Dallas, Texas 04/24/2014 (FINANCIALSTRENDS) – Hercules Offshore, Inc. (NASDAQ:HERO) hit the motherlode with its first quarter earnings report for 2014. The earnings beat analyst estimates, but that’s not what investors were cheering about afterwards. The key aspect was the positive outlook for continued exploration and drilling in the Gulf of Mexico.
The Hercules Offshore First Quarter Earnings Report
For the first quarter of 2014, Hercules Offshore reported revenue of $256.7 million, with income from continuing operations of $19.9 million, or $0.12 per diluted share. This doesn’t compare all that well to first quarter 2013, when the company reported $40.3 million, or $0.25 per diluted share, on revenue of $186.2 million.
The huge difference is attributed to the first quarter 2014 results including an after-tax charge related to early debt retirement and issuance costs of $15.2 million, or $0.10 per diluted share. The 2013 first results, on the other hand, included a non-cash tax gain related to the Seahawk acquisition of $37.7 million, or $0.23 per diluted share.
The point here being that first quarter results for 2014 are really better thane expected. The company’s Domestic Offshore division generated operating income of $51.5 million in the first quarter 2014, which is actually quite good in comparison to operating income of $40.0 million in the first quarter 2013.
Statement by Hercules Offshore President and CEO John T. Rynd
John T. Rynd, Chief Executive Officer and President of Hercules Offshore said that, “First quarter results reflect a healthy jackup rig market in the U.S. Gulf of Mexico and fleet growth in our International Offshore segment. Domestic drilling activity remains active, with the possibility of an improvement in demand later this year. Average dayrates in the U.S. Gulf of Mexico continue to rise as various rigs roll into higher paying contracts. Going forward, we expect stable pricing in the U.S. Gulf of Mexico, as all new contracts signed during the latest quarter were executed at current dayrates.”
The fact that Hercules is looking at stable pricing in the Gulf of Mexico and the possibility of improvement in demand this year could mean the complications and controversies over drilling are now in the past, and that has to be good news for Hercules investors.