HOUSTON, May 6 (UPI) -- The recovery in crude oil prices since the 2016 low point hasn't been enough to translate to improved business conditions, the head of Hercules Offshore said.
Crude oil prices have rebounded sharply from lows below $30 per barrel earlier this year as markets start a slow move toward a balance between supply and demand. John Rynd, the president and CEO of Hercules, which emerged from bankruptcy in November, said the first quarter was weak for companies servicing the exploration and production side of the oil and gas industry.
"The rebound in oil prices over the past few months, while encouraging, has yet to translate to a material improvement in business prospects, as customers remain extremely cautious," he said in a statement. "Further cost reduction measures have been implemented in response to the weak environment."
Rival company Transocean said earlier this year it expected "very few" new drilling contracts for 2016. In March, Rynd warned that all segments of the company's portfolio have been negatively impacted by the market downturn. While working with the board of directors on strategic options, he said the company was "vigilant" in its cost-saving efforts.
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.
Hercules said the 68 percent decline in operating expenses was largely the resulted in the decline in the number of rigs in service. 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 productive activity.