It appears that Hercules Offshore Inc. (NASDAQ:HERO) will continue to struggle, as Citigroup (NYSE:C) said there are some major headwinds the company faces which will be difficult to overcome until the price of natural gas increases.
Citigroup said they're maintaining their "Hold-Speculative" rating on the company as a result.
“Our $2.40 EV/EBITDA derivation applies a 6.0x EV/EBITDA multiple to our forward-12-month EBITDA of $161 million. The multiple is below the 10.2x peak HERO multiple reached in the most recent downturn and is well above the 1.6x trough reached at the peak of the last upturn. The multiple is based on historical analysis of HERO and relative market multiples and is within the 2.9x–15.6x historical range where the average of offshore driller stocks traded over the past ten years. The median group EV/EBITDA multiple was 7.9x in the most recent cycle,” said Citi.
Citigroup lowered the price target of Hercules significantly, from $3.60 to $2.40. Hercules was at $2.43 a share as of 12:19 PM EDT, gaining $0.05, or 2.10 percent.
Showing posts with label Hercules. Show all posts
Showing posts with label Hercules. Show all posts
Thursday, October 28, 2010
Monday, October 25, 2010
BP (NYSE:BP), Chevron (NYSE:CVX), Transocean (NYSE:RIG), Exxon (NYSE:XOM), Conoco (NYSE:COP), Shell (NYSE:RDS-A), Diamond (NYSE:DO), Hercules (Nasdaq:HERO) Have 100s of Wells Waiting for Approval in Gulf
Although BOEMRE director Michael Bromwich has said ther are only 10 new wells waiting for permits in the Gulf of Mexico, companies like BP (NYSE:BP), Chevron (NYSE:CVX), Transocean (NYSE:RIG), Exxon (NYSE:XOM), Conoco (NYSE:COP), Shell (NYSE:RDS-A), Diamond (NYSE:DO) and Hercules (Nasdaq:HERO) in fact have hundreds of wells waiting to be approved.
The disingenuous figures put forth by Bromwich are so small because hundreds of wells haven't been approved to enter into the permitting process.
There are 69 exploration and development plans are backlogged, just sitting there awaiting action, with each one including three to five wells, according to senior vice president and general counsel of Hercules, James W. Noe. And that was as of August 17. Since then no figures have been released, suggesting far more waiting to have decisions made.
Since the moratorium was lifted on October 12, there have only been six permits approved by the Bureau of Ocean Energy Management, Regulation and
Enforcement, and those were only in shallow-water areas, not the deepwater sections which allegedly have had the moratorium lifted.
I say allegedly because the regulations and permits are effectively having the same results as if a moratorium were still in place for deepwater drilling.
The disingenuous figures put forth by Bromwich are so small because hundreds of wells haven't been approved to enter into the permitting process.
There are 69 exploration and development plans are backlogged, just sitting there awaiting action, with each one including three to five wells, according to senior vice president and general counsel of Hercules, James W. Noe. And that was as of August 17. Since then no figures have been released, suggesting far more waiting to have decisions made.
Since the moratorium was lifted on October 12, there have only been six permits approved by the Bureau of Ocean Energy Management, Regulation and
Enforcement, and those were only in shallow-water areas, not the deepwater sections which allegedly have had the moratorium lifted.
I say allegedly because the regulations and permits are effectively having the same results as if a moratorium were still in place for deepwater drilling.
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