Hercules Offshore received a welcome notice from Saudi Aramco—a withdrawal notice to rescind Aramco’s previously issued notice of termination of its contract for the Hercules 261. As a result, almost all terms and conditions of the contract remain in full force and effect for the remainder of the five-year term of the contract.
Saudi Aramco’s contract with Hercules will run through November 2019. The decision to keep the contract in place comes weeks after the Organization of Petroleum Exporting Countries increased oil production.
Despite the good news, dayrates on Hercules 261, Hercules 262 and Hercules 266, which are also under contract with Saudi Aramco, are expected to be significantly reduced to bring those dayrates down to current market rates for similarly-classed rigs in the area.
Hercules shares increased by 11% on the news. Previously, share prices suffered when the company announced that it had to sell off several rigs, cut 40% of its workforce, and cold-stacked 11 of its 20 rigs in the Gulf of Mexico. Currently, Hercules operates 29 jackups (with a new one now under construction) and 24 liftboats.
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Saudi Aramco cancels Hercules contract
Image: Hercules rig / Hercules
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