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STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc.

Hercules Offshore, Inc. · Nov 13, 2012 · 39 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 1
    World Class Stephens, Inc. Fall Investment Conference November 13-14, 2012
  2. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 2
    World Class Overview
  3. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 3
    A Global Leader in Shallow Water Services Overview Worldwide Operations Global leader in jackup drilling and liftboat services 39 jackup rigs - fourth largest worldwide fleet 63 liftboats - largest worldwide fleet Operations in…
  4. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 4
    World Class Business Outlook
  5. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 5
    Domestic Offshore Segment Overview Global recession and Macondo U.S. GOM Supply/Demand of Marketed Jackups created extreme industry conditions in 2009 and 2010 Near the bottom (April 2011), Hercules acquired main competitor just as…
  6. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 6
    U.S. GOM Supply vs. Demand U.S. GOM Jackup Supply and Demand as of October 23, 2012 89% Industry Utilization Number of Rigs of Marketed Rigs Current Less: Cold Marketed Planned Jackup Visible GOM Jackup Stacked Supply…
  7. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 7
    US GOM Shelf Production Mix Crude oil and condensate volumes account U.S. GOM Shelf Oil & Condensate Production Mix for a growing percentage of U.S. Gulf of (water depth < 500 ft) Mexico Shelf production 45% From 2000 through 2006,…
  8. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 8
    Production Mix and Commodity Price Relationship Growing disparity between the price to Relationship between Oil/Gas Price to Production Mix crude oil and natural gas has been the driver of the shift in production mix 5.0 40% In 2004,…
  9. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 9
    Domestic Customer Base Exposure to Crude Oil Domestic customers have Customers U.S. GOM Liquids Mix significant exposure to crude oil, specifically Louisiana Light Sweet Apache 38% (LLS), which trades at a premium to WTI Chevron…
  10. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 10
    Domestic Offshore Backlog Hercules Offshore Average Backlog per Marketed Rig U.S.(1)GOM 180 150 120 90 60 30 0 Strong company backlog per rig near historical high and sustained over the past six months…
  11. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 11
    Leading Edge Dayrates Hercules Offshore Leading Edge Dayrates U.S. GOM 100 120 90 110 80 Dayrate (000 per day) Dayrate (000 per day) 100 70 90 60 80 50 70 40 30 60 20 50 200MC 250MS 250MC* 300MC* 350ILC *…
  12. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 12
    Large and Diverse Domestic Customer Base Diverse group of operators in the U.S. U.S. GOM Industry Customers Mix (1) GOM, ranging in size from mega-cap to private E&P Top three operators account for approximately 41% of U.S. GOM jackup…
  13. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 13
    Central GOM Lease Sales Gulf of Mexico lease sales are Central GOM Lease…
  14. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 14
    U.S. GOM Shelf M&A Activity GOM Shelf E&P Transaction Values (1) Closing Date Buyer Seller Deal Value (mm) % Oil Dec-10 Energy XXI ExxonMobil 1,012 55% Feb-11 EPL Oil & Gas Anglo-Suisse 201 92% May-11 Tana Exploration Maritech…
  15. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 15
    Reactivation Matrix (1) Capital Payback Analysis (m onths to payback) Dayrate Assumption 75,000 80,000 85,000 90,000 95,000 Reactivation Capital Cost 10 8.0 7.2 6.5 6.0 5.5 11 8.9 7.9 7.2 6.6 6.0 ( in millions) 12…
  16. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 16
    Domestic Offshore Potential Earnings Upside (1) Incremental EBITDA Analysis ( in m illions, except dayrate) Increase in Average Dayrate 5,000 10,000 15,000 20,000 25,000 18 28 56 84 112 140 Number of Rigs Working 19 43 72…
  17. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 17
    International Offshore Resilient oil prices are supportive of International Jackup Backlog and Dayrates strong growth in international capital spending National Oil Companies have been aggressively adding to their rig fleets since the…
  18. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 18
    International Offshore Drilling Outlook FY 2012E FY 2013E Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Middle Hercules 261 83-85k 83-85k East Middle Hercules 262 79-81k 79-81k East Middle Hercules 266 124-126k East Hercules 208 Indonesia 99-101K…
  19. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 19
    Key International Jackup Markets Snapshot Middle East Jackup Supply / Demand West Africa Jackup Supply / Demand 140 40 130 35 Total Supply Total Supply Marketed Supply 120 Marketed Supply 30 Total Contracted Total Contracted…
  20. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 20
    Discovery Offshore Investment Creative and opportunistic means to establish ownership in premium, long-lived assets Discovery rig capabilities in top 8% of global rig fleet Discovery rig class commands highest dayrates among all…
  21. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 21
    Discovery Offshore Economics to Hercules Offshore KFELS Super A and similar jackup rig designs offer the most attractive rates relative to capital costs Hercules Offshore to receive: Administrative fee of 6,000 per day per rig Rig…
  22. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 22
    Discovery Offshore Market Bifurcation Global jackup utilization, currently +90%, has tightened significantly in past 12 months Average dayrates for ultra high-specification jackup rigs continue to command a significant premium to…
  23. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 23
    International Liftboats Largest liftboat provider in West Africa and established presence in Middle East Well-established liftboat market and long term demand growth drivers in West Africa, tempered by competition creep Robust…
  24. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 24
    Domestic Liftboats Seasonally-driven market demand, with activity levels most active during the summer and fall period Select industry capacity movement out of the Gulf of Mexico, including Companys Kingfish vessel to the Middle…
  25. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 25
    World Class Corporate Initiatives
  26. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 26
    History of Growth August October January June August September October November February 2004 2004 2005 2005 2005 2005 2005 2005 2006 Acquired five Acquired 22 Acquired Rig 25 Acquired Rig Acquired Acquired Initial Acquired…
  27. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 27
    Successful Debt Reduction and Asset Sales Efforts Net Debt (1) Proceeds from Asset Sales Company has reduced net debt 468 million since 2Q08 Asset sales have generated a cumulative 196 million in proceeds since 2008 Divestitures…
  28. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 28
    Strengthen Balance Sheet with Refinancing Execution of comprehensive refinancing to facilitate rig acquisition, increase operational flexibility and extend maturity profile completed in April 2012 Refinancing consist of the following:…
  29. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 29
    World Class Conclusion
  30. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 30
    Hercules Offshores Strategy Remains Consistent Maintain Leading Position in Diversify Geographically Core Businesses Opportunistic Growth Focus on and Fleet Optimization Shallow Water Assets Maintain Status as an Efficient,…
  31. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 31
    Investment Highlights Positive industry trends continue in the U.S. GOM led by tight jackup rig supply and oil/liquids-rich activity demand driver Strengthening international jackup market, exemplified by Companys recent Saudi Aramco…
  32. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 32
    APPENDIX 32 World Class
  33. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 33
    Domestic Offshore Marketed Rig Data Domestic Offshore Fleet Status as of 10/23/2012 Contract Est. Duration (1) Rig Name Rig Type Location Customer / Status Dayrate (000s) Days Date Hercules 120 120' - MC, TD GOM Chevron 39-41 69…
  34. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 34
    Domestic Offshore Marketed Rig Data (continued) Domestic Offshore Fleet Status as of 10/23/2012 (continued) 69-71 53 12/15/12 Hercules 214 200' - MC, TD GOM Apache 79-81 180 06/13/13 Walter Oil & Gas 57-59 23 11/15/12 Walter Oil &…
  35. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 35
    International Offshore Marketed Rig Data International Offshore Fleet Status as of 10/23/2012 Contract Est. Duration (1) Rig Name Rig Type Location Customer / Status Dayrate (000s) Days Date Hercules 170 170' - ILC, TD Bahrain…
  36. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 36
    GOM Shallow Water Operator Data Top 20 Shallow Water (0-350ft) GOM Lease Holders Apache Corp Current % of Total Operator Chevron Jackup Current Stone Energy Apache Corp 8 24% McMoran O&G Chevron 3 9% W&T Offshore Stone Energy…
  37. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 37
    Summary of Discovery Offshore Structure Overview Structure Discovery Offshore is a newly established Luxembourg-based company Investors Hercules Offshore Constructing two ultra high-specification Keppel FELS Super A jackup rigs…
  38. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 38
    Adjusted EBITDA reconciliation The following table reconciles our Losses from Continuing Operations, the most directly comparable GAAP financial measure, to EBITDA and Adjusted EBITDA in thousands As of 12/31/2011 Loss from…
  39. STEPHENS 2012 FALL INVESTMENT CONFERENCE – Hercules Offshore, Inc. – slide 39
    World Class

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