Hercules Offshore agrees sale of 11 inland barge rigs, which includes three active rigs, eight cold stacked rigs and related assets (Inland Asset Package) for cash proceeds of approximately $45 million.
Excluded from the 'Inland Asset Package' are the Hercules 27, for which the Company has a separate agreement to sell the rig to a third party for $5 million, the Hercules 52, and the Hercules 9.
The Company will also retain existing working capital within the Inland segment. Closing will be staggered based on the expiration dates of existing contracts on the three active rigs and is subject to the completion of certain customary closing conditions. The initial closing will include ten of the rigs and is expected in late second quarter 2013, at which time the Company will receive $35 million, and closing on the final rig is expected in early third quarter 2013, at which time the Company will receive the remaining balance of $10 million. The Company expects to record a non-cash impairment charge of approximately $40 million as a result of the sale in the second quarter 2013.
John T. Rynd, Chief Executive Officer and President of Hercules Offshore stated, "The sale of our Inland rigs is consistent with our on-going efforts to rationalize non-core assets. Market challenges in this segment have been significant over the past several years, making it difficult to generate a positive return from these assets. We do not expect these challenges to materially abate. The sale will generate cash proceeds that can be reinvested in higher returning assets that are strategic to our growth objectives."
Headquartered in Houston, Hercules Offshore, Inc. operates a fleet of 38 jackup rigs, 13 barge rigs and 64 liftboats. The Company offers a range of services to oil and gas producers to meet their needs during drilling, well service, platform inspection, maintenance, and decommissioning operations in several key shallow water provinces around the world.