Contract drilling services provider
Hercules Offshore Inc.
) has decided to acquire additional shares of Luxembourg-based
Discovery Offshore S.A through its subsidiary. The shares will be
purchased at 15.00 Norwegian Kroner each and will increase
Hercules' total investment in Discovery to more than 50%.
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Simultaneously, Hercules Offshore inked a deal with All Coast LLC
to sell its domestic liftboat assets for $54.0 million in cash.
The transaction includes 29 marketed liftboats, 10 cold-stacked
liftboats and associated assets. Hercules Offshore will keep
existing working capital of $7.3 million as of May 31, 2013
within the Domestic Liftboat segment. The deal is likely to close
in early July, subject to customary closing conditions. The
company expects to incur an impairment charge of $4 million upon
Additionally, Hercules Offshore also declared its intention to
offer $400 million senior notes due 2021 in a private placement.
Net proceeds from the offering along with available cash in hand
will be used by the company to finance its purchase of shares of
Discovery Offshore S.A. and the payment of $333.9 million due for
Discovery Triumph and Discovery Resilience.
Headquartered in Houston, Hercules Offshore operates a fleet of
38 jackup rigs, 13 barge rigs and 63 liftboats. It provides
various services to oil and gas producers, which are required
during drilling, well service, platform inspection, maintenance,
and decommissioning work.
Hercules Offshore currently retains a Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.
However, there are certain other firms in the energy sector that
are expected to perform better over the short term. These include
Cheniere Energy Partners LP
Oiltanking Partners LP
). All these firms sport a Zacks Rank #1 (Strong Buy).