Dahlman Rose Reiterates Hold Rating on Hercules Offshore (HERO)

Dahlman Rose is out with a research report this afternoon, where it reiterates its Hold rating on Hercules Offshore HERO.

The DR analysts said that they view the company's purchase of Seahawk favorably as the acquisition price of just ~$14MM per working jackup is quite attractive.

They added that they have begun to see higher activity levels in the GoM, and dayrates have responded modestly so far: 250ft MC jackups are now fixing in the mid-$40k/d range compared to low-$40k/d at the start of 2011. At a ~$14MM per-rig price, these dayrates provide an annual EBITDA yield in excess of 30%.

As for valuation, the analysts remarked, “We maintain our Hold rating due to uncertainty ahead, but we feel the toughest times are likely behind Hercules.”