SEC Filings

8-K
HORNBECK OFFSHORE SERVICES INC /LA filed this Form 8-K on 08/07/2003
Entire Document
 
<PAGE>


MANAGEMENT DISCUSSION

         The Company took delivery of a total of five newly constructed,
deepwater OSVs on June 13, August 11 and October 20, 2002 and March 17 and June
19, 2003, respectively, all of which are 240ED or 265-ft. class OSVs. The $4.7
million net increase in second quarter 2003 revenue over the prior year quarter
was comprised primarily of incremental revenue from these newly constructed
vessels. This increase was offset, in part, by a decrease in the average dayrate
of its other OSVs, primarily its 200-ft. class vessels, due to soft market
conditions in the deepwater Gulf of Mexico. Operating costs and depreciation
expense increased by a combined $3.7 million, primarily related to the
incremental quarter-over-quarter effect of the five new, larger class OSVs. In
addition, as previously announced, the Company completed the acquisition of five
220-ft. deepwater OSVs on June 26, 2003.

         Todd Hornbeck, President and CEO, stated, "As anticipated on our last
conference call, we continue to experience choppy market conditions in our
deepwater OSV segment. In response, we have mobilized a third OSV to Trinidad
and are pleased to report that we have secured our first time charter in Mexico,
a two-year contract for service to Pemex. Despite a soft market, we have posted
another quarter of strong financial results. The revenue contribution from our
tug and tank barge segment is seasonally down from the first quarter, as
expected. Meanwhile, over the last seven weeks, we have increased the size of
our deepwater OSV fleet by seven vessels, beginning on June 19th with the
delivery of the second vessel under our third newbuild program and ending
yesterday with the acquisition of an additional deepwater vessel from Candy
Fleet."

CERTAIN RECENT DEVELOPMENTS

         On June 19, 2003, Hornbeck took delivery of the HOS Gemstone, the
Company's second 240ED-class offshore supply vessel. The HOS Gemstone, which was
delivered two weeks early by the shipyard, is currently working under a one-year
time charter with a large independent oil and gas company to support its
deepwater operations in the Gulf of Mexico.

         On July 11, 2003, the Company commenced service with the 240-ft. class
HOS Deepwater in Mexico under a two-year time charter for Pemex. The HOS
Deepwater will retain its U.S.-flag status during the term of the charter, which
will enable the Company to return the vessel to Jones Act service in the U.S.
Gulf of Mexico after the expiration of the charter and any renewals.

         On August 6, 2003, the Company acquired an additional 220-foot
deepwater OSV. The vessel was purchased from Candy Marine Investment Corporation
("Candy Fleet") for $9.0 million. The closing of the transaction was effected
after satisfying certain conditions precedent to closing, including the receipt
in July of $13.5 million in proceeds of the Company's previously announced $30
million private offering of common stock, and satisfactory completion of a
drydocking and survey of the vessel in early August. Hornbeck plans to continue
operating the acquired OSV, which was renamed the HOS Mariner, in the deepwater
Gulf of Mexico. In connection with the acquisition, the Company was also granted
options to purchase three 180-foot offshore supply vessels from Candy Fleet for
an aggregate exercise price of $4.5 million. The options will expire on August
6, 2004.

                                  Page 2 of 5