UPDATE: Citi Color On Hero Estimate Increases

Citi, which raised its PT on shares of Hercules Offshore HERO, is providing some color on the stock.

“We are raising our EPS estimates in 2011 and 2012 and introducing an EPS estimate of ($0.06) per share in 2013,” Citi writes. “Our three-year earnings trajectory is now significantly higher than that of consensus.

“We are reducing our forecasted growth in rig cash costs per day to 5% per year from 10% per year (and have vetted this change with the company). HERO guided the effective tax rate to high-20s/low-30s from mid-40s previously based on geographical shifts in the revenue mix. We expect D&A to remain flat going forward as decreases resulting from the $125M impairment charge in 4Q10 are likely to offset increases from the acquired HAWK assets.”

Hercules Offshore closed Wednesday at $5.86.