Boston, MA 09/19/2014 (wallstreetpr) – Provider of marine services and shallow-water drilling to oil and gas companies, Hercules Offshore, Inc. (NASDAQ:HERO) is facing slowdown in the drilling activities in the Gulf of Mexico much ahead of its expectations. As a result, the company would be forced to park one more pair of rig.
Slow Down Impact
Hercules Offshore, Inc. (NASDAQ:HERO) seems to be facing various issues to put its rigs into work. While asset sales in the region have been attributed for the slow down, the hurricanes threat has also forced it to idle its rigs, Bloomberg said. The News has also had its impact on the stock in the Nasdaq Stock Exchange.
Hercules Offshore has disclosed recently that it was going to idle one more vessel as a result of the slowdown. This meant that it would be its sixth fleet to get idled and represented one-third of the total available fleet of 18 in the Gulf of Mexico. It appears that the idling of rigs would continue its pace.
According to a Cowen and Company analyst, Lowe, Hercules Offshore, Inc. (NASDAQ:HERO) would be idling another pair of its vessel next week since their contracts come to an end. In a research note to clients, he said that a drop in demand was ahead of his expectation and much more than he has expected.
Customer Consolidation
The analyst said that the latest softness in the present market in the Gulf of Mexico was mainly due to the customer consolidation apart from transfer of assets in the last one-year period since he expects a more rigorous permitting process.
Hercules has been struggling to retain its value as it has already lost over half of it in the current year. Lowe said that the company’s customers would likely to commence their drilling either later in the current year or early next year. According to his estimate, Hercules Offshore, Inc. (NASDAQ:HERO) has 15 of its rigs in working conditions while three were out of service either for upgrade or regular inspection.
