Below is from the presentation and it sounds significant!!!
Five-year contract extensions on the Hercules
261 and Hercules 262
Total potential revenue of approximately $465
– Equates to an average dayrate of $125k - $130k
per rig, an increase of over 50% from current
– New dayrates will commence in late 4Q14
Strong indication of customer’s desire for, and
longevity of jackup rigs of this class
Positive reflection of Company’s relationship
with world-class operator
Agreed. The 5 year contract extensions on 261 and 262 are huge. The rigs currently in Saudi Arabia contact through 2019 and day rates move from $79 -85K to $117 -$137K. The majority of the $30M+ annual increase on just these two rigs, starting in the 4th Q of 2014, flows straight to the bottom line.
We also will see a bump to earnings when 208 starts in January at $127 -129K ( up from $95-67). These day rate increases are better than any could have thought possible a year ago. Ultrahigh spec is the future and HERO now in that space which also allows them to balance their domestic to international ratio.
Three years ago, backlog was sitting at around $200 Million. Today it is over $1 billion. With backlog continuing to grow, I believe that we will witness a new leg up on day rate in the GOM. With so many rigs there, the impact to earnings will be significant.
This is the best under $10 stock in this industry today. Think long term and win.