Hercules Offshore lays off 30 percent of workforce

HOUSTON — Offshore driller Hercules Offshore has laid off 30 percent of its workforce since October, company officials said on a conference call with analysts Thursday.

The Houston-based company had about 2,200 employees, according to its most recent annual report. A company executive said Hercules has shed 672 workers in several rounds of layoffs in recent months.

That would be just about double the number of employees Hercules said it would lay off by the end of December in a similar announcement last year.

John Rynd, the company’s CEO, also said the company may consider cutting its contribution to workers’ 401K plans and reducing pay.

Rynd said the cuts occurred worldwide. The company’s workforce, he said, is one of its biggest expenses.

“We’ve taken a big axe to that,” he said.

In response to slowing demand for offshore rigs, the company has cold-stacked five rigs in the U.S. Gulf of Mexico.

The company reported a net loss of $154.1 million in the fourth quarter. It suffered a net loss of $101.2 million in the fourth quarter of 2013. For the year, it suffered a net loss of $216.1 million, compared to losses of $68.1 million in 2013.

Rynd said the challenges facing his company have been compounded by the fact that oil prices took a dive at the same time producers — his customers — were planning their 2015 budgets.

He said producers are putting pressure on Hercules to reduce its day rates and demand for offshore rigs is waning.

“What’s the duration of this cycle?” Rynd said. “None of us have that answer.”