Hercules Offshore to sell assets in bankruptcy

HOUSTON, June 6 (UPI) -- U.S. rig company Hercules Offshore said Monday it was returning to Chapter 11 bankruptcy and now planning to sell off all of its assets.

Crude oil prices are up more than 80 percent from their 2016 lows below $30 per barrel, though Hercules CEO John Rynd said recently the recovery was not strong enough for his company, which emerged from bankruptcy in November

Hercules reported a net loss of $26.9 million on revenue of $50.9 million for the first quarter, compared with a net loss of $57.1 million on revenue of $122.6 million year-on-year. Operating expenses, meanwhile, were $11.7 million, compared with $36 million year-on-year. The company had a series of rig contracts suspended as lower crude oil prices during the first quarter left its customers with less capital to invest in exploration and production activity.

The company said Monday that all of the lenders holding the company's debt voted to accept a plan for Chapter 11 bankruptcy.

"Under the terms of the plan, all of the company's assets will be marketed for sale, and those left unsold at the completion of the Chapter 11 process will be placed into a wind-down vehicle to ensure their continued, safe operation until sales are finalized," it said in a filing. "The company's international subsidiaries are not included as part of the Chapter 11 cases but will be part of the sale process."

The company said it plans to continue operating under its contractual obligations throughout the sale process and to continue with its regular payment and benefits programs for employees. For shareholders, Hercules said a vote in favor of bankruptcy was encouraged because it was the best option to preserve any remaining value.

In March, Rynd warned that all segments of the company's portfolio have been negatively impacted by the market downturn. Rival company Transocean said earlier this year it expected "very few" new drilling contracts for 2016.

The company in 2013 spent more than $3 million in salvage costs after one if its rigs was damaged when a natural gas cloud ignited after Walter Oil & Gas Corp. reported it lost control of a well in the Gulf of Mexico while preparing it for production.