HOUSTON, March 31 (UPI) — Prospects for drilling services for oil and gas won’t improve without a recovery in crude oil prices, the head of U.S. rig company Hercules Offshore said.
The company reported a net combined loss of $385.5 million for the three-month period ending Dec. 31. Hercules last year filed for Chapter 11 bankruptcy and, upon emergence Nov. 6, the company said it’s had a “fresh start.”
“We emerged from our restructuring process with significantly less debt and over $500 million in cash,” President and CEO John T. Rynd said in a statement.
The company filed for bankruptcy in August as part of a financial restructuring effort in an era of lower crude oil prices. It has since formed a special committee to consider options for selling itself or merging with a rival.
Lower crude oil prices, off more than 70 percent from peaks above $100 per barrel in mid-2014, leave energy companies with little capital to invest in exploration and production. That’s left companies that provide those services to energy companies with even tighter purse strings.
In mid-March, rival Transocean said in a filing with the U.S. Securities and Exchange Commission it expected “very few” new drilling contracts for 2016. Last week, oil field services company Baker Hughes reported the international rig count of 1018 was 20 percent below the level from last year.
For Hercules, Rynd said all segments of its portfolio have been negatively impacted by the market downturn. While working with the board of directors on strategic options, he said the company was “vigilant” in its cost-saving efforts.
“Looking into 2016 and beyond, we do not expect business conditions to rebound without a material and sustained rally in oil prices,” he said.