HOUSTON, April 29 (UPI) -- The demand for offshore rigs should remain low for the year with few signs of recovery in the current oil price market, U.S. rig company Hercules Offshore said.
"[This year] is shaping up to be a very challenging year for our industry in general and our company in particular," Hercules Offshore President and Chief Executive Officer John Rynd said in a statement Wednesday.
Hercules said it posted a first quarter net loss of $57.1 million, compared to net income of $19.9 million during the first quarter of 2014.
Crude oil is trading in a bear market in part because of weak demand and surplus, largely built as a result of increased U.S. production. Peer companies Halliburton, Baker Hughes and Schlumberger have all cut staff and spending in an effort to streamline capital in the depressed market.
Hercules said first quarter 2015 revenue generated from U.S. operations fell by 63 percent year-on-year to $52.9 million. The company said it ended the first quarter with nine marketed rigs, compared with 18 for first quarter 2014.
The situation was similar for international operations, where revenue was down 36 percent to $51.6 million.
Saudi Aramco in February canceled a contract to lease the Hercules 261 rig, effective March 27. The rig company said it's been in talks with the Saudi oil company to reduce the day rates for two other rigs, Hercules 262 and Hercules 266.
Hercules in April scored a win when it signed a five-year contract with Eni for work off the West African coast.
Rynd said the Eni contract was a bright spot in a market that should otherwise be rough moving forward through the year.
"We expect continued weakness in rig utilization through the remainder of 2015, or at least until we see a meaningful improvement in commodity prices," he said.