share, in the same April-June period last year. Revenues fell from $927 million to $810 million.
In a written statement, Oceaneering CEO, M. Kevin McEvoy, said even though sales from its ROV business, subsea products line and other units were down, the earnings exceeded the company’s expectations and would have been higher than in the first quarter if not for the asset write-down.
“This was attributable to performances from our ROV and subsea products segments,” he said. “ROV benefitted from better-than-expected revenue per day on hire due to more vessel work, and subsea projects profited from higher U.S. Gulf of Mexico demand for deep-water intervention and diving services.”
He said weak demand prompted the company to stop manufacturing blowout preventer control systems but it will still provide after-market parts for the units it has already installed. The company put three new ROVs in the field and retired another three. It had a total of 336 ROVs in its fleet.
The company’s outlook for the second half of the year is “down somewhat from last quarter’s guidance,” McEvoy said, noting the company expects its subsea products unit and ROV business to see lower earnings.
“We believe our cash flow and liquidity position us well to manage our business through the current low commodity price environment,” McEvoy said. “Longer-term, deep-water is still expected to continue to play a critical role in global oil supply growth required to replace depletion and meet projected demand.”
Oceaneering shares fell $1.40 on Wednesday to $38.82 a share on the New York Stock Exchange as the price of U.S. crude fell to its lowest point in three and a half months. The company reported its earnings after the market closed.