Hercules Offshore has cut 40 percent of workforce amid low oil

HOUSTON — The CEO of rig contractor Hercules Offshore says the firm’s global workforce has been cut by nearly 40 percent this year as it wrestles with sunken oil prices. It had 1,800 employees at the end of 2014.

“The personnel decisions have been very difficult as these are our friends and colleagues who have contributed to the success of our business over the past several years,” Hercules CEO John Rynd told investors in a quarterly conference call Wednesday. “But unfortunately, these are actions we have to take.”

Like other offshore drillers, the Houston firm is facing budget-busting forces on two fronts. Drilling activity has fallen dramatically since oil prices were cut in half in recent months and daily rates for rigs have dropped. Rynd says the firm is still trimming the company but is working to avoid cutting at the expense of its safety performance and operating efficiency.

Hercules lost $20 million, or 35 cents a share, in the first quarter, compared with a gain of $57 million, or 12 cents a share, in the same period last year. It took a $15 million charge for paying down debt. The company’s revenue plunged from $256.7 million to $122.6 million.

The firm cold-stacked five U.S. rigs in the January-March period, bringing its total number of stacked rigs to nine, with just four rigs working. Rynd said drillers are marketing 19 jackup rigs in the Gulf of Mexico but only 10 are under contract now.

“This is the lowest level of demand we have seen since the early days of the offshore industry,” he said.