World Class Global Hunter Securities Conference July 17-19, 2011
World Class Overview
A Global Leader in Shallow Water Services Jackups Liftboats 50 Jackups 65 Liftboats Largest jackup provider in the U.S. Gulf of Mexico; 4th largest Largest liftboat provider provider worldwide (1) worldwide Operations on…
Global Footprint Global Summary Liftboats 65 Jackup Rigs 50 Inland Barges 17 Submersibles 2 Platform Rigs 1 U.S. Gulf of Mexico Jackup Rigs 42 U.S. Gulf Coast Submersibles 2 Inland Barges 17 Liftboats 41 (1) Malaysia…
Hercules Strategy Remains Consistent Maintain Leading Position Diversify Geographically in Core Businesses Opportunistic Growth Focus on And Fleet Optimization Shallow Water Assets Maintain Status as an Efficient, Low-Cost…
Health, Safety and Environmental Record Total Recordable Incident Rate (TRIR)(1) Lost Time Incident Rate (1) (LTIR) (2) 2.5 0.60 0.55 2.17 0.53 2.06 0.50 2 0.46 0.49 0.45 1.77 1.84 0.38 1.48 0.40 0.38 1.5 0.35 1.44…
World Class Business Outlook
Domestic Offshore Permit activity post Macondo GOM Jackup Backlog and Dayrates (1) remains slow, but pace has improved 8.0 150 135 Backlog on several rigs contracted 7.0 GOM Backlog per Marketed Rig (Months) 120…
GOM Supply vs. Demand U.S. GOM Jackup Supply and Demand as of July 11, 2011 90 82 Number of Rigs 74% Industry Utilization of Marketed Rigs 60 46 42 (36) 31 (4) 30 0 Current Less: Cold Marketed Planned Jackup Visible…
GOM Shelf Transaction History Rebound in GOM Shelf M&A suggests GOM Shelf E&P Transaction Values (1) a pick up in activity levels in billions 6.0 Energy XXIs 1+billion purchase of ExxonMobil GOM Shelf assets (Nov. 2010) 5.3 EPLs…
International Offshore Robust International E&P capital International Jackup Backlog and Dayrates (1) spending growth forecasted in 2011, supported by strength in oil prices 16.0 200 14.0 175 Tender activity and customer…
International Drilling Outlook FY 2011 Q1 Q2 Q3 Q4 Hercules 185 W. Africa 59-61k Contract Hercules 260 India 142-144k preparation 69-71k Middle Hercules 261 137-139k East Middle Hercules 262 127-129k East Hercules 208…
Jackup Newbuild Activity Newbuild Jackup Delivery Schedule Summary Shipyard Location 35 Build Country of Rigs % of Total 30 Brazil 2 3% China 15 21% Number of Rigs 25 India 5 7% 20 28 Mexico 1 1% 15 9 16 Russia 1 1% 10…
Domestic Liftboats First quarter 2011 utilization impacted by seasonality Activity levels have improved in the second quarter of 2011 Term contracts recently signed for seven vessels extending through the end of September 2011…
P&A and Decommissioning Market Opportunity U.S. GOM Platform Removal U.S. GOM Well Abandonment 1,600 200 1,400 1,200 150 1,000 800 100 600 50 400 200 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010…
International Liftboats Largest liftboat provider in West Africa and established presence in Middle East Utilization has improved since late 2010, reflecting higher international activity Increased drydocking schedule expected to…
World Class Strategic Positioning
Proactive Steps Taken to Confront Market Challenges Significant operational and financial challenges since late 2008 Global economic and financial market meltdown Crude oil and natural gas price collapse Global drilling activity…
Reduce Costs and Promote Industry Cause Reduced Cost Structure Leadership in Shallow Water Coalition Proactively reduced cost structure through Hercules led effort to organize the Shallow downturn by prudently stacking idle assets…
Strengthen Balance Sheet and Divest Non-Core Assets Term Loan Paydown Non-Core Asset Sales Reduced Term Loan balance by approximately Approximately 85 million in sales proceeds 409 million since 2Q09 from non-core assets since 2008…
Investment for Future Growth: Discovery Offshore Overview Structure Discovery Offshore is a newly established Luxembourgbased company Investors Hercules Offshore Constructing two ultra highspecification Keppel FELS Super A 119…
Capitalize on Market Opportunity: Seahawk Acquisition Attractive valuation with significant hard asset values Acquired 20 jackup rigs, related equipment and receivables from Seahawk, and assumed liabilities limited to payables Total…
Increase Financial Flexibility: Amendment to Credit Agreement Amendment to Credit Agreement allows for greater financial flexibility More accommodative Total Leverage Ratio thresholds Increase investment basket to 50 million from 25…
Closing Thoughts Drilling Operations Improving demand and pricing momentum for domestic jackups Significant synergies realized from Seahawk transaction Active international tender activity and strong oil prices resulting in…
APPENDIX 26 World Class
Domestic Offshore Marketed Rig Data Domestic Offshore Fleet Status as of 06/20/2011 Contract Est. Duration (1) Rig Name Rig Type Location Customer / Status Dayrate (000s) Days Date Shipyard 07/15/11 Hercules 120 120' - MC, TD GOM…
International Offshore Marketed Rig Data International Offshore Fleet Status as of 6/20/2011 Contract Est. Duration (1) Rig Name Rig Type Location Customer / Status Dayrate (000s) Days Date Hercules 170 170' - ILC, TD Bahrain…
Timeline of Events April 20: Tragedy June 8: NTL-05 issued by the BOEM outlining May 26: SWESC met with at Macondo Well the first round of new safety regulations DOI Secretary Salazar including CEO certification of equipment and 3rd…
Summary of Regulatory Changes Notice to Lessees (NTL) No. 2010 - 05 Notice to Lessees (NTL) No.2010 - 06 Issued on June 8, 2010 Issued on June 18, 2010 Independent third-party verification of Plans require additional information on…
Summary of Regulatory Changes (continued) Notice to Lessees (NTL) No. 2010 G05: Idle Iron NTL Establishes well abandonment/structure removal requirements that are no longer tied to the one-year anniversary of lease expiration…
Maximum Total Leverage Ratio Table Period Total Leverage Ratio April 1, 2011 June 30, 2011 6.75 to 1.00 July 1, 2011 September 30, 2011 7.50 to 1.00 October 1, 2011 December 31, 2011 7.75 to 1.00 January 1, 2012 March 31, 2012…
Minimum Fixed Charge Coverage Ratio Table Consolidated Fixed Charge Period Coverage Ratio July 1, 2009 December 31, 2011 1.00 to 1.00 January 1, 2012 March 31, 2012 1.05 to 1.00 April 1, 2012 June 30, 2012 1.10 to 1.00…
GOM Shallow Water Operator Data Top 20 Shallow Water (0-350ft) GOM Lease Holders Current Current Operator Apache Corp Jackup Liftboat Chevron Apache Corp 1 6 Stone Energy Chevron 5 15 McMoran O&G Stone Energy 0 3 W&T Offshore…
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