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!!
"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.
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.