Saudi Aramco’s decision to drive down its day rates has contributed to Hercules Offshore posting significant losses.
It posted losses of $88.3mn for the quarter, compared with a $6.6mn profit during the same period last year.
In June, Hercules announced that the terms of its contracts for the Hercules 261, Hercules 262, and Hercules 266 had been renegotiated.
Aramco had told Hercules that it would be cancelling the contract altogether, but the service company agreed to slash its day rates to keep the Saudi energy giant.
Figures now show that the new agreement cost Hercules $13.6mn.
Outlining its international performance for the second quarter of 2015, the company said: “International Offshore revenue of $17.5 million in the second quarter 2015 includes a $13.4mn adjustment related to retroactive day rate concessions on the Hercules 261, 262 and 266 made on their existing contracts with Saudi Aramco, and compares to revenue of $71.7 million in the second quarter 2014.
“Utilisation decreased to 50.0% in the second quarter 2015 from 62.5% in the second quarter 2014, largely due to idle time on the Hercules Triumph, Hercules Resilience and Hercules 208, partially offset by higher utilisation on the Hercules 261 and Hercules 260.
“Average revenue per rig per day decreased to $47,975 in the second quarter 2015 from $157,637 in the second quarter of 2014, driven largely by idle time on the Hercules Resilience and Hercules Triumph, lower renegotiated day rates on the three rigs working for Saudi Aramco, as well as the retroactive day rate adjustments on these three rigs.
John T. Rynd, CEO and president of Hercules Offshore said: “Second quarter results reflect the weak operating conditions across the offshore services sector as well the impact of our resolution with Saudi Aramco for our three rigs in the Middle East.
“The latest pullback in the price of oil is likely to delay any improvement in worldwide activity levels well into 2016.
“The limited visibility and challenging market conditions that we expect to persist for some time drove our decision to restructure our capital base.”
