HERCULES OFFSHORE S 1 A Filing Table of by HERO-Agreements

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Index to Financial Statements

                                     As filed with the Securities and Exchange Commission on September 22, 2005
                                                                                                                                                Registration No. 333-126457


                                                        UNITED STATES
                                            SECURITIES AND EXCHANGE COMMISSION
                                                                       Washington, D.C. 20549



                                                     AMENDMENT NO. 2
                                                           TO
                                                        FORM S-1
                                                 REGISTRATION STATEMENT
                                                                        UNDER
                                                               THE SECURITIES ACT OF 1933



                                                                         Hercules Offshore, LLC
                                                                   to be converted as described herein to
                                                                        a corporation to be renamed

                                                   HERCULES OFFSHORE, INC.
                                                                (Exact name of registrant as specified in its charter)




                      Delaware                                                             1381                                                   83-0402575
              (State or other jurisdiction of                                   (Primary Standard Industrial                                     (I.R.S. Employer
             incorporation or organization)                                      Classification Code Number)                                    Identification No.)


                      2929 Briarpark Drive, Suite 435                                                                        Steven A. Manz
                           Houston, Texas 77042                                                                           Chief Financial Officer
                              (713) 952-4176                                                                             Hercules Offshore, LLC
                 (Address, including zip code, and telephone number,                                                  2929 Briarpark Drive, Suite 435
            including area code, of registrant’s principal executive offices)
                                                                                                                           Houston, Texas 77042
                                                                                                                              (713) 952-4176
                                                                                                               (Name, address, including zip code, and telephone number,
                                                                                                                       including area code, of agent for service)




                                                                                      Copies to:
                            David L. Emmons                                                                                   T. Mark Kelly
                               Tull R. Florey                                                                             Douglas E. McWilliams
                            Baker Botts L.L.P.                                                                            Vinson & Elkins L.L.P.
                           910 Louisiana Street                                                                             1001 Fannin Street
                              One Shell Plaza                                                                              2300 First City Tower
                         Houston, Texas 77002-4995                                                                       Houston, Texas 77002-6760
                              (713) 229-1234                                                                                  (713) 758-2222
      Approximate date of commencement of proposed sale to the public:            As soon as practicable after the effective date of this
registration statement.



     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the ―Securities Act‖), check the following box. 

      If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. 

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. 

     If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. 
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                                                CALCULATION OF REGISTRATION FEE

                  Title of Each Class of                                       Proposed Maximum                                    Amount of
                Securities to be Registered                                Aggregate Offering Price(1)(2)                        Registration Fee
Common Stock, par value $0.01 per share                                          $172,500,000                                     $20,304(3)
Rights to Purchase Series A Junior Participating
  Preferred Stock(4)                                                                   —                                              —


(1)   Includes shares of common stock subject to an over-allotment option granted to the underwriters.
(2)   Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) of the Securities Act.
(3)   The registration fee was paid at the time of the initial filing of the registration statement on July 8, 2005.
(4)   The rights to purchase Series A Junior Participating Preferred Stock initially will be attached to and trade with the shares of common
      stock being registered hereby. The value attributed to such rights, if any, is reflected in the offering price of the common stock.
      Accordingly, no separate registration fee is payable with respect thereto.

      The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such
date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

                                              SUBJECT TO COMPLETION, DATED SEPTEMBER 22, 2005

                                                                              Shares




                                                    Hercules Offshore, Inc.
                                                           Common Stock

      We are selling             shares of our common stock and the selling stockholders are selling           shares of our common
stock. Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common
stock is expected to be between $              and $       per share. We have applied to list our common stock on the NASDAQ
National Market under the symbol “HERO.” We will not receive any of the proceeds from the shares of common stock sold by the
selling stockholders.

     The underwriters have an option to purchase a maximum of                  additional shares from the selling stockholders to cover
over-allotments of shares.

      Investing in our common stock involves risks. See “ Risk Factors ” beginning on page 11.
                                                               Underwriting
                                        Price to              Discounts and              Proceeds to                Proceeds to Selling
                                        Public                Commissions                 Hercules                     Stockholders

Per Share                           $                             $                          $                            $
Total                           $                             $                          $                            $

      Delivery of the shares of common stock will be made on or about                   , 2005.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.


Credit Suisse First Boston                                                                                           Citigroup

Simmons & Company
         International
                                                        Deutsche Bank Securities
                                                                                                       Howard Weil Incorporated
The date of this prospectus is   , 2005.
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                                                         TABLE OF CONTENTS
                                                                                                                                       Page

P ROSPECTUS S UMMARY                                                                                                                      1
R ISK F ACTORS                                                                                                                           11
F ORWARD -L OOKING I NFORMATION                                                                                                          21
U SE OF P ROCEEDS                                                                                                                        23
D IVIDEND P OLICY                                                                                                                        23
C APITALIZATION                                                                                                                          24
D ILUTION                                                                                                                                25
S ELECTED C ONSOLIDATED F INANCIAL D ATA                                                                                                 26
M ANAGEMENT ’ S D ISCUSSION AND A NALYSIS OF F INANCIAL C ONDITION AND R ESULTS OF O PERATIONS                                           28
I NDUSTRY O VERVIEW                                                                                                                      48
B USINESS                                                                                                                                53
M ANAGEMENT                                                                                                                              63
                                                                                                                                      Page

C ERTAIN R ELATIONSHIPS AND R ELATED P ARTY T RANSACTIONS                                                                                71
S ELLING S TOCKHOLDERS                                                                                                                   73
D ESCRIPTION OF C APITAL S TOCK                                                                                                          74
S HARES E LIGIBLE FOR F UTURE S ALE                                                                                                      81
U NDERWRITING                                                                                                                            82
N OTICE TO C ANADIAN R ESIDENTS                                                                                                          85
M ATERIAL U NITED S TATES F EDERAL T AX C ONSIDERATIONS FOR N ON -U.S. H OLDERS                                                          86
L EGAL M ATTERS                                                                                                                          88
E XPERTS                                                                                                                                 88
W HERE Y OU C AN F IND M ORE I NFORMATION                                                                                                89
I NDEX TO F INANCIAL S TATEMENTS                                                                                                        F-1



     You should rely only on the information contained in this document or to which we have referred you. We have not authorized
anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The
information in this document may only be accurate on the date of this document.


                                                  Dealer Prospectus Delivery Obligation

      Until            , 2005 (25 days after the commencement of this offering), all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to
deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

                                                                     i
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                                                           Industry and Market Data

      In this prospectus, we rely on and refer to information regarding our industry from the U.S. Energy Information Administration, the U.S.
Minerals Management Service, the American Petroleum Institute, Bloomberg L.P., John S. Herold, Inc. and ODS-Petrodata, Inc. These
organizations are not affiliated with us and are not aware of and have not consented to being named in this prospectus. We believe this
information is reliable. In addition, in many cases we have made statements in this prospectus regarding our industry and our position in the
industry based on our experience in the industry and our own evaluation of market conditions.

                                                        Non-GAAP Financial Measures

     The body of accounting principles generally accepted in the United States is commonly referred to as ―GAAP.‖ A non-GAAP financial
measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash
flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. In this prospectus, we disclose
Adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA is calculated as net income before interest expense, taxes, depreciation
and amortization and loss on early retirement of debt. Adjusted EBITDA is not a substitute for the GAAP measures of earnings and cash flow.

                                                              Financial Statements

      We were formed in July 2004 to provide drilling and liftboat services to the oil and natural gas exploration and production industry. Since
our formation, we have acquired our fleet of jackup rigs and liftboats in a number of separate asset acquisitions, including:

       •    in August 2004, we acquired five jackup rigs from Parker Drilling Company and assumed the management of another jackup rig
            from an unrelated party;

       •    in October 2004, we acquired 22 liftboats from Global Industries, Ltd.;

       •    in January 2005, we acquired an additional jackup rig from Parker Drilling;

       •    in January 2005, we acquired a jackup rig, which we had been managing since August 2004, from Porterhouse Offshore L.P.;

       •    in June 2005, we acquired 17 liftboats, one of which we have sold, from Superior Energy Services, Inc.;

       •    in June 2005, we acquired a jackup rig from Transocean Inc.;

       •    in August 2005, we acquired a newly constructed liftboat from CS Liftboats, Inc.; and

       •    in September 2005, we acquired a jackup rig from Hydrocarbon Capital II LLC.

      As a result of our recent formation, we have limited operating history upon which you can base an evaluation of our current business and
our future earnings prospects. This prospectus includes audited financial statements only as of December 31, 2004 and for the period from
inception (July 27, 2004) to December 31, 2004 and unaudited financial information as of and for the three-month period ended March 31,
2005 and the three- and six-month periods ended June 30, 2005. In this prospectus, we refer to the period from inception (July 27, 2004) to
December 31, 2004 as the five-month period ended December 31, 2004. We have not completed or provided in this prospectus any stand-alone
pre-acquisition financial statements for the assets we acquired in the transactions described above. As described under ―Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Acquisition History and Financial Statement Presentation,‖ we
have concluded that we are not required to include such pre-acquisition financial statements in this prospectus, and we believe that separate
audited financial statements for the assets we acquired as of any date or for any period prior to our acquisition of those assets would not be
meaningful to investors. As a result, and given our recent date of formation, we have not provided in this prospectus three years of audited
financial statements that normally would be included in a prospectus forming part of an SEC registration statement.

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                                                                             PROSPECTUS SUMMARY

       This summary highlights selected information contained elsewhere in this prospectus. This summary is not complete and does not contain
all of the information that is important to you or that you should consider before investing in our common stock. You should read carefully the
entire prospectus, including the risk factors, financial data and financial statements included herein, before making a decision about whether
to invest in our common stock. Unless the context requires otherwise or we specifically indicate otherwise, the information in this prospectus
assumes that the underwriters do not exercise their over-allotment option, the information in this prospectus relating to us assumes the
completion of the conversion of our company from a Delaware limited liability company to a Delaware corporation, which we refer to as the
“Conversion,” as described under the caption “The Conversion” below, and the terms “Hercules,” “our company,” “we,” “our,” “ours” and
“us” refer to Hercules Offshore, Inc. and its subsidiaries after giving effect to the Conversion.

                                                                                       Our Company

      We provide shallow-water drilling and liftboat services to the oil and natural gas exploration and production industry in the U.S. Gulf of
Mexico. We currently own a fleet of eight jackup rigs that can drill in maximum water depths ranging from 85 to 250 feet and a fleet of 39
liftboats with leg lengths ranging from 105 to 260 feet. In the U.S. Gulf of Mexico, we have the fourth-largest fleet of jackup rigs operating in
water depths of 250 feet and less and the largest fleet of liftboats with leg lengths greater than 100 feet, with a market share of approximately
35% in this class of liftboats. We contract our jackup rigs and liftboats to major integrated energy companies and independent oil and natural
gas operators.

       Our jackup rigs are mobile, self-elevating drilling platforms equipped with legs that can be lowered to the ocean floor until a foundation
is established to support the drilling platform. Our rigs are used primarily for exploration and development drilling in the shallow waters of the
U.S. Gulf of Mexico. Five of our eight jackup rigs have a cantilever design that permits the drilling platform to be extended out from the hull to
perform drilling or workover operations over certain types of preexisting platforms or structures. Our other three jackup rigs have a slot-type
design, which requires drilling operations to take place through a slot in the hull. Historically, rigs with a cantilever design have maintained
higher levels of utilization than rigs with a slot-type design, which are primarily used for exploratory drilling. However, one of our slot-type
rigs has a competitive advantage in very shallow water as it is one of the few jackup rigs in the world that can drill in water depths as shallow
as nine feet.

       The following table contains information regarding our jackup rig fleet as of September 21, 2005.
                                                                                                                  Maximum/Minimu
                                                                                                                         m
                                                                                                                    Water Depth                                  Rated Drilling
                                                                                                                      Rating                                       Depth(2)
          Rig Name(1)                                              Type                                                (feet)                                        (feet)

               11                           Mat-supported, cantilever                                                         175/21                                     20,000 (3)
               15                           Independent leg, slot                                                               85/9                                     20,000
               16                           Independent leg, cantilever                                                       170/16                                     16,000
               20                           Mat-supported, cantilever                                                          85/20                                     25,000
               21                           Mat-supported, cantilever                                                         120/22                                     20,000
               22                           Mat-supported, cantilever                                                         173/22                                     15,000
               30                           Mat-supported, slot                                                               250/25                                     20,000
               31                           Mat-supported, slot                                                               250/25                                     20,000

(1)   As of September 21, 2005, two of our rigs, Rig 16 and Rig 31 , were undergoing refurbishment and one rig, Rig 21 , was awaiting mobilization to a shipyard for repairs of damage
      sustained during Hurricane Katrina. The table does not include Rig 25 , which was severely damaged in connection with the storm and which we believe is likely to be declared a
      constructive total loss under our insurance policies. See ―Management’s Discussion and Analysis of Financial Condition and Results of Operations—Hurricane Katrina.‖
(2)   Rated drilling depth means drilling depth stated by the manufacturer of the rig. Depending on deck space and other factors, a rig may not have the actual capacity to drill at the rated
      drilling depth.
(3)   Rated workover depth. Rig 11 is currently configured for workover activity, which includes maintenance and repair or modification of wells that have already been drilled and
      completed to enhance or resume the well’s production.

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      Our liftboats are self-propelled, self-elevating vessels with a large open deck space, which provides a versatile, mobile and stable
platform to support a broad range of offshore maintenance and construction services throughout the life of an oil or natural gas well. Once a
liftboat is in position, typically adjacent to an offshore production platform or well, third-party service providers perform inspection,
maintenance or construction service on the platform or well. Unlike larger and more costly alternatives, such as jackup rigs or construction
barges, our liftboats are self-propelled and can quickly reposition at a worksite or move to another location without third-party assistance. The
following table contains information regarding our liftboat fleet as of September 21, 2005.
                                                                                                                               Average
              Leg Length/                           Number                               Average                              Maximum
             Liftboat Class                             of                              Deck Area                             Deck Load
                  (feet)                           Liftboats(1)                        (square feet)                           (pounds)

                260                                     1                                 8,170                               715,000
                229                                     2                                 5,000                               500,000
              190-215                                   3                                 4,108                               567,000
              140-150                                   5                                 2,463                               200,000
              120-130                                  14                                 1,697                               132,929
                105                                    14                                 1,346                               107,143

(1)   The table does not include the eight liftboats we have agreed to acquire from Danos & Curole Marine Contractors, LLC. See ―—Recent
      Developments.‖

     We generally contract our jackup rigs and liftboats under daily rental agreements that provide for a fixed rental rate while operating,
which we refer to as a ―dayrate.‖ To date, most of our contracts have been on a short-term basis.

                                                         Our Industry and Recent Trends

      The drilling and liftboat service industry is cyclical and typically driven by general economic activity and changes in actual or anticipated
oil and natural gas prices. In general, demand for our rigs is correlated to our customers’ expectations of energy prices, particularly natural gas
prices. As a result, we expect that sustained high energy prices generally would have a positive impact on our earnings, whereas sustained low
energy prices generally would have a negative impact on our earnings. Demand for liftboats historically has been less cyclical than demand for
jackup rigs, although demand for liftboats and for jackup rigs generally is affected by the same factors. We believe that recent trends in the
industry, including the following, should benefit our operations:

       •    strong commodity price environment;

       •    growing U.S. demand for natural gas and maturing natural gas fields;

       •    increasing capital budgets of oil and natural gas producers;

       •    reduced supply of jackup rigs in the U.S. Gulf of Mexico; and

       •    aging production infrastructure in the U.S. Gulf of Mexico.

      For further information on our industry and recent trends, please read ―Industry Overview.‖

                                                                  Our Strengths

      We believe our operations benefit from a number of competitive strengths, including the following:

       •    Favorable Niche Position in the U.S. Gulf of Mexico Shallow-Water Jackup Rig Market. We believe that our fleet of jackup rigs fills
            an important niche in the shallow-water drilling market of the U.S. Gulf of Mexico. Three of our eight rigs have design features
            making them capable of working in special drilling situations encountered in the U.S. Gulf of Mexico.

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       •    Leading Provider of Liftboat Services in the U.S. Gulf of Mexico. We operate the largest fleet of liftboats in the U.S. Gulf of Mexico
            with leg lengths greater than 100 feet. Our liftboat fleet comprises a broad range of liftboat sizes and capabilities and is deployed
            across the major producing areas of the U.S. Gulf of Mexico continental shelf.

       •    Operation of Jackup Rigs and Liftboats Provides Balance to Our Business. Utilization and dayrates for jackup rigs, which are used
            primarily for exploration and development drilling, tend to be more closely correlated with oil and natural gas price expectations and
            drilling activity levels than utilization and dayrates for liftboats, which are used throughout the life of an oil and natural gas field.
            We believe that our liftboats help us balance our exposure to commodity prices and drilling activity levels that we experience with
            our jackup rigs.

       •    Strong Relationships with a Diversified Customer Base. Our customer base provides exposure to the spending patterns of major
            integrated energy companies, which are more stable, and of smaller independent exploration and production companies, which are
            more commodity-driven and subject to wider fluctuations. We benefit from our management’s long-standing relationships with
            many of our customers, and in some instances, we have developed preferred service provider relationships with our clients.

       •    Experienced and Incentivized Management Team . Our senior and operating level management team has extensive industry
            experience in the U.S. Gulf of Mexico and internationally, with an average of approximately 25 years of experience in the oil service
            industry. We believe that their considerable knowledge of and experience in our industry enhances our ability to operate effectively
            throughout industry cycles. Our management also has substantial experience in identifying and completing asset acquisitions. Our
            incentive compensation plans are designed to align our management’s interests with our operating, financial and safety performance.

      For further information on our strengths, please read ―Business—Our Strengths.‖

                                                                   Our Strategies

     Our goal is to be a leading provider of drilling and liftboat services, primarily in shallow water markets, to the oil and natural gas
exploration and production industry. We intend to employ the following strategies to achieve our goal:

       •    Focus on Drilling and Liftboat Services. As one of the largest operators of shallow-water jackup rigs and liftboats in the U.S. Gulf
            of Mexico, we believe we are well-positioned to benefit from any increased levels of drilling and production maintenance activity.
            We also intend to selectively pursue expansion opportunities in international markets with characteristics similar to the
            shallow-water U.S. Gulf of Mexico, such as West Africa, the Middle East and the Asia-Pacific region.

       •    Maintain Our Status as an Efficient, Low-Cost Service Provider . We strive to maintain an organizational structure and asset base
            that allow us to be an efficient, low-cost service provider in the industry. Because of the smaller rig and crew sizes required to
            operate our jackup fleet as compared to higher specification assets, we believe our rigs have an operating and capital cost advantage.
            In addition, our liftboat operations are organized to allow for the integration of future liftboat acquisitions without significant
            incremental overhead.

       •    Pursue Strategic Growth Opportunities . We believe that opportunities remain to acquire shallow-water rigs from service providers
            that are more focused on higher specification assets needed to service customers operating in the deepwater market segment or
            drilling complex ultra-deep wells. We also believe that opportunities exist to acquire liftboats from smaller-scale operators as those
            operators may opt for consolidation given the economic and operational advantages associated with operating a larger fleet.

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       •    Remain Financially Disciplined and Conservative. We use return on capital employed in evaluating new investments and intend to
            pursue only those investments that we believe will produce strong returns on capital employed throughout an entire industry cycle.
            Furthermore, we intend to maintain a conservative capital structure and sufficient liquidity to operate throughout the industry cycle.

      For further information on our strategies, please read ―Business—Our Strategies.‖

                                                Risks Related to Our Business and Our Strategy

      Prospective investors should carefully consider the matters described under ―Risk Factors,‖ including that our business depends on the
level of activity in the oil and natural gas industry; our business is concentrated in the shallow-water U.S. Gulf of Mexico, where market
conditions are highly cyclical and subject to rapid change; our industry is highly competitive, with intense price competition; our business
involves numerous operating hazards, including loss or damage from severe weather; and our acquisition strategy may be unsuccessful. One or
more of these matters could negatively impact our business and our ability to implement successfully our business strategy.

                                                              Recent Developments

     Liftboat Acquisition from Superior Energy. In June 2005, we acquired 17 liftboats from Superior Energy Services, Inc. for an aggregate
purchase price of $20.0 million, one of which we sold in August 2005. The liftboats we acquired have leg lengths ranging from 105 to 130 feet.

       Acquisition of Rig 16 . In June 2005, we acquired our jackup rig Rig 16 from Transocean Inc. for a purchase price of $20.0 million. This
rig is capable of drilling in water depths of up to 170 feet. We are currently refurbishing Rig 16 in the United Arab Emirates and expect to
spend approximately $7.5 million on that refurbishment. We expect the rig to be available in the first quarter of 2006. We intend to seek work
for the rig in a suitable international location.

      Liftboat Acquisition from CS Liftboats. In August 2005, we acquired the newly constructed liftboat Whale Shark from CS Liftboats, Inc.
for $12.5 million. The liftboat has a leg length of 260 feet, and we intend to seek work for it in the U.S. Gulf of Mexico and suitable
international locations. We funded the purchase price of the liftboat with available cash. We expect to spend an additional $0.5 million to
complete the commissioning of the liftboat. We expect the liftboat to be available in the fourth quarter of 2005.

     Acquisition of Rig 31. In September 2005, we acquired Rig 31 , a 250-foot mat-supported, slot jackup rig, from Hydrocarbon Capital II
LLC for $12.6 million. The rig is currently located in Singapore, and we expect to spend approximately $15 million to refurbish the rig and to
seek work for it in a suitable international location. We expect the rig to be available in the third quarter of 2006.

      Liftboat Acquisition from Danos & Curole . In September 2005, we entered into a definitive agreement to purchase eight liftboats and
related assets from Danos & Curole Marine Contractors, LLC for a purchase price of $44.0 million. We expect to complete the acquisition in
the fourth quarter of 2005.

      Four of the liftboats, which have leg lengths ranging from 130 to 230 feet, are located in the U.S. Gulf of Mexico. These vessels are
currently operating under short-term contracts. We intend to integrate them into our existing liftboat operation and seek work for them in the
U.S. Gulf of Mexico and suitable international locations. It is our intention to hire most of the vessel-based Danos personnel to operate the
liftboats, but we will manage the operation and marketing of the vessels with our own personnel. One of these vessels, which has a leg length

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of 150 feet, sustained damage during Hurricane Katrina. We have agreed to pay Danos up to $0.5 million to salvage the vessel and to reimburse
Danos for up to $1.5 million of any deductible amounts Danos is responsible for under its insurance policies covering the vessel. Danos has not
yet been able to determine whether the vessel is a constructive total loss. If it is, the purchase price under the purchase agreement with Danos
would be reduced by the amount of insurance proceeds Danos recovers in respect of such loss. We believe this amount would be approximately
$3.3 million. If the vessel can be repaired, Danos will repair the vessel and deliver it to us upon completion of repairs. We would be responsible
for the cost of repairs that exceed Danos’ available insurance coverage and for any deductible amount, as noted above.

      The remaining four liftboats, which have leg lengths ranging from 130 to 170 feet, are currently operated in Nigeria. We have agreed with
Danos that, upon our acquisition of the vessels, we will provide these vessels to Danos under an operating agreement. Danos is currently using
these liftboats to provide services to customers in Nigeria. Under the operating agreement, Danos will deliver to us the contract revenues
earned by the vessels. We will pay to Danos all of Danos’ expenses incurred to operate the vessels in Nigeria plus a management fee. The term
of the operating agreement expires in September 2006, one year after the execution of the definitive agreement with Danos, subject to our right
to terminate the agreement on 30 days’ notice to Danos. Danos will operate these vessels in Nigeria until we are able to establish our own
operations in that country.

     We intend to use a portion of the net proceeds to us from this offering to pay the purchase price of the assets. This offering is not
conditioned on the closing of the acquisition. The acquisition is subject to various closing conditions that may not be satisfied, and we may not
complete the acquisition in the fourth quarter or at all.

       Senior Secured Credit Agreement. In June 2005, we entered into a senior secured credit agreement with a syndicate of financial
institutions. This agreement provides for a $140.0 million term loan and a $25.0 million revolving credit facility. The term loan matures in June
2010 and has quarterly principal payments in an amount equal to 1% per annum. We used $54.6 million of the $140.0 million of proceeds from
the term loan to repay all outstanding amounts under the credit facility of our drilling company subsidiary and $47.5 million of the proceeds to
repay all outstanding amounts under the credit facility of our liftboat company subsidiary, in each case including accrued interest, fees and
applicable prepayment premiums. We terminated both of those credit facilities in connection with the repayment. In addition, we used $20.0
million of the proceeds from the term loan to fund the purchase price of Rig 16 .

      In accordance with the credit agreement, in July 2005, we entered into hedge transactions with the purpose and effect of fixing the
interest rate on $70.0 million of the outstanding principal amount of the term loan at 7.54% for three years. In addition, we entered into hedge
transactions with the purpose and effect of capping the interest rate on an additional $20.0 million of such principal amount at 8.25% for three
years.

      Hurricane Damage . In August 2005, two of our jackup rigs, Rig 21 and Rig 25 , sustained damage during Hurricane Katrina. We believe
that Rig 25 is likely to be declared a constructive total loss under our insurance policies. If the rig is not declared a constructive total loss, the
rig would require substantial repairs before returning to work. We do not believe that we could complete such repairs prior to 2007. Rig 21
suffered extensive damage to its mat as a result of the storm. The rig will be moved onto a drydock in a shipyard in the fourth quarter for a
detailed survey, and we expect that the rig will not be available for service until the second quarter of 2006. See ―Management’s Analysis of
Financial Condition and Results of Operations—Hurricane Katrina.‖

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                                                                The Conversion

      We were formed in July 2004 as a Delaware limited liability company. Prior to the completion of this offering, we will convert to a
Delaware corporation and change our name to Hercules Offshore, Inc. In the Conversion, each of our limited liability company interests will be
converted into 350 shares of common stock. Upon completion of the Conversion, we will have outstanding 23,922,850 shares of common
stock, 57.5% of which will be owned by LR-Hercules Holdings, L.P. (―Lime Rock‖) and 28.8% of which will be owned by Greenhill Capital
Partners, L.P. and its affiliates (―Greenhill‖). Following this offering, Lime Rock will hold      % of the outstanding common stock
(or      % if the underwriters exercise the over-allotment option in full), and Greenhill will hold      % of the outstanding common stock
(or      % if the underwriters exercise the over-allotment option in full).

       Given our status as a limited liability company, our owners elected to be taxed at the member unitholder level rather than at the company
level. Following the Conversion, we will be taxed at the company level. As a result, for periods following the Conversion, our financial
statements will include a tax provision on our income. On a pro forma basis after giving effect to the Conversion, as if we had been subject to
income taxes, we would have recorded a tax provision of approximately $2.9 million for the five-month period ended December 31, 2004 and
approximately $7.0 million for the six-month period ended June 30, 2005. In addition, upon completion of the Conversion, we will record a tax
provision related to the recognition of deferred taxes equal to the tax effect of the difference between the book and tax basis of our assets and
liabilities as of the effective date of the Conversion. Assuming we had completed the Conversion as of June 30, 2005, the amount of the
provision would have been approximately $6.9 million.

      For additional information about the Conversion, please read ―Certain Relationships and Related Party Transactions—Conversion.‖

                                                          Principal Executive Offices

      Our principal executive offices are located at 2929 Briarpark Drive, Suite 435, Houston, Texas 77042, and our telephone number is (713)
952-4176. Our corporate website address is www.herculesoffshore.com . The information contained in or accessible from our corporate website
is not part of this prospectus.

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                                                                The Offering

Common stock offered by us                                  shares

Common stock offered by the selling                         shares
 stockholders

Common stock to be outstanding after the                    shares
 offering

Common stock held by the selling stockholders               shares (        shares if the underwriters exercise the over-allotment option in
 after the offering                                full).

Use of proceeds                                    We estimate that the net proceeds to us from this offering, after deducting underwriter
                                                   discounts and commissions and our estimated offering expenses, will be approximately
                                                   $          million. We intend to use the net proceeds from this offering to repay a portion of
                                                   the amounts outstanding under our new term loan, to pay the purchase price of the eight
                                                   liftboats from Danos & Curole and for other corporate purposes, which may include the
                                                   refurbishment of Rig 16 and Rig 31 and the acquisition of additional rigs and liftboats. We
                                                   will not receive any proceeds from the sale of common stock by the selling stockholders.
                                                   See ―Use of Proceeds.‖

Over-allotment option                              The selling stockholders have granted the underwriters a 30-day option to purchase a
                                                   maximum of             additional shares of our common stock at the initial public offering
                                                   price to cover over-allotments.

Risk factors                                       You should consider carefully all of the information set forth in this prospectus and, in
                                                   particular, the specific factors set forth under ―Risk Factors‖ below, before deciding
                                                   whether to invest in our common stock.

Dividend policy                                    We do not intend to declare or pay regular dividends on our common stock in the
                                                   foreseeable future.

NASDAQ National Market symbol for our              HERO
 common stock

      The number of shares of our common stock to be outstanding after this offering excludes 2,450,000 shares of common stock reserved for
issuance under our 2004 long-term incentive plan, of which options to purchase 945,000 shares at a weighted average exercise price of $3.23
per share have been issued as of June 30, 2005, after giving effect to the Conversion. Effective upon and subject to the completion of this
offering, we plan to grant options to purchase an aggregate of 884,500 shares of our common stock to employees with an exercise price equal
to the public offering price per share indicated on the cover of this prospectus. The number of shares of common stock to be outstanding after
the offering set forth in this prospectus does not take these awards into account.

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                                                     Summary Consolidated Financial Data

      We have derived the following consolidated financial information as of and for the five-month period ended December 31, 2004 from our
audited consolidated financial statements included elsewhere in this prospectus. We have derived the consolidated financial information as of
and for the six-month period ended June 30, 2005 from our unaudited consolidated financial statements included elsewhere in this prospectus.
We have derived the consolidated financial information as of March 31, 2005 and for the three-month periods ended March 31, 2005 and June
30, 2005 from our unaudited consolidated financial statements not included in this prospectus. The consolidated financial information as of and
for the three-month period ended March 31, 2005 and the three- and six-month periods ended June 30, 2005 includes, in management’s
opinion, all adjustments necessary for the fair presentation of our financial position as of such date and our results of operations for such
period.

      We were formed in July 2004 and commenced operations in August 2004. From our formation to June 30, 2005, we completed several
significant asset acquisitions that impact the comparability of our historical financial results. Our financial results reflect the impact of the
assets only after the date of their acquisition. This prospectus does not include any financial information relating to the assets for periods prior
to their acquisition date. As described under ―Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Acquisition History and Financial Statement Presentation,‖ we have concluded that we are not required to include such
pre-acquisition financial statements in this prospectus, and we believe that separate audited financial statements for the assets we acquired as of
any date or for any period prior to our acquisition of those assets would not be meaningful to investors. In addition, prior to the completion of
this offering, we will convert from a Delaware limited liability company to a Delaware corporation to be renamed Hercules Offshore, Inc.
Please read ―—The Conversion‖ above. Moreover, the financial and operating data as of March 31, 2005 and June 30, 2005 and for the
three-month period ended March 31, 2005 and the three- and six-month periods ended June 30, 2005 include Rig 25 , which was severely
damaged during Hurricane Katrina and which we believe is likely to be declared a constructive total loss under our insurance policies. See
―Management’s Discussion and Analysis of Financial Condition and Results of Operations—Hurricane Katrina.‖

      As a result of the foregoing, our historical financial statements included in this prospectus do not reflect the results of operations of all of
our existing assets or our capital structure upon completion of this offering. Accordingly, those historical financial statements may not be
representative of our future financial performance or capital structure. In addition, our results of operations for the five-month period ended
December 31, 2004, the three-month period ended March 31, 2005 and the three- and six-month periods ended June 30, 2005 are not
necessarily indicative of the results of operations that may be achieved for an entire year.

       You should read the following information in conjunction with ―Selected Consolidated Financial Data,‖ ―Management’s Discussion and
Analysis of Financial Condition and Results of Operations‖ and our consolidated financial statements and the related notes included elsewhere
in this prospectus.

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                                                             Five Months            Three Months               Three Months      Six Months
                                                                Ended                  Ended                      Ended            Ended
                                                             December 31,            March 31,                   June 30,         June 30,
                                                                 2004                   2005                       2005             2005

                                                                                (dollars in thousands, except per share data)
INCOME STATEMENT DATA:
Revenues:
    Drilling services                                        $       24,006        $       24,891             $       26,288     $   51,179
    Marine services                                                   7,722                 9,164                     10,787         19,951

           Total revenues                                            31,728                34,055                     37,075         71,130
Costs and Expenses:
    Operating expenses for drilling services, excluding
       depreciation and amortization shown separately                12,799                11,241                     12,095         23,336
    Operating expenses for marine services, excluding
       depreciation and amortization shown separately                 4,198                  4,580                     5,847         10,427
    Depreciation and amortization                                     2,016                  2,462                     2,860          5,322
    General and administrative, excluding depreciation and
       amortization shown separately                                  2,808                  2,201                     2,904           5,105

           Total costs and expenses                                  21,821                20,484                     23,706         44,190

Operating Income                                                      9,907                13,571                     13,369         26,940
Other Income (Expense):
    Interest expense                                                 (2,070 )               (2,303 )                  (2,534 )        (4,837 )
    Loss on early retirement of debt(a)                                 —                      —                      (2,786 )        (2,786 )
    Other, net                                                          228                    134                       101             235

           Total other income (expense)                              (1,842 )               (2,169 )                  (5,219 )        (7,388 )

Net Income(b)                                                $        8,065        $       11,402             $        8,150     $   19,552

Net Income Per Share(b)(c):
     Basic                                                   $         0.55        $          0.48            $          0.34    $      0.82
     Diluted                                                 $         0.55        $          0.48            $          0.34    $      0.81
Weighted Average Shares Outstanding(c):
    Basic                                                            14,690                23,718                     23,923         23,821
    Diluted                                                          14,690                23,718                     24,243         24,021
BALANCE SHEET DATA (as of end of period):
Cash and cash equivalents                                    $    14,460           $        8,547             $      35,384
Working capital                                                   30,283                   30,972                    55,714
Total assets                                                     132,156                  173,859                   244,699
Long-term debt, net of current portion                            53,000                   77,000                   138,950
Total members’ equity                                             71,087                   86,818                    94,968
OTHER FINANCIAL DATA:
Adjusted EBITDA(d)                                           $       12,151        $       16,167             $       16,330     $   32,497
Net cash (used in) provided by:
     Operating activities                                         (6,495 )                  6,548                     19,537          26,085
     Investing activities                                        (96,274 )                (40,949 )                  (46,905 )       (87,854 )
     Financing activities                                        117,229                   28,488                     54,205          82,693
Capital expenditures                                              94,443                   42,326                     45,048          87,374
Deferred drydocking expenditures                                     601                      623                      1,607           2,230

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                                                                                            Five Months                   Three Months                 Three Months                  Six Months
                                                                                               Ended                         Ended                        Ended                        Ended
                                                                                            December 31,                   March 31,                     June 30,                     June 30,
                                                                                                2004                          2005                         2005                         2005

OPERATING DATA:
   Rigs:
        Number of rigs (as of end of period)                                                             5                            7                            8                          8
        Average revenue per rig per day(e)                                                 $        32,098               $       40,833               $       43,653                $    42,234
        Rig utilization(f)                                                                            99.6 %                       99.3 %                       94.5 %                     96.9 %
   Liftboats:
        Number of liftboats (as of end of period)                                                       22                            22                           39                         39
        Average revenue per liftboat per day(e)                                            $         5,720               $         6,311              $         6,109               $      6,200
        Liftboat utilization(f)                                                                       68.9 %                        73.3 %                       73.8 %                     73.6 %

(a)   In connection with the repayment of a portion of our new term loan with proceeds from this offering as described under ―Use of Proceeds,‖ we expect to recognize pretax charges of
      $          million, consisting of the write-off of deferred financing costs related to the portion of the debt that will be retired.
(b)   On a pro forma basis after giving effect to the Conversion, as if we had been subject to income taxes, for the five-month period ended December 31, 2004, the three-month period ended
      March 31, 2005, and the three- and six-month periods ended June 30, 2005, net income would have been $5.2 million, $7.3 million, $5.2 million and $12.5 million, respectively, and
      diluted net income per share would have been $0.35, $0.31, $0.22 and $0.52, respectively.
(c)   The weighted average shares outstanding reflects the conversion of each outstanding membership interest into a total of 350 shares of common stock. The calculation of diluted
      weighted average shares outstanding includes weighted average outstanding options to purchase 320,168 and 199,603 shares of common stock for the three- and six-month periods
      ended June 30, 2005, respectively.
(d)   Adjusted EBITDA consists of net income before interest expense, taxes, depreciation and amortization and loss on early retirement of debt. See ―Non-GAAP Financial Measures.‖
      Adjusted EBITDA is included in this prospectus because our management considers it an important supplemental measure of our performance and believes that it is frequently used by
      securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA and Adjusted EBITDA when reporting their
      results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using Adjusted
      EBITDA. In addition, we utilize Adjusted EBITDA in evaluating acquisition targets. Management also believes that Adjusted EBITDA is a useful tool for measuring our ability to meet
      our future debt service, capital expenditures and working capital requirements, and Adjusted EBITDA is commonly used by us and our investors to measure our ability to service
      indebtedness. Adjusted EBITDA is not a substitute for the GAAP measures of earnings or of cash flow and is not necessarily a measure of our ability to fund our cash needs. In addition,
      it should be noted that companies calculate EBITDA and Adjusted EBITDA differently and, therefore, Adjusted EBITDA as presented for us may not be comparable to EBITDA and
      Adjusted EBITDA reported by other companies. Adjusted EBITDA has material limitations as a performance measure because it excludes interest expense, taxes, depreciation and
      amortization and loss on early retirement of debt. The following tables reconcile Adjusted EBITDA with our net income and with our net cash provided by (used in) operating activities.

                                                                        Reconciliation of Adjusted EBITDA

                                                                                             Five Months                     Three Months              Three Months                  Six Months
                                                                                                Ended                           Ended                     Ended                        Ended
                                                                                             December 31,                     March 31,                  June 30,                     June 30,
                                                                                                 2004                            2005                      2005                         2005

                                                                                                                                 (dollars in thousands)
      Net income                                                                           $          8,065               $       11,402               $         8,150              $    19,552
      Plus: interest expense                                                                          2,070                        2,303                         2,534                    4,837
      Plus: depreciation and amortization                                                             2,016                        2,462                         2,860                    5,322
      Plus: loss on early retirement of debt                                                            —                            —                           2,786                    2,786

      Adjusted EBITDA                                                                               12,151                        16,167                       16,330                    32,497

      Less: interest expense                                                                        (2,070 )                       (2,303 )                     (2,534 )                  (4,837 )
      Plus: amortization of deferred financing fees                                                    215                            246                          246                       492
      Plus: allowance for doubtful accounts                                                            519                            —                            319                       319
      Less: increase in current assets                                                             (22,379 )                       (8,534 )                      1,485                    (7,049 )
      Plus: increase in current liabilities                                                          5,069                            972                        3,691                     4,663

      Net cash (used in) provided by operating activities                                  $         (6,495 )             $         6,548              $       19,537               $    26,085
(e)   Average revenue per rig or liftboat per day in the table above and elsewhere in this prospectus is defined as revenue earned by our rigs or liftboats, as applicable, in the period divided by
      the total number of days our rigs or liftboats, as applicable, were under contract, known as operating days, in the period.
(f)   Utilization for our fleet shown in the table above and elsewhere in this prospectus is defined as the total number of operating days for our rigs or liftboats, as applicable, in the period as
      a percentage of the total number of calendar days in the period.

                                                                                                10
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                                                                 RISK FACTORS

      You should carefully consider each of the following risks and all of the information set forth in this prospectus before deciding to invest
in our common stock. If any of the following risks and uncertainties develop into actual events, our business, financial condition, results of
operations or cash flows could be materially adversely affected. In that case, the trading price of our common stock could decline and you may
lose all or part of your investment.

      This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially
from those anticipated in these forward-looking statements as a result of the risks faced by us described below. See “Forward-Looking
Information.”

Risks Related to Our Business

Our business depends on the level of activity in the oil and natural gas industry, which is significantly affected by volatile oil and natural
gas prices.

      Our business depends on the level of activity in oil and natural gas exploration, development and production primarily in the U.S. Gulf of
Mexico, and in particular, the level of exploration, development and production expenditures of our customers. Oil and natural gas prices and
our customers’ expectations of potential changes in these prices significantly affect this level of activity. In particular, changes in the price of
natural gas materially affect our operations because drilling in the shallow-water U.S. Gulf of Mexico is primarily focused on developing and
producing natural gas reserves. Oil and natural gas prices are extremely volatile and are affected by numerous factors, including the following:

       •    the demand for oil and natural gas in the United States and elsewhere;

       •    the cost of exploring for, producing and delivering oil and natural gas;

       •    economic and weather conditions in the United States and elsewhere;

       •    expectations regarding future prices;

       •    advances in exploration, development and production technology;

       •    the ability of the Organization of Petroleum Exporting Countries, commonly called ―OPEC,‖ to set and maintain production levels
            and pricing;

       •    the level of production in non-OPEC countries;

       •    the policies of various governments regarding exploration and development of their oil and natural gas reserves; and

       •    the worldwide military and political environment, uncertainty or instability resulting from an escalation or additional outbreak of
            armed hostilities or other crises in the Middle East or further acts of terrorism in the United States, or elsewhere.

     Depending on the market prices of oil and natural gas, companies exploring for oil and natural gas may cancel or curtail their drilling
programs, thereby reducing demand for drilling services. Any reduction in the demand for drilling and liftboat services may materially erode
dayrates and utilization rates for our units, which would adversely affect our financial condition and results of operations.

Our business is concentrated in the shallow-water U.S. Gulf of Mexico, where market conditions are highly cyclical and subject to rapid
change. The mature nature of this region could result in less drilling activity in the area, thereby reducing demand for our services.

     Historically, the offshore service industry has been highly cyclical, with periods of high demand and high dayrates often followed by
periods of low demand and low dayrates. Periods of low demand intensify the

                                                                         11
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competition in the industry and often result in rigs or liftboats being idle for long periods of time. We may be required to idle rigs or liftboats or
enter into lower dayrate contracts in response to market conditions in the future. In the U.S. Gulf of Mexico, contracts are generally short term,
and oil and natural gas companies tend to respond quickly to upward or downward changes in prices. Due to the short-term nature of most of
our contracts, changes in market conditions can quickly affect our business. In addition, customers generally have the right to terminate our
contracts with little or no notice, and without penalty. As a result of the cyclicality of our industry, we expect our results of operations to be
volatile.

      In addition, the U.S. Gulf of Mexico, and in particular the shallow-water region of the U.S. Gulf of Mexico, is a mature oil and natural
gas production region that has experienced substantial seismic survey and exploration activity for many years. Because a large number of oil
and natural gas prospects in this region have already been drilled, additional prospects of sufficient size and quality could be more difficult to
identify. According to the EIA, the average size of the U.S. Gulf of Mexico discoveries has declined significantly since the early 1990s. In
addition, the amount of natural gas production in the shallow-water U.S. Gulf of Mexico has declined over the last decade. Moreover, oil and
natural gas companies may be unable to obtain financing necessary to drill prospects in this region. The decrease in the size of oil and natural
gas prospects, the decrease in production or the failure to obtain such financing may result in reduced drilling activity in the U.S. Gulf of
Mexico and reduced demand for our services.

Our industry is highly competitive, with intense price competition. Our inability to compete successfully may reduce our profitability.

      Our industry is highly competitive. Our contracts are traditionally awarded on a competitive bid basis. Pricing is often the primary factor
in determining which qualified contractor is awarded a job. Dayrates also depend on the supply of vessels. Generally, excess marine service
capacity puts downward pressure on dayrates. Excess capacity can occur when newly constructed vessels enter the market, when vessels are
mobilized between market areas and when non-marketed vessels are re-activated. Many other companies in the drilling industry are larger than
we are and have more diverse fleets, or fleets with generally higher specifications, and greater resources than we have. In addition, the
competitive environment has intensified as recent mergers among oil and natural gas companies have reduced the number of available
customers. Finally, competition among shallow-water drilling and marine service providers is also affected by each provider’s reputation for
safety and quality. We may not be able to maintain our competitive position, and we believe that competition for contracts will continue to be
intense in the foreseeable future. Our inability to compete successfully may reduce our profitability.

A single customer accounts for a significant portion of our revenues, the loss of which could adversely affect our financial condition and
results of operations.

       We derive a significant amount of our revenue from a single major integrated energy company. Chevron Corporation represented
approximately 40% and 38% of our marine services revenues for the five-month period ended December 31, 2004 and the six-month period
ended June 30, 2005, respectively. Chevron represented approximately 33% and 30% of our drilling services revenues for the five-month
period ended December 31, 2004 and the six-month period ended June 30, 2005, respectively. The recently completed merger of Chevron and
Unocal Corporation could result in a decrease in Chevron’s activity in the U.S. Gulf of Mexico. Our financial condition and results of
operations will be materially adversely affected if Chevron curtails its activities in the U.S. Gulf of Mexico, terminates its contracts with us,
fails to renew its existing contracts or refuses to award new contracts to us and we are unable to enter into contracts with new customers at
comparable dayrates.

Re-activation of non-marketed rigs or mobilization of rigs back to the U.S. Gulf of Mexico could result in excess rig supply in the region,
and our rig dayrates and utilization could be reduced.

    If industry conditions continue to improve, inactive rigs that are not currently being marketed could be reactivated to meet an increase in
demand for drilling rigs , and we expect that Hurricane Katrina will result in

                                                                         12
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the reactivation of a number of stacked shallow-water rigs by our competitors . Improved market conditions, particularly relative to other
drilling markets, could also lead to jackup rigs and other mobile offshore drilling units being moved into the U.S. Gulf of Mexico or could lead
to increased rig construction and rig upgrade programs by our competitors. Some of our competitors have already announced plans to upgrade
existing equipment or build additional jackup rigs with higher specifications than our rigs. According to ODS-Petrodata, as of September 2005,
40 jackup rigs had been ordered by industry participants, national oil companies and financial investors for delivery through 2009. A significant
increase in the supply of jackup rigs or other mobile offshore drilling units could adversely affect both our utilization and dayrates.

Upgrade, refurbishment and repair projects are subject to risks, including delays and cost overruns, which could have an adverse impact on
our available cash resources and results of operations.

      We make upgrade, refurbishment and repair expenditures for our fleet from time to time, including when we acquire units or when repairs
or upgrades are required by law, in response to an inspection by a governmental authority or when a unit is damaged. We are currently
refurbishing Rig 16 , a rig that we recently acquired and that has not worked for approximately six years. We also are refurbishing the recently
acquired Rig 31 , and we expect to spend approximately $15 million in refurbishment costs prior to placing it into service. In addition, Rig 21 ,
which suffered extensive damage to its mat as a result of Hurricane Katrina, will be moved onto a drydock in a shipyard in the fourth quarter
for a detailed survey. Based on our preliminary survey, we anticipate that the mat will require extensive repairs. We expect that the rig will not
be available for service until the second quarter of 2006. However, once the rig has been drydocked, we may discover currently unforeseen
damage to the rig, which may result in a longer repair period. Moreover, if Rig 25 is not declared a constructive total loss, based on our
preliminary analysis of the damage to the rig, we believe that the rig would require substantial repairs before returning to work. We do not
believe that we could complete such repairs prior to 2007.

      Upgrade, refurbishment and repair projects are subject to the risks of delay or cost overruns inherent in any large construction project,
including costs or delays resulting from the following:

       •    unexpectedly long delivery times for key equipment and materials;

       •    shortages of skilled labor necessary to perform the work;

       •    unforeseen increases in the cost of equipment, labor and raw materials, particularly steel;

       •    unforeseen engineering problems;

       •    unanticipated actual or purported change orders;

       •    work stoppages;

       •    financial or other difficulties at shipyards;

       •    adverse weather conditions; and

       •    inability to obtain required permits or approvals.

     Significant cost overruns or delays would adversely affect our financial condition and results of operations. Additionally, capital
expenditures for rig upgrade and refurbishment projects could exceed our planned capital expenditures.

Our jackup rigs are at a relative disadvantage to higher specification rigs, which may be more likely to obtain contracts than lower
specification jackup rigs such as ours.

      Many of our competitors have jackup fleets with generally higher specification rigs than those in our jackup fleet. Particularly during
market downturns when there is decreased rig demand, higher specification rigs may be more likely to obtain contracts than lower specification
jackup rigs such as ours. In addition, higher specification rigs may be more adaptable to different operating conditions and therefore have
greater flexibility to move to areas of demand in response to changes in market conditions. Because many of our rigs were designed
specifically for drilling in the shallow-water U.S. Gulf of Mexico, our ability to move them to other regions in

                                                                         13
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Index to Financial Statements

response to changes in market conditions is limited. Furthermore, in recent years, an increasing amount of exploration and production
expenditures have been concentrated in deepwater drilling programs and deeper formations, including deep natural gas prospects, requiring
higher specification jackup rigs, semisubmersible drilling rigs or drillships. This trend is expected to continue and could result in a decline in
demand for lower specification jackup rigs like ours, which could have an adverse impact on our financial condition and results of operations.

Our acquisition strategy may be unsuccessful if we incorrectly predict operating results, are unable to identify and complete future
acquisitions, fail to successfully integrate acquired assets or businesses we acquire, or are unable to obtain financing for acquisitions on
acceptable terms.

      The acquisition of assets or businesses that are complementary to our drilling and liftboat operations is an important component of our
business strategy. We believe that attractive acquisition opportunities may arise from time to time, and any such acquisition could be
significant. At any given time, discussions with one or more potential sellers may be at different stages. However, any such discussions may
not result in the consummation of an acquisition transaction and we may not be able to identify or complete any acquisitions. In addition, we
cannot predict the effect, if any, that any announcement or consummation of an acquisition would have on the trading price of our common
stock.

      Any future acquisitions could present a number of risks, including:

       •    the risk of incorrect assumptions regarding the future results of acquired operations or assets or expected cost reductions or other
            synergies expected to be realized as a result of acquiring operations or assets;

       •    the risk of failing to integrate the operations or management of any acquired operations or assets successfully and timely; and

       •    the risk of diversion of management’s attention from existing operations or other priorities.

In addition, we may not be able to obtain, on terms we find acceptable, sufficient financing that may be required for any such acquisition or
investment.

      If we are unsuccessful in completing acquisitions of other operations or assets, our financial condition could be adversely affected and we
may be unable to implement an important component of our business strategy successfully. In addition, if we are unsuccessful in integrating
our acquisitions in a timely and cost-effective manner, our financial condition and results of operations could be adversely affected.

Our business involves numerous operating hazards, and our insurance may not be adequate to cover our losses.

      Our operations are subject to the usual hazards inherent in the drilling and operation of oil and natural gas wells, such as blowouts,
reservoir damage, loss of production, loss of well control, punchthroughs, craterings, fires and pollution. The occurrence of these events could
result in the suspension of drilling or production operations, claims by the operator, severe damage to or destruction of the equipment involved
and injury or death to rig or liftboat personnel. We may also be subject to personal injury and other claims of rig or liftboat personnel as a result
of our drilling and liftboat operations. Operations also may be suspended because of machinery breakdowns, abnormal operating conditions,
failure of subcontractors to perform or supply goods or services and personnel shortages.

       In addition, our drilling and liftboat operations are subject to perils peculiar to marine operations, including capsizing, grounding,
collision and loss or damage from severe weather. Tropical storms, hurricanes and other severe weather prevalent in the U.S. Gulf of Mexico,
such as Hurricane Katrina in August 2005, Hurricane Dennis in July 2005 and Hurricane Ivan in September 2004, could have a material
adverse effect on our operations. During such severe storms, our liftboats typically leave location and cease to earn a full dayrate.

                                                                         14
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Under U.S. Coast Guard guidelines, the liftboats cannot return to work until the weather improves and seas are less than five feet.

      In August 2005, two of our jackup rigs, Rig 21 and Rig 25 , sustained damage during Hurricane Katrina. Rig 25 is severely damaged, and
we believe that the rig is likely to be declared a constructive total loss under our insurance policies. Rig 21 suffered extensive damage to its mat
as a result of the storm, and we expect that the rig will not be available for service until the second quarter of 2006. In addition, our liftboats
were required to leave location and did not earn a full dayrate for an average of five days per vessel.

      Damage to the environment could result from our operations, particularly through oil spillage or extensive uncontrolled fires. We may
also be subject to property, environmental and other damage claims by oil and natural gas companies and other businesses operating offshore
and in coastal areas. Our insurance policies and contractual rights to indemnity may not adequately cover losses, and we may not have
insurance coverage or rights to indemnity for all risks. Moreover, pollution and environmental risks generally are not totally insurable.

      Following the terrorist attacks on September 11, 2001, insurance underwriters increased insurance premiums for many of the coverages
historically maintained and issued general notices of cancellation to their customers for war risk, terrorism and political risk insurance in
respect of a wide variety of insurance coverages, including liability and aviation coverages. Insurance markets are volatile, and we expect our
insurance premiums to increase as a result of the recent severe weather in the U.S. Gulf of Mexico. Insurance premiums and/or deductibles
could be increased further or coverages may be unavailable in the future.

      If a significant accident or other event, including terrorist acts, war, civil disturbances, pollution or environmental damage, occurs and is
not fully covered by insurance or a recoverable indemnity from a customer, it could adversely affect our financial condition and results of
operations. Moreover, we may not be able to maintain adequate insurance in the future at rates we consider reasonable or be able to obtain
insurance against certain risks.

Failure to employ a sufficient number of skilled workers or an increase in labor costs could hurt our operations.

       We require skilled personnel to operate and provide technical services and support for our rigs and liftboats. In periods of increasing
activity and when the number of operating units in the U.S. Gulf of Mexico increases, either because of new construction, re-activation of idle
units or the mobilization of units into the region, shortages of qualified personnel could arise, creating upward pressure on wages and difficulty
in staffing our units. In addition, our ability to expand our operations depends in part upon our ability to increase the size of our skilled labor
force. We will need to hire additional rig-based employees in connection with the commencement of operations of Rig 16 and Rig 31 .
Moreover, in the past year, our labor costs have increased significantly.

       Although our employees are not covered by a collective bargaining agreement, the marine services industry has been targeted by
maritime labor unions in an effort to organize U.S. Gulf of Mexico employees. A significant increase in the wages paid by competing
employers or the unionization of our U.S. Gulf of Mexico employees could result in a reduction of our skilled labor force, increases in the wage
rates that we must pay, or both. If either of these events were to occur, our capacity and profitability could be diminished and our growth
potential could be impaired.

Governmental laws and regulations may add to our costs or limit drilling activity and liftboat operations.

      Our operations are affected in varying degrees by governmental laws and regulations. The industries in which we operate are dependent
on demand for services from the oil and natural gas industry and, accordingly, are also affected by changing tax and other laws relating to the
energy business generally. We are also subject to the jurisdiction of the United States Coast Guard, the National Transportation Safety Board
and the United States Customs and Border Protection Service, as well as private industry organizations such as the American Bureau of

                                                                         15
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Shipping. We may be required to make significant capital expenditures to comply with laws and the applicable regulations and standards of
those authorities and organizations. Moreover, the cost of compliance could be higher than anticipated. Similarly, as we expand our
international operations, we will become subject to certain international conventions and the laws, regulations and standards of other foreign
countries in which we operate. It is also possible that these conventions, laws, regulations and standards may in the future add significantly to
our operating costs or limit our activities.

     In addition, as our vessels age, the costs of drydocking the vessels in order to comply with government laws and regulations and to
maintain their class certifications are expected to increase, which could have an adverse effect on our financial condition and results of
operations.

Compliance with or a breach of environmental laws can be costly and could limit our operations.

      Our operations are subject to regulations that require us to obtain and maintain specified permits or other governmental approvals, control
the discharge of materials into the environment, require the removal and cleanup of materials that may harm the environment or otherwise
relate to the protection of the environment. For example, as an operator of mobile offshore drilling units and liftboats in navigable U.S. waters
and some offshore areas, we may be liable for damages and costs incurred in connection with oil spills or other unauthorized discharges of
chemicals or wastes resulting from those operations. Laws and regulations protecting the environment have become more stringent in recent
years, and may in some cases impose strict liability, rendering a person liable for environmental damage without regard to negligence or fault
on the part of such person. Some of these laws and regulations may expose us to liability for the conduct of or conditions caused by others or
for acts that were in compliance with all applicable laws at the time they were performed. The application of these requirements, the
modification of existing laws or regulations or the adoption of new requirements could have a material adverse effect on our financial condition
and results of operations.

We will be subject to additional political, economic, and other uncertainties as we expand our international operations.

      An element of our business strategy is to expand into international oil and natural gas producing areas such as West Africa, the Middle
East and the Asia-Pacific region, including India. Our international operations will be subject to a number of risks inherent in any business
operating in foreign countries, including:

       •    political, social and economic instability;

       •    potential seizure or nationalization of assets;

       •    increased operating costs;

       •    modification or renegotiation of contracts;

       •    import-export quotas;

       •    restrictions on currency repatriations;

       •    currency fluctuations and devaluations; and

       •    other forms of government regulation and economic conditions that are beyond our control.

      As our international operations expand, the exposure to these risks will increase. Our financial condition and results of operations could
be susceptible to adverse events beyond our control that may occur in the particular country or region in which we are active.

Our debt could adversely affect our ability to operate our business and make it difficult to meet our debt service obligations.

     As of June 30, 2005, after giving effect to this offering and application of the net proceeds as described under ―Use of Proceeds,‖ we
would have had total outstanding debt of approximately $            million. This debt

                                                                        16
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would have represented approximately         % of our total capitalization. We would have up to $25.0 million of available capacity under our
revolving credit facility, under which we may continue to borrow to fund working capital or other needs in the near term. Our level of debt and
the limitations imposed on us by our existing or future debt agreements could have significant consequences on our business and future
prospects, including the following:

       •    we may not be able to obtain necessary financing in the future for working capital, capital expenditures, acquisitions, debt service
            requirements or other purposes;

       •    our less leveraged competitors could have a competitive advantage because they have greater flexibility to utilize their cash flow to
            improve their operations and to be profitable at decreased dayrates in the event of a downturn in our industry;

       •    we may be exposed to risks inherent in interest rate fluctuations because our borrowings generally are at variable rates of interest,
            which would result in higher interest expense in the event of increases in interest rates; and

       •    we could be more vulnerable in the event of a downturn in our business that would leave us less able to take advantage of significant
            business opportunities and to react to changes in our business and in market or industry conditions.

      Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to
generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are
beyond our control. Our future cash flows may be insufficient to meet all of our debt obligations and commitments, and any insufficiency could
negatively impact our business. To the extent we are unable to repay our indebtedness as it becomes due or at maturity with cash on hand or
from other sources, we will need to refinance our debt, sell assets or repay the debt with the proceeds from further equity offerings. Additional
indebtedness or equity financing may not be available to us in the future for the refinancing or repayment of existing indebtedness, and we may
not be able to complete asset sales in a timely manner sufficient to make such repayments.

Our senior secured credit agreement imposes significant operating and financial restrictions, which may prevent us from capitalizing on
business opportunities and taking some actions.

      Our senior secured credit agreement imposes significant operating and financial restrictions on us. These restrictions limit our ability to:

       •    make investments and other restricted payments, including dividends;

       •    incur additional indebtedness;

       •    create liens;

       •    restrict dividend or other payments by our subsidiaries to us;

       •    sell our assets or consolidate or merge with or into other companies;

       •    engage in transactions with affiliates; and

       •    make capital expenditures.

These limitations are subject to a number of important qualifications and exceptions. Our credit agreement also requires us to maintain a
minimum interest coverage ratio and a maximum leverage ratio. These covenants may adversely affect our ability to finance our future
operations and capital needs and to pursue available business opportunities. A breach of any of these covenants could result in a default in
respect of the related debt. If a default were to occur, the relevant lenders could elect to declare the debt, together with accrued interest and
other fees, immediately due and payable and proceed against any collateral securing that debt.

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Risks Related to Our Limited Operating History

Because we have a limited operating history and we have not provided three years of audited financial statements that normally would be
required in an SEC registration statement, you may not be able to evaluate our current business and future earnings prospects accurately.

      We were formed in July 2004 to provide drilling and liftboat services to the oil and natural gas exploration and production industry. As a
result, we have limited operating history upon which you can base an evaluation of our current business and our future earnings prospects.

      In addition, this prospectus includes audited financial statements only as of December 31, 2004 and for the five-month period ended
December 31, 2004 and unaudited financial information as of and for the three-month period ended March 31, 2005 and the three- and
six-month periods ended June 30, 2005. We have acquired our fleet of jackup rigs and liftboats in a number of separate asset acquisitions since
our formation in July 2004. We have not completed or provided in this prospectus any stand-alone pre-acquisition financial statements for the
assets we acquired in these transactions. As a result, and given our recent date of formation, we have not provided in this prospectus three years
of audited financial statements that normally would be included in a prospectus forming part of an SEC registration statement. Accordingly,
you have limited financial information upon which to make your decision whether to invest in our common stock.

Risks Related to Our Principal Stockholders

Following this offering, our two largest stockholders and their affiliates, to the extent they vote together, will control the outcome of
stockholder voting.

      Following this offering, Lime Rock will hold          % of the outstanding common stock of our company (or         % if the underwriters
exercise the over-allotment option in full), and Greenhill will hold       % of the outstanding common stock of our company (or          % if the
underwriters exercise the over-allotment option in full). Accordingly, to the extent Lime Rock and Greenhill vote together, they will be able to
control the outcome of matters requiring a stockholder vote, including the election of directors, adoption of amendments to our certificate of
incorporation or bylaws and approval of transactions involving a change of control. In addition, as a result of its ownership, Lime Rock will be
able to exert significant control over us and may be able effectively to control the outcome of matters requiring a stockholder vote. Investors in
this offering, by themselves, will not be able to affect the outcome of any stockholder vote.

Our interests may conflict with those of Lime Rock, Greenhill and their affiliates with respect to our past and ongoing business
relationships, and because of their ownership, we may not be able to resolve these conflicts on terms commensurate with those possible in
arms-length transactions.

       Our interests may conflict with those of Lime Rock, Greenhill and their affiliates in a number of areas relating to our past and ongoing
relationships, including:

       •    the timing and manner of any sales or distributions by Lime Rock or Greenhill of all or any portion of their ownership interests in
            us;

       •    business opportunities that may be presented to Lime Rock or Greenhill and to our directors associated with Lime Rock or
            Greenhill;

       •    competition between those stockholders and us within the same lines of business; and

       •    our dividend policy.

     We may not be able to resolve any potential conflicts with Lime Rock, Greenhill and their affiliates, and even if we do, the resolution
may be less favorable than if we were dealing with an unaffiliated party.

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Risks Related to this Offering, the Securities Markets and Ownership of Our Common Stock

We will limit foreign ownership of our company, which could reduce the price of our common stock.

      Our certificate of incorporation will limit the percentage of outstanding common stock and other classes of capital stock that can be
owned by non-United States citizens within the meaning of statutes relating to the ownership of U.S.-flagged vessels. Applying the statutory
requirements applicable today, our certificate of incorporation would provide that no more than 20% of our outstanding common stock may be
owned by non-United States citizens and will establish mechanisms to maintain compliance with these requirements. These restrictions may
have an adverse impact on the liquidity or market value of our common stock because holders may be unable to transfer our common stock to
non-United States citizens. Any attempted or purported transfer of our common stock in violation of these restrictions will be ineffective to
transfer such common stock or any voting, dividend or other rights in respect of such common stock.

Substantial sales of our common stock by our current holders or us could cause our stock price to decline and issuances by us may dilute
your ownership interest in our company.

      We are unable to predict whether significant amounts of our common stock will be sold by our current holders after the offering. Any
sales of substantial amounts of our common stock in the public market by our current holders or us, or the perception that these sales might
occur, could lower the market price of our common stock. Further, if we issue additional equity securities to raise additional capital, your
ownership interest in our company may be diluted and the value of your investment may be reduced. Please read ―Shares Eligible for Future
Sale‖ for information about the number of shares that will be outstanding and could be sold after this offering.

The initial public offering price of our common stock may not be indicative of the market price of our common stock after this offering.

      Prior to this offering, there has been no public market for our common stock. An active market for our common stock may not develop or
be sustained after this offering. The initial public offering price of our common stock will be determined by negotiations between us and
representatives of the underwriters, based on numerous factors that we discuss in the ―Underwriting‖ section of this prospectus. This price may
not be indicative of the market price at which our common stock will trade after this offering.

We have no plans to pay regular dividends on our common stock, so you may not receive funds without selling your common stock.

      We do not intend to declare or pay regular dividends on our common stock in the foreseeable future. Instead, we generally intend to
invest any future earnings in our business. Subject to Delaware law, our board of directors will determine the payment of future dividends on
our common stock, if any, and the amount of any dividends in light of any applicable contractual restrictions limiting our ability to pay
dividends, our earnings and cash flows, our capital requirements, our financial condition, and other factors our board of directors deems
relevant. Our new senior secured credit agreement restricts our ability to pay dividends or other distributions on our equity securities.
Accordingly, you may have to sell some or all of your common stock in order to generate cash flow from your investment. You may not
receive a gain on your investment when you sell our common stock and may lose the entire amount of your investment.

The price of our common stock may be volatile.

      The market price of our common stock could be subject to significant fluctuations after this offering and may decline below the initial
public offering price. You may not be able to resell your shares at or above the initial public offering price. Among the factors that could affect
our stock price are:

       •    our operating and financial performance and prospects;

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       •    quarterly variations in the rate of growth of our financial indicators, such as earnings per share, net income and revenues;

       •    changes in revenue or earnings estimates;

       •    publication of research reports by analysts;

       •    speculation in the press or investment community;

       •    strategic actions by us or our competitors, such as acquisitions or restructurings;

       •    sales of our common stock by stockholders;

       •    actions by institutional investors, Lime Rock or Greenhill;

       •    fluctuations in oil and natural gas prices;

       •    general market conditions; and

       •    U.S. and international economic, legal and regulatory factors unrelated to our performance.

      The stock markets in general have experienced extreme volatility that has at times been unrelated to the operating performance of
particular companies. These broad market fluctuations may adversely affect the trading price of our common stock.

Provisions in our charter documents or Delaware law may inhibit a takeover, which could adversely affect the value of our common stock.

      Our certificate of incorporation and bylaws will contain, and Delaware corporate law contains, provisions that could delay or prevent a
change of control or changes in our management that a stockholder might consider favorable. These provisions will apply even if the offer may
be considered beneficial by some of our stockholders. If a change of control or change in management is delayed or prevented, the market price
of our common stock could decline. Please read ―Description of Capital Stock‖ for a description of these provisions.

Purchasers in this offering will experience immediate and substantial dilution in net tangible book value per share.

    Dilution per share represents the difference between the initial public offering price and the net consolidated book value per share
immediately after the offering of our common stock. Purchasers of our common stock in this offering will experience immediate dilution of
$       in net tangible book value per share as of June 30, 2005, based on an assumed offering price of $           per share.

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                                                      FORWARD-LOOKING INFORMATION

      Certain of the statements contained in this prospectus are forward-looking statements. All statements other than statements of historical
fact are, or may be deemed to be, forward-looking statements. Forward-looking statements include information concerning our possible or
assumed future financial performance and results of operations, including statements about the following subjects :

       •    our strategy, including the expansion and growth of our operations and our ability to make future acquisitions on attractive terms;

       •    our ability to enter into new contracts for our rigs and liftboats and future utilization rates and contract rates for the units;

       •    the correlation between demand for our rigs and our liftboats and our earnings and customers’ expectations of energy prices;

       •    expected useful lives of our rigs and liftboats;

       •    our plans, expectations and any effects of focusing on shallow-water drilling and liftboat services in the U.S. Gulf of Mexico,
            pursuing efficient, low-cost operations, pursuing strategic growth opportunities and maintaining a conservative capital structure and
            sufficient liquidity;

       •    our plans regarding increased international operations;

       •    future capital expenditures and refurbishment costs;

       •    expected repair time for Rig 21 and declaration of Rig 25 as a constructive total loss;

       •    expected general and administrative expenses;

       •    sufficiency of funds for required capital expenditures, working capital and debt service;

       •    our ability to obtain an attractive price for dispositions of certain assets;

       •    liabilities under laws and regulations protecting the environment;

       •    expected outcomes of litigation, claims and disputes and their expected effects on our financial condition and results of operations;
            and

       •    expectations regarding improvements in offshore drilling activity, demand for our rigs and liftboats, operating revenues, operating
            and maintenance expense, insurance expense and deductibles, interest expense, debt levels and other matters with regard to outlook.

      We have based these statements on our assumptions and analyses in light of our experience and perception of historical trends, current
conditions, expected future developments and other factors we believe are appropriate in the circumstances. Forward-looking statements by
their nature involve substantial risks and uncertainties that could significantly affect expected results, and actual future results could differ
materially from those described in such statements. Although it is not possible to identify all factors, we continue to face many risks and
uncertainties. Among the factors that could cause actual future results to differ materially are the risks and uncertainties described under ―Risk
Factors‖ above and the following:

       •    oil and natural gas prices, and industry expectations about future prices;

       •    demand for offshore jackup rigs and liftboats;

       •    our ability to enter into and the terms of future contracts;

       •    uncertainties relating to the extent of the damage to Rig 21 and Rig 25 and the other rigs and liftboats in our fleet;

       •    the impact of governmental laws and regulations;

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Index to Financial Statements

       •    the adequacy of sources of liquidity;

       •    uncertainties relating to the level of activity in offshore oil and natural gas exploration, development and production;

       •    competition and market conditions in the contract drilling and liftboat industries;

       •    the availability of skilled personnel;

       •    labor relations and work stoppages;

       •    operating hazards, war, terrorism and cancellation or unavailability of insurance coverage;

       •    the effect of litigation and contingencies; and

       •    our inability to achieve our plans or carry out our strategy.

      Many of these factors are beyond our ability to control or predict. Any of these factors, or a combination of these factors, could materially
affect our future financial condition or results of operations and the ultimate accuracy of the forward-looking statements. These
forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially
from those projected in the forward-looking statements. Management cautions against putting undue reliance on forward-looking statements or
projecting any future results based on such statements or present or prior earnings levels. In addition, each forward-looking statement speaks
only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements.

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Index to Financial Statements

                                                                USE OF PROCEEDS

      We estimate that our net proceeds from the sale of            shares of our common stock in this offering will be approximately
$         million, after deducting underwriting discounts and commissions and our estimated offering expenses. This estimate assumes a public
offering price of $         per share, which is the mid-point of the offering price range indicated on the cover of this prospectus. We will not
receive any of the proceeds from any sale of shares of our common stock by the selling stockholders.

      We intend to use a portion of the net proceeds we receive from this offering to repay approximately $            million of indebtedness
outstanding under our new $140.0 million senior secured term loan described below, together with accrued and unpaid interest to the
repayment date of approximately $            million. We also intend to use a portion of the net proceeds from this offering to pay the purchase
price of the eight liftboats from Danos & Curole of approximately $44.0 million. This offering is not conditioned on the closing of that
acquisition, which acquisition is subject to various closing conditions that may not be satisfied. We intend to use the remaining net proceeds,
including any proceeds not used for the Danos acquisition if it fails to close, for other corporate purposes, which may include the refurbishment
of Rig 16 and Rig 31 and the acquisition of additional rigs and liftboats.

      In June 2005, we entered into a $140.0 million senior secured term loan. We used the proceeds from the term loan to repay all
outstanding amounts under two credit facilities, including accrued interest, fees and applicable prepayment premiums, to fund the purchase
price of the jackup rig Rig 16 and for general corporate purposes. We terminated both of those credit facilities in connection with the
repayment. Amounts outstanding under our new senior secured term loan currently bear interest at either (1) the highest of (a) Comerica Bank’s
base rate, (b) the three-month certificate of deposit rate plus 0.5% and (c) the Federal funds effective rate plus 0.5%, in each case plus 2.25%,
or (2) LIBOR plus 3.25%. As of June 30, 2005, amounts outstanding under the term loan bore interest at 6.58%. In accordance with the credit
agreement, in July 2005, we entered into hedge transactions with the purpose and effect of fixing the interest rate on $70.0 million of the
outstanding principal amount of the term loan at 7.54% for three years. In addition, we entered into hedge transactions with the purpose and
effect of capping the interest rate on an additional $20.0 million of such principal amount at 8.25% for three years. The term loan matures in
June 2010 and has quarterly principal payments in an amount equal to 1% per annum. For additional information about the term loan, please
read ―Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources‖ in this
prospectus.

                                                                DIVIDEND POLICY

      We do not intend to declare or pay regular dividends on our common stock in the foreseeable future. Instead, we generally intend to
invest any future earnings in our business. Subject to Delaware law, our board of directors will determine the payment of future dividends on
our common stock, if any, and the amount of any dividends in light of:

       •    any applicable contractual restrictions limiting our ability to pay dividends;

       •    our earnings and cash flows;

       •    our capital requirements;

       •    our financial condition; and

       •    other factors our board of directors deems relevant.

      Our new senior secured credit agreement restricts our ability to pay dividends or other distributions on our equity securities.

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Index to Financial Statements

                                                               CAPITALIZATION

      We have provided in the table below our consolidated cash and cash equivalents and capitalization as of June 30, 2005: (1) on an actual
basis; (2) on a pro forma basis after giving effect to the Conversion; and (3) on a pro forma as adjusted basis after giving effect to this offering
and the use of the net proceeds as described under ―Use of Proceeds‖ as if these transactions had occurred as of June 30, 2005. This table
should be read in conjunction with ―Selected Consolidated Financial Data,‖ ―Management’s Discussion and Analysis of Financial Condition
and Results of Operations‖ and our consolidated financial statements and related notes appearing elsewhere in this prospectus.
                                                                                                                        June 30, 2005

                                                                                                                                             Pro Forma
                                                                                                     Actual            Pro Forma             As Adjusted

                                                                                                              (in thousands, except par values)
Cash and cash equivalents(1)                                                                     $    35,384       $      35,384        $

Long-term debt, including current portion:
    Senior secured credit facilities                                                             $ 140,000         $ 140,000            $

        Total long-term debt, including current portion                                              140,000             140,000
Members’/stockholders’ equity:
   Member interests                                                                                   67,351                 —                             —
   Preferred stock, par value $0.01 per share; 50,000 shares authorized pro forma and
     pro forma as adjusted; no shares issued and outstanding pro forma or pro forma
     as adjusted                                                                                          —                  —                             —
   Common stock, par value $0.01 per share; 200,000 shares authorized pro forma and
     pro forma as adjusted; 23,923 shares issued and outstanding pro
     forma;           shares issued and outstanding pro forma as adjusted                                —                   239
   Additional paid-in capital                                                                            —                67,112
   Retained earnings(2)                                                                               27,617              27,617

      Total members’/stockholders’ equity                                                             94,968              94,968

                 Total capitalization                                                            $ 234,968         $ 234,968            $


(1)   Does not give effect to our payment in August 2005 of $12.5 million in cash to fund the purchase price of the Whale Shark or to our
      payment in September 2005 of $12.6 million in cash to fund the purchase price of Rig 31 .
(2)   Includes a charge of $        million consisting of the write-off of deferred financing costs related to the portion of our new term loan that
      will be retired. The after-tax impact of the write-off on members’/stockholders’ equity is $            million.

                                                                         24
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                                                                    DILUTION

      The net tangible book value of our common stock as of June 30, 2005 was approximately $                  million, or $      per share. Net
tangible book value per share represents our total tangible assets less our total liabilities and divided by the aggregate number of shares of our
common stock outstanding. Dilution in net tangible book value per share represents the difference between the amount per share of our
common stock that you pay in this offering and the net tangible book value per share of our common stock immediately after this offering.

      After giving effect to the sale by us of           shares of common stock in this offering at an assumed initial public offering price of
$         per share, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, the net
tangible book value of our common stock as of June 30, 2005 would have been approximately $                 million, or $         per share. This
represents an immediate increase in net tangible book value of $            per share to existing holders who will receive shares in the Conversion
and an immediate dilution in net tangible book value of $            per share to new investors purchasing shares of common stock in this
offering. The following table illustrates this dilution per share:

Assumed initial public offering price per share                                                                                         $
    Net tangible book value per share as of June 30, 2005                                                 $
    Increase in net tangible book value per share attributable to new investors

Net tangible book value per share after this offering

Dilution in net tangible book value per share to new investors                                                                          $


      These computations assume that no additional shares are issued upon exercise of outstanding stock options granted under our 2004
long-term incentive plan. As of June 30, 2005, options to purchase 945,000 shares of common stock at a weighted average exercise price of
$3.23 per share have been granted under the plan. See ―Management—2004 Long-Term Incentive Plan.‖

      We have provided in the following table, as of June 30, 2005, the differences between the amounts paid or to be paid by the groups set
forth in the table with respect to the aggregate number of shares of our common stock acquired or to be acquired by each group.
                                                                                                                                             Average
                                                                                                                                             Price per
                                                                             Shares Purchased                  Total Consideration            Share

                                                                          Number            Percent           Amount             Percent

                                                                                                               (dollars in thousands)
Existing stockholders                                                    23,922,850                %      $     67,351                  %    $    2.82
Option holders(1)                                                           945,000                              3,050                            3.23
New investors

      Total                                                                                     100.0 %   $                        100.0 %


(1)   Excludes options to purchase approximately             shares of our common stock to be granted in connection with the offering.

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                                              SELECTED CONSOLIDATED FINANCIAL DATA

      We have derived the following consolidated financial information as of and for the five-month period ended December 31, 2004 from our
audited consolidated financial statements included elsewhere in this prospectus. We have derived the consolidated financial information as of
and for the six-month period ended June 30, 2005 from our unaudited consolidated financial statements included elsewhere in this prospectus.
We have derived the consolidated financial information as of March 31, 2005 and for the three-month periods ended March 31, 2005 and June
30, 2005 from our unaudited consolidated financial statements not included in this prospectus. The consolidated financial information as of and
for the three-month period ended March 31, 2005 and the three- and six-month periods ended June 30, 2005 includes, in management’s
opinion, all adjustments necessary for the fair presentation of our financial position as of such date and our results of operations for such
period.

      We were formed in July 2004 and commenced operations in August 2004. From our formation to June 30, 2005, we completed several
significant asset acquisitions that impact the comparability of our historical financial results. Our financial results reflect the impact of the
assets only after the date of their acquisition. This prospectus does not include any financial information relating to the assets for periods prior
to their acquisition date. As described under ―Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Acquisition History and Financial Statement Presentation,‖ we have concluded that we are not required to include such
pre-acquisition financial statements in this prospectus, and we believe that separate audited financial statements for the assets we acquired as of
any date or for any period prior to our acquisition of those assets would not be meaningful to investors. In addition, prior to the completion of
this offering, we will convert from a Delaware limited liability company to a Delaware corporation to be renamed Hercules Offshore, Inc.
Please read ―Prospectus Summary—The Conversion.‖ Moreover, the financial data as of March 31, 2005 and June 30, 2005 and for the
three-month period ended March 31, 2005 and the three- and six-month periods ended June 30, 2005 include Rig 25 , which was severely
damaged during Hurricane Katrina and which we believe is likely to be declared a constructive total loss under our insurance policies. See
―Management’s Discussion and Analysis of Financial Condition and Results of Operations—Hurricane Katrina.‖

      As a result of the foregoing, our historical financial statements included in this prospectus do not reflect the results of operations of all of
our existing assets or our capital structure upon completion of this offering. Accordingly, those historical financial statements may not be
representative of our future financial performance or capital structure. In addition, our results of operations for the five-month period ended
December 31, 2004, the three-month period ended March 31, 2005 and the three- and six-month periods ended June 30, 2005 are not
necessarily indicative of the results of operations that may be achieved for an entire year.

     You should read the following information in conjunction with ―Management’s Discussion and Analysis of Financial Condition and
Results of Operations‖ and our consolidated financial statements and the related notes included elsewhere in this prospectus.

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                                                       Five Months             Three Months                  Three Months              Six Months
                                                          Ended                   Ended                         Ended                    Ended
                                                     December 31, 2004         March 31, 2005                June 30, 2005            June 30, 2005

                                                                           (dollars in thousands, except per share data)
INCOME STATEMENT DATA:
Revenues:
    Drilling services                            $              24,006        $         24,891              $        26,288       $         51,179
    Marine services                                              7,722                   9,164                       10,787                 19,951

           Total revenues                                       31,728                  34,055                       37,075                 71,130
Costs and Expenses:
    Operating expenses for drilling services,
       excluding depreciation and amortization
       shown separately                                         12,799                  11,241                       12,095                 23,336
    Operating expenses for marine services,
       excluding depreciation and amortization
       shown separately                                          4,198                    4,580                       5,847                 10,427
    Depreciation and amortization                                2,016                    2,462                       2,860                  5,322
    General and administrative, excluding
       depreciation and amortization shown
       separately                                                2,808                    2,201                       2,904                   5,105

           Total costs and expenses                             21,821                  20,484                       23,706                 44,190

Operating Income                                                 9,907                  13,571                       13,369                 26,940
Other Income (Expense):
    Interest expense                                            (2,070 )                 (2,303 )                    (2,534 )                (4,837 )
    Loss on early retirement of debt(a)                            —                        —                        (2,786 )                (2,786 )
    Other, net                                                     228                      134                         101                     235

           Total other income (expense)                         (1,842 )                 (2,169 )                    (5,219 )                (7,388 )

Net Income(b)                                    $               8,065        $         11,402              $         8,150       $         19,552

Net Income Per Share(b)(c):
     Basic                                       $                0.55        $             0.48            $              0.34   $            0.82
     Diluted                                     $                0.55        $             0.48            $              0.34   $            0.81
Weighted Average Shares Outstanding(c):
    Basic                                                       14,690                  23,718                       23,923                 23,821
    Diluted                                                     14,690                  23,718                       24,243                 24,021
BALANCE SHEET DATA (as of end of
  period):
Cash and cash equivalents                        $             14,460         $          8,547              $       35,384
Working capital                                                30,283                   30,972                      55,714
Total assets                                                  132,156                  173,859                     244,699
Long-term debt, net of current portion                         53,000                   77,000                     138,950
Total members’ equity                                          71,087                   86,818                      94,968
OTHER FINANCIAL DATA:
Net cash (used in) provided by:
     Operating activities                        $             (6,495 )       $          6,548              $        19,537       $         26,085
     Investing activities                                     (96,274 )                (40,949 )                    (46,905 )              (87,854 )
     Financing activities                                     117,229                   28,488                       54,205                 82,693
Capital expenditures                                           94,443                   42,326                       45,048                 87,374
Deferred drydocking expenditures                                  601                      623                        1,607                  2,230
(a) In connection with the repayment of a portion of our new term loan with proceeds from this offering as described under ―Use of
    Proceeds,‖ we expect to recognize pretax charges of $           million, consisting of the write-off of deferred financing costs related to the
    portion of the debt that will be retired.
(b) On a pro forma basis after giving effect to the Conversion, as if we had been subject to income taxes, for the five-month period ended
    December 31, 2004, the three-month period ended March 31, 2005 and the three- and six-month periods ended June 30, 2005, net income
    would have been $5.2 million, $7.3 million, $5.2 million and $12.5 million, respectively, and diluted net income per share would have
    been $0.35, $0.31, $0.22 and $0.52, respectively.
(c) The weighted average shares outstanding reflects the conversion of each outstanding membership interest into a total of 350 shares of
    common stock. The calculation of diluted weighted average shares outstanding includes weighted average outstanding options to purchase
    320,168 and 199,603 shares of common stock for the three- and six-month periods ended June 30, 2005, respectively.

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                           MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                                              RESULTS OF OPERATIONS

      The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Selected
Consolidated Financial Data” and our consolidated financial statements and notes thereto appearing elsewhere in this prospectus. This
discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from
those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” and
elsewhere in this prospectus. See “Forward-Looking Information.”

Overview

      We provide shallow-water drilling and liftboat services to the oil and natural gas exploration and production industry in the U.S. Gulf of
Mexico. We provide these services to major integrated energy companies and independent oil and natural gas operators. We report our business
activities in two business segments, Contract Drilling Services and Marine Services:

       •    Contract Drilling Services. We own a fleet of eight jackup rigs that can drill in maximum water depths ranging from 85 to 250 feet.
            Under most of our contract drilling service agreements, we are paid a fixed daily rental rate called a ―dayrate,‖ and we are required
            to pay all costs associated with our own crews as well as the upkeep and insurance of the rig and equipment.

       •    Marine Services. We own a fleet of 39 liftboats with leg lengths ranging from 105 to 260 feet. Our liftboats are used to provide a
            wide range of offshore support services, including platform maintenance, platform construction, well intervention and
            decommissioning services, and can be moved from location to location within a short period of time. Under most of our liftboat
            contracts, we are paid a fixed dayrate for the rental of the vessel, which typically includes the costs of a small crew of four to eight
            employees, and we also receive a variable rate for reimbursement of other operating costs such as catering, fuel and rental
            equipment and other items.

       Our revenues are affected primarily by dayrates, fleet utilization and the number and type of units in our fleet. Utilization and dayrates, in
turn, are influenced principally by the demand for rig and liftboat services from the exploration and production sectors of the oil and natural gas
industry. Our contracts in the U.S. Gulf of Mexico tend to be short-term in nature and are heavily influenced by changes in the supply of units
relative to the fluctuating expenditures for both drilling and production activity.

      Our operating costs are primarily a function of fleet configuration and utilization levels. The most significant direct operating costs for
our Contract Drilling Services segment are wages paid to crews, maintenance and repairs to the rigs, and marine insurance. These costs do not
vary significantly whether the rig is operating under contract or idle, unless we believe that the rig is unlikely to work for a prolonged period of
time, in which case we may decide to ―cold-stack‖ the rig. Cold-stacking is a common term used to describe a rig that is expected to be idle for
a protracted period and typically for which routine maintenance is suspended and the crews are either redeployed or laid-off. When a rig is
cold-stacked, operating expenses for the rig are greatly reduced because the crew is smaller and maintenance activities are suspended. Rigs that
have been cold-stacked typically require a lengthy reactivation project that can involve significant expenditures, particularly if the rig has been
cold-stacked for a long period of time.

      The most significant costs for our Marine Services segment are the wages paid to crews and the amortization of regulatory drydocking
costs. Unlike our Contract Drilling Services segment, a significant portion of the expenses incurred with operating each liftboat are paid for or
reimbursed by the customer under contractual terms and prices. This includes fuel, catering expenses, offshore communications and crane
overtime. We record reimbursements from customers as revenues and the related expenses as operating costs. Our liftboats are required to
undergo regulatory inspections every year and to be drydocked two out of every five years; the

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drydocking expenses and time of drydock vary depending on the condition of the vessel. All costs associated with regulatory inspections,
including related drydocking costs, are deferred and amortized over the period until the next scheduled inspection.

Industry Background and Trends

       Market conditions continued to improve during the first six months of 2005. Our jackup rigs were contracted at dayrates ranging from
approximately $31,000 to $46,000 in the first six months of 2005, as compared to dayrates ranging from approximately $23,000 to $37,000 for
the five-month period ended December 31, 2004. Our liftboats were contracted at dayrates ranging from approximately $3,600 to $14,300 in
the first six months of 2005, as compared to dayrates ranging from approximately $3,300 to $13,700 for the five-month period ended December
31, 2004. Dayrates for our jackup rigs have continued to increase in the third quarter, with dayrates ranging from approximately $36,000 to
$53,000 in the period from July 1, 2005 to August 31, 2005. Our liftboats were contracted at dayrates ranging from approximately $3,500 to
$12,300 in the same period, and we expect that average dayrates will increase as a result of higher utilization and increased demand as
described below.

       The following table compares utilization rates for our jackup rigs, as operated by us or previous owners, with rates for similar units in the
U.S. Gulf of Mexico for the first six months of 2005 and the years ended December 31, 2004, 2003, 2002 and 2001. The industry utilization
rates for jackup rigs presented below are based on data provided by ODS-Petrodata and include the total number of jackup rigs of the specified
type in the U.S. Gulf of Mexico. No industry data is available with respect to utilization rates of liftboats in the U.S. Gulf of Mexico; however,
we believe that the utilization rates for our liftboats are comparable to those for similar vessels in our industry. The rates for our rigs and
liftboats in the table below are presented on a pro forma basis as to the acquisitions of the rigs and liftboats currently in our fleet, excluding Rig
16 , which was located in the Middle East for all periods presented, Rig 31 , which was located in Singapore for all periods presented, Rig 25 ,
which was severely damaged during Hurricane Katrina and which we believe is likely to be declared a constructive total loss, and the Whale
Shark , which was acquired in August 2005 and is newly constructed. The rates therefore include utilization data for such units when owned
and operated by prior owners. As a result, the utilization rates for our rigs and liftboats presented below may not be indicative of the utilization
rates that we would have achieved had we owned the assets for all of the periods presented or that we will achieve in the future. In addition,
because the utilization rates for our rigs and liftboats presented below are on a pro forma basis, those rates differ from the historical utilization
rates for our rigs and liftboats presented elsewhere in this prospectus. Utilization shown in the table below equals the total number of operating
days for all rigs or liftboats of the specified type in the period as a percentage of the total number of calendar days in the period.

                                                     PRO FORMA UTILIZATION RATES
                                                                                                                                               Six
                                                                                                                                            Months
                                                                                                                                             Ended
                                                                                                                                            June 30,
                                                                                                  Year Ended December 31,                     2005

                                                                                         2001         2002         2003         2004

Jackup Rigs:
U.S. Gulf of Mexico
     250-foot mat slot jackup rigs                                                       63.1 %       12.9 %       34.6 %       48.5 %          67.4 %
     200-foot mat cantilever jackup rigs                                                 85.2         61.2         84.9         98.2            99.5
Hercules rigs(1)                                                                         81.9         78.4         88.6         87.4            98.1
Liftboats:
Hercules liftboats(2)                                                                    71.4 %       74.3 %       59.2 %       61.7 %          70.0 %

(1)   Excludes Rig 16 , which is located in the Middle East , Rig 31 , which was located in Singapore for all periods presented, and Rig 25 ,
      which was severely damaged during Hurricane Katrina and which we believe is likely to be declared a constructive total loss. Rig 16 and
      Rig 31 were not marketed and were stacked for all

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      periods presented. Utilization rates for Rig 25 were 83.0%, 98.1%, 100.0%, 68.0% and 100.0% for the years ended December 31, 2001,
      2002, 2003 and 2004 and the six months ended June 30, 2005, respectively.
(2)   Excludes the Whale Shark , which was acquired in August 2005 and is newly constructed. Liftboats, unlike jackup rigs, are required to
      undergo annual inspections as well as more thorough inspections requiring drydocking two out of every five years. As a result, we
      believe that utilization rates of approximately 90% represent effectively full utilization of our liftboat fleet.

Hurricane Katrina

      We expect that Hurricane Katrina will have a material impact on our results of operations for the third and fourth quarters of 2005. Two
of our jackup rigs, Rig 21 and Rig 25 , sustained damage during the storm. After the storm, we discovered Rig 25 submerged in approximately
15 feet of water. It appears from our preliminary examination of the rig that its legs have been sheered off below the hull, its derrick has been
destroyed and the electrical power control systems have been irreparably damaged. As of the date of this prospectus, we have been unable to
determine whether the rig’s jacking systems have been damaged or whether seawater has breached the watertight areas of the hull and damaged
the rig’s mechanical systems. If the jacking systems or the mechanical systems have been damaged, the repair costs for these items could be
significant. Because the rig is submerged and because of the apparent significant stress put on the rig’s legs and hull, we believe that a complete
survey of the rig is likely to reveal that the total repair costs to the rig will exceed $40 million. This would result in the rig’s being declared a
constructive total loss under our insurance policies.

      We have commenced the salvage and removal of Rig 25 , the cost of which is covered by our insurance, subject to a single deductible of
$1.0 million. If Rig 25 is declared a constructive total loss, we would receive the total rig insured value of $50.0 million, which would not be
subject to a deductible. In this case, because the insurance proceeds would exceed the carrying value of the rig, which was $21.5 million as of
June 30, 2005, we would recognize a gain equal to the excess. Under the terms of our senior secured credit agreement, we would be required
within one year of our receipt of the insurance proceeds to either apply the proceeds to the acquisition of additional long-term productive assets
or reduce the outstanding principal amount of our term loan.

       If Rig 25 is not declared a constructive total loss, based on our preliminary analysis of the damage to the rig described above we believe
that the rig would require substantial repairs before returning to work. We do not believe that we could complete such repairs prior to 2007.

      As a result of the damage to Rig 25 , the contract for the rig with our customer was terminated as of August 31, 2005, and the contract
revenue that we had been generating ceased on that date. Prior to termination, the rig was contracted at a dayrate of approximately $41,000. For
the six-month period ended June 30, 2005, Rig 25 operated a total of 176 days and contributed revenues of $7.0 million.

      Rig 21 suffered extensive damage to its mat as a result of the storm. The rig will be moved onto a drydock in a shipyard in the fourth
quarter of 2005 for a detailed survey, and we expect that the rig will not be available for service until the second quarter of 2006. The cost of
the repairs is covered by our insurance, subject to a $1.0 million deductible. We will accrue the $1.0 million insurance deductible during the
third quarter of 2005, which will be recorded in operating expenses.

     Rig 21 was working under a contract that provides for a force majeure dayrate that is slightly less than the operating dayrate if operations
were to cease as a result of a storm like Hurricane Katrina, but the term of the force majeure period is not specified in the contract. The rig
began to earn this rate when operations ceased and the rig was evacuated in advance of the hurricane. Given the likelihood that Rig 21 will not
be available for service until 2006, we have commenced discussions with the customer to determine how long we will receive the force
majeure dayrate and to determine the rate, if any, the rig should earn after the force majeure rate ceases and

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while the rig is being repaired. Based on our preliminary discussions, the force majeure rate may have ceased and Rig 21 may not earn any
additional revenues from the time that the damage to the rig was discovered following the storm until the time that we have completed the
repairs and the rig is returned to location, which we expect to occur sometime during the second quarter of 2006. In addition, the customer may
terminate the current contract for Rig 21 , and we may be required to market the rig to other parties in 2006 following the completion of the
repairs. For the six-month period ended June 30, 2005, Rig 21 operated a total of 174 days and contributed revenues of $7.5 million.

      We expect that the operating expenses for both Rig 25 and Rig 21 for the third and fourth quarters of 2005 will be reduced as the rigs will
not be operational during that period.

      According to the American Petroleum Institute, as a result of Hurricane Katrina, approximately 46 offshore production platforms in the
Gulf of Mexico have been destroyed and a number of other platforms suffered significant damage. Following major storm events like
Hurricane Katrina, our customers typically inspect all of their offshore installations and conduct repairs, if necessary. This has resulted in
increased demand for our liftboat fleet. Average utilization for our liftboat fleet has increased from 73.8% during the three-month period ended
June 30, 2005 to 85.5% during the period following landfall of Hurricane Katrina through September 21, 2005. In addition, we anticipate that
the average dayrates for our liftboat fleet will increase as a result of the increased demand. We expect the increased demand to continue
through the remainder of 2005.

      In addition, several of our customers maintained operations bases and management offices in the New Orleans area, and communication
with these customers has been impaired by the storm. Impaired communications with these customers could result in delays in their remitting
payments to us and providing logistical support to our rigs and liftboats, as well as in our efforts to market and negotiate contracts.

Critical Accounting Policies

     Critical accounting policies are those that are important to our results of operations, financial condition and cash flows and require
management’s most difficult, subjective or complex judgments. Different amounts would be reported under alternative assumptions. We have
evaluated the accounting policies used in the preparation of the consolidated financial statements and related notes appearing elsewhere in this
prospectus. We apply those accounting policies that we believe best reflect the underlying business and economic events, consistent with
accounting principles generally accepted in the United States. We believe that our policies are generally consistent with those used by other
companies in our industry.

      We periodically update the estimates used in the preparation of the financial statements based on our latest assessment of the current and
projected business and general economic environment. Our significant accounting policies are summarized in Note A to our consolidated
financial statements. We believe that our more critical accounting policies include those related to property and equipment, revenue
recognition, allowance for doubtful accounts and deferred charges. Inherent in such policies are certain key assumptions and estimates.

   Property and Equipment

      Property and equipment represents 70.5% of our total assets as of June 30, 2005. Property and equipment is stated at cost, less
accumulated depreciation. Expenditures that substantially increase the useful lives of our assets are capitalized and depreciated, while routine
expenditures for maintenance items are expensed as incurred. Depreciation is computed using the straight-line method over the useful life of
the asset. We review our property and equipment for potential impairment when events or changes in circumstances indicate that the carrying
value of any asset may not be recoverable. For property and equipment, the determination of recoverability is made based on the estimated
undiscounted future net cash flows of the assets being reviewed. Any actual impairment charge would be recorded using the estimated
discounted value of future cash flows. Our estimates, assumptions and judgments used in the application of our property and equipment
accounting policies

                                                                        31
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Index to Financial Statements

reflect both historical experience and expectations regarding future industry conditions and operations. Using different estimates, assumptions
and judgments, especially those involving the useful lives of our rigs and liftboats and expectations regarding future industry conditions and
operations, would result in different carrying values of assets and results of operations. For example, a prolonged downturn in the drilling
industry in which utilization and dayrates were significantly reduced could result in an impairment of the carrying value of our jackup rigs.

   Revenue Recognition

      Revenues are generated from our rigs and liftboats working under daywork contracts as the services are provided. Some of our contracts
also allow us to recover additional direct costs, including mobilization and demobilization costs, additional labor and additional catering costs.
Under most of our liftboat contracts, we receive a variable rate for reimbursement of costs such as catering, fuel and rental equipment and other
items. Revenue for the recovery or reimbursement of these costs is recognized when the costs are incurred except for mobilization revenues,
which are amortized over the related drilling contract.

   Allowance for Doubtful Accounts

     Accounts receivable represents approximately 11.4% of our assets and 41.9% of our current assets as of June 30, 2005. We continuously
monitor our accounts receivable from our customers to identify any collectability issues. An allowance for doubtful accounts is established
when a review of customer accounts indicates that a specific amount will not be collected. We establish an allowance for doubtful accounts
based on the actual amount we believe is not collectable.

   Deferred Charges

      All of our liftboats are required to undergo regulatory inspections on an annual basis and to be drydocked two out of every five years to
ensure compliance with U.S. Coast Guard regulations for vessel safety and vessel maintenance standards. Costs associated with these
inspections, which generally involve setting the vessels on a drydock, are deferred, and the costs are amortized over the period of time between
the inspection and the time the next inspection is due. As of June 30, 2005, our deferred charges related to regulatory inspection costs totaled
$1.7 million. The amortization of the regulatory inspection costs was reported as part of our depreciation and amortization expense.

Acquisition History and Financial Statement Presentation

   Acquisitions from Parker Drilling and Assumption of Management of Rig 30

       In August 2004, we acquired five jackup rigs, four platform rigs and related assets from Parker Drilling Company for $39.3 million. The
four platform rigs and related assets that we acquired are not core to our business. We have sold three of the four platform rigs for net proceeds
of $0.8 million, and we intend to sell the fourth, which is inactive. In January 2005, we acquired another jackup rig and related assets from
Parker Drilling for $21.5 million. The jackup rigs acquired ranged in age from 22 years to 33 years, with an average expected remaining useful
life of approximately 15 years.

     Each of the jackup rigs we acquired from Parker Drilling was, at the time we acquired it, operating under a short-term contract with a
customer. We assumed the obligation to perform these contracts and completed each of them within 90 days of our acquisition of the rigs.
Thereafter, the rigs began working under contracts that we negotiated with our customers. We did not acquire any rights to the Parker Drilling
name in the acquisitions, and we have not marketed the rigs under the Parker Drilling name.

     Immediately following the August 2004 acquisition, we hired 248 rig-based employees who had been employed by Parker Drilling.
Seven out of the 27 members of our headquarters staff following the acquisition

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Index to Financial Statements

were employed by Parker Drilling immediately prior to the acquisition; however, none of our senior management, and only one salesperson in
our marketing staff, had been employed by Parker Drilling immediately prior to the acquisition. Other than this salesperson, we did not hire any
financial, legal, human resources, information technology, marketing, safety, training, payroll, purchasing, warehouse, transportation or
environmental employees or managers from Parker Drilling. The substantial majority of the Parker Drilling employees that we hired were
rig-based, hourly compensated employees.

      Concurrent with the August 2004 closing, we hired two operations management personnel and four office employees who had been
employed by Hercules Offshore Corporation (―Unrelated HOC‖). Unrelated HOC was formed in March 2001 by Thomas J. Seward II, the
current president of our drilling company subsidiary, and Thomas E. Hord, the current vice president, operations and chief operating officer of
that subsidiary, to manage a single jackup rig, Rig 30 (formerly named the Odin Victory ), under a rig management contract with Porterhouse
Offshore L.P., the owner of the rig. We do not own or control Unrelated HOC.

      At the closing, Unrelated HOC and Porterhouse Offshore terminated the rig management contract, and Porterhouse Offshore entered into
a new contract with us under which we were reimbursed for all of our expenses plus $100 per day. Aside from the rig management contract
with Porterhouse Offshore, we did not acquire any other assets or liabilities of Unrelated HOC, and the rig-based crews operating Rig 30
remained employees of Unrelated HOC until we hired them in January 2005 in connection with our acquisition of the rig as described below.

   Acquisition from Global Industries

      In October 2004, we acquired 22 liftboats and related assets from Global Industries, Ltd. for $53.5 million, including a property in New
Iberia, Louisiana, which we use as an operational office. At the time of the acquisition, some of the liftboats were operating under short-term
contracts with customers, with the remaining liftboats available for work. We assumed those contracts and completed them within 30 days of
our acquisition of the units. Thereafter, the units began working under short-term contracts that we negotiated with our customers. We did not
acquire any rights to the Global Industries name in the acquisition, and we have not marketed the rigs under the Global Industries name. The
liftboats acquired ranged in age from four years to 32 years, with an expected average remaining useful life of approximately 15 years.

     Under a transition services agreement, for six months following the acquisition, Global Industries was to perform the accounting and
marketing/sales functions related to the liftboat operations on our behalf. Subsequent to closing, however, we began hiring our own accounting
and administrative support personnel, some of whom were former Global Industries employees, and terminated the transition services
agreement in February 2005. In connection with the closing of the acquisition, we hired 151 vessel-based employees, nine mechanics, the
general manager of the group and a liftboat operations manager who had been employed by Global Industries immediately prior to the
acquisition. We did not hire any financial, legal, human resources, information technology, marketing, safety, training, payroll, purchasing,
warehouse, transportation or environmental employees or managers from Global Industries. The substantial majority of Global Industries
employees that we hired were vessel-based, hourly compensated employees.

   Acquisition from Porterhouse Offshore

      In January 2005, we acquired the jackup rig Rig 30 and related assets from Porterhouse Offshore for $20.0 million. At the time of
acquisition, the age of the rig was 26 years, with an expected remaining useful life of approximately 15 years, and was operating under a
short-term contract. As described above, we had managed the rig under the management contract entered into with Porterhouse Offshore
concurrent with the closing of the August 2004 Parker Drilling acquisition. We hired the rig-based personnel operating the rig, who were
employees of Unrelated HOC, at the time of the acquisition of the rig. We did not acquire any personnel from Porterhouse Offshore.

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   Acquisition from Superior

       In June 2005, we acquired 17 liftboats and related assets from Superior Energy Services, Inc. for $20.0 million. In August 2005, we sold
one of the liftboats for $0.3 million. At the time of the acquisition, ten of the liftboats were operating under short-term contracts with
customers, three of the vessels were stacked, and the remaining four liftboats were available for work. We completed such contracts within 30
days of our acquisition of the units. Thereafter, any work for the units is under contracts that we negotiate with our customers. We did not
acquire any rights to the Superior Energy name in the acquisition, and we have not marketed the liftboats under the Superior Energy name. The
liftboats acquired ranged in age from 20 years to 33 years, with an expected remaining average useful life of approximately 15 years. Average
utilization of these liftboats during the first quarter of 2005 was approximately 61%. The average utilization of the 13 actively marketed
liftboats during that period was 80%.

     In connection with the closing of the acquisition, we hired 35 vessel-based employees who had been employed by Superior Energy
immediately prior to the acquisition. These employees are all hourly compensated employees. We did not hire any financial, legal, human
resources, information technology, marketing, safety, training, payroll, purchasing, warehouse, transportation or environmental employees or
managers from Superior Energy.

   Acquisition from Transocean

      In June 2005, we acquired jackup rig Rig 16 from Transocean Inc. for a purchase price of $20.0 million. This rig is capable of drilling in
water depths of up to 170 feet. We are currently refurbishing the rig in the United Arab Emirates and expect to spend approximately $7.5
million on that refurbishment. We expect the rig to be available in the first half of 2006. We intend to seek work for the rig under a longer-term
contract in a suitable international location. The age of the rig is 24 years, with an expected remaining useful life of approximately 15 years.
We did not acquire any customer contracts from Transocean and did not hire any employees from Transocean in connection with the
acquisition.

   Acquisition from CS Liftboats

      In August 2005, we acquired the liftboat Whale Shark from CS Liftboats, Inc. for a purchase price of $12.5 million. The liftboat has a leg
length of 260 feet, and we intend to seek work for it in the U.S. Gulf of Mexico and suitable international locations. The newly constructed
liftboat is expected to be available for service in September 2005. We did not acquire any customer contracts from CS Liftboats and did not
hire any employees from CS Liftboats in connection with the acquisition.

   Acquisition from Hydrocarbon Capital

       In September 2005, we acquired Rig 31 from Hydrocarbon Capital II LLC for a purchase price of $12.6 million. This rig is capable of
drilling in water depths of up to 250 feet. We are currently refurbishing the rig in Singapore and expect to spend approximately $15 million on
that refurbishment. We expect the rig to be available in the third quarter of 2006. We intend to seek work for the rig under a longer-term
contract in a suitable international location. The age of the rig is 26 years, with an expected remaining useful life of approximately 15 years.
We did not acquire any customer contracts from Hydrocarbon Capital and did not hire any employees from Hydrocarbon Capital in connection
with the acquisition.

   Nature of Acquisitions

     We believe that the acquisitions described above represent the acquisition of assets, not of ―businesses‖ within the meaning of applicable
accounting guidance. We did not acquire separate entities, subsidiaries or divisions. Although we hired rig- and vessel-based personnel, and
some shore-based staff, we did not acquire from the sellers most of the personnel who had performed management functions of overseeing and
supporting the assets that were sold to us. As of June 30, 2005, we employed approximately 430 people in our drilling

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operations and 250 people in our liftboat operations, exclusive of headquarters staff. Approximately 60% of those employees were employees
of Parker Drilling, Global Industries or Superior Energy immediately prior to our related acquisition of assets from those companies.

      We have independently developed the operating rights necessary to operate the assets, including the establishment of our own operating
privileges with the U.S. Coast Guard and the U.S. Minerals Management Service. We did not acquire any of our processes and systems from
any of the sellers. Instead, we have independently developed the material systems we use in operating our business, including systems related
to management; accounting; payroll; benefits; health, safety and environment; training; marketing and sales; maintenance; and project
management. We did not acquire any intangible assets or intellectual property from any of the sellers. Without the systems we have developed,
we could not successfully access our customer base to generate revenue.

   Financial Statements

      Since we have concluded that the acquisitions of rigs and liftboats described above do not constitute the acquisition of businesses, we
have not provided audited stand-alone pre-acquisition financial statements of the assets acquired. We do not believe that separate audited
financial statements for the assets acquired for any date or period prior to our acquisition of those assets would be meaningful to investors.
There are significant differences between the organization, operation and overhead structures of our company, on the one hand, and of each of
the sellers, on the other hand. In addition, Parker Drilling had held the assets we acquired from them for sale and accounted for their operations
as discontinued operations since 2003. We believe, therefore, that for an extended period such assets did not receive the same management
attention, marketing effort or maintenance as other assets operated by Parker Drilling or that we provide to the rigs and our other assets.

Changes in Financial Reporting of Future Results of Operations

      As a newly organized private company, we have relied on outside service providers for much of our administrative support functions.
Following this offering, we will be subject to reporting and other obligations under the Securities Exchange Act of 1934. These requirements
include the preparation and filing of detailed annual, quarterly and current reports. In addition, we will be required to keep abreast of and
comply with material changes in the applicable rules and regulations promulgated by the SEC, including the changes and requirements
mandated by the Sarbanes-Oxley Act of 2002. We expect these rules and regulations to result in both a significant initial cost, as we implement
internal controls and other procedures designed to comply with the requirements of the Sarbanes-Oxley Act, and in an ongoing increase in our
legal, audit and financial compliance costs, to divert management attention from operations and strategic opportunities and to make legal,
accounting and administrative activities more time-consuming and costly. We also expect to incur substantially higher costs to maintain
directors and officers insurance. As a result, our general and administrative expenses likely will increase, and we estimate that this increase will
be approximately $5 million per year based on our general and administrative expenses for the six-month period ended June 30, 2005.

      Prior to the Conversion, our company is a limited liability company, and our owners have elected to be taxed at the member unitholder
level rather than at the company level. In connection with this offering, we are reorganizing our corporate structure as a corporation. Following
the Conversion, we will be required to recognize a tax provision on our income. Because all of our income in 2004 and the first six months of
2005 was generated in the U.S. Gulf of Mexico, our effective tax rate as a corporation would have been approximately 36%. We expect that our
effective tax rate will fluctuate from time to time based on our decision to move assets to areas outside the United States and future acquisitions
and investment decisions. In addition, upon completion of the Conversion, we will record a tax provision related to the recognition of deferred
taxes equal to the tax effect of the difference between the book and tax basis of our assets and liabilities as of the effective date of the
Conversion. Assuming we had completed the Conversion as of June 30, 2005, the amount of the provision would have been approximately
$6.9 million.

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Results of Operations

      We were formed in July 2004 and commenced operations in August 2004. From our formation to June 30, 2005, we completed several
significant transactions that impact the comparability of our historical financial results. These transactions include:

       •    the acquisition of five jackup rigs from Parker Drilling in August 2004;

       •    the acquisition of 22 liftboats from Global Industries in October 2004;

       •    the acquisition of a jackup rig from Parker Drilling in January 2005;

       •    the acquisition of a jackup rig from Porterhouse Offshore in January 2005;

       •    the acquisition of 17 liftboats from Superior Energy in June 2005; and

       •    the acquisition of a jackup rig from Transocean in June 2005.

      Our financial results reflect the impact of these assets only after the date of their acquisition. This prospectus does not include any
financial information relating to the assets for periods prior to their acquisition date.

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     The following table sets forth our operating days, average utilization rates, average revenue and expenses per day, revenues and operating
expenses by operating segment and other selected information for the periods indicated:
                                                                  For the Five             For the Three               For the Three       For the Six
                                                                Months Ended               Months Ended                Months Ended       Months Ended
                                                               December 31, 2004           March 31, 2005              June 30, 2005      June 30, 2005

                                                                                     (dollars in thousands, except per day amounts)
Contract Drilling Services Segment:
    Number of rigs (as of end of period)                                       5                        7                           8                8
    Operating days                                                           748                      610                         602            1,212
    Available days                                                           751                      614                         637            1,551
    Utilization(1)                                                          99.6 %                   99.3 %                      94.5 %           96.9 %
    Average revenue per rig per day(2)                     $              32,098         $         40,833             $        43,653     $     42,234
    Average operating expense per rig per
      day(3)                                               $              17,046         $         18,309             $        18,988     $     18,654
    Revenues                                               $              24,006         $         24,891             $        26,288     $     51,179
    Operating expenses, excluding depreciation
      and amortization, shown separately                   $              12,799         $         11,241             $        12,095     $     23,336
    Depreciation and amortization                          $               1,070         $          1,292             $         1,318     $      2,610
    General and administrative, excluding
      depreciation and amortization, shown
      separately                                           $               1,972         $          1,183             $         1,682     $      2,865
    Operating income                                       $               8,165         $         11,175             $        11,193     $     22,368
Marine Services Segment:
   Number of liftboats (as of end of period)                                  22                        22                         39                39
   Operating days                                                          1,350                     1,452                      1,766             3,218
   Available days                                                          1,958                     1,980                      2,392             4,372
   Utilization(1)                                                           68.9 %                    73.3 %                     73.8 %            73.6 %
   Average revenue per liftboat per day(2)                 $               5,720         $           6,311            $         6,109     $       6,200
   Average operating expense per liftboat per
      day(3)                                               $               2,144         $           2,313            $         2,444     $      2,385
   Revenues                                                $               7,722         $           9,164            $        10,787     $     19,951
   Operating expenses, excluding depreciation
      and amortization, shown separately                   $               4,198         $           4,580            $         5,847     $     10,427
   Depreciation and amortization                           $                 946         $           1,167            $         1,534     $      2,701
   General and administrative, excluding
      depreciation and amortization, shown
      separately                                           $                 581         $             441            $           380     $         821
   Operating income                                        $               1,997         $           2,976            $         3,026     $       6,002
Total Company:
    Revenues                                               $              31,728         $         34,055             $        37,075     $     71,130
    Operating expenses, excluding depreciation
       and amortization, shown separately                  $              16,997         $         15,821             $        17,942     $     33,763
    Depreciation and amortization                          $               2,016         $          2,462             $         2,860     $      5,322
    General and administrative, excluding
       depreciation and amortization, shown
       separately                                          $               2,808         $          2,201             $         2,904     $      5,105
    Operating income                                       $               9,907         $         13,571             $        13,369     $     26,940
    Interest expense                                       $               2,070         $          2,303             $         2,534     $      4,837
    Loss on early retirement of debt                                         —                        —                         2,786            2,786
    Net income                                             $               8,065         $         11,402             $         8,150     $     19,552

(1)   Utilization is defined as the total number of operating days for our rigs or liftboats, as applicable, in the period as a percentage of the total
      number of calendar days in the period.
(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.
(3)   Average operating expense per rig or liftboat per day is defined as operating expenses, excluding depreciation and amortization, shown
      separately, incurred by our rigs or liftboats, as applicable, in the period divided by the total number of days in the period.

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      Our operations generally are affected by the seasonal differences in weather patterns in the U.S. Gulf of Mexico. These differences may
result in increased operations in the spring, summer and fall periods and a decrease in the winter months. The rainy weather, tropical storms,
hurricanes and other storms prevalent in the U.S. Gulf of Mexico during the year, such as Hurricane Katrina in August 2005, Hurricane Dennis
in July 2005 and Hurricane Ivan in September 2004, may also affect our operations. During such severe storms, our liftboats typically leave
location and cease to earn a full dayrate. Under U.S. Coast Guard guidelines, the liftboats cannot return to work until the weather improves and
seas are less than five feet. Accordingly, our operating results may vary from quarter to quarter, depending on factors outside of our control,
and therefore the dayrates and average utilization rates presented above may not be the same as those that can be expected to be attained during
other months of a calendar year.

   Six-Month Period Ended June 30, 2005 versus the Five-Month Period Ended December 31, 2004

      Average Revenue per Day

      Contract Drilling Services Segment. Average revenue per rig per day for our Contract Drilling Services segment increased to $42,234 for
the six-month period ended June 30, 2005 (the ―Current Period‖) compared with $32,098 for the five-month period ended December 31, 2004
(the ―Prior Period‖), an increase of 32%. This increase resulted from higher dayrates on our rigs and the January 2005 acquisitions of Rig 25
and Rig 30 , which have earned dayrates that have been higher than the average for the rest of our rig fleet.

      Marine Services Segment. Average revenue per liftboat per day for our Marine Services segment increased to $6,200 for the Current
Period compared with $5,720 for the Prior Period, an increase of 8%. This increase resulted from higher dayrates for our liftboats with leg
lengths of 105, 130, 150, 200 and 229 feet and higher utilization of larger vessels, which typically have higher dayrates.

      Average Operating Expense per Day

      Contract Drilling Services Segment. Average operating expense per rig per day for our Contract Drilling Services segment increased to
$18,654 for the Current Period compared with $17,046 for the Prior Period, an increase of 9%. The increase resulted primarily from an increase
in labor and catering expenses, which represented approximately 65% of our average daily operating expenses in each period. The increase in
our labor costs per day resulted primarily from raises paid to our crews in the Current Period.

       Marine Services Segment. Average operating expense per liftboat per day for our Marine Services segment increased to $2,385 for the
Current Period compared with $2,144 for the Prior Period, an increase of 11%. This increase resulted primarily from higher labor expenses due
to raises paid to our crews in the Current Period.

      Utilization and Operating Days

      Contract Drilling Services Segment. Utilization for our Contract Drilling Services segment was 96.9% for the Current Period compared
with 99.6% for the Prior Period. The Current Period reflects our ownership of eight jackup rigs following the acquisitions of Rig 25 and Rig 30
in January 2005 and Rig 16 in June 2005. The Prior Period reflects our ownership of only five jackup rigs.

      Marine Services Segment. Utilization for our Marine Services segment increased to 73.6% in the Current Period compared with 68.9%
for the Prior Period. Operating days for the Current Period totaled 3,218. Operating days for the Prior Period totaled 1,350. Both periods
include our 22 liftboats acquired from Global Industries in October 2004. The Current Period also includes our 17 liftboats acquired from
Superior Energy in June 2005.

      Rig Information

     We did not own any jackup rigs at the beginning of the five-month period ended December 31, 2004. We acquired five jackup rigs and
assumed the management of another jackup rig from an unrelated party in August

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2004. During the Prior Period, those jackup rigs were contracted at dayrates ranging from approximately $23,000 to $37,000.

      We owned five jackup rigs and managed a sixth jackup rig at the beginning of the six-month period ended June 30, 2005. We acquired
two jackup rigs, including the jackup rig that we had been managing since August 2004, in January 2005, and an additional jackup rig in June
2005. Our jackup rigs were contracted at dayrates ranging from $32,000 to $37,901 from January 1, 2005 to the date of the acquisition of the
two jackup rigs in January 2005. Following the January 2005 acquisition but prior to the June 2005 acquisition, our jackup rigs were contracted
at dayrates ranging from $33,000 to $46,000. Our jackup rigs were contracted at dayrates ranging from $33,000 to $46,000 from the date of the
acquisition of our eighth jackup rig in June 2005 to the end of the Current Period.

      Liftboat Information

     We did not own any liftboats at the beginning of the five-month period ended December 31, 2004. We acquired 22 liftboats in October
2004. During the Prior Period, those liftboats were contracted at dayrates ranging from approximately $3,300 to $13,700.

      We owned 22 liftboats at the beginning of the six-month period ended June 30, 2005. We acquired 17 liftboats in June 2005. Our liftboats
were contracted at dayrates ranging from $2,800 to $13,000 from January 1, 2005 to the date of the acquisition in June 2005. Our liftboats were
contracted at dayrates ranging from $3,000 to $13,500 from the date of the acquisition in June 2005 to the end of the Current Period.

   Three-Month Period Ended June 30, 2005 versus the Three-Month Period Ended March 31, 2005

      Revenues

      Consolidated. Total revenues for the three-month period ended June 30, 2005 (the ―Current Quarter‖) were $37.1 million compared with
$34.1 million for the three-month period ended March 31, 2005 (the ―Prior Quarter‖), an increase of $3.0 million, or 9%. This increase resulted
primarily from a full quarter of operations of Rig 25 and Rig 30 , which we acquired in January 2005, and higher jackup dayrates and additional
operating days in our Marine Services segment, primarily due to the acquisition of 17 liftboats in June 2005. Total revenues included $0.9
million in reimbursements from our customers for expenses paid by us for each of the Current Quarter and the Prior Quarter.

      Contract Drilling Services Segment . Revenues for our Contract Drilling Services segment were $26.3 million for the Current Quarter
compared with $24.9 million for the Prior Quarter, an increase of $1.4 million, or 6%. This increase resulted primarily from additional revenue
from Rig 25 and Rig 30, which were acquired in January 2005. Rig 25 and Rig 30 contributed revenues of approximately $7.8 million in the
Current Quarter compared with $6.2 million in the Prior Quarter, an increase of $1.6 million. Average revenue per rig per day was $43,653 in
the Current Quarter compared with $40,833 in the Prior Quarter, with average utilization of 94.5% in the Current Quarter compared with
99.3% in the Prior Quarter. Revenues for our Contract Drilling Services segment included $0.5 million in reimbursements from our customers
for expenses paid by us for the Current Quarter compared with $0.8 million for the Prior Quarter.

      Marine Services Segment. Revenues for our Marine Services segment were $10.8 million for the Current Quarter compared with $9.2
million in the Prior Quarter, an increase of $1.6 million, or 17%. This increase resulted primarily from additional operating days in the Current
Quarter, with 1,766 operating days in that quarter compared with 1,452 operating days in the Prior Quarter. Approximately 215 of the
additional operating days were attributable to the 17 liftboats acquired in June 2005. Average revenue per liftboat per day was $6,109 in the
Current Quarter compared with $6,311 in the Prior Quarter, with average utilization of 74.0% in the Current Quarter compared with 73.3% in
the Prior Quarter. The average revenue per liftboat per day was negatively impacted by the liftboats acquired in June 2005, which are smaller
and earned lower average dayrates

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than the remaining fleet. Revenues for our Marine Services segment included $0.4 million in reimbursements from our customers for expenses
paid by us for the Current Quarter compared with $0.1 million for the Prior Quarter.

      Operating Expenses

      Consolidated . Total operating expenses, excluding depreciation and amortization, shown separately, for the Current Quarter were $17.9
million compared with $15.8 million in the Prior Quarter, an increase of $2.1 million, or 13%. This increase resulted primarily from a full
quarter of operations of Rig 25 and Rig 30 , which we acquired in January 2005, and increased rig and liftboat operating expenses as described
below.

      Contract Drilling Services Segment . Operating expenses, excluding depreciation and amortization, shown separately, for our Contract
Drilling Services segment were $12.1 million in the Current Quarter compared with $11.2 million in the Prior Quarter, an increase of $0.9
million, or 8%. This increase resulted from additional operating expenses of $0.3 million for Rig 25 and Rig 30 , $0.4 million in wage increases
paid to our crews and $0.2 million in additional repairs and maintenance. Average operating expenses per rig per day were $18,988 in the
Current Quarter compared with $18,309 in the Prior Quarter.

      Marine Services Segment. Operating expenses, excluding depreciation and amortization, shown separately, for our Marine Services
segment were $5.8 million for the Current Quarter compared with $4.5 million in the Prior Quarter, an increase of $1.3 million, or 30%. This
increase resulted from $0.6 million in additional expenses associated with the 17 liftboats acquired in June 2005, $0.3 million in additional
expenses due to higher utilization on the 22 liftboats acquired in October 2004 and $0.4 million in additional repairs and maintenance.

      Depreciation and Amortization

      Depreciation and amortization expense in the Current Quarter was $2.9 million compared with $2.5 million in the Prior Quarter, an
increase of $0.4 million, or 16%. This increase resulted from $0.4 million in additional amortization of regulatory inspections and related
drydockings.

      General and Administrative Expenses

      General and administrative expenses, excluding depreciation and amortization, shown separately, in the Current Quarter were $2.9
million compared with $2.2 million in the Prior Quarter, an increase of $0.7 million, or 32%. This increase resulted primarily from $0.5 million
in additional general and administrative expenses in our Contract Drilling Services segment and $0.2 million in additional expenses for our
corporate offices.

      Interest Expense

       Interest expense in the Current Quarter was $2.5 million compared with $2.3 million in the Prior Quarter, an increase of $0.2 million, or
9%. This increase resulted from $0.1 million in interest expense associated with the $20.0 million in borrowings incurred in the acquisition of
17 liftboats in June 2005 and $0.1 million associated with $140.0 million in borrowings incurred in refinancing our debt in June 2005.

   Six-Month Period Ended June 30, 2005

      Revenues

      Consolidated . Total revenues for the six-month period ended June 30, 2005 were $71.1 million. Total revenues were positively impacted
by higher jackup dayrates and additional operating days in our Marine Services segment. Total revenues included $1.8 million in
reimbursements from our customers for expenses paid by us.

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Index to Financial Statements

      Contract Drilling Services Segment . Revenues for our Contract Drilling Services segment were $51.2 million for the six-month period
ended June 30, 2005. Rig 25 and Rig 30, which were acquired in January 2005, contributed revenues of approximately $14.0 million. Average
revenue per rig per day was $42,234 and average utilization was 96.9%. Revenues for our Contract Drilling Services segment included $1.3
million in reimbursements from our customers for expenses paid by us.

      Marine Services Segment . Revenues for our Marine Services segment were $19.9 million for the six-month period ended June 30, 2005.
Average revenue per liftboat per day was $6,200 and average utilization was 73.6%. Revenues for our Marine Services segment included $0.5
million in reimbursements from our customers for expenses paid by us.

      Operating Expenses

      Consolidated . Total operating expenses, excluding depreciation and amortization, shown separately, for the six-month period ended June
30, 2005 were $33.8 million. Total operating expenses were impacted by the acquisition of Rig 25 and Rig 30 in January 2005 and increased rig
and liftboat operating expenses.

      Contract Drilling Services Segment . Operating expenses, excluding depreciation and amortization, shown separately, for our Contract
Drilling Services segment were $23.3 million for the six-month period ended June 30, 2005. Average operating expenses per rig per day were
$18,654. Average labor costs per rig per day, which include wages and benefits paid to crews, were $10,656. Average rig maintenance
expenses per rig per day, excluding capitalized costs, were $2,589. Other rig expenses, which include catering, rentals, communications,
insurance and mobilization costs, averaged $5,409 per rig per day.

      Marine Services Segment . Operating expenses, excluding depreciation and amortization, shown separately, for our Marine Services
segment were $10.5 million for the six-month period ended June 30, 2005. Our most significant operating expenses consisted of labor ($5.6
million), catering ($1.5 million) and repair and maintenance ($1.1 million). Operating expenses on our liftboats averaged $2,385 per liftboat per
day in the period, ranging from $1,357 per liftboat per day for the smaller vessels to $3,361 per liftboat per day for the larger vessels.

      Depreciation and Amortization Expenses

      Total depreciation and amortization expenses were $5.3 million for the six-month period ended June 30, 2005. Results for the six-month
period ended June 30, 2005 included $2.6 million of depreciation expense for our drilling fleet, $1.8 million of depreciation expense for our
liftboat fleet and $0.9 million of amortization of regulatory inspections and related drydockings.

      General and Administrative Expenses

     General and administrative expenses, excluding depreciation and amortization, shown separately, were $5.1 million for the six-month
period ended June 30, 2005. Our Contract Drilling Services and Marine Services segments incurred general and administrative expenses of
$2.9 million and $0.8 million, respectively. General and administrative expenses for our corporate office were $1.4 million.

      Interest Expense

      Interest expense was $4.8 million for the six-month period ended June 30, 2005. Results for the period included $2.0 million of interest
expense associated with the $28.0 million in borrowings incurred in the acquisition of five drilling rigs in August 2004, $1.0 million associated
with the $28.0 million in borrowings incurred in the acquisition of 22 liftboats in October 2004, $1.6 million associated with $25.0 million of
borrowings incurred in the acquisitions of Rig 25 and Rig 30 in January 2005, $0.1 million associated with the

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$20.0 million in borrowings incurred in the acquisition of 17 liftboats in June 2005 and $0.1 million associated with $140.0 million in
borrowings incurred in refinancing our debt in June 2005.

   Five-Month Period Ended December 31, 2004

      Revenues

      Consolidated. Total revenues were $31.7 million for the five-month period ended December 31, 2004. Revenues for the period include
activity for the five jackup rigs acquired from Parker Drilling in August 2004 and for the 22 liftboats acquired from Global Industries in
October 2004. Total revenues included $0.9 million in reimbursements from our customers for expenses paid by us.

      Contract Drilling Services Segment . Revenues for our Contract Drilling Services segment were $24.0 million for the five-month period
ended December 31, 2004. Segment revenues included activity for the five jackup rigs beginning on August 2, 2004. Average revenue per rig
per day was $32,098 and average utilization was 99.6%. Revenues for our Contract Drilling Services segment included $0.6 million in
reimbursements from our customers for expenses paid by us.

     Marine Services Segment. Revenues for our Marine Services segment were $7.7 million for the five-month period ended December 31,
2004. Segment revenues included activity for the 22 liftboats beginning on October 2, 2004. Average revenue per liftboat per day was $5,720
and average utilization was 68.9%. Revenues for our Marine Services segment included $0.3 million in reimbursements from our customers for
expenses paid by us.

      Operating Expenses

      Consolidated. Total operating expenses, excluding depreciation and amortization, shown separately, were $17.0 million for the
five-month period ended December 31, 2004. Total operating expenses included expenses for five jackup rigs beginning on August 2, 2004 and
for 22 liftboats beginning on October 2, 2004.

      Contract Drilling Services Segment . Operating expenses, excluding depreciation and amortization, shown separately, for our Contract
Drilling Services segment were $12.8 million for the five-month period ended December 31, 2004. Average operating expenses per rig were
$17,046 per day. Average labor costs per rig, which include wages and benefits paid to crews, were $9,631 per day. Rig maintenance expenses
per rig, excluding capitalized costs, were $2,508 per day. Other rig expenses, which included catering, rentals, communications, insurance and
mobilization costs, averaged $4,907 per rig per day.

      Marine Services Segment. Operating expenses, excluding depreciation and amortization, shown separately, for our Marine Services
segment were $4.2 million for the five-month period ended December 31, 2004. Segment expenses included three months of activity from the
inception of the segment on October 2, 2004 with the acquisition of 22 liftboats from Global Industries. Our most significant operating
expenses were labor ($2.2 million), vessel maintenance, excluding capital expenditures and drydocking costs ($0.5 million), and insurance
($0.4 million). Operating expenses on our liftboats averaged $2,144 per liftboat per day in the period, ranging from $1,158 per day for the
smaller vessels to $3,014 per day for the larger vessels.

      Depreciation and Amortization Expenses

      Total depreciation and amortization expenses were $2.0 million for the five-month period ended December 31, 2004 and included $1.1
million of depreciation expense associated with the acquisition of five jackup rigs from Parker Drilling in August 2004, $0.8 million of
depreciation expense associated with the 22 liftboats from Global Industries in October 2004 and $0.1 million of amortization of regulatory
inspections and related drydockings.

      General and Administrative Expenses

     General and administrative expenses, excluding depreciation and amortization, shown separately, were $2.8 million for the five-month
period ended December 31, 2004. Our Contract Drilling Services and Marine Services

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segments incurred general and administrative expenses of $2.0 million and $0.6 million, respectively. General and administrative expense for
our corporate office were $0.2 million.

      Interest Expense

      Interest expense was $2.1 million for the five-month period ended December 31, 2004, which represented interest due on a $28.0 million
term loan used to fund the acquisition of five jackup rigs from Parker Drilling in August 2004 and an additional $28.0 million term loan used to
fund the acquisition of 22 liftboats from Global Industries in October 2004.

Liquidity and Capital Resources

   Sources and Uses of Cash

      Sources and Uses of Cash for the Six-Month Period Ended June 30, 2005

       Net cash provided by operating activities for the six-month period ended June 30, 2005 was $26.1 million, which was primarily
attributable to net income of $19.6 million plus depreciation and amortization of $5.3 million, an increase in accounts payable and other current
liabilities of $4.6 million and a $2.8 million loss on the early retirement of debt, partially offset by a $6.2 million increase in accounts
receivable and other current assets. The increase in accounts receivable was attributable to the increased revenue from Rig 25 and Rig 30
acquired in January 2005, to higher average dayrates for our Contract Drilling Services segment and the revenue from the 17 liftboats acquired
in June 2005.

      Net cash used in investing activities for the six-month period ended June 30, 2005 was $87.9 million. The net cash investments during the
period included the acquisition in January 2005 of Rig 25 and Rig 30 for an aggregate of $41.5 million, the acquisitions in June 2005 of 17
liftboats for an aggregate of $20.0 million and Rig 16 for $20.0 million and an increase in deferred drydocking expenses of $2.2 million. The
acquisition of Rig 25 was funded in part by a $2.0 million deposit paid in 2004, which was applied towards the purchase price at closing.

      Net cash provided by financing activities for the six-month period ended June 30, 2005 totaled $82.7 million. This amount included
borrowings of $45.0 million under two of our credit facilities for the acquisitions of Rig 25 and Rig 30 and 17 liftboats and $140.0 million
under our new senior secured term loan. In addition, we received contributions from owners totaling $4.3 million. We repaid the $101.0 million
outstanding under our then-existing credit facilities with proceeds from our new term loan. We also paid $5.6 million in fees and expenses in
connection with our debt agreements.

      Sources and Uses of Cash for the Five-Month Period Ended December 31, 2004

      Net cash used in operating activities for the five-month period ended December 31, 2004 was $6.5 million. Net income for the period
totaled $8.1 million, which was offset by the adjustments to net income representing a reduction in cash of $14.6 million. The adjustments to
reconcile net income to net cash used by operating activities included an increase in accounts receivable and other current assets totaling $21.7
million partially offset by depreciation of $2.0 million and an increase in accounts payable and other current liabilities of $5.1 million. The
increases in both the current assets and the current liabilities were attributable to the start-up of our business activities.

     Net cash used in investing activities for the five-month period ended December 31, 2004 was $96.2 million. The net cash investments
during the period included the acquisition of five jackup and four platform rigs from Parker Drilling in August 2004 for $39.3 million, the
acquisition of a fleet of 22 liftboats from Global Industries in October 2004 for $53.5 million, an increase in deferred drydocking expenses of
$0.6 million and a deposit of $2.0 million related to the purchase of Rig 25 , which closed in January 2005. Additionally, in November 2004 we

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sold three platform rigs for $0.8 million that we had purchased from Parker Drilling in August 2004. We accounted for this sale as a reduction
in the original purchase price of the assets.

      Net cash provided by financing activities for the five-month period ended December 31, 2004 totaled $117.2 million. This included
contributions from owners of $63.0 million and proceeds from borrowings under our term loans totaling $56.0 million, less lenders fees and
expenses totaling $1.8 million.

   Liquidity and Financing Arrangements

      Contributions from owners and borrowings from our creditors represented our primary source of liquidity for the five-month period
ended December 31, 2004. For the same period, our primary uses of cash were the acquisitions of the jackup and platform rigs from Parker
Drilling and the fleet of liftboats from Global Industries. Contributions from owners, borrowings from our creditors and cash from operations
represented our primary sources of liquidity for the six-month period ended June 30, 2005. For the same period, our primary uses of cash were
the acquisition of Rig 25 from Parker Drilling, the acquisition of Rig 30 from Porterhouse Offshore L.P., the acquisition of 17 liftboats from
Superior Energy and the acquisition of Rig 16 from Transocean.

      We believe that our current cash on hand and our cash flow from operations for the next 12 months, together with availability under our
revolving credit facility, the net proceeds to us from this offering and insurance recoveries, will be adequate during such period to repay our
debts as they become due, to make normal recurring capital additions and improvements, to meet working capital requirements, to refurbish
Rig 16 and Rig 31 , to repair Rig 21 and, if it is not declared a constructive total loss, Rig 25 and otherwise to operate our business. Our ability
to make payments on our indebtedness and to fund planned capital expenditures in the future will depend on our ability to generate cash, which
is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our future cash
flows may be insufficient to meet all of our debt obligations and commitments, and any insufficiency could negatively impact our business. To
the extent we are unable to repay our indebtedness as it becomes due or at maturity with cash on hand or from other sources, we will need to
refinance our debt, sell assets or repay the debt with the proceeds from further equity offerings. Additional indebtedness or equity financing
may not be available to us in the future for the refinancing or repayment of existing indebtedness, and we can provide no assurance as to the
timing of any asset sales or the proceeds that could be realized by us from any such asset sale.

   Cash

      Cash balances as of June 30, 2005 totaled $35.4 million. This represented an increase of $20.9 million from the cash balances of $14.5
million as of December 31, 2004. The increase was due to aggregate borrowings of $185.0 million under our various term loans, contributions
from owners totaling $4.3 million and cash flow generated from operations of $26.1 million. The amounts were partially offset by debt
repayments of $101.0 million and the acquisition of rigs and liftboat for a total of $81.5 million.

   Debt

     Our current debt structure is used to fund our business operations, and our revolving credit facility is a source of liquidity. As of June 30,
2005, we had outstanding long-term debt of $140.0 million, including current maturities of $1.1 million.

       In June 2005, we entered into a senior secured credit agreement with a syndicate of financial institutions. This agreement provides for a
$140.0 million term loan and a $25.0 million revolving credit facility. We may seek commitments to increase the amount available under the
credit agreement by an additional $25.0 million if the amount outstanding under the term loan is no more than $105.0 million and our leverage
ratio, after giving effect to the incurrence of the additional $25.0 million of borrowings, is no greater than 2.5 to 1. We used $54.6 million of
the proceeds from the term loan to repay all outstanding amounts under the credit facility of our

                                                                         44
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drilling company subsidiary and $47.5 million of the proceeds to repay all outstanding amounts under the credit facility of our liftboat company
subsidiary, in each case including accrued interest, fees and applicable prepayment premiums. We terminated both of those credit facilities in
connection with the repayment. In addition, we used $20.0 million of the remaining proceeds from the term loan to fund the purchase price of
Rig 16 . In connection with the repayment of the two credit facilities, we recognized in the second quarter of 2005 pretax charges of $2.8
million, consisting of the write-off of deferred financing costs related to the retired debt.

       The revolving credit facility provides for swing line loans of up to $2.5 million and for the issuance of up to $5.0 million of letters of
credit. The revolving loans bear interest at either (1) the highest of (a) Comerica Bank’s base rate, (b) the three-month certificate of deposit rate
plus 0.5% and (c) the Federal funds effective rate plus 0.5%, in each case plus 2.25%, or (2) LIBOR plus 3.25%. We may prepay the revolving
loans at any time without premium or penalty. The revolving loans mature in June 2008. We are required to pay a commitment fee of 0.50% on
the average daily amount of the unused commitment amount of the revolving credit facility and a letter of credit fee of 3.25%, plus a fronting
fee of 0.13%, with respect to the undrawn amount of each issued letter of credit. As of June 30, 2005, no amounts were outstanding and no
letters of credit had been issued under the revolving credit facility.

      The term loan bears interest at either (1) the highest of (a) Comerica Bank’s base rate, (b) the three-month certificate of deposit rate plus
0.5% and (c) the Federal funds effective rate plus 0.5%, in each case plus 2.25%, or (2) LIBOR plus 3.25%. As of June 30, 2005, the entire
principal amount of the $140.0 million term loan was outstanding, and the interest rate was 6.58%. In accordance with the credit agreement, in
July 2005, we entered into hedge transactions with the purpose and effect of fixing the interest rate on $70.0 million of the outstanding
principal amount of the term loan at 7.54% for three years. In addition, we entered into hedge transactions with the purpose and effect capping
the interest rate on an additional $20.0 million of such principal amount at 8.25% for three years. Principal payments of $350,000 are due
quarterly, and the outstanding principal balance of the term loans is payable in full in June 2010. We may prepay the term loans at any time
without premium or penalty, except that prepayments made during the first year with proceeds from debt issuances or in connection with a
repricing of the term loan will be made at 101% of the principal repaid.

      We are required to prepay the term loan with:

       •    the proceeds from sales of certain assets;

       •    the proceeds from casualties or condemnations of assets to the extent that the net cash proceeds from any such casualty or
            condemnation exceed $1.0 million and are not reinvested within one year;

       •    the net proceeds of certain debt for borrowed money;

       •    25% of the net proceeds of any public or private offering of our equity securities, provided that holders of the term loan may reject
            the mandatory prepayment; and

       •    50% of excess cash flow if either our leverage ratio is above 3.0 to 1.0 or the outstanding principal balance of the term loan is
            greater than $110.0 million.

      Our obligations under the credit agreement are secured by our liftboats, rigs and substantially all of our other personal property, including
the equity of our subsidiaries. All of our material subsidiaries guarantee our obligations under the agreement and have granted similar liens on
substantially all of their assets.

       The credit agreement contains financial covenants relating to leverage and interest coverage. Other covenants contained in the agreement
restrict, among other things, repurchases of equity interests, mergers, asset dispositions, guaranties, debt, liens, acquisitions, dividends,
distributions, investments, affiliate transactions, prepayments of other debt and capital expenditures. We are currently in compliance with our
covenants under the credit agreement. The credit agreement contains customary events of default.

     We expect to repay $             of the outstanding amount under the term loan, together with the accrued and unpaid interest, with
proceeds from this offering.

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   Capital Expenditures

      We expect capital expenditures and deferred drydocking costs to be approximately $185.6 million in 2005, including $105.2 million that
we had spent as of August 31, 2005. Of the total amount, approximately $107.1 million relates to the purchases of jackup rigs and liftboats
already completed, including Rig 31 , and an additional $44.0 million relates to the acquisition of the eight liftboats from Danos & Curole,
which we expect to complete in the fourth quarter of 2005. In addition to the acquisitions, we expect to spend $14.0 million to refurbish assets
acquired in 2005, including $7.5 million to upgrade Rig 16 , $0.5 million to complete the commissioning of the Whale Shark and $6.0 million
to commence the refurbishment of the Rig 31 . We expect to complete the refurbishment of the Rig 31 during the first half of 2006 for a total of
approximately $15.0 million. In addition, during 2005 we expect to spend approximately $12.0 million on maintenance capital expenditures to
our other jackup rigs and liftboats, and $8.5 million in deferred drydocking costs for our liftboat fleet. The repair costs of Rig 21 and, if it is not
declared a constructive total loss, Rig 25 are covered by insurance, subject to an aggregate $1.0 million deductible.

       The timing and amounts we actually spend in connection with our plans to upgrade and refurbish other selected rigs and liftboats is
subject to our discretion and will depend on our view of market conditions and our cash flows. From time to time, we may review possible
acquisitions of rigs, liftboats or businesses, joint ventures, mergers or other business combinations, and we may have outstanding from time to
time bids to acquire certain assets from other companies. We may not, however, be successful in our acquisition efforts. If we do complete any
such acquisitions, we may make significant capital commitments for such purposes. Any such transactions could involve the payment by us of
a substantial amount of cash. We would likely fund the cash portion of such transactions, if any, through cash balances on hand, the incurrence
of additional debt, sales of assets, equity interests or other securities or a combination thereof. If we acquire additional assets, we would expect
that the ongoing capital expenditures for our company as a whole would increase in order to maintain our equipment in a competitive
condition.

      Our ability to fund capital expenditures would be adversely affected if conditions deteriorate in our business or industry, we experience
poor results in our operations or we fail to meet covenants under our revolving credit facility and term loans.

   Asset Dispositions

      In addition, from time to time we may consider possible dispositions of assets. As of June 30, 2005, Rig 41 , a platform rig, had been
classified as an asset held for resale. We believe that the net book value of $2.0 million for this asset as of June 30, 2005 is reasonable and will
be realized upon disposal. In addition, as of June 30, 2005, the Moonfish , a liftboat that we sold in August 2005 for $0.3 million, was classified
as an asset held for resale.

   Contractual Obligations

      The following table summarizes our contractual obligations as of June 30, 2005, after giving effect to the completion of this offering and
the application of the net proceeds as described under ―Use of Proceeds‖:
                                                                                Payments due by period ending June 30,

                                                                            2007 to                    2009 to
Contractual Obligations(1)                           2006                    2008                       2010             Thereafter        Total

                                                                                              (in thousands)
Long-term debt obligations                    $                       $                         $                              —      $
Management compensation obligations                         1,162.5                   493.8                       —            —               1,656.3
Operating lease obligations                                   108.0                   215.0                      90.0          —                 413.0

      Total contractual obligations           $                       $                         $                              —      $


(1)    As of June 30, 2005, we did not have any material purchase obligations for goods or services.

   Off-Balance Sheet Arrangements

      We have no off-balance sheet arrangements.

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Recent Accounting Pronouncements

      In November 2004, we adopted an incentive compensation plan for key management personnel, which includes equity-based
compensation as well as other forms that our board of directors deems appropriate to provide incentives for attracting and retaining qualified
management personnel. To date, seven employees have been granted stock options under this plan. In December 2004, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards (―SFAS‖) No. 123R, ―Share-Based Payment.‖ SFAS No.
123R requires that companies expense the value of employee stock options and similar awards. We intend to adopt SFAS No. 123R effective
on January 1, 2006. Under this method, we will record compensation expense at fair value for all awards we grant after the date we adopt the
standard. In addition, we will be required to record compensation expense at fair value (as previous awards continue to vest) for the unvested
portion of previously granted stock option awards that were outstanding as of the date of adoption. We estimate that the expense associated
with this adoption will total approximately $         per quarter. We have not recognized any expense associated with our option grants to
date.

Quantitative and Qualitative Disclosures About Market Risk

      We are exposed to interest rate risk with respect to our variable rate debt. All of the debt under our term loan is at variable rates. As of
June 30, 2005, the interest rate for the $140.0 million outstanding under the term loan was 6.58%. In accordance with the credit agreement, in
July 2005, we entered into hedge transactions with the purpose and effect of fixing the interest rate on $70.0 million of the outstanding
principal amount of the term loan at 7.54% for three years. In addition, we entered into hedge transactions with the purpose and effect capping
the interest rate on an additional $20.0 million of such principal amount at 8.25% for three years. A hypothetical 100 basis point increase in the
average interest rate on our variable rate debt would increase our annual interest expense by approximately $1.4 million.

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                                                            INDUSTRY OVERVIEW

      The drilling and liftboat service industry is cyclical and typically driven by general economic activity and changes in actual or anticipated
oil and natural gas prices. In general, demand for our rigs is correlated to our customers’ expectations of energy prices, particularly natural gas
prices. As a result, we expect that sustained high energy prices generally would have a positive impact on our earnings, whereas sustained low
energy prices generally would have a negative impact on our earnings. Demand for liftboats historically has been less cyclical than demand for
jackup rigs, although demand for liftboats and for jackup rigs generally is affected by the same factors. We believe that recent trends in the
industry, including the trends identified below, should benefit our operations.

      Strong Commodity Price Environment. Currently, oil and natural gas prices are high relative to historical levels. As illustrated in the
charts below, the rolling twelve-month average price of oil has increased from $18.42 per barrel as of January 1, 1996 to $53.07 per barrel as of
September 19, 2005, and the rolling twelve-month average price of natural gas has increased from $1.72 per mmbtu to $7.13 per mmbtu over
the same period. We believe that high oil and natural gas prices, if sustained, could result in increased exploration and development drilling
activity and higher demand and dayrates for drilling and liftboat service companies.

                                   U.S. CRUDE OIL PRICE ROLLING TWELVE MONTH AVERAGE




    Source: Bloomberg (last twelve months rolling average of historical WTI-Cushing prices). As of September 19, 2005.

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                                  U.S. NATURAL GAS PRICE ROLLING TWELVE MONTH AVERAGE




    Source: Bloomberg (last twelve months rolling average of historical Henry Hub prices). As of September 19, 2005.

      Growing U.S. Demand for Natural Gas and Maturing Natural Gas Fields . Most of our customers in the shallow-water U.S. Gulf of
Mexico are drilling or maintaining natural gas wells. Currently, approximately one-quarter of domestic natural gas production comes from the
U.S. Gulf of Mexico. According to the EIA, from 1988 to 2004 U.S. demand for natural gas grew by 12.0 billion cubic feet per day, equal to an
annual rate of 1.4%, while domestic supply grew by 4.7 billion cubic feet per day, equal to an annual rate of 0.6%. Over the next two decades,
the EIA projects a need for a 15% growth in domestic natural gas production (from approximately 19 trillion cubic feet to 22 trillion cubic feet
per year) and an increase in liquefied natural gas, or LNG, imports from abroad in order to meet growing demand for natural gas.

                                U.S. NATURAL GAS PRODUCTION vs. U.S. NATURAL GAS CONSUMPTION




    Source: EIA. As of December 31, 2004

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      As illustrated in the chart below, although the overall number of natural gas wells drilled in the United States has increased in recent
years, a corresponding increase in production has not been realized. We believe that a further increase in drilling activity for natural gas will be
required as a result of the expected increasing demand for natural gas and the increasing production decline rates of natural gas wells in the
United States.

                                    U.S. NATURAL GAS PRODUCTION AND GAS WELLS DRILLED




    Source: EIA. As of December 31, 2004.

      Increasing Capital Budgets of Oil and Natural Gas Producers. With commodity prices near historic highs, many oil and natural gas
exploration and production companies are generating cash flow that exceeds their recent levels of capital investment. Many of these companies
have been using a portion of their excess cash flow to increase capital budgets in an attempt to meet rising demand for oil and natural gas and
to mitigate production and reserve declines. We believe that a portion of these increased capital expenditures by these companies will be
incurred to drill new wells, work over existing wells and construct new or repair existing offshore platforms, which would increase the demand
for our services.

                       HISTORICAL U.S. UPSTREAM CAPITAL EXPENDITURES OF TOP 50 U.S. PRODUCERS




    Source: John S. Herold, Inc. 38 Global Upstream Performance Review—Top 50 U.S. Producers.
                                     th




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       Reduced Supply of Jackup Rigs in the U.S. Gulf of Mexico. Increased international demand for jackup rigs has caused some contract
drillers to redeploy rigs from the U.S. Gulf of Mexico to international areas, in many cases under multi-year contracts. According to
ODS-Petrodata, the number of marketed jackup rigs in the U.S. Gulf of Mexico has declined from 149 rigs in March 2001 to 94 rigs in
September 2005, a decline of approximately 37%. In addition, several competitors have recently announced the mobilization of a total of nine
jackup rigs from the U.S. Gulf of Mexico to the Middle East and South America by the end of the first half of 2006. As illustrated in the charts
below, this redeployment, together with attrition, has reduced the overall supply of jackup rigs in the U.S. Gulf of Mexico (see first chart
below) and has created a more favorable operating environment for service companies, with increased utilization and higher dayrates for the
remaining rigs (see second chart below). In addition, we believe a substantial majority of the newbuild jackup rigs recently ordered in the
industry, which according to ODS-Petrodata have estimated construction costs per rig ranging from approximately $90.0 million to $155.0
million, are intended to service the rising demand in international drilling markets.

                                            U.S. GULF OF MEXICO SUPPLY AND DEMAND




    Source: ODS-Petrodata. As of September 19, 2005.

                                  SHALLOW WATER U.S. GULF OF MEXICO JACKUP DAYRATES




    Source: ODS-Petrodata. As of September 19, 2005.
    Note: Data unavailable for 250-foot mat slot jackup rigs from January 2002 – June 2002.

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       Aging Production Infrastructure in the U.S. Gulf of Mexico. The aging of production platforms in the U.S. Gulf of Mexico is expected to
increase the demand for the types of maintenance and decommissioning services provided from our liftboat fleet. Currently, there are over
3,900 production platforms in the U.S. Gulf of Mexico, of which approximately 58% are more than 15 years old and 83% are in water depths
of 180 feet or less, which is within the operating capability of our liftboat fleet. These production platforms are generally subject to extensive
and detailed periodic inspections and require frequent maintenance. Accordingly, we believe the aging of the U.S. Gulf of Mexico production
platforms will provide a source of demand for liftboat services that is less discretionary, and more stable, than drilling activity. In addition,
according to the American Petroleum Institute, as a result of Hurricane Katrina, approximately 46 offshore production platforms in the Gulf of
Mexico have been destroyed and a number of other platforms suffered significant damage. The need for inspections and repairs of offshore
installations following major storm events like Hurricane Katrina has resulted in increased demand for liftboat services in the U.S. Gulf of
Mexico.

                       INSTALLATION DATE OF PRODUCTION PLATFORMS IN THE U.S. GULF OF MEXICO




    Source: U.S. Department of the Interior/Minerals Management Service. As of December 31, 2004.

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                                                                   BUSINESS

Overview

      We provide shallow-water drilling and liftboat services to the oil and natural gas exploration and production industry in the U.S. Gulf of
Mexico. We currently own a fleet of eight jackup rigs that can drill in maximum water depths ranging from 85 to 250 feet and a fleet of 39
liftboats with leg lengths ranging from 105 to 260 feet. In the U.S. Gulf of Mexico, we have the fourth-largest fleet of jackup rigs operating in
water depths of 250 feet and less and the largest fleet of liftboats with leg lengths greater than 100 feet, with a market share of approximately
35% in this class of liftboats. We contract our jackup rigs and liftboats to major integrated energy companies and independent oil and natural
gas operators.

      We acquired six jackup rigs from Parker Drilling Company in two separate transactions completed in August 2004 and January 2005. We
acquired a seventh jackup rig in January 2005 that we had previously operated under a management agreement with the rig’s prior owner. In
June 2005, we acquired an eighth jackup rig located in the Middle East, Rig 16 , from Transocean Inc. We are currently refurbishing Rig 16 in
the United Arab Emirates. In September 2005, we acquired Rig 31 from Hydrocarbon Capital II LLC. We are currently refurbishing the rig in
Singapore and expect the rig to be available in the third quarter of 2006. We intend to seek work for Rig 16 and Rig 31 in suitable international
locations. Rig 25 , which we acquired from Parker Drilling in January 2005, was severely damaged in connection with Hurricane Katrina, and
we believe that the rig is likely to be declared a constructive total loss under our insurance policies.

     We acquired 22 of our liftboats from Global Industries, Ltd. in October 2004, 17 of our liftboats, one of which we have sold, from
Superior Energy Services, Inc. in June 2005, and one of our liftboats from CS Liftboats, Inc. in August 2005. In September 2005, we agreed to
acquire an additional eight liftboats from Danos & Curole. We expect to complete the acquisition in the fourth quarter of 2005.

    We are a holding company and conduct our operations through our subsidiaries Hercules Liftboat Company LLC and Hercules Drilling
Company LLC. Our organizational structure following completion of the Conversion is presented below:




Our Strengths

       Favorable Niche Position in the U.S. Gulf of Mexico Shallow-Water Jackup Rig Market. We believe that our fleet of jackup rigs fills an
important niche in the shallow-water drilling market of the U.S. Gulf of Mexico, with three of our eight rigs capable of working in special
drilling situations. Our Rig 21 and Rig 22 are the only jackup drilling rigs in the U.S. Gulf of Mexico with square mats, which allow these rigs
to approach a platform from all four sides. This characteristic is particularly important in the U.S. Gulf of Mexico where many platforms have
pipelines beneath the structure. Rig 15 is one of the few jackup rigs in the U.S. Gulf of Mexico capable of working in water depths as shallow
as nine feet. We believe these characteristics contribute to the utilization of our rig fleet.

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      Leading Provider of Liftboat Services in the U.S. Gulf of Mexico. We operate the largest fleet of liftboats in the U.S. Gulf of Mexico with
leg lengths greater than 100 feet. Our liftboat fleet comprises a broad range of liftboat sizes and capabilities, which allows us to provide
customers with an effective and cost-efficient liftboat for a particular application. Our large liftboat fleet is deployed across the major
producing areas of the U.S. Gulf of Mexico continental shelf, permitting us more effectively to respond to customer demand and minimize
travel time between jobs. We believe our liftboat captains and crews are some of the most experienced in the industry.

      Operation of Jackup Rigs and Liftboats Provides Balance to Our Business. Jackup rigs are used primarily for exploration and
development drilling. Consequently, utilization and dayrates for jackup rigs tend to be more closely correlated with oil and natural gas price
expectations and drilling activity levels than utilization and dayrates for liftboats. In contrast, liftboats are used throughout the life of an oil and
natural gas field. As a result, utilization and dayrates for liftboats tend to be more stable than for jackup rigs. We believe that our liftboats help
us balance our exposure to commodity prices and drilling activity levels that we experience with our jackup rigs.

     Strong Relationships with a Diversified Customer Base. Our customer base includes major integrated energy companies and independent
exploration and production companies. This customer base provides exposure to the spending patterns of major integrated energy companies,
which are more stable, and of smaller independent exploration and production companies, which are more commodity-driven and subject to
wider fluctuations. We benefit from our management’s long-standing relationships with many of our customers, and in some instances, we
have developed preferred service provider relationships with our clients.

       Experienced and Incentivized Management Team . Our senior and operating level management team has extensive industry experience in
the U.S. Gulf of Mexico and internationally, with an average of approximately 25 years of experience in the oil service industry. We believe
that their considerable knowledge of and experience in our industry enhances our ability to operate effectively throughout industry cycles. Our
management also has substantial experience in identifying and completing asset acquisitions. Our incentive compensation plans are designed to
align our management’s interests with our operating, financial and safety performance.

Our Strategies

      Focus on Drilling and Liftboat Services. We view our core business as providing shallow-water drilling and liftboat services to the
exploration and production industry. As one of the largest operators of shallow-water jackup rigs and liftboats in the U.S. Gulf of Mexico, we
believe we are well-positioned to benefit from any increased levels of drilling and production maintenance activity. We also intend to
selectively pursue expansion opportunities in international markets with characteristics similar to the shallow-water U.S. Gulf of Mexico, such
as West Africa, the Middle East and the Asia-Pacific region.

       Maintain Our Status as an Efficient, Low-Cost Service Provider . We strive to maintain an organizational structure and asset base that
allow us to be an efficient, low-cost service provider in the industry. Because of the smaller rig and crew sizes required to operate our jackup
fleet as compared to higher specification assets, we believe our rigs have an operating and capital cost advantage. In addition, our liftboat
operations are organized to allow for the integration of future liftboat acquisitions without significant incremental overhead.

      Pursue Strategic Growth Opportunities . We believe that opportunities remain to acquire shallow-water rigs from service providers that
are more focused on higher specification assets needed to service customers operating in the deepwater market segment or drilling complex
ultra-deep wells. We also believe that opportunities exist to acquire liftboats from smaller-scale operators as those operators may opt for
consolidation given the economic and operational advantages associated with operating a larger fleet.

      Remain Financially Disciplined and Conservative. We use return on capital employed in evaluating new investments and intend to pursue
only those investments that we believe will produce strong returns on capital employed throughout an entire industry cycle. Furthermore, we
intend to maintain a conservative capital structure and sufficient liquidity to operate throughout the industry cycle.

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Our Fleet

   Jackup Rigs

      As of September 21, 2005, five of our jackup rigs were operating under contracts ranging in duration from well-to-well to six months, at
an average dayrate of $51,100. The following table contains information regarding our jackup rig fleet as of September 21, 2005. We include
information in the table for rated drilling depth, which means drilling depth stated by the manufacturer of the rig. Depending on deck space and
other factors, a rig may not have the actual capacity to drill at the rated drilling depth. The table does not include Rig 25 , which was severely
damaged in connection with Hurricane Katrina and which we believe is likely to be declared a constructive total loss under our insurance
policies.
                                                                                Maximum/Minimu
                                                                                       m
                                                                                  Water Depth                Rated
                                                                  Year              Rating               Drilling Depth
Rig Name                            Type                          Built              (feet)                   (feet)                    Status

      11            Mat-supported, cantilever                     1980                  175/21                  20,000 (1)        Contracted
      15            Independent leg, slot                         1982                    85/9                  20,000            Contracted
      16            Independent leg, cantilever                   1981                  170/16                  16,000            Shipyard
      20            Mat-supported, cantilever                     1980                   85/20                  25,000            Contracted
      21            Mat-supported, cantilever                     1980                  120/22                  20,000                Contracted(2)
      22            Mat-supported, cantilever                     1971                  173/22                  15,000            Contracted
      30            Mat-supported, slot                           1979                  250/25                  20,000            Contracted
      31            Mat-supported, slot                           1979                  250/25                  20,000            Shipyard

(1)        Rated workover depth. Rig 11 is currently configured for workover activity, which includes maintenance and repair or modification of
           wells that have already been drilled and completed to enhance or resume the well’s production.
(2)        Rig 21 is awaiting mobilization to a shipyard for repairs of damage sustained during Hurricane Katrina. We are currently in discussions
           with our customer as to what rate, if any, the rig should earn while it is being repaired. See ―Management’s Discussion and Analysis of
           Financial Condition and Results of Operations—Hurricane Katrina.‖

       Jackup rigs are mobile, self-elevating drilling platforms equipped with legs that can be lowered to the ocean floor until a foundation is
established to support the drilling platform. Once a foundation is established, the drilling platform is jacked further up the legs so that the
platform is above the highest expected waves. The rig hull includes the drilling rig, jackup system, crew quarters, loading and unloading
facilities, storage areas for bulk and liquid materials, helicopter landing deck and other related equipment.

      Jackup rig legs may operate independently or have a lower hull referred to as a ―mat‖ attached to the lower portion of the legs in order to
provide a more stable foundation in soft bottom areas, similar to those encountered in the shallow-water U.S. Gulf of Mexico. Independent leg
rigs are better suited for harder or uneven seabed conditions while mat rigs are better suited for soft bottom conditions. In addition, mat rigs
generally are able to more quickly position themselves on the worksite and more easily move on and off location than independent leg rigs.

       Our rigs are used primarily for exploration and development drilling in the shallow waters of the U.S. Gulf of Mexico. Six of our eight
jackup rigs are mat-supported. Five of our eight jackup rigs have a cantilever design that permits the drilling platform to be extended out from
the hull and to perform drilling or workover operations over some types of preexisting platforms or structures. Our three other jackup rigs have
a slot-type design, which requires drilling operations to take place through a slot in the hull. Slot-type rigs are usually used for exploratory
drilling rather than development drilling, in that their configuration makes them difficult to position over existing platforms or structures.
Historically, rigs with a cantilever design have maintained higher levels of utilization than rigs with a slot-type design. However, one of our
slot-type rigs has a competitive advantage in very shallow water as it is one of the few jackup rigs in the world that can drill in water depths as
shallow as nine feet.

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Liftboats

      The following table contains information regarding our liftboats as of September 21, 2005:
                                                                                                   Leg            Deck         Maximum
                                                                                       Year      Length           Area         Deck Load       Gross
Liftboat Name(1)                                                                       Built      (feet)      (square feet)     (pounds)      Tonnage

Whale Shark                                                                            2004        260                8,170     715,000           99
Kingfish                                                                               1996        229                5,000     500,000          188
Man-O-War                                                                              1996        229                5,000     500,000          188
Wahoo                                                                                  1981        215                4,525     500,000          491
Amberjack                                                                              1981        205                3,800     500,000          417
Swordfish                                                                              2000        190                4,000     700,000          189
Manta Ray                                                                              1981        150                2,400     200,000          194
Seabass                                                                                1983        150                2,600     200,000          186
Hammerhead                                                                             1980        145                1,648     150,000          178
Blue Runner                                                                            1980        140                3,400     300,000          174
Starfish                                                                               1978        140                2,266     150,000           99
Pompano                                                                                1981        130                1,864     100,000          196
Sandshark                                                                              1982        130                1,940     150,000          196
Stingray                                                                               1979        130                2,266     150,000           99
Albacore                                                                               1985        130                2,200     150,000          171
Moray                                                                                  1980        130                1,824     130,000          178
Skipfish                                                                               1985        130                1,000     110,000           91
Sailfish                                                                               1982        130                1,764     150,000          179
Mahi Mahi                                                                              1980        130                1,500     142,000           97
Rockfish                                                                               1981        125                1,400     150,000          195
Gar                                                                                    1978        120                2,100     150,000           98
Grouper                                                                                1979        120                2,100     150,000           97
Sea Robin                                                                              1984        120                1,534     119,000           98
Tilapia                                                                                1976        120                1,268     110,000           97
Snapper                                                                                1982        120                1,000     100,000           98
Barracuda                                                                              1979        105                1,648     110,000           93
Carp                                                                                   1978        105                1,648     110,000           98
Cobia                                                                                  1978        105                1,648     110,000           94
Dolphin                                                                                1980        105                1,648     110,000           97
Herring                                                                                1979        105                1,648     110,000           97
Marlin                                                                                 1979        105                1,648     110,000           97
Corina                                                                                 1974        105                  953     100,000           98
Pike                                                                                   1980        105                  936     130,000           92
Remora                                                                                 1976        105                1,479     100,000           94
Wolffish                                                                               1977        105                  900     100,000           99
Seabream                                                                               1980        105                  813     100,000           92
Sea Trout                                                                              1978        105                1,130     100,000           97
Tarpon                                                                                 1979        105                1,648     110,000           97
Palometa                                                                               1972        105                1,100     100,000           99

(1)   The Snapper, Corina and Pike are currently stacked. The Whale Shark is undergoing final commissioning prior to entering service. All
      other liftboats are either available or operating.

      Liftboats are self-propelled, self-elevating work platforms complete with legs, cranes and living accommodations, and with a large open
deck space, which provides a versatile, mobile and stable platform to support a broad range of offshore maintenance and construction services
throughout the life of an oil or natural gas well. Once on location, a liftboat hydraulically lowers its legs until the legs are seated on the ocean
floor and

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then jacks up until the work platform is elevated above the wave action. Once the liftboats are positioned, their stability, open deck area, crane
capacity and relatively low costs of operation make them ideal work platforms for a wide range of offshore support services, such as:

       •    platform construction, inspection, maintenance and removal;

       •    well intervention and workover;

       •    well plug and abandonment;

       •    crane lift services;

       •    pipeline installation and maintenance; and

       •    offshore crew accommodation.

      Unlike larger and more costly alternatives, such as jackup rigs or construction barges, our liftboats are self-propelled and can quickly
reposition at a worksite or move to another location without third-party assistance. Our liftboats are ideal working platforms to support
platform and pipeline inspection and maintenance tasks because of their ability to maneuver efficiently and support multiple activities at
different working heights. Diving operations may also be performed from our liftboats in connection with underwater inspections and repair. In
addition, our liftboats provide an effective platform from which to perform well-servicing activities such as mechanical wireline, electrical
wireline and coiled tubing operations. Technological advances, such as coiled tubing, allow more well-servicing procedures to be conducted
from liftboats. Moreover, during both platform construction and removal, smaller platform components can be installed and removed more
efficiently and at a lower cost using a liftboat crane and liftboat-based personnel than with a specialized construction barge.

      The length of the legs is the principal measure of capability for a liftboat, as it determines the maximum water depth in which the liftboat
can operate. Our liftboats are capable of operating in water depths of up to 180 feet. Six of our liftboats have leg lengths of 190 feet or greater,
which allows us to service approximately 83% of the 3,900 existing production platforms in the shallow-water U.S. Gulf of Mexico. In
addition, the capability to reposition at a work site or to move to another location within a short time adds to their versatility. Each of our
liftboats is staffed with two full-time crews that work 24 hours per day, seven days per week, and rotate based on a 14 days on and 14 days off
schedule. Currently, we own 39 liftboats in the U.S. Gulf of Mexico.

Contracts

       Our contracts to provide services are individually negotiated and vary in their terms and provisions. We obtain most of our contracts
through competitive bidding against other contractors. In general, contracts provide for payment on a dayrate basis, with higher rates while the
unit is operating and lower rates for periods of mobilization or when operations are interrupted or restricted by equipment breakdowns, adverse
weather conditions or other factors. To date, most of our contracts have been on a short-term basis.

       A dayrate drilling contract generally extends over a period of time covering the drilling of a single well or group of wells or covering a
stated term. These contracts typically can be terminated by the customer under various circumstances such as the loss or destruction of the
drilling unit or the suspension of drilling operations for a specified period of time as a result of a breakdown of major equipment. The contract
term in some instances may be extended by the customer’s exercising options for the drilling of additional wells or for an additional term, or by
exercising a right of first refusal.

      A liftboat contract generally is based on a flat dayrate for the vessel and crew, with variable costs such as catering, fuel and oil charged to
the customer at a surcharge. Our liftboat dayrates are determined by prevailing market rates, vessel availability and historical rates paid by the
specific customer. Liftboat contracts generally are for shorter terms than are drilling contracts.

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Customers

       Our customers primarily include major integrated energy companies and independent oil and natural gas operators in the U.S. Gulf of
Mexico. Our three largest drilling customers for the five-month period ended December 31, 2004 were Chevron, Bois d’Arc Offshore and
Petroquest Energy, which accounted for 33.1%, 19.4% and 10.7%, respectively, of our drilling services revenues for that period. Our four
largest drilling customers for the six-month period ended June 30, 2005 were Chevron, Noble Energy, Bois d’Arc Offshore and Century, which
accounted for 29.8%, 17.5%, 14.1%, and 13.7%, respectively, of our drilling services revenues for that period. Our two largest liftboat
customers for the five-month period ended December 31, 2004 were Chevron and Bois d’Arc Offshore, which accounted for 40.1% and 12.5%,
respectively, of our marine services revenues for that period. Our largest liftboat customer for the six-month period ended June 30, 2005 was
Chevron, which accounted for 37.4% of our marine services revenues for that period. No other customer accounted for more than 10% of our
drilling or marine services revenues for either period.

Competitors

     The U.S. Gulf of Mexico shallow-water market is highly competitive. Drilling and liftboat contracts are traditionally awarded on a
competitive bid basis. Pricing is often the primary factor in determining which qualified contractor is awarded a job, although technical
capability of service and equipment, unit availability, unit location, safety record and crew quality may also be considered. Many of our
competitors in the U.S. Gulf of Mexico shallow-water market have greater financial and other resources than we have and may be better able to
make technological improvements to existing equipment or replace equipment that becomes obsolete.

Safety

      We actively participate with government, trade organizations and the public in creating responsible laws, regulations and standards to
safeguard the workplace, the community and the environment. Our Operations Department manages our health and safety program and
identifies areas that may require special emphasis, including new initiatives that evolve within the industry. Our Human Resources Department
coordinates our training, whether conducted in-house or at a training facility. Supervisors carry out and monitor compliance with the safety and
health policies on their vessels. In addition, our incentive bonus program for rig and liftboat employees includes safety performance as a
component.

Insurance

       We maintain insurance coverage that includes physical damage, third party liability, maritime employers liability, pollution and other
coverage. Our primary marine package provides for hull and machinery coverage for our rigs and liftboats up to a scheduled value for each
asset. Rig coverages include a $1.0 million deductible per occurrence; liftboat deductibles vary from $150,000 to $500,000 depending on the
insured value of the particular vessel. There is no deductible in the event of a total loss. The protection and indemnity coverage under the
primary marine package has a $5.0 million limit per occurrence with excess liability up to $100.0 million. The primary marine package also
provides coverage for cargo and charterer’s legal liability. Vessel pollution is covered under a Water Quality Insurance Syndicate policy. In
addition to our marine package, we have separate policies providing coverage for general domestic liability, employer’s liability, domestic auto
liability and non-owned aircraft liability, with customary deductibles and coverages. Insurance premiums under our program are approximately
$5.5 million for the twelve-month policy period.

      We believe that our insurance coverage is customary for the industry and adequate for our business. However, there are risks that such
insurance will not adequately protect us against or not be available to cover all the liability from all of the consequences and hazards we may
encounter in our operations.

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Regulation

      Our operations are affected in varying degrees by governmental laws and regulations. Our industry is dependent on demand for services
from the oil and natural gas industry and, accordingly, is also affected by changing tax and other laws relating to the energy business generally.
We are also subject to the jurisdiction of the U.S. Coast Guard, the National Transportation Safety Board, the U.S. Customs and Border
Protection Service, as well as private industry organizations such as the American Bureau of Shipping. The Coast Guard and the National
Transportation Safety Board set safety standards and are authorized to investigate vessel accidents and recommend improved safety standards,
and the U.S. Customs Service is authorized to inspect vessels at will. Coast Guard regulations also require annual inspections and periodic
drydock inspections or special examinations of our vessels.

       The shorelines and shallow water areas of the U.S. Gulf of Mexico are ecologically sensitive. Heightened environmental concerns in
these areas have led to higher drilling costs, a more difficult and lengthy well permitting process and, in general, have adversely affected
drilling decisions of oil and natural gas companies. In the United States, regulations applicable to our operations include regulations that require
us to obtain and maintain specified permits or governmental approvals, control the discharge of materials into the environment, require removal
and cleanup of materials that may harm the environment or otherwise relate to the protection of the environment. For example, as an operator
of mobile offshore units in navigable U.S. waters and some offshore areas, we may be liable for damages and costs incurred in connection with
oil spills or other unauthorized discharges of chemicals or wastes resulting from or related to those operations. Laws and regulations protecting
the environment have become more stringent and may in some cases impose strict liability, rendering a person liable for environmental damage
without regard to negligence or fault on the part of such person. Some of these laws and regulations may expose us to liability for the conduct
of or conditions caused by others or for acts which were in compliance with all applicable laws at the time they were performed. The
application of these requirements or the adoption of new or more stringent requirements could have a material adverse effect on our financial
condition and results of operations.

      The U.S. Federal Water Pollution Control Act of 1972, commonly referred to as the Clean Water Act, prohibits the discharge of specified
substances into the navigable waters of the United States without a permit. The regulations implementing the Clean Water Act require permits
to be obtained by an operator before specified exploration activities occur. Offshore facilities must also prepare plans addressing spill
prevention control and countermeasures. Violations of monitoring, reporting and permitting requirements can result in the imposition of civil
and criminal penalties. A recent United States district court decision could result in certain of our vessels being required to obtain Clean Water
Act permits for the discharge of ballast water. Under current Clean Water Act regulations, our vessels are exempt from such permitting
requirements; however, in Northwest Environmental Advocates v. EPA , issued in March 2005, the federal district court in California ordered
the Environmental Protection Agency to repeal the exemption. Under the court’s ruling, owners and operators of vessels would be required to
comply with the Clean Water Act permitting requirements or face penalties. Although the EPA may appeal this decision, we expect to incur
certain costs to obtain Clean Water Act permits for our vessels if the permitting exemption is repealed. Because we do not yet know how this
matter will ultimately be resolved, we cannot estimate its potential financial impact at this time. However, we believe that any financial impacts
resulting from the repeal of the permitting exemption for ballast water discharge will not be material.

       The U.S. Oil Pollution Act of 1990 (―OPA‖) and related regulations impose a variety of requirements on ―responsible parties‖ related to
the prevention of oil spills and liability for damages resulting from such spills. Few defenses exist to the liability imposed by OPA, and the
liability could be substantial. Failure to comply with ongoing requirements or inadequate cooperation in the event of a spill could subject a
responsible party to civil or criminal enforcement action. OPA also requires owners and operators of all vessels over 300 gross tons to establish
and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet their potential liabilities under OPA. The U.S.
Coast Guard has implemented regulations requiring evidence of

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financial responsibility in the amount of $900 per gross ton. Under OPA, an owner or operator of a fleet of vessels is required only to
demonstrate evidence of financial responsibility in an amount sufficient to cover the vessel in the fleet having the greatest maximum liability
under OPA. Vessel owners and operators may evidence their financial responsibility by showing proof of insurance, surety bond, self-insurance
or guarantee. We have obtained the necessary OPA financial assurance certifications for each of our vessels subject to such requirements.

       The Coast Guard and Maritime Transportation Act of 2004 (the ―CGMTA‖) recently amended OPA to require the owner or operator of
any non-tank vessel of 400 gross tons or more that carries oil of any kind as a fuel for main propulsion to prepare and submit a response plan
that covers each applicable vessel by August 8, 2005. For vessels that have International Tonnage Certificates, gross tonnage is based on the
certificate, which may vary from the standard U.S. gross tonnage for the vessel reflected in our liftboat table above. The vessel response plan
must include detailed information on actions to be taken by vessel personnel to prevent or mitigate any discharge or substantial threat of
discharge. We submitted the required plans to the Coast Guard prior to the August 2005 deadline.

      The U.S. Outer Continental Shelf Lands Act authorizes regulations relating to safety and environmental protection applicable to lessees
and permittees operating on the outer continental shelf. Included among these are regulations that require the preparation of spill contingency
plans and establish air quality standards for certain pollutants, including particulate matter, volatile organic compounds, sulfur dioxide, carbon
monoxide and nitrogen oxides. Specific design and operational standards may apply to outer continental shelf vessels, rigs, platforms, vehicles
and structures. Violations of lease conditions or regulations related to the environment issued pursuant to the Outer Continental Shelf Lands
Act can result in substantial civil and criminal penalties, as well as potential court injunctions curtailing operations and canceling leases. Such
enforcement liabilities can result from either governmental or citizen prosecution.

      The U.S. Comprehensive Environmental Response, Compensation, and Liability Act, also known as CERCLA or the ―Superfund‖ law,
imposes liability without regard to fault or the legality of the original conduct on some classes of persons that are considered to have
contributed to the release of a ―hazardous substance‖ into the environment. These persons include the owner or operator of a facility where a
release occurred, the owner or operator of a vessel from which there is a release, and companies that disposed or arranged for the disposal of
the hazardous substances found at a particular site. Persons who are or were responsible for releases of hazardous substances under CERCLA
may be subject to joint and several liability for the cost of cleaning up the hazardous substances that have been released into the environment
and for damages to natural resources. Prior owners and operators are also subject to liability under CERCLA. It is also not uncommon for third
parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment.

      Recent terrorist actions have spurred a variety of initiatives intended to enhance vessel security. In October 2003, the U.S. Coast Guard
finalized regulations required to implement the Maritime Transportation and Security Act of 2002. These regulations required, among other
things, the development of vessel security plans and on-board installation of automatic information systems, or AIS, to enhance
vessel-to-vessel and vessel-to-shore communications. We believe that our vessels are in substantial compliance with all vessel security
regulations.

      Although significant capital expenditures may be required to comply with these governmental laws and regulations, such compliance has
not materially adversely affected our earnings or competitive position. We believe that we are currently in compliance in all material respects
with the environmental regulations to which we are subject.

     Our operations are conducted in the U.S. domestic trade, which is governed by the coastwise laws of the United States. The U.S.
coastwise laws reserve marine transportation, including liftboat services, between points

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in the United States to vessels built in and documented under the laws of the United States and owned and manned by U.S. citizens. Generally,
an entity is deemed a U.S. citizen for these purposes so long as:

       •    it is organized under the laws of the United States or a state;

       •    each of its president or other chief executive officer and the chairman of its board of directors is a U.S. citizen;

       •    no more than a minority of the number of its directors necessary to constitute a quorum for the transaction of business are non-U.S.
            citizens;

       •    at least 75% of the interest and voting power in the corporation is held by U.S. citizens free of any trust, fiduciary arrangement or
            other agreement, arrangement or understanding whereby voting power may be exercised directly or indirectly by non-U.S. citizens;
            and

       •    in the case of a limited partnership, the general partner meets U.S. citizenship requirements for U.S. coastwise trade.

      Because we could lose our privilege of operating our liftboats in the U.S. coastwise trade if non-U.S. citizens were to own or control in
excess of 25% of our outstanding interests, our certificate of incorporation will restrict foreign ownership and control of our common stock to
not more than 20% of our outstanding interests. Two of our liftboats rely on an exemption from the Jones Act in order to operate in the U.S.
Gulf of Mexico. If these liftboats were to lose this exemption, we would be unable to use them in the U.S. Gulf of Mexico and would be forced
to seek opportunities for them in international locations.

       The United States is one of approximately 165 member countries to the International Maritime Organization (―IMO‖), a specialized
agency of the United Nations that is responsible for developing measures to improve the safety and security of international shipping and to
prevent marine pollution from ships. Among the various international conventions negotiated by the IMO is the International Convention for
the Prevention of Pollution from Ships (―MARPOL‖). MARPOL imposes environmental standards on the shipping industry relating to oil
spills, management of garbage, the handling and disposal of noxious liquids, harmful substances in packaged forms, sewage and air emissions.

      Annex VI to MARPOL, which became effective internationally on May 19, 2005, sets limits on sulfur dioxide and nitrogen oxide
emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances. Annex VI also imposes a global cap on the
sulfur content of fuel oil and allows for specialized areas to be established internationally with more stringent controls on sulfur emissions. For
vessels over 400 gross tons, platforms and drilling rigs, Annex VI imposes various survey and certification requirements. For this purpose,
gross tonnage is based on the International Tonnage Certificate for the vessel, which may vary from the standard U.S. gross tonnage for the
vessel reflected in our liftboat table above. The United States has not yet ratified Annex VI. Any vessels we operate internationally would,
however, become subject to the requirements of Annex VI in those countries that have implemented its provisions. Because we currently
anticipate offering only our rigs for international projects, and such rigs are generally exempt from the more costly compliance requirements of
Annex VI, we do not anticipate incurring significant costs to comply with Annex VI in the near term. If the United States does elect to ratify
Annex VI in the future, we could be required to incur potentially significant costs to bring certain of our vessels into compliance with these
requirements.

Employees

      As of August 31, 2005, we had approximately [700] employees. We require skilled personnel to operate and provide technical services
and support for our rigs and liftboats. As a result, we conduct extensive personnel recruiting, training and safety programs. We will need to hire
additional rig-based employees in connection with the commencement of operations of Rig 16 and Rig 31. As of August 31, 2005, none of our
employees was working under collective bargaining agreements. Efforts have been made from time to time, however, to unionize portions of
the offshore workforce in the U.S. Gulf of Mexico. We believe that our employee relations are good.

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Properties

     We maintain our principal executive offices in Houston, Texas, which is under lease, and have an operational office in New Iberia,
Louisiana, which we own.

Legal Proceedings

      We and our subsidiaries are routinely involved in litigation, claims and disputes arising in the ordinary course of our business. We do not
believe that ultimate liability, if any, resulting from any such pending litigation will have a material adverse effect on our financial condition or
results of operations.

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                                                               MANAGEMENT

Executive Officers and Directors

       The following table sets forth information concerning our executive officers and directors upon completion of this offering, including
their ages, as of September 15, 2005:
                                                                                                                                       Director
Name                                           Age                                      Position                                        Class

John T. Reynolds                               35    Chairman of the Board                                                            Class III
Randall D. Stilley                             51    Chief Executive Officer and President and Director                                Class I
Steven A. Manz                                 40    Chief Financial Officer                                                            N/A
John T. Rynd                                   48    Senior Vice President of Hercules Offshore and President, Hercules
                                                     Drilling Company, LLC
Randal R. Reed                                 49    President, Hercules Liftboat Company, LLC                                          N/A
Thomas E. Hord                                 53    Vice President, Operations and Chief Operating Officer, Hercules Drilling          N/A
                                                     Company, LLC
Don P. Rodney                                  58    Vice President, Finance, Hercules Drilling Company, LLC                            N/A
Renee M. Pitre                                 44    Vice President, Finance, Hercules Liftboat Company, LLC                            N/A
Thomas R. Bates, Jr.                           56    Director                                                                         Class II
F. Gardner Parker                              63    Director                                                                         Class III
V. Frank Pottow                                42    Director                                                                         Class III
Steven A. Webster                              53    Director                                                                          Class I

      John T. Reynolds has served as Chairman of the Board of Directors since our formation. Mr. Reynolds is co-founder and a managing
director of Lime Rock Management LP, an energy-focused private equity firm. Prior to co-founding Lime Rock Management in 1998,
Mr. Reynolds was a Vice President at Goldman Sachs & Co., an investment banking firm. He was a senior analyst for oil services in the
Investment Research department at Goldman Sachs, where he worked from 1992 to 1998.

      Randall D. Stilley has served as Chief Executive Officer and President since October 2004. Prior to joining Hercules, Mr. Stilley was
Chief Executive Officer of Seitel, Inc., an oilfield services company, from January 2004 to October 2004. From 2000 until he joined Seitel, Mr.
Stilley was an independent business consultant and managed private investments. From 1997 until 2000, Mr. Stilley was President of the
Oilfield Services Division at Weatherford International, Inc., an oilfield services company. Prior to joining Weatherford in 1997, Mr. Stilley
served in a variety of positions at Halliburton Company, an oilfield services company. Mr. Stilley is a member of the Executive Committee at
the Houston Technology Center. He is a registered professional engineer in the state of Texas and a member of the Society of Petroleum
Engineers.

      Steven A. Manz has served as Chief Financial Officer since January 2005. Prior to joining Hercules, Mr. Manz worked at Noble
Corporation, a contract drilling company, from May 1995 to January 2005 in a number of roles, including Managing Director of the Noble
Technology Services Division from May 2003 to January 2005, Vice President of Strategic Planning from August 2000 to May 2003, Director
of Accounting and Investor Relations from March 1997 to August 2000 and Internal Audit Manager from May 1995 to March 1997. Prior to
joining Noble, Mr. Manz served as senior auditor of Cooper Industries, an electrical products manufacturer, from May 1993 to May 1995 and
as a member of the Audit Group of Price Waterhouse LLP from August 1989 to May 1993.

       John T. Rynd will become Senior Vice President of Hercules Offshore and President of Hercules Drilling Company, LLC in October
2005. Prior to joining Hercules, Mr. Rynd worked at Noble Drilling Services Inc., a wholly owned subsidiary of Noble Corporation, a contract
drilling company, as Vice President—Investor Relations from October 2000 to September 2005 and as Vice President—Marketing and
Contracts from September 1994 to September 2000. From June 1990 to September 1994, Mr. Rynd worked for Chiles Offshore Corporation, a
contract drilling company, including as Vice President—Marketing.

     Randal R. Reed has served as President of our subsidiary, Hercules Liftboat Company, LLC, since October 2004. From 1995 to October
2004, Mr. Reed was manager of the fleet of liftboats, diveboats and crewboats of Global Industries, Ltd. , an oilfield services company.

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      Thomas E. Hord has served as Vice President, Operations and Chief Operating Officer of Hercules Drilling Company, LLC since August
2004. Prior to joining our company, Mr. Hord supervised rig operations and marketing for Unrelated HOC and its predecessor companies since
1982.

     Don P. Rodney has served as Vice President, Finance of Hercules Drilling Company, LLC since July 2004. From October 2003 to June
2004, Mr. Rodney was Chief Financial Officer of Unrelated HOC. Mr. Rodney was retired from July 2003 to October 2003. From November
2002 to July 2003, he was Treasurer of TODCO, a contract drilling company. Mr. Rodney was Controller, Inland Water Division of
Transocean from February 2001 until October 2002. From November 1992 until January 2001, Mr. Rodney served as Vice President, Finance
for R&B Falcon Drilling USA, Inc., a marine contract drilling company, and its predecessors. From 1976 to November 1992, Mr. Rodney
worked for Atlantic Pacific Marine Corp., a marine contract drilling company, in a number of positions, including as Controller from 1983 until
November 1992.

      Renee M. Pitre has served as Vice President, Finance of Hercules Liftboat Company, LLC since November 2004. From 1997 to
November 2004, she was controller over four divisions of Global Industries, Ltd. From 1992 to 1997, Ms. Pitre was controller for the Americas
region for Subsea International, an offshore oilfield services company.

      Thomas R. Bates, Jr. has served as a director since our formation. Mr. Bates has been a managing director at Lime Rock Management LP
since October 2001. From February 2000 through September 2001, Mr. Bates was a business consultant. From June 1998 through January
2000, Mr. Bates was President of the Discovery Group of Baker Hughes Incorporated, an oilfield services company. From June 1997 to May
1998, he was President and Chief Executive Officer of Weatherford/Enterra, Inc., an oilfield services company. From March 1992 to May
1997, Mr. Bates was President of Anadrill at Schlumberger Limited, an oilfield services company. Mr. Bates was Vice President of Sedco
Forex at Schlumberger from February 1986 to March 1992. Mr. Bates serves on the board of directors of NATCO Group Inc.

      F. Gardner Parker will become a director upon the closing of this offering. From 1970 until 1984, Mr. Parker worked at Ernst & Ernst
(now Ernst & Young LLP), an accounting firm, and was a partner at that firm from 1978 until 1984. Mr. Parker has been Managing Outside
Trust Manager with Camden Property Trust, a real estate investment trust, since 1998. He serves as director of Carrizo Oil and Gas, Inc.,
Crown Resources Corporation, Sharps Compliance Corp. and Blue Dolphin Energy Company.

      V. Frank Pottow has served as a director since October 2004. Mr. Pottow joined Greenhill & Co., an investment banking and merchant
banking firm, as a managing director in July 2002 and has served as a member of the Investment Committee of Greenhill Capital Partners since
July 2002. From October 1997 to July 2002, he was a managing director of SG Capital Partners, LLC, a private equity firm. From June 1996 to
October 1997, he was a managing director of Thayer Capital Partners, a private equity firm. From January 1992 to March 1996, he was a
Principal of Odyssey Partners, L.P., an investment firm.

      Steven A. Webster has served as a director since May 2005. Mr. Webster has been President and Co-Managing Partner of Avista Capital
Partners LP, a partnership focusing on private equity investments in energy, media, healthcare and other industries, since June 2005. Since
2000, he has been a consultant to Global Energy Partners, an affiliate of Credit Suisse First Boston LLC, which has specialized in private
equity investments in the energy industry. From 2000 to June 2005, he served as Chairman of Global Energy Partners. From 1998 to 1999, he
served as President and CEO of R&B Falcon Corporation, a marine contract drilling company. From 1988 through 1997, Mr. Webster was
Chairman and CEO of Falcon Drilling Company Inc., a company he founded. Mr. Webster has been a financial intermediary since 1979 and an
active investor since 1984 in the energy sector. He serves as Chairman of Carrizo Oil & Gas Inc., Basic Energy Services and Crown

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Resources Corporation. He is also a trust manager of Camden Property Trust and a director of Brigham Exploration Company, Geokinetics
Inc., Grey Wolf, Inc. and Goodrich Petroleum Corporation.

      Upon completion of this offering, the following directors will resign from the board:

      J. William Franklin, Jr. has served as a director since our formation. Mr. Franklin has been a principal at Lime Rock Management LP
since February 2003. From July 2000 to February 2003, he was an associate at Riverstone Holdings, a private equity firm. From July 1998 to
July 2000, Mr. Franklin was obtaining his master’s of business administration from Harvard Business School. From July 1996 to July 1998,
Mr. Franklin was an analyst with Simmons & Company International. From January 1995 to July 1996, he was the senior financial analyst in
the Corporate Development Group of Parker & Parsley Petroleum Company, an oil and natural gas exploration and production company.

      Boris Gutin has served as a director since October 2004. Mr. Gutin has been an associate at Greenhill Capital Partners, a private equity
firm, since joining Greenhill in August 2003. From September 2001 to August 2003, Mr. Gutin was obtaining his master’s of business
administration from Harvard Business School. From August 1999 to August 2001, he was an investment professional at American Securities
Capital Partners, a private equity firm. From August 1998 to August 1999, Mr. Gutin was in the Principal Investment Area of Goldman Sachs
& Co., the firm’s private equity or merchant banking division, and, from August 1996 to August 1998, he was in Goldman Sachs’ Leveraged
Finance Group, which focused on bank and high-yield bond financings.

Board Structure and Compensation of Directors

      Upon completion of the offering, our board of directors will consist of seven members. Our board has determined that each of those
directors, other than Mr. Stilley, our Chief Executive Officer and President, is independent under applicable NASDAQ Marketplace Rules.

      Our directors will be divided into three classes serving staggered three-year terms. Class I, Class II and Class III directors will serve until
our annual meetings of stockholders in 2006, 2007 and 2008, respectively. At each annual meeting of stockholders, directors will be elected to
succeed the class of directors whose terms have expired. This classification of our board of directors could have the effect of increasing the
length of time necessary to change the composition of a majority of the board of directors. In general, at least two annual meetings of
stockholders will be necessary for stockholders to effect a change in a majority of the members of the board of directors.

      Directors who are also full-time officers or employees of our company will receive no additional compensation for serving as directors.
All other directors will receive an annual retainer of $30,000. Each non-employee director also will receive a fee of $1,500 for each board
meeting and each committee meeting attended. In addition, the chairman of the audit committee will receive an annual fee of $15,000 and the
chairman of the nominating, governance and compensation committee will receive an annual fee of $8,000. Each non-employee director also
will receive an annual grant of restricted stock under our 2004 long-term incentive plan having a fair market value (as defined in the plan) of
$40,000. Any fees payable to directors who are affiliated with Lime Rock or Greenhill will be paid to Lime Rock and Greenhill, as applicable.

Board Committees

      Our board of directors plans to have an audit committee and a nominating, governance and compensation committee following this
offering. Following the phase-in period permitted under the NASDAQ Marketplace Rules, we intend that all the members of our nominating,
governance and compensation committee will be independent under applicable provisions of those rules. In addition, we intend that the
members of our audit committee will be independent under applicable provisions of the Securities Exchange Act of 1934 and the NASDAQ
Marketplace Rules following the phase-in period.

      Nominating, Governance and Compensation Committee . The nominating, governance and compensation committee, which is expected
to consist of Messrs. Bates, Parker, Pottow and Webster, will assist the board in

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identifying and recommending candidates to fill vacancies on the board of directors and for election by the stockholders, recommending
committee assignments for directors to the board of directors, monitoring and assessing the performance of the board of directors and
individual non-employee directors, reviewing compensation received by directors for service on the board of directors and its committees,
developing and recommending to the board of directors appropriate corporate governance policies, practices and procedures for our company,
reviewing and approving the compensation of our executive officers and other key employees, evaluating the performance of our chief
executive officer, overseeing the performance evaluation of senior management and administering and making recommendations to the board
of directors with respect to our incentive-compensation plans, equity-based plans and other compensation benefit plans.

      Audit Committee . The audit committee, which is expected to consist of Messrs.                         , Parker and Reynolds, will assist the
board in overseeing (a) the integrity of our financial statements, (b) our compliance with legal and regulatory requirements, (c) the
independence, qualifications and performance of our independent registered public accounting firm and (d) the performance of our internal
audit function. The Board of Directors has determined that Mr. Parker qualifies as an ―audit committee financial expert,‖ as such term is
defined in the rules of the SEC.

Security Ownership of Executive Officers and Directors

      The following table sets forth information as of the date of this prospectus with respect to the ownership of our common stock by each of
our directors and persons to become director upon closing of this offering, by each named executive officer in the summary compensation table
below and by all directors and executive officers as a group. To our knowledge, except as indicated in the footnotes to this table or as provided
by applicable community property laws, the persons named in the table have sole investment and voting power with respect to the shares of
common stock indicated.
                                                                                                                       Percentage Beneficially Owned

                                                                                               Number of               Before                 After
Name and Address of Beneficial Owner(1)                                                        Shares(2)              Offering               Offering

John T. Reynolds(3)                                                                            13,762,700                 57.5 %
Randall D. Stilley                                                                                828,600                  3.4 %
Thomas J. Seward II(4)                                                                            303,100                  1.3 %
Randal R. Reed                                                                                    123,750                      *
Thomas E. Hord                                                                                    408,950                  1.7 %
Don P. Rodney                                                                                      99,150                      *
Renee M. Pitre                                                                                     40,000                      *
Thomas R. Bates, Jr.(5)                                                                        13,762,700                 57.5 %
J. William Franklin, Jr.                                                                              —                    —
Boris Gutin                                                                                           —                    —
F. Gardner Parker                                                                                     —                    —
V. Frank Pottow                                                                                       —                    —
Steven A. Webster(6)                                                                            1,400,700                  5.9 %
All directors and executive officers as a group (14 persons)                                   17,146,950                 68.6 %

*     Represents ownership of less than 1%.
(1)   The address of each beneficial owner is 2929 Briarpark Drive, Suite 435, Houston, Texas 77042.
(2)   Shares of common stock subject to options that are exercisable within 60 days of the date of this prospectus are deemed outstanding for
      purposes of determining the beneficial ownership and computing the percentage ownership of such person, but are not deemed
      outstanding for purposes of computing the percentage ownership of any other person. Accordingly, the following shares of common
      stock subject to stock options are included in the table: Randall D. Stilley—620,000; Randal R. Reed—123,750; Thomas E.
      Hord—103,750; Don P. Rodney—57,500; Renee M. Pitre—40,000; and all directors and executive officers as a group—1,090,000.
(3)   Consists of the shares owned by Lime Rock. Mr. Reynolds serves as a managing member of LR2 GP, LLC, which controls the
      investment decisions of Lime Rock. Mr. Reynolds disclaims beneficial ownership of the shares shown in the table.
(4)   Mr. Seward, the former president of our drilling company subsidiary, resigned from our company in September 2005. He directly owns
      140,000 shares of our common stock and is the beneficial owner of 163,100 shares of our common stock through the Thomas J. Seward
      II Profit Sharing Plan.

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(5)    Consists of the shares owned by Lime Rock. Mr. Bates is a member of LR2 GP, LLC, which controls the investment decisions of Lime
       Rock. Mr. Bates disclaims beneficial ownership of the shares shown in the table.
(6)    Mr. Webster directly owns 364,000 shares of our common stock and is the beneficial owner of 1,036,700 shares of our common stock
       through Kestrel Capital, LP, over which Mr. Webster shares voting and investment power.

Executive Compensation

     The following table provides information regarding the compensation awarded to or earned during the five-month period ended
December 31, 2004 by our chief executive officer and each of the next four most highly compensated executive officers who were serving as
executive officers on December 31, 2004 (collectively, the ―named executive officers‖).

                                                       Summary Compensation Table
                                                                                                               Long-Term           All Other
                                                                                Annual Compensation           Compensation       Compensation(1)

                                                                                                               Securities
                                                                                                               Underlying
Name and Principal Position                                                   Salary           Bonus            Options

Randall D. Stilley(2)                                                       $ 57,692         $ 64,000             525,000       $            —
  Chief Executive Officer and President
Thomas E. Hord(3)                                                              52,779           79,000             87,500                  2,132
  Vice President, Operations and
  Chief Operating Officer, Hercules
  Drilling Company, LLC
Randal R. Reed(2)                                                              31,250           20,000            105,000                    901
  President, Hercules Liftboat Company, LLC
Don P. Rodney(3)                                                               30,037           44,000                —                    2,174
  Vice President, Finance, Hercules
  Drilling Company, LLC
Thomas J. Seward II(4)                                                         63,050           79,000                —                    1,268

(1)    These amounts represent employer matching contributions pursuant to our 401(k) plan.
(2)    Messrs. Stilley and Reed joined our company in October 2004.
(3)    Messrs. Hord and Rodney joined our company in August 2004.
(4)    Mr. Seward, who joined our company in August 2004 as the president of Hercules Drilling Company, LLC, resigned his position in
       September 2005.

      The annual salaries for our named executive officers who are serving as executive officers as of the dates of this prospectus and Steven A.
Manz, our chief financial officer, for 2005 are as follows: Mr. Stilley—$300,000; Mr. Hord—$225,000; Mr. Reed—$125,000; Mr.
Rodney—$150,000; and Mr. Manz—$180,000. In addition, each of these executives participates in our annual incentive bonus program. Under
the program, bonuses are paid to our executive officers and other management personnel on a discretionary basis as determined by the
Compensation Committee based on target objectives established by the Committee. The program provides incentives to maximize our
profitability, optimize our capital expenditures and maintain high safety standards. Target bonuses as a percentage of base salary for our named
executive officers and Mr. Manz are as follows: Mr. Stilley—50%; Mr. Hord—50%; Mr. Reed—50%; Mr. Rodney—40% and Mr.
Manz—50%. If our performance is above specified thresholds determined by the Compensation Committee, bonuses may exceed the target
bonus, with the maximum bonus payable of up to two times the target bonus.

      In addition, Mr. Stilley and Mr. Manz will receive cash bonuses in the amount of $300,000 and $180,000, respectively, upon completion
of this offering.

2004 Long-Term Incentive Plan

     We have adopted the Hercules Offshore 2004 Long-Term Incentive Plan for our employees, consultants and directors. The plan
authorizes the granting of awards covering an aggregate of 2,450,000 shares of our common stock in any combination of the following:

        •   options to purchase shares of our common stock, which may be incentive stock options or non-qualified stock options;

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       •    restricted stock and other stock-based awards, such as restricted stock units and phantom stock; and

       •    performance stock awards.

The plan also authorizes the granting of cash awards to participants.

      Administration. Following the closing of this offering, the plan will be administered by the compensation committee of our board of
directors, which has the authority to determine the terms and conditions of each award and to adopt rules, regulations and guidelines regarding
the plan.

      Stock Options. The compensation committee is authorized under the plan to grant options to purchase shares of common stock, which
may be incentive stock options meeting the requirements of Section 422 of the Internal Revenue Code or non-qualified stock options. Options
will be evidenced by a written award agreement with the participant, which will include any provisions that the compensation committee may
specify. The exercise price of an option intended to be an incentive stock option may not be less than the fair market value of our common
stock on the date of grant. All incentive stock options granted under the plan must have a term of no more than ten years. The grant price,
number of shares, terms and conditions of exercise, whether a stock option may qualify as an incentive stock option under the Internal Revenue
Code, and other terms of a stock option grant will be fixed by the compensation committee as of the grant date.

       The grant price of any stock option must be paid in full at the time the stock is delivered to the participant. The price must be paid in cash
or, if permitted by the compensation committee and elected by the participant, by means of tendering previously owned shares of our common
stock or shares issued pursuant to an award under the plan or any combination of the foregoing.

      Restricted Stock Awards. The compensation committee may make awards consisting of common stock subject to restrictions on
transferability and other restrictions that the committee chooses to impose, including limitations on the right to vote or receive dividends, if
any, with respect to the common stock to which the award relates. These awards may be subject to forfeiture upon termination of employment,
upon a failure to satisfy performance goals during an applicable restriction period, or any other comparable measurement of performance.

      Performance Stock Awards. The compensation committee may grant performance shares to participants on terms and conditions as it may
determine. The compensation committee has the discretion to determine the number of performance shares granted to each participant and to
set performance goals and other terms or conditions to payment of the performance shares in its discretion which, depending on the extent to
which they are met, will determine the number and value of performance shares that will be paid to the participant.

      Other Stock-Based Awards. The compensation committee may, subject to limitations under applicable law, grant other awards that are
payable in or valued relative to shares of our common stock, such as restricted stock units and phantom stock, as it deems to be consistent with
the purposes of the plan, including shares of common stock awarded purely as a bonus and not subject to any restrictions or conditions. The
compensation committee will determine the terms and conditions of any other stock-based awards.

      Deferred Payment. The compensation committee may permit a participant to defer the payment of an award in certain circumstances. The
payment of awards that have been deferred may be paid in installments or in a single future lump-sum payment, and may, in the discretion of
the compensation committee, be credited with interest and dividend equivalents, depending upon the nature of the award that has been deferred.

      Amendment, Modification and Termination. Subject to applicable stock exchange or NASDAQ rules, the compensation committee may at
any time amend or terminate the plan without stockholder approval. The compensation committee may amend or terminate any outstanding
award without approval of the participant; however, no amendment or termination may be made that would otherwise adversely impact a
participant, without the consent of the participant.

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Option Grants, Exercise and Valuation

      During 2004, options were granted to the named executive officers as shown in the first table below. All such options have an exercise
price at least equal to fair market value on the grant date. All options will become exercisable upon the completion of this offering. Shown in
the second table below is information with respect to unexercised options held at December 31, 2004.

                                                            Option Grants in 2004(1)
                                      Number of                                                                         Potential Realizable Value at
                                      Securities        % of Total                                                                Assumed
                                      Underlying      Options Granted                                                   Annual Rates of Stock Price
                                       Options         to Employees             Exercise Price          Expiration        Appreciation for Option
Name                                   Granted            in 2004               ($ per share)             Date                    Term(2)

                                                                                                                         5%                     10%

Randall D. Stilley                      525,000                  73.2 %     $              2.86         11/17/2014   $ 943,342           $     2,390,614
Thomas E. Hord                           87,500                  12.2 %                    2.86         12/31/2006      25,625                    52,500
Randal R. Reed                          105,000                  14.6 %                    2.86         11/17/2014     188,668                   478,123
Don P. Rodney                               —                     —                         —                  —           —                         —
Thomas J. Seward II                         —                     —                         —                  —           —                         —

(1)    Options were granted pending the adoption of the Hercules Offshore 2004 Long-Term Incentive Plan. The plan was adopted by our
       board in February 2005 with an effective date of November 2004.
(2)    The amounts under these columns result from calculations assuming 5% and 10% annual growth rates through the actual option term as
       set by the SEC. The gains reflect a future value based upon growth at these prescribed rates.

                                                   Aggregated Fiscal Year-End Option Value
                                                                                    Number of Shares                         Value of Unexercised
                                                                                 Underlying Unexercised                     In-the-Money Options
                                                                               Options at Fiscal Year End(1)                at Fiscal Year End(2)

Name                                                                      Exercisable              Unexercisable     Exercisable             Unexercisable

Randall D. Stilley                                                             175,000                   350,000
Thomas E. Hord                                                                  87,500                       —
Randal R. Reed                                                                  35,000                    70,000
Don P. Rodney                                                                      —                         —                —                         —
Thomas J. Seward II                                                                —                         —                —                         —

(1)    Number of options shown includes all options as of December 31, 2004.
(2)    Prior to this offering, there was no public market for common stock and, therefore, the values of each unexercised in-the-money stock
       option is calculated as the product of (a) the number of options and (b) the difference between the estimated initial public offering price
       of $          per share and the exercise price of the stock option.

Option Grants in Connection with this Offering

      Effective upon and subject to the completion of this offering, we plan to grant options with respect to an aggregate of 884,500 shares of
our common stock to our employees under our 2004 long-term incentive plan. The following table sets forth the grants of stock options we plan
to make under our 2004 long-term incentive plan to the named executive officers and all executive officers and directors as a group. The
exercise price per share of the stock options granted at the closing of this offering will be the public offering price per share indicated on the
cover of this prospectus. Stock options issued in connection with this offering will become exercisable in four equal amounts on the date of
grant and on each of the first three anniversaries of the grant date. In addition, we will grant 70,000 shares of restricted stock to Mr. Rynd upon
completion of this offering.

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                                                                                                            Securities
                                                                                                           Underlying                 % of Initial
Name                                                                                                     Options Granted             Option Grants

Randall D. Stilley                                                                                              380,000                       43.0 %
Thomas E. Hord                                                                                                   65,000                        7.3 %
Randal R. Reed                                                                                                   75,000                        8.5 %
Don P. Rodney                                                                                                    20,000                        2.3 %
Thomas J. Seward II                                                                                                 —                          —
All executive officers and directors as a group(1)                                                              720,000                       81.4 %

(1)    Includes options to purchase 100,000 shares of common stock to be awarded to Steven A. Manz, who became our chief financial officer
       in January 2005.

Employment Agreements

      We have entered into employment agreements with each of Mr. Stilley for a term ending on October 11, 2006, Mr. Manz for a term
ending on January 10, 2007 and Mr. Hord for a term ending on August 1, 2006. Each agreement may be terminated by us for cause upon 10
days’ written notice to the executive officer and by us or the executive officer without cause upon 90 days’ written notice to the other party.
The agreement with Mr. Hord is subject to automatic renewals for successive one-year terms until either party terminates the contract upon 90
days’ written notice to the other party, in which case the agreement will terminate at the end of the calendar quarter in which the 90th day
occurs. Under each agreement, the executive is entitled to a base salary and an annual bonus based on the achievement of performance criteria
established by our board.

      The agreements with Messrs. Stilley and Manz provide that if the executive is terminated without cause (as defined in each agreement)
during the term of the agreement, the executive will be entitled to (1) his monthly base salary at the rate then in effect for the remainder of the
term of the agreement, but not less than twelve months, payable in installments, (2) an additional sum, payable in monthly installments, equal
to his annual bonus for the year prior to the year in which he is terminated without cause, and (3) continued medical benefits for the remainder
of the term of the agreement, but not less than twelve months. The agreement with Mr. Hord provides that if he is terminated without cause (as
defined in the agreement) during the term of the agreement, he will be entitled to (1) his monthly base salary at the rate then in effect for the
remainder of the term of the agreement, payable in installments, (2) an additional sum equal to his annual bonus for the year in which he is
terminated without cause, prorated from January 1 to the effective date of the termination, and (3) for the remainder of the term of the
agreement, a housing and automobile allowance.

      During the term and for the longer of (a) a period of one year following the term or (b) any period in which the executive is receiving
severance payments from us, each executive is subject to a covenant not to compete with us or solicit our employees. Each executive has also
covenanted not to reveal our confidential information during the term of employment or thereafter and to assign to us any inventions created by
the executive while employed by us or within one year thereafter.

      Mr. Seward, the former president of our drilling company subsidiary, resigned from the company in September 2005. In connection with
his resignation, Mr. Seward entered into a consulting agreement with us pursuant to which he will receive (1) a monthly payment of $20,450
until August 1, 2006 and (2) an annual bonus. In addition, we will pay the annual premium on Mr. Seward’s life insurance policy and the
premiums on his health insurance coverage until August 1, 2006.

Compensation Committee Interlocks and Insider Participation

     None of our executive officers have served as members of a compensation committee (or if no committee performs that function, the
board of directors) of any other entity that has an executive officer serving as a member of our board of directors.

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                                CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Offering by Selling Stockholders

      We are paying the expenses of the offering by the selling stockholders, including a single firm of attorneys for the selling stockholders,
other than the underwriting discounts, commissions and taxes with respect to shares of common stock sold by the selling stockholders and the
fees and expenses of any other attorneys, accountants and other advisors separately retained by them.

Registration Rights Agreement

       We have entered into a registration rights agreement with our existing holders. Under the agreement, holders of at least 25% of the
registrable securities subject to the agreement may require us to file a registration statement under the Securities Act to register the sale of
shares of our common stock, subject to certain limitations, including that the reasonably anticipated gross proceeds must be at least $15.0
million. These stockholders may request a total of three such registrations and only one in any six-month period. These holders also have the
right to cause us to register their registrable securities on Form S-3, when it becomes available to us, if the reasonably anticipated gross
proceeds would be at least $10.0 million. In addition, if we propose to register securities under the Securities Act, then the holders who are
party to the agreement will have ―piggy-back‖ rights, subject to quantity limitations determined by underwriters if the offering involves an
underwriting, to request that we register their registrable securities. There is no limit to the number of these ―piggy-back‖ registrations in which
these holders may request their shares be included. We generally will bear the registration expenses incurred in connection with registrations.
We have agreed to indemnify these stockholders against certain liabilities, including liabilities under the Securities Act, in connection with any
registration effected under the agreement. These registration rights will terminate at the earlier of (a) seven years from the closing date of this
offering or (b) with respect to any holder, the date that all registrable securities held by that holder may be sold in a three-month period without
registration under Rule 144 of the Securities Act and such registrable securities represent less than one-percent of all outstanding shares of our
capital stock.

Conversion

      We were formed in July 2004 as a Delaware limited liability company. Prior to the completion of this offering, we will convert to a
Delaware corporation and change our name to Hercules Offshore, Inc. In the Conversion, (1) each of our limited liability company interests
will be converted into 350 shares of common stock, and (2) each outstanding option will become an option for that whole number of shares of
common stock equal to the number of shares subject to the option prior to Conversion multiplied by 350, with an exercise price per share equal
to the exercise price in effect prior to the Conversion divided by 350.

Transactions Before the Conversion

      One of our former managers, who served as manager from July 2004 until May 2005, is a principal in Bassoe Offshore USA, a provider
of rig brokerage services. We paid an aggregate of $0.4 million to Bassoe in the five-month period ended December 31, 2004 for rig brokerage
services in connection with our acquisition of jackup rigs. We paid $0.2 million to Bassoe in July 2005 for rig brokerage services in connection
with our acquisition of Rig 16 . We also have engaged Bassoe to provide such services in connection with our sale of a platform rig.

      In January 2005, we acquired the jackup rig Rig 30 from Porterhouse Offshore for $20.0 million. Thomas E. Hord, vice president,
operations and chief operating officer of our drilling company subsidiary, Thomas J. Seward II, the former president of our drilling company
subsidiary and currently a consultant with us until August 2006, and one of our former managers beneficially own 1.3%, 1.3% and 2.6%,
respectively, limited partnership interests in Porterhouse Offshore. In connection with this transaction, Mr. Hord received 217 membership
interests valued at $0.2 million, Mr. Seward’s affiliate, the Thomas J. Seward II Defined Benefit

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Plan, received 216 membership interests valued at $0.2 million, and the former manager and his affiliate, Bass Rig AS, each received 432
membership interests valued at $0.4 million.

    In addition, prior to the Conversion, our executive officers, directors and 5% stockholders have invested cash and other property in our
company in exchange for membership interests through a number of other private placements as follows:

       •    We issued an aggregate of 39,322 membership interests to Lime Rock in three separate transactions between August 2, 2004 and
            December 16, 2004 for an aggregate of $39.3 million in cash and all of Lime Rock’s membership interest in a subsidiary company,
            which interest had a nominal value .

       •    We issued an aggregate of 19,661 membership interests to Greenhill in two separate transactions on October 1, 2004 and December
            16, 2004 for an aggregate of $19.7 million in cash.

       •    We issued an aggregate of 596 membership interests to Randall D. Stilley, our chief executive officer, president and a director, in
            two separate transactions on October 1, 2004 and December 16, 2004 for an aggregate of $0.6 million in cash.

       •    We issued 100 membership interests to Steven A. Manz, our chief financial officer, on January 20, 2005 for $0.1 million in cash.

       •    We issued 400 membership interests to Mr. Seward on July 29, 2004 for $0.1 million in cash. We also issued an aggregate of 250
            membership interests to the Thomas J. Seward II Defined Benefit Plan, which interests are beneficially owned by Mr. Seward, on
            August 2, 2004 for $0.3 million in cash. In addition, we issued 125 membership interests to Harbour Capital Consultants, Inc., an
            affiliate of Mr. Seward, on January 13, 2005 for $0.1 million in cash.

       •    We issued an aggregate of 655 membership interests to Mr. Hord in three separate transactions between July 29, 2004 and January
            13, 2005 for an aggregate of $0.2 million in cash and a promissory note in the amount of $0.2 million, which was repaid on
            September 15, 2004.

       •    We issued an aggregate of 119 membership interests to Don P. Rodney, vice president, finance of our drilling company subsidiary,
            in two separate transactions on August 2, 2004 and January 13, 2005 for an aggregate of $0.1 million in cash.

       •    We issued an aggregate of 1,040 membership interests to Steven A. Webster, one of our directors, in two separate transactions on
            July 29, 2004 and August 2, 2004 for an aggregate of $1.0 million in cash. We also issued an aggregate of 2,962 membership
            interests to Kestrel Capital, LP, which interests are beneficially owned by Mr. Webster, in three separate transactions between July
            29, 2004 and January 13, 2005 for an aggregate of $3.0 million in cash.

       •    We issued an aggregate of 1,065 membership interests to one of our former managers in three separate transactions between July 29,
            2004 and December 16, 2004 for an aggregate of $0.9 million in cash and $0.1 million of rig brokerage services rendered. We also
            issued an aggregate of 444 membership interests to BassRig AS and 75 membership interests to Bass Invest AS (which subsequently
            assigned its membership interests to BassRig AS), each of which is an affiliate of the former manager, in four separate transactions
            between July 29, 2004 and December 16, 2004 for an aggregate of $0.3 million in cash and $0.1 million of rig brokerage services
            rendered.

       We believe that the transactions described under this caption ―—Transactions Before the Conversion‖ were on terms that were reasonable
and in our best interest, although those transactions, together with the arrangements described under ―—Offering by Selling Stockholders‖ and
―Registration Rights Agreement,‖ may not have been on or have terms as favorable to our company as we could have obtained from
unaffiliated third-parties in arms-length transactions. In addition, our interests may conflict with those of Lime Rock, Greenhill and their
affiliates with respect to our past and ongoing business relationships, and because of their ownership, we may not be able to resolve these
conflicts on terms commensurate with those possible in arms-length transactions. See ―Risk Factors—Risks Related to Our Principal
Stockholders.‖

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                                                           SELLING STOCKHOLDERS

      The following table sets forth information as of the date of this prospectus regarding shares beneficially owned by all selling
stockholders. To our knowledge, except as indicated in the footnotes to this table or as provided by applicable community property laws, upon
consummation of this offering, the persons named in the table have sole investment and voting power with respect to the shares of common
stock indicated.
                                                                                Maximum
                                                                                Number of
                                                          Number of          Shares to be Sold
                                     Shares              Shares to be        Upon Exercise of
Name and Address of                Beneficially            Sold in            Over-Allotment
Beneficial Owners                    Owned                 Offering             Option(1)                     Percentage Beneficially Owned

                                                                                                                 After Offering           After Offering
                                                                                                                 (Assuming No               (Assuming
                                                                                                                Exercise of Over-        Exercise of Over-
                                                                                                  Before           Allotment             Allotment Option
                                                                                                 Offering           Option)                   in Full)

LR-Hercules Holdings,
  L.P.(2)                          13,762,700                                                       57.5 %
Greenhill Capital Partners,
  L.P.(3)                            4,258,100                                                      17.8 %
Greenhill Capital, L.P.(3)           1,359,050                                                       5.7 %
Greenhill Capital Partners
  (Executives), L.P.(3)                655,550                                                        2.7 %
Greenhill Capital Partners
  (Cayman), L.P.(3)                    608,650                                                        2.5 %
Steven A. Webster(4)                 1,400,700 (5)                                                    5.9 %
Kestrel Capital, LP(6)               1,036,700                                                        4.3 %
Thomas J. Seward II                    303,100 (7)                                                    1.3 %
Thomas E. Hord                         392,700 (8)                                                    1.6 %

* Represents ownership of less than 1%.
(1) If the underwriters fully exercise their over-allotment option, then the selling stockholders will sell the number of shares of common stock
    indicated. If the underwriters partially exercise their over-allotment option, then the number of shares to be sold by each selling
    stockholder will be allocated pro rata.
(2) LR2 GP, L.P., the general partner of LR-Hercules Holdings, L.P., as well as LR2 GP, LLC, which controls the general partner, may be
    deemed to beneficially own the shares held by LR-Hercules Holdings, L.P. We have been informed by LR-Hercules Holdings, L.P. that all
    decisions regarding investments by LR-Hercules Holdings, L.P. are made by an investment committee whose composition may change.
    No individual has authority to make any such decisions without the approval of the investment committee. The current members of the
    investment committee are Thomas R. Bates, Jr., John G. Clarkson, Jonathan C. Farber, Mark A. McCall, John T. Reynolds and Lawrence
    Ross, each of whom disclaims beneficial ownership in the shares held by Lime Rock except to the extent of his pecuniary interest therein.
    The address of LR-Hercules Holdings, L.P. is c/o Lime Rock Management LP, 518 Riverside Avenue, Westport, Connecticut 06880.
(3) GCP Managing Partner, L.P., the managing general partner of Greenhill Capital Partners, L.P., Greenhill Capital, L.P., Greenhill Capital
    Partners (Executives), L.P. and Greenhill Capital Partners (Cayman), L.P. (the ―Funds‖), as well as Greenhill Capital Partners, LLC, which
    controls the managing general partner, and Greenhill & Co., Inc., the sole member of Greenhill Capital Partners, LLC, may be deemed to
    beneficially own the shares held by the Funds. We have been advised by the Funds that all decisions regarding investments by the Funds
    are made by an investment committee whose composition may change. No individual has authority to make any such decisions without the
    approval of the investment committee. The current members of the investment committee are Robert H. Niehaus, Scott L. Bok, Robert F.
    Greenhill, Simon A. Borrows and V. Frank Pottow, each of whom disclaims beneficial ownership in the shares held by the Funds except
    to the extent of his pecuniary interest therein. The address of the Funds is 300 Park Avenue, New York, New York 10022. Each of the
    Funds is an affiliate of a registered broker-dealer and has informed us that:

       •    it acquired the shares in the ordinary course of business; and

       •    at the time the shares were acquired, it had no agreements or understandings, directly or indirectly, with us or any of our affiliates or
            any person acting on our behalf or on behalf of any of our affiliates to distribute the shares.
(4)   Mr. Webster is a consultant to an investment fund affiliated with Credit Suisse First Boston LLC.
(5)   Includes 1,036,700 shares held by Mr. Webster’s affiliate, Kestrel Capital, LP.
(6)   Mr. Webster beneficially owns the shares held by Kestrel Capital, LP.
(7)   Includes 163,100 shares held by Mr. Seward’s affiliate, the Thomas J. Seward II Profit Sharing Plan.
(8)   Includes 87,500 shares of common stock subject to options that are exercisable within 60 days of the date of this prospectus.

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                                                    DESCRIPTION OF CAPITAL STOCK

      In connection with our conversion from a limited liability company to a corporation, we will file a certificate of incorporation in
Delaware and adopt bylaws. The following describes our common stock, preferred stock, certificate of incorporation and bylaws that will be in
effect following the Conversion and upon the closing of this offering. This description is a summary only. We encourage you to read the
complete text of our certificate of incorporation and bylaws, forms of which we have filed as exhibits to the registration statement of which this
prospectus is a part. These documents will become effective at the time of the Conversion without substantive change.

      Our authorized capital stock will consist of 200,000,000 shares of common stock, par value $.01 per share, and 50,000,000 shares of
preferred stock, par value $.01 per share. Immediately prior to this offering, there has been no public market for our common stock. Although
we have applied to list our common stock on the NASDAQ National Market, a market for our common stock may not develop, and if one
develops, it may not be sustained.

Common Stock

      Each share of common stock will entitle the holder to one vote on all matters on which holders are permitted to vote, including the
election of directors. There will be no cumulative voting rights. Accordingly, holders of a majority of shares entitled to vote in an election of
directors will be able to elect all of the directors standing for election.

      Subject to preferences that may be applicable to any outstanding preferred stock, the holders of the common stock will share equally on a
per share basis any dividends when, as and if declared by the board of directors out of funds legally available for that purpose. If we are
liquidated, dissolved or wound up, the holders of our common stock will be entitled to a ratable share of any distribution to stockholders, after
satisfaction of all of our liabilities and of the prior rights of any outstanding class of our preferred stock. Our common stock will carry no
preemptive or other subscription rights to purchase shares of our stock and will not be convertible, redeemable or assessable or entitled to the
benefits of any sinking fund.

Preferred Stock

      Our board of directors will have the authority, without stockholder approval, to issue shares of preferred stock from time to time in one or
more series and to fix the number of shares and terms of each such series. The board may determine the designation and other terms of each
series, including, among others:

       •    dividend rates;

       •    whether dividends will be cumulative or non-cumulative;

       •    redemption rights;

       •    liquidation rights;

       •    sinking fund provisions;

       •    conversion or exchange rights; and

       •    voting rights.

      The issuance of preferred stock, while providing us with flexibility in connection with possible acquisitions and other corporate purposes,
could reduce the relative voting power of holders of our common stock. It could also affect the likelihood that holders of our common stock
will receive dividend payments and payments upon liquidation.

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      For purposes of the rights plan described below, our board of directors intends to designate           shares of preferred stock to constitute
the Series A Junior Participating Preferred Stock prior to completion of the offering. For a description of the rights plan, please read
―—Stockholder Rights Plan.‖

      The issuance of shares of capital stock, or the issuance of rights to purchase shares of capital stock, could be used to discourage an
attempt to obtain control of our company. For example, if, in the exercise of its fiduciary obligations, our board of directors determined that a
takeover proposal was not in the best interest of our stockholders, the board could authorize the issuance of preferred stock or common stock
without stockholder approval. The shares could be issued in one or more transactions that might prevent or make the completion of the change
of control transaction more difficult or costly by:

       •    diluting the voting or other rights of the proposed acquiror or insurgent stockholder group;

       •    creating a substantial voting block in institutional or other hands that might undertake to support the position of the incumbent
            board; or

       •    effecting an acquisition that might complicate or preclude the takeover.

     In this regard, our certificate of incorporation will grant our board of directors broad power to establish the rights and preferences of the
authorized and unissued preferred stock. Our board could establish one or more series of preferred stock that entitle holders to:

       •    vote separately as a class on any proposed merger or consolidation;

       •    cast a proportionately larger vote together with our common stock on any transaction or for all purposes;

       •    elect directors having terms of office or voting rights greater than those of other directors;

       •    convert preferred stock into a greater number of shares of our common stock or other securities;

       •    demand redemption at a specified price under prescribed circumstances related to a change of control of our company; or

       •    exercise other rights designed to impede a takeover.

      Alternatively, a change of control transaction deemed by the board to be in the best interest of our stockholders could be facilitated by
issuing a series of preferred stock having sufficient voting rights to provide a required percentage vote of the stockholders.

Certificate of Incorporation and Bylaws

   Election and Removal of Directors

       Our board of directors will consist of between one and 16 directors, excluding any directors elected by holders of preferred stock pursuant
to provisions applicable in the case of defaults. The exact number of directors will be fixed from time to time by resolution of the board. Our
board of directors will be divided into three classes serving staggered three-year terms, with only one class being elected each year by our
stockholders. At each annual meeting of stockholders, directors will be elected to succeed the class of directors whose terms have expired. This
system of electing and removing directors may discourage a third party from making a tender offer or otherwise attempting to obtain control of
our company, because it generally makes it more difficult for stockholders to replace a majority of the directors. In addition, no director may be
removed except for cause, and directors may be removed for cause by an affirmative vote of shares representing a majority of the shares then
entitled to vote at an election of directors. Any vacancy occurring on the board of directors and any newly created directorship may be filled
only by a majority of the remaining directors in office.

   Stockholder Meetings

      Our certificate of incorporation and our bylaws will provide that special meetings of our stockholders may be called only by the chairman
of our board of directors or a majority of the directors. Our certificate of incorporation and our bylaws will specifically deny any power of any
other person to call a special meeting.

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   Stockholder Action by Written Consent

     Our certificate of incorporation and our bylaws will provide that holders of our common stock will not be able to act by written consent
without a meeting, unless such consent is unanimous.

   Amendment of Certificate of Incorporation

      The provisions of our certificate of incorporation described above under ―—Election and Removal of Directors,‖ ―—Stockholder
Meetings‖ and ―—Stockholder Action by Written Consent‖ may be amended only by the affirmative vote of holders of at least 75% of the
voting power of our outstanding shares of voting stock, voting together as a single class. The affirmative vote of holders of at least a majority
of the voting power of our outstanding shares of stock will generally be required to amend other provisions of our certificate of incorporation.

   Amendment of Bylaws

      Our bylaws may generally be altered, amended or repealed, and new bylaws may be adopted, with:

       •    the affirmative vote of a majority of directors present at any regular or special meeting of the board of directors called for that
            purpose, provided that any alteration, amendment or repeal of, or adoption of any bylaw inconsistent with, specified provisions of
            the bylaws, including those related to special and annual meetings of stockholders, action of stockholders by written consent,
            classification of the board of directors, nomination of directors, special meetings of directors, removal of directors, committees of
            the board of directors and indemnification of directors and officers, requires the affirmative vote of at least 75% of all directors in
            office at a meeting called for that purpose; or

       •    the affirmative vote of holders of 75% of the voting power of our outstanding shares of voting stock, voting together as a single
            class.

   Other Limitations on Stockholder Actions

      Our bylaws will also impose some procedural requirements on stockholders who wish to:

       •    make nominations in the election of directors;

       •    propose that a director be removed;

       •    propose any repeal or change in our bylaws; or

       •    propose any other business to be brought before an annual or special meeting of stockholders.

      Under these procedural requirements, in order to bring a proposal before a meeting of stockholders, a stockholder must deliver timely
notice of a proposal pertaining to a proper subject for presentation at the meeting to our corporate secretary along with the following:

       •    a description of the business or nomination to be brought before the meeting and the reasons for conducting such business at the
            meeting;

       •    the stockholder’s name and address;

       •    any material interest of the stockholder in the proposal;

       •    the number of shares beneficially owned by the stockholder and evidence of such ownership; and

       •    the names and addresses of all persons with whom the stockholder is acting in concert and a description of all arrangements and
            understandings with those persons, and the number of shares such persons beneficially own.

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      To be timely, a stockholder must generally deliver notice:

       •    in connection with an annual meeting of stockholders, not less than 120 nor more than 180 days prior to the date on which the
            annual meeting of stockholders was held in the immediately preceding year, but in the event that the date of the annual meeting is
            more than 30 days before or more than 60 days after the anniversary date of the preceding annual meeting of stockholders, a
            stockholder notice will be timely if received by us not later than the close of business on the later of (1) the 120th day prior to the
            annual meeting and (2) the 10th day following the day on which we first publicly announce the date of the annual meeting; or

       •    in connection with the election of a director at a special meeting of stockholders, not less than 40 nor more than 60 days prior to the
            date of the special meeting, but in the event that less than 55 days’ notice or prior public disclosure of the date of the special meeting
            of the stockholders is given or made to the stockholders, a stockholder notice will be timely if received by us not later than the close
            of business on the 10th day following the day on which a notice of the date of the special meeting was mailed to the stockholders or
            the public disclosure of that date was made.

      In order to submit a nomination for our board of directors, a stockholder must also submit any information with respect to the nominee
that we would be required to include in a proxy statement, as well as some other information. If a stockholder fails to follow the required
procedures, the stockholder’s proposal or nominee will be ineligible and will not be voted on by our stockholders.

   Limitation of Liability of Directors and Officers

       Our certificate of incorporation will provide that no director will be personally liable to us or our stockholders for monetary damages for
breach of fiduciary duty as a director, except as required by applicable law, as in effect from time to time. Currently, Delaware law requires that
liability be imposed for the following:

       •    any breach of the director’s duty of loyalty to our company or our stockholders;

       •    any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law;

       •    unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General
            Corporation Law; and

       •    any transaction from which the director derived an improper personal benefit.

       As a result, neither we nor our stockholders have the right, through stockholders’ derivative suits on our behalf, to recover monetary
damages against a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior, except in the
situations described above.

       Our bylaws will provide that, to the fullest extent permitted by law, we will indemnify any officer or director of our company against all
damages, claims and liabilities arising out of the fact that the person is or was our director or officer, or served any other enterprise at our
request as a director, officer, employee, agent or fiduciary. We will reimburse the expenses, including attorneys’ fees, incurred by a person
indemnified by this provision when we receive an undertaking to repay such amounts if it is ultimately determined that the person is not
entitled to be indemnified by us. Amending this provision will not reduce our indemnification obligations relating to actions taken before an
amendment.

   Foreign Ownership

     In order to continue to enjoy the benefits of U.S. flag registry for our liftboats, we must maintain U.S. citizenship for U.S. coastwise trade
purposes as defined in the Merchant Marine Act of 1936, the Shipping Act of 1916 and applicable federal regulations. Under these regulations,
to maintain U.S. citizenship and, therefore, be qualified to engage in U.S. coastwise trade:

       •    our president or chief executive officer, our chairman of the board and a majority of a quorum of our board of directors must be U.S.
            citizens; and

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       •    at least 75% of the ownership and voting power of each class of our stock must be held by U.S. citizens free of any trust, fiduciary
            arrangement or other agreement, arrangement or understanding whereby voting power may be exercised directly or indirectly by
            non-U.S. citizens, as defined in the Merchant Marine Act, the Shipping Act and applicable federal regulations.

       In order to protect our ability to register our liftboats under federal law and operate our liftboats in U.S. coastwise trade, our certificate of
incorporation will contain provisions that limit foreign ownership of our capital stock to a fixed percentage that is equal to 5% less than the
percentage that would prevent us from being a U.S. citizen (currently 25%) for purposes of the Merchant Marine Act and the Shipping Act. We
refer to the percentage limitation on foreign ownership as the permitted percentage. The permitted percentage is currently 20%.

      Our certificate of incorporation provides that:

       •    any transfer, or attempted or purported transfer, of any shares of our capital stock that would result in the ownership or control in
            excess of the permitted percentage by one or more persons who is not a U.S. citizen for purposes of U.S. coastwise shipping will be
            void and ineffective as against us; and

       •    if, at any time, persons other than U.S. citizens own shares of our capital stock or possess voting power over any shares of our
            capital stock, in each case (either of record or beneficially) in excess of the permitted percentage, we may withhold payment of
            dividends on and suspend the voting rights attributable to such shares.

      Certificates representing our common stock may bear legends concerning the restrictions on ownership by persons other than U.S.
citizens. In addition, our certificate of incorporation permits us to:

       •    require, as a condition precedent to the transfer of shares of capital stock on our records, representations and other proof as to the
            identity of existing or prospective stockholders;

       •    establish and maintain a dual stock certificate system under which different forms of certificates may be used to reflect whether the
            owner thereof is a U.S. citizen; and

       •    redeem any shares held by non-U.S. citizens that exceed the permitted percentage at a price based on the then-current market price
            of the shares.

   Anti-Takeover Effects of Some Provisions

      Some provisions of our certificate of incorporation and bylaws could make the following more difficult:

       •    acquisition of control of us by means of a proxy contest or otherwise, or

       •    removal of our incumbent officers and directors.

      These provisions, as well as our ability to issue preferred stock, are designed to discourage coercive takeover practices and inadequate
takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of
directors. We believe that the benefits of increased protection give us the potential ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to acquire or restructure us, and that the benefits of this increased protection outweigh the disadvantages of discouraging
those proposals, because negotiation of those proposals could result in an improvement of their terms.

Stockholder Rights Plan

      Prior to consummation of the offering, we intend to adopt a preferred share purchase rights plan. Under the plan, each share of our
common stock will include one right to purchase preferred stock. The rights will separate from the common stock and become exercisable (1)
ten days after public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire,
beneficial ownership of 15% of our

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outstanding common stock or (2) ten business days following the start of a tender offer or exchange offer that would result in a person’s
acquiring beneficial ownership of 15% of our outstanding common stock. A 15% beneficial owner is referred to as an ―acquiring person‖ under
the plan. The plan will provide that Lime Rock and Greenhill and their respective affiliates will not be acquiring persons under the plan, and
therefore, future acquisitions by them would not be subject to the antitakeover effects of the plan.

     Our board of directors can elect to delay the separation of the rights from the common stock beyond the ten-day periods referred to above.
The plan also will confer on our board the discretion to increase or decrease the level of ownership that causes a person to become an acquiring
person. Until the rights are separately distributed, the rights will be evidenced by the common stock certificates and will be transferred with and
only with the common stock certificates.

     After the rights are separately distributed, each right will entitle the holder to purchase from us one one-hundredth of a share of Series A
Junior Participating Preferred Stock for a purchase price of $          . The rights will expire at the close of business on      , unless we
redeem or exchange them earlier as described below.

       If a person becomes an acquiring person, the rights will become rights to purchase shares of our common stock for one-half the current
market price, as defined in the rights agreement, of the common stock. This occurrence is referred to as a ―flip-in event‖ under the plan. After
any flip-in event, all rights that are beneficially owned by an acquiring person, or by certain related parties, will be null and void. Our board of
directors will have the power to decide that a particular tender or exchange offer for all outstanding shares of our common stock is fair to and
otherwise in the best interests of our stockholders. If the board makes this determination, the purchase of shares under the offer will not be a
flip-in event.

      If, after there is an acquiring person, we are acquired in a merger or other business combination transaction or 50% or more of our assets,
earning power or cash flow are sold or transferred, each holder of a right will have the right to purchase shares of the common stock of the
acquiring company at a price of one-half the current market price of that stock. This occurrence is referred to as a ―flip-over event‖ under the
plan. An acquiring person will not be entitled to exercise its rights, which will have become void.

       Until ten days after the announcement that a person has become an acquiring person, our board of directors may decide to redeem the
rights at a price of $.01 per right, payable in cash, shares of our common stock or other consideration. The rights will not be exercisable after a
flip-in event until the rights are no longer redeemable.

      At any time after a flip-in event and prior to either a person’s becoming the beneficial owner of 50% or more of the shares of our
common stock or a flip-over event, our board of directors may decide to exchange the rights for shares of our common stock on a one-for-one
basis. Rights owned by an acquiring person, which will have become void, will not be exchanged.

      Other than provisions relating to the redemption price of the rights, the rights agreement may be amended by our board of directors at any
time that the rights are redeemable. Thereafter, the provisions of the rights agreement other than the redemption price may be amended by the
board of directors to cure any ambiguity, defect or inconsistency, to make changes that do not materially adversely affect the interests of
holders of rights (excluding the interests of any acquiring person), or to shorten or lengthen any time period under the rights agreement. No
amendment to lengthen the time period for redemption may be made if the rights are not redeemable at that time.

      The rights will have certain anti-takeover effects. The rights will cause substantial dilution to any person or group that attempts to acquire
us without the approval of our board of directors. As a result, the overall effect of the rights may be to render more difficult or discourage any
attempt to acquire us even if the acquisition may be favorable to the interests of our stockholders. Because the board of directors can redeem
the rights or approve a tender or exchange offer, the rights should not interfere with a merger or other business combination approved by the
board.

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Delaware Business Combination Statute

       We will elect to be subject to Section 203 of the Delaware General Corporation Law, which regulates corporate acquisitions. Section 203
prevents an ―interested stockholder,‖ which is defined generally as a person owning 15% or more of a corporation’s voting stock, or any
affiliate or associate of that person, from engaging in a broad range of ―business combinations‖ with the corporation for three years after
becoming an interested stockholder unless:

       •    the board of directors of the corporation had previously approved either the business combination or the transaction that resulted in
            the stockholder’s becoming an interested stockholder;

       •    upon completion of the transaction that resulted in the stockholder’s becoming an interested stockholder, that person owned at least
            85% of the voting stock of the corporation outstanding at the time the transaction commenced, other than statutorily excluded
            shares; or

       •    following the transaction in which that person became an interested stockholder, the business combination is approved by the board
            of directors of the corporation and holders of at least two-thirds of the outstanding voting stock not owned by the interested
            stockholder.

      Under Section 203, the restrictions described above also do not apply to specific business combinations proposed by an interested
stockholder following the announcement or notification of designated extraordinary transactions involving the corporation and a person who
had not been an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority
of the corporation’s directors, if such extraordinary transaction is approved or not opposed by a majority of the directors who were directors
prior to any person becoming an interested stockholder during the previous three years or were recommended for election or elected to succeed
such directors by a majority of such directors.

      Section 203 may make it more difficult for a person who would be an interested stockholder to effect various business combinations with
a corporation for a three-year period. Section 203 also may have the effect of preventing changes in our management and could make it more
difficult to accomplish transactions which our stockholders may otherwise deem to be in their best interests.

Listing of Common Stock

      We have applied to list our common stock on the NASDAQ National Market under the symbol ―HERO.‖

Transfer Agent and Registrar

      The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company.

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                                                   SHARES ELIGIBLE FOR FUTURE SALE

      Prior to this offering, there has been no public market for our common stock. The market price of our common stock could drop because
of sales of a large number of shares in the open market following this offering or the perception that those sales may occur. These factors also
could make it more difficult for us to raise capital through future offerings of common stock.

      After this offering, we will have           shares of our common stock outstanding. All of the shares of our common stock sold in this
offering will be freely tradable without restriction under the Securities Act, except for any shares that may be acquired by one of our affiliates,
as that term is defined in Rule 144 under the Securities Act. Affiliates are individuals or entities that directly, or indirectly through one or more
intermediaries, control, are controlled by, or are under common control with, us and may include our directors and officers as well as our
significant stockholders.

      All of the shares outstanding upon completion of the offering, other than the shares sold in the offering, are deemed ―restricted securities‖
as defined in Rule 144, and may not be sold other than through registration under the Securities Act or under an exemption from registration,
such as the one provided by Rule 144.

      In general, beginning 90 days after the date of the prospectus, a stockholder subject to Rule 144 who has owned common stock of an
issuer for at least one year may, within any three-month period, sell up to the greater of:

       •    1% of the total number of shares of common stock then outstanding; and

       •    the average weekly trading volume of the common stock during the four calendar weeks preceding the filing with the SEC of the
            stockholder’s required notice of sale.

      Rule 144 requires stockholders to aggregate their sales with other affiliated stockholders for purposes of complying with this volume
limitation. Sales under Rule 144 are also subject to other requirements regarding the manner of sale, notice and availability of current public
information about us. A stockholder who has owned common stock for at least two years, and who has not been an affiliate of the issuer for at
least 90 days, may sell common stock free from the manner of sale, public information, volume limitation and notice requirements of Rule 144.

      Each of our company, our executive officers and directors, the selling stockholders and certain other persons has agreed that, without the
prior written consent of Credit Suisse First Boston LLC and Citigroup Global Markets Inc. on behalf of the underwriters, it will not, for a
period of 180 days after the date of this prospectus, sell shares of common stock or take other related actions, subject to limited exceptions, all
as described under ―Underwriting.‖ These lock-up agreements cover substantially all the shares outstanding upon completion of the offering,
other than the shares sold in the offering. Credit Suisse First Boston LLC and Citigroup Global Markets Inc. have no current intent or
arrangement to release any shares subject to these lock-up agreements. The release of any lock-up will be considered on a case-by-case basis.
In considering whether to release any shares, Credit Suisse First Boston LLC and Citigroup Global Markets Inc. would consider the particular
circumstances surrounding the request, including the length of time before the lock-up expires, the number of shares requested to be released,
the reasons for the request, the possible impact on the market for our common stock, and whether the holder of our shares requesting the release
is an officer, director or other affiliate of our company.

       Upon completion of the offering, we expect that options to purchase 1,899,500 shares of common stock will have been granted under our
2004 long-term incentive plan. We intend to file a registration statement on Form S-8 under the Securities Act to register shares of common
stock reserved for issuance under that plan. This registration will permit the resale of these shares by nonaffiliates in the public market without
restriction under the Securities Act, upon completion of the lock-up period described above. Shares registered under the Form S-8 registration
statement held by affiliates will be subject to Rule 144 volume limitations.

      In addition, holders of the shares of our common stock issued in the Conversion, other than the shares sold by the selling stockholders in
the offering, have registration rights with respect to their shares. See ―Certain Relationships and Related Party Transactions—Registration
Rights Agreement.‖

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                                                                UNDERWRITING

      Under the terms and subject to the conditions contained in an underwriting agreement dated            , 2005, we and the selling
stockholders have agreed to sell to the underwriters named below, for whom Credit Suisse First Boston LLC and Citigroup Global Markets Inc.
are acting as representatives, the following respective number of shares of our common stock:
                                                                                                                                             Number of
Underwriter                                                                                                                                   Shares

Credit Suisse First Boston LLC
Citigroup Global Markets Inc.
Howard Weil Incorporated
Deutsche Bank Securities Inc.
Simmons & Company International




     Total                                                                                                                             $


      The underwriting agreement provides that the underwriters are obligated to purchase all of the shares of our common stock in this
offering if any are purchased, other than those shares covered by the over-allotment option described below. The underwriting agreement also
provides that if an underwriter defaults, the purchase commitments of the non-defaulting underwriters may be increased or this offering may be
terminated.

      The selling stockholders have granted to the underwriters a 30-day option to purchase on a pro rata basis up to          additional
outstanding shares from the selling stockholders at the initial public offering price less the underwriting discounts and commissions. The option
may be exercised only to cover any over-allotments of common stock.

      The underwriters propose to offer the shares of common stock initially at the public offering price on the cover page of this prospectus
and to selling group members at that price less a selling concession of $         per share. The underwriters and selling group members may
allow a discount of $        per share on sales to other broker/dealers. After the initial public offering, the representatives may change the
public offering price and concession and discount to broker/dealers.

      The following table summarizes the compensation and estimated expenses we and the selling stockholders will pay:
                                                                         Per Share                                             Total

                                                           Without                       With                    Without                       With
                                                        Over-allotment               Over-allotment           Over-allotment               Over-allotment

Underwriting Discounts and Commissions
  paid by us                                        $                            $                        $                            $
Expenses payable by us                              $                            $                        $                            $
Underwriting Discounts and Commissions
  paid by selling stockholders                      $                            $                        $                            $
Expenses payable by selling stockholders            $                            $                        $                            $

      We estimate that our out-of-pocket expenses for this offering will be approximately $           .

     The representatives have informed us that the underwriters do not expect sales to accounts over which the underwriters have discretionary
authority to exceed 5% of the shares of common stock being offered.

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      We have agreed that we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the
Securities and Exchange Commission a registration statement under the Securities Act relating to, any shares of our common stock or securities
convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale,
pledge, disposition or filing, without the prior written consent of Credit Suisse First Boston LLC and Citigroup Global Markets Inc. for a period
of 180 days after the date of this prospectus , except with respect to common stock issued or issuable pursuant to stock options outstanding on
the date of this prospectus and common stock and other stock-based awards issued or issuable pursuant to our 2004 long-term incentive plan.
However, in the event that either (1) during the last 17 days of the ―lock-up‖ period, we release earnings results or material news or a material
event relating to us occurs or (2) prior to the expiration of the ―lock-up‖ period, we announce that we will release earnings results during the
16-day period beginning on the last day of the ―lock-up‖ period, then in either case the expiration of the ―lock-up‖ will be extended until the
expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as
applicable, unless Credit Suisse First Boston LLC and Citigroup Global Markets Inc. waive, in writing, such an extension.

      Our officers and directors, the selling stockholders and certain other persons have agreed that they will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or
exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other
arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these
transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to
make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of Credit Suisse First Boston LLC and Citigroup Global Markets Inc. for a period of 180 days after the date of this prospectus.
However, in the event that either (1) during the last 17 days of the ―lock-up‖ period, we release earnings results or material news or a material
event relating to us occurs or (2) prior to the expiration of the ―lock-up‖ period, we announce that we will release earnings results during the
16-day period beginning on the last day of the ―lock-up‖ period, then in either case the expiration of the ―lock-up‖ will be extended until the
expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as
applicable, unless Credit Suisse First Boston LLC and Citigroup Global Markets Inc. waive, in writing, such an extension.

      The underwriters have reserved for sale at the initial public offering price up to           shares of the common stock for employees,
directors and other persons associated with us who have expressed an interest in purchasing common stock in the offering. The number of
shares available for sale to the general public in the offering will be reduced to the extent these persons purchase the reserved shares. Any
reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares.

    We and the selling stockholders have agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to
payments that the underwriters may be required to make in that respect.

      We have applied to list our common stock on the NASDAQ National Market.

       Some of the underwriters and their affiliates have engaged in transactions with, and performed commercial and investment banking
financial advisor or lending services for, us and our affiliates from time to time, for which they have received customary compensation and may
do so in the future. Affiliates of Credit Suisse First Boston LLC and Citigroup Global Markets Inc. are arrangers and agents under our credit
facility and receive fees customary for performing these services and interest on such. See ―Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Liquidity and Capital Resources—Liquidity and Financing Arrangements—Debt.‖

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      Prior to this offering, there has been no public market for our common stock. The initial public offering price for our common stock will
be determined by negotiation between us and the underwriters. The principal factors to be considered in determining the initial public offering
price include the following:

       •    the information included in this prospectus and otherwise available to the underwriters;

       •    market conditions for initial public offerings;

       •    the history of and prospects for our business and our past and present operations;

       •    the history of and prospects for the industry in which we compete;

       •    our past and present earnings and current financial position;

       •    an assessment of our management;

       •    the market of securities of companies in businesses similar to ours; and

       •    the general condition of the securities markets.

      The initial public offering price may not correspond to the price at which our common stock will trade in the public market subsequent to
this offering, and an active trading market may not develop and continue after this offering.

      In connection with the offering the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering
transactions and penalty bids in accordance with Regulation M under the Securities Exchange Act of 1934 (the ―Exchange Act‖).

       •    Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified
            maximum.

       •    Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to
            purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short
            position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares
            that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the
            number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their
            over-allotment option and/or purchasing shares in the open market.

       •    Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed
            in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will
            consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they
            may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the
            over-allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked
            short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of
            the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

       •    Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally
            sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price
of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of our common stock
may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NASDAQ National
Market or otherwise and, if commenced, may be discontinued at any time.

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       A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters, or selling group
members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses
electronically. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online
brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make Internet
distributions on the same basis as other allocations.

                                                    NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

      The distribution of our common stock in Canada is being made only on a private placement basis exempt from the requirement that we
prepare and file a prospectus with the securities regulatory authorities in each province where trades of common stock are made. Any resale of
the common stock in Canada must be made under applicable securities laws which will vary depending on the relevant jurisdiction, and which
may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the common stock.

Representations of Purchasers

    By purchasing common stock in Canada and accepting a purchase confirmation a purchaser is representing to us and the dealer from
whom the purchase confirmation is received that:

       •    the purchaser is entitled under applicable provincial securities laws to purchase the common stock without the benefit of a
            prospectus qualified under those securities laws,

       •    where required by law, that the purchaser is purchasing as principal and not as agent, and

       •    the purchaser has reviewed the text above under ―—Resale Restrictions.‖

Rights of Action—Ontario Purchasers Only

      Under Ontario securities legislation, a purchaser who purchases a security offered by this prospectus during the period of distribution will
have a statutory right of action for damages, or while still the owner of the common stock, for rescission against us in the event that this
prospectus contains a misrepresentation. A purchaser will be deemed to have relied on the misrepresentation. The right of action for damages is
exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action
and three years from the date on which payment is made for the common stock. The right of action for rescission is exercisable not later than
180 days from the date on which payment is made for the common stock. If a purchaser elects to exercise the right of action for rescission, the
purchaser will have no right of action for damages against us. In no case will the amount recoverable in any action exceed the price at which
the common stock was offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the
misrepresentation, we will have no liability. In the case of an action for damages, we will not be liable for all or any portion of the damages that
are proven to not represent the depreciation in value of the common stock as a result of the misrepresentation relied upon. These rights are in
addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of
the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.

Enforcement of Legal Rights

      All of our directors and officers as well as the experts named herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada upon us or

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those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may
not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or
those persons outside of Canada.

Taxation and Eligibility for Investment

      Canadian purchasers of common stock should consult their own legal and tax advisors with respect to the tax consequences of an
investment in the common stock in their particular circumstances and about the eligibility of the common stock for investment by the purchaser
under relevant Canadian legislation.

                     MATERIAL UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

      The following is a summary of material United States federal income and estate tax considerations applicable to non-U.S. holders relating
to the purchase, ownership and disposition of our common stock, which does not purport to be a complete analysis of all the potential tax
considerations relating thereto. The rules governing the United States federal income and estate taxation of non-U.S. holders are complex, and
no attempt will be made in this prospectus to provide more than a summary of certain of those rules. This summary is based on the Internal
Revenue Code of 1986, Treasury regulations, rulings and pronouncements of the Internal Revenue Service, and judicial decisions as of the date
of this prospectus. These authorities may be changed, perhaps retroactively, so as to result in United States federal income and estate tax
consequences different from those described in this summary. We have not sought any ruling from the IRS with respect to the statements made
and conclusions reached in this summary, and there can be no assurance that the IRS will agree with these statements and conclusions.

      This summary is addressed only to persons who are non-U.S. holders who hold our common stock as a capital asset. As used in this
discussion, ―non-U.S. holder‖ means a beneficial owner of our common stock that for United States federal income tax purposes is not:

       •    an individual who is a citizen or resident of the United States;

       •    a partnership, or other entity treated as a partnership for United States federal income tax purposes;

       •    a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state
            thereof or the District of Columbia;

       •    an estate whose income is subject to United States federal income taxation regardless of its source; or

       •    a trust (1) if it is subject to the supervision of a court within the United States and one or more United States persons have the
            authority to control all substantial decisions of the trust or (2) that has a valid election in effect under applicable Treasury regulations
            to be treated as a United States person.

An individual may be treated as a resident of the United States in any calendar year for U.S. federal income tax purposes, instead of a
nonresident, by, among other ways, being present in the United States for at least 31 days in that calendar year and for an aggregate of at least
183 days during a three-year period ending in the current calendar year. For purposes of the 183-day calculation, all of the days present in the
current year, one-third of the days present in the immediately preceding year and one-sixth of the days present in the second preceding year are
counted. Residents are taxed for U.S. federal income tax purposes as if they were U.S. citizens.

       This summary does not address the tax considerations arising under the laws of any foreign, state or local jurisdiction or the effect of any
tax treaty. In addition, this discussion does not address tax considerations that are the result of a holder’s particular circumstances or of special
rules, such as those that apply to holders subject to the alternative minimum tax, financial institutions, tax-exempt organizations, insurance
companies, dealers or traders in securities or commodities, regulated investment companies, real estate investment trusts, certain former
citizens or former long-term residents of the United States, or persons who will hold our common stock as a

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position in a hedging transaction, ―straddle‖ or ―conversion transaction.‖ Special rules not discussed herein may apply to a non-U.S. holder that
is a controlled foreign corporation or passive foreign investment company. If a partnership (or any other entity treated as a partnership for
United States federal income tax purposes) holds our common stock, then the United States federal income tax treatment of a partner will
generally depend on the status of the partner and the activities of the partnership. Such a partner is encouraged to consult its tax advisor as to its
consequences.

    THIS DISCUSSION DOES NOT CONSTITUTE LEGAL ADVICE TO ANY PROSPECTIVE PURCHASER OF OUR
COMMON STOCK. INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK ARE ENCOURAGED TO
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL
TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS TO ANY TAX CONSEQUENCES ARISING UNDER THE
LAWS OF ANY OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

Dividends

      Payments on our common stock will constitute dividends for United States federal income tax purposes to the extent paid from our
current or accumulated earnings and profits, as determined under United States federal income tax principles. Amounts not treated as dividends
for United States federal income tax purposes will constitute a return of capital and will first be applied against and reduce a holder’s adjusted
basis in our common stock, but not below zero, and then the excess, if any, will be treated as gain from the sale of common stock.

       Dividends paid on our common stock to a non-U.S. holder generally will be subject to withholding of United States federal income tax at
a 30% rate or such lower rate specified by an applicable treaty. However, dividends that are effectively connected with the conduct of a trade or
business within the United States by the non-U.S. holder (and, where a tax treaty applies, are attributable to a United States permanent
establishment of the non-U.S. holder) are not subject to the withholding tax, provided certain certification and disclosure requirements are
satisfied. Instead, such dividends are subject to United States federal income tax on a net income basis in the same manner as if the non-U.S.
holder were a United States person as defined under the Internal Revenue Code. Any such effectively connected dividends received by a
foreign corporation may be subject to an additional ―branch profits tax‖ at a 30% rate or such lower rate specified by an applicable treaty.

      A non-U.S. holder of our common stock who wishes to claim the benefit of an applicable treaty rate and avoid backup withholding, as
discussed below, for dividends will generally be required to complete IRS Form W-8BEN (or valid substitute or successor form) and certify
under penalty of perjury that such holder is not a United States person as defined under the Internal Revenue Code. Special certification and
other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals and to non-U.S.
holders whose stock is held through certain foreign intermediaries.

     A non-U.S. holder of our common stock eligible for a reduced rate of United States withholding tax pursuant to a treaty may obtain a
refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS.

Disposition of Our Common Stock

     A non-U.S. holder will generally not be subject to United States federal income tax on any gain realized on the sale, exchange,
redemption, retirement or other disposition of our common stock unless:

       •    the gain is effectively connected with the conduct of a trade or business in the United States (and, where a tax treaty applies, is
            attributable to a United States permanent establishment of the non-U.S. holder);

       •    the non-U.S. holder is an individual present in the United States for 183 days or more in the taxable year in which disposition occurs
            and certain other conditions are met; or

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       •    we are or have been a ―United States real property holding corporation‖ for United States federal income tax purposes at any time
            during the shorter of the non-U.S. holder’s holding period for our common stock and the five year period ending on the date of
            disposition.

       An individual non-U.S. holder described in the first bullet point immediately above will be subject to tax on the net gain derived from the
disposition in the same manner as if the non-U.S. holder were a United States person as defined under the Internal Revenue Code. An
individual non-U.S. holder described in the second bullet point immediately above will be subject to a flat 30% tax on the gain derived from the
disposition, which tax may be offset by United States source capital losses, even though the individual is not considered a resident of the
United States. If a non-U.S. holder that is a foreign corporation falls under the first bullet point immediately above, it will be subject to tax on
its net gain derived from the disposition in the same manner as if it were a United States person as defined under the Internal Revenue Code
and, in addition, may be subject to the additional ―branch profits tax‖ at a 30% rate or such lower rate specified by an applicable treaty.

      We are not currently and do not anticipate becoming a ―United States real property holding corporation‖ for United States federal income
tax purposes. If we become a ―United States real property holding corporation,‖ a non-U.S. holder may, in certain circumstances, be subject to
United States federal income tax on the disposition of our common stock.

Certain United States Federal Estate Tax Considerations

      Common stock beneficially owned by an individual who is not a citizen or resident of the United States (as defined for United States
federal estate tax purposes) at the time of death will generally be includable in the decedent’s gross estate for United States federal estate tax
purposes, unless an applicable treaty provides otherwise.

Information Reporting and Backup Withholding

      In general, we must submit annually an information return to the IRS and to each non-U.S. holder describing any dividends paid,
regardless of whether withholding was required. Copies of these returns may also be made available under the provisions of a specific treaty or
agreement to the tax authority of the country in which the non-U.S. holder resides. In addition, a non-U.S. holder may be subject to United
States backup withholding on dividends paid and on the proceeds from a disposition of our common stock unless the non-U.S. holder complies
with the required certification procedures to establish that it is not a United States person as defined under the Internal Revenue Code.

     Any amount withheld from a payment under the backup withholding rules may be allowed as a credit against the non-U.S. holder’s
United States federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the
IRS.

                                                                LEGAL MATTERS

     Certain legal matters in connection with this offering will be passed upon for us by Baker Botts L.L.P., Houston, Texas, for the selling
stockholders by Fulbright & Jaworski L.L.P., Houston, Texas, and for the underwriters by Vinson & Elkins L.L.P., Houston, Texas.

                                                                     EXPERTS

      The consolidated balance sheet of Hercules Offshore, LLC and its subsidiaries as of December 31, 2004 and the related consolidated
statements of operations, members’ equity and cash flows for the period from inception

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(July 27, 2004) to December 31, 2004 have been audited by Grant Thornton LLP, independent registered public accounting firm, given on the
authority of said firm as experts in accounting and auditing.

                                             WHERE YOU CAN FIND MORE INFORMATION

       We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock
offered by this prospectus. In this prospectus we refer to that registration statement, together with all amendments, exhibits and schedules to
that registration statement, as ―the registration statement.‖

      As is permitted by the rules and regulations of the SEC, this prospectus, which is part of the registration statement, omits some
information, exhibits, schedules and undertakings set forth in the registration statement. For further information with respect to us, and the
securities offered by this prospectus, please refer to the registration statement.

      Following this offering, we will be required to file current, quarterly and annual reports, proxy statements and other information with the
SEC. You may read and copy those reports, proxy statements and other information at the public reference facility maintained by the SEC at
100 F Street, N.E., Washington, D.C. 20549. Copies of this material may also be obtained from the Public Reference Room of the SEC at 100
F Street, N.E., Washington, D.C. 20549 at prescribed rates. Information on the operation of the Public Reference Room may be obtained by
calling the SEC at (800) 732-0330. The SEC maintains a Web site at www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that make electronic filings with the SEC using its EDGAR system.

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                                                 INDEX TO FINANCIAL STATEMENTS
                                                                                                                                  Page


Report of Independent Registered Public Accounting Firm                                                                           F-2
Consolidated Balance Sheets at December 31, 2004 and June 30, 2005                                                                F-3
Consolidated Statements of Operations for the period from inception (July 27, 2004) to December 31, 2004 and for the six months
  ended June 30, 2005                                                                                                             F-4
Consolidated Statements of Members’ Equity for the period from inception (July 27, 2004) to December 31, 2004 and for the six
  months ended June 30, 2005                                                                                                      F-5
Consolidated Statements of Cash Flows for the period from inception (July 27, 2004) to December 31, 2004 and for the six months
  ended June 30, 2005                                                                                                             F-6
Notes to Consolidated Financial Statements                                                                                        F-7

                                                                    F-1
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                                REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Hercules Offshore, LLC

      We have audited the accompanying consolidated balance sheet of Hercules Offshore, LLC and subsidiaries as of December 31, 2004, and
the related consolidated statements of operations, members’ equity and cash flows for the period from July 27, 2004 (inception) to December
31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.

      We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Hercules Offshore, LLC and subsidiaries as of December 31, 2004, and the results of their operations and their cash flows for the period from
July 27, 2004 (inception) to December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Houston, Texas
March 18, 2005

                                                                        F-2
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                                                     Hercules Offshore, LLC and Subsidiaries

                                                     CONSOLIDATED BALANCE SHEETS
                                                                                                            December 31,              June 30,
                                                                                                                2004                   2005

                                                                                                                                    (unaudited)
                                                                                                                (In thousands, except unit
                                                                                                                          data)
                                                     ASSETS
 CURRENT ASSETS
    Cash and cash equivalents                                                                               $    14,460           $      35,384
    Accounts receivable, net                                                                                     19,501                  27,889
    Deposits                                                                                                      2,032                     283
    Assets held for sale                                                                                            —                     2,239
    Prepaid expenses and other                                                                                    2,359                     700

       Total current assets                                                                                      38,352                 66,495
 PROPERTY AND EQUIPMENT, net                                                                                     91,774                172,581
 DEFERRED CHARGES, net                                                                                            2,030                  5,623

             Total assets                                                                                   $   132,156           $    244,699


                                 LIABILITIES AND MEMBERS’ EQUITY

 CURRENT LIABILITIES
    Current portion of long-term debt                                                                       $     3,000           $       1,050
    Accounts payable                                                                                              1,838                   3,551
    Accrued liabilities                                                                                           2,548                   6,180
    Other liabilities                                                                                               683                     —

             Total current liabilities                                                                            8,069                  10,781

 LONG-TERM DEBT, net of current portion                                                                          53,000                138,950

 COMMITMENTS AND CONTINGENCIES

 MEMBERS’ EQUITY
    Member Units (64,022 and 68,351 units issued and outstanding)                                                63,022                  67,351
    Retained earnings                                                                                             8,065                  27,617

             Total members’ equity                                                                               71,087                  94,968

             Total liabilities and members’ equity                                                          $   132,156           $    244,699


                                         The accompanying notes are an integral part of these statements.

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                                                  Hercules Offshore, LLC and Subsidiaries

                                          CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                Period from inception                         Six months
                                                                                                  (July 27, 2004) to                             ended
                                                                                                 December 31, 2004                           June 30, 2005

                                                                                                                                             (unaudited)
                                                                                                          (In thousands, except unit data)
 Revenues
     Drilling services                                                                      $                  24,006                   $          51,179
     Marine services                                                                                            7,722                              19,951

                                                                                                               31,728                              71,130
 Costs and Expenses
     Operating expenses for drilling services, excluding depreciation and
        amortization, shown separately                                                                         12,799                              23,336
     Operating expenses for marine services, excluding depreciation and
        amortization, shown separately                                                                           4,198                             10,427
     Depreciation and amortization                                                                               2,016                              5,322
     General and administrative, excluding depreciation and amortization,
        shown separately                                                                                         2,808                               5,105

                                                                                                               21,821                              44,190

 Operating Income                                                                                                9,907                             26,940
 Other Income (Expense)
     Interest expense                                                                                           (2,070 )                            (4,837 )
     Loss on early retirement of debt                                                                              —                                (2,786 )
     Other, net                                                                                                    228                                 235

 Net Income                                                                                 $                    8,065                  $          19,552

 Earnings per Unit:
     Basic                                                                                  $                  192.16                   $          287.28
     Diluted                                                                                $                  192.16                   $          284.89
 Weighted Average Units Outstanding:
     Basic                                                                                                     41,971                              68,060
     Diluted                                                                                                   41,971                              68,630

                                        The accompanying notes are an integral part of these statements.

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                                                 Hercules Offshore, LLC and Subsidiaries

                                       CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY
                                                                                                                                          Total
                                                                                           Number             Member         Retained    Members’
                                                                                           of Units            Units         Earnings     Equity

                                                                                                      (In thousands, except unit data)
Balance at July 27, 2004                                                                      —           $       —      $        —      $      —
Member contributions                                                                       64,022              63,022             —          63,022
Net income                                                                                    —                   —             8,065         8,065

Balance at December 31, 2004                                                               64,022              63,022           8,065        71,087
Member contributions (unaudited)                                                            4,329               4,329             —           4,329
Net income (unaudited)                                                                        —                   —            19,552        19,552

Balance at June 30, 2005 (unaudited)                                                       68,351         $ 67,351       $ 27,617        $ 94,968


                                       The accompanying notes are an integral part of these statements.

                                                                     F-5
Table of Contents

Index to Financial Statements

                                                    Hercules Offshore, LLC and Subsidiaries

                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                  Period from inception                   Six months
                                                                                                    (July 27, 2004) to                      ended
                                                                                                   December 31, 2004                     June 30, 2005

                                                                                                                                         (unaudited)
                                                                                                                    (In thousands)
 Cash flows from operating activities
     Net income                                                                               $                    8,065             $         19,552
     Adjustments to reconcile net income to net cash (used in) provided by
        operating activities
          Depreciation and amortization                                                                            2,016                         5,322
          Amortization of deferred financing fees                                                                    215                           492
          Provision for bad debts                                                                                    519                           319
          Loss on early retirement of debt                                                                           —                           2,786
          (Increase) decrease in operating assets—
               Increase in receivables                                                                          (20,020 )                       (8,707 )
               Decrease (increase) in prepaid expenses and other                                                 (2,359 )                        1,659
          Increase (decrease) in operating liabilities—
               Increase in accounts payable                                                                        1,838                         1,713
               Increase in accrued liabilities                                                                     2,548                         3,632
               (Decrease) increase in other liabilities                                                              683                          (683 )

                    Net cash (used in) provided by operating activities                                           (6,495 )                     26,085
 Cash flows from investing activities
     Purchase of property and equipment                                                                         (94,443 )                     (87,374 )
     Proceeds from disposal of assets, net of commissions                                                           803                           —
     Deferred drydocking expenditures                                                                              (601 )                      (2,230 )
     Deposits                                                                                                    (2,033 )                       1,750

                    Net cash used in investing activities                                                       (96,274 )                     (87,854 )
 Cash flows from financing activities
     Proceeds from borrowings                                                                                    56,000                       185,000
     Payment of debt                                                                                                —                        (101,000 )
     Payment of debt issuance costs                                                                              (1,793 )                      (5,636 )
     Contributions from members                                                                                  63,022                         4,329

                        Net cash provided by financing activities                                               117,229                        82,693

                    Net increase (decrease) in cash and cash equivalents                                         14,460                        20,924
 Cash and cash equivalents at beginning of period                                                                   —                          14,460

 Cash and cash equivalents at end of period                                                   $                  14,460              $         35,384

 Supplemental disclosures of cash flow information
     Cash paid for interest                                                                   $                    1,484             $           4,554

                                          The accompanying notes are an integral part of these statements.

                                                                        F-6
Table of Contents

Index to Financial Statements

                                                    Hercules Offshore, LLC and Subsidiaries

                                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           (Information as of June 30, 2005 and for the six months ended June 30, 2005 is unaudited)

NOTE A—ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements
follows.

1.    Organization

     Hercules Offshore, LLC (the ―Company‖) was formed July 27, 2004 in the state of Delaware. The Company owns, as of June 30, 2005,
through its subsidiaries Hercules Holdings, LLC (―Holdings‖) and Hercules Liftboat Holdings, LLC (―Liftboats‖), eight jackup drilling rigs,
one platform rig and thirty-nine liftboat vessels that provide shallow-water drilling and liftboat services to the oil and natural gas exploration
and production industry.

      On August 2, 2004, Holdings purchased five jackup drilling rigs and four platform rigs from Parker Drilling Company (―Parker‖) for
$39,250,000. In November 2004, the Company sold three of the four platform rigs acquired from Parker for net proceeds of $802,750. No gain
or loss was recognized on the transaction. On October 2, 2004, Liftboats purchased a fleet of 22 liftboats and an operating facility located in
New Iberia, Louisiana from Global Industries, Ltd. (―Global‖) for $53,500,000. During January 2005, Holdings completed the purchase of two
jackup drilling rigs, Rig 25 (formerly the Parker 25 ) and Rig 30 (formerly the Odin Victory ), for $21,500,000 and $20,000,000, respectively.
In June 2005, Liftboats purchased a fleet of 17 liftboats from Superior Energy Services, Inc. for $20,000,000 and Holdings purchased the
jackup drilling rig, Rig 16 (formerly the Jupiter ), from Transocean Inc. for $20,000,000.

     Following the purchase of the liftboats from Global, Global had performed invoicing and other administrative functions for the Company
under a transition services agreement until the Company could assume these functions. The following table summarizes amounts processed
through Global as of and for the period from inception to December 31, 2004 (in thousands):
               Expenses                         Accounts Payable                         Revenues                             Receivables

                $458                                 $61                                  $2,451                               $1,553

      A portion of the sales and receivables relates to office space rented by Global. Rental income from Global was $54,000 for the period
from inception to December 31, 2004 and is included in other, net on the Consolidated Statement of Operations. Rent receivable from Global
was $18,000 at December 31, 2004. The transition services agreement was terminated in February 2005, and there were no material amounts
incurred during 2005 or balances due to or from Global at June 30, 2005.

2.    Basis of Presentation

     In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of only
normal recurring accruals, except as discussed elsewhere herein, necessary for a fair presentation of the consolidated financial position of the
Company as of June 30, 2005, and the results of its operations and cash flows for the six months ended June 30, 2005. The consolidated results
of operations for the six months ended June 30, 2005 are not necessarily indicative of the results that may be expected for the full year.

3.    Principles of Consolidation

     The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany account
balances and transactions have been eliminated in consolidation.

                                                                        F-7
Table of Contents

Index to Financial Statements

                                                   Hercules Offshore, LLC and Subsidiaries

                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

                           (Information as of June 30, 2005 and for the six months ended June 30, 2005 is unaudited)

NOTE A—ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

4.    Cash and Cash Equivalents

      Cash and cash equivalents includes cash on hand and cash maintained in United States bank deposit accounts.

5.    Revenue Recognition

      Revenue generated from the operation of the Company’s drilling rigs and liftboats are recognized under domestic dayrate contracts as
services are performed. Certain of the Company’s contracts include provisions for the recovery of other direct costs, including mobilization and
demobilization costs, extra labor and extra catering. Under most of its liftboat contracts, the Company receives a variable rate for
reimbursement of costs such as catering, fuel, and rental equipment and other items. Revenue for the recovery of these costs is recognized
when the costs are incurred. For certain Contract Drilling Services contracts, the Company may receive lump-sum fees for the mobilization of
equipment and personnel. Mobilization fees received and costs incurred to mobilize a rig from one market to another under contracts longer
than one month are recognized over the term of the related drilling contract.

     The Company records reimbursements from customers for ―out-of-pocket‖ expenses as revenues and the related cost as direct operating
expenses. Total revenues included $892,700 and $1,809,536 in reimbursements from the Company’s customers for expenses paid by the
Company in the period from inception (July 27, 2004) to December 31, 2004 and the six months ended June 30, 2005, respectively.

6.    Stock-Based Compensation

      Stock-based employee compensation arrangements are accounted for using the intrinsic value method as prescribed in Accounting
Principles Board Opinion No. 25 (―APB Opinion 25‖), ―Accounting for Stock Issued to Employees,‖ and related interpretations. Accordingly,
compensation cost for options granted to employees is measured as the excess, if any, of the fair value of member units at the date of grant over
the exercise price an employee must pay to acquire the member units. No compensation cost has been recognized in the accompanying
consolidated financial statements. Had the Company determined compensation cost using the alternative fair value method prescribed by SFAS
No. 123 described below, pro forma net income would not be materially different than that reported in accompanying financial statements.

      In December 2004, the Financial Accounting Standards Board (―FASB‖) issued Statement of Financial Accounting Standards (―SFAS‖)
No. 123 (revised 2004) Share-Based Payment (―SFAS No. 123R‖), which replaces SFAS No. 123, Accounting for Stock-Based Compensation
(―SFAS No. 123‖), and supersedes APB Opinion 25. SFAS No. 123R requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the financial statements based on their fair values beginning with the first interim period in fiscal
2006, with early adoption encouraged. The pro forma disclosures previously permitted under SFAS No. 123 no longer will be an alternative to
financial statement recognition. The Company is required to adopt SFAS No. 123R in the first quarter of fiscal 2006. Under SFAS No. 123R,
the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for
compensation cost and the transition method to be used at date of adoption. The transition methods include prospective and retroactive
adoption options. Under the retroactive option, prior periods may be restated either as of the beginning of the year of adoption or for all periods
presented. The prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock
beginning with the first

                                                                        F-8
Table of Contents

Index to Financial Statements

                                                  Hercules Offshore, LLC and Subsidiaries

                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

                           (Information as of June 30, 2005 and for the six months ended June 30, 2005 is unaudited)

NOTE A—ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

quarter of adoption of SFAS No. 123R as the requisite service is rendered on or after the required effective date, while the retroactive methods
would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. The Company is
evaluating the requirements of SFAS No. 123R and has not determined the impact of its adoption.

7.    Allowance for Doubtful Accounts

      Management of the Company monitors the accounts receivable from its customers for any collectibility issues. An allowance for doubtful
accounts is established based on reviews of individual customer accounts, recent loss experience, current economic conditions, and other
pertinent factors. Accounts deemed uncollectible are charged to the allowance. During the period from inception to December 31, 2004, the
Company recorded a provision for bad debts of $519,165. During the six months ended June 30, 2005, the Company recorded a provision for
bad debts of $318,967. No amounts have been applied against the allowance, and the allowance was $519,165 at December 31, 2004 and
$838,132 at June 30, 2005.

8.    Property and Equipment

      Property and equipment are stated at cost, less accumulated depreciation. Expenditures for property and equipment and items that
substantially increase the useful lives of existing assets are capitalized at cost and depreciated. Routine expenditures for repairs and
maintenance are expensed as incurred. Depreciation is computed utilizing the straight-line method over the useful lives of the assets.
Amortization of leasehold improvements is computed utilizing the straight-line method over the useful lives of the assets or over the lives of
the leases, whichever is shorter.

      The useful lives of property and equipment for the purposes of computing depreciation are as follows:
                                                                                                                                            Years

Drilling rigs and marine equipment                                                                                                               15
Drilling machinery and equipment                                                                                                                  3
Furniture and fixtures                                                                                                                            5
Computer equipment                                                                                                                                3
Automobiles and trucks                                                                                                                            3
Building                                                                                                                                         20

9.    Assets Held for Sale

      Assets are classified as held for sale when the Company has a plan for disposal and those assets meet the held for sale criteria of SFAS
144, ―Accounting for Impairment or Disposal of Long-Lived Assets‖. During the first quarter of 2005, the Company’s Contract Drilling
Services segment committed to a plan to sell Rig 41 (a platform rig), in connection with the Company’s efforts to dispose of certain
non-strategic assets. The rig has been idle since being acquired on August 2, 2004. The rig was classified as an asset held for sale in March
2005. The estimated fair value of the rig less its selling costs exceeds the rig’s carrying value of approximately $2.0 million and, as such, no
loss has been recognized for the six months ended June 30, 2005. The Company is actively marketing the rig to various equipment dealers and
third-party contractors. During the second quarter of 2005, the Company’s Marine Services segment committed to a plan to sell the Moonfish (a
liftboat), in connection with the Company’s effort to dispose of certain non-strategic assets. The liftboat has been idle since

                                                                       F-9
Table of Contents

Index to Financial Statements

                                                   Hercules Offshore, LLC and Subsidiaries

                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

                           (Information as of June 30, 2005 and for the six months ended June 30, 2005 is unaudited)

NOTE A—ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

being acquired on June 1, 2005. The liftboat was classified as an asset held for sale in June 2005. The estimated fair value of the liftboat less its
selling costs exceeds the liftboat’s carrying value of approximately $0.2 million and, as such, no loss has been recognized for the six months
ended June 30, 2005. The Moonfish was sold in August 2005. No gain or loss was recognized on the transaction.

10.   Impairment of Long-Lived Assets

       The carrying value of long-lived assets, principally property and equipment, is reviewed for potential impairment when events or changes
in circumstances indicate that the carrying amount of such assets may not be recoverable. For property and equipment held for use, the
determination of recoverability is made based upon the estimated undiscounted future net cash flows of the related asset or group of assets
being evaluated. Actual impairment charges are recorded using an estimate of discounted future cash flows. There were no impairment charges
for the periods from inception to December 31, 2004 or for the six months ended June 30, 2005.

11.   Deferred Charges

      Deferred charges consist of drydocking costs and financing fees. The drydock costs are capitalized at cost and amortized on the
straight-line method through the date of the next drydocking, ranging between 12 and 24 months. Unamortized drydocking costs, net of
accumulated amortization, at December 31, 2004 and June 30, 2005 were $452,256 and $1,687,908, respectively. Accumulated amortization of
drydocking costs at December 31, 2004 and June 30, 2005 was $149,228 and $1,143,428, respectively.

      Financing fees are deferred and amortized over the life of the applicable debt instrument. Unamortized deferred financing fees at
December 31, 2004 were $1,577,793, net of accumulated amortization of $215,283. Unamortized deferred financing fees at June 30, 2005 were
$3,935,014. There was no accumulated amortization as of June 30, 2005. All unamortized deferred financing fees outstanding at December 31,
2004 were expensed in conjunction with the refinancing of the Company’s long-term debt in June 2005, and the portion outstanding as of the
date of the refinancing is included in loss on early retirement of debt on the statement of operations. The amortization expense related to
deferred financing fees is included in interest expense on the statement of operations. All financing fees at December 31, 2004 and June 30,
2005 relate to debt obtained through credit agreements dated July 30, 2004, October 1, 2004 and June 29, 2005 (see Note E).

12.   Deposits

     Deposits at December 31, 2004 include $2,000,000 placed in escrow for the purchase of the jackup drilling rig, Rig 25 . The purchase was
consummated in January 2005 and the deposit was applied to the purchase price. Deposits at June 30, 2005 include $250,000 for an option to
purchase the jackup rig Odin Spirit .

13.   Income Taxes

      The Company is a limited liability corporation and has elected to be taxed as a partnership. As such, the members of the Company are
taxed on their proportionate share of net income. Accordingly, no provision or liability for income taxes is included in the accompanying
financial statements for the Company. When the Company becomes a taxable entity as is expected by management, a provision will be made
reflecting the difference between the book and tax basis of assets and liabilities.

                                                                        F-10
Table of Contents

Index to Financial Statements

                                                  Hercules Offshore, LLC and Subsidiaries

                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

                           (Information as of June 30, 2005 and for the six months ended June 30, 2005 is unaudited)

NOTE A—ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

14.   Use of Estimates

       In preparing financial statements in conformity with accounting principles generally accepted in the United States of America,
management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

15.   Fair Value of Financial Instruments

      The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, accounts receivable, accounts
payable and accrued liabilities, approximate fair values because of their short-term nature. The carrying amount of long-term debt is equal to
fair market value because the debt bears interest at market rates.

16.   Earnings Per Unit

      The Company calculates earnings per unit by dividing net income by the weighted average number of member units outstanding. Diluted
earnings per unit include the dilutive effects of any outstanding unit options calculated under the treasury method. Options with an exercise
price equal to or in excess of the average market price of the Company’s units are excluded from the calculation of the dilutive effect of unit
options for diluted earnings per unit calculations. There were no options outstanding with dilutive effects for the period from inception (July
27, 2004) to December 31, 2004 and there were 570 options outstanding with dilutive effects for the six months ended June 30, 2005.

NOTE B—PROPERTY AND EQUIPMENT

      The following is a summary of property and equipment—at cost, less accumulated depreciation (in thousands):
                                                                                                       December 31, 2004             June 30, 2005

Drilling rigs and marine equipment                                                                 $              89,432         $        170,872
Drilling machinery and equipment                                                                                     667                    3,825
Building                                                                                                           2,400                    2,400
Land                                                                                                                 600                      600
Automobiles and trucks                                                                                               353                      532
Computer equipment                                                                                                   139                      331
Furniture and fixtures                                                                                                33                      275

     Total property and equipment                                                                                 93,624                  178,835
Less accumulated depreciation                                                                                     (1,850 )                 (6,254 )

      Total property and equipment, net                                                            $              91,774         $        172,581


                                                                      F-11
Table of Contents

Index to Financial Statements

                                                   Hercules Offshore, LLC and Subsidiaries

                                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

                            (Information as of June 30, 2005 and for the six months ended June 30, 2005 is unaudited)

NOTE C—ASSET ACQUISITIONS

     During January 2005, Holdings completed the purchase of two jackup drilling rigs, Rig 25 (formerly the Parker 25 ) and Rig 30 (formerly
the Odin Victory ), for $21,500,000 and $20,000,000, respectively. These purchases were partially funded by a $25,000,000 term loan under the
Lehman Credit Agreement (as defined in Note E below). In connection with this new term loan, the Lehman Credit Agreement was amended in
January 2005 to increase the amount of credit available to the Company from $28,000,000 to $53,000,000 (see Note E).

      In June 2005, the Company purchased 17 liftboats from Superior Energy Services, Inc. for $20,000,000. One of these liftboats was being
held for sale as of June 30, 2005, and was sold in August 2005 (see Note L). The transaction was funded by an increase in the Company’s term
loan from Comerica. In connection with this term loan, the Comerica loan agreement was amended to increase the amount of credit to the
Company from $28,000,000 to $47,000,000. In June 2005, the Company purchased the jackup rig, Rig 16 , from Transocean Inc. for
$20,000,000. A $2,000,000 refundable escrow account was funded by the Company in May 2005. The Company funded the purchase price
with proceeds from its new term loan (see Note E).

NOTE D—BENEFIT PLANS

      The Company has established a 401(k) plan for its employees. Participation is available to all employees beginning two months from the
date of hire. Participants can contribute up to a maximum of $14,000 each year, and the Company matches participant contributions equal to
100% of the first 3% and 50% of the next 2% of a participant’s salary. The Company made matching contributions of $167,858 and $371,698
for the period from inception to December 31, 2004 and the six months ended June 30, 2005, respectively.

NOTE E—LONG-TERM DEBT

      Long-term debt is comprised of the following (in thousands):
                                                                                                        December 31, 2004          June 30, 2005

Senior secured term loan due June 2010                                                                                —        $         140,000
12.5% senior secured term loan (Lehman) due December 2006                                           $              28,000                    —
Senior secured term loan (Comerica) due October 2009                                                               28,000                    —

Total debt                                                                                                         56,000                140,000
Less debt due within one year                                                                                       3,000                  1,050

     Total long-term debt                                                                           $              53,000      $         138,950


      The scheduled maturity of our debt as of December 31, 2004 was as follows (in thousands):
Years ending December 31,

        2005                                                                                                                         $     3,000
        2006                                                                                                                              32,000
        2007                                                                                                                               4,000
        2008                                                                                                                               4,000
        2009                                                                                                                              13,000

        Total                                                                                                                        $ 56,000


                                                                      F-12
Table of Contents

Index to Financial Statements

                                                   Hercules Offshore, LLC and Subsidiaries

                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

                           (Information as of June 30, 2005 and for the six months ended June 30, 2005 is unaudited)

NOTE E—LONG-TERM DEBT—Continued

Lehman Commercial Paper Inc. term loan

      On July 30, 2004, Holdings entered into a credit agreement with Lehman Commercial Paper Inc. (the ―Lehman Credit Agreement‖)
providing for a $28,000,000 term loan. On January 4, 2005, the Lehman Credit Agreement was amended, providing for an additional
$25,000,000 term loan, which increased the total amount outstanding under the Lehman Credit Agreement to $53,000,000. The term loans bore
interest at 12.5% per annum with interest payable monthly. The term loans were repaid in full in June 2005.

Comerica Bank term loan

      On October 1, 2004, Liftboats entered a credit agreement with Comerica Bank providing for a $28,000,000 term loan and a $4,000,000
revolving credit line (the ―Comerica Credit Agreement‖). At December 31, 2004, the entire balance of the term loan was outstanding and no
amount was drawn on the revolving credit line. The term loan and revolving credit line bore interest at a prime rate determined by the agent to
the Comerica Credit Agreement plus a margin derived from the ratio of funded debt to EBITDA. The average interest rate for the period ended
December 31, 2004 was approximately 5.7 percent and 6.1 percent, respectively. The term loan was repaid in full in June 2005.

Senior secured credit agreement

      In June 2005, the Company entered into a senior secured credit agreement with a syndicate of financial institutions. This agreement
provides for a $140,000,000 term loan and a $25,000,000 revolving credit facility. The Company may seek commitments to increase the
amount available under the credit agreement by an additional $25,000,000 if the amount outstanding under the term loan is no more than
$105,000,000 and the Company’s leverage ratio, after giving effect to the incurrence of the additional $25,000,000 of borrowings, is no greater
than 2.5 to 1.

      The revolving credit facility provides for swing line loans of up to $2,500,000 and for the issuance of up to $5,000,000 of letters of credit.
The revolving loans bear interest at either (1) the highest of (a) Comerica Bank’s base rate, (b) the three-month certificate of deposit rate plus
0.5% and (c) the Federal funds effective rate plus 0.5%, in each case plus 2.25%, or (2) LIBOR plus 3.25%. The Company may prepay the
revolving loans at any time without premium or penalty. The revolving loans mature in June 2008. The Company is required to pay a
commitment fee of 0.50% on the average daily amount of the unused commitment amount of the revolving credit facility and a letter of credit
fee of 3.25%, plus a fronting fee of 0.13% with respect to the undrawn amount of each issued letter of credit. As of June 30, 2005, no amounts
were outstanding and no letters of credit had been issued under the revolving credit facility.

      The term loan bears interest at either (1) the highest of (a) Comerica Bank’s base rate, (b) the three-month certificate of deposit rate plus
0.5% and (c) the Federal funds effective rate plus 0.5%, in each case plus 2.25%, or (2) LIBOR plus 3.25%. Principal payments of $350,000
are due quarterly, and the outstanding principal balance of the term loans is payable in full in June 2010. The Company may prepay the term
loans at any time without premium or penalty, except that prepayments made during the first year with proceeds for debt issuance or in
connection with a repricing of the term loan will be made at 101% of the principal repaid. The Company is required to make prepayments on
the term loan in certain cases. As of June 30, 2005, the entire principal amount of the original $140,000,000 term loan was outstanding, and the
interest rate was 6.58%.

                                                                       F-13
Table of Contents

Index to Financial Statements

                                                   Hercules Offshore, LLC and Subsidiaries

                                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

                            (Information as of June 30, 2005 and for the six months ended June 30, 2005 is unaudited)

NOTE E—LONG-TERM DEBT—Continued

       The credit agreement contains financial covenants relating to leverage and interest coverage. Other covenants contained in the agreement
restrict, among other things, repurchases of equity interests, mergers, asset dispositions, guaranties, debt, liens, acquisitions, dividends,
distributions, investments, affiliate transactions, prepayments of other debt and capital expenditures. Management believes that the Company is
in compliance with its covenants under the credit agreement. The credit agreement contains customary events of default.

      Amounts outstanding under the Lehman Credit Agreement and Comerica Credit Agreement were repaid with the proceeds from the new
senior secured term loan, and the Company terminated the credit agreements upon the repayment. All unamortized deferred financing fees
outstanding at December 31, 2004 were expensed in conjunction with the refinancing of the Company’s long-term debt in June 2005, and the
portion outstanding as of the date of the refinancing is included in loss on early retirement of debt on the statement of operations.

NOTE F—CONCENTRATION OF CREDIT RISK

     The Company maintains its cash in bank deposit accounts at high credit quality financial institutions as permitted by its credit
agreements. The balances, at times, may exceed federally insured limits.

      The Company provides services to a diversified group of customers in the oil and natural gas exploration and production industry in the
U.S. Gulf of Mexico. Credit is extended based on an evaluation at each customer’s financial condition. The Company maintains an allowance
for doubtful accounts receivable based on expected collectibility and establishes a reserve when required payment is unlikely to occur.

NOTE G—SALES TO MAJOR CUSTOMERS

     The customer base for the Company is primarily concentrated in the oil and natural gas exploration and production industry. Sales to
customers exceeding 10 percent or more of the Company’s total revenue are as follows:
                                                                                             Period from inception                  Six Months
                                                                                               (July 27, 2004) to                     Ended
                                                                                              December 31, 2004                    June 30, 2005

Chevron                                                                                                          31 %                         32 %
Noble Energy                                                                                                     —                            12 %
Bois d’Arc Offshore                                                                                              15 %                         11 %

NOTE H—COMMITMENTS AND CONTINGENCIES

     Operating Leases—The Company has operating lease commitments for real estate and office space that expire at various dates through
2009. As of June 30, 2005, future minimum rental payments related to operating leases were as follows (in thousands):
Years ending December 31,

        2005                                                                                                                                $ 90
        2006                                                                                                                                 108
        2007                                                                                                                                 108
        2008                                                                                                                                 108
        2009                                                                                                                                  89

        Total                                                                                                                               $ 503


                                                                      F-14
Table of Contents

Index to Financial Statements

                                                  Hercules Offshore, LLC and Subsidiaries

                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

                           (Information as of June 30, 2005 and for the six months ended June 30, 2005 is unaudited)

NOTE H—COMMITMENTS AND CONTINGENCIES—Continued

     Rental expense for operating leases for the period from inception to December 31, 2004 and for the six months ended June 30, 2005 was
$34,572 and $66,794 respectively.

      Legal Proceedings—The Company is involved in various claims and lawsuits in the normal course of business. Management does not
believe any accruals are necessary in accordance with SFAS No. 5, Accounting for Contingencies.

      Self Insurance—The Company is self-insured for the deductible portion of its insurance coverage. Management believes adequate
accruals have been made on known and estimated exposures up to the deductible portion of the Company’s insurance coverages. Management
believes that claims and liabilities in excess of the amounts accrued are adequately insured.

NOTE I—STOCK-BASED COMPENSATION PLAN

       The Company adopted the Hercules Offshore 2004 Long-Term Incentive Plan (the ―Plan‖) to provide long-term incentives to
non-employee Managers, officers and key employees (―Eligible Participants‖) of the Company. Under the Plan, the Managers of the Company
may grant incentive stock options, non-qualified options, performance stock awards, restricted stock awards, phantom stock and cash awards or
any combination thereof from time to time to Eligible Participants. Up to 7,000 member units are available for issuance under the Plan. The
Compensation Committee of the Board of Managers establishes the terms of the awards, including the term, vesting period and exercise price.
As of December 31, 2004, there had been no awards granted to Eligible Participants under the Plan. There were options to purchase 2,700
member units granted under the Plan during the six months ended June 30, 2005. The options generally expire five years from the effective
date of grant, except that the award to one executive officer covering 250 member units expires on December 31, 2006. The options vest and
become exercisable one-third on the effective date of grant and one-third on each of the first and second anniversaries of the effective date of
grant.
                                                                                                    Number of Units             Weighted-Average
                                                                                                     Under Option                Exercise Price


Outstanding at December 31, 2004                                                                                —              $             —
     Granted                                                                                                  2,700                        1,130
     Exercised                                                                                                  —                            —
     Forfeited                                                                                                  —                            —

Outstanding at June 30, 2005                                                                                  2,700            $           1,130
Exercisable at June 30, 2005                                                                                    900            $           1,000

NOTE J—SEGMENTS

       The Company’s operations are aggregated into two reportable segments: (i) Contract Drilling Services and (ii) Marine Services. The
Contract Drilling Services segment consists of jackup rigs used in support of offshore drilling activities. The Marine Services segment consists
of liftboats used in offshore support services. Accounting policies of the segments are the same as those described in the Summary of
Significant Accounting Policies (see Note A). The Company eliminates intersegment revenue and expenses, if any.

                                                                      F-15
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Index to Financial Statements

                                                  Hercules Offshore, LLC and Subsidiaries

                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

                          (Information as of June 30, 2005 and for the six months ended June 30, 2005 is unaudited)

NOTE J—SEGMENTS—Continued

      Operating results and net income by segment were as follows (in thousands):
                                                                                               Period from Inception (July 27, 2004)
                                                                                                       to December 31, 2004

                                                                               Contract                    Marine           Corporate
                                                                           Drilling Services               Services         and Other           Total

Revenues                                                               $              24,006           $      7,722        $       —        $    31,728
Operating expenses, excluding depreciation and amortization,
  shown separately                                                                    12,799                  4,198                —             16,997
Depreciation and amortization                                                          1,070                    946                —              2,016
General and administrative expenses, excluding depreciation and
  amortization, shown separately                                                        1,972                   581                255            2,808

     Operating income (loss)                                                            8,165                 1,997                (255 )         9,907
Interest expense                                                                       (1,648 )                (422 )               —            (2,070 )
Other, net                                                                                158                    64                   6             228

     Net income (loss)                                                 $                6,675          $      1,639        $       (249 )   $     8,065

Total property and equipment, net of accumulated depreciation          $              38,843           $ 52,918            $           13   $    91,774

                                                                                                  Six Months Ended June 30, 2005

                                                                               Contract                    Marine           Corporate
                                                                           Drilling Services               Services         and Other           Total

Revenues                                                               $              51,179           $ 19,951            $       —        $    71,130
Operating expenses, excluding depreciation and amortization,
  shown separately                                                                    23,336                10,427                 —             33,763
Depreciation and amortization                                                          2,610                 2,701                  11            5,322
General and administrative expenses, excluding depreciation and
  amortization, shown separately                                                        2,865                   821              1,419            5,105

     Operating income (loss)                                                          22,368                  6,002             (1,430 )         26,940
Interest expense                                                                      (3,621 )               (1,089 )             (127 )         (4,837 )
Loss on retirement of debt                                                            (1,843 )                 (943 )              —             (2,786 )
Other, net                                                                               158                     63                 14              235

     Net income (loss)                                                 $              17,062           $      4,033        $ (1,543 )       $    19,552

Total property and equipment, net of accumulated depreciation          $            100,865            $ 71,628            $           88   $ 172,581


NOTE K—RELATED PARTIES

     A former Manager of the Company is a principal in Bassoe Offshore USA. The Company paid $442,250 in the period from inception to
December 31, 2004 to Bassoe Offshore USA for rig brokerage fees in connection with acquisitions by the Company of certain jackup rigs. The
Company incurred $200,000 in such rig brokerage fees for the six months ended June 30, 2005. The services were bid under competitive
marketplace conditions. The Company believes that these transactions were on terms that were reasonable and in the best interest of the
Company.
F-16
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Index to Financial Statements

                                                   Hercules Offshore, LLC and Subsidiaries

                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

                           (Information as of June 30, 2005 and for the six months ended June 30, 2005 is unaudited)

NOTE K—RELATED PARTIES—Continued

      In January 2005, the Company purchased Rig 30 from Porterhouse Offshore, LP (―Porterhouse‖). Two of the Company’s officers and a
Manager of the Company at the time of acquisition were partners in Porterhouse, which owned and sold Rig 30 to the Company. The Company
believes that this transaction was on terms that were reasonable and in the best interest of the Company. In the transaction, these individuals
received membership units in the Company valued at $211,209, $211,209 and $422,338, respectively.

NOTE L—SUBSEQUENT EVENTS (Unaudited)

      The following describes certain events that have occurred subsequent to June 30, 2005:

     In September 2005, the Company purchased Rig 31 from Hydrocarbon Capital II LLC for $12,600,000. The Company funded the
purchase price with available cash.

     In September 2005, the Company entered into a definitive agreement to purchase eight liftboats and related assets from Danos & Curole
Marine Contractors, LLC for a purchase price of $44,000,000. The Company expects to complete the acquisition in the fourth quarter of 2005.

       In August 2005, two of the Company’s jackup rigs, Rig 21 and Rig 25 , sustained damage during Hurricane Katrina. The Company
believes that Rig 25 is likely to be declared a constructive total loss under its insurance policies. If the rig is not declared a constructive total
loss, the rig would require substantial repairs before returning to work. The Company does not believe that it could complete such repairs prior
to 2007. Rig 21 suffered extensive damage to its mat as a result of the storm. The rig will be moved onto a drydock in a shipyard in the fourth
quarter for a detailed survey, and the Company expects that the rig will not be available for service until the second quarter of 2006. As a result
of the damage to Rig 21 and Rig 25 , the Company will recognize a $1,000,000 loss in the third quarter of 2005 representing its insurance
deductible. The loss will be included in operating expenses on the statement of operations.

     In August 2005, the Company purchased the liftboat Whale Shark from CS Liftboats, Inc. for $12,500,000. The Company funded the
purchase price with available cash.

      In August 2005, the Company sold the liftboat Moonfish for net proceeds of $270,000. No gain or loss was recorded on the transaction.

       In July 2005, the Company entered into several transactions to hedge its variable rate debt with the purpose and effect of fixing the
interest rate on a portion of the outstanding principal of the term loan. The Company entered into two floating-to-fixed interest rate swaps on a
total of $70,000,000 of the term loan principal in which the Company receives an interest rate of three-month LIBOR and pays a fixed coupon
over three years, with the terms of the swaps matching those of the term loan. The Company also entered into two purchased caps hedging
interest payments made on a total of $20,000,000 of the term loan principal at a strike price of 5.0% over three years. The counterparty is
obligated to pay the Company in any quarter that actual LIBOR resets above the strike price, with the terms of the caps matching those of the
term loan. All hedge transactions have payment dates of October 1, January 1, April 1 and July 1. These hedging arrangements effectively fix
the interest rate on $70,000,000 of the principal amount at 7.54% for three years and cap the interest rate on $20,000,000 of the principal
amount at 8.25% for three years.

                                                                        F-17
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Index to Financial Statements

                                                                     PART II

                                           INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

     The following table sets forth the expenses, other than underwriting discounts and commissions, payable in connection with the sale of
common stock being registered. The selling stockholders will not bear any portion of such expenses. All the amounts shown are estimates
except for the SEC registration fee.

SEC registration fee                                                                                                                     $    20,304
NASD filing fee                                                                                                                               17,750
NASDAQ filing fee                                                                                                                            100,000
Legal fees and expenses                                                                                                                            *
Blue sky fees and expenses (including legal fees)                                                                                                  *
Printing expenses                                                                                                                                  *
Accounting fees and expenses                                                                                                                       *
Transfer agent fees and expenses                                                                                                                   *
Miscellaneous                                                                                                                                      *

     Total                                                                                                                               $         *


* To be filed by amendment.

Item 14. Indemnification of Officers and Directors.

      Delaware law permits a corporation to adopt a provision in its certificate of incorporation eliminating or limiting the personal liability of a
director, but not an officer in his or her capacity as such, to the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except that such provision shall not eliminate or limit the liability of a director for (1) any breach of the director’s duty of
loyalty to the corporation or its stockholders, (2) acts or omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (3) liability under section 174 of the Delaware General Corporation Law (the ―DGCL‖) for unlawful payment of dividends or
stock purchases or redemptions or (4) any transaction from which the director derived an improper personal benefit. Our certificate of
incorporation will provide that, to the fullest extent of Delaware law, none of our directors will be liable to us or our stockholders for monetary
damages for breach of fiduciary duty as a director.

       Under Delaware law, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any type of
proceeding, other than an action by or in the right of the corporation, because he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation a director, officer, employee or agent of another corporation or other entity,
against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection
with such proceeding if: (1) he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation and (2) with respect to any criminal proceeding, he or she had no reasonable cause to believe that his or her conduct
was unlawful. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit brought by or in the right of the corporation because he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other entity,
against expenses, including attorneys’ fees, actually and reasonably incurred in connection with such action or suit if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, except that no
indemnification will be made if the person is found liable to the corporation unless, in such a case, the court determines the person is
nonetheless entitled to indemnification for such expenses. A corporation must also indemnify a present or former director or officer has been
successful on the merits or otherwise in defense of any proceeding, or in defense of any claim, issue or matter therein, against expenses,
including attorneys’ fees, actually and reasonably incurred by him or her. Expenses, including attorneys’ fees, incurred by a director or

                                                                        II-1
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Index to Financial Statements

officer, or any employees or agents as deemed appropriate by the board of directors, in defending civil or criminal proceedings may be paid by
the corporation in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of such director, officer,
employee or agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation.
The Delaware law regarding indemnification and the advancement of expenses is not exclusive of any other rights a person may be entitled to
under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

      Under the DGCL, the termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that a person did not act in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and, with respect to any criminal proceeding, had reasonable cause to believe
that his or her conduct was unlawful.

     Our certificate of incorporation and bylaws will authorize indemnification of any person entitled to indemnity under law to the full extent
permitted by law.

      Delaware law also provides that a corporation may purchase and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of
another corporation or other entity, against any liability asserted against and incurred by such person, whether or not the corporation would
have the power to indemnify such person against such liability. We will maintain, at our expense, an insurance policy that insures our officers
and directors, subject to customary exclusions and deductions, against specified liabilities that may be incurred in those capacities.

ITEM 15. Recent Sales of Unregistered Securities

      Hercules Offshore, LLC was formed in July 2004. Since the date of our formation, we have issued the following securities that were not
registered under the Securities Act:

           (1) On July 29, 2004, we issued an aggregate of 1,267 membership interests to the following persons in connection with the
      formation of our company:

                    (a) 67 membership interests to Steven A. Webster and one of his affiliates for an aggregate purchase price of $16,750;

                  (b) 400 membership interests to a former manager of our company and one of his affiliates for an aggregate purchase price of
             $100,000; and

                    (c) 800 membership interests to two executive officers for an aggregate purchase price of $200,000.

           (2) On August 2, 2004, we issued an aggregate of 21,983 membership interests to the following persons in connection with the
      acquisition of five jackup rigs from Parker Drilling Company:

                  (a) 19,000 membership interests to LR-Hercules Holdings, LP (―Lime Rock‖) in exchange for $19.0 million in cash and all of
             Lime Rock’s membership interest in our subsidiary, Hercules Holdings LLC, which interest had a nominal value;

                    (b) 1,233 membership interests to Steven A. Webster and one of his affiliates for an aggregate purchase price of $1.2 million;

                   (c) 1,050 membership interests to a former manager of our company and certain of his affiliates in exchange for $900,000 in
             cash and $150,000 of rig brokerage services rendered;

                  (d) 50 membership interests to two employees of Bassoe Offshore USA, Inc. (―Bassoe‖) in exchange for $50,000 of rig
             brokerage services rendered;

                    (e) 350 membership interests to two executive officers for an aggregate purchase price of $350,000;

                                                                         II-2
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Index to Financial Statements

                    (f) 150 membership interests to an executive officer in exchange for a promissory note in the amount of $150,000; and

                    (g) 150 membership interests to three private investors for an aggregate purchase price of $100,000.

           (3) On October 1, 2004, we issued an aggregate of 31,000 membership interests to the following persons in connection with the
      acquisition of 22 liftboats from Global Industries, Ltd.:

                    (a) 14,000 membership interests to Lime Rock for an aggregate purchase price of $14.0 million;

                   (b) 16,500 membership interests to Greenhill Capital Partners, L.P. and its affiliates (―Greenhill‖) for an aggregate purchase
             price of $16.5 million; and

                    (c) 500 membership interests to an executive officer for a purchase price of $500,000.

           (4) On December 16, 2004, we issued an aggregate of 9,772 membership interests to the following persons in connection with the
      acquisition of a jackup rig from Parker Drilling Company:

                    (a) 6,322 membership interests to Lime Rock for an aggregate purchase price of $6.3 million;

                    (b) 3,161 membership interests to Greenhill for an aggregate purchase price of $3.2 million;

                    (c) 30 membership interests to three private investors for an aggregate purchase price of $30,000;

                    (d) 115 membership interests to two executive officers for an aggregate purchase price of $115,000;

                  (e) 134 membership interests to a former manager of our company and one of his affiliates for an aggregate purchase price of
             $134,000; and

                    (f) 10 membership interests to two employees of Bassoe for an aggregate purchase price of $10,000.

           (5) On January 13, 2005, we issued an aggregate of 4,229 membership interests to the following persons in connection with the
      acquisition of a jackup rig from Porterhouse Offshore L.P.:

                    (a) 538 membership interests to two executive officers and their affiliates for an aggregate purchase price of $0.5 million;

                  (b) 864 membership interests to a former manager of our company and one of his affiliates for an aggregate purchase price of
             $0.9 million;

                    (c) 2,702 membership interests to Steven A. Webster and one of his affiliates for an aggregate purchase price of $2.7 million;
             and

                  (d) 125 membership interests to Harbour Capital Consultants, Inc., an affiliate of an executive officer, for a purchase price of
             $125,000.

             (6) On January 20, 2005, we issued 100 membership interests to an executive officer for a purchase price of $100,000.

      Each of the transactions above was exempt from registration under the Securities Act by virtue of Section 4(2) thereof as a transaction not
involving a public offering.

      Prior to the closing of the offering, we will convert from a Delaware limited liability company into a Delaware corporation. At the time of
the Conversion, each of our outstanding membership interests will be automatically converted into a total of 350 shares of common stock. The
issuance of common stock to our members in the Conversion will be exempt from registration under the Securities Act by virtue of the
exemption provided under Section 3(a)(9) thereof as the common stock will be exchanged by us with our existing security holders exclusively
where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange. The issuance of common stock
will also be exempt from registration under the Securities Act by virtue of Section 4(2) thereof as a transaction not involving a public offering.

                                                                         II-3
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Index to Financial Statements

ITEM 16. Exhibits and Financial Statement Schedules

(A) Exhibits:
Exhibit
Number              Description

 1.1*               Form of Underwriting Agreement.
 2.1**              Plan of Conversion.
 3.1**              Form of Certificate of Incorporation.
 3.2**              Form of Bylaws.
 4.1*               Form of specimen common stock certificate.
 4.2**              Credit Agreement dated as of June 30, 2005 among Hercules Offshore, LLC (the ―Company‖), as Borrower, Comerica Bank,
                    as Administrative Agent, Citicorp North America, Inc., as Syndication Agent, Credit Suisse, Cayman Islands Branch, as
                    Documentation Agent, and the Lenders party thereto.
 4.3*               Form of Rights Agreement between the Company and                    , as rights agent.
 4.4*               Form of Certificate of Designations of Series A Junior Participating Preferred Stock.
 5.1*               Opinion of Baker Botts L.L.P. regarding validity of securities being issued.
10.1+**             Employment Agreement, dated effective as of October 11, 2004, by and between the Company and Randall D. Stilley.
10.2+**             Employment Agreement, dated effective as of January 10, 2005, by and between the Company and Steven A. Manz.
10.3+**             Employment Agreement, dated effective as of January 1, 2005, by and between Hercules Drilling Company, LLC and Thomas
                    J. Seward II.
10.4+**             Employment Agreement, dated effective as of January 1, 2005, by and between Hercules Drilling Company, LLC and Thomas
                    E. Hord.
10.5+**             Hercules Offshore 2004 Long-Term Incentive Plan.
10.6+**             Form of Stock Option Agreement.
10.7**              Form of Registration Rights Agreement between the Company and the holders listed on the signature page thereto.
10.8**              Asset Purchase Agreement dated as of July 9, 2004 among Hercules Drilling Company, LLC (formerly named Hercules
                    Assets, LLC) (―Hercules Drilling‖) and Parker Drilling Offshore USA, LLC.
10.9**              Asset Purchase Agreement dated September 2, 2004 among Hercules Liftboat Company, LLC (formerly named Mercury
                    Offshore Assets, LLC) and Global Industries, Ltd.
10.10**             Asset Purchase Agreement dated as of November 15, 2004 among Hercules Drilling and Parker Drilling Offshore USA, LLC.
10.11**             Asset and Securities Purchase Agreement dated as of January 13, 2005 among Hercules Drilling, the Company, Porterhouse
                    Offshore, LP and Filet Ltd.
10.12**             Rig Sale Agreement dated as of May 13, 2005 among Transocean Offshore Deepwater Drilling Inc. and the Company.
10.13**             Vessel Purchase Agreement dated as of May 19, 2005 among Superior Energy Services, L.L.C. and the Company.
10.14               Vessel Purchase Agreement dated as of August 4, 2005 between C.S. Liftboats, Inc. and the Company.
10.15               Rig Sale Agreement dated as of August 8, 2005 between Hydrocarbon Capital II LLC and the Company.
10.16               Asset Purchase Agreement dated as of September 16, 2005 by and among Hercules Liftboat Company, LLC, Danos Marine,
                    Inc. and Danos & Curole Marine Contractors, LLC.
10.17+*             Employment Agreement by and between the Company and John T. Rynd.

                                                                      II-4
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Index to Financial Statements

Exhibit
Number              Description

10.18+*             Consulting Agreement by and between the Company and Thomas J. Seward II.
21.1**              List of subsidiaries.
23.1                Consent of Grant Thornton LLP.
23.2*               Consent of Baker Botts L.L.P. (included in Exhibit 5.1).
23.3                Consent of F. Gardner Parker to be named as director of the Company.
24.1**              Powers of Attorney.

+     Management contract or compensatory plan or arrangement.
*     To be filed by amendment.
**    Previously filed.

(B) Financial Statement Schedules:

      Financial statement schedules are omitted because they are not required or the required information is shown in our consolidated financial
statements or the notes thereto.

ITEM 17. Undertakings

       (a) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements
certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

      (b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

      (c) The undersigned registrant hereby undertakes that:

            (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as
      part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to
      Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was
      declared effective.

            (2) For purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of
      prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
      at that time shall be deemed to be the initial bona fide offering thereof.

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Index to Financial Statements

                                                                SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on September 22, 2005.

                                                                                       HERCULES OFFSHORE, LLC

                                                                                       By:               /s/   R ANDALL D. S TILLEY
                                                                                                                   Randall D. Stilley
                                                                                                          Chief Executive Officer and President

     Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the
capacities indicated on September 22, 2005.
                                       Signature                                                                 Title



                       /s/     R ANDALL D. S TILLEY                                            Chief Executive Officer and President
                                                                                                    (Principal Executive Officer)
                                   Randall D. Stilley


                         /s/    S TEVEN A. M ANZ                                                       Chief Financial Officer
                                                                                             (Principal Financial and Accounting Officer)
                                    Steven A. Manz


                                           *                                                          Chairman of the Board

                                   John T. Reynolds


                                           *                                                                   Manager

                                 Thomas R. Bates, Jr.


                                           *                                                                   Manager

                                J. William Franklin, Jr.


                                           *                                                                   Manager

                                      Boris Gutin


                                           *                                                                   Manager

                                   V. Frank Pottow


                                           *                                                                   Manager

                                   Steven A. Webster


*By:                         /S/     S TEVEN A. M ANZ
                                       Steven A. Manz
                                       Attorney-in-Fact

                                                                       II-6
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Index to Financial Statements

                                                            INDEX TO EXHIBITS
 Exhibit
 Number             Description

 1.1*               Form of Underwriting Agreement.
 2.1**              Plan of Conversion.
 3.1**              Form of Certificate of Incorporation.
 3.2**              Form of Bylaws.
 4.1*               Form of specimen common stock certificate.
 4.2**              Credit Agreement dated as of June 30, 2005 among Hercules Offshore, LLC (the ―Company‖), as Borrower, Comerica Bank,
                    as Administrative Agent, Citicorp North America, Inc., as Syndication Agent, Credit Suisse, Cayman Islands Branch, as
                    Documentation Agent, and the Lenders party thereto.
 4.3*               Form of Rights Agreement between the Company and                    , as rights agent.
 4.4*               Form of Certificate of Designations of Series A Junior Participating Preferred Stock.
 5.1*               Opinion of Baker Botts L.L.P. regarding validity of securities being issued.
10.1+**             Employment Agreement, dated effective as of October 11, 2004, by and between the Company and Randall D. Stilley.
10.2+**             Employment Agreement, dated effective as of January 10, 2005, by and between the Company and Steven A. Manz.
10.3+**             Employment Agreement, dated effective as of January 1, 2005, by and between Hercules Drilling Company, LLC and Thomas
                    J. Seward II.
10.4+**             Employment Agreement, dated effective as of January 1, 2005, by and between Hercules Drilling Company, LLC and Thomas
                    E. Hord.
10.5+**             Hercules Offshore 2004 Long-Term Incentive Plan.
10.6+**             Form of Stock Option Agreement.
10.7**              Form of Registration Rights Agreement between the Company and the holders listed on the signature page thereto.
10.8**              Asset Purchase Agreement dated as of July 9, 2004 among Hercules Drilling Company, LLC (formerly named Hercules
                    Assets, LLC) (―Hercules Drilling‖) and Parker Drilling Offshore USA, LLC.
10.9**              Asset Purchase Agreement dated September 2, 2004 among Hercules Liftboat Company, LLC (formerly named Mercury
                    Offshore Assets, LLC) and Global Industries, Ltd.
10.10**             Asset Purchase Agreement dated as of November 15, 2004 among Hercules Drilling and Parker Drilling Offshore USA, LLC.
10.11**             Asset and Securities Purchase Agreement dated as of January 13, 2005 among Hercules Drilling, the Company, Porterhouse
                    Offshore, LP and Filet Ltd.
10.12**             Rig Sale Agreement dated as of May 13, 2005 among Transocean Offshore Deepwater Drilling Inc. and the Company.
10.13**             Vessel Purchase Agreement dated as of May 19, 2005 among Superior Energy Services, L.L.C. and the Company.
10.14               Vessel Purchase Agreement dated as of August 4, 2005 between C.S. Liftboats, Inc. and the Company.
10.15               Rig Sale Agreement dated as of August 8, 2005 between Hydrocarbon Capital II LLC and the Company.
10.16               Asset Purchase Agreement dated as of September 16, 2005 by and among Hercules Liftboat Company, LLC, Danos Marine,
                    Inc. and Danos & Curole Marine Contractors, LLC.
10.17+*             Employment Agreement by and between the Company and John T. Rynd.

                                                                      II-7
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Index to Financial Statements

 Exhibit
 Number             Description

10.18+*             Consulting Agreement by and between the Company and Thomas J. Seward II.
21.1**              List of subsidiaries.
23.1                Consent of Grant Thornton LLP.
23.2*               Consent of Baker Botts L.L.P. (included in Exhibit 5.1).
23.3                Consent of F. Gardner Parker to be named as director of the Company.
24.1**              Powers of Attorney.

+     Management contract or compensatory plan or arrangement.
*     To be filed by amendment.
**    Previously filed.

                                                                     II-8
                                    Exhibit 10.14

  VESSEL PURCHASE AGREEMENT

          by and between

       C.S. LIFTBOATS, INC.

                and

    HERCULES OFFSHORE, LLC



          In respect of the

           MIV JOSHUA

(U.S. COAST GUARD OFFICIAL NUMBER

             1164414)
                                                 TABLE OF CONTENTS

ARTICLE 1 SALE AND PURCHASE OF THE VESSEL                            1
   Section 1.1.      Sale and Purchase of the Vessel                 1
   Section 1.1(a)    Payment of the Purchase Price                   1
   Section 1.2.      Closing                                         2
   Section 1.3.      ―As Is, Where Is‖ Sale Language                 4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER                   5
   Section 2.1.      Organization, Existence and Corporate Power     5
   Section 2.2.      Authorization and Execution                     5
   Section 2.3.      No Conflict                                     5
   Section 2.4.      Title; No Encumbrances                          5
   Section 2.5.      Litigation                                      5
   Section 2.6.      Taxes                                           6
   Section 2.7.      Condition of Vessel                             6
   Section 2.8.      Brokers                                         6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE BUYER                6
   Section 3.1.      Organization, Existence and Corporate Power     6
   Section 3.2.      Authorization and Execution                     6
   Section 3.3.      No Conflict                                     6
   Section 3.4.      Litigation                                      6
ARTICLE 4 TERMINATION                                                7
   Section 4.1.      Termination                                     7
   Section 4.2.      Effect of Termination; Survival                 7
ARTICLE 5 MISCELLANEOUS                                              7
   Section 5.1.      Indemnities                                     7
   Section 5.2.      Due Diligence                                   8
   Section 5.3.      Usage of Vessel Prior to Closing                9
   Section 5.4.      Further Cooperation                             9
   Section 5.5.      Expenses                                        9
   Section 5.6.      Amendments and Waivers                          9
   Section 5.7.      Notices                                         9
   Section 5.8.      Survival                                        9

                                                            i
   Section 5.9.             Severability; Counterparts                              9
   Section 5.10.            Governing Law                                           10
   Section 5.11.            Venue                                                   10
   Section 5.12.            Successors and Assigns                                  10
   Section 5.13.            Entire Agreement and Cancellation of Prior Agreements   10

EXHIBITS

EXHIBIT A:         Definitions
EXHIBIT B:         Specifications of the Vessel
EXHIBIT C:         Certificate of Acceptance of Delivery

                                                                   ii
THIS VESSEL PURCHASE AGREEMENT (this “Agreement” ), dated as of August 4, 2005, is entered into by and between C.S.
Liftboats, Inc. , a Louisiana corporation (the “Seller” ), whose principle place of business is 13933 Pumping Plant Road, Abbeville, Louisiana
70510, and Hercules Offshore, LLC. , a Delaware limited liability company, (the “Buyer” ), whose principle place of business is 2929
Briarpark Drive, Suite 435, Houston, Texas, 77042 (each of the Buyer and the Seller, being referred to individually as a “Party” and
collectively as the “Parties” ).

                                                                 WITNESSETH

WHEREAS , the Seller is the owner of the liftboat M/V Joshua, United States Coast Guard Official Number 1164414 (the “M/V Joshua” );

WHEREAS , the Seller desires to sell to the Buyer the M/V Joshua together with its engines, tackle, general outfit, navigational, electronic,
radar, communication and other associated equipment, appliances, spare parts and other items appurtenant or related to the Vessel, whether on
board or ashore, as set out on Exhibit B hereto (the M/V Joshua and all such equipment and spare parts being referred to collectively as the
“Vessel” ) upon the terms and conditions set forth herein; and

WHEREAS , the Buyer desires to purchase the Vessel on the terms set forth herein.

NOW THEREFORE , in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Buyer and the Seller hereby agree as follows:

                                                                   ARTICLE 1

                                                 SALE AND PURCHASE OF THE VESSEL

       Section 1.1 Sale and Purchase of the Vessel . Upon the terms and subject to the conditions of this Agreement, the Seller hereby agrees to
sell to the Buyer, and the Buyer hereby agrees to purchase from the Seller, all right, title and interest in and to the Vessel for the cash sum of
Twelve Million Five Hundred Thousand U.S. Dollars (US$12,500,000.00) (the “Purchase Price” ). The Seller shall be liable for any and all
taxes, fees, levies and other charges that may be payable, assessed or levied by any Government Authority as a result of the sale and purchase
of the Vessel (collectively, the “Taxes” ).

     Section 1.1(a) Payment of the Purchase Price .

      (i)   Upon execution of the Main Terms Summary by the Buyer and the Seller on July 28, 2005, Buyer delivered to Seller a
            non-refundable deposit in the sum of One Million Two Hundred Fifty Thousand U.S. Dollars (US$1,250,000.00) ( “the Deposit”
            ). This deposit was paid by wire transfer of same day funds in accordance with the following wire transfer instructions:

                   Receiving Bank ABA:              062005690
                   Receiving Bank:                  Regions Bank
                                                    800 South Lewis Street
                                                    New Iberia, LA 70560

                   Beneficiary: Account Name — C.S. Liftboats, Inc.
                   Account Number — 4701146765

                                                                         1
      (ii)   Upon closing of the Purchase of the Vessel the Deposit will be credited toward the Purchase Price. The balance of the Purchase
             Price in the amount of Eleven Million Two Hundred Fifty Thousand US Dollars ($11,250,000.00 US dollars) shall be paid to the
             Seller concurrently with the Closing by way of wire transfer of same day funds wired to the Seller’s account referred to in
             paragraph 1.1(a) above when the closing conditions set out in Section 1.2(b) have been met;

     Section 1.2 Closing .

      (a) The closing (the “Closing” ) of the purchase and sale of the Vessel shall take place in accordance with the terms of this Agreement at
New Iberia, Louisiana at the Regions Bank, located at 800 South Lewis Street, New Iberia, Louisiana, on a business day to be mutually agreed
by the Buyer and the Seller (the “Closing Date” ) on or before August 28, 2005 . On or before the Closing Date, the Buyer and the Seller shall
comply with their respective obligations set out in this Section 1.2.

       (b) Closing Conditions and Deliveries of the Buyer . The obligation of the Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at or prior to the Closing, of the following closing conditions: (i) the Seller has
completed its closing deliveries set out in Section 1.2(c); (ii) the representations and warranties of the Seller shall have been true and correct
when made and shall be true and correct as of the Closing with the same force and effect as if made as of the Closing, and the covenants and
agreements contained in this Agreement to be complied with by the Seller on or before the Closing shall have been complied with in all
material respects; Upon satisfaction of the above, the Buyer shall deliver to the Seller: (A) the Purchase Price less the Deposit; and (B) a
certificate from the Buyer dated the Closing Date and signed by a duly authorized officer thereof certifying that: (1) the representations and
warranties of the Buyer were true and correct when made and are true and correct as of the Closing Date; and (2) the Buyer has complied in all
material respects with all of its covenants and agreements contained in this Agreement.

     (c) Closing Deliveries of the Seller . At the Closing, the Seller shall deliver, or shall cause to be delivered:

      (i)    a bill of sale fully executed by the Seller and notarized (the “Bill of Sale” ), as required, pursuant to which the Seller shall or shall
             cause to be transferred, sold, conveyed, assigned and delivered to the Buyer all right, title and interest in and to the Vessel free and
             clear of all Encumbrances

                                                                           2
         (as hereinafter defied) and in such form as is required by the United States Coast Guard National Vessel Documentation Center (the
         “NVDC” );

(ii)     a ―Satisfaction of Mortgage‖ or other release document executed by Regions Bank, P.O. Box 11240, New Iberia, La. U.S.A. (
         “Regions Bank” ), discharging fully the $50,000,000.00 mortgage (the “Mortgage” ) granted in favor of Regions Bank on the
         Vessel in such form as is satisfactory to the Buyer and is required by the NVDC;

(iii)     a release document discharging UCC lien numbers 47-205-0475; and 47-205-0476 on the Vessel in favor of Regions Bank in
          such form as is satisfactory to the Buyer;

(iv) any other document, instrument or action required to cancel any and all other Encumbrances on the Vessel or any collateral relating
     to the Vessel in favor of any person, including, without limitation, Regions Bank;

(v)      a good standing certificate from the Secretary of State for the State of Louisiana dated as of the Closing Date certifying that the
         Buyer is in good standing and is authorized to do business in Louisiana;

(vi) a certificate from the Seller and the shareholders of the Seller dated the Closing Date and signed by a duly authorized officer and
     the shareholders thereof certifying that: (A) the representations and warranties of the Seller were true and correct when made and
     are true and correct as of the Closing Date; and (B) the Seller has complied in all material respects with all of its covenants and
     agreements contained in this Agreement;

(vii)     executed copies of such documents, if any, provided prior to the Closing Date by the Buyer to the Seller to facilitate the Buyer’s
          registration of the Vessel with the United States Coast Guard or such other jurisdiction chosen by the Buyer;

(viii)       the Vessel safely afloat at a dockside at or near the Port of New Iberia, Louisiana, or such other location to be mutually agreed
             by the Parties;

(ix) a receipt for the Purchase Price upon issuance of the Closing Certificate;

(x)      a true and complete certified copy of the resolution(s) duly and validly adopted by the shareholders and Board of Directors of the
         Seller evidencing their authorization of the execution and delivery of this Agreement and the consummation of the transactions
         contemplated hereby;

(xi) Any technical or regulatory documentation pertaining to the Vessel which the Seller may have in its possession and which is not
     already aboard the Vessel, including, without limitation, ABS certificates, loadline certificates, radio licenses, operating manuals
     and engineering drawings.

                                                                      3
               The Buyer shall also be entitled to retain a hard copy of the Vessel’s preventative maintenance records, provided that this
               documentation may be provided to the Buyer onboard the Vessel;

      (xii)     A fax copy or original of a Certificate of Ownership from the NVDC dated on the Closing Date showing the Vessel to be free
                from Encumbrances; and

      (xiii)       All documentation necessary to transfer any warranties on any of the equipment comprising the Vessel to the extent that the
                   Seller has the benefit of any such warranties.

      (d) Risk of Loss . Risk of loss or damage to the Vessel shall pass to the Buyer at the Closing Time. Prior to the Closing Time, the Seller
shall be responsible for and shall bear any and all risk of loss or damage to the Vessel. If during the period between the date hereof and the
Closing Time, there is an actual total casualty loss, constructive total casualty loss or compromised total casualty loss (collectively, a “Total
Loss” ) of the Vessel, the Seller shall provide written notice to the Buyer of such Total Loss. In such event, this Agreement shall terminate
entirely upon written notice from Buyer to Seller electing to terminate, which notice must be delivered to Seller by 5:00 PM, Houston, Texas
time, on the fifth Business Day after Seller has notified Buyer of such Total Loss.

      (e) Delivery . Concurrently with the delivery of the Bill of Sale, (i) the Seller shall deliver to the Buyer, and the Buyer shall accept from
the Seller, the Vessel free from Encumbrances, and (ii) each party shall acknowledge such delivery and acceptance by executing and delivering
the Certificate of Acceptance and Delivery, attached hereto as Exhibit C (the “Certificate of Acceptance” ). Title to the Vessel shall pass to
the Buyer as of the time specified in the Certificate of Acceptance (the “Closing Time” ). In respect of that property, if any, forming part of the
Rig which does not fall within the Bill of Sale, the Seller and the Buyer hereby agree that title shall be deemed to pass to Buyer as of the
Closing Time without further documentation or action by either party.

       Section 1.3 ―As Is, Where Is‖ Sale Language . The Vessel shall be sold on an ―as is, where is‖ basis and the Buyer shall be required to,
and shall, accept delivery of the Vessel from the Seller in such condition; provided, however , that the Vessel shall be in the Condition set forth
in Section 2.7. Additionally, the Buyer acknowledges that the Vessel in not currently United States Coast Guard approved or ABS Class
certified and the Buyer shall be required to accept delivery of the Vessel from the Seller in such condition. Except as set forth in Subsections
2.4 and 2,7 and herein, no representations or warranties, either expressed or implied, are made with respect to the maintenance, repair,
condition, design, operation, seaworthiness, value, marketability, merchantability, usefulness or suitability, for any purpose, of the Vessel,
including without limitation, (a) any implied or expressed warranty of merchantability, (b) any implied or expressed warranty of fitness for a
particular purpose, and (c) any claim by the Buyer for damages because of or related to any defects, whether known or unknown, with respect
to the physical condition of the Vessel.

                                                                           4
                                                                   ARTICLE 2

                                         REPRESENTATIONS AND WARRANTIES OF SELLER

      As an inducement to the Buyer to enter into this Agreement, the Seller represents and warrants to the Buyer as of the date hereof and as of
the Closing Date that:

      Section 2.1 Organization, Existence and Corporate Power . The Seller is a corporation duly organized and validly existing under the laws
of the State of Louisiana and has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and the
other documents, certificates and instruments contemplated hereby and thereby.

       Section 2.2 Authorization and Execution . The execution, delivery and performance of this Agreement and the other documents,
certificates and instruments contemplated hereby and thereby and the consummation of the transactions contemplated hereby and thereby have
been duly authorized and approved by all requisite action on the part of the Seller. This Agreement has been, and when executed and delivered,
each other document, certificate and instrument required to be executed will have been, duly executed and delivered by the Seller and
constitutes the legal, valid and binding obligation of the Seller enforceable against it in accordance with the terms hereof and thereof.

       Section 2.3 No Conflict . Neither the execution, delivery or performance by the Seller of this Agreement, nor the consummation of the
transactions contemplated hereby will violate or contravene the Seller’s articles of incorporation, by-laws or other constituent documents, or
any judgment, decree, order or award of any court or other governmental agency or any law, rule or regulation applicable to the Seller or any of
its property or assets or conflict with result in a breach of, or constitute a default under, any agreement, instrument or contractual obligation to
which the Seller is a party or by which it or its properties and assets (including the Vessel) are bound.

      Section 2.4 Title; No Encumbrances . The Seller has good, valid, indefeasible and merchantable title to the Vessel and the Vessel is free
and clear of all mortgages, security interests, debts, claims, liens, libels and encumbrances of any kind whatsoever, including, without
limitations, any charter or other similar agreement whether recorded or unrecorded (collectively, the “Encumbrances” ) except for the
Mortgage which shall be discharged by the Seller on the Closing Date in accordance with Section 1.2(c).

The Seller hereby agrees to defend, protect, indemnify and hold harmless the Buyer against any and all costs, expenses, losses, damages, suits,
claims or proceedings arising from any Encumbrance, including the Mortgage, that (i) exists prior to the Closing; or (ii) exists prior to the
Closing and, notwithstanding the Seller’s covenants, representations and warranties herein, still exists after the Closing, in both instances,
irrespective of when such costs, expenses, losses, damages, suits, claims or proceedings are incurred or raised, as applicable.

      Section 2.5 Litigation . There is no legal action, suit, arbitration, government investigation or other legal or administrative proceedings,
nor any order, decree or judgment

                                                                         5
pending, in effect, or threatened against or relating to the Vessel or the Seller, which in any manner would impair or impede the transactions
contemplated by this Agreement.

     Section 2.6 Taxes . The Seller has duly and timely prepared and filed with the appropriate Governmental Authorities all returns, reports,
information returns, or other documents filed or required to be filed with such governmental authorities and has paid any taxes or other
amounts due in respect thereof that if unpaid could result in a claim by any Governmental Authority against the Vessel or the Buyer.

      Section 2.7 Condition of Vessel . The Vessel is in the same condition it was in on July 28, 2005, normal wear and tear excepted.

      Section 2.8 Brokers . Other than Bassoe Offshore, the Seller has not, directly or indirectly, employed any broker, finder or intermediary
that might be entitled to any brokerage, finder’s or similar fee or commission in connection with the transactions contemplated by this
Agreement, and the Seller shall be responsible for all fees of Bassoe Offshore.

                                                                    ARTICLE 3

                                       REPRESENTATIONS AND WARRANTIES OF THE BUYER

      As an inducement to the Seller to enter into this Agreement, the Buyer represents and warrants to the Seller as of the date hereof and as of
the Closing Date that:

     Section 3.1 Organization, Existence and Corporate Power . The Buyer is a limited liability company duly organized and validly existing
under the laws of the State of Delaware, and has all requisite power and is authority to execute, deliver and perform its obligation under this
Agreement.

      Section 3.2 Authorization and Execution . The execution, delivery and performance of this Agreement and the consummation of the
transaction contemplated hereby have been duly authorized and approved by all requisite actions of the Buyer. This Agreement has been duly
executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer enforceable against it in accordance
with its terms.

       Section 3.3 No Conflict . Neither the execution, delivery or performance by the Buyer of this Agreement nor the consummation of the
transactions contemplated hereby will violate or contravene the Certificate of Formation or limited liability company agreement of the Buyer or
any judgment, decree, order or award of any court or other governmental agency or any law, rule or regulation applicable to the Buyer or any of
its property or assets, or conflict with, result in a breach of, or constitute a default under, any agreement, instrument or contractual obligation to
which the Buyer is a party or by which it or its property are bound.

     Section 3.4 Litigation . There are no legal actions, suits, arbitrations, government investigations on or other legal or administrative
proceedings, nor any order, decree or judgment pending, in effect, or threatened against the Buyer, which in any manner would impair or
impede the transactions contemplated by the Agreement.

                                                                          6
                                                                    ARTICLE 4

                                                                 TERMINATION

      Section 4.1 Termination . This Agreement may, by written notice given at or prior to the Closing, be terminated: (a) by mutual consent of
the Seller and the Buyer; (b) by the Seller or the Buyer if there has been a material breach by the other of any representation, warranty,
covenant or agreement contained in this Agreement that shall not have been cured or waived by the other Party by the Closing Date; provided ,
that such breaching Party shall have up to thirty (30) days beyond the Closing Date to cure any such material breach; or (c) by the Buyer if
there is a Total Loss to the Vessel pursuant to Section 1.2(d).

     Section 4.2 Effect of Termination; Survival .

      (a) Upon the termination of this Agreement pursuant to Section 4.1(a) or (c) hereof, this Agreement shall be void and of no effect and
there shall be no liability by reason of this Agreement or the termination thereof on either Party except for any liability arising out of a breach
of any representation, warranty, agreement or covenant of this Agreement prior to the date of termination or any representation warranty,
agreement or covenant that survives the termination of this Agreement.

     (b) The provisions of this Subsection 4.2 shall survive any termination of this Agreement.

                                                                    ARTICLE 5

                                                               MISCELLANEOUS

     Section 5.1 Indemnities .

     (a) Indemnification of the Buyer by the Seller .

      (i)   The Seller hereby agrees to pay and assume liability for, and does hereby agree to indemnify, defend, protect, save and hold
            harmless the Buyer and the Vessel from and against all liabilities, obligations, losses, damages, penalties, claims (including claims
            by any employee of the Seller, or any of its servants, crew or agents), actions, suits and related costs, expenses and disbursements,
            of whatsoever kind and nature, imposed on, asserted against, or incurred by, the Buyer or the Vessel, in any way relating to or
            arising out of or alleged to be attributable to, related to or arising out of: (A) any breach of representation or warranty of the Seller
            under this Agreement or any breach or non-fulfillment of any covenant, agreement or other obligation of the Seller as set forth in
            this Agreement; (B) Encumbrances or other losses, claims, damages or liabilities of any kind or nature whatsoever related to the
            Seller’s ownership or operation of the Vessel prior to the Closing Time; or (C) any Taxes imposed on the Seller, the Buyer or the
            Vessel by any Governmental Authority or other U.S. taxes, U.S. fees, U.S. levies and other governmental charges imposed by

                                                                          7
             any Governmental Authority on the Seller, the Buyer or the Vessel that relate to the Seller’s period of ownership of the Vessel.

      (ii)   The Seller shall not be liable to the Buyer for any consequential damages of any kind or nature whatsoever, including but not
             limited to loss of profits, revenue or cost of transportation, arising from the Seller’s failure to comply with its obligations
             hereunder.

     (b) Indemnification of the Seller by the Buyer .

      (i)    The Buyer hereby agrees to pay and assume liability for, and does hereby agree to indemnify, defend, protect, save and hold
             harmless the Seller from and against any and all liabilities, obligations, losses, damages, penalties, claims (including claims by any
             employee of the Buyer or any of its servants, crew or agents), actions, suits and related costs and expenses and disbursements,
             including reasonable legal fees and expenses of whatsoever kind and nature, imposed on, asserted against or incurred by the Seller
             or the Vessel, in any way relating to or arising out of or alleged to be attributable to, related to or arising out of: (A) any breach of
             representation or warranty of the Buyer under this Agreement or any breach or non-fulfillment of any covenant, agreement or other
             obligation of the Buyer as set forth in this Agreement; and (B) any Encumbrances or other losses, claims, damages or liabilities of
             any kind or nature whatsoever related to the Buyer’s inspection or operation of the Vessel from July 28, 2005 until the Closing
             Date.

      (ii)   The Buyer shall not be liable to the Seller for any consequential damages of any kind or nature whatsoever, including but not
             limited to loss of profits or revenue, arising from the Buyer’s failure to comply with its obligations hereunder; provided that the
             Buyer has used its best efforts to comply with its obligations hereunder.

      (c) Survival of Indemnities . Not withstanding the termination of this Agreement, the indemnities and hold harmless obligations provided
for herein, shall survive the Closing and/or the termination of the Agreement, and shall continue in full force and effect for applicable claims or
causes of action until the expiration of the applicable statute of limitations with respect to claims of that type.

      Section 5.2 Due Diligence . The Seller shall, and shall cause each of its officers, employees, agents, accountants and counsel to (I) afford
the officers, employees, agents, counsel, other representatives of the Buyer full access to the Vessel and its related books and records; and (ii)
furnish to the officers, employees, agents, counsel of the Buyer such additional information regarding the Vessel and the transactions
contemplated by this Agreement as the Buyer or any of such persons may from time to time reasonably request.

                                                                           8
     Section 5.3 Usage of Vessel Prior to Closing . The Seller shall not, from the date of this Agreement, use the Vessel except as required by
the U.S. Coast Guard or a Governmental Authority or as otherwise agreed with the Buyer, unless this Agreement is terminated.

       Section 5.4 Further Cooperation . The Seller shall cooperate with the Buyer in seeking to obtain all approvals required for this
Agreement, including cooperating in any application for such approval on behalf of the Buyer, as may be requested by the Buyer. In addition,
each of the Parties hereto shall use its reasonable best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws or otherwise to consummate and make effective the transaction contemplated by
this Agreement. In case, at any time after the Closing Date, any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each Party to this Agreement shall use their reasonable best efforts to take all such action.

       Section 5.5 Expenses . The Buyer and the Seller shall each pay their own out-of-pocket fees and expenses, including, without limitation,
all legal, advisory or other fees and expenses, arising in connection with any transactions contemplated by this Agreement.

     Section 5.6 Amendments and Waivers . No Modification, waiver or amendment of this Agreement shall be effective unless such
modification, waiver or amendment is in writing and executed by the Parties hereto.

      Section 5.7 Notices . Any notice provided for by the terms and condition of this Agreement shall be in writing and shall be deems
effective as follows: (a) if delivered personally, upon delivery; (b) if sent by post, upon certified receipt; (c) if sent by a courier service, upon
receipt; or (d) if sent by facsimile to have been received by the recipient. Notices shall be addressed to the relevant Party’s signatory at the
address of such Party set forth opposite each Party’s name on the signature page hereof (until notice of a change thereof is delivered as
provided in this Section 5.11)

      Section 5.8 Survival . All agreements, indemnities, covenants, representations and warranties made herein shall survive the execution and
delivery of this Agreement and the Closing.

      Section 5.9 Severability; Counterparts . In case any provision of or obligation under this Agreement shall be declared invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provision or obligation, or of such provision or
obligation in any other jurisdiction shall not in any way be affected or impaired thereby. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transaction contemplated by this
Agreement are consummated as originally contemplated to the greatest extent possible. This Agreement may be executed by the Parties hereto
in separate counterparts, each of which when so executed and delivered shall be an original, but all of such counterparts shall together
constitute one and the same instrument.

                                                                           9
     Section 5.10 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the United States, the
United States General Maritime Law and the substantive law of the State of Louisiana without regard to any laws, rules or regulation
concerning conflict of laws that might result in the application of the laws of any other jurisdiction.

     Section 5.11 Venue . Any dispute, claim or lawsuit arising out of or relating to this agreement shall be filed in the United States District
Court in and for the Eastern District of Louisiana, located in New Orleans, Louisiana.

     Section 5.12 Successors and Assigns . This Agreement shall be binding upon and shall inure to the Parties hereto and their respective
successors and assigns; provided, however , that neither the Buyer nor the Seller shall be permitted to assign its rights under this Agreement
without the prior written consent of the other Party, except that either Party may assign its rights and interests under this Agreement to one or
more of its subsidiaries without the consent of the other.

      Section 5.13 Entire Agreement and Cancellation of Prior Agreements . This Agreement contains the entire agreement between the Parties.
All prior proposals, negotiations and agreements prior to the execution of this Agreement are not included in this Agreement and are hereby
voided.

     IN WITNESS WHEREOF, the Parties have executed this Agreement through their duly authorized officers as of the date set forth in the
preamble to this Agreement.

Signed for and on behalf of:

C.S. LIFTBOATS, INC.
13933 Pumping Plant Road
Abbeville, Louisiana 70510
U.S.A.

              / S / C HESTER J. S MITH
By: Chester J. Smith
Title: President

Signed for and on behalf of:

HERCULES OFFSHORE, LLC.
2929 Briarpark Drive, Suite 435
Houston, Texas 77042

            / S / R ANDALL D. S TILLEY
By:          Randall D. Stilley
Title:       Authorized Manager

                                                                        10
                                                                   EXHIBIT A

                                                                 DEFINITIONS

“Additional Parts” has the meaning specified in Section 5.8.

“Agreement” has the meaning specified in the Recitals.

“Bill of Sale” has the meaning specified in Section 1.2(c)(i).

“Buyer” means Hercules Offshore, LLC

“Business Day” means a day on which banks are open for business in Houston, Texas.

“Certificate of Acceptance” has the meaning specified in Section 1.2(e).

“Closing” has the meaning specified in Section 1.2(a).

“Closing Date” has the meaning specified in Section 1.2(a).

“Closing Time” has the meaning specified in Section 1.2(e).

“Deposit” has the meaning specified in Section 1.1(a)(i).

“Governmental Authority” means any local, national or state agency or institution, authority, department, directorate, inspectorate, minister,
ministry, municipality, official or public statutory persons of, any judicial body of or the government or legislature of, the United States of
America.

“Mortgage” has the meaning specified in Section 1.2(c).

“M/V Joshua” has the meaning specified in the Recitals.

“NVDC” has the meaning specified in Section 1.2(c)(i).

“Party” and “Parties” has the meaning specified in the Recitals.

“Purchase Price” has the meaning specified in Section 1.1.

“Regions Bank” has the meaning specified in Section 1.2(c).

“Seller” means C.S. Liftboats, Inc.

“Taxes” has the meaning specified in Section 1.1.

“Total Loss” has the meaning specified in Section 1.2(d).

“Vessel” has the meaning specified in the Recitals.

                                                                      A-1
                                                            EXHIBIT B

Specifications of the Vessel

Specification:

       L.O.A.                                                133’
       Molded Beam:                                          100’
       Molded Depth:                                         11’
       Outside of Towers Beam:                               100’
       Forward Deck Area                                     7,600’ Working Area
       Leg Length:                                           260’
       Pads:                                                 35 x 17 with % Plating
       Leg Diameter:                                         99‖ x 1
       Deck Load:                                            400 Short Tons
       Working Water Depth:                                  @180 of water w/ 25’ wave action
       Cranes: E.B.I. (Boom Extension Available)             1 ~ 100 ton with 100’ Boom Length
                                                             1 ~ 15 ton with 60’ Length
                                                             Planetarys - 10 per leg - 5 per slide
       Main Engines:                                         2 ~ 3508 CAT with 5-1 Gear
                                                             (2000 HP comb @ 1800 RPM)
       Power Pack:                                           Engine 280 HP at 1800 RPM
                                                             Powered by two 40 HP pumps
       Generators:                                           2-3306 CAT Engines
                                                             (180 kW each) at 1800 RPM
       Air Manifold on Deck:                                 With 3 outlets
       2 Fire Monitors Forward on Port and Starboard Side
       2-Drop Pumps:                                         15 HP each
       Forward Working Deck Area                             6500
       Bow Thruster                                          150 HP

Capacities:

       Water Maker                                           2,000 Gallons Per Day
       Fuel Oil:                                             10,000 US Gallons
       Fresh Water:                                          29,000 US Gallons
       Lube Oil:                                             1,500 US Gallons
       Hydraulic Oil:                                        2,000 US Gallons

                                                                B-1
Accommodations:

       Crewmen:                                                 12, Pilot House Level
       Charter Co. Personnel:                                   30 on Focsle Deck

Electronics:

       1-Furuno 24 Miles radar installed
       1-J.R.C. 24 Mile Color Radar
       1-Loud Hailer Intercom with six speakers
       2-VHF Marine Radios (one to be battery emergency as per U.S.C.G.)
       1-Single Sideband
       1-Digital Depth Finder
       1-GPS

Classifications:

           Vessel is classified — A.B.S. # 100 Al world wide service class liftboat — U.S. Flagged with Al loadline and U.S.C.G approved.

                                                                   B-2
                                                                                                                                   Exhibit 10.15

                                                          RIG SALE AGREEMENT

      This Rig Sale Agreement (this “Agreement” ) is entered into as of the 8th day of August, 2005, by and between Hydrocarbon Capital II
LLC, a Delaware limited liability company and a wholly-owned subsidiary of Lehman Commercial Paper Inc., a New York corporation (
“Seller” ), and Hercules Offshore, LLC, a Delaware limited liability company ( “Buyer” ).

     WHEREAS , Seller is the owner of the Rig (as defined below); and

     WHEREAS , Buyer wishes to purchase, and Seller wishes to sell, the Rig on the terms and conditions set forth below;

      NOW, THEREFORE , for and in consideration of the premises and the mutual agreements contained herein, Buyer and Seller hereby
agree as follows:

1.    DEFINITIONS

     Each of the following terms shall have the meaning ascribed thereto when used throughout this Agreement and the Exhibits hereto:

     “Affiliate” shall mean, with respect to one of the parties hereto, any other company or legal entity which (i) is owned or controlled by
such party, (ii) owns or controls such party, or (iii) is under common ownership or control of such party. As used in the preceding sentence,
―control‖ shall mean the right or ability to control more than fifty percent (50%) of the voting rights of a company or entity.

     “Bill of Sale” has the meaning given to it in Article 7.2(a)(1) .

     “Business Day” shall mean a day on which banks are open for business in New York, New York.

     “Buyer Assignee” has the meaning given to it in Article 11 .

     “Certificate of Acceptance” shall mean the Certificate of Acceptance of Delivery in the form of Exhibit “A” to be delivered at the
Closing in respect of the Rig.

     “Claim Notice” has the meaning given to it in Article 11.

     “Closing” shall mean the consummation of the purchase and sale of the Rig.

     “Closing Date” shall mean the date of the Closing with respect to the Rig in accordance with Article 7.1 , provided that it shall be a
Business Day.

     “Closing Payment” has the meaning given to it in Article 3.3.

     “Closing Time” shall mean the day and time specified as the Closing Time on the Certificate of Acceptance.

                                                                         1
     “Damages” has the meaning given to it in Article 10.1.

     “De Minimis Damage” has the meaning given to it in Article 9.2(b).

     “Deposit” has the meaning given to it in Article 3.2.

     “Election Period” has the meaning given to it in Article 10.6(a).

     “Force Majeure” has the meaning given to it in Article 19.5.

     “Indemnified Party” has the meaning given to it in Article 10.5.

     “Indemnifying Party” has the meaning given to it in Article 10.5.

     “Indemnity Payment” has the meaning given to it in Article 10.7(c).

     “Interim Period” has the meaning given to it in Article 9.1(a).

      “Lien” shall mean a lien, maritime liens, mortgage, security interest, pledge or other charge or encumbrance, including, without
limitation, a charter or drilling contract (or similar arrangement), or any other debts and claims whatsoever.

     “Outside Date” has the meaning given to it in Article 7.1.

     “Partial Loss” has the meaning given to it in Article 9.2(a).

     “Permitted Assignment” has the meaning given to it in Article 11.

     “Recouped Amount” has the meaning given to it in Article 10.7(c).

     “Repair Work” has the meaning given to it in Article 9.2(a)(1)

      “Rig” shall mean that certain self-elevating offshore mobile drilling unit known as the Odin Spirit (ex ―Bohai 6‖), being of Panamanian
registry, Patente No. 29392-PEXT-1, together with its respective engines, tackle, winches, cordage, general outfit, drilling equipment,
electronic and navigation equipment, radio installations, appurtenances, appliances, inventory, spare or replacement parts, stores, tools and
provisions designated for the Rig, whether on board or ashore. The Rig shall not include any item which is listed on Exhibit “B”.

     “Sale Price” has the meaning given to it in Article 3.1.

      “Taxes” means any tax, fee, levy, duty or charge, including income, capital gains, sales, value added, transfer, customs, stamp,
registration and any other tax, fee, levy, duty or charge, that is assessed by any country or any other governmental authority and any fines,
penalties or interest with respect to the foregoing tax, fee, levy, duty or charge; provided however , that it shall not include any of the foregoing
which arise as a result of the sale and/or transfer of the Rig pursuant to this Agreement.

                                                                          2
     “Third-Party Claim” has the meaning given to it in Article 10.6.

     “Total Loss” has the meaning given to it in Article 9.1(a).

2.    SALE AND PURCHASE

      Seller hereby agrees to sell the Rig to Buyer, and Buyer hereby agrees to purchase the Rig from Seller, upon the terms and conditions set
forth in this Agreement.

3.    CONSIDERATION

      3.1 Subject to the terms hereof, the aggregate purchase price (the “Sale Price” ) to be paid by Buyer to Seller for the Rig is Twelve
Million Five Hundred Thousand United States Dollars (US$12,500,000); plus (x) an amount equal to all expenditures for capital improvements
to the Rig paid by Seller after June 16, 2005 and prior to the Closing; provided, however, that Buyer shall have approved all such expenditures
made after the date hereof and that the capital improvements relating to such expenditures are reflected on the scope of work, attached as
Exhibit “C” to this Agreement.

       3.2 Buyer has, prior to the date hereof, deposited with Seller Two Hundred and Fifty Thousand United States Dollars (US$250,000) as a
deposit (the “Deposit” ), which amount will be applied at the Closing as partial payment of the Sale Price. The Deposit will be returned to
Buyer in the event (i) this Agreement is terminated based on a breach of any representation, warranty or covenant of Seller contained herein,
(ii) the Closing has not occurred on or before October 1, 2005 due to the actions of Seller or (iii) this Agreement is terminated pursuant to
Article 9.1(a). Seller will retain the Deposit as Seller’s sole and exclusive remedy in the event (i) this Agreement is terminated based on a
breach of any representation, warranty or covenant by Buyer contained herein or (ii) the Closing has not occurred on or before October 1, 2005;
provided that the failure of the Closing to occur is not a result of the actions of Seller.

       3.3 At the Closing and subject to any applicable Sale Price reduction pursuant to Article 9.2 and the other provisions of this Agreement,
(i) the Deposit shall be applied against the Sale Price and (ii) Buyer shall pay the balance of the Sale Price to Seller (the “Closing Payment” )
pursuant to Article 3.4.

     3.4 All payments to Seller hereunder are to be made in United States Dollars in immediately available funds wired to the following bank
account:

Citibank., N.A.
Fed ABA # 021-000-089
Account number: 40615659
Ref Edward O’Connell

4.    REPRESENTATIONS AND WARRANTIES

      4.1 Disclaimer of Other Warranties . Except as may be otherwise expressly stated in this Agreement, Buyer hereby acknowledges that the
sale and purchase of the Rig is on an ―AS IS, WHERE IS AND WITH ALL FAULTS‖ basis, and that this sale and purchase of the Rig is

                                                                        3
WITHOUT ANY REPRESENTATION, WARRANTY, GUARANTY OR CONDITION, EXPRESSED OR IMPLIED, BY SELLER, AND
THAT SELLER DOES NOT MAKE ANY WARRANTY, GUARANTY, OR REPRESENTATION OF ANY KIND, EITHER EXPRESS OR
IMPLIED, STATUTORY OR OTHERWISE, WITH REGARD TO THE RIG, INCLUDING, BUT NOT LIMITED TO, AS TO
SEAWORTHINESS, CLASSIFICATION, VALUE, DESIGN, OPERATION, MERCHANTABILITY, FITNESS FOR USE OR
PARTICULAR PURPOSE OF THE RIG OR AS TO THE ELIGIBILITY OF THE RIG FOR ANY PARTICULAR TRADE OR
CLASSIFICATION, AND BUYER HEREBY WAIVES AS AGAINST SELLER AND ITS AFFILIATES ALL WARRANTIES OR
REMEDIES OR LIABILITIES WITH RESPECT TO SUCH WARRANTIES, ARISING BY LAW OR OTHERWISE WITH RESPECT TO
THE RIG. As between Seller and Buyer, the execution by Buyer of the Certificate of Acceptance shall be conclusive proof that the Rig is in
full and complete compliance with all requirements of this Agreement other than as stated in this Agreement.

     4.2 Buyer’s Representations . Buyer hereby represents, covenants and warrants to Seller the following:

      (a) All necessary limited liability company action of Buyer has been taken duly to authorize the transactions contemplated by this
Agreement, and upon execution and delivery of this Agreement by Buyer, this Agreement will constitute the valid, legal and binding
obligations of Buyer, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and
similar laws, as well as principles of equity;

      (b) Buyer is duly formed and validly existing under the laws of its state of organization and has full legal right, power and authority to
enter into this Agreement and to perform its obligations hereunder;

      (c) Buyer has completed its inspection of the Rig as of the date hereof, including the Rig’s documentation, and is satisfied with the results
thereof; and

      (d) The execution or delivery of this Agreement and completion of all transactions contemplated hereby, will not either now, or after
notice or lapse of time, or both:

           1. conflict with, violate, result in a breach or right of termination or acceleration under or require any consent or authorization under
     any of the terms, conditions or provisions of any mortgage, indenture, agreement, loan, guarantee, note, bond, permit, license, lease,
     grant, patent, or other undertaking or authorization, written or oral, to or by which Buyer is a party or is bound;

          2. conflict with, result in a breach of or require any consent under any of the terms, conditions or provisions of Buyer’s certificate of
     formation, limited liability company agreement or equivalent governing instruments; or

           3. result in a violation by Buyer of any judgment, decree, order (including an executive order), award, writ, injunction or decree
     applicable to, or binding upon, Buyer.

                                                                         4
     4.3 Seller’s Representations . Seller hereby represents, covenants and warrants to Buyer the following:

     (a) Seller is the legal and beneficial owner of, and has good and marketable title to, the Rig, free and clear of all Liens;

     (b) At Closing, the Rig will be free of Liens;

      (c) All necessary limited liability company action of Seller has been taken, or will be duly taken prior to Closing, to authorize the
transactions contemplated by this Agreement, and upon execution and delivery of this Agreement by Seller, this Agreement will constitute the
valid, legal and binding obligations of Seller, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency,
reorganization, moratorium and similar laws, as well as principles of equity;

      (d) Seller is duly formed and validly existing under the laws of its state of organization and has full legal right, power and authority to
enter into this Agreement, and to perform its obligations hereunder;

     (e) No Taxes, duties, or customs for import or export duties on the Rig are outstanding;

     (f) Other than Bassoe Offshore, Seller has not, directly or indirectly, employed any broker, finder or intermediary that might be entitled to
any brokerage, finders’ or similar fee or commission in connection with the transactions contemplated by this Agreement; and

      (g) The execution or delivery of this Agreement and completion of all transactions contemplated hereby, will not either now, or after
notice or lapse of time, or both:

           1. 1, conflict with, violate, result in a breach or right of termination or acceleration under or require any consent or authorization
     under any of the terms, conditions or provisions of any. mortgage, indenture, agreement, loan, guarantee, note, bond, permit, license,
     lease, grant, patent, or other undertaking or authorization, written or oral, to or by which Seller is a party or is bound;

          2. conflict with, result in a breach of or require any consent under any of the terms, conditions or provisions of Seller’s certificate of
     formation, limited liability company agreement or equivalent governing instruments; or

           3. result in a violation by Seller of any judgment, decree, order (including an executive order), award, writ, injunction or decree
     applicable to, or binding upon, Seller.

     4.4 Survival .

           All representations and warranties contained in this Agreement shall survive the Closing, provided that no representation or
     warranty of either Seller or Buyer shall be valid after one year following the Closing, except in the case of fraud in which case such a
     representation or warranty shall survive for two years.

                                                                          5
5.    CERTAIN COVENANTS

      5.1 Seller’s Covenants . Seller covenants and agrees as follows:

       (a) Seller agrees to cooperate, and to cause its Affiliates to cooperate, with Buyer to effect an orderly transition of the ownership of the
Rig to Buyer. Seller will comply in all material respects with applicable laws regarding the ownership, operation and use of the Rig. Seller will
not, without the prior written consent of Buyer: (i) mortgage, pledge or subject to a Lien, or permit any Lien to be created against, the Rig; (ii)
sell, transfer, assign, license or otherwise dispose of, or agree to sell, transfer, assign, license or dispose of, the Rig or any part thereof,
including any equipment, parts, spares or replacements; (iii) fail to keep in full force and effect the currently existing insurance coverage, or
substantially equivalent insurance coverage, on the Rig through the Closing Time, provided that Force Majeure does not render impossible
such coverage; (iv) enter into any new drilling contract or charter (or similar arrangement) in respect of the Rig; or (v) commit to do any of the
foregoing.

       (b) Seller shall promptly notify Buyer of the occurrence of (i) any material dispute or proceeding between Seller and any governmental
agency or authority or any other person or entity related to the operation, use or ownership of the Rig, (ii) any accident or damage to the Rig, or
(iii) any other event or condition which would make any representation or warranty made by Seller or Buyer not true and correct in any
material respect, or which would make any agreement or covenant required to be performed by Seller incapable of being performed in any
material respect, or which would cause a condition to Seller’s obligations to close not to be satisfied.

      5.2 Buyer’s Covenants .

            Buyer covenants and agrees that Buyer shall promptly notify Seller of the occurrence of any event or condition which would make
      any representation or warranty made by Buyer or Seller not true and correct in any material respect, or which would make any agreement
      or covenant required to be performed by Buyer incapable of being performed in any material respect, or which would cause a condition to
      Buyer’s obligations to close not to be satisfied.

6.    CONDITIONS PRECEDENT

     6.1 Buyer’s Conditions Precedent . The obligations of Buyer to consummate the transactions to be performed by it in connection with the
Closing are, in all respects, subject to satisfaction, or waiver by Buyer, of the below-listed conditions precedent:

      (a) The Rig shall be safely jacked-up in the waters offshore of Singapore and shall be free from Liens;

      (b) The representations and warranties of Seller set forth in Article 4.3 shall be true and correct in all material respects as of the Closing
Date with the same force and effect as if such representations and warranties had been made on and as of the Closing Date, and Seller shall
have performed in all material respects the covenants and agreements of Seller contained herein that are required to be performed by Seller at
or prior to the Closing;

                                                                          6
     (c) All of the items described in Article 7.2(a) shall have been delivered by Seller to Buyer; and

      (d) Any necessary third party authorization, license, consent or approval of the transactions contemplated hereby under relevant laws
regarding the ownership, operation and use of the Rig shall have been obtained.

     6.2 Seller’s Conditions Precedent . The obligations of Seller to consummate the transactions to be performed by it in connection with the
Closing are, in all respects, subject to satisfaction, or waiver by Seller, of the below-listed conditions precedent:

      (a) The representations and warranties of Buyer set forth in Article 4.2 shall be true and correct in all material respects as of the Closing
Date with the same force and effect as if such representations and warranties had been made on and as of the Closing Date, and Buyer shall
have performed in all material respects the covenants and agreements of Buyer contained herein that are required to be performed by Buyer at
or prior to the Closing;

      (b) Any necessary third party authorization, license, consent or approval of the transactions contemplated hereby under relevant laws
regarding the ownership, operation and use of the Rig shall have been obtained; and

     (c) All of the items described in Article 7.2(b) shall have been delivered by Buyer to Seller.

7.    CLOSING

      7.1 Closing . Subject to the other terms and conditions of this Agreement, Seller shall sell and Buyer shall purchase the Rig, and the
Closing shall be held at 9 a.m., local time at the offices of Baker Botts L.L.P, 910 Louisiana Street, Houston, Texas 77002, or at such other
place as is mutually agreed to by Buyer and Seller. The Closing shall take place three (3) Business Days after the satisfaction or appropriate
waiver of all of the closing conditions set forth in Article 6 but in any event not later than October 1, 2005 ( “Outside Date” ); provided that,
subject to the provisions of Article 9 , if a Partial Loss (as defined therein) has occurred with respect to the Rig and Seller has elected to make
repairs pursuant to Article 9.2 , the Closing shall take place on the third Business Day following the date of completion of the pertinent repairs.
In the event the Closing has not occurred by the Outside Date or the date described in the preceding sentence regarding repairs, Seller or Buyer
may terminate this Agreement by providing notice to the other; provided, that such termination shall be without prejudice and in no way affect,
or act as a bar to or wavier of, any rights which any party may have hereunder; and provided further, that the party attempting to terminate this
Agreement may not he in breach of any of its material representations, warranties, covenants or agreements contained herein.

     7.2 Documents to be Delivered by Seller and Buyer . On the Closing Date, representatives of Seller and Buyer shall meet as contemplated
above for the purpose of completing the sale and purchase of the Rig.

                                                                         7
      (a) Seller’s Deliveries. Simultaneously with Buyer’s delivery of the Closing Payment as described in Article 7.2(b)(1) below, Seller shall
deliver to Buyer the following with respect to the Rig:

          1. A notarized bill of sale for the Rig in a form acceptable to the Panamanian Registry and substantially in the form attached hereto
     as Exhibit “D” (the “Bill of Sale” ).

          2. Any technical or regulatory documentation pertaining to the Rig which Seller may have in its possession and which is not already
     aboard the Rig, including, without limitation, DNV certificates, loadline certificates, radio licenses, operating manuals and engineering
     drawings; provided, however, that Seller does not represent that it has in its possession any such documentation, does not represent that
     any documentation that Seller does have is current, valid or correct, and does not represent that the Rig is capable of obtaining any needed
     documentation. Buyer shall also be entitled to retain a hard copy of the Rig’s preventive maintenance records, provided that this
     documentation may be provided to Buyer onboard the Rig.

           3. A certified copy of the resolutions of Seller’s managers authorizing the sale of the Rig for the Sale Price and the other
     transactions contemplated herein and authorizing the issuance of a power of attorney in favor of Seller’s representatives and authorizing
     such representative(s) to sign all necessary documents relating to such transactions.

           4. A fax copy or original of a Transcript of Registry dated on the Closing Date showing the Rig to be free from registered Liens or
     other registered encumbrances.

     (b) Buyer’s Deliveries . Simultaneously with delivery of the Rig as contemplated herein and the items set forth in Article 7.2(a) above,
Buyer shall:

           1. Pay and deliver to Seller in full and free of bank charges the Closing Payment.

           2. Deliver a certified copy of the resolutions of the Buyer’s Board of Managers authorizing the purchase of the Rig for the Sale
     Price and the other transactions contemplated herein and authorizing the issuance of a power of attorney in favor of the representatives of
     Buyer and authorizing such representative(s) to sign all necessary documents relating to such transactions.

     (c) Other Actions to be taken at Closing .

          At Closing Seller and Buyer shall execute and deliver the Certificate of Acceptance as contemplated in Article 8 below in a form
     acceptable to the Panamanian Registry and substantially in the form thereof attached hereto as Exhibit ―A‖.

                                                                       8
8.    DELIVERY

      Concurrently with the delivery of the Bill of Sale, (i) Seller shall deliver to Buyer, and Buyer shall accept from Seller, the Rig free from
Liens, and (ii) each party shall acknowledge such delivery and acceptance by executing and delivering the Certificate of Acceptance. The Rig
shall be delivered at its then current location in the offshore waters of Singapore, safely jacked-up, it being understood that any shore based
items shall be delivered in their current on-shore location in Singapore. The risk of loss of, and title to, the Rig, shall pass to Buyer as of the
Closing Time. In respect of that property, if any, forming part of the Rig which does not fall within the Bill of Sale, Seller and Buyer hereby
agree that title shall be deemed to pass to Buyer as of the Closing Time without further documentation or action by either party.

9.    INTERIM PERIOD

     9.1 Total Loss .

      (a) If during the period between the date hereof and the Closing Time (the “Interim Period” ), there is an actual total casualty loss,
constructive total casualty loss or compromised total casualty loss (collectively, a “Total Loss” ) of the Rig, Seller shall provide written notice
to Buyer of such Total Loss. In such event, this Agreement shall terminate entirely upon written notice from Buyer to Seller electing to
terminate, which notice must be delivered to Seller by 5:00 p.m., Houston, Texas time, on the fifth Business Day after Seller has notified Buyer
of such Total Loss; or

      (b) If during the Interim Period, there is a Total Loss of the Rig, and if Buyer or Seller has elected to terminate this Agreement in
accordance with Article 9.1(a) , then this Agreement shall immediately terminate and Seller shall pay the Deposit to Buyer pursuant to Article
3.2 , which shall be Seller’s sole obligation, and neither Buyer nor Seller shall have any further obligations or rights under this Agreement.

     9.2 Partial Loss .

     (a) If, during the Interim Period, the Rig suffers loss or damage which is not a Total Loss (a “Partial Loss” ), then the terms of this
Article 9.2 shall apply. In such event, Seller shall provide written notice to Buyer of such Partial Loss and:

           1. Seller shall either (i) perform the work necessary to cause the Rig to meet the Inspection Condition (the “Repair Work” ) at
     Seller’s sole expense, or (ii) notify Buyer that Seller does not intend to perform the Repair Work, in which case the provisions of Articles
     9.2(a)(2) and (3) shall apply;

           2. If Seller cannot complete the Repair Work prior to the Outside Date or if Seller notifies Buyer that it does not intend to perform
     the Repair Work, and the parties are able to agree in writing on the costs of such Repair Work not completed by the Outside Date, or
     some other acceptable Sale Price reduction, within 15 Business Days of Buyer’s receipt of notice pursuant to this Article 9.2(a) , then the
     Sale Price shall be reduced by such agreed amount; or

                                                                          9
           3. If Seller cannot complete the Repair Work prior to the Outside Date or. if Seller notifies Buyer that it does not intend to perform
      such Repair Work, and the parties are unable to agree in writing on the costs of the Repair Work or other acceptable Sale Price reduction
      within the time period specified in Article 9.2(a)(2) , then the Rig shall be treated as having suffered a Total Loss and the provisions of
      Article 9.1 shall apply.

     (b) The parties agree that a partial loss or damage which would reasonably be expected to cost less than One Hundred Twenty-Five
Thousand United States Dollars (US$125,000) to repair ( “De Minimis Damage” ) shall not be considered a Partial Loss and shall not require
any correction or remediation on the part of Seller hereunder, whether pursuant to Article 9 , or otherwise.

10.   INDEMNITY AND LIABILITY

       10.1 Buyer’s Personnel and Property . Buyer shall defend, release, indemnify and hold harmless Seller, its Affiliates, subcontractors and
the respective officers, directors, agents, and employees of any of the foregoing, from and against all liens, claims, demands, causes of action,
liability, damages, costs, expenses or losses (including, but not limited to, attorneys’ fees) (collectively, ― Damages ‖) attributable to, or for or
on account of, injury to or illness or death of employees, invitees and/or agents of Buyer and its Affiliates and subcontractors, or loss of or
damage to property of Buyer, its Affiliates and subcontractors (including the Rig on or after the Closing Time) which arise from, are incident to
or result directly or indirectly from the presence of employees, subcontractors, invitees and/or agents of Buyer or its Affiliates on the Rig.

      10.2 Seller’s Personnel and Property . Seller shall defend, release, indemnify and hold harmless Buyer, its Affiliates, subcontractors and
the respective officers, directors, employees and agents of any of the foregoing, from and against all Damages attributable to, or for or on
account of, injury to or illness or death of employees, invitees and/or agents of Seller, its Affiliates and subcontractors or loss of or damage to
property of Seller or its Affiliates (including the Rig prior to the Closing Time), and subcontractors which arise from, are incident to or result
directly or indirectly from the presence of employees, subcontractors, invitees and/or agents of Seller or its Affiliates on the Rig.

      10.3 Seller’s Other Indemnities . Subject to Articles 4.4, 10.1 and 10.2 above, and the other provisions of this Agreement, Seller shall
release, indemnify, defend and hold Buyer harmless from and against any Damages arising out of or in connection with:

      (a) the Rig or the operation of the Rig, to the extent the alleged event giving rise to such claim occurred prior to the Closing Time;

       (b) any breach of any of the representations or warranties made by Sellers in Article 4.3 or any breach by Seller of any of the covenants
or agreements set forth in this Agreement. It is understood and agreed that the maximum aggregate amount of all indemnity payments by Seller
and related to the Rig under this Article 10.3(b) shall not exceed the Sale Price and that no indemnity payments will be due under this Article
10.3(b) in respect of the first One Hundred Thousand United States Dollars (US$100,000) of Damages suffered by the parties otherwise
entitled to indemnity under this Article 10.3(b) .

                                                                         10
      10.4 Buyer’s Other Indemnities . Subject to Articles 4.4, 10.1 and 10.2 above, and the other provision of this Agreement, Buyer shall
release, indemnify, defend and hold Seller harmless from and against any Damages arising out of or in connection with:

     (a) the Rig or the operation of the Rig, to the extent the alleged event giving rise to such claim occurred at or after the Closing Time;

       (b) any breach of any of the representations or warranties made by Buyer in Article 4.2 or any breach by Buyer of any of the covenants or
agreements set forth in this Agreement. It is understood and agreed that the maximum aggregate amount of all indemnity payments by Buyer
and related to the Rig under this Article 10.4(b) shall not exceed the Sale Price and that no indemnity payments will be due under this Article
10.4(b) in respect of the first One Hundred Thousand United States Dollars (US$100,000) of Damages suffered by the parties otherwise
entitled to indemnity under this Article 10.4(b) .

      10.5 Indemnification Notices . If any party claiming indemnification (an “Indemnified Party” ) is seeking indemnification under this
Agreement from a party owing a duty of indemnification hereunder (the “Indemnifying Party” ), the Indemnified Party must give written
notice of the claim to the Indemnifying Party describing in reasonable detail the nature of the claim, an estimate of the Damages attributable to
the claim (which estimate will not be conclusive or binding) and the basis for the Indemnified Party’s request for indemnification hereunder. If
the Indemnifying Party does not respond within a 30 calendar day period, the Indemnifying Party will be deemed to have rejected such claim in
which event the Indemnified Party will be free to pursue such remedies as may be available to the Indemnified Party under this Agreement and
applicable law.

      10.6 Third Party Claims . All claims for indemnification under this Agreement with respect to Damages claimed or asserted by a third
party against an Indemnified Party (that third-party claim or assertion, a “Third-Party Claim” ) shall be asserted and resolved as this Article
10.6 provides.

       (a) An Indemnified Party claiming indemnification in respect of a Third-Party Claim must promptly (i) notify the Indemnifying Party of
any Third-Party Claim asserted against the Indemnified Party that could reasonably give rise to a right of indemnification under this Agreement
and (ii) transmit to the Indemnifying Party a notice (a “Claim Notice” ) describing in reasonable detail the nature of the Third-Party Claim, an
estimate of the amount of damages attributable to that claim to the extent feasible (which estimate will not be conclusive or binding) and the
basis for the Indemnified Party’s request for indemnification under this Agreement. The failure to promptly deliver a Claim Notice will not
relieve the Indemnifying Party of its obligations to the Indemnified Party with respect to the related Third-Party Claim, except to the extent that
the resulting delay is materially prejudicial to the defense of that claim. Within 30 days after receipt of any Claim Notice (the “Election
Period” ), the Indemnifying Party must notify the Indemnified Party (i) whether the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article 10 with respect to that Third-Party Claim and (ii) if the Indemnifying Party does not dispute its potential
liability to the Indemnified Party with respect to that Third-Party Claim, whether the Indemnifying Party elects, at the sole cost and expense of
the Indemnifying Party, to defend the Indemnified Party against that Third-Party Claim.

                                                                        11
       (b) If the Indemnifying Party does not dispute its potential liability to the Indemnified Party and notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the Third-Party Claim, then the Indemnifying Party will have the
right to defend, at its sole cost and expense, that Third-Party Claim by all appropriate proceedings, which proceedings the Indemnifying Party
must prosecute diligently to a final conclusion or settle at its discretion in accordance with this Article 10.6 , and the Indemnified Party will
furnish the Indemnifying Party with all information in its possession with respect to that Third-Party Claim and otherwise cooperate with the
Indemnifying Party in the defense of that Third-Party Claim; provided, however, that the Indemnifying Party will not enter into any settlement
with respect to any Third-Party Claim that purports to limit the activities of, or otherwise restricts in any way, any Indemnified Party or any
Affiliate of any Indemnified Party without the prior consent of that Indemnified Party (which consent shall not be unreasonably withheld). The
Indemnified Party is hereby authorized, at the sole cost and expense of the Indemnifying Party, to file, during the Election Period, any motion,
answer or other pleadings that the Indemnified Party deems necessary or appropriate to protect its interests or those of the Indemnifying Party.
The Indemnified Party may participate in, but not control, any defense or settlement of any Third-Party Claim the Indemnifying Party controls
under this Article 10.6 and will bear its own costs and expenses with respect to that participation; provided, however, that if the named parties
to any such action (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party, and the Indemnified Party
has been advised by counsel that there may be one or more legal defenses available to it that are different from or additional to those available
to the Indemnifying Party, then the Indemnified Party may employ separate counsel at its sole cost and expense and, on its receipt of written
notification of that employment, the Indemnifying Party will not have the right to assume or continue the defense of that action on behalf of the
Indemnified Party.

       (c) If the Indemnifying Party (i) within the Election Period (A) disputes its potential liability to the Indemnified Party under this Article
10, (B) elects not to defend the Indemnified Party under Article 10.6(a) , or (C) fails to notify the Indemnified Party that the Indemnifying
Party elects to defend the Indemnified Party under Article 10.6(a) , or (ii) elects to defend the Indemnified Party under Article 10.6(a) , but
fails diligently and promptly to prosecute or settle the Third-Party Claim, then the Indemnified Party will have the right to defend, at the sole
cost and expense of the Indemnifying Party (if the Indemnified Party is entitled to indemnification hereunder), the Third-Party Claim by all
appropriate proceedings, which proceedings the Indemnified Party must promptly and vigorously prosecute to a final conclusion or settle. The
Indemnified Party will have full control of such defense and proceedings. Notwithstanding the foregoing, if the Indemnifying Party has
delivered a written notice to the Indemnified Party to the effect that the Indemnifying Party disputes its potential liability to the Indemnified
Party under this Article 10 and if that dispute is resolved in favor of the Indemnifying Party, the Indemnifying Party will not be required to
bear the costs and expenses of the Indemnified Party’s defense under this Article 10 or of the Indemnifying Party’s participation therein at the
Indemnified Party’s request, and the Indemnified Party will reimburse the Indemnifying Party in full for all reasonable costs and expenses of
that litigation. The Indemnifying Party may participate in, but not control, any defense or settlement the Indemnified Party controls under this
Article 10.6(c) , and the Indemnifying Party will bear its own costs and expenses with respect to that participation.

                                                                         12
      (d) Payments of all amounts owing by an Indemnifying Party under this Article 10 relating to a Third-Party Claim will be made within 30
days after the latest of (i) the settlement of that Third-Party Claim, (ii) the expiration of the period for appeal of a final adjudication of that
Third-Party Claim or (iii) the expiration of the period for appeal of a final adjudication of the Indemnifying Party’s liability to the Indemnified
Party under this Agreement in respect of that Third-Party Claim.

      10.7 General Indemnity and Liability Provisions .

     (a) Application of Indemnities . All of the indemnities and allocations of risk contained in this Article 10 or elsewhere in this
Agreement shall apply notwithstanding the negligence, or gross negligence or willful misconduct (whether sole, concurrent, active or
passive) of any person or party (including an Indemnified Party), or the strict liability of, liability imposed by statute on, or other
breach of obligation by, any person or party (including an Indemnified Party), or any other event of condition (excluding, in all cases,
the willful misconduct of an Indemnified Party). Indemnitees shall be entitled to reasonable attorneys’ fees incurred in asserting or
enforcing the indemnities granted herein.

      (b) Consequential Damages . In no event shall either Seller, on the one hand, or Buyer, on the other, be liable to the other for special,
indirect or consequential damages suffered by the other party resulting from or arising out of this Agreement, including, without limitation, loss
of profit, loss of use or business interruptions, however same may be caused. The foregoing shall not affect the indemnity obligations for
Third-Party Claims set forth in this Article 10.

     (c) Recouped Amount . If, after an indemnity payment is made under this Article 10 by an Indemnifying Party (an “Indemnity
Payment” ) to an Indemnified Party, such Indemnified Party receives, directly or indirectly, any refund, rebate, credit, settlement or other
payment or amount from any person relating to such Indemnity Payment (a “Recouped Amount” ) which was not included in the
Indemnifying Party’s favor when calculating the Indemnity Payment, the Indemnified Party shall promptly inform the Indemnifying Party and
pay an amount equal to the Recouped Amount to the Indemnifying Party. In addition, if any Indemnified Party becomes aware of
circumstances that could reasonably give rise to a Recouped Amount, the Indemnified Party shall promptly so notify the Indemnifying Party.

11.   ASSIGNMENT

      This Agreement may not be assigned by any party without the prior written consent of the other parties; provided, however, that Buyer
shall be entitled to assign this Agreement to an Affiliate ( “Buyer Assignee” ) of Buyer ( “Permitted Assignment” ) in the manner and under
the terms set forth herein. Buyer shall notify Seller on or prior to the date of any Permitted Assignment. In the event of the Permitted
Assignment, Buyer shall remain directly responsible for all obligations of Buyer hereunder and further cause Buyer Assignee to fully comply
with the terms hereof, it being the understanding and agreement of the parties that Buyer shall in no way be relieved of any liability or
responsibility hereunder.

                                                                        13
12.      TAXES AND FEES

      Seller shall bear all Taxes that relate to the ownership, operation or storage of the Rig prior to the Closing Time. Buyer shall bear (i) all
Taxes that relate to the ownership, operation or storage of the Rig after the Closing Time and (ii) all Taxes assessed on account of the sale or
transfer of the Rig to Buyer. Each party shall defend, indemnify and hold the other party harmless from and against all such Taxes for which
the indemnifying party is responsible under this Article 12 . Notwithstanding the foregoing, any Taxes, fees and expenses in connection with
the registration under Buyer’s flag shall be for Buyer’s account, whereas similar charges in connection with the closing of the Seller’s registry
shall be for Seller’s account.

13.      CHOICE OF LAW AND JURISDICTION

      The parties agree that this Agreement shall be governed by and construed in accordance with general maritime laws of the United States,
and, to the extent such maritime laws cannot be applied, the laws of the State of Texas.

      Each of the parties hereto agrees that any action or proceeding brought to enforce the rights or obligations of any party hereto under this
Agreement may be commenced and maintained in any court of competent jurisdiction located in the Harris County, Texas, and that any Texas
State court or federal court sitting in the Harris County, Texas shall have exclusive jurisdiction over any such action or proceeding brought by
any of the parties hereto.

14.      COST OF THE TRANSACTION

     Whether or not the transactions contemplated hereby shall be consummated, the parties agree that each party will pay the fees, expenses
and disbursements of such party and its agents, representatives, and counsel incurred in connection with the subject matter of this Agreement.
Without limiting the generality of the foregoing, Buyer shall bear the costs incurred by it in carrying out the inspection of the Rig.

15.      NOTICES

      Any notice, demand or communication required, permitted or desired to be given hereunder must be given in writing and shall be deemed
effectively given upon receipt and shall be personally delivered, telecopied or mailed by prepaid certified mail, return receipt requested,
addressed as follows:

Seller                              Hydrocarbon Capital II LLC
                                    Attn: James P. Seery
                                    745 Seventh Ave.
                                    New York, New York 10019
                                    Telecopy: (646) 758-2209
with a copy to                      Lehman Commercial Paper Inc.
                                    Attn: J. Robert Chambers
                                    600 Travis Street, Suite 7200
                                    Houston, Texas 77002
                                    Telecopy: (713) 236-3912

                                                                         14
Buyer                              Hercules Offshore, LLC
                                   Attn: Steven Manz, Chief Financial Officer
                                   2929 Briar Park Drive, Suite 435
                                   Houston, Texas 77042
                                   Telecopy: (713) 952-4342
with a copy to                     Baker Botts L.L.P.
                                   Attn: David Emmons
                                   2001 Ross Avenue, Suite 600
                                   Dallas, Texas 75201
                                   Telecopy: (214) 661-4414

or to such other address, and to the attention of such other person or officer, as any party may designate by notice.

16.   BROKERAGE

       Each party agrees to bear its own cost related to fees or commissions of its brokers or agents and to indemnify the other from and against
all loss, cost, damage or expense (including reasonable attorneys’ fees and expenses) arising out of claims for any fees or commissions of its
brokers or agents, if any, employed or alleged to have been employed in connection with the sale and purchase of the Rig.

17.   ENTIRE AGREEMENT/AMENDMENT

      This Agreement (including the exhibits and schedules hereto) supersedes (and the parties hereby terminate without recourse) all
preceding oral and written agreements, records, negotiations, reference materials and correspondence between the parties regarding the subject
matter hereof, and this Agreement constitutes the entire agreement of whatsoever kind or nature existing between the parties respecting the sale
of the Rig, excluding only the provisions of the June 16, 2005 Memorandum of Understanding between Seller and Buyer under the Caption
―Confidentiality‖. As between the parties, no oral statements, prior correspondence, schedules, lists, brochures, drawings or written material of
any kind not specifically incorporated herein shall be of any force and effect, and shall not be relied upon by the other party. All prior
representations or agreements, whether written or verbal, not expressly incorporated herein, are superseded and may not be relied upon and no
changes in or additions to this Agreement may be made by either party except in a writing signed by both parties hereto.

18.   NAME AND MARKINGS

      Buyer shall ensure that the name of the Rig is changed and that any markings on the outer part of the Rig bearing the name of the Rig
shall be removed or deleted as soon as possible but not later than 120 days after the Closing Date.

                                                                        15
19.   GENERAL

      19.1 The invalidity, illegality or unenforceability of any provision or any part of any provision of this Agreement shall not affect the
continuation in force of such other part or the remainder of this Agreement.

     19.2 This Agreement may be executed in any number of counterparts by the parties hereto on separate counterparts, each of which when
executed and delivered shall constitute an original, but all of which shall together constitute one and the same instrument.

      19.3 The provisions of Articles 10.1 and 10.2 and any other provision which, due to their nature should reasonably be expected to
survive, shall survive any termination of this Agreement.

      19.4 Neither party shall be in breach of its obligations (other than its obligation to pay money) to the extent it is prevented or hindered by
Force Majeure. “Force Majeure” shall be any event of extraordinary nature which is beyond the reasonable control of a party and not
reasonably foreseeable at the time of the signature of this Agreement, and shall include (but not be limited to) acts of war or acts of God, or
warlike operations in the region where the Rig is located, but shall not include mere financial distress or inability to pay on the part of either
party, When, due to termination of such Force Majeure, such performance is no longer impossible, the party affected thereby shall immediately
resume such performance under this Agreement; provided, however, if such event of Force Majeure shall continue for 30 days beyond the
Outside Date, either party shall have the right to terminate this Agreement by written notice to the other party. In the event this Agreement is
terminated pursuant to this paragraph, each party shall be released from its obligations hereunder (but without prejudice to any rights accrued
prior to the date of termination).

      19.5 This Agreement shall be binding upon and inure for the benefit of the parties and their respective successors and assigns.

      19.6 Neither of the parties has the right to make any public statement with regard to or in connection with this Agreement or to disclose
information related thereto without prior approval by the other party, unless required by applicable law, the rules and regulations of the United
States Securities and Exchange Commission or applicable rules and regulations of any exchange or market to which Buyer is subject.
Notwithstanding the foregoing, Buyer and Seller shall be entitled, after due notice in advance to the other party, to make such public statements
as they reasonably determine are required in order to comply with the rules or regulations of any securities exchange on which their (or their
respective ultimate parent’s) securities are listed for trading.

       19.7 Buyer may, at its option and expense, place a reasonable number of representatives on board the Rig at any time and from time to
time during the term of this Agreement. Buyer shall coordinate with Seller with regard to the timing and method of travel to the Rig. All such
representatives shall be subject to any and all safety and other rules in effect on the Rig. Without affecting the indemnity obligations or
liabilities of Buyer hereunder, in the event any such representatives are placed on board the Rig, Buyer shall maintain insurance

                                                                        16
coverage relating to such representatives boarding the Rig naming Seller as an additional insured as is reasonably prudent for similarly situated
rig operators. Upon request of Seller, Buyer shall furnish certificates of insurance reflecting that Seller is an additional named insured under
such policies and that such policies may not be canceled without thirty (30) days’ prior written notice to Seller.

                                                 [Remainder of Page Intentionally Left Blank]

                                                                       17
      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in multiple originals by their duly authorized
officers, all as of the day and year first above written.

                                                                                 “BUYER”
                                                                                 Hercules Offshore, LLC

                                                                                 By:             / S / R ANDALL D. S TILLEY
                                                                                 Name:     Randall D. Stilley
                                                                                 Title:    Authorized Manager

                                                                                 “SELLER”
                                                                                 Hydrocarbon Capital II LLC
                                                                                 By: Lehman Commercial Paper Inc., Managing Member

                                                                                 By:                / S / J. R OBERT C HAMBERS
                                                                                 Name:         J. Robert Chambers
                                                                                 Title:        Authorized Signatory

                                                                   18
                                                              EXHIBIT “B”

                                                       Equipment Excluded from Sale

The following equipment is not included in the sale:

NONE

                                                                   19
                                                      EXHIBIT “C”

                                                      Scope of Work

Keppel FELS Limited Invoice # 25100180 totaling $115,106.10 to overhaul engines #2 & #4.

                                                            20
                                            Exhibit 10.16


   ASSET PURCHASE AGREEMENT
             by and among
   Hercules Liftboat Company, L.L.C.,
           Danos Marine, Inc.
                   and
Danos & Curole Marine Contractors, L.L.C.
          September 16, 2005
                                                     TABLE OF CONTENTS

ARTICLE 1   PURCHASE AND SALE OF ASSETS                                  1
    1.1     Purchase and Sale of Assets                                  1
    1.2     Assignment of Contracts                                      2
    1.3     Purchase Price                                               3
    1.4     Post-Closing Purchase Price Adjustment                       3
    1.5     Allocation of Purchase Price                                 4
    1.6     Purchase of Inventory on Order                               4
ARTICLE 2   THE CLOSING                                                  5
    2.1     Time and Place of the Closing                                5
    2.2     Delivery of Purchased Assets                                 5
    2.3     Procedure at the Closing                                     5
    2.4     Loss of or Damage to Certain Purchased Assets                6
ARTICLE 3   REPRESENTATIONS AND WARRANTIES OF THE SELLER                  7
   3.1      Status of the Seller                                          7
   3.2      Power and Authority; Enforceability                           7
   3.3      No Violation                                                  8
   3.4      Brokers’ Fees                                                 8
   3.5      Purchased Assets                                              8
   3.6      Contracts                                                     9
   3.7      Vessels                                                       9
   3.8      Compliance with Laws                                         10
   3.9      Taxes                                                        10
   3.10     Labor; Employees                                             10
   3.11     Environmental, Health and Safety Compliance                  10
   3.12     Litigation                                                   11
   3.13     Insurance                                                    11
ARTICLE 4   REPRESENTATIONS AND WARRANTIES OF THE BUYER                  12
   4.1      Entity Status                                                12
   4.2      Power and Authority; Enforceability                          12
   4.3      No Violation                                                 12
   4.4      Brokers’ Fees                                                12
   4.5      Coastwise Citizen                                            12
ARTICLE 5   PRE-CLOSING AND POST-CLOSING COVENANTS                       13
   5.1      General                                                      13
   5.2      Governmental Filings                                         13
   5.3      Operation of Business Pending Closing                        13
   5.4      Full Access                                                  14
   5.5      Publicity; Confidentiality                                   14
   5.6      Taxes; Duties and Customs                                    14
   5.7      Employees                                                    15

                                                             ii
     5.8         Release of Vessels from Mortgages                         16
ARTICLE 6        POST-CLOSING COVENANTS                                    16
    6.1          General                                                   16
    6.2          Litigation Support                                        16
    6.3          Tax Matters                                               17
    6.4          Removal of Marks                                          17
    6.5          Handling of Cash and Other Payments                       17
    6.6          Agreement Not to Compete                                  17
    6.7          Access                                                    17
    6.8          Andre Danos                                               18
ARTICLE 7        CLOSING CONDITIONS                                        18
    7.1          Conditions Precedent to Obligation of the Buyer           18
    7.2          Conditions Precedent to Obligations of the Seller         19
ARTICLE 8        TERMINATION                                               20
ARTICLE 9        INDEMNIFICATION                                           20
    9.1          Indemnification of the Buyer by the Sellers               20
    9.2          Indemnification of the Sellers by the Buyer               21
    9.3          Notice and Defense of Third Party Claims                  21
    9.4          Limitations of Indemnification                            22
    9.5          Survival                                                  22
ARTICLE 10       DEFINITIONS                                               23
ARTICLE 11       MISCELLANEOUS                                             26
   11.1          Entire Agreement                                          26
   11.2          Successors                                                27
   11.3          Assignments                                               27
   11.4          Notices                                                   27
   11.5          Specific Performance                                      28
   11.6          Counterparts                                              28
   11.7          Headings                                                  28
   11.8          Governing Law                                             28
   11.9          Amendments and Waivers                                    28
   11.10         Severability                                              29
   11.11         Expenses                                                  29
   11.12         Construction                                              29
   11.13         Incorporation of Exhibits and Disclosure Schedule         29

Disclosure Schedule

Sec. 1.1A Purchased Assets

                                                                     iii
Sec. 1.1B Permits

Sec. 1.1C Business Records

Sec. 1.1D Drawings and Intellectual Property

Sec. 1.1E Vehicles

Sec. 1.2 Assigned Contracts

Sec. 1.5 Allocation of Purchase Price of Purchased Assets

Sec. 3.3 Consents

Sec. 3.5(a) Encumbrances on Purchased Assets

Sec. 3.7 Vessel Documentation

Sec 3.10 Labor Matters

Sec. 3.11 Compliance with Laws

Sec. 9.1 Certain Indemnification Obligations

Exhibits

Exhibit A Form of Bill of Sale, Assignment and Assumption Agreement

Exhibit B Form of U.S. Coast Guard Bills of Sale

Exhibit C Form of Protocol of Delivery and Acceptance

Exhibit D Form of Time Charter

                                                                 iv
                                                     ASSET PURCHASE AGREEMENT

      This Asset Purchase Agreement (this ― Agreement” ) is made as of September 16, 2005, by and between Hercules Liftboat Company,
L.L.C., a Delaware limited liability company (the ― Buyer ‖), on the one hand, and DANOS & CUROLE MARINE CONTRACTORS, LLC, a
Louisiana limited liability company (―D&C‖), and DANOS MARINE, INC., a Louisiana corporation (―Danos‖, and, together with D&C, the
―Sellers‖), on the other hand. The Buyer and the Sellers may be referred to herein individually as a ― Party ,‖ and collectively as the ― Parties
.‖ Except as otherwise provided herein, capitalized terms used herein shall have that meanings specified in Article 10.

                                                                   RECITALS

     WHEREAS , D&C owns and operates six lift boat vessels that are currently operating in the Gulf of Mexico and the coastal waters of
Nigeria; and

     WHEREAS, Danos owns and operates two lift boat vessels that are currently operating in the Gulf of Mexico and the coastal waters of
Nigeria;

     WHEREAS , the Sellers are engaged in the business of providing lift boat services to the offshore oil drilling industry through the
Vessels (the ― Business ‖); and

      WHEREAS , the Sellers desire to transfer to the Buyer, and the Buyer desires to acquire from the Sellers, the Vessels and certain other
assets used in the Business, on the terms and conditions specified herein.

                                                                 AGREEMENT

      NOW, THEREFORE , in consideration of the foregoing and the mutual promises herein made, and in consideration of the
representations, warranties and covenants contained herein, the Parties agree as follows:

                                                             ARTICLE 1
                                                     PURCHASE AND SALE OF ASSETS

1.1 Purchase and Sale of Assets.

      At the Closing, on the terms and subject to the conditions set forth in this Agreement, the Sellers will sell, convey, transfer, assign and
deliver to the Buyer (i) the vessels listed on Schedule 1.1A of the Disclosure Schedule together with their respective engines, tackle, winches,
cordage, general outfit, electronic and navigation equipment, radio installations, appurtenances, appliances, inventory, spare parts, stores, tools
and provisions designated for such vessels, whether on board or ashore, (collectively, the ― Vessels ‖) and certain other assets used in the
Business and listed on Section 1.1A of the Disclosure Schedule, (ii) all permits (to the extent transferable) listed on Section 1.1B of

                                                                         1
the Disclosure Schedule, (iii) all business records listed on Section 1.1C of the Disclosure Schedule (the ― Records ‖); (iv) any technical or
regulatory documentation pertaining to the Vessels which the Sellers may have in their possession and which is not already aboard the Vessels,
including, without limitation, DNV certificates, loadline certificates, radio licenses, operating manuals and preventive maintenance manuals
(collectively, the ― Vessel Documentation ‖); (v) all drawings and intellectual property listed in Section 1.1D of the Disclosure Schedule (the ―
Intellectual Property ‖); and (vi) the vehicles listed on Section 1.1E of the Disclosure Schedule. The assets described in the foregoing clauses
(i) through (vi) are hereinafter collectively referred to as the ― Purchased Assets .‖

1.2 Assignment of Contracts.

     At the Closing, the Sellers will convey, transfer and assign to the Buyer the rights of the Sellers under the contracts designated by the
Buyer and listed in Section 1.2 of the Disclosure Schedule or designated by the Buyer in writing at least 15 days prior to the Closing (the ―
Assigned Contracts ‖), subject to the following terms and conditions:

      (a) Notwithstanding any other provision hereof, this Agreement shall not constitute nor require an assignment to the Buyer of any
contract if an attempted assignment of such contract without the consent of any party would constitute a breach thereof or a violation of any
Law or any Order, rule or regulation of any Governmental Authority or court unless and until such consent shall have been obtained. In the
case of any contract that cannot be effectively transferred to the Buyer without such consent, the Sellers agree that they will promptly use
commercially reasonable efforts to obtain or cause to be obtained the necessary consents to the transfer of such contracts. The Buyer agrees to
use commercially reasonable efforts to cooperate with the Sellers in obtaining such consents and to enter into such arrangement of assumption
as may be reasonably requested by the other contracting party under such contract, to the extent not inconsistent with the terms of this
Agreement; provided, however, that in no event shall the Buyer be required to pay any fees or other compensation in connection with obtaining
such consents.

       (b) With respect to each of the Assigned Contracts that are assigned to the Buyer pursuant to Section 1.2(a), the Sellers shall be entitled to
all revenues, and shall retain all Liabilities and obligations under such contracts resulting from events or occurrences or relating to periods
ending prior to the Effective Time, and the Buyer shall be entitled to receive all revenues, and shall assume all Liabilities and obligations under
such contracts resulting from events or occurrences or relating to periods on or after the Effective Time.

      (c) To the extent that consent to assign any Assigned Contract for the use of a Vessel is not obtained prior to Closing (an ― Unassigned
Contract ‖), if a Vessel is performing work for a customer pursuant to the terms of such Unassigned Contract at the Effective Time (a) such
Unassigned Contract shall be held by the Sellers in trust for the Buyer after the Effective Time, (b) all obligations thereunder shall be
performed by the Buyer in the name of the Sellers, and (c) all benefits, liabilities and obligations derived

                                                                         2
thereunder shall be for the account of the Buyer. Once consent for the assignment of such Unassigned Contract is obtained, the Sellers shall
assign such Unassigned Contract to the Buyer. The arrangement described in this Section 1.2(c) shall terminate on the earlier of the date on
which (i) consent to the assignment of the Unassigned Contract is obtained, (ii) the Buyer consummates other arrangements with the party or
parties under such Unassigned Contract providing for the Buyer’s provision of services to such party or parties and the complete release of the
Sellers for the future provision of services to such party or parties or (iii) such Unassigned Contract terminates. Notwithstanding the foregoing,
the Sellers shall indemnify the Buyer from any Liabilities arising after the Effective Time from any communications or actions by the Sellers
that were not authorized by the Buyer with respect to any Unassigned Contract.

1.3 Purchase Price . The aggregate purchase price to be paid by the Buyer for the Purchased Assets shall equal forty-four million dollars
($44,000,000.00) (the “Purchase Price” ), of which $37,900,000 shall be paid to D&C and $6,100,000 shall be paid to Danos. The Purchase
Price shall be subject to adjustment pursuant to Sections 1.4 and 2.4. The Buyer will also reimburse the Sellers up to $500,000 for costs and
expenses incurred in the salvage of the Vessel Andre Danos, and will reimburse the Sellers for the deductible under the applicable insurance
policy relating to the Andre Danos ; provided, however, that in no event, shall the reimbursement for such deductible exceed $1,500,000.

1.4 Post-Closing Purchase Price Adjustment.

      (a) The Parties agree and acknowledge that the spare parts and inventory listed in Section 1.1A of the Disclosure Schedule represent, as
of the date hereof, all spare parts and inventory of the Sellers on or for use on the Vessels within the ordinary course of the Business. As
promptly as practicable, but in no event later than 30 days after the Closing Date, the Sellers shall cause to be prepared and delivered to the
Buyer a revised Section 1.1A of the Disclosure Schedule (the ― Revised Inventory List ‖) that reflects all spare parts and inventory aboard the
Vessels or for use on the Vessels at the time of the Closing. To the extent that the Revised Inventory List differs by more than $50,000 in value
with Section 1.1A of the Disclosure Schedule attached hereto, the Purchase Price will be adjusted, upward or downward, on a dollar-for-dollar
basis, to reflect such difference. If the Purchase Price is increased by virtue of the Revised Inventory List containing a value of spare parts and
inventory at least $50,000 greater than the value set forth on the original Section 1.1A of the Disclosure Schedule, the Buyer will deliver to the
Sellers, within 5 days of the Revised Inventory List becoming final hereunder, the difference in value set forth on the Revised Inventory List
and Section 1.1A of the Disclosure Schedule attached hereto. If the Purchase Price is decreased by virtue of the Revised Inventory List
reflecting a value of spare parts and inventory at least $50,000 less than the value set forth on the original Section 1.1A of the Disclosure
Schedule, the Sellers will refund to the Buyer, within 5 days of the Revised Inventory List becoming final, the difference in value set forth on
the Revised Inventory List and Section 1.1A of the Disclosure Schedule attached hereto.

                                                                         3
      (b) If the Buyer in good faith disagrees with the Revised Inventory List, then the Buyer shall notify the Sellers in writing (the ― Notice of
Disagreement ‖) of such disagreement within 10 days after delivery of the Revised Inventory List to the Buyer. During such 10-day period, the
Buyer and its representatives shall be permitted to review during normal business hours the invoices and records of the Sellers, as they relate to
the spare parts and inventory listed on the Revised Inventory List. The Notice of Disagreement shall set forth in reasonable detail the basis for
the disagreement and specify the adjustments that, in the Buyer’s opinion, should be made to the Revised Inventory List in order to comply
with the requirements of this Agreement. Thereafter, the Buyer and the Sellers shall attempt in good faith to reconcile their differences, and any
resolution by them as to any disputed items shall be final, binding and conclusive on the Parties and shall be evidenced by a writing signed by
the Buyer and the Sellers. If the Buyer and the Sellers are unable to resolve the disagreement within 15 days after delivery of the Notice of
Disagreement, then the Buyer and the Sellers shall instruct an independent accountant, agreed on by both Parties (the ― Independent
Accountant ‖), to resolve the disputed items and make a determination with respect thereto, which determination shall be provided to the
Buyer and the Sellers by the Independent Accountant in a written notice within 30 days after selection of the Independent Accountant.

       (c) The Revised Inventory List shall be deemed to be final, binding and conclusive on the Buyer and the Sellers upon the earliest of (i) the
failure of the Buyer to deliver to the Seller a Notice of Disagreement within 10 days of the Sellers’ delivery of the Revised Inventory List;
(ii) the resolution of all disputes by the Buyer and the Sellers, as evidenced by a signed writing or (iii) the resolution of all disputes by the
Independent Accountant, as evidenced by the amended and binding Independent Accountant’s Revised Inventory List.

1.5 Allocation of Purchase Price. Unless otherwise agreed to in writing by the Parties, (a) Section 1.5 of the Disclosure Schedule attached
hereto sets forth the allocations established by the Buyer and the Sellers of the Purchase Price among the Purchased Assets; (b) the allocations
set forth in Section 1.5 of the Disclosure Schedule will be used by the Buyer and the Sellers as the basis for reporting asset values and other
items for purposes of all required tax returns (including any tax returns required to be filed under Section 1060(b) of the Code and the treasury
regulations thereunder); and (c) the Buyer and the Sellers shall not assert, in connection with any audit or other proceeding with respect to
taxes, any asset values or other items inconsistent with the allocations set forth in Section 1.5 of the Disclosure Schedule.

1.6 Purchase of Inventory on Order. Following the Closing, the Buyer will purchase from the Sellers any equipment or other materials that
were ordered in the ordinary course of business, consistent with past practices, prior to the Closing for use upon the Vessels or as part of
Inventory, but was not delivered or invoiced prior to the Closing. The purchase price for such equipment and Inventory shall be equal to the
invoiced amount owed by the Sellers.

                                                                        4
                                                                   ARTICLE 2
                                                                  THE CLOSING

2.1 Time and Place of the Closing. The closing of the transactions contemplated hereby (the “Closing” ) will take place at the offices of
Adams and Reese, LLP in Houston, Texas, or at such other location agreed by the Parties, commencing at 9:00 a.m., Houston time, on
October 31, 2005; provided that the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions
contemplated hereby has occurred (other than conditions with respect to actions the respective Parties will take at the Closing itself), or such
other date as the Parties may mutually determine (the “Closing Date” ). The Closing shall be deemed consummated and effective as of the
close of business on the Closing Date (the “Effective Time ‖).

2.2 Delivery of Purchased Assets. At the Effective Time, title, ownership and possession of the Purchased Assets shall pass to the Buyer and
the Buyer shall take possession of the Purchased Assets free and clear of all Encumbrances wherever they are located at the Effective Time.

2.3 Procedure at the Closing.

     (a) At the Closing, the Sellers shall deliver, or cause to be delivered, to the Buyer:

           (i) a Bill of Sale, Assignment and Assumption Agreement, substantially in the form attached as Exhibit A hereto, duly executed by
     the applicable Seller, and (B) Bills of Sale, in the forms attached as Exhibit B hereto for the Vessels in form suitable for recording with
     the U.S. Coast Guard National Vessel Documentation Center (the items set forth in subsections (A) and (B) are collectively referred to as
     the ― Bills of Sale ‖);

           (ii) a certificate from each Seller, duly executed by an officer or manager of such Seller, certifying as to the matters set forth in
     Sections 7.1(a) and (b);

         (iii) all of the Records and Vessel Documentation (provided that the Sellers may retain copies of such Records and Vessel
     Documentation);

           (iv) evidence of the consents and releases referred to in Sections 5.2, 5.8, and 7.1(c) below;

          (v) a Protocol of Delivery and Acceptance for each Vessel, in the form attached as Exhibit C hereto (the ― Protocols of Delivery
     and Acceptance ‖), duly executed by the applicable Seller;

           (vi) certificates of title for all vehicles included in the Purchased Assets;

                                                                           5
           (vii) a Time Charter Agreement (the ― Time Charter Agreement”) duly executed by Danos & Curole Nigeria, Ltd., in the form
     attached as Exhibit D hereto; and

           (viii) such other instruments and documents as the Buyer may reasonably require.

     (b) At the Closing, the Buyer shall deliver, or cause to be delivered, to the Sellers:

          (i) the Purchase Price, as adjusted pursuant to Section 2.4, in cash or other immediately available funds by wire transfer to the
     accounts designated by the Sellers in writing at least two Business Days prior to the Closing Date;

           (ii) the Bill of Sale, Assignment and Assumption Agreement, duly executed by the Buyer;

           (iii) a certificate, duly executed by an officer of the Buyer, certifying as to the matters set forth in Sections 7.2(a) and (b);

           (iv) the Protocols of Delivery and Acceptance, duly executed by the Buyer;

           (v) the Time Charter Agreement duly executed by the Buyer; and

           (vi) such other instruments and documents as the Sellers may reasonably require.

2.4 Loss of or Damage to Certain Purchased Assets.

      (a) If, between the date of this Agreement and the Effective Time there is an actual total casualty loss, a constructive total casualty loss or
a compromised total casualty loss (collectively, a ― Total Loss ‖) of any Vessel identified in Section 1.1A of the Disclosure Schedule,
including by governmental or private seizure or arrest, forced sale or other involuntary transfer (― Unavailable Assets ‖), then the Purchase
Price shall be reduced by the value ascribed to such Unavailable Asset(s) in Section 1.5 of the Disclosure Schedule.

      (b) If, between the date of this Agreement and the Effective Time, any Purchased Asset is damaged, but not a Total Loss, then no
Purchase Price adjustment shall be made and the Sellers shall be responsible for repairing such Purchased Asset at the Sellers’ sole cost and the
Buyer shall make such Purchased Asset available to the Sellers, at no cost to the Sellers, after the Closing for the purpose of repairing it;
provided, however, that the Sellers shall not be obligated to repair any Purchased Asset if the cost of such repair is not reasonably expected to
exceed $30,000. The Sellers shall use commercially reasonable efforts to complete all such repairs in as short a time as possible, and in any
event the Sellers shall complete all such repairs within 30 days after

                                                                          6
the Closing Date. The adjustment mechanism described in this Section 2.4 will not be applied with respect to any asset that has been replaced
by the Sellers by a similar asset of comparable value that is reasonably acceptable to the Buyer and where such vessel is in an appropriate
condition to conduct the Business as presently conducted by the Vessel it is replacing.

      (c) The adjustment mechanism described in Section 2.4(a) will be applied and the Parties will be required to proceed with the Closing so
long as the estimated adjustment pursuant to Section 2.4(a) would not exceed $5,000,000.00. If the estimated adjustment pursuant to
Section 2.4(a) would exceed $5,000,000.00, then the Buyer or the Sellers may, at their option, either continue to apply the adjustment
mechanism and proceed with the Closing or terminate this Agreement without consummating the transactions contemplated hereby.

                                                        ARTICLE 3
                                      REPRESENTATIONS AND WARRANTIES OF THE SELLERS

      The Sellers, jointly and severally, represent and warrant to the Buyer as follows, except as set forth on the Disclosure Schedule:

3.1 Status of the Sellers . (a) Danos is duly organized, validly existing and in good standing under the laws of the State of Louisiana, and
(b) D&C is duly organized, validly existing and in good standing under the laws of the State of Louisiana. Each of the Sellers has the power
and authority to own, lease and operate the Purchased Assets and to conduct the Business. Each of the Sellers is duly authorized, qualified or
licensed to do business as a foreign limited liability company and is in good standing in each jurisdiction in which its right, title or interest in or
to any of the Purchased Assets or the conduct of the Business requires such authorization, qualification or licensing, except where the failure to
so qualify or to be in good standing would not have a material adverse effect on any of the Purchased Assets, the Business or the results of
operations of the Sellers. There is no pending or, to the Knowledge of the Sellers, threatened, action for the dissolution, liquidation, insolvency
or rehabilitation of either Seller.

3.2 Power and Authority; Enforceability . Each of the Sellers has the power and authority to execute and deliver each Transaction Document
to which it is a party, and to perform and consummate the transactions contemplated thereby. Each of the Sellers has taken all actions necessary
to authorize the execution and delivery of each Transaction Document to which it is party, the performance of its obligations thereunder, and
the consummation of the transactions contemplated thereby. Each Transaction Document to which either Seller is a party or by which either
Seller is bound has been or will be duly authorized, executed and delivered by, and is or will be enforceable against, such Seller, except as such
enforceability may be subject to the effects of bankruptcy, insolvency, reorganization, moratorium or other Laws relating to or affecting the
rights of creditors and general principles of equity.

                                                                           7
3.3 No Violation . The execution and the delivery of the Transaction Documents by each of the Sellers and the performance and consummation
of the transactions contemplated thereby by it will not (a) breach in any material respect any Law or Order to which such Seller is subject or
any provision of such Seller’s organizational documents, (b) breach in any material respect any contract, Order, or Permit to which it is a party
or by which it is bound or to which any of its assets is subject, (c) require the giving of notice to, or the consent of, any Person, the lack of
which would reasonably be expected to materially affect the Buyer’s ownership or operation of the Purchased Assets, or (d) result in the
creation of any Encumbrances, except for such consents contemplated by Section 5.2 or specifically set forth in Section 3.3 of the Disclosure
Schedule.

3.4 Brokers’ Fees . Neither Seller has any Liability to pay any compensation to any broker, finder, or agent with respect to the transactions
contemplated hereby for which the Buyer could become directly or indirectly liable.

3.5 Purchased Assets.

     (a) Except for the Encumbrances disclosed to the Buyer in Section 3.5(a) of the Disclosure Schedule, each Seller has good, valid and
marketable title to the Purchased Assets being conveyed by such Seller hereunder. All Encumbrances referenced in Section 3.5(a) of the
Disclosure Schedule shall be released prior to the Closing.

     (b) The Vessels have been maintained by the Sellers in conformity with their customary past practices and the Sellers have delivered to
the Buyer complete and accurate, in all material respects, copies of the maintenance logs for each of the Vessels.

    (c) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, ALL OF THE PURCHASED ASSETS TO BE CONVEYED AT
THE CLOSING WILL BE CONVEYED, ―AS IS, WHERE IS‖, WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, AS TO ITS
CONDITION. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE BUYER HEREBY SPECIFICALLY
ACKNOWLEDGES AND AGREES THAT UPON AND AFTER EXECUTION OF THE SALE CONTEMPLATED BY THIS
AGREEMENT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND EXCEPT FOR FRAUD, THE BUYER SHALL
HAVE NO RECOURSE WHATEVER AGAINST THE SELLER FOR ANY DEFECTS IN THE PURCHASED ASSETS, WHETHER
SUCH DEFECTS ARE VISIBLE OR HIDDEN. THE BUYER FURTHER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, IT IS PURCHASING, AND THE SELLER IS SELLING, THE PURCHASED ASSETS WITHOUT ANY
EXPRESS, IMPLIED OR STATUTORY WARRANTY AGAINST VICES AND DEFECTS THEREIN, WHETHER APPARENT, LATENT
OR HIDDEN, OR REDHIBITORY VICES. THE BUYER EXPRESSLY WAIVES, AND THE SELLERS EXPRESSLY DISCLAIM, ANY
IMPLIED OR STATUTORY WARRANTIES GROWING OUT OF OR CONNECTED WITH ANY VICES OR DEFECTS IN THE
PURCHASED ASSETS, WHETHER APPARENT, LATENT OR HIDDEN, OR REDHIBITORY VICES AND DEFECTS. EXCEPT AS
EXPRESSLY SET FORTH IN THIS

                                                                        8
AGREEMENT, THE BUYER FURTHER EXPRESSLY WAIVES ANY RIGHT FOR A RESCISSION OF THIS SALE OR REDUCTION
OF THE PRICE OF THE PURCHASED ASSETS AS A RESULT OF SUCH VICES AND DEFECTS, AND FURTHER EXPRESSLY
WAIVES ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, INCLUDING THE
WARRANTIES PROVIDED FOR IN ARTICLES 2520, 2531, 2541 AND 2545 OF THE LOUISIANA CIVIL CODE, AND UNDER ANY
SUCCESSOR ARTICLES THERETO. THIS EXPRESS WAIVER OF REPRESENTATIONS AND WARRANTIES SHALL BE
CONSIDERED A MATERIAL AND INTEGRAL PART OF THIS TRANSACTION ENTERED INTO BETWEEN THE PARTIES
HERETO, WITHOUT WHICH THE SELLERS WOULD NOT HAVE CONVEYED AND ASSIGNED THE PURCHASED ASSETS. THE
NEGATION AND EXCLUSION OF WARRANTY OF THIS PARAGRAPH HAS BEEN EXPLAINED TO THE BUYER AND THE
BUYER TAKES NOTE OF SAME AND BY EXECUTING THIS AGREEMENT, AND THE BILLS OF SALE, THE BUYER CERTIFIES
THAT THE BUYER UNDERSTANDS THIS PARAGRAPH, THAT ANY QUESTIONS OR DOUBTS THE BUYER HAD CONCERNING
SAME HAVE BEEN ANSWERED SATISFACTORILY FOR THE BUYER, AND THAT, EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT, THE BUYER ACCEPTS THE PURCHASED ASSETS SUBJECT TO THE NEGATION AND THE EXCLUSION OF
WARRANTIES HEREIN PROVIDED.

      (d) The Purchased Assets are all of the assets necessary for the performance of the Vessel operations as currently conducted.

3.6 Contracts. The Sellers have delivered to the Buyer a correct and complete copy of each Assigned Contract (as amended to date). With
respect to each such contract: (a) such contract was duly and validly executed and delivered by the appropriate Seller and, to the Knowledge of
the Sellers, the other parties thereto; (b) the contract is legal, valid, binding, enforceable against such Seller and, to the Knowledge of the
Sellers, the other parties thereto, and is in full force and effect; (c) such Seller has not, and to the Knowledge of the Sellers, no other party has,
repudiated any material provision of the contract; and such Seller is not in material default under any assigned contract.

3.7 Vessels . At the Closing, the Vessels shall be free and clear of all Encumbrances. Each of the Sellers is a ―citizen of the United States‖
within the meaning of Section 2 of the Shipping Act, 1916, as amended, qualified to engage in the coastwise trade (as that term is defined in 46
U.S.C. S883) of the United States. Except as disclosed on Schedule 3.7 attached hereto, the Vessels are duly documented under the laws and
flag of the United States solely in the name of the appropriate Seller and are qualified to engage in, and are currently engaged in, the coastwise
trade. The Vessels that are operating in Nigerian waters are operating in compliance with the Cabotage Act of 2003 and the Shipping Act,
1916. The Vessels are duly documented in the name of the appropriate Seller as owner with the U.S. Coast Guard and, except as disclosed on
Schedule 3.7 attached hereto, the Vessels have, and as of the Closing Date will have, current certificates of inspection and documentation in
effect with the U.S. Coast Guard, in each

                                                                          9
case free of reportable exceptions or notations of record. Except as disclosed on Schedule 3.7 attached hereto, each Vessel is afloat and in
satisfactory operating condition for use in the operations for which it is intended to be used. Except as disclosed on Schedule 3.7 attached
hereto, each Vessel has all equipment necessary for its operation in the manner vessels of its kind are being operated in the trade in which such
Vessel is presently being operated. Except as disclosed on Schedule 3.7 attached hereto, each Vessel holds in full force all licenses, certificates
and permits and rights required for operation in the manner vessels of its kind are being operated in the trade in which such Vessel is presently
being operated. Except as disclosed on Schedule 3.7 attached hereto, with respect to each Vessel which is required to be classed, such Vessel
has a valid and unextended class certificate without condition or recommendation, and the class of such Vessel is maintained without condition
or recommendation. Except as disclosed on Schedule 3.7 attached hereto, with respect to each Vessel that is required to have a certificate of
inspection, such Vessel has a valid certificate of inspection, valid for at least 12 months.

3.8 Compliance with Laws . Except for the matters covered by Section 3.11, neither Seller has received written notice of any violation, or
potential violation, of, and is in material compliance with all, and is not in material violation of, any Law or Order applicable to either of the
Sellers or the Vessels.

3.9 Taxes . Each Seller has duly and timely prepared and filed with the appropriate Governmental Authorities all returns, reports, information
returns or other documents filed or required to be filed with such governmental authorities and has paid any taxes or other amounts due in
respect thereof that if unpaid could result in a claim by any Governmental Authority against any of the Vessels or the Buyer.

3.10 Labor; Employees . Section 3.10 of the Disclosure Schedule lists all employees working on the Vessels (the ―Vessel Crew‖), the current
rate of pay for each such employee and any and all commissions, bonuses, benefits or other compensation arrangements between the Sellers
and each of such employees. Except as set forth on Schedule 3.10, no member of the Vessel Crew is presently a member of a collective
bargaining unit, and to the Sellers’ Knowledge, there are no threatened or contemplated attempts to organize for collective bargaining purposes
any of the members of the Vessel Crew. There are no liabilities under any of the Sellers’ Plans which would subject the Buyer or the Vessels to
any taxes, penalties or other liabilities. The Sellers will make available to the Buyer the opportunity to recruit all Vessel Crew personnel who
are employed by the Sellers at the Effective Time.

3.11 Environmental, Health and Safety Compliance . Except as described in Schedule 3.11 attached hereto, and except where the failure of
any of the following statements to be true would not reasonably be expected to result in a material adverse effect on the Vessels taken as a
whole or the ownership, operation or chartering of the Vessels taken as a whole:

          (a) Each Seller is and has been in compliance with all Environmental Laws with respect to the Vessels, including 29 C.F.R.
     §§ 1910.1001 and 1915.1001

                                                                         10
     regarding safety and health standards, 40 C.F.R. §§ 61.145 regarding removal, shipping, dislodging, cutting, drilling or other disturbance
     of asbestos-containing materials, 40 C.F.R. § 61.150 regarding disposal of any asbestos-containing products, and 49 C.F.R. parts 171 and
     172 regarding disposal of any asbestos and/or asbestos-containing materials;

         (b) to the Sellers’ Knowledge, none of the Sellers or the Vessels are subject to any remedial obligations under any Environmental
     Laws;

          (c) to the Sellers’ Knowledge, all material notices, permits, or similar authorizations, if any, required to be obtained or filed under
     any Environmental Law in connection with the current operation of the Vessels have been obtained or filed;

           (d) to the Sellers’ Knowledge, there are no past, pending or threatened investigations, proceedings or claims against Vessels relating
     to the presence, release or remediation of any Hazardous Material related to the Vessels or for non-compliance with any Environmental
     Law related to the Vessels;

          (e) There are no conditions or circumstances which exist or have existed with respect to any of the Sellers, or the Vessels or for
     non-compliance with any Environmental Law related to the Vessels;

           (f) to the Sellers’ Knowledge, there are no conditions or circumstances which exist or have existed with respect to either of the
     Sellers, or the Vessels including the offsite disposal of Hazardous Materials, that could impose any liability on the Buyer with respect to
     any Environmental Law; and

           (g) To the Sellers’ Knowledge, there is no asbestos existing on any of the Vessels.

3.12 Litigation. There is no litigation or proceeding (including any condemnation proceeding) affecting or relating to the Purchased Assets
pending (with service or other written notice having been made or otherwise delivered to or received on behalf of the Sellers) or, to the
Knowledge of the Sellers, threatened. There is no claim or governmental investigation affecting or relating to the Purchased Assets pending or,
to the Knowledge of the Sellers, threatened.

3.13 Insurance. Each of the Sellers maintains with sound and reputable insurers, and there are currently in full force and effect, policies of
insurance with respect to the Purchased Assets and Business against such casualties and contingencies of such type and such amounts as are
customary for lift boat operators of similar size engaged in similar operations as the Business. All premiums due and payable with respect to
such policies have been timely paid. No notice of cancellation of, or indication of an intention not to renew, any such policy has been received
by either of the Sellers. In accordance with the terms of the applicable policy, Sellers have provided their insurance broker with

                                                                        11
written notice that damage was incurred by the vessel Andre Danos during Hurricane Katrina.

                                                       ARTICLE 4
                                      REPRESENTATIONS AND WARRANTIES OF THE BUYER

     The Buyer represents and warrants to the Sellers as follows:

4.1 Entity Status. The Buyer is a limited liability company duly created, formed or organized, validly existing and in good standing under the
Laws of the State of Delaware. There is no pending or, to the Knowledge of the Buyer, threatened, action for the dissolution, liquidation,
insolvency or rehabilitation of the Buyer.

4.2 Power and Authority; Enforceability . The Buyer has the power and authority to execute and deliver each Transaction Document to
which it is party, and to perform and consummate the transactions contemplated thereby. The Buyer has taken all action necessary to authorize
the execution and delivery of each Transaction Document to which it is party. Each Transaction Document to which the Buyer is party has been
or will be duly authorized, executed and delivered by, and is or will be enforceable against, the Buyer, except as such enforceability may be
subject to the effects of bankruptcy, insolvency, reorganization, moratorium or other Laws relating to or affecting the rights of creditors and
general principles of equity.

4.3 No Violation. The execution and delivery of the Transaction Documents to which the Buyer is party and the performance and
consummation of the transactions contemplated thereby by the Buyer will not (a) breach in any material respect any Law or Order to which the
Buyer is subject or any provision of its organizational documents, (b) breach in any material respect any contract, Order or Permit to which the
Buyer is a party or by which it is bound or to which any of its assets is subject or (c) require the giving of notice to, or the consent of, any
Person, except for such consents contemplated by Section 5.2.

4.4 Brokers’ Fees. The Buyer has no Liability to pay any compensation to any broker, finder or agent with respect to the transactions
contemplated hereby for which the Seller could become liable.

4.5 Coastwise Citizen. The Buyer is a ―citizen of the United States‖ within the meaning of Section 2 of the Shipping Act, 1916, as amended,
qualified to engage in the coastwise trade (as that term is defined in 46 U.S.C. S883) of the United States.

                                                                       12
                                                               ARTICLE 5
                                                         PRE-CLOSING COVENANTS

     The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing Date, except as
otherwise expressly provided in this Article 5:

5.1 General. Each Party will use commercially reasonable efforts to take all actions and to do all things necessary, proper or advisable to
consummate, make effective and comply with all of the terms of this Agreement and the transactions contemplated hereby (including
satisfaction, but not waiver, of the Closing conditions set forth in Article 7).

5.2 Governmental Filings . The Parties agree that the transactions contemplated by this Agreement are subject to the approval of the
Department of Transportation — Maritime Administration (―MARAD‖) and that the Parties shall cooperate with each other to make the
required filings and submissions required by MARAD in connection with the transactions contemplated by this Agreement.

5.3 Operation of Business Pending Closing. Neither Seller will engage in any practice, take any action or enter into any transaction outside
the ordinary course of the Business and will continue to operate the Purchased Assets in a manner consistent with the past practices of the
Business, including maintenance and repair of operating Vessels and related equipment. Without limiting the foregoing:

       (a) other than a forced sale because of a Total Loss, the Sellers will not sell, transfer or assign any of the Purchased Assets or agree to
sell, transfer or assign any of the Purchased Assets, other than inventory used in the ordinary course of business;

      (b) the Sellers will not impose or permit to be imposed any Encumbrance upon any of the Purchased Assets that will not be fully released
at Closing;

      (c) the Sellers will not fail to keep in full force and effect the currently existing insurance coverage on the Purchased Assets;

     (d) the Seller will not enter into any contract or charter (or similar arrangement) with a term greater than 30 days with respect to the
Vessels without the prior consent of the Buyer;

     (e) the Sellers will inform the Buyer as promptly as practicable of the occurrence of any destruction, material damage or material loss of
any Purchased Asset;

      (f) the Sellers will perform in all material respects its obligations under all agreements that are related to any of the Purchased Assets;

                                                                          13
     (g) the Sellers will continue to purchase supplies and similar items in the ordinary course of business, and will continue to replenish
inventory and spare parts on the Vessels in accordance with past practices;

      (h) the Sellers will continue to maintain and operate the Vessels in conformity with the past practices of the Sellers; and

     (i) the Sellers will use commercially reasonable efforts to keep intact the relationships of the Business with its licensors, suppliers,
customers and employees.

5.4 Full Access. The Sellers will permit representatives of the Buyer to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Sellers, to all Vessels, premises, properties, personnel, books, records and documents
related to the ownership or operation of the Purchased Assets and the Business (but excluding any such books, records and documents relating
exclusively to the businesses of the Sellers other than the Business), and will furnish copies of all such books, records and documents as the
Buyer may reasonably request; provided, however, that the Sellers shall not be obligated to provide the Buyer with access to any books and
records regarding the Sellers’ employees if providing such records would be prohibited by applicable Laws. The foregoing provisions on access
shall apply from the effective date hereof until the Closing or earlier termination of this Agreement.

5.5 Publicity; Confidentiality. The Parties shall consult with each other prior to issuing any press release or any written public statement with
respect to this Agreement or the transactions contemplated hereby, and shall not issue any such press release or written public statement
without the prior written consent of the other Party, which consent shall not be unreasonably withheld. Except as may be required by Law or as
otherwise expressly contemplated herein, neither the Buyer nor its employees, agents, or representatives shall disclose to any third party this
Agreement, the subject matter or terms hereof or any Confidential Information without the prior written consent of the Sellers; provided,
however, that the Buyer may disclose any such Confidential Information as follows: (a) to the Buyer’s employees, lenders, counsel or
accountants who have agreed to be subject to the requirements of this Section 5.5, (b) to comply with any applicable Law or Order, provided
that prior to making any such disclosure the Buyer notifies the Sellers of any action or proceeding of which it is aware which may result in
disclosure and uses its commercially reasonable efforts to limit or prevent such disclosure and (c) to comply with the Buyer’s requirements
under the Securities Act and the Exchange Act.

5.6   Taxes; Duties and Customs.

      (a) Any transfer taxes, stamp taxes and sales and use taxes relating to the sale or purchase of the Purchased Assets hereunder and for any
related interest and penalties (including any attorneys or accountants fees associated with contesting such tax upon written agreement of the
Parties) (collectively, ―Sale Taxes‖) that are imposed by the United States of America or any state or local Governmental Authority therein or
by the

                                                                         14
country of Nigeria or any Governmental Authority within Nigeria shall be paid and apportioned equally among the Buyer, on one hand, and the
Sellers on the other. The Sellers shall bear all taxes that relate to the ownership, operation or storage of the Vessels prior to the Effective Time.
The Buyer shall bear all taxes that relate to the ownership, operation or storage of the Vessels after the Effective Time. The Parties shall use
commercially reasonable efforts to minimize the amounts of Sale Taxes to the extent reasonably practicable.

      (b) The Sellers and the Buyer agree to cooperate with each other in order to reduce any customs or import duties or similar charges
assessed or assessable against either the Sellers or the Buyer in connection with the sale or purchase of the Purchased Assets hereunder;
including; without limitation, transferring title to the Vessels in mutually acceptable locations in international waters on the Closing Date.

5.7   Employee Matters. Except as contemplated in the Time Charter Agreement:

       (a) Immediately prior to the Effective Time, the Sellers shall terminate their employment of the Vessel Crew, each of whom is actively at
work and assigned to crew the Vessels. The Sellers shall pay in full all compensation, bonuses, accrued severance and other payments that may
result from the termination of employment by the Sellers of any employee(s) of the Sellers and any compensation due such employees up to
and including the Closing Date. The Buyer will employ all of the Vessel Crew (subject to the Buyer’s existing standards for employment)
effective as of the Effective Time at base salaries or wages comparable to those paid to similarly situated employees of the Buyer, giving each
such employee full credit under the Buyer’s benefit plans for years of service with the Sellers. To the extent that the Buyer does not employ
more than 45 persons whose employment was severed by the Sellers hereunder, the Buyer will be responsible for liabilities imposed on the
Sellers under the Worker Adjustment and Retraining Notification Act that are directly related to the termination by the Seller of any employees
pursuant to this Section 5.7(a). Upon request of the Buyer and subject to applicable law, the Seller shall provide the Buyer access to, and
provide data regarding, employment information concerning the Vessel Crew and such other personnel records as the Buyer may reasonably
request. The Sellers have made and makes no other representation or warranty or any other statement or communication regarding the Buyer’s
right, ability, plan or intention to employ any employee of the Sellers or the terms and conditions upon which any such employee may be
employed by the Buyer and will not make any such representations, warranties, statements or communications during the period beginning on
the date hereof and ending on the Closing Date.

      (b) The Buyer shall not assume any Plan, program or arrangement of the Sellers. The Sellers shall have no responsibility for, and the
Buyer shall be responsible for, any and all liabilities, obligations and claims of any kind arising out of employment of the Vessel Crew by the
Buyer after the Effective Time. The Buyer shall have no responsibility for, and the Sellers shall be responsible for, any and all liabilities,
obligations and claims of any kind arising out of employment of any employees by the Seller before the Effective Time and the termination of
employment of any employees by

                                                                         15
the Seller. The Buyer shall not be deemed to be a successor employer to the Sellers with respect to any employee benefit plans or programs of
the Sellers, and no plan or program adopted or maintained by the Buyer after the Closing Date is or shall be deemed to be a ―successor plan,‖
as such term is defined in Employee Retirement Income Security Act or the Code, of any such plan or benefit program of the Sellers.

      (c) Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement shall cause duplicate benefits to be
paid or provided to or with respect to a member of the Vessel Crew under any employee benefit policies, Plans, arrangements, programs,
practices, or agreements of the Sellers or the Buyer, nor shall anything contained herein be deemed to require the Buyer to continue the
employment of any person for any period of time.

5.8 Release of Vessels from Mortgages.

     (a) On or before the Closing Date the Sellers shall cause the Vessels to be released from any mortgages or other Encumbrances
encumbering them and shall deliver certificates of ownership certified by the U.S Coast Guard National Vessel Documentation Center showing
the Vessels to be free of Encumbrances.

      (b) The Sellers shall be solely responsible for the payment of any release fees, recording fees or other costs associated with such releases.

                                                         ARTICLE 6
                                       POST-CLOSING COVENANTS; ADDITIONAL COVENANTS

      The Parties agree as follows with respect to the period following the Closing, or, in the case of Section 6.7, for the periods so indicated:

6.1 General. In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each
Party will take such further action (including, the execution and delivery of such further instruments and documents) as the other Party
reasonably may request, all at the requesting Party’s sole cost and expense.

6.2 Litigation Support. So long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand against any Person other than the other Party in connection with (a) the transactions contemplated by this
Agreement or (b) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction involving any of the Purchased Assets, the other Party will cooperate with such Party and such Party’s counsel in the contest or
defense, make available their personnel and provide such testimony and access to their books and records as shall be necessary in connection
with the contest or defense, at the sole cost and expense of the contesting or defending Party.

                                                                          16
6.3 Tax Matters. After the Closing, the Parties will cooperate fully with each other, on a commercially reasonable basis, in connection with the
preparation, signing and filing of tax returns and in any administrative, judicial or other proceeding involving taxes relating to the Purchased
Assets, including the furnishing or making available of records, books of account or other materials necessary.

6.4 Removal of Marks. Promptly following the Closing, but in any event within 60 days after the Closing Date, the Buyer shall remove, or
cause to be removed, from all Purchased Assets other than Purchased Assets then being used in Nigeria or offshore Nigeria, any markings
bearing the name ―Danos & Curole Marine Contractors‖ or ―Danos Marine, Inc.‖ (including any variations or derivations thereof) or any
trademarks, trade names or logos of the Sellers. The Buyer shall remove, or cause to be removed, all such markings, trademarks, trade names or
logos from Purchased Assets used in Nigeria or offshore Nigeria as soon as reasonably practicable following the Closing.

6.5 Handling of Cash and Other Payments. The Sellers shall promptly deliver to the Buyer any cash, checks or other instruments of payment
received by the Sellers after the Effective Time in respect of the Purchased Assets relating to periods after the Effective Time. Likewise, the
Buyer shall promptly deliver to the Sellers any cash, checks or other instruments of payment received by the Buyer after the Effective Time in
respect of the Purchased Assets relating to periods before the Effective Time. If a payment is received by a Party for services or products
provided by the Vessels both prior to and after the Effective Time and there is no clear delineation of the amounts attributed to the periods
preceding and following the Effective Time, then the Parties shall use reasonable proration techniques to allocate such amounts in a manner
such that the Sellers will receive amounts attributable to the operation of the Vessels prior to the Effective Time and the Buyer will receive
amounts attributable to the operation of the Vessels after the Effective Time.

6.6 Agreement Not to Compete. Each of the Sellers agrees that, except as contemplated by the Time Charter Agreement, during the two-year
period following the date of the Closing, the Sellers will not compete with the Buyer by engaging, directly or indirectly, in the business of
providing lift boat services to the offshore oil drilling industry in the Gulf of Mexico or the waters offshore Nigeria. Any violation of this
Agreement will entitle the Buyer, at the Buyer’s option, either to (a) an aggregate payment of $5,000,000 from the Sellers as liquidated
damages or (b) the right to proceed against the Sellers in a court for injunctive relief and/or monetary damages. The Parties hereby agree to the
exclusive jurisdiction of the federal and state courts of Harris County, Texas for any such proceeding.

6.7 Access. From the date hereof, until the six-month anniversary of the Closing, the Sellers shall provide full access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of the Sellers, to all accounting and audit records, accounting
personnel and any independent accounting firms having performed audit functions for the Sellers, so that the Buyer can prepare any financial
statements relating to the Purchased Assets required by the Securities and Exchange Commission to

                                                                        17
be filed in any filings of the Buyer under the Securities Act of 1933, as amended (the ― Securities Act ‖), and the Securities Exchange Act of
1934, as amended (the ― Exchange Act ‖).

6.8 Andre Danos . The Sellers agree that they will, as soon as is reasonably practical following the date of this Agreement, salvage and repair
(to the extent it is not a Total Loss) the Andre Danos . The Sellers shall use their commercially reasonable best efforts to pursue their insurance
claims. If the vessel is not a Total Loss, the Sellers shall cause the Andre Danos to be repaired in a reputable shipyard, to be mutually agreed to
by the Buyer and the Sellers, and shall apply all available insurance proceeds toward the repair of the Andre Danos . Once insurance proceeds
are completely expended, should additional repairs to the Andre Danos be required, Buyer will be responsible for funding such repairs. If it is
determined that the damage to the Andre Danos suffered during Hurricane Katrina and/or during the salvage operation has resulted in the
vessel being a Total Loss, then the Purchase Price shall be adjusted downward by an amount equal to the total insurance proceeds paid to the
Sellers with respect to the Andre Danos. If the full Purchase Price has already been paid, then the Sellers will reimburse the Buyer for any
amounts that would have been deducted from the Purchase Price under the previous sentence. Nothing in this Section 6.8 will affect the
Buyer’s obligation to pay the salvage costs of the Andre Danos and to pay the deductible under the Sellers’ applicable insurance policies, as
provided in Section 1.3 hereof. Notwithstanding anything to the contrary set forth herein, delivery of the Andre Danos shall occur on the later
to occur of (1) the Closing, and (2) upon completion of such repairs. The Sellers shall deliver, and the Buyer shall accept, the Andre Danos in
federal or international waters in the Gulf of Mexico.

                                                                ARTICLE 7
                                                           CLOSING CONDITIONS

7.1 Conditions Precedent to Obligation of the Buyer. The obligations of the Buyer with respect to actions to be taken on the Closing Date
are subject to the satisfaction or waiver in writing on or prior to the Closing Date of all of the following conditions. The Buyer shall have the
right to waive any condition not so satisfied.

       (a) Accuracy of Representations and Warranties . Each representation and warranty set forth in Article 3 must be accurate and complete
in all material respects (except with respect to any provisions including the word ―material‖ or words of similar import, with respect to which
such representations and warranties must have been accurate and complete) as of the Closing Date, as if made on the Closing Date, except that
those representations and warranties which address matters only as of a particular date only shall be required to be true and correct as of such
date.

      (b) Compliance with Obligations . The Sellers shall have performed and complied with all of their covenants set forth in this Agreement
to be performed or complied with at or prior to Closing (singularly and in the aggregate) in all material respects.

                                                                        18
      (c) Consents . All necessary authorizations and/or consents, permits or approvals of and filings with any Governmental Authority or,
subject to Section 1.2, any other third party (as applicable) relating to the consummation of the transactions contemplated herein shall have
been obtained and made. Subject to Section 1.2, all authorizations, consents and approvals set forth in Section 3.3 of the Disclosure Schedule
shall have been obtained, and all consents reasonable requested by the Buyer in writing at least 15 days prior to the Closing Date, shall have
been obtained.

      (d) No Adverse Litigation . There must not be pending or threatened any action or proceeding by or before any Governmental Authority,
arbitrator or mediator which shall seek to restrain, prohibit, invalidate or collect Damages arising out of the transactions contemplated hereby.

      (e) Deliveries of the Sellers . The Sellers shall have delivered, or be standing ready to deliver, to the Buyer, the documents required to be
delivered by the Sellers pursuant to Section 2.3.

7.2 Conditions Precedent to Obligation of the Sellers. The obligations of the Sellers with respect to actions to be taken on the Closing Date
are subject to the satisfaction or waiver in writing on or prior to the Closing Date of all of the following conditions. The Sellers shall have the
right to waive any condition not so satisfied.

       (a) Accuracy of Representations and Warranties . Each representation and warranty set forth in Article 4 must be accurate and complete
in all material respects (except with respect to any provisions including the word ―material‖ or words of similar import, with respect to which
such representations and warranties must have been accurate and complete) as of the Closing Date, as if made on the Closing Date, except that
those representations and warranties that address matters only as of a particular date only shall be required to be true and correct as of such
date.

     (b) Compliance with Obligations . The Buyer must have performed and complied with all its covenants and obligations set forth in this
Agreement to be performed or complied with at or prior to Closing (singularly and in the aggregate) in all material respects.

      (c) Consents . All necessary authorizations and/or consents, permits or approvals of and filings with any Governmental Authority relating
to the consummation of the transactions contemplated herein shall have been obtained and made.

      (d) No Adverse Litigation . There must not be pending or threatened any action or proceeding by or before any Governmental Authority,
arbitrator or mediator which shall seek to restrain, prohibit, invalidate or collect Damages arising out of the transactions contemplated hereby.

                                                                         19
      (e) Deliveries of the Buyer . The Buyer shall have delivered, or be standing ready to deliver, to the Sellers, the documents required to be
delivered by the Buyer pursuant to Section 2.3.

                                                                  ARTICLE 8
                                                                TERMINATION

The Parties may terminate this Agreement as provided below:

     (a) the Buyer and the Sellers may terminate this Agreement by mutual written consent at any time prior to the Closing;

     (b) the Buyer and the Sellers may terminate this Agreement pursuant to Section 2.4(c) upon delivery of written notice to the Buyer;

     (c) the Buyer or the Sellers may terminate this Agreement upon delivery of written notice if the Closing has not occurred prior to the
Expiration Date, provided that the Party delivering such notice shall not have caused such failure to close;

     (d) the Buyer may terminate this Agreement by giving written notice to the Seller at any time prior to the Closing if the Sellers have
breached any representation, warranty or covenant contained in this Agreement in any material respect (except with respect to materiality for
any provisions including the word ―material‖ or words of similar import, in which case such termination rights will arise upon any breach), the
Buyer has notified the Sellers of such breach, and the breach has continued without cure for a period of 10 days after the notice of breach; and

      (e) the Sellers may terminate this Agreement by giving written notice to the Buyer at any time prior to the Closing if the Buyer has
breached any representation, warranty or covenant contained in this Agreement in any material respect; (except with respect to materiality for
any provisions including the word ―material‖ or words of similar import, in which case such termination rights will arise upon any breach), the
Sellers have notified the Buyer of such breach, and the breach has continued without cure for a period of 10 days after the notice of breach.

                                                                ARTICLE 9
                                                             INDEMNIFICATION

9.1 Indemnification of the Buyer by the Sellers . Each of the Sellers hereby jointly and severally agrees to pay and assume liability for, and
does hereby agree to indemnify, protect, save and keep harmless the Buyer and its officers, directors, employees, contractors and members
(collectively, the ―Buyer Indemnities‖), from and against any and all liabilities, obligations, losses, damages, penalties, claims (including
claims by any employee of the Sellers or any of its servants, crew or agents), actions, suits and related costs, expenses and disbursements,
including reasonable legal fees and expenses, of whatsoever kind and nature (collectively, ―Losses‖), imposed on, asserted against or

                                                                        20
incurred by the Buyer Indemnitees, in any way relating to or arising out of or alleged to be attributable to, related to or arising out of the
following:

      (a) any inaccuracy in any representation or warranty of the Sellers in this Agreement;

      (b) any breach or nonfulfillment of any covenant, agreement or other obligation of the Sellers;

      (c) Encumbrances affecting the Purchased Assets arising prior to the Effective Time; and

      (d) the item disclosed on Section 9.1 of the Disclosure Schedule.

9.2 Indemnification of the Sellers by the Buyer . The Buyer hereby agrees to pay and assume liability for, and does hereby agree to
indemnify, protect, save and keep harmless the Sellers and their officers, directors, employees, contractors and stockholders (the ―Seller
Indemnitees‖), from and against any and all Losses imposed on, asserted against or incurred by the Seller Indemnitees, in any way relating to or
arising out of or alleged to be attributable to, related to or arising out of the following:

      (a) any inaccuracy in any representation or warranty of the Buyer in this Agreement;

      (b) any breach or nonfulfillment of any covenant, agreement or other obligation of the Buyer; or

     (c) any Losses sustained by the Seller Indemnitees arising out of or related to the ownership or operation of the Vessels after the Effective
Time.

9.3 Notice and Defense of Third Party Claims . If any third party demand, claim, action or proceeding shall be brought or asserted under
Section 9.1 or 9.2 against an indemnified party or any successor thereto (the ―Indemnified Person‖) in respect of which indemnity may be
sought under this Section 9.1 or 9.2 from an indemnifying person or any successor thereto (the ―Indemnifying Person‖), the Indemnified Person
shall give prompt written notice thereof to the Indemnifying Person who shall have the right to assume its defense, including the hiring of
counsel reasonably satisfactory to the Indemnified Person and the payment of all expenses; except that any delay or failure to so notify the
Indemnifying Person shall relieve the Indemnifying Person of its obligations under Section 9.1 or 9.2 only to the extent, if at all, that it is
prejudiced by reason of such delay or failure. The Indemnified Person shall have the right to employ separate counsel in any of the foregoing
actions, claims or proceedings and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the
Indemnified Person unless both the Indemnified Person and the Indemnifying Person are named as parties and the Indemnified Person shall in
good faith determine that representation by the same counsel is inappropriate. In the event that the Indemnifying Person, within ten days after
notice of any such action or claim, does not assume the

                                                                          21
defense thereof, the Indemnified Personal shall have the right to undertake the defense, compromise or settlement of such action, claim or
proceeding for the account of the Indemnifying Person, subject to the right of the Indemnifying Person to assume the defense of such action,
claim or proceeding with counsel reasonably satisfactory to the Indemnified Person at any time prior to the settlement, compromise or final
determination thereof. Anything in this Section 9.3 to the contrary notwithstanding, the Indemnifying Person shall not, without the Indemnified
Person’s prior consent, settle or compromise any action or claim or consent to the entry of any judgment with respect to any action, claim or
proceeding for anything other than money damages paid by the Indemnifying Person. The Indemnifying Person may, without the Indemnified
Person’s prior consent, settle or compromise any such action, claim or proceeding or consent to entry of any judgment with respect to any such
action or claim that requires solely the payment of money damages by the Indemnifying Person and that includes as an unconditional term
thereof the release by the claimant or the plaintiff of the Indemnified Person from all liability in respect of such action, claim or proceeding.
The Indemnifying Party shall promptly reimburse the Indemnified Party for the amount of any judgment rendered with respect to any third
party demand, claim, action or proceeding and for all damages incurred by the Indemnified Party in connection with the defense of such
demand, claim, action or proceedings.

9.4 Limitations on Indemnification.

      Neither the Sellers, on one hand, nor the Buyer, on the other, shall have any liability with respect to, or obligation to indemnify for,
Losses under Article 9 hereof unless and to the extent that the aggregate amount of Losses for which such Party would be liable exceeds, on an
aggregate basis, $450,000. Notwithstanding anything in this Agreement to the contrary, the maximum indemnification liability of the Sellers,
on the one hand, and the Buyer, on the other, shall not exceed $9,000,000 in the aggregate. Notwithstanding the foregoing, the limitations
contained in this Section 9.4 shall not apply to any indemnification obligation

      (a) arising under Section 9.1(a) and resulting from a breach of the representations or warranties contained in Sections 3.1, 3.2, 3.3, 3.4,
3.5(a) and 3.7,

      (b) arising under Section 9.2(a) and resulting from a breach of the representations or warranties contained in Sections 4.1, 4.2, 4.3 and
4.4, or

     (c) arising under Sections 9.1(b), 9.1(c), 9.1(d), 9.2(b) or 9.2(c).

9.5 Survival.

      The liability of the Sellers, on the one hand, or the Buyer, on the other, for indemnification obligations arising under this Agreement shall
be limited to claims for which an Indemnified Person delivers written notice to the Indemnifying Party on or before the second anniversary of
the Closing Date; provided, however, that any indemnification obligation (a) arising under Section 9.1(a) and resulting from a breach of

                                                                            22
the representations or warranties contained in Sections 3.1, 3.2, 3.3, 3.4, 3.5(a) and 3.7, (b) arising under Section 9.2(a) and resulting from a
breach of the representations or warranties contained in Sections 4.1, 4.2, 4.3 and 4.4, or (c) arising under Sections 9.1(b), 9.1(c), 9.2(b) or
9.2(c), shall not be so limited and shall survive indefinitely.

                                                                   ARTICLE 10
                                                                  DEFINITIONS

“Agreement” is defined in the preamble to this Agreement.

“Assigned Contracts” is defined in Section 1.2.

“ Bills of Sale ” is defined in Section 2.3(a).

“ Business ” is defined in the recitals to this Agreement.

“Business Day ” means a day of the year on which banks are not required or authorized to be closed in the City of Houston, Texas.

“ Buyer ” is defined in the preamble to this Agreement.

“Buyer Indemnitees” is defined in Section 9.1.

“Closing” is defined in Section 2.1.

“Closing Date” is defined in Section 2.1.

“Code” means the Internal Revenue Code of 1986.

“Confidential Information” means (a) any proprietary information concerning the Purchased Assets that is not already generally available to
the public and (b) the material terms and provisions of this Agreement and the Exhibits and Disclosure Schedule hereto.

“D&C” is defined in the preamble to this Agreement.

“Danos” is defined in the preamble to this Agreement.

“ Disclosure Schedule ” means that group of schedules referred to in this Agreement delivered separately by the Sellers to the Buyer
concurrently with the execution and delivery of this Agreement but incorporated by reference into this Agreement.

“ Effective Time ” is defined in Section 2.1.

“Encumbrances” means any Order, security interest, lien, contract, covenant, community property interest, equitable interest, right of first
refusal, maritime lien or restriction of any kind, including any restriction on use, voting, transfer, receipt of

                                                                         23
income or exercise of any other attribute of ownership, but shall not include the following: (a) liens for taxes or assessments (x) not yet due and
payable, (y) which are being contested in good faith through appropriate proceedings and which do not relate to amounts or obligations
exceeding $10,000 in the aggregate or (z) for which reasonable reserves have been established and which do not relate to amounts or
obligations exceeding $10,000 in the aggregate, (b) mechanics’, materialmen’s, carriers’, workers’, repairers’ and other similar liens arising or
incurred in the ordinary and usual course of business relating to obligations as to which there is no material default or the validity of which are
being contested in good faith or for which reasonable reserves have been established and which do not relate to amounts or obligations
exceeding $10,000 in the aggregate; provided, however, that any such lien arising in connection with the salvage and repair of the Vessel
Andre Danos shall not be subject to any such limitations, and (d) such other encumbrances and encroachments which are immaterial in nature
and amount and which do not exceed $10,000 in the aggregate.

“Environmental Laws” means, as to any given asset or operation of the Sellers, all applicable Laws and Orders pertaining to protection of the
environment in effect as of the Closing, including those pertaining to solid waste, as defined by the U.S. Environmental Protection Agency
Regulations at 40 C.F.R. Part 261, the Resource Conservation and Recovery Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended (―CERCLA‖), the Superfund Amendment and Reauthorization Act of 1986, as amended, and the
Oil Pollution Act, 1990, as amended (―OPA‖).

“Exchange Act” is defined in Section 5.4.

“Expiration Date” means November 15, 2005.

“Governmental Authority” means any legislature, agency, bureau, branch, department, division, commission, court, tribunal, magistrate,
justice, multi-national organization, quasi-governmental body or other similar recognized organization or body of any federal, state, county,
municipal, local or foreign government or other similar recognized organization or body exercising similar powers or authority.

“Hazardous Material” means any substance which is listed or defined as a hazardous substance, hazardous constituent or solid waste pursuant
to any Environmental Law, including ―Hazardous Substances,‖ as defined in CERCLA, or ―oil‖ as defined in OPA and the regulations
promulgated thereunder.

“Intellectual Property” is defined in Section 1.1.

“Independent Accountant” is defined in Section 1.4(b).

“Indemnified Person” is defined in Section 9.3.

“Indemnifying Person” is defined in Section 9.3.

                                                                        24
“Knowledge” -

     ( a) with respect to the Seller, means the actual knowledge, after reasonable inquiry, of Hank Danos or Al Danos.

      (b) with respect to the Buyer, means the actual knowledge, after reasonable inquiry, of its chief executive officer or its chief financial
officer.

“Law” means any law (statutory, common, or otherwise), constitution, treaty, convention, ordinance, equitable principle, code, rule, regulation,
executive order or other similar authority enacted, adopted, promulgated or applied by any Governmental Authority, each as amended and now
in effect.

“Liability” means any liability, duty, or obligation, whether known or unknown, asserted or unasserted, absolute or contingent, matured or
unmatured, conditional or unconditional, latent or patent, accrued or unaccrued, liquidated or unliquidated, or due or to become due, including
any liability that could give rise to a lien, claim or encumbrance on a Purchased Asset.

“Loss” is defined in Section 9.1.

“Notice of Disagreement” is defined in Section 1.4(b).

“Order” means any order, ruling, decision, verdict, decree, writ, subpoena, mandate, precept, command, directive, consent, approval, award,
judgment, injunction or other similar determination or finding by, before or under the supervision of any Governmental Authority, arbitrator or
mediator.

“Party” is defined in the preamble to this Agreement.

“Parties” is defined in the preamble to this Agreement.

“Permit” means any permit, license, certificate, approval, consent, notice, waiver, franchise, registration, filing, accreditation or other similar
authorization required by any Law or Governmental Authority.

“Person” means any individual, partnership, limited liability company, corporation, association, joint stock company, trust, joint venture, labor
organization, unincorporated organization or Governmental Authority.

“Plan” means any pension, profit sharing, 401(k), disability, medical, dental, severance pay, vacation pay, sick pay, stock purchase, stock
option, deferred compensation, incentive compensation, fringe benefit, stay-with-bonus, change of control agreement or other employee benefit
plan, program or agreement, including, without limitation, any employee benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (―ERISA‖), that is maintained or contributed to by the

                                                                         25
Sellers or any organization that is a member of a controlled group of organizations within the meaning of Code Sections 414(b), (c), (m) or
(o) of which either of the Sellers is a member (the ―Controlled Group‖) or under which either of the Sellers or any member of the Controlled
Group has any liability or contingent liability, and which cover the employees of the Seller.

“Protocols of Delivery and Acceptance” is defined in Section 2.3(a).

“Purchase Price” is defined in Section 1.3.

“Purchased Assets” is defined in Section 1.1.

“Records” is defined in Section 1.1.

“ Revised Inventory List” is defined in Section 1.4(a).

“Sale Taxes” is defined in Section 5.6.

“Securities Act” is defined in Section 6.7.

“Seller” is defined in the preamble to this Agreement.

“Seller Indemnities” is defined in Section 9.2.

“Time Charter Agreement” is defined in Section 2.3(a)(vii).

“Total Loss” is defined in Section 2.4.

“Transaction Documents” means this Agreement and the Bills of Sale.

“Unassigned Contract” is defined in Section 1.2(c).

“Unavailable Assets” is defined in Section 2.4(a).

“Vessel Crew” is defined in Section 3.10.

“Vessels” is defined in Section 1.1.

                                                                ARTICLE 11
                                                              MISCELLANEOUS

11.1 Entire Agreement. This Agreement, together with the Exhibits and Disclosure Schedule hereto, and the certificates, documents,
instruments and writings that are delivered pursuant hereto, constitutes the entire agreement and understanding of the Parties in respect of its
subject matters and supersedes all prior understandings,

                                                                        26
agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof or the
transactions contemplated hereby.

11.2 Successors. All of the terms, agreements, covenants, representations, warranties and conditions of this Agreement are binding upon, and
inure to the benefit of and are enforceable by, the Parties and their respective successors.

11.3 Assignments. No Party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written
approval of the other Party.

11.4 Notices. All notices, requests, demands, claims and other communications hereunder will be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given two Business Days after it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

If to the Buyer:

Hercules Liftboat Company, L.L.C.
2929 Briarpark Drive, Suite 435
Houston, Texas 77042

Attn: Steven A. Manz
Tel: (713) 952-4176
Fax: (713) 952-4342

with a copy to (which shall not constitute notice):
David L. Emmons
Baker Botts L.L.P.
2001 Ross Avenue, Suite 700
Dallas, Texas 75201

Tel: (214) 953-6414
Fax: (214) 661-4414


If to the Seller:

Danos & Curole Marine Contractors, L.L.C.
P.O. Box 1460
Larose, LA 70373

Attn: Mr. Hank Danos
President and CEO

                                                                        27
with a copy to (which shall not constitute notice):

Virginia Boulet
Adams and Reese, LLP
701 Poydras St., Suite 4500
New Orleans, LA. 70139

Attn: Virginia Boulet
Tel: (504) 585-0331
Fax: (504) 566-0210

Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually
is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth.

11.5 Specific Performance. Each Party acknowledges and agrees that the other Party would be damaged irreparably if any provision of this
Agreement is not performed in accordance with its specific terms or is otherwise breached. Accordingly, each Party agrees that the other Party
will be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this
Agreement and its terms and provisions in any action instituted in any court of the United States or any state thereof having jurisdiction over
the Parties and the matter in addition to any other remedy to which they may be entitled, at Law or in equity.

11.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

11.7 Headings. The article and section headings contained in this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.

11.8 Governing Law. The Parties agree that this Agreement will governed in accordance with the laws of the State of Texas, without regard to
its conflicts of law rules. The Parties agree that all disputes in any way relating to, arising under, connected with, or incident to this Agreement,
shall be litigated, if at all, exclusively in the courts of the State of Texas, in Harris County, and, if necessary, the corresponding appellate
courts. The Parties expressly submit themselves to jurisdiction in such courts.

                                                                         28
11.9 Amendments and Waivers. No amendment, modification, replacement, termination or cancellation of any provision of this Agreement
will be valid, unless the same shall be in writing and signed by the Buyer and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior
or subsequent such occurrence.

11.10 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof, provided that any provision of this Agreement that is invalid or
unenforceable in any situation or in any jurisdiction will not affect the enforceability of the remaining terms and provisions hereof or the
enforceability of the offending term or provision in any other situation or in any other jurisdiction.

11.11 Expenses. Except as otherwise expressly provided in this Agreement, each Party will bear its own costs and expenses incurred in
connection with the preparation, execution and performance of this Agreement and the transactions contemplated hereby including all fees and
expenses of agents, representatives, financial advisors, legal counsel and accountants.

11.12 Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party because of the authorship of any provision of this Agreement. Any reference to any federal, state, local
or foreign Law shall be deemed also to refer to Law, as amended as of the date of the applicable reference, and all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word ―including‖ means ―including without limitation.‖ The Parties intend
that each representation, warranty and covenant contained herein shall have independent significance.

11.13 Incorporation of Exhibits and Disclosure Schedule. The Exhibits and the Disclosure Schedule identified in this Agreement are
incorporated herein by reference and made a part hereof.

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

                                                      SIGNATURE PAGE TO FOLLOW

                                                                        29
DANOS & CUROLE MARINE CONTRACTORS, LLC

BY:             / S / G ARRET H ENRY D ANOS
      Garret Henry Danos, President

DANOS MARINE, INC.

BY:              / S / A LLEN J OSEPH D ANOS
      Allen Joseph Danos, President

HERCULES LIFTBOAT COMPANY, LLC

By:                / S / R ANDALL D. S TILLEY
Name:    Randall D. Stilley
Title:   Manager


                                                30
                Schedule 1.1A
               Purchased Assets
                   Vessels

                                  Official
   Vessel                         Number

 Eric Danos                        902606
 Ana Danos                        1116895
 Paul Danos                       1070562
Alyce Danos                        671967
Aimee Danos                        980381
Sarah David                       1049542
Marcel Danos                       964536
Andre Danos                       1032269

                     31
                                                                                                                                EXHIBIT 23.1

                              CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated March 18, 2005, accompanying the consolidated financial statements of Hercules Offshore, LLC and
Subsidiaries appearing in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration
Statement and Prospectus, and to the use of our name as it appears under the caption ―Experts‖.

/s/ GRANT THORNTON LLP

Houston, Texas
September 19, 2005
                                                                                                                                  Exhibit 23.3

                                                CONSENT TO BE NAMED A DIRECTOR

      I hereby consent to the use of my name and any references to me as a person to be appointed as a director of Hercules Offshore, Inc., a
Delaware corporation to result from the conversion of Hercules Offshore, LLC, a Delaware limited liability company (the ―Company‖), upon
consummation of the offering described in the Company’s Registration Statement on Form S-1 (Registration No. 333-126457) filed with the
U.S. Securities and Exchange Commission under the Securities Act of 1933. I also consent to the filing of this consent as an exhibit to the
Registration Statement.

Dated: September 20, 2005

                                                                          /s/ F. GARDNER PARKER
                                                                          F. Gardner Parker

								
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