Energy firm Hercules Offshore returning to Chapter 11 bankruptcy

Houston-based energy firm Hercules Offshore is set to return to Chapter 11 bankruptcy less than seven months after completing its first trip through bankruptcy, but this time it expects to dissolve by selling its assets instead of staying in business.

The offshore oil drilling services firm and rig operator said Friday morning that it had secured support from 99% of its first-lien credit-line lenders to file a pre-packaged Chapter 11 bankruptcy petition.

The company said its business deteriorated rapidly due to slumping oil prices after it exited bankruptcy Nov. 6 and then ordered a review of its strategic options Feb. 11.

The company's swift return to bankruptcy illustrates the lingering effects of oil's brief crash below $30 per barrel in early 2016, despite the quick rebound to $50 by Thursday.

At least 77 oil and gas producers based in North America have filed bankruptcy petitions since the beginning of 2015, citing nearly $52 billion in debt, according to law firm Haynes and Boone's May 16 report.

Hercules said its bankruptcy plan includes paying all unsecured creditors in full, which will be possible in part by shifting all of the company's unsold assets "into a wind-down vehicle to ensure their continued, safe operation until they can be sold."

The company said its foreign assets are not part of the bankruptcy but will be offloaded.

Shareholders will receive an upfront payment of $12.5 million and additional payouts over time if they vote to accept the plan, Hercules said.

Hercules stock (HERO) fell 29.4% to $1.37 in early trading Friday.

Hercules' assets include jackup rigs and liftboats. The company also provides various shallow-water offshore services, such as drilling, platform inspection and decommissioning.

Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.