New subscribers — an opportunity to scale in a buy in HERO is now at hand.
HERO provides shallow water drilling and marine services for oil and gas exploration.
HERO announced the execution of a definitive agreement to acquire the offshore drilling rig Ocean Columbia from a subsidiary of Diamond Offshore Drilling (DO). The purchase price is $40 million in cash. Ocean Columbia is a LeTourneau Class 82 SD-C self-elevating drilling rig registered and flagged in the Marshall Islands. Subject to customary closing conditions, the company expects the acquisition to close in May. Hercules Offshore also announced that it has entered into a three-year drilling contract with Saudi Aramco for the use of the Ocean Columbia. Over this three-year period, the company expects to generate total revenues of $160M, including a lump-sum mobilization fee, assuming a utilization rate of 98% for the rig. Under the drilling contract, Saudi Aramco has the option to extend the term for an additional one-year period. Prior to commencing work under the contract, the company expects to spend approximately $45M for repairs, upgrades and other contract specific refurbishments to the rig and to mobilize the rig from the Gulf of Mexico to the Middle East. The company expects the rig to commence work under the contract in November.
Hercules Offshore files to sell 20M shares of common stock to finance the transaction..
Credit Suisse Securities, Goldman, Sachs & Co. and Deutsche Bank Securities are serving as Joint Book-Running Managers of the offering.
We recommend that subscribers able to get shares in the secondary participate to the tune of 20-30% full core position size provided the price is under $4.50. If the price is under $4.20, consider 35-40% full core position size.
Those holding HERO but less than 50% full core position size may add in the secondary.
Since the market is so high, please do not exceed 50% of full core position size. Please also consider not purchasing higher than $4.50, preferably under $4.25.
This event shows the wisdom of taking partial profits on an ongoing basis. This event also shows that our call earlier today to take partial profits in HERO for those holding 100% full core position was very timely.
This is a buy. Subscribers to ZYX Buy Change Alert bought this position at an average price of $2.55. Previously, profits have been taken at an average price of $6.00.
