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Rig sales begin for bankrupt Hercules Offshore

Company filed for bankruptcy in June with a declaration that its assets were up for sale.

By Daniel J. Graeber
Hercules Offshore announces the sale of one of its drilling rigs as the company moves through Chapter 11 bankruptcy. File photo by A.J. Sisco/UPI
Hercules Offshore announces the sale of one of its drilling rigs as the company moves through Chapter 11 bankruptcy. File photo by A.J. Sisco/UPI | License Photo

HOUSTON, July 12 (UPI) -- A little more than a month into Chapter 11 bankruptcy, rig company Hercules Offshore said it sold one of its drilling components for around $3 million.

The international drilling subsidiary of Hercules Offshore said it reached a deal to sell its Hercules 267 rig to an undisclosed buyer for $3.16 million.

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"The sale is expected to close imminently, subject to the satisfaction of customary closing conditions," the company said in a statement.

Hercules 267 was last listed in Gabon after serving under a reduced-rate contract offshore Ivory Coast.

Hercules last month said it was returning to Chapter 11 bankruptcy with a plan to sell off all of its assets. The company already had a series of rig contracts suspended as lower crude oil prices during the first quarter left its customers with less capital to invest in exploration and production activity

Under bankruptcy last year, the company said the terms of restructuring would support $1.2 billion of outstanding notes and provide $450 million in new debt financing, which would support the construction costs of a new rig, Hercules Highlander.

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Hercules reported a net loss of $26.9 million on revenue of $50.9 million for the first quarter, compared with a net loss of $57.1 million on revenue of $122.6 million year-on-year. Operating expenses, meanwhile, were $11.7 million, compared with $36 million year-on-year.

When announcing bankruptcy last month, the company said it plans to continue operating under its contractual obligations throughout the sale process and to continue with its regular payment and benefits programs for employees.

The company in 2013 spent more than $3 million in salvage costs after one if its rigs was damaged when a natural gas cloud ignited after Walter Oil & Gas Corp. reported it lost control of a well in the Gulf of Mexico while preparing it for production.

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