Hercules Offshore Shares Fall On Dismal 3Q Outlook

NEW YORK (AP) — Shares of Hercules Offshore Inc. sank on Thursday after the offshore drilling services company forecast third-quarter revenue below analyst expectations.

Hercules shares tumbled 76 cents, or 12 percent, to $5.53 in morning trading. Shares have risen 43 percent since the start of the month.

On Wednesday after the markets closed, the company estimated third-quarter revenue of $155 million to $160 million. Analysts polled by Thomson Reuters predicted $165.4 million in quarterly revenue.

Hercules also said it would offer up to 17.5 million shares of stock, with an option for underwriters to buy another 2.6 million additional shares. It said it would use the money to pay down debt on its term loan, and for general corporate purposes.

CapitalOne Southcoast analyst Pierre Conner said he is not surprised that the company decided to issue equity with stock above $6.

"We wouldn't be surprised if they decide to raise equity again, if stock keeps outperforming," Conner said.

Conner said the additional share dilutes earnings per share, but highlighted the company's efforts to clean up the balance sheet. Conner held to his $4 price target. He raised his 2009 and 2010 estimates to a loss of 69 cents per share and a loss of 54 cents per share compared with earlier predictions of a loss of 76 cents per share and a loss of 71 cents per share, respectively.

Analysts expect a 2009 loss of 70 cents per share and a 2010 loss of 69 cents per share.