HOUSTON (AP) -- Hercules Offshore Inc. said Monday that it will sell the bulk of its inland barge rigs as part of the oil and gas drilling company's shift to focus on more profitable parts of its business.
The Houston-based company said it will sell 11 inland barge rigs, three of which are active, for $45 million. It has a separate agreement to sell its Hercules 27 rig for $5 million. The company did not disclose the buyers.
Hercules CEO and President John Rynd said that there have been "significant" market challenges in this segment over the past several years, making it difficult to generate a positive return on the assets. The company does not expect these challenges to abate and said the sale will generate cash that can be reinvested in higher-returning assets.
The company, according to its website, has the largest inland barge drilling rig fleet along the U.S. Gulf Coast with 13 rigs. Inland rigs are typically mobile units used for work in more shallow water, such as marshes or inland bays.
Hercules will instead turn its focus to its larger base of 38 jackup rigs and 64 liftboats.
The company said the closing of the deals are staggered based on the expiration dates of contracts on three active rigs. The initial closing, which includes 10 of the rigs, is expected in the second quarter; Hercules will receive $35 million at that time. The closing of the final rig is expected in the third quarter, when Hercules will receive the remaining $10 million.
Hercules anticipates taking a $40 million impairment charge tied to the sale.
The price of oil fell Monday ahead of the release later this week of economic data from the U.S. and China, the world's two largest economies, and a speech by the Federal Reserve chief. Benchmark crude for June delivery was down 55 cents to $95.47 a barrel in electronic trading on the New York Mercantile Exchange.
Shares of Hercules jumped nearly 7 percent to $7.66 by midday. Its stock has been climbing steadily over the past 12 months and is trading near the top of its 52-week trading of $2.91 to $7.77.