##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
   ANNUAL
    REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES
    EXCHANGE ACT OF 1934
  For the fiscal year ended December 31, 2008
 Commission file number: 0-51582
  Hercules Offshore,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or other jurisdiction
    of
    incorporation or organization)

56-2542838(I.R.S. Employer
    Identification No.)9 Greenway Plaza, Suite 2200
    Houston, Texas(Address of principal
    executive offices)

77046(Zip
    Code)   Registrants telephone number, including area code:
 (713) 350-5100
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Exchange on Which RegisteredCommon Stock, $0.01 par value per share
    Rights to Purchase Preferred Stock

NASDAQ Global Select Market
    NASDAQ Global Select Market   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


3Item 1A.


Risk Factors


16Item 1B.


Unresolved Staff Comments


29Item 2.


Properties


29Item 3.


Legal Proceedings


29Item 4.


Submission of Matters to a Vote of Security
    Holders


30PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


30Item 6.


Selected Financial Data


31Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


34Forward-Looking Statements


58Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


59Item 8.


Financial Statements and Supplementary Data


61Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


100Item 9A.


Controls and Procedures


100Item 9B.


Other Information


100PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


101Item 11.


Executive Compensation


101Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


101Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


101Item 14.


Principal Accountant Fees and Services


101PART IVItem 15.


Exhibits and Financial Statement Schedules


101EX-10.15EX-10.16EX-10.18EX-21.1EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1   2




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##### Table of Contents



PART I  Item 1.
    Business  In this Annual Report on
    Form 10-K,
    we refer to Hercules Offshore, Inc. and its subsidiaries as
    we, the Company or Hercules
    Offshore, unless the context clearly indicates otherwise.
    Hercules Offshore, Inc. is a Delaware corporation formed in July
    2004, with its principal executive offices located at 9 Greenway
    Plaza, Suite 2200, Houston, Texas 77046. Hercules
    Offshores telephone number at such address is
    (713) 350-5100
    and our Internet address is www.herculesoffshore.com.
  Overview
        Domestic Offshore
  International Offshore
  Inland
  Domestic Liftboats
  International Liftboats
  Delta Towing
   3




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##### Table of Contents



Our
    Fleet
  Jackup
    Drilling Rigs
            Maximum/Minimum


RatedYear


Water Depth


DrillingRig Name

Type

Built


Rating


Depth(a)

Location

Status(b)(Feet)


(Feet)Hercules 85

ILS


1982



85/9


20,000

U.S. GOM

Cold StackedHercules 101

MC


1980



100/20


20,000

U.S. GOM

Cold StackedHercules 110

MC


1981



100/20


20,000

Trinidad

Cold StackedHercules 120

MC


1958



120/22


18,000

U.S. GOM

ContractedHercules 150

ILC


1979



150/10


20,000

U.S. GOM

ShipyardHercules 152

MC


1980



150/22


20,000

U.S. GOM

ContractedHercules 153

MC


1980
(c)


150/22


25,000

U.S. GOM

Cold StackedHercules 156

ILC


1983



150/14


20,000

Gabon

ContractedHercules 170

ILC


1981
(d)


170/16


16,000

Qatar

ContractedHercules 173

MC


1971



173/22


15,000

U.S. GOM

ContractedHercules 185

ILC


1982
(d)


120/20


20,000

Namibia

ShipyardHercules 200

MC


1979



200/23


20,000

U.S. GOM

Ready StackedHercules 201

MC


1981



200/23


20,000

U.S. GOM

ContractedHercules 202

MC


1981



200/23


20,000

U.S. GOM

ContractedHercules 203

MC


1982



200/23


20,000

U.S. GOM

ContractedHercules 204

MC


1981



200/23


20,000

U.S. GOM

ContractedHercules 205

MC


1979



200/23


20,000

Mexico

ContractedHercules 206

MC


1980



200/23


20,000

Mexico

ContractedHercules 207

MC


1981



200/23


20,000

U.S. GOM

Cold StackedHercules 208(e)

MC


1980
(f)


200/22


20,000

Malaysia

ContractedHercules 211

MC


1980



200/23


18,000(g)

U.S. GOM

Cold Stacked 4




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##### Table of Contents



Maximum/Minimum


RatedYear


Water Depth


DrillingRig Name

Type

Built


Rating


Depth(a)

Location

Status(b)(Feet)


(Feet)Hercules 250

MS


1974



250/24


20,000

U.S. GOM

ContractedHercules 251

MS


1978



250/24


20,000

U.S. GOM

ShipyardHercules 252

MS


1978



250/24


20,000

U.S. GOM

Ready StackedHercules 253

MS


1982



250/24


20,000

U.S. GOM

ShipyardHercules 257

MS


1979



250/24


20,000

U.S. GOM

ContractedHercules 258

MS


1979
(f)


250/24


20,000

India

ContractedHercules 260

ILC


1979
(f)


250/12


20,000

India

ContractedHercules 261

ILC


1979
(f)


250/12


20,000

Saudi Arabia

ContractedHercules 262

ILC


1982
(f)


250/12


20,000

Saudi Arabia

ContractedHercules 350

ILC


1982



350/16


25,000

U.S. GOM

Ready Stacked     (a)
    
    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.(b)
    
    Rigs designated as Contracted are under contract
    while rigs described as Ready Stacked are not under
    contract but generally are ready for service. Rigs described as
    Cold Stacked are not actively marketed, normally
    require the hiring of an entire crew and require a maintenance
    review and refurbishment before they can function as a drilling
    rig. Rigs described as Shipyard are undergoing
    maintenance, repairs, or upgrades and may or may not be actively
    marketed depending on the length of stay in the shipyard.(c)
    
    Rig upgrade and/or major refurbishment was completed in 2007.(d)
    
    Hercules 170 completed its rig upgrade and major
    refurbishment in 2006 and Hercules 185 is currently
    undergoing an upgrade and major refurbishment that will be
    completed in 2009.(e)
    
    This rig is currently unable to operate in the U.S. Gulf of
    Mexico due to regulatory restrictions.(f)
    
    Rig upgrade and/or major refurbishment was completed in 2008.(g)
    
    Rated workover depth. Hercules 211is 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.  Other
    Drilling Rigs
     5




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##### Table of Contents



Maximum/MinimumYear


Water Depth


Rated DrillingRig Name

Type

Built


Rating


Depth(a)

Location

Status(b)(Feet)


(Feet)Hercules 75

Sub


1983



85/14


25,000

U.S. GOM

Cold StackedHercules 77

Sub


1982
(c)


85/14


30,000

U.S. GOM

Cold StackedHercules 78

Sub


1985
(c)


85/14


30,000

U.S. GOM

Cold StackedPlatform 3

Plat


1993



N/A


25,000

Mexico

Contracted     (a)
    
    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.(b)
    
    Rigs designated as Contracted are under contract
    while rigs described as Cold Stacked are not
    actively marketed, normally require the hiring of an entire crew
    and require a maintenance review and refurbishment before they
    can function as a drilling rig.(c)
    
    Rig upgrade and/or major refurbishment was completed in 2007.  Barge
    Drilling Rigs
      Year


Horsepower

Rated DrillingRig Name

Type

Built


Rating

Depth(a)

Location

Status(b)(Feet)1

Conv.


1980


2,000

20,000

U.S. GOM

Cold Stacked9

Posted


1981


2,000

25,000

U.S. GOM

Warm Stacked11

Conv.


1982


3,000

30,000

U.S. GOM

Cold Stacked15

Conv.


1981


2,000

25,000

U.S. GOM

Cold Stacked17

Posted


1981


3,000

30,000

U.S. GOM

Warm Stacked19

Conv.


1974


1,000

14,000

U.S. GOM

Cold Stacked27

Posted


1979
(c)

3,000

30,000

U.S. GOM

Cold Stacked28

Conv.


1980


3,000

30,000

U.S. GOM

Cold Stacked29

Conv.


1981


3,000

30,000

U.S. GOM

Contracted41

Posted


1981


3,000

30,000

U.S. GOM

Ready Stacked46

Posted


1979


3,000

30,000

U.S. GOM

Cold Stacked48

Posted


1982


3,000

30,000

U.S. GOM

Warm Stacked49

Posted


1980


3,000

30,000

U.S. GOM

Contracted52

Posted


1981


2,000

25,000

U.S. GOM

Cold Stacked55

Posted


1981


3,000

30,000

U.S. GOM

Contracted57

Posted


1975


2,000

25,000

U.S. GOM

Cold Stacked64

Posted


1979


3,000

30,000

U.S. GOM

Warm Stacked     (a)
    
    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. 6




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##### Table of Contents



(b)
    
    Rigs designated as Contracted are under contract
    while rigs described as Ready Stacked are not under
    contract but generally are ready for service. Rigs described as
    Warm Stacked may have a reduced number of crew, but
    only require a full crew to be ready for service. Rigs described
    as Cold Stacked are not actively marketed, normally
    require the hiring of an entire crew and require a maintenance
    review and refurbishment before they can function as a drilling
    rig.(c)
    
    Rig upgrade and/or major refurbishment was completed in 2008.  Liftboats
    
    production platform construction, inspection, maintenance and
    removal;
    well intervention and workover;
    well plug and abandonment; and
    pipeline installation and maintenance.        Year

Leg

Deck


Maximum



GrossLiftboat Name(1)

Built

Length

Area


Deck Load

Location

Tonnage(Feet)

(Square feet)


(Pounds)Whale Shark

2005

260


8,170


729,000

UAE


99Tigershark

2001

230


5,300


1,000,000

U.S. GOM


469Kingfish

1996

229


5,000


500,000

U.S. GOM


188Man-O-War

1996

229


5,000


500,000

U.S. GOM


188Wahoo

1981

215


4,525


500,000

U.S. GOM


491Blue Shark

1981

215


3,800


400,000

Nigeria


1,182Amberjack

1981

205


3,800


500,000

Bahrain


417 7




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##### Table of Contents



Year

Leg

Deck


Maximum



GrossLiftboat Name(1)

Built

Length

Area


Deck Load

Location

Tonnage(Feet)

(Square feet)


(Pounds)Bullshark

1998

200


7,000


1,000,000

U.S. GOM


859Creole Fish

2001

200


5,000


798,000

U.S. GOM


192Cutlassfish

2006

200


5,000


798,000

U.S. GOM


183Black Jack

1997

200


4,000


480,000

Nigeria


777Swordfish

2000

190


4,000


700,000

U.S. GOM


189Mako

2003

175


5,074


654,000

U.S. GOM


168Leatherjack

1998

175


3,215


575,850

U.S. GOM


168Oilfish

1996

170


3,200


590,000

Nigeria


495Manta Ray

1981

150


2,400


200,000

U.S. GOM


194Seabass

1983

150


2,600


200,000

U.S. GOM


186F.J. Leleux(2)

1981

150


2,600


200,000

Nigeria


407Black Marlin

1984

150


2,600


200,000

Nigeria


407Hammerhead

1980

145


1,648


150,000

U.S. GOM


178Pilotfish

1990

145


2,400


175,000

Nigeria


292Rudderfish

1991

145


3,000


100,000

Nigeria


309Blue Runner

1980

140


3,400


300,000

U.S. GOM


174Starfish

1978

140


2,266


150,000

U.S. GOM


99Rainbow Runner

1981

140


3,400


300,000

U.S. GOM


174Pompano

1981

130


1,864


100,000

U.S. GOM


196Sandshark

1982

130


1,940


150,000

U.S. GOM


196Stingray

1979

130


2,266


150,000

U.S. GOM


99Albacore

1985

130


1,764


150,000

U.S. GOM


171Moray

1980

130


1,824


130,000

U.S. GOM


178Skipfish

1985

130


1,116


110,000

U.S. GOM


91Sailfish

1982

130


1,764


137,500

U.S. GOM


179Mahi Mahi

1980

130


1,710


142,000

U.S. GOM


99Triggerfish

2001

130


2,400


150,000

U.S. GOM


195Scamp

1984

130


2,400


150,000

Nigeria


195Rockfish

1981

125


1,728


150,000

U.S. GOM


192Gar

1978

120


2,100


150,000

U.S. GOM


98Grouper

1979

120


2,100


150,000

U.S. GOM


97Sea Robin

1984

120


1,507


110,000

U.S. GOM


98Tilapia

1976

120


1,280


110,000

U.S. GOM


97Charlie Cobb(2)

1980

120


2,000


100,000

Nigeria


229Durwood Speed(2)

1979

120


2,000


100,000

Nigeria


210James Choat(2)

1980

120


2,000


100,000

Nigeria


210Solefish

1978

120


2,000


100,000

Nigeria


229Tigerfish

1980

120


2,000


100,000

Nigeria


210Zoal Albrecht(2)

1982

120


2,000


100,000

Nigeria


213Barracuda

1979

105


1,648


110,000

U.S. GOM


93Carp

1978

105


1,648


110,000

U.S. GOM


98Cobia

1978

105


1,648


110,000

U.S. GOM


94Dolphin

1980

105


1,648


110,000

U.S. GOM


97 8




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##### Table of Contents



Year

Leg

Deck


Maximum



GrossLiftboat Name(1)

Built

Length

Area


Deck Load

Location

Tonnage(Feet)

(Square feet)


(Pounds)Herring

1979

105


1,648


110,000

U.S. GOM


97Marlin

1979

105


1,648


110,000

U.S. GOM


97Corina

1974

105


953


100,000

U.S. GOM


98Pike

1980

105


1,360


130,000

U.S. GOM


92Remora

1976

105


1,179


100,000

U.S. GOM


94Wolffish

1977

105


1,044


100,000

U.S. GOM


99Seabream

1980

105


1,140


100,000

U.S. GOM


92Sea Trout

1978

105


1,500


100,000

U.S. GOM


97Tarpon

1979

105


1,648


110,000

U.S. GOM


97Palometa

1972

105


780


100,000

U.S. GOM


99Jackfish

1978

105


1,648


110,000

U.S. GOM


99Bonefish

1978

105


1,344


90,000

Nigeria


97Croaker

1976

105


1,344


72,000

Nigeria


82Gemfish

1978

105


2,000


100,000

Nigeria


223Tapertail

1979

105


1,392


110,000

Nigeria


100     (1)
    
    The Palometaand Wolffishare currently
    cold-stacked. The Whale Sharkis in a shipyard in the UAE
    undergoing regulatory and other modifications and repairs and is
    expected to re-enter service in the second quarter of 2009. All
    other liftboats are either available or operating.(2)
    
    We operate these vessels; however, they are owned by a third
    party.  Competition
    Customers
   9




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##### Table of Contents



Contracts
          Contract
    Backlog
   10




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##### Table of Contents



For the Years Ending December 31,Total


2009


2010


2011


2012


Thereafter(In thousands)Domestic Offshore

$
43,431


$
43,431


$



$



$



$
International Offshore


681,323



281,951



271,070



128,302







Inland


2,101



2,101















Total

$
726,855


$
327,483


$
271,070


$
128,302


$



$
   Employees
      Insurance
     11




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##### Table of Contents



Regulation
         12




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##### Table of Contents




    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; and
    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.  non-U.S. citizens
 13




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##### Table of Contents



non-U.S. operations
    Available
    Information
  www.herculesoffshore.com Form 10-K, Form 10-Q, Form 8-K, www.sec.gov
 14




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##### Table of Contents



Segment
    and Geographic Information
   15




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##### Table of Contents



Item 1A.
    Risk
    Factors  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.
    
    the demand for oil and natural gas in the United States and
    elsewhere;
    the cost of exploring for, developing, producing and delivering
    oil and natural gas, and the relative cost of onshore production
    or importation of natural gas;
    political, economic and weather conditions in the United States
    and elsewhere;
    imports of liquefied natural gas;
    expectations regarding future commodity 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;
    domestic and international tax policies and governmental
    regulations;
    the development and exploitation of alternative fuels, and the
    competitive, social and political position of natural gas as a
    source of energy compared with other energy sources;
    the policies of various governments regarding exploration and
    development of their oil and natural gas reserves;
    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 and
    other significant oil and natural gas producing regions or
    further acts of terrorism in the United States, or
    elsewhere; and
    acts of terrorism in the United States and elsewhere.   16




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##### Table of Contents



The
    offshore service industry is highly cyclical, and certain of our
    contracts, primarily in the U.S. Gulf of Mexico, are short-term
    contracts. The volatility of the industry, coupled with our
    short-term contracts, could result in sharp declines in our
    profitability.
    A
    significant portion of our business is conducted in the
    shallow-water U.S. Gulf of Mexico. The mature nature of this
    region could result in less drilling activity in the area,
    thereby reducing demand for our services.
    Our
    industry is highly competitive, with intense price competition.
    Our inability to compete successfully may reduce our
    profitability.
     17




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##### Table of Contents



Our
    customers may seek to cancel or renegotiate some of our drilling
    and liftboat contracts during periods of depressed market
    conditions or if we experience downtime, operational
    difficulties, or
    safety-related
    issues.
    We can
    provide no assurance that our current backlog of contract
    drilling revenue will be ultimately realized.
    Our
    business involves numerous operating hazards, and our insurance
    may not be adequate to cover our losses.
   18




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##### Table of Contents



Our
    customers may be unable or unwilling to indemnify
    us.
    Our
    international operations are subject to additional political,
    economic, and other uncertainties not generally associated with
    domestic operations.
   19




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##### Table of Contents




    political, social and economic instability, war and acts of
    terrorism;
    potential seizure, expropriation or nationalization of assets;
    damage to our equipment or violence directed at our employees,
    including kidnappings;
    piracy;
    increased operating costs;
    complications associated with repairing and replacing equipment
    in remote locations;
    repudiation, modification or renegotiation of contracts;
    limitations on insurance coverage, such as war risk coverage in
    certain areas;
    import-export quotas;
    confiscatory taxation;
    work stoppages or spikes, particularly in the Nigerian and
    Mexican labor environment;
    unexpected changes in regulatory requirements;
    wage and price controls;
    imposition of trade barriers;
    imposition or changes in enforcement of local content laws;
    restrictions on currency or capital repatriations;
    currency fluctuations and devaluations; and
    other forms of government regulation and economic conditions
    that are beyond our control.      non-U.S. contract
 20




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##### Table of Contents



A
    small number of customers account for a significant portion of
    our revenues, and the loss of any of these customers could
    adversely affect our financial condition and results of
    operations.
    Reactivation
    of non-marketed rigs or liftboats, mobilization of rigs or
    liftboats back to the U.S. Gulf of Mexico or new construction of
    rigs or liftboats could result in excess supply in the region,
    and our dayrates and utilization could be reduced.
    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.
    
    unexpectedly long delivery times for, or shortages of, key
    equipment, parts and materials;
    shortages of skilled labor and other shipyard personnel
    necessary to perform the work;
    unforeseen increases in the cost of equipment, labor and raw
    materials, particularly steel;
    unforeseen design and engineering problems;
    latent damages or deterioration to equipment and machinery in
    excess of engineering estimates and assumptions;
    unanticipated actual or purported change orders; 21




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##### Table of Contents




    work stoppages;
    latent damages or deterioration to hull, equipment and machinery
    in excess of engineering estimates and assumptions;
    failure or delay of third-party service providers and labor
    disputes;
    disputes with shipyards and suppliers;
    delays and unexpected costs of incorporating parts and materials
    needed for the completion of projects;
    failure or delay in obtaining acceptance of the rig from our
    customer;
    financial or other difficulties at shipyards;
    adverse weather conditions; and
    inability or delay in obtaining customer acceptance or
    flag-state, classification society, or regulatory approvals.    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.
   22




---



##### Table of Contents



TODCOs
    tax sharing agreement with Transocean may require continuing
    substantial payments.
    The
    recent worldwide financial and credit crisis could lead to an
    extended worldwide economic recession and have a material
    adverse effect on our revenue and profitability.
    The
    global financial crisis may have impacts on our business and
    financial condition that we currently cannot
    predict.
    In
    order to execute our growth strategy, we may require additional
    capital in the future, which may not be available to
    us.
   23




---



##### Table of Contents



Acquisitions
    are an important component of our business strategy. Our
    acquisition strategy may be unsuccessful if we are unable to
    identify and complete future acquisitions, fail to successfully
    integrate acquired assets or businesses we acquire, are unable
    to obtain financing for acquisitions on acceptable terms or
    incorrectly predict operating results.
      
    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.      Failure
    to retain or attract skilled workers could hurt our
    operations.
      Governmental
    laws and regulations may add to our costs or limit drilling
    activity and liftboat operations.
   24




---



##### Table of Contents



Compliance
    with or a breach of environmental laws can be costly and could
    limit our operations.
    We may
    not be able to maintain or replace our rigs and liftboats as
    they age.
    Our
    operating and maintenance costs with respect to our rigs do not
    necessarily fluctuate in proportion to changes in operating
    revenues.
    We are
    subject to litigation that could have an adverse effect on
    us.
   25




---



##### Table of Contents



Changes
    in effective tax rates or adverse outcomes resulting from
    examination of our tax returns could adversely affect our
    operating results and financial results.
    Our
    business would be adversely affected if we failed to comply with
    the provisions of U.S. law on coastwise trade, or if those
    provisions were modified, repealed or waived.
    U.S.-flag U.S.-flag
  Our
    debt could adversely affect our ability to operate our business
    and make it difficult to meet our debt service
    obligations.
    
    we may not be able to obtain necessary financing in the future
    for working capital, capital expenditures, acquisitions, debt
    service requirements or other purposes;
    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
    to the extent we have not hedged such risk in the event of
    increases in interest rates; and 26




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##### Table of Contents




    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
    senior secured credit agreement imposes significant operating
    and financial restrictions, which may prevent us from
    capitalizing on business opportunities and taking some
    actions.
    
    make investments and other restricted payments, including
    dividends;
    incur or guarantee additional indebtedness;
    create or incur liens;
    restrict dividend or other payments by our subsidiaries to us;
    sell our assets or consolidate or merge with or into other
    companies; and
    engage in transactions with affiliates.    If we
    are unable to comply with the restrictions and covenants in the
    agreements governing our indebtedness, there could be a default
    under the terms of these agreements, which could result in an
    acceleration of payment of funds that we have
    borrowed.
   27




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##### Table of Contents



We are
    a holding company, and we are dependent upon cash flow from
    subsidiaries to meet our obligations.
      We
    limit foreign ownership of our company, which may restrict
    investment in our common stock and could reduce the price of our
    common stock.
  non-United U.S.-flagged non-United States non-United
    We
    have no plans to pay regular dividends on our common stock, so
    investors in our common stock may not receive funds without
    selling their shares.
    Provisions
    in our charter documents, stockholder rights plan or Delaware
    law may inhibit a takeover, which could adversely affect the
    value of our common stock.
   28




---



##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties        Item 3.
    Legal
    Proceedings      Robert E. Aaron et al. vs. Phillips 66 Company et al. Circuit
    Court, Second Judicial District, Jones County,
    Mississippi.
 29




---



##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Quarterly
    Common Stock Prices and Dividend Policy
    PriceHigh


Low2008Fourth Quarter

$
14.94


$
3.06Third Quarter


39.35



13.08Second Quarter


39.47



24.07First Quarter


27.52



20.00   PriceHigh


Low2007Fourth Quarter

$
28.43


$
22.93Third Quarter


34.98



24.88Second Quarter


36.97



25.45First Quarter


29.24



23.80  30




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##### Table of Contents



Issuer
    Purchases of Equity Securities
    TotalNumber of


MaximumShares


Number ofPurchased


Shares thatTotal





as Part of a


may yet beNumber of


Average


Publicly


PurchasedShares


Price Paid


Announced


Under thePeriod

Purchased(1)


per Share


Plan(2)


Plan(2)October 1 - 31, 2008


212


$
7.10



N/A



N/ANovember 1 - 30, 2008


6,336



7.23



N/A



N/ADecember 1 - 31, 2008










N/A



N/ATotal


6,548



7.22



N/A



N/A     (1)
    
    Represents the surrender of shares of our common stock to
    satisfy tax withholding obligations in connection with the
    vesting of restricted stock issued to employees under our
    stockholder-approved long-term incentive plan.(2)
    
    We did not have at any time during 2008, 2007 or 2006, and
    currently do not have, a share repurchase program in place.
    However, on June 3, 2008, we completed an offering of
    $250.0 million aggregate original principal amount of our
    3.375% Convertible Senior Notes due 2038
    (Notes). We sold the Notes to the Initial Purchasers
    in reliance on the exemption from registration provided by
    Section 4(2) of the Securities Act of 1933, and we were
    advised by the Initial Purchasers that the Initial Purchasers
    resold the Notes only to qualified institutional buyers in
    reliance on Rule 144A under the Securities Act. We used
    $49.2 million of the net proceeds to repurchase,
    concurrently with the issuance of the Notes, approximately
    1,450,000 shares of our common stock in privately
    negotiated transactions at a purchase price of $33.95 per share.
    For additional information regarding the 3.375% Convertible
    Senior Notes and the terms of conversion, see
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Liquidity and
    Capital Resources  Debt and our
    Form 8-K
    filed June 3, 2008.  Item 6.
    Selected
    Financial Data  Form 10-K, Form 10-K
   31




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##### Table of Contents



Period fromYear Ended


Year Ended


Year Ended


Year Ended


Inception toDecember 31,


December 31,


December 31,


December 31,


December 31,2008(a)


2007


2006


2005


2004(In thousands, except per share data)Statement of Operations Data:Revenues

$
1,111,807


$
726,278


$
344,312


$
161,334


$
31,728Operating income (loss)


(1,120,913
)


225,642



158,057



55,859



9,907Income (loss) from continuing operations


(1,069,343
)


136,012



119,050



27,456



8,065Earnings (loss) per share from continuing operations:Basic

$
(12.10
)

$
2.31


$
3.80


$
1.10


$
0.55Diluted


(12.10
)


2.28



3.70



1.08



0.55Balance Sheet Data (as of end of period):Cash and cash equivalents

$
106,455


$
212,452


$
72,772


$
47,575


$
14,460Working capital


185,285



325,068



110,897



70,083



30,283Total assets


2,590,895



3,643,948



605,581



354,825



132,156Long-term debt, net of current portion


1,042,766



890,013



91,850



93,250



53,000Total stockholders equity


907,772



2,011,433



394,851



215,943



71,087Cash dividends per share


















     (a)
    
    Includes $950.3 million ($950.3 million, net of taxes
    or $(10.76) per diluted share) and $376.7 million
    ($236.7 million, net of taxes or $(2.68) per diluted share)
    in impairment of goodwill and impairment of property and
    equipment charges, respectively.  32




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##### Table of Contents



Period fromYear Ended


Year Ended


Year Ended


Year Ended


Inception toDecember 31,


December 31,


December 31,


December 31,


December 31,2008


2007


2006


2005


2004(In thousands)Other Financial Data:Net cash provided by (used in):Operating activities

$
269,948


$
175,741


$
124,241


$
54,762


$
(8,528
)Investing activities


(515,787
)


(825,007
)


(149,983
)


(174,952
)


(94,241
)Financing activities


139,842



788,946



50,939



153,305



117,229Capital expenditures(a)


585,084



155,390



204,456



168,038



94,443Deferred drydocking expenditures


17,269



20,772



12,544



7,369



601     (a)
    
    2008 includes the purchase of the Hercules 350, the
    Hercules 262and the Hercules 261as well as
    related equipment. 33




---



##### Table of Contents



Item 7.
    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 the accompanying consolidated financial
    statements as of December 31, 2008 and 2007 and for the
    years ended December 31, 2008, 2007 and 2006 included in
    Item 8 of this annual report. The following 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 in Item 1A and elsewhere in this
    annual report. See Forward-Looking Statements.
  OVERVIEW
          Domestic Offshore
  International Offshore
  Inland
  Domestic Liftboats
  International Liftboats
  Delta Towing
 34




---



##### Table of Contents



RESULTS
    OF OPERATIONS
     35




---



##### Table of Contents



Year Ended December 31,2008


2007


2006(Dollars in thousands)Domestic Offshore:Number of rigs (as of end of period)(a)


27



27



6Revenues

$
382,358


$
241,452


$
160,761Operating expenses


227,884



122,131



51,862Impairment of goodwill


507,194







Impairment of property and equipment


174,613







Depreciation and amortization expense


66,850



35,143



8,882General and administrative expenses


4,673



6,105



6,980Operating income (loss)

$
(598,856
)

$
78,073


$
93,037International Offshore:Number of rigs (as of end of period)


12



10



3Revenues

$
327,983


$
144,778


$
30,460Operating expenses


147,899



59,593



13,377Impairment of goodwill


150,886







Depreciation and amortization expense


37,865



15,513



2,547General and administrative expenses


2,980



1,863



1,606Operating income (loss)

$
(11,647
)

$
67,809


$
12,930Inland:Number of barges (as of end of period)(a)


27



27



Revenues

$
162,487


$
107,100


$
Operating expenses


125,656



56,636



Impairment of goodwill


205,474







Impairment of property and equipment


202,055







Depreciation and amortization expense


43,107



16,264



General and administrative expenses


8,347



533



Operating income (loss)

$
(422,152
)

$
33,667


$
Domestic Liftboats:Number of liftboats (as of end of period)


45



47



47Revenues

$
94,755


$
137,745


$
133,929Operating expenses


54,474



59,902



49,025Depreciation and amortization expense


21,317



24,969



18,854General and administrative expenses


2,386



2,190



2,259Operating income

$
16,578


$
50,684


$
63,791International Liftboats:Number of liftboats (as of end of period)


20



18



17Revenues

$
85,896


$
63,282


$
19,162Operating expenses


39,122



31,879



9,874Depreciation and amortization expense


9,912



7,619



1,923General and administrative expenses


5,990



3,888



3,056Operating income

$
30,872


$
19,896


$
4,309     (a)
    
    In January 2009, we retired four Domestic Offshore rigs and ten
    Inland barges.  36




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##### Table of Contents



Year Ended December 31,2008


2007


2006(Dollars in thousands)Delta Towing:Revenues

$
58,328


$
31,921


$
Operating expenses


36,676



16,050



Impairment of goodwill


86,733







Depreciation and amortization expense


10,926



4,598



General and administrative expenses


4,058



1,011



Operating income (loss)

$
(80,065
)

$
10,262


$
Total Company:Revenues

$
1,111,807


$
726,278


$
344,312Operating expenses


631,711



346,191



124,138Impairment of goodwill


950,287







Impairment of property and equipment


376,668







Depreciation and amortization expense


192,894



104,634



32,310General and administrative expenses


81,160



49,811



29,807Operating income (loss)


(1,120,913
)


225,642



158,057Interest expense


(59,486
)


(34,859
)


(9,278
)Gain on disposal of assets










30,690Gain (loss) on early retirement of debt, net


41,313



(2,182
)


Other, net


3,315



6,483



4,038Income (loss) before income taxes


(1,135,771
)


195,084



183,507Income tax benefit (provision)


66,428



(59,072
)


(64,457
)Income (loss) from continuing operations


(1,069,343
)


136,012



119,050Income (loss) from discontinued operation, net of taxes


(1,520
)


510



Net income (loss)

$
(1,070,863
)

$
136,522


$
119,050     Year Ended December 31, 2008AverageAverage


OperatingOperating


Available





Revenue


ExpenseDays


Days


Utilization(1)


per Day(2)


per Day(3)Domestic Offshore


5,907



8,166



72.3
%

$
64,730


$
27,906International Offshore


2,753



3,005



91.6
%


119,137



49,218Inland


4,048



5,885



68.8
%


40,140



21,352Domestic Liftboats


10,343



15,785



65.5
%


9,161



3,451International Liftboats


5,028



6,501



77.3
%


17,084



6,018   37




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##### Table of Contents



Year Ended December 31, 2007AverageAverage


OperatingOperating


Available





Revenue


ExpenseDays


Days


Utilization(1)


per Day(2)


per Day(3)Domestic Offshore


3,265



4,958



65.9
%

$
73,952


$
24,633International Offshore


1,549



1,625



95.3
%


93,465



36,673Inland


2,279



2,941



77.5
%


46,994



19,257Domestic Liftboats


11,265



16,749



67.3
%


12,228



3,576International Liftboats


5,077



6,149



82.6
%


12,464



5,184   Year Ended December 31, 2006AverageAverage


OperatingOperating


Available





Revenue


ExpenseDays


Days


Utilization(1)


per Day(2)


per Day(3)Domestic Offshore


1,973



2,078



94.9
%

$
81,480


$
24,957International Offshore


305



321



95.0
%


99,868



41,673Inland


n/a



n/a



n/a



n/a



n/aDomestic Liftboats


11,895



15,416



77.2
%


11,259



3,180International Liftboats


1,765



2,009



87.9
%


10,857



4,915     (1)
    
    Utilization is defined as the total number of days our rigs or
    liftboats, as applicable, were under contract, known as
    operating days, in the period as a percentage of the total
    number of available days in the period. Days during which our
    rigs and liftboats were undergoing major refurbishments,
    upgrades or construction, and days during which our rigs and
    liftboats are cold-stacked, are not counted as available days.
    Days during which our liftboats are in the shipyard undergoing
    drydocking or inspection are considered available days for the
    purposes of calculating utilization.(2)
    
    Average revenue per rig or liftboat per day is defined as
    revenue earned by our rigs or liftboats, as applicable, in the
    period divided by the total number of operating days for our
    rigs or liftboats, as applicable, in the period. Included in
    Domestic Offshore revenue is a total of $0.4 million
    related to amortization of contract specific capital
    expenditures reimbursed by the customer for the year ended
    December 31, 2007. There was no such revenue in the years
    ended December 31, 2008 and 2006. Included in International
    Offshore revenue is a total of $11.6 million,
    $3.2 million and $2.6 million related to amortization
    of deferred mobilization revenue and contract specific capital
    expenditures reimbursed by the customer for the years ended
    December 31, 2008, 2007 and 2006, respectively. Included in
    revenue for our International Offshore segment for the year
    ended December 31, 2006 is $2.0 million earned for a
    timely departure of Hercules 170from the shipyard in the
    second quarter of 2006. Included in International Liftboats
    revenue is a total of $0.3 million related to amortization
    of deferred mobilization revenue for the year ended
    December 31, 2008. There was no such revenue in the years
    ended December 31, 2007 and 2006.(3)
    
    Average operating expense per rig or liftboat per day is defined
    as operating expenses, excluding depreciation and amortization,
    incurred by our rigs or liftboats, as applicable, in the period
    divided by the total number of available days in the period. We
    use available days to calculate average operating expense per
    rig or liftboat per day rather than operating days, which are
    used to calculate average revenue per rig or liftboat per day,
    because we incur operating expenses on our rigs and liftboats
    even when they are not under contract and earning a dayrate. In
    addition, the operating expenses we incur on our rigs and
    liftboats per day when they are not under contract are typically
    lower than the
    per-day
    expenses we incur when they are under contract. Included in
    International Offshore operating expense is a total of
    $5.6 million, $2.8 million and $1.6 million
    related to amortization of deferred mobilization expenses for
    the years ended December 31, 2008, 2007 and 2006,
    respectively.   38




---



##### Table of Contents



2008
    Compared to 2007
  Revenues
  Consolidated.
  Domestic Offshore.
  International Offshore. Hercules 260
  Inland.
  Domestic Liftboats.
 39




---



##### Table of Contents



International Liftboats.
  Delta Towing.
  Operating
    Expenses
  Consolidated.
  Domestic Offshore.
  International Offshore.
  Inland.
  Domestic Liftboats.
  International Liftboats.
  Delta Towing.
 40




---



##### Table of Contents



Impairment
    of Goodwill
    Impairment
    of Property and Equipment
    Depreciation
    and Amortization
    General
    and Administrative Expenses
    Interest
    Expense
    Gain
    (Loss) on Early Retirement of Debt, Net
    Other
    Income
    Income
    Tax Benefit (Provision)
    Discontinued
    Operation
   41




---



##### Table of Contents



2007
    Compared to 2006
  Revenues
  Consolidated.
  Domestic Offshore.
  International Offshore. Hercules 258
  Inland.
  Domestic Liftboats.
  International Liftboats.
  Delta Towing.
 42




---



##### Table of Contents



Operating
    Expenses
  Consolidated.
  Domestic Offshore.
  International Offshore.
  Inland.
  Domestic Liftboats.
  International Liftboats.
  Delta Towing.
  Depreciation
    and Amortization
    General
    and Administrative Expenses
    Interest
    Expense
   43




---



##### Table of Contents



Loss
    on Early Retirement of Debt
    Other
    Income
    Discontinued
    Operation
    Income
    Tax Provision
    Critical
    Accounting Policies
      Cash
    and Cash Equivalents and Marketable Securities
     44




---



##### Table of Contents



Goodwill
  Goodwill and Other
    Intangible Assets
    Other
    Intangible Assets
      2009

$
4,7812010


1,8142011


6582012


2013


   Property
    and Equipment
   45




---



##### Table of Contents



Revenue
    Recognition
    Income
    Taxes
  Accounting for Income Taxes
   46




---



##### Table of Contents



Allowance
    for Doubtful Accounts
    Deferred
    Charges
    Stock-Based
    Compensation
     47




---



##### Table of Contents



OUTLOOK
  Offshore
               48




---



##### Table of Contents



Inland
      Liftboats
   49




---



##### Table of Contents



Labor
    Markets
   50




---



##### Table of Contents



LIQUIDITY
    AND CAPITAL RESOURCES
  Sources
    and Uses of Cash
    2008


2007Net Cash Provided by Operating Activities

$
269.9


$
175.7Net Cash Used in Investing Activities:Acquisition of Assets


(320.8
)


Acquisition of Business, Net of Cash Acquired






(728.4
)Additions to Property and Equipment


(264.2
)


(155.4
)Deferred Drydocking Expenditures


(17.3
)


(20.8
)Sale of (Investment in) Marketable Securities


39.3



(39.3
)Proceeds from Sale of Assets, Net


17.0



109.7Insurance Proceeds Received


30.2



4.3Other






4.9Total


(515.8
)


(825.0
)Net Cash Provided by Financing Activities:Short-term Debt Borrowings (Repayments), Net


2.5



(1.4
)Long-term Debt Borrowings


350.0



900.0Long-term Debt Repayments


(121.5
)


(97.8
)Redemption of 3.375% Convertible Senior Notes


(44.8
)


Common Stock Repurchases


(49.2
)


Proceeds from Exercise of Stock Options


5.1



2.1Excess Tax Benefit from Stock-Based Arrangements


5.9



3.8Payment of Debt Issuance Costs


(8.1
)


(17.8
)Other






0.1Total


139.9



789.0Net Increase (Decrease) in Cash and Cash Equivalents

$
(106.0
)

$
139.7   Sources
    of Liquidity and Financing Arrangements
     51




---



##### Table of Contents



Cash
    Requirements and Contractual Obligations
  Asset
    Acquisition
    Debt
           52




---



##### Table of Contents



53




---



##### Table of Contents



Capital
    Expenditures
            Contractual
    Obligations
   54




---



##### Table of Contents



Payments due by PeriodContractual Obligations and

Less than


1-3


4-5


After 5Contingent Commitments

1 Year


Years


Years


Years


Total(In thousands)Recorded Obligations:Long-term debt obligations

$
11,455


$
18,000


$
1,021,254


$
3,508


$
1,054,217Insurance note payable


11,126















11,126FIN 48 liability(b)


17,209















17,209Purchase obligations(a)


16,506















16,506Other


2,273















2,273Unrecorded Obligations:Letters of credit


19,110



9,961











29,071Surety Bonds


38,905



12,462











51,367Management compensation obligations


3,335



6,376











9,711Purchase obligations(a)


18,304















18,304Operating lease obligations


6,267



5,925



2,491



4,850



19,533Total contractual obligations

$
144,490


$
52,724


$
1,023,745


$
8,358


$
1,229,317     (a)
    
    A purchase obligation is defined as an agreement to
    purchase goods or services that is enforceable and legally
    binding on the company and that specifies all significant terms,
    including: fixed or minimum quantities to be purchased; fixed,
    minimum or variable price provisions; and the approximate timing
    of the transaction. These amounts are primarily comprised of
    open purchase order commitments to vendors and subcontractors.(b)
    
    FIN 48 liabilities of $5.7 million have been excluded
    from the table above as a reasonably reliable estimate of the
    period of cash settlement cannot be made.  Off-Balance
    Sheet Arrangements
  Guarantees
    Letters
    of Credit and Surety Bonds
   55




---



##### Table of Contents



Accounting
    Pronouncements
  No. 157-3, Determining the Fair Value of a Financial Asset when the
    Market for that Asset is not Active No. 157-3). No. 157-3 Fair
    Value Measurements No. 157-3
  14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) (FSP 14-1), FSP 14-1 FSP 14-1 FSP 14-1 FSP 14-1 FSP 14-1
  Disclosures about Derivative Instruments and Hedging
    Activities Accounting for Derivative Instruments and Hedging Activities
  ,
    Business Combinations Business Combinations
  SFAS No. 157-2, Effective Date of FASB Statement No. 157
 56




---



##### Table of Contents



, The Fair Value Option for Financial
    Assets and Financial Liabilities
 57




---



##### Table of Contents



FORWARD-LOOKING
    STATEMENTS  Form 10-K
  
    our ability to enter into new contracts for our rigs and
    liftboats and future utilization rates for the units;
    the correlation between demand for our rigs and our liftboats
    and our earnings and customers expectations of energy
    prices;
    future capital expenditures and refurbishment, repair and
    upgrade costs;
    expected completion times for our refurbishment and upgrade
    projects;
    sufficiency and availability of funds for required capital
    expenditures, working capital and debt service;
    our plans regarding increased international operations;
    expected useful lives of our rigs and liftboats;
    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 and dayrates, market conditions, 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.    
    oil and natural gas prices and industry expectations about
    future prices;
    demand for offshore drilling rigs and liftboats;
    our ability to enter into and the terms of future contracts;
    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 and
    other oil and natural gas producing regions or further acts of
    terrorism in the United States, or elsewhere;
    the impact of governmental laws and regulations;
    the adequacy of sources of credit and 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, particularly in the West
    African labor environments; 58




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##### Table of Contents




    operating hazards such as severe weather and seas, fires,
    cratering, blowouts, 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.    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk    Interest
    Rate Exposure
          Interest
    Rate Swaps and Derivatives
   59




---



##### Table of Contents



Liquidity and Capital
    Resources
    January 1, 2009  March 31, 2009

$
50,000     December 31, 2008 - March 31, 2009

$
325,000April 1, 2009 - June 30, 2009


250,000July 1, 2009 - September 30, 2009


175,000October 1, 2009 - December 30, 2009


75,000  60




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
               ERNST &
    YOUNG LLP
    61




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                 ERNST &
    YOUNG LLP
    62




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
           GRANT
    THORNTON LLP
    63




---



##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007(In thousands, except par value)ASSETSCurrent Assets:Cash and Cash Equivalents

$
106,455


$
212,452Marketable Securities






39,300Accounts Receivable, Net


293,089



221,663Insurance Claims Receivable


776



43,342Supplies


2,587



2,494Prepaids


23,033



31,417Current Deferred Tax Asset


17,379



18,960Other


16,706



23,565460,025



593,193Property and Equipment, Net


2,088,530



2,060,224Goodwill






940,241Other Assets, Net


42,340



50,290$
2,590,895


$
3,643,948LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Short-term Debt and Current Portion of Long-term Debt

$
11,455


$
21,653Insurance Note Payable


11,126



16,931Accounts Payable


99,823



105,527Accrued Liabilities


83,424



80,138Taxes Payable


32,440



23,006Other Current Liabilities


36,472



20,870274,740



268,125Long-term Debt, Net of Current Portion


1,042,766



890,013Other Liabilities


35,529



15,493Deferred Income Taxes


330,088



458,884Commitments and ContingenciesStockholders Equity:Common Stock, $0.01 par value; 200,000 Shares
    Authorized; 89,459 and 88,876 Shares Issued, Respectively;
    87,976 and 88,857 SharesOutstanding, Respectively


895



889Capital in Excess of Par Value


1,755,392



1,731,882Treasury Stock, at Cost, 1,483 Shares and 19 Shares,
    Respectively


(50,081
)


(582
)Accumulated Other Comprehensive Loss


(14,932
)


(8,117
)Retained Earnings (Deficit)


(783,502
)


287,361907,772



2,011,433$
2,590,895


$
3,643,948    64




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Year Ended December 31,2008


2007


2006(In thousands, except per share data)Revenues

$
1,111,807


$
726,278


$
344,312Costs and Expenses:Operating Expenses


631,711



346,191



124,138Impairment of Goodwill


950,287







Impairment of Property and Equipment


376,668







Depreciation and Amortization


192,894



104,634



32,310General and Administrative


81,160



49,811



29,8072,232,720



500,636



186,255Operating Income (Loss)


(1,120,913
)


225,642



158,057Other Income (Expense):Interest Expense


(59,486
)


(34,859
)


(9,278
)Gain on Disposal of Assets










30,690Gain (Loss) on Early Retirement of Debt, Net


41,313



(2,182
)


Other, Net


3,315



6,483



4,038Income (Loss) Before Income Taxes


(1,135,771
)


195,084



183,507Income Tax Benefit (Provision)


66,428



(59,072
)


(64,457
)Income (Loss) from Continuing Operations


(1,069,343
)


136,012



119,050Income (Loss) from Discontinued Operation,Net of Taxes


(1,520
)


510



Net Income (Loss)

$
(1,070,863
)

$
136,522


$
119,050Basic Earnings (Loss) Per Share:Income (Loss) from Continuing Operations

$
(12.10
)

$
2.31


$
3.80Income (Loss) from Discontinued Operation


(0.02
)


0.01



Net Income (Loss)

$
(12.12
)

$
2.32


$
3.80Diluted Earnings (Loss) Per Share:Income (Loss) from Continuing Operations

$
(12.10
)

$
2.28


$
3.70Income (Loss) from Discontinued Operation


(0.02
)


0.01



Net Income (Loss)

$
(12.12
)

$
2.29


$
3.70Weighted Average Shares Outstanding:Basic


88,351



58,897



31,327Diluted


88,351



59,563



32,203    65




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
  December 31, 2008


December 31, 2007


December 31, 2006Shares


Amount


Shares


Amount


Shares


Amount(In thousands)Common Stock:Balance at Beginning of Period


88,876


$
889



32,008


$
320



30,243


$
302Exercise of Stock Options


478



5



250



3



129



2Issuance of Common Stock, Net










56,618



566



1,600



16Issuance of Restricted Stock


105



1











36



Balance at End of Period


89,459



895



88,876



889



32,008



320Capital in Excess of Par Value:Balance at Beginning of Period






1,731,882







243,157







184,698Exercise of Stock Options






5,122







2,052







1,230Issuance of Common Stock, Net














1,471,379







54,182Issuance of Restricted Stock






(1
)














Reclass of Restricted Stock






















(1,322
)Compensation Expense Recognized






12,535







7,680







3,098Compensation Capitalized as part of the Purchase Price Allocation














3,778







Excess Tax Benefit From Stock-Based Arrangements






5,860







3,836







1,271Other






(6
)














Balance at End of Period






1,755,392







1,731,882







243,157Treasury Stock:Balance at Beginning of Period


(19
)


(582
)


(6
)


(220
)






Repurchase of Common Stock


(1,464
)


(49,499
)


(13
)


(362
)


(6
)


(220
)Balance at End of Period


(1,483
)


(50,081
)


(19
)


(582
)


(6
)


(220
)Restricted Stock:Balance at Beginning of Period






















(1,322
)Reclass of Restricted Stock






















1,322Balance at End of Period






















Accumulated ComprehensiveIncome (Loss):Balance at Beginning of Period






(8,117
)






755







476Change in Unrealized Gain (Loss) on Hedge Transactions, Net of
    Tax of $3,669, $4,778 and $(150), Respectively






(6,815
)






(8,872
)






279Balance at End of Period, Net of Tax of $8,040, $4,371 and
    $(407), Respectively






(14,932
)






(8,117
)






755Retained Earnings (Deficit):Balance at Beginning of Period






287,361







150,839







31,789Net Income (Loss)






(1,070,863
)






136,522







119,050Balance at End of Period






(783,502
)






287,361







150,839Total Stockholders Equity


87,976


$
907,772



88,857


$
2,011,433



32,002


$
394,851    66




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
  Year Ended December 31,2008


2007


2006(In thousands)Net Income (Loss)

$
(1,070,863
)

$
136,522


$
119,050Other Comprehensive Income (Loss):Reclassification of (gains) losses, net included in net income


5,034



(897
)


(382
)Other comprehensive gains (losses), net


(11,849
)


(7,975
)


661Comprehensive Income (Loss)

$
(1,077,678
)

$
127,650


$
119,329    67




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2008


2007


2006(In thousands)Cash Flows from Operating Activities:Net Income (Loss)

$
(1,070,863
)

$
136,522


$
119,050Adjustments to Reconcile Net Income (Loss) to Net Cash Provided
    by Operating Activities:Depreciation and Amortization


192,918



109,064



32,310Stock-Based Compensation Expense


12,535



7,680



3,098Deferred Income Taxes


(111,952
)


2,841



27,200Provision for Doubtful Accounts Receivable


6,167







Amortization of Deferred Financing Fees


4,036



1,805



686Gain on Disposal of Assets


(3,029
)


(4,491
)


(30,779
)Excess Tax Benefit from Stock-Based Arrangements


(5,860
)


(3,836
)


(1,271
)(Gain) Loss on Early Retirement of Debt, Net


(41,313
)


2,182



Impairment of Goodwill


950,287







Impairment of Property and Equipment


376,668







(Increase) Decrease in Operating Assets -Accounts Receivable


(78,510
)


58,827



(50,653
)Insurance Claims Receivable


(840
)


(13,565
)


5,919Prepaid Expenses and Other


53,635



9,263



(12,617
)Increase (Decrease) in Operating Liabilities -Accounts Payable


(5,482
)


(6,794
)


15,842Insurance Note Payable


(45,173
)


(25,301
)


3,657Other Current Liabilities


17,125



15,239



11,499Tax Sharing Agreement Payment


(4,000
)


(116,003
)


Other Liabilities


23,599



2,308



300Net Cash Provided by Operating Activities


269,948



175,741



124,241Cash Flows from Investing Activities:Acquisition of Business, Net of Cash Acquired






(728,396
)


Acquisition of Assets


(320,839
)






Additions of Property and Equipment


(264,245
)


(155,390
)


(204,456
)Deferred Drydocking Expenditures


(17,269
)


(20,772
)


(12,544
)Investment in Marketable Securities






(151,675
)


Proceeds from Sale of Marketable Securities


39,300



112,375



Insurance Proceeds Received


30,221



4,285



61,278Proceeds from Sale of Assets, Net


17,045



109,745



5,989(Increase) Decrease in Restricted Cash






4,821



(250
)Net Cash Used in Investing Activities


(515,787
)


(825,007
)


(149,983
)Cash Flow from Financing Activities:Short-term Debt Borrowings (Repayments), Net


2,455



(1,395
)


Long-term Debt Borrowings


350,000



900,000



Long-term Debt Repayments


(121,427
)


(97,750
)


(1,400
)Redemption of 3.375% Convertible Senior Notes


(44,848
)






Common Stock Repurchases


(49,228
)






Proceeds from Issuance of Common Stock, Net










54,198Proceeds from Exercise of Stock Options


5,127



2,054



1,232Excess Tax Benefit from Stock-Based Arrangements


5,860



3,836



1,271Payment of Debt Issuance Costs


(8,097
)


(17,753
)


(630
)(Distributions to) Contributions from Members










(3,732
)Other






(46
)


Net Cash Provided by Financing Activities


139,842



788,946



50,939Net Increase (Decrease) in Cash and Cash Equivalents


(105,997
)


139,680



25,197Cash and Cash Equivalents at Beginning of Period


212,452



72,772



47,575Cash and Cash Equivalents at End of Period

$
106,455


$
212,452


$
72,772    68




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Nature of
    Business and Significant Accounting Policies  Organization
      Hercules 350 Hercules 261 Hercules 262
  Principles
    of Consolidation
    Reclassifications
    Cash
    and Cash Equivalents and Marketable Securities
     69




---



##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Revenue
    Recognition
    Years Ended December 31,2008


2007


2006Mobilization revenue deferred

$
33,727


$
6,517


$
5,680Mobilization expense deferred


7,490



3,340



3,287Mobilization revenue recognized


11,860



3,060



2,590Mobilization expense recognized


5,550



2,839



1,600     out-of-pocket
  Stock-Based
    Compensation
  Share-Based Payment Accounting for Stock Issued to
    Employees
    Accounts
    Receivable and Allowance for Doubtful Accounts
   70




---



##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Insurance
    Claims Receivable
  Hercules 205
  Prepaid
    Expenses
    Property
    and Equipment
        YearsDrilling rigs and marine equipment (salvage value of 10%)


15Drilling machinery and equipment


312Furniture and fixtures


3Computer equipment


37Automobiles and trucks


3   Accounting for the
    Impairment or Disposal of Long-Lived Assets
 71




---



##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Goodwill
  Goodwill and
    Other Intangible Assets Disclosures about
    Segments of an Enterprise and Related Information.
     72




---



##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Domestic


International





DeltaOffshore


Offshore


Inland


Towing


TotalAs of January 1, 2007

$



$



$



$



$
Goodwill acquired during the period


513,602



133,046



206,264



87,329



940,241As of December 31, 2007

$
513,602


$
133,046


$
206,264


$
87,329


$
940,241Purchase Price and Other Adjustments


(6,408
)


17,840



(790
)


(596
)


10,046Impairment


(507,194
)


(150,886
)


(205,474
)


(86,733
)


(950,287
)As of December 31, 2008

$



$



$



$



$
   Other
    Intangible Assets
      2009

$
4,7812010


1,8142011


6582012


2013


   Other
    Assets
     73




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Income
    Taxes
        Use of
    Estimates
    Fair
    Value of Financial Instruments
     74




---



##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounting
    Pronouncements
  No. 157-3, Determining the Fair Value of a Financial Asset when the
    Market for that Asset is not Active No. 157-3). No. 157-3 Fair
    Value Measurements No. 157-3
  14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) (FSP 14-1), FSP 14-1 FSP 14-1 FSP 14-1 FSP 14-1 FSP 14-1
  Disclosures about Derivative Instruments and Hedging
    Activities Accounting for Derivative Instruments and Hedging Activities
  Business Combinations Business Combinations
   75




---



##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  SFAS No. 157-2, Effective Date of FASB Statement No. 157
  , The Fair Value Option for Financial
    Assets and Financial Liabilities
  2.
    Property
    and Equipment, Net    December 31,2008


2007Drilling rigs and marine equipment

$
2,248,713


$
1,914,018Drilling machinery and equipment


47,062



235,680Leasehold improvements


10,615



9,722Automobiles and trucks


1,812



2,470Computer equipment


15,294



10,505Furniture and fixtures


1,484



962Total property and equipment, at cost


2,324,980



2,173,357Less accumulated depreciation


(236,450
)


(113,133
)Total property and equipment, net

$
2,088,530


$
2,060,224   3.
    Earnings
    Per Share    Year Ended December 31,2008


2007


2006Denominator:Weighted average basic shares


88,351



58,897



31,327Add effect of stock equivalents






666



876Weighted average diluted shares


88,351



59,563



32,203    76




---



##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    4.
    Asset
    Acquisitions and Business Combination        July 11, 2007(In thousands)Cash and Cash Equivalents

$
235,163Accounts Receivable


190,452Insurance Claims Receivable


20,875Current Deferred Tax Asset


19,319Prepaid Expenses and Other


14,121Property and Equipment, Net


1,685,837Goodwill


950,287Other Assets, Net


26,508Total Assets


3,142,562Short-Term Debt


(3,618
)Accounts Payable


(82,977
)Income Taxes Payable


(9,289
)Other Current Liabilities


(64,153
)Long-Term Debt


(14,062
)Deferred Tax Liabilities


(523,520
)Other Liabilities


(5,621
)Total Purchase Price

$
2,439,322    77




---



##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year EndedDecember 31,2007


2006(In millions, except per share amounts)Revenues

$
1,182.4


$
1,189.7Net Income


193.8



223.1Basic earnings per share


2.19



2.53Diluted earnings per share


2.16



2.50   Hercules 350 Hercules 261 Hercules 262
  5.
    Dispositions  Hercules
    256
    6.
    Discontinued
    Operation    No. 87-24, Allocation of Interest to Discontinued Operations
 78




---



##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2008


2007Revenues

$
1,818


$
40,515Income (Loss) Before Income Taxes

$
(2,341
)

$
4,429Income Tax (Provision) Benefit


821



(3,919
)Income (Loss) from Discontinued Operation, Net of Taxes

$
(1,520
)

$
510   7.
    Stock-based
    Compensation  Share-Based Payment Accounting for Stock Issued to Employees
       79




---



##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2008


2007


2006Dividend yield










Expected price volatility


40.8
%


35.0
%


Risk-free interest rate


2.85
%


4.58
%


Expected life of options (in years)


6.0



5.9



Weighted-average fair value of options granted

$
6.35


$
11.18



       Year EndedDecember 31,2006Compensation expense related to stock options, net of tax of $736

$
1,367Basic earnings per share impact


(0.04
)Diluted earnings per share impact


(0.04
)Cash flow from operating activities impact


(3,374
)Cash flow from financing activities impact


1,271     Weighted-


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicOptions

Shares


Price


Term


Value(In thousands)Outstanding at January 1, 2008


2,314,802


$
17.39



7.98


$
17,558Granted


947,800



15.28Exercised


(478,169
)


10.72Forfeited


(38,223
)


24.10Outstanding at December 31, 2008


2,746,210



17.73



7.96



643Vested or Expected to Vest atDecember 31, 2008


2,701,707



17.70



7.94



643Exercisable at December 31, 2008


1,687,810



18.42



7.11



643  80




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Weighted-AverageRestricted


Grant DateStock


Fair ValueNon-Vested at January 1, 2008


282,364


$
26.42Granted


417,655



26.12Vested


(105,539
)


28.15Forfeited


(102,176
)


26.65Non-Vested at December 31, 2008


492,304



25.93     8.
    Accrued
    Liabilities    December 31,2008


2007Accrued Liabilities:Taxes other than Income

$
17,610


$
21,686Accrued Payroll and Employee Benefits


36,160



27,941Accrued Self-Insurance Claims


29,541



29,973Other


113



538$
83,424


$
80,138   9.
    Benefit
    Plans   81




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    Debt    December 31,


December 31,2008


2007Term Loan Facility, due July 2013

$
886,500


$
895,5003.375% Convertible Senior Notes due June 2038


161,754



9.5% Senior Notes, due December 2008






10,4327.375% Senior Notes, due April 2018


3,512



3,5136.95% Senior Notes, due April 2008






2,221Foreign Overdraft Facility


2,455



Total Debt


1,054,221



911,666Less Short-term Debt and Current Portion of Long-term Debt


11,455



21,653Total Long-term Debt, Net of Current Portion

$
1,042,766


$
890,013     2009

$
11,4552010


9,0002011


9,0002012


9,0002013


1,012,254Thereafter


3,512$
1,054,221   Senior
    secured credit agreement
       82




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    the net proceeds from sales of certain assets to the extent that
    the Company does not reinvest the proceeds in its business
    within one year;
    the net proceeds from casualties or condemnations of assets to
    the extent that the Company does not reinvest the proceeds in
    its business within one year;
    the net proceeds of debt that the Company incurs to the extent
    that such debt is not permitted by the credit agreement;
    50% of the net proceeds that the Company receives from any
    issuance of preferred stock; and
    commencing with the fiscal year ending December 31, 2008,
    50% of the Companys excess cash flow until the outstanding
    principal balance of the term loan is less than
    $550.0 million.       83




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Senior
    notes and other debt
         84




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    11.
    Derivative
    Instruments and Hedging        December 31, 2008-March 31, 2009

$
325,000April 1, 2009-June 30, 2009


250,000July 1, 2009-September 30, 2009


175,000October 1,
    2009-December 30,
    2009


75,000     January 1, 2009-March 31, 2009

$
50,000   Accounting for Certain Derivative
    Instruments and Certain Hedging Activities (an amendment of FASB
    Statement No. 133) Amendment of Statement 133 on Derivative Instruments and
    Hedging Activities
 85




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      December 31,


December 31,2008


2007Fair value included in Other

$
21


$
Fair value included in Other Assets, Net






322Fair value included in Other Current Liabilities


15,669



4,025Fair value included in Other Liabilities


7,324



8,784Cumulative unrealized loss, net of tax of $8,040 and $4,371,
    respectively included in Accumulated Other Comprehensive Loss


(14,932
)


(8,117
)   Recognized Gain (Loss) in Consolidated Statements of
    Operations for the Year Ended December 31,2008


2007


2006Realized gains included in Other, Net

$



$
658


$
588Realized gains (losses) included in Interest Expense

$
(7,745
)

$
239


$
             Market approach 
  Income approach 
  Cost approach 
 86




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Total


Quoted Prices inFair Value


Active Markets for





SignificantMeasurement


Identical Asset or


Significant Other


UnobservableDecember 31,


Liability


Observable Inputs


Inputs


Valuation2008


(Level 1)


(Level 2)


(Level 3)


TechniqueDerivative Assets

$
21


$



$
21


$




ADerivative Liabilities


22,993







22,993







A   12.
    Supplemental
    Cash Flow Information    Year EndedDecember 31,2007Fair Value of Assets, net of cash acquired

$
1,974,086Goodwill


940,241Common Stock Issuance


(1,475,763
)Total Liabilities


(710,168
)Cash Consideration, net of cash acquired

$
728,396   Year Ended December 31,2008


2007


2006(In thousands)Cash paid during the period for:Interest, net of capitalized interest

$
55,865


$
36,426


$
8,246Income taxes


42,854



45,893



27,363       13.
    Concentration
    of Credit Risk     87




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    Sales to
    Major Customers    Year Ended December 31,2008


2007


2006Chevron Corporation


12
%


21
%


35
%     15.
    Income
    Taxes    Year Ended December 31,2008


2007


2006United States

$
(1,248,346
)

$
111,064


$
168,885Foreign


112,575



84,020



14,622Total

$
(1,135,771
)

$
195,084


$
183,507     Year Ended December 31,2008


2007


2006Current-United
    States

$
11,733


$
23,262


$
33,054Current-foreign


31,103



11,217



3,070Current-state


1,867



3,284



1,133Current income tax provision


44,703



37,763



37,257Deferred-United
    States


(96,344
)


23,315



26,597Deferred-foreign


(5,683
)


(159
)


(59
)Deferred-state


(9,104
)


(1,847
)


662Deferred income tax (benefit) provision


(111,131
)


21,309



27,200Total income tax (benefit) provision

$
(66,428
)

$
59,072


$
64,457  88




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007Deferred tax assets:Net operating loss carryforward (Federal, State &
    Foreign)

$
53,868


$
95,939Credit carryforwards


31,180



28,271Accrued expenses


15,698



17,200Unearned income


6,370



4,509Intangibles


3,569



99Stock Based Compensation


4,523



2,931Other


9,123



4,700Deferred tax assets


124,331



153,649Deferred tax liabilities:Fixed assets


(428,427
)


(582,233
)Deferred expenses


(2,612
)


(7,820
)Other


(6,001
)


(3,520
)Deferred tax liabilities


(437,040
)


(593,573
)Net deferred tax liabilities

$
(312,709
)

$
(439,924
)     Year Ended December 31,2008


2007


2006Statutory rate


35.0
%


35.0
%


35.0
%Effect of:Impairment of Goodwill


(29.3
)






State income taxes


0.7



0.1



1.1Taxes on foreign earnings at greater (lesser) than the U.S.
    statutory rate


(0.4
)


(4.4
)


(1.0
)Other


(0.2
)


(0.4
)


Effective rate


5.8
%


30.3
%


35.1
%      89




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounting for the Income Taxes Share Based Payment
  Accounting for Uncertainty in
    Income Taxes
      Balance as of January 1, 2008

$
Increases related to current year tax positions


5,467Increases related to tax positions taken in earlier periods


8,009Balance as of December 31, 2008

$
13,476  90




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          16.
    Segments    Domestic Offshore
  International Offshore
 91




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Inland
  Domestic Liftboats
  International Liftboats
  Delta Towing
        Year Ended December 31, 2008


Year Ended December 31, 2007Income (Loss)


Depreciation





Income


Depreciationfrom


and





from


andRevenue


Operations


Amortization


Revenue


Operations


AmortizationDomestic Offshore(a)

$
382,358


$
(598,856
)

$
66,850


$
241,452


$
78,073


$
35,143International Offshore(b)


327,983



(11,647
)


37,865



144,778



67,809



15,513Inland(c)


162,487



(422,152
)


43,107



107,100



33,667



16,264Domestic Liftboats


94,755



16,578



21,317



137,745



50,684



24,969International Liftboats


85,896



30,872



9,912



63,282



19,896



7,619Delta Towing(d)


58,328



(80,065
)


10,926



31,921



10,262



4,598$
1,111,807


$
(1,065,270
)

$
189,977


$
726,278


$
260,391


$
104,106Corporate






(55,643
)


2,917







(34,749
)


528Total Company

$
1,111,807


$
(1,120,913
)

$
192,894


$
726,278


$
225,642


$
104,634     (a)
    
    2008 Income (Loss) from Operations for the Companys
    Domestic Offshore Segment includes $507.2 million and
    $174.6 million in impairment of goodwill and impairment of
    property and equipment charges, respectively.(b)
    
    2008 Income (Loss) from Operations for the Companys
    International Offshore Segment includes an impairment of
    goodwill charge of $150.9 million. 92




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (c)
    
    2008 Income (Loss) from Operations for the Companys Inland
    Segment includes $205.5 million and $202.1 million in
    impairment of goodwill and impairment of property and equipment
    charges, respectively.(d)
    
    2008 Income (Loss) from Operations for the Companys Delta
    Towing Segment includes an impairment of goodwill charge of
    $86.7 million.  Year Ended December 31, 2006Income


Depreciationfrom


andRevenue


Operations


AmortizationDomestic Offshore

$
160,761


$
93,037


$
8,882International Offshore


30,460



12,930



2,547Inland










Domestic Liftboats


133,929



63,791



18,854International Liftboats


19,162



4,309



1,923Delta Towing










$
344,312


$
174,067


$
32,206Corporate






(16,010
)


104Total Company

$
344,312


$
158,057


$
32,310   Total AssetsDecember 31,


December 31,2008


2007Domestic Offshore(a)

$
930,988


$
1,504,548International Offshore(b)


955,911



681,742Inland(c)


217,477



646,120Domestic Liftboats


148,307



186,568International Liftboats


168,356



149,813Delta Towing(d)


92,371



193,963Corporate


77,485



281,194Total Company

$
2,590,895


$
3,643,948     (a)
    
    2008 Assets for the Companys Domestic Offshore Segment
    reflect the $507.2 million and $174.6 million
    impairment of goodwill and impairment of property and equipment,
    respectively.(b)
    
    2008 Assets for the Companys International Offshore
    Segment reflect the impairment of goodwill of
    $150.9 million.(c)
    
    2008 Assets for the Companys Inland Segment reflect
    $205.5 million and $202.1 million impairment of
    goodwill and impairment of property and equipment, respectively.(d)
    
    2008 Assets for the Companys Delta Towing Segment reflect
    the impairment of goodwill of $86.7 million.  93




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31,2008(a)


2007


2006Capital Expenditures and Deferred DrydockingExpenditures:Domestic Offshore

$
139,893


$
22,720


$
76,635International Offshore


390,732



78,455



20,100Inland


39,739



17,145



Domestic Liftboats


12,362



16,950



66,279International Liftboats


8,302



20,183



53,955Delta Towing


4,125



4,024



Corporate


7,200



16,685



31Total Company

$
602,353


$
176,162


$
217,000     (a)
    
    Includes the purchase of the Hercules 350, the
    Hercules 262and the Hercules 261as well as
    related equipment (See Note 4).    Year Ended December 31,2008


2007


2006Operating Revenues:United States

$
697,930


$
514,911


$
294,690Saudi Arabia


371







India


93,544



52,501



12,392Mexico


90,815



28,364



Nigeria


83,141



60,384



18,440Other(a)


146,006



70,118



18,790Total

$
1,111,807


$
726,278


$
344,312   As of December 31,2008


2007Long-Lived Assets:United States

$
1,226,379


$
2,375,874Saudi Arabia


301,147



India


157,686



128,773Mexico


101,429



161,568Nigeria


79,886



82,455Other(a)


264,343



302,085Total

$
2,130,870


$
3,050,755     (a)
    
    Other represents countries in which we operate that individually
    had operating revenues or long-lived assets representing less
    than 4% of total operating revenues earned or total long-lived
    assets. 94




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   17.
    Commitments
    and Contingencies  Operating
    Leases
    Years Ended December 31,2009

$
6,2672010


3,9342011


1,9912012


1,3032013


1,188Thereafter


4,850Total

$
19,533     Legal
    Proceedings
  Accounting for
    Contingencies
      Robert E. Aaron et al. vs. Phillips 66 Company et al. Circuit
    Court, Second Judicial District, Jones County,
    Mississippi.
 95




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Insurance
       96




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Surety
    Bonds and Unsecured Letters of Credit
      Insurance
    Claims
  Hercules 205
  Hercules 120 Rig 25 Rig 25 Rig 25 Hercules 120
 97




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  18.
    Unaudited
    Interim Financial Data    Quarter EndedMarch 31


June 30


September 30


December 31(a)2008Operating Revenues

$
212,494


$
270,106


$
315,738


$
313,469Operating Income (Loss)


21,364



40,852



67,057



(1,250,186
)Income (Loss) from Continuing Operations


4,875



16,652



33,126



(1,123,996
)Loss from Discontinued Operation,Net of Taxes


(389
)


(209
)


(168
)


(754
)Net Income (Loss)

$
4,486


$
16,443


$
32,958


$
(1,124,750
)Basic Earnings (Loss) Per Share:Income (Loss) from Continuing Operations

$
0.05


$
0.19


$
0.38


$
(12.78
)Loss from Discontinued Operation










(0.01
)


(0.01
)Net Income (Loss)

$
0.05


$
0.19


$
0.37


$
(12.79
)Diluted Earnings (Loss) Per Share:Income (Loss) from Continuing Operations

$
0.05


$
0.19


$
0.37


$
(12.78
)Loss from Discontinued Operation






(0.01
)






(0.01
)Net Income (Loss)

$
0.05


$
0.18


$
0.37


$
(12.79
)     (a)
    
    Includes $950.3 million and $376.7 million in
    impairment of goodwill and impairment of property and equipment
    charges, respectively.  Quarter EndedMarch 31


June 30


September 30


December 312007Operating Revenues

$
110,464


$
99,044


$
272,573


$
244,197Operating Income


48,044



33,104



87,604



56,890Income from Continuing Operations


33,391



23,466



46,352



32,803Income (Loss) from Discontinued Operation,Net of Taxes










2,019



(1,509
)Net Income

$
33,391


$
23,466


$
48,371


$
31,294Basic Earnings Per Share:Income from Continuing Operations

$
1.04


$
0.73


$
0.56


$
0.37Income (Loss) from Discontinued Operation










0.03



(0.02
)Net Income

$
1.04


$
0.73


$
0.59


$
0.35Diluted Earnings Per Share:Income from Continuing Operations

$
1.03


$
0.72


$
0.56


$
0.37Income (Loss) from Discontinued Operation










0.02



(0.02
)Net Income

$
1.03


$
0.72


$
0.58


$
0.35  98




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##### Table of Contents



HERCULES
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  19.
    Related
    Parties                  20.
    Subsequent
    Event   99




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rule 13a-15
      Managements
    Report on Internal Control over Financial Reporting
  Rule 13a-15(f)
      Item 9B.
    Other
    Information   100




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##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Code of
    Business Conduct and Ethical Practices
  www.herculesoffshore.com www.herculesoffshore.com
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Financial Statements
  Consolidated Financial Statement Schedules
   101




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##### Table of Contents



Exhibits:
  ExhibitNumber



Description2
.1



Plan of Conversion (incorporated by reference to
    Exhibit 2.1 to Hercules Registration Statement on
    Form S-1
    (Registration
    No. 333-126457),
    as amended (the
    S-1
    Registration Statement), originally filed on July 8,
    2005).2
.2



Amended and Restated Agreement and Plan of Merger, dated
    effective as of March 18, 2007, by and among Hercules, THE
    Hercules Offshore Drilling Company LLC and TODCO (incorporated
    by reference to Annex A to the Joint Proxy/Statement
    Prospectus included in Part I of Hercules
    Registration Statement on
    Form S-4
    (Registration No.
    333-142314),
    as amended (the
    S-4
    Registration Statement), originally filed April 24,
    2007).3
.1



Certificate of Incorporation of Hercules (incorporated by
    reference to Exhibit 3.1 to Hercules Current Report
    on
    Form 8-K
    dated November 1, 2005 (File No. 0-51582) (the 2005
    Form 8-K)).3
.2



Amended and Restated Bylaws of Hercules (incorporated by
    reference to Exhibit 3.1 to Hercules Current Report
    on
    Form 8-K
    dated July 11, 2007 (File No. 0-51582) (the 2007
    Form 8-K)).4
.1



Form of specimen common stock certificate (incorporated by
    reference to Exhibit 4.1 to the
    S-1
    Registration Statement).4
.2



Rights Agreement, dated as of October 31, 2005, between
    Hercules and American Stock Transfer &
    Trust Company, as rights agent (incorporated by reference
    to Exhibit 4.1 to the 2005
    Form 8-K).4
.3



Amendment No. 1 to Rights Agreement, dated as of
    February 1, 2008, between Hercules and American Stock
    Transfer & Trust Company, as rights agent.4
.4



Certificate of Designations of Series A Junior
    Participating Preferred Stock (incorporated by reference to
    Exhibit 4.2 to the 2005
    Form 8-K).4
.5



Credit Agreement dated as of July 11, 2007 among Hercules,
    as borrower, its subsidiaries party thereto, as guarantors, UBS
    AG, Stamford Branch, as issuing bank, administrative agent and
    collateral agent, Amegy Bank National Association and Comerica
    Bank, as co-syndication agents, Deutsche Bank AG Cayman Islands
    Branch and Jefferies Finance LLC, as co-documentation agents,
    and the lenders party thereto (incorporated by reference to
    Exhibit 10.1 to the 2007
    Form 8-K).
    Hercules and its subsidiaries are parties to several debt
    instruments that have not been filed with the SEC under which
    the total amount of securities authorized does not exceed 10% of
    the total assets of Hercules and its subsidiaries on a
    consolidated basis. Pursuant to paragraph 4(iii)(A) of
    Item 601(b) of
    Regulation S-K,
    Hercules agrees to furnish a copy of such instruments to the
    SEC upon request.4
.6



Indenture, dates as of June 3, 2008, by and between the
    Company and the Trustee (incorporated by reference to
    Exhibit 4.1 to Hercules Current Report on
    Form 8-K
    dated June 3, 2008
    (File No.-0-51582)).4
.7



Form of Note (included in Exhibit 4.6).10
.1



Separation Agreement dated as of June 20, 2008, between
    Hercules and Randall D. Stilley (incorporated by reference to
    Exhibit 10.1 to Hercules Current Report on
    Form 8-K
    dated June 23, 2008 (File No.-0-51582)).10
.2



Separation Agreement dated as of December 15, 2008, between
    Hercules and Randal R. Reed (incorporated by reference to
    Exhibit 10.1 to Hercules Current Report on
    Form 8-K
    dated December 19, 2008, 2008 (File No.-0-51582)) (the
    2008
    Form 8-K).10
.3



Executive Employment Agreement dated as of December 15,
    2008, between Hercules and John T. Rynd (incorporated
    by reference to Exhibit 10.2 to the 2008
    Form 8-K.10
.4



Executive Employment Agreement dated as of June 20, 2008,
    between Hercules Offshore, Inc. and John T. Rynd (incorporated
    by reference to Exhibit 10.2 to Hercules Current
    Report on
    Form 8-K
    dated June 23, 2008 (File No.-0-51582)).10
.5



Employment Agreement, dated as of December 15, 2008, by and
    between Hercules and Lisa W. Rodriguez (incorporated
    by reference to Exhibit 10.3 to the 2008
    Form 8-K.10
.6



Executive Employment Agreement, dated December 15, 2008,
    between Hercules and James W. Noe (incorporated by reference to
    Exhibit 10.4 to the 2008
    Form 8-K). 102




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##### Table of Contents



ExhibitNumber



Description10
.7



Executive Employment Agreement, dated December 15, 2008,
    between Hercules and Terrell L. Carr (incorporated by reference
    to Exhibit 10.5 to the 2008
    Form 8-K).10
.8



Executive Employment Agreement, dated December 15, 2008,
    between Hercules and Todd Pellegrin (incorporated by reference
    to Exhibit 10.6 to the 2008
    Form 8-K).10
.9



Executive Employment Agreement, dated December 15, 2008,
    between Hercules and Troy L. Carson (incorporated by reference
    to Exhibit 10.7 to the 2008
    Form 8-K).10
.10



Expatriate Employment Agreement, dated November 1, 2006,
    between Hercules and Don P. Rodney incorporated by reference to
    Exhibit 10.2 to Hercules Current Report on
    Form 8-K
    dated October 31, 2006 (File
    No. 0-51582)).10
.11



Extension Letter between Hercules and Don P. Rodney, dated
    December 31, 2008 (incorporated by reference to
    Exhibit 10.1 to Hercules Current Report on
    Form 8-K
    dated January 6, 2009
    (File No. 0-51582).10
.12



Form of Indemnification Agreement (incorporated by reference to
    Exhibit 10.1 to Hercules Current Report on
    Form 8-K
    dated April 7, 2006 (File
    No. 0-51582)).10
.13



Amended and Restated Hercules Offshore 2004 Long-Term Incentive
    Plan (incorporated by reference to Annex E to the Joint
    Proxy Statement/Prospectus included in Part I of the
    S-4
    Registration Statement).10
.14



First Amendment to Hercules Offshore Inc. Amended and Restated
    2004 Long-Term Incentive Plan (incorporated by reference to
    Exhibit 10.4 to Hercules Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2008 (File
    No. 0-51582)).*10
.15



Form of Stock Option Agreement.*10
.16



Form of Restricted Stock Agreement for Employees and Consultants.10
.17



Form of Restricted Stock Agreement for Directors (incorporated
    by reference to Exhibit 10.14 to Hercules Annual
    Report on
    Form 10-K
    for the year ended December 31, 2006 (File
    No. 0-51582)).*10
.18



Hercules Offshore, Inc. Amended and Restated Deferred
    Compensation Plan.10
.19



Schedule of executive officer and director compensation
    arrangements.10
.20



Registration Rights Agreement, dated as of July 8, 2005,
    between Hercules and the holders listed on the signature page
    thereto (incorporated by reference to Exhibit 10.9 to
    Hercules Annual Report on
    Form 10-K
    for the year ended December 31, 2005 (File
    No. 0-51582)).10
.21



Increase Joinder, dated as of April 28, 2008, among
    Hercules, as borrower, its subsidiaries party thereto, the
    incremental lenders and other lenders party thereto, and UBS AG
    Stamford Branch, as administrative agent for the lenders party
    thereto (incorporated by reference to Exhibit 10.1 to
    Hercules Current Report on
    Form 8-K
    dated April 30, 2008 (File
    No. 0-51582)).10
.22



Purchase Agreement, dated May 28, 2008, by and between the
    Company and Goldman, Sachs & Co., Banc of America
    Securities LLC and UBS Securities LLC, as representatives of the
    Initial Purchasers (incorporated by reference to
    Exhibit 10.1 to Hercules Current Report on
    Form 8-K
    dated June 3, 2008 (File No.-0-51582)).10
.23



Asset Purchase Agreement, dated April 3, 2006, by and
    between Hercules Liftboat Company, LLC and Laborde Marine Lifts,
    Inc. (incorporated by reference to Exhibit 10.1 to
    Hercules Current Report on
    Form 8-K
    dated April 3, 2006 (File
    No. 0-51582)).10
.24



Asset Purchase Agreement, dated as of August 23, 2006, by
    and among Hercules International Holdings, Ltd., Halliburton
    West Africa Ltd. and Halliburton Energy Services Nigeria Limited
    (incorporated by reference to Exhibit 10.1 to
    Hercules Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2006 (File
    No. 0-51582)).10
.25



First Amendment to Asset Purchase Agreement, dated as of
    November 1, 2006, by and among Hercules International
    Holdings, Ltd., Hercules Oilfield Services Ltd., Halliburton
    West Africa Ltd. and Halliburton Energy Services Nigeria Limited
    (incorporated by reference to Exhibit 10.2 to
    Hercules Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2006
    (File No. 0-51582)). 103




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##### Table of Contents



ExhibitNumber



Description10
.26



Earnout Agreement, dated November 7, 2006, by and among
    Hercules Oilfield Services, Ltd., Halliburton West Africa Ltd.
    and Halliburton Energy Services Nigeria Limited (incorporated by
    reference to Exhibit 10.3 to Hercules Current Report
    on
    Form 8-K
    dated November 7, 2006
    (File No. 0-51582)).*21
.1



Subsidiaries of Hercules.*23
.1



Consent of Ernst & Young LLP.*23
.2



Consent of Grant Thornton LLP.*31
.1



Certification of Chief Executive Officer of Hercules pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.*31
.2



Certification of Chief Financial Officer of Hercules pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.*32
.1



Certification of the Chief Executive Officer and the Chief
    Financial Officer of Hercules pursuant to Section 901 of
    the Sarbanes-Oxley Act of 2002.     *
    
    Filed herewith.
    
    Compensatory plan, contract or arrangement. 104




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##### Table of Contents



SIGNATURES
      By:
    /s/  JOHN
    T. RYND  John T. Rynd
 Chief Executive Officer and President
    Signatures

Title/s/  JOHN
    T. RYNDJohn
    T. Rynd

Chief Executive Officer, President and Director
    (Principal Executive Officer)/s/  LISA
    W. RODRIGUEZLisa
    W. Rodriguez

Senior Vice President and Chief Financial Officer
    (Principal Financial Officer)/s/  TROY
    L. CARSONTroy
    L. Carson

Vice President and Corporate Controller
    (Principal Accounting Officer)/s/  JOHN
    T. REYNOLDSJohn
    T. Reynolds

Chairman of the Board/s/  THOMAS
    N. AMONETTThomas
    N. Amonett

Director/s/  SUZANNE
    V. BAERSuzanne
    V. Baer

Director/s/  THOMAS
    R. BATES, JR.Thomas
    R. Bates, Jr.

Director/s/  THOMAS
    M HAMILTONThomas
    M Hamilton

Director/s/  THOMAS
    J. MADONNAThomas
    J. Madonna

Director/s/  F.
    GARDNER PARKERF.
    Gardner Parker

Director/s/  THIERRY
    PILENKOThierry
    Pilenko

Director/s/  STEVEN
    A. WEBSTERSteven
    A. Webster

Director  105




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##### Table of Contents



EXHIBIT
    INDEX
  ExhibitNumber



Description2
.1



Plan of Conversion (incorporated by reference to
    Exhibit 2.1 to Hercules Registration Statement on
    Form S-1
    (Registration
    No. 333-126457),
    as amended (the
    S-1
    Registration Statement), originally filed on July 8,
    2005).2
.2



Amended and Restated Agreement and Plan of Merger, dated
    effective as of March 18, 2007, by and among Hercules, THE
    Hercules Offshore Drilling Company LLC and TODCO (incorporated
    by reference to Annex A to the Joint Proxy/Statement
    Prospectus included in Part I of Hercules
    Registration Statement on
    Form S-4
    (Registration No.
    333-142314),
    as amended (the
    S-4
    Registration Statement), originally filed April 24,
    2007).3
.1



Certificate of Incorporation of Hercules (incorporated by
    reference to Exhibit 3.1 to Hercules Current Report
    on
    Form 8-K
    dated November 1, 2005 (File No. 0-51582) (the 2005
    Form 8-K)).3
.2



Amended and Restated Bylaws of Hercules (incorporated by
    reference to Exhibit 3.1 to Hercules Current Report
    on
    Form 8-K
    dated July 11, 2007 (File No. 0-51582) (the 2007
    Form 8-K)).4
.1



Form of specimen common stock certificate (incorporated by
    reference to Exhibit 4.1 to the
    S-1
    Registration Statement).4
.2



Rights Agreement, dated as of October 31, 2005, between
    Hercules and American Stock Transfer &
    Trust Company, as rights agent (incorporated by reference
    to Exhibit 4.1 to the 2005
    Form 8-K).4
.3



Amendment No. 1 to Rights Agreement, dated as of
    February 1, 2008, between Hercules and American Stock
    Transfer & Trust Company, as rights agent.4
.4



Certificate of Designations of Series A Junior
    Participating Preferred Stock (incorporated by reference to
    Exhibit 4.2 to the 2005
    Form 8-K).4
.5



Credit Agreement dated as of July 11, 2007 among Hercules,
    as borrower, its subsidiaries party thereto, as guarantors, UBS
    AG, Stamford Branch, as issuing bank, administrative agent and
    collateral agent, Amegy Bank National Association and Comerica
    Bank, as co-syndication agents, Deutsche Bank AG Cayman Islands
    Branch and Jefferies Finance LLC, as co-documentation agents,
    and the lenders party thereto (incorporated by reference to
    Exhibit 10.1 to the 2007
    Form 8-K).
    Hercules and its subsidiaries are parties to several debt
    instruments that have not been filed with the SEC under which
    the total amount of securities authorized does not exceed 10% of
    the total assets of Hercules and its subsidiaries on a
    consolidated basis. Pursuant to paragraph 4(iii)(A) of
    Item 601(b) of
    Regulation S-K,
    Hercules agrees to furnish a copy of such instruments to the
    SEC upon request.4
.6



Indenture, dates as of June 3, 2008, by and between the
    Company and the Trustee (incorporated by reference to
    Exhibit 4.1 to Hercules Current Report on
    Form 8-K
    dated June 3, 2008
    (File No.-0-51582)).4
.7



Form of Note (included in Exhibit 4.6).10
.1



Separation Agreement dated as of June 20, 2008, between
    Hercules and Randall D. Stilley (incorporated by reference to
    Exhibit 10.1 to Hercules Current Report on
    Form 8-K
    dated June 23, 2008 (File No.-0-51582)).10
.2



Separation Agreement dated as of December 15, 2008, between
    Hercules and Randal R. Reed (incorporated by reference to
    Exhibit 10.1 to Hercules Current Report on
    Form 8-K
    dated December 19, 2008, 2008 (File No.-0-51582)) (the
    2008
    Form 8-K).10
.3



Executive Employment Agreement dated as of December 15,
    2008, between Hercules and John T. Rynd (incorporated
    by reference to Exhibit 10.2 to the 2008
    Form 8-K.10
.4



Executive Employment Agreement dated as of June 20, 2008,
    between Hercules Offshore, Inc. and John T. Rynd (incorporated
    by reference to Exhibit 10.2 to Hercules Current
    Report on
    Form 8-K
    dated June 23, 2008 (File No.-0-51582)).10
.5



Employment Agreement, dated as of December 15, 2008, by and
    between Hercules and Lisa W. Rodriguez (incorporated
    by reference to Exhibit 10.3 to the 2008
    Form 8-K.10
.6



Executive Employment Agreement, dated December 15, 2008,
    between Hercules and James W. Noe (incorporated by reference to
    Exhibit 10.4 to the 2008
    Form 8-K). 106




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##### Table of Contents



ExhibitNumber



Description10
.7



Executive Employment Agreement, dated December 15, 2008,
    between Hercules and Terrell L. Carr (incorporated by reference
    to Exhibit 10.5 to the 2008
    Form 8-K).10
.8



Executive Employment Agreement, dated December 15, 2008,
    between Hercules and Todd Pellegrin (incorporated by reference
    to Exhibit 10.6 to the 2008
    Form 8-K).10
.9



Executive Employment Agreement, dated December 15, 2008,
    between Hercules and Troy L. Carson (incorporated by reference
    to Exhibit 10.7 to the 2008
    Form 8-K).10
.10



Expatriate Employment Agreement, dated November 1, 2006,
    between Hercules and Don P. Rodney incorporated by reference to
    Exhibit 10.2 to Hercules Current Report on
    Form 8-K
    dated October 31, 2006 (File
    No. 0-51582)).10
.11



Extension Letter between Hercules and Don P. Rodney, dated
    December 31, 2008 (incorporated by reference to
    Exhibit 10.1 to Hercules Current Report on
    Form 8-K
    dated January 6, 2009
    (File No. 0-51582).10
.12



Form of Indemnification Agreement (incorporated by reference to
    Exhibit 10.1 to Hercules Current Report on
    Form 8-K
    dated April 7, 2006 (File
    No. 0-51582)).10
.13



Amended and Restated Hercules Offshore 2004 Long-Term Incentive
    Plan (incorporated by reference to Annex E to the Joint
    Proxy Statement/Prospectus included in Part I of the
    S-4
    Registration Statement).10
.14



First Amendment to Hercules Offshore Inc. Amended and Restated
    2004 Long-Term Incentive Plan (incorporated by reference to
    Exhibit 10.4 to Hercules Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2008 (File
    No. 0-51582)).*10
.15



Form of Stock Option Agreement.*10
.16



Form of Restricted Stock Agreement for Employees and Consultants.10
.17



Form of Restricted Stock Agreement for Directors (incorporated
    by reference to Exhibit 10.14 to Hercules Annual
    Report on
    Form 10-K
    for the year ended December 31, 2006 (File
    No. 0-51582)).*10
.18



Hercules Offshore, Inc. Amended and Restated Deferred
    Compensation Plan.10
.19



Schedule of executive officer and director compensation
    arrangements.10
.20



Registration Rights Agreement, dated as of July 8, 2005,
    between Hercules and the holders listed on the signature page
    thereto (incorporated by reference to Exhibit 10.9 to
    Hercules Annual Report on
    Form 10-K
    for the year ended December 31, 2005 (File
    No. 0-51582)).10
.21



Increase Joinder, dated as of April 28, 2008, among
    Hercules, as borrower, its subsidiaries party thereto, the
    incremental lenders and other lenders party thereto, and UBS AG
    Stamford Branch, as administrative agent for the lenders party
    thereto (incorporated by reference to Exhibit 10.1 to
    Hercules Current Report on
    Form 8-K
    dated April 30, 2008 (File
    No. 0-51582)).10
.22



Purchase Agreement, dated May 28, 2008, by and between the
    Company and Goldman, Sachs & Co., Banc of America
    Securities LLC and UBS Securities LLC, as representatives of the
    Initial Purchasers (incorporated by reference to
    Exhibit 10.1 to Hercules Current Report on
    Form 8-K
    dated June 3, 2008 (File No.-0-51582)).10
.23



Asset Purchase Agreement, dated April 3, 2006, by and
    between Hercules Liftboat Company, LLC and Laborde Marine Lifts,
    Inc. (incorporated by reference to Exhibit 10.1 to
    Hercules Current Report on
    Form 8-K
    dated April 3, 2006 (File
    No. 0-51582)).10
.24



Asset Purchase Agreement, dated as of August 23, 2006, by
    and among Hercules International Holdings, Ltd., Halliburton
    West Africa Ltd. and Halliburton Energy Services Nigeria Limited
    (incorporated by reference to Exhibit 10.1 to
    Hercules Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2006 (File
    No. 0-51582)).10
.25



First Amendment to Asset Purchase Agreement, dated as of
    November 1, 2006, by and among Hercules International
    Holdings, Ltd., Hercules Oilfield Services Ltd., Halliburton
    West Africa Ltd. and Halliburton Energy Services Nigeria Limited
    (incorporated by reference to Exhibit 10.2 to
    Hercules Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2006
    (File No. 0-51582)). 107




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##### Table of Contents



ExhibitNumber



Description10
.26



Earnout Agreement, dated November 7, 2006, by and among
    Hercules Oilfield Services, Ltd., Halliburton West Africa Ltd.
    and Halliburton Energy Services Nigeria Limited (incorporated by
    reference to Exhibit 10.3 to Hercules Current Report
    on
    Form 8-K
    dated November 7, 2006
    (File No. 0-51582)).*21
.1



Subsidiaries of Hercules.*23
.1



Consent of Ernst & Young LLP.*23
.2



Consent of Grant Thornton LLP.*31
.1



Certification of Chief Executive Officer of Hercules pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.*31
.2



Certification of Chief Financial Officer of Hercules pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.*32
.1



Certification of the Chief Executive Officer and the Chief
    Financial Officer of Hercules pursuant to Section 901 of
    the Sarbanes-Oxley Act of 2002.     *
    
    Filed herewith.
    
    Compensatory plan, contract or arrangement. 108