Saudi Aramco again cuts its rig rates with struggling Hercules Offshore

Struggling drilling contractor Hercules Offshore said Friday customer Saudi Aramco will pay it less to use Hercules’ offshore rigs.

Houston-based Hercules, which emerged from bankruptcy late last year, is one of several drilling rig companies repeatedly reducing its rates in order to maintain contracts during the oil bust.

Noble Corp., for instance, said Thursday it is finalizing discussions with state-owned Saudi Aramco — the world’s largest oil producer — to reduce operating rates for 2016, after previously cutting its rates last year. Noble has at least four rigs currently operating with Saudi Aramco.

Hercules said Friday it received notice from Saudi Aramco regarding the reduced rates on thee Hercules rigs. The 2016 day rates were cut from $67,000 a day to $63,650 a day.

But that comes after much more dramatic reductions last year. After Saudi Aramco initially said it would cancel one of its Hercules contracts, the Saudi oil giant changed course after Hercules agreed to the $67,000 rate — down from amounts ranging from $117,000 to $136,000 a day.

The Hercules jack-up rigs were built in the 1970s, according to data compiled by Rigzone.

Hercules already has cold-stacked most of its 20 rigs in the Gulf of Mexico. Cold-stacking is the industry term for mothballing a rig with a skeleton crew for long periods of time.

Hercules filed for bankruptcy protection in June, but it only lasted for a few months before emerging in November. Hercules’ stock closed Thursday at $2.39 a share.

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