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Hercules Offshore, Inc. (HERO) Message Board

  • UHUH24 UHUH24 Mar 4, 2011 10:30 AM Flag

    Hard Book $20/shr

    The rigs have been depreciated but they are worth more than cost. Steel has doubled in price. In a couple of years when drilling is back to normal, the stock will be selling at 1.5 times hard book. Another driller, Rowan, will want the assets. The stock was $35 before the Gulf spill. The recent rig purchase is timely and done for cash--no dilution. Analysts are just realizing the leverage in the business. Day rates can double and that is pure profit. Stock off to $15!!

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    • "The recent rig purchase is timely and done for cash--no dilution."
      NO IT WASN'T

      On February 11, 2011, Hercules Offshore, Inc. (the “ Company ”) and its wholly owned subsidiary, SD Drilling LLC (collectively with the Company, “ Purchasers ”), entered into an asset purchase agreement (the “ Asset Purchase Agreement ”) with Seahawk Drilling, Inc. (“ Seahawk ”) and certain of its subsidiaries...
      The purchase consideration is One Hundred Million Dollars ($100,000,000.00) (the “ Consideration ”), preliminarily consisting of $25,000,012 in cash plus 22,321,425 shares of common stock.

      22.3 million shares Seems like dilution to me.

      • 1 Reply to wright1bby
      • Whoops!

        $15.30 Hard book

        Net Book value of PP&A 1923 Million grossed up by 40% to get replacement value plus fair value rigs purchased $300= $3 billion less $875MM debt= $2.1B

        New shares 23MMN = total out 137 million.

        2100/137 = $15.30/shr NAV

        There is still a lot of room. The inflationary environment coming makes this a perfect hedge--lots of assets and manageable debt and positive cash flow.

    • Noble will buy Hercules. They want to expand their shallow water presence. HERO is now the largest swallow water driller in the GUlf. That gives them a lot of pricing leverage when Gulf drilling returns to normal. I also expect HERO to get back to the old highs. Does it matter if you pay 5,6 or 8 if we are going to $30. We now know they are THE survivor.

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