Hercules one of first to exit bankruptcy amidst oil crisis

Hercules rig in GoM/Getty Images

Hercules rig in GoM/Getty Images

Since oil prices began to fall last year, several companies filed for bankruptcy. Since last October, at least six oil and gas companies reporting debt loads higher than $500 million have done so.


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Hercules Offshore, which owns the biggest fleet of shallow-water rigs in the Gulf of Mexico, was one of the first to file. It looks like it might be one of the first to exit bankruptcy protection as well. The company has submitted the required paperwork to officially exit Chapter 11 by the end of October. “Hercules has the benefit of being one of the first in and, hopefully, the first out” according to Emanuel Grillo, an attorney for Hercules.

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Investors holding 99 percent of the notes voted for the deal, in which senior note holders will take over the company. Additionally, it will reduce the $1.2 billion owed while some note holders will provide $450 million in financing to finish a new drilling rig.

EI Creative cropThe deal proceeded so quickly because the company started negotiating months before August 13, 2015, the date of the bankruptcy filing. The consensus is that management is not to blame, as the size of the offshore rig downturn was deemed just too much. Joseph Triepke of Oilpro stated that “Rynd is one of the best in the business.” It became apparent that the issues regarding the industry faced a massive turn down that is one of historical proportions.

As quoted in Bloomberg, Hercules was proactive in ending their bankruptcy. Grillo reported they began negotiations with creditors before their bankruptcy filing. The company was able to gain the support of many of it’s note holders for a reorganization plan. According to Grillo, “The company started early in the process before there was a default.”


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