HOUSTON, October 30 /PRNewswire/ --

Hercules Offshore, Inc. (Nasdaq: HERO) today reported net income of US$48.4 million, or US$0.58 per diluted share, on revenues of US$294.4 million for the third quarter 2007, compared to net income of US$29.7 million, or US$0.91 per diluted share, on revenues of US$97.2 million for the third quarter 2006.

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The company's acquisition of TODCO closed on July 11, 2007, and the results from the acquired business are included from the date of the acquisition. Also included in the quarter ended September 30, 2007 are a loss of US$1.0 million related to the early retirement of debt, net of a US$0.4 million gain on interest rate derivatives, and US$2.6 million in severance costs and other costs related to the TODCO acquisition. On an after-tax basis, these items approximated US$2.3 million, or US$0.03 per diluted share. Excluding the effect of these items, net income for the third quarter 2007 was US$50.7 million, or US$0.61 per diluted share.

Randy Stilley, Chief Executive Officer and President, stated, "Our third quarter financial results clearly reflect a difficult market environment for shallow water drilling in the U.S. Gulf of Mexico. Despite this slowdown, we generated substantial cash flow during the quarter due to the increased diversity of the company's asset base and our continued focus on maintaining a low cost operating structure. Two-thirds of our operating income was generated by business segments other than our Domestic Offshore, which are currently experiencing stronger fundamentals. Furthermore, again during this quarter, our operating cost performance was exceptional across the fleet. While it is difficult to predict a recovery in our domestic offshore drilling business, there are some early signs of a moderate increase in demand as we enter the fourth quarter."

Mr. Stilley continued, "I am pleased with the way our entire team handled the integration of TODCO in a thorough yet expeditious manner. We are moving forward as one company with a focus on delivering exceptional services to our customers and industry leading returns to our shareholders."

Offshore Highlights

During the third quarter 2007, revenues from Domestic Offshore were US$99.6 million, a 115% percent increase over revenues of US$46.4 million in the third quarter 2006, which resulted from additional operating days as a result of the TODCO acquisition, somewhat offset by lower utilization and lower average daily revenue per rig. Third quarter 2007 utilization was 69.8% compared to 99.3% during the third quarter 2006, and average daily revenue per rig decreased by US$7,576 to US$77,200 in the third quarter 2007 as a result of reduced demand due to lower activity. Operating income increased to US$36.7 million in the third quarter 2007 from US$27.8 million in the prior year period.

International Offshore revenues were US$50.5 million, up from US$7.9 million in the third quarter 2006. The significant increase largely resulted from additional operating days from the TODCO acquisition as well as the full quarter impact of Hercules 258, which entered service in September 2006. This segment now includes the operating results of ten offshore rigs compared with three at the end of September 2006. Our average revenue per day increased by US$6,910 to US$85,735 during the third quarter 2007 compared with US$78,825 in the prior year period. Operating income increased to US$21.7 million in the third quarter 2007 from US$2.5 million in the prior year period.

Inland Highlights

With the acquisition of TODCO, we commenced operations in the Inland segment, which consists of 27 barge drilling rigs. During the third quarter 2007, we generated revenues of US$53.6 million and operating income of US$19.6 million. We generated average revenue per day of US$46,682 on utilization of 83.4%.

Liftboat Highlights

Domestic Liftboats revenues were US$35.7 million in the third quarter 2007, down from US$40.1 million in the third quarter 2006. Operating income decreased to US$12.5 million in the third quarter 2007 from US$21.0 million in the same period a year ago. The reduced revenue and operating income are partially the result of slightly reduced activity by our customers as we generated utilization of 67.5% during the third quarter of 2007 compared with 77.0% in the prior year period, as well as higher insurance and drydocking amortization expenses.

International Liftboats revenues were US$18.1 million in the third quarter 2007, up from US$2.8 million in the third quarter 2006. This increase was largely the result of increased operating days stemming from the acquisition of eight liftboats and the bareboat charter of an additional five liftboats in late 2006. As a result, our operating days increased to 1,383 in the third quarter of 2007 from 235 in the prior year period. Operating income increased to US$6.7 million in the third quarter 2007 from US$0.2 million in the third quarter 2006.

Other Highlights

Our Other segment consists of our wholly owned subsidiary, Delta Towing, and our fleet of nine onshore drilling rigs, both of which were assumed as part of the previously mentioned TODCO acquisition. During the third quarter 2007, this segment generated revenues of US$36.9 million and operating income of US$9.6 million.

Non-GAAP

Certain non-GAAP performance measures and corresponding reconciliations to GAAP financial measures for the company have been provided for meaningful comparisons between current results and prior operating periods. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. In order to fully assess the financial operating results, management believes that the adjusted net income figures included in this release are appropriate measures of the continuing and normal operations of the company. However, these measures should be considered in addition to, and not as a substitute, or superior to, net income, operating income, cash flows from operations, or other measures of financial performance prepared in accordance with GAAP. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure in the table that follows the financial statements.

Conference Call Information

Hercules Offshore will conduct a conference call at 10:00 a.m. CDT (11:00 a.m. EDT) on Tuesday October 30, 2007 to discuss its third quarter 2007 financial results. The conference call will also be broadcast live via the Internet at http://www.herculesoffshore.com. To participate in the conference call by telephone, please call, 10 minutes prior to the scheduled start time, one of the following telephone numbers:

+1-866-383-8108 (Domestic) +1-617-597-5343 (International) The access or confirmation code is 72716765

A replay of the conference call will be available by telephone on Tuesday October 30, 2007 beginning at 12:00 p.m. CDT (1:00 p.m. EDT), through Tuesday November 6, 2007. The phone number for the conference call replay is +1-888-286-8010 or internationally +1-617-801-6888. The access code is 79105164. Additionally, the recorded conference call will be accessible through our website at http://www.herculesoffshore.com for 28 days after the conference call.

Additional Information

Headquartered in Houston, Hercules Offshore, Inc. currently operates a fleet of 33 jackup rigs, 27 barge rigs, 65 liftboats, three submersible rigs, nine land rigs, one platform rig and a fleet of marine support vessels operated through a wholly owned subsidiary, and has operations in ten different countries on four continents. The company offers a range of services to oil and gas producers to meet their needs during drilling, well service, platform inspection, maintenance, and decommissioning operations in shallow waters.

For more information, please visit our website at http://www.herculesoffshore.com.

The news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are subject to a number of risks, uncertainties and assumptions, including the factors described in Hercules Offshore's most recent periodic reports and other documents filed with the Securities and Exchange Commission, which are available free of charge at the SEC's website at http://www.sec.gov or the company's website at http://www.herculesoffshore.com. Hercules cautions you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements.

HERCULES OFFSHORE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (All amounts in US dollars unless otherwise noted) September 30, December 31, 2007 2006 (unaudited) ASSETS Current Assets: Cash and Cash Equivalents $80,052 $72,772 Restricted Cash 4,592 250 Marketable Securities 19,850 - Accounts Receivable 265,746 89,136 Insurance Claims Receivable 25,472 - Supplies 5,917 - Prepaids 49,710 14,438 Current Deferred Tax Asset 12,395 - Other 9,935 3,627 473,669 180,223 Property and Equipment, Net 2,178,443 415,864 Goodwill 929,294 - Other Assets, Net 55,145 9,494 $3,636,551 $605,581 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short-term Debt and Current Portion of Long-term Debt $12,152 $1,400 Insurance Note Payable 30,180 6,058 Accounts Payable 101,805 29,123 Accrued Liabilities 64,740 16,262 Taxes Payable 11,352 8,745 Interest Payable 15,388 2,105 Other Current Liabilities 14,187 5,633 249,804 69,326 Long-term Debt, Net of Current Portion 905,003 91,850 Other Liabilities 19,873 6,700 Deferred Income Taxes 480,930 42,854 Commitments and Contingencies Stockholders' Equity 1,980,941 394,851 $3,636,551 $605,581 HERCULES OFFSHORE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 Revenues $294,365 $97,212 $503,873 $229,642 Costs and Expenses: Operating Expenses, Excluding Depreciation and Amortization 143,902 33,197 229,825 81,393 Depreciation and Amortization 39,581 9,097 63,520 22,582 General and Administrative, Excluding Depreciation and Amortization 18,018 7,209 36,516 20,396 201,501 49,503 329,861 124,371 Operating Income 92,864 47,709 174,012 105,271 Other Income (Expense) Interest Expense (15,761) (2,575) (19,230) (6,824) Gain on Disposal of Assets - 1,110 - 30,690 Loss on Early Retirement of Debt (1,312) - (2,182) - Other, Net 2,507 874 5,028 2,697 Income Before Income Taxes 78,298 47,118 157,628 131,834 Income Tax Provision (29,927) (17,439) (52,400) (48,310) Net Income $48,371 $29,679 $105,228 $83,524 Earnings Per Share: Basic $0.59 $0.93 $2.15 $2.68 Diluted $0.58 $0.91 $2.12 $2.61 Weighted Average Shares Outstanding: Basic 82,663 31,786 48,912 31,146 Diluted 83,418 32,545 49,568 31,959

HERCULES OFFSHORE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended September 30, 2007 2006 Cash Flows from Operating Activities: Net Income $105,228 $83,524 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 63,520 22,582 Stock-based Compensation Expense 6,157 2,277 Deferred Income Taxes 25,986 27,652 Amortization of Deferred Financing Fees 1,046 506 Excess Tax Benefit from Stock-based Arrangements (1,612) - Loss on Early Retirement of Debt 2,182 - Gain on Disposal of Assets (1,641) (30,779) (Increase) Decrease in Operating Assets - Accounts Receivable 15,169 (28,392) Insurance Claims Receivable (9,026) (7,913) Tax Sharing Agreement Payment (118,247) - Prepaid Expenses and Other 2,869 (23,673) Increase (Decrease) in Operating Liabilities - Accounts Payable (11,253) 16,420 Insurance Note Payable (12,052) 9,629 Other Current Liabilities 5,492 12,335 Other Liabilities 834 526 Net Cash Provided by Operating Activities 74,652 84,694 Cash Flows from Investing Activities: Acquisition of Business, Net of Cash Acquired (733,763) - Investment in Marketable Securities (128,525) - Proceeds from Sale of Marketable Securities 108,675 - Additions of Property and Equipment (97,521) (143,282) Deferred Drydocking Expenditures (14,680) (8,967) Insurance Proceeds Received 3,850 50,090 Proceeds from Sale of Assets, Net 2,211 5,989 (Increase) Decrease in Restricted Cash 229 (250) Net Cash Used in Investing Activities (859,524) (96,420) Cash Flows from Financing Activities: Long-term Debt Borrowings 900,000 - Payment of Debt (93,715) (1,050) Proceeds from Issuance of Common Stock - 54,198 Proceeds from Exercise of Stock Options 2,054 340 Excess Tax Benefit from Stock-based Arrangements 1,612 - Payment of Debt Issuance Costs (17,753) (639) Distributions to Members - (3,732) Other (46) - Net Cash Provided by Financing Activities 792,152 49,117 Net Increase in Cash and Cash Equivalents 7,280 37,391 Cash and Cash Equivalents at Beginning of Period 72,772 47,575 Cash and Cash Equivalents at End of Period $80,052 $84,966

HERCULES OFFSHORE, INC. AND SUBSIDIARIES SELECTED FINANCIAL AND OPERATING DATA (Dollars in thousands, except per day amounts) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 Domestic Offshore: Number of rigs (as of end of period) 27 6 27 6 Revenues $99,588 $46,415 $170,744 $111,703 Operating expenses, excluding depreciation and amortization 47,292 14,280 74,754 37,606 Depreciation and amortization expense 13,962 2,538 19,214 6,279 General and administrative expenses, excluding depreciation and amortization 1,663 1,846 5,216 5,219 Operating income $36,671 $27,751 $71,560 $62,599 International Offshore: Number of rigs (as of end of period) 10 3 10 3 Revenues $50,498 $7,883 $91,014 $12,159 Operating expenses, excluding depreciation and amortization 22,888 4,047 37,606 5,650 Depreciation and amortization expense 5,800 935 8,531 1,186 General and administrative expenses, excluding depreciation and amortization 122 442 1,667 949 Operating income $21,688 $2,459 $43,210 $4,374 Inland: Number of barges (as of end of period) 27 - 27 - Revenues $53,638 $- $53,638 $- Operating expenses, excluding depreciation and amortization 26,546 - 26,546 - Depreciation and amortization expense 6,950 - 6,950 - General and administrative expenses, excluding depreciation and amortization 533 - 533 - Operating income $19,609 $- $19,609 $- Domestic Liftboats: Number of liftboats (as of end of period) 47 47 47 47 Revenues $35,677 $40,082 $105,575 $95,842 Operating expenses, excluding depreciation and amortization 16,321 13,339 45,600 33,389 Depreciation and amortization expense 6,354 5,171 18,616 14,059 General and administrative expenses, excluding depreciation and amortization 545 618 1,622 1,780 Operating income $12,457 $20,954 $39,737 $46,614

HERCULES OFFSHORE, INC. AND SUBSIDIARIES SELECTED FINANCIAL AND OPERATING DATA - (Continued) (Dollars in thousands, except per day amounts) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 International Liftboats: Number of liftboats (as of end of period) 18 4 18 4 Revenues $18,090 $2,832 $46,028 $9,938 Operating expenses, excluding depreciation and amortization 8,581 1,531 23,045 4,748 Depreciation and amortization expense 1,843 426 5,485 979 General and administrative expenses, excluding depreciation and amortization 1,011 721 2,843 2,075 Operating income $6,655 $154 $14,655 $2,136 Other: Revenues $36,874 $- $36,874 $- Operating expenses, excluding depreciation and amortization 22,274 - 22,274 - Depreciation and amortization expense 4,400 - 4,400 - General and administrative expenses, excluding depreciation and amortization 577 - 577 - Operating income $9,623 $- $9,623 $- Total Company: Revenues $294,365 $97,212 $503,873 $229,642 Operating expenses, excluding depreciation and amortization 143,902 33,197 229,825 81,393 Depreciation and amortization expense 39,581 9,097 63,520 22,582 General and administrative expenses, excluding depreciation and amortization 18,018 7,209 36,516 20,396 Operating income 92,864 47,709 174,012 105,271 Interest expense (15,761) (2,575) (19,230) (6,824) Gain on disposal of asset - 1,110 - 30,690 Loss on early retirement of debt (1,312) - (2,182) - Other income 2,507 874 5,028 2,697 Income before income taxes 78,298 47,118 157,628 131,834 Income tax provision (29,927) (17,439) (52,400) (48,310) Net income $48,371 $29,679 $105,228 $83,524

HERCULES OFFSHORE, INC. AND SUBSIDIARIES SELECTED FINANCIAL AND OPERATING DATA - (Continued) (Dollars in thousands, except per day amounts) (Unaudited) Three Months Ended September 30, 2007 Average Average Operating Revenue Expense Operating Available Utilization per per Days Days (1) Day (2) Day (3) Domestic Offshore 1,290 1,848 69.8% $77,200 $25,591 International Offshore 589 589 100.0% 85,735 38,859 Inland 1,149 1,377 83.4% 46,682 19,278 Domestic Liftboats 2,858 4,232 67.5% 12,483 3,857 International Liftboats 1,383 1,564 88.4% 13,080 5,487 Other n/a n/a n/a n/a n/a Three Months Ended September 30, 2006 Average Average Operating Revenue Expense Operating Available Utilization per per Days Days (1) Day (2) Day (3) Domestic Offshore 548 552 99.3% 84,776 $25,871 International Offshore 100 100 100.0% 78,825 40,466 Inland - - - - - Domestic Liftboats 3,171 4,119 77.0% 12,641 3,238 International Liftboats 235 368 63.9% 12,050 4,158 Other n/a n/a n/a n/a n/a Nine Months Ended September 30, 2007 Average Average Operating Revenue Expense Operating Available Utilization per per Days Days (1) Day (2) Day (3) Domestic Offshore 2,139 2,934 72.9% $79,824 $25,479 International Offshore 948 951 99.7% 96,006 39,544 Inland 1,149 1,377 83.4% 46,682 19,278 Domestic Liftboats 8,505 12,517 67.9% 12,413 3,643 International Liftboats 3,797 4,585 82.8% 12,122 5,026 Other n/a n/a n/a n/a n/a Nine Months Ended September 30, 2006 Average Average Operating Revenue Expense Operating Available Utilization per per Days Days (1) Day (2) Day (3) Domestic Offshore 1,424 1,526 93.3% $78,449 $24,644 International Offshore 133 137 97.1% 91,486 41,147 Inland - - - - - Domestic Liftboats 8,823 11,276 78.2% 10,863 2,961 International Liftboats 947 1,092 86.7% 10,494 4,348 Other n/a n/a n/a n/a n/a (1) Utilization is defined as the total number of days our rigs or liftboats, as applicable, were under contract, known as operating days, in the period as a percentage of the total number of available days in the period. Days during which our rigs and liftboats were undergoing major refurbishments, upgrades or construction, and days during which our rigs and liftboats are cold-stacked, are not counted as available days. Days during which our liftboats are in the shipyard undergoing drydocking or inspection are considered available days for the purposes of calculating utilization. (2) Average revenue per rig or liftboat per day is defined as revenue earned by our rigs or liftboats, as applicable, in the period divided by the total number of operating days for our rigs or liftboats, as applicable, in the period. Included in Domestic Offshore revenue is a total of US$0.2 million and US$0.3 million related to amortization of contract specific capital expenditures reimbursed by the customer for the three and nine months ended September 30, 2007, respectively. There was no such revenue in the three and nine months ended September 30, 2006. Included in International Offshore revenue is a total of US$0.3 million and US$2.9 million related to amortization of deferred mobilization revenue and contract specific capital expenditures reimbursed by the customer for the three and nine months ended September 30, 2007, respectively, and US$0.7 million and US$0.8 million for the three and nine months ended September 30, 2006, respectively. (3) Average operating expense per rig or liftboat per day is defined as operating expenses, excluding depreciation and amortization, incurred by our rigs or liftboats, as applicable, in the period divided by the total number of available days in the period. We use available days to calculate average operating expense per rig or liftboat per day rather than operating days, which are used to calculate average revenue per rig or liftboat per day, because we incur operating expenses on our rigs and liftboats even when they are not under contract and earning a dayrate. In addition, the operating expenses we incur on our rigs and liftboats per day when they are not under contract are typically lower than the per-day expenses we incur when they are under contract. Included in International Offshore operating expense is a total of US$0.6 million and US$2.2 million related to amortization of deferred mobilization expenses for the three and nine months ended September 30, 2007, respectively, and US$0.6 million for each of the three and nine months ended September 30, 2006.

Hercules Offshore, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) (In thousands, except per share data) We report our financial results in accordance with generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP performance measures and ratios may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. One such non-GAAP financial measure we may present from time to time is operating income or net income excluding certain charges or amounts. This adjusted income amount is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for operating income, net income or other income data prepared in accordance with GAAP. See the table below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended September 30, 2007 and the nine months ended September 30, 2007 and 2006. We did not report non-GAAP financial measures for the three months ended September 30, 2006. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure in the following table: Three Months Ended Nine Months Ended September September September 30, 30, 30, 2007 2007 2006 Operating Income: GAAP Operating Income $92,864 $174,012 $105,271 Adjustment 2,585 (a) 3,090 (b) - Non-GAAP Operating Income $95,449 $177,102 $105,271 Other Income (Expense): GAAP Other Income (Expense) $(14,566) $(16,384) $26,563 Adjustment 960 (a) 1,524 (b) (29,580)(c) Non-GAAP Other Income (Expense) $(13,606) $(14,860) $(3,017) Provision for Income Taxes: GAAP Provision for Income Taxes $(29,927) $(52,400) $(48,310) Tax Impact of Adjustment (1,241)(a) (1,615)(b) 10,945 (c) Non-GAAP Provision for Income Taxes $(31,168) $(54,015) $(37,365) Net Income: GAAP Net Income $48,371 $105,228 $83,524 Total Adjustment, Net of Tax 2,304 (a) 2,999 (b) (18,635)(c) Non-GAAP Net Income $50,675 $108,227 $64,889 Diluted Earnings per Share: GAAP Diluted Earnings per Share $0.58 $2.12 $2.61 Adjustment per Share 0.03 (a) 0.06 (b) (0.58)(c) Non-GAAP Diluted Earnings per Share $0.61 $2.18 $2.03 (a) Adjustment represents US$2.6 million in severance and other acquisition related costs and a loss of US$1.0 million related to the early retirement of debt, net of a US$0.4 million derivative gain. On an after-tax basis, these adjustments approximated US$2.3 million, or three cents per diluted share. (b) Adjustment represents US$3.1 million in severance and other acquisition related costs and a loss of US$1.5 million related to the early retirement of debt, net of a US$0.7 million derivative gain. On an after-tax basis, these adjustments approximated US$3.0 million, or 6 cents per diluted share. (c) Adjustment represents a gain on an after-tax basis of US$18.6 million related to an insurance claim settlement on the loss of Rig 25.

Web site: http://www.herculesoffshore.com

Stephen M. Butz, Vice President Finance and Treasurer of Hercules Offshore, Inc., +1-713-979-9832 ; Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20050601/DAW092LOGO , AP Archive: http://photoarchive.ap.org , PRN Photo Desk, photodesk@prnewswire.com