Hercules Encounters Well Control Issue in Gulf of Mexico

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Hercules Offshore, Inc. (NASDAQ: HERO) announced on Tuesday that it is experiencing a well control incident in the Gulf of Mexico. Unfortunately, this is likely to bring up fears of the BP Plc (NYSE: BP) tragedy in the Gulf of Mexico for many readers and for many who live in the Gulf area. Hercules statement shows that this is on jackup drilling rig Hercules 265, which is listed as a 250-foot mat-supported cantilevered unit.

Unfortunately, that is all we know at this point. Hercules’ fleet operates 40 jackup rigs, which includes two Keppel FELS Super A high-specification, harsh-environment jackup rigs, and 24 liftboats. The company’s statement said,

“Efforts are ongoing to regain control of the natural gas well. At this time, all personnel on board have been evacuated and are being transported to a secure location… The rig is currently operating for Walter Oil & Gas Corporation in the U.S. Gulf of Mexico OCS lease block South Timbalier 220. All necessary governmental authorities have been notified of the incident.”

Hercules also said that efforts are ongoing with Walter Oil & Gas, the client, “to mobilize the necessary resources to regain control of the well and minimize any potential impact on the environment.”

We will follow up with more data when it is available. Hercules’ shares are trading down by 3.3% at $7.62 after hitting a 52-week high today. The new 52-week trading range is $3.35 to $7.96 and its market cap is roughly $1.2 billion.

Update at 1:45 PM EST: The July 18 fleet status report shows that the Hercules 265 rig has a $101,000 to $103,000 dayrate.

Update 1:52 PM EST: WWLTV shows that 47 workers were evacuated and was reported as a “natural gas blowout located about 40 miles south and 10 to 15 miles west of Grand Isle, Louisiana.”

Update 1:58 PM EST: The Bureau of Safety and Environmental Enforcement said that the well is flowing gas and no oil is being released… “BSEE inspectors conducting an overflight reported a light sheen one-half mile by 50 feet in area which is dissipating almost immediately.”

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