June 6, 2016 These are based on the Company s knowledge on the date hereof. The may not contain all the information that is relevant for your purposes. Please see our public filings with the Securities and Exchange Commission for additional information. Chapter 11 Filings and Sale Process 1. What are the key terms of the Chapter 11 Plan? Under the terms of the Plan, all of the Company s assets will be marketed for sale, and those left unsold at the completion of the Chapter 11 process will be placed into a wind-down vehicle to ensure their continued, safe operation until sales are finalized. The Company s international subsidiaries are not included as part of the Chapter 11 cases but will be part of the sale process. Hercules s Plan is unique because the Company s largest lenders (generally among the first groups to be paid in a Chapter 11 case) have given other stakeholders priority. As a result, the Company s suppliers will be paid in full, and shareholders will receive both an upfront payment at the conclusion of the Chapter 11 cases as well as a share of the sale proceeds, assuming the shareholder class votes to approve the Plan. If the shareholder class votes to reject the Plan, shareholders will have to wait for the lenders to be paid in full before they receive any recovery. The lender group will be paid from a combination of cash on hand and sale proceeds, dividing the sale proceeds based on a waterfall if the shareholder class votes to accept the Plan. 2. What are the next steps in the process? The Company expects to complete the Chapter 11 process in a timely manner, at which point all of the unsold assets will be put into a wind down vehicle until they are sold. All rigs and liftboats currently under contract, both in the U.S. and internationally, are expected to maintain operations as usual throughout the sale process. 3. How does the Chapter 11 filing and sale process impact day-to-day operations? The Company intends to operate its rigs and liftboats as usual and to uphold its commitments to customers throughout the sale process. Employees in the field should see little change in their day-to-day responsibilities until a sale is complete. The Company s corporate office in Houston will continue to support ongoing operations while also preparing its assets for sale. 1 of 6
4. Why has Hercules filed for chapter 11 protection for a second time? On November 6, 2015, Hercules completed its initial financial restructuring under Chapter 11 of the U.S. Bankruptcy Code with a new $450 million senior secured credit facility in place. Since this time, the ongoing decline in oil prices, the consolidation of its U.S. customer base and the addition of new capacity have negatively impacted dayrates and demand for Hercules's services. On February 11, 2016, the Company announced the formation of a Special Committee comprised of all the independent members of its Board of Directors to explore strategic alternatives. The decision was made to enter into a Restructuring Support Agreement on May 26, 2016, to maximize value for stakeholders and ensure a smooth transition for customers, suppliers and employees. Today's Chapter 11 announcement is the next step for the Company and follows a thorough sale process, which did not yield results that would have been better for stakeholders than what is contemplated by the Chapter 11 Plan. 5. What entities are included in the Chapter 11 cases? The Chapter 11 cases include Hercules and certain of its U.S. subsidiaries. The Company s international businesses are not included in the case but will be a part of the sale process. 6. How is this chapter 11 case different from the case initiated in August? The key difference is the Company s end goal. In its first Chapter 11 case, Hercules significantly reduced its debt with the business objective of overcoming global challenges that are deeply impacting the offshore drilling sector. Unfortunately, since then, market conditions have worsened. As a result, the Company has determined that the best means of protecting the interests of its employees, customers, suppliers, lenders, shareholders and other business partners is to move forward with an orderly sale of its assets. The Chapter 11 process helps to preserve business continuity for these assets, which in turn, helps to maximize the value of future sales. International entities are not included in the Chapter 11 Cases but will be included in the sale process. They will continue to operate as usual throughout the sale process. 7. Which assets are for sale? All of the Company s assets are included in the sale process, including those that are not included in the Chapter 11 filings. 8. How will the chapter 11 process help to facilitate the asset sales? The Chapter 11 process helps to preserve business continuity for these assets, which in turn, helps to maximize the value of future sales. It also allows the Company to settle creditor claims and address legacy liabilities, so buyers may purchase the assets free and clear of these obligations. 2 of 6
9. What happened to the Hercules Highlander? As announced on May 27, 2016, the Company entered into a definitive agreement to transfer the right to acquire the newbuild harsh environment jackup rig, formerly named Hercules Highlander, to a subsidiary of Maersk Drilling. According to the agreement, Maersk Highlander UK Ltd. succeeds to the right to take delivery of the rig and has paid Jurong Shipyard Pte Ltd ("Jurong") in Singapore for the Highlander. 10. Where can I get additional information? Additional information is available at http://www.herculesoffshore.com. Questions also may be directed to the Company s dedicated hotline at +1 (855) 628-7532 (International: +1 (917) 651-0320) or via email at herculesinfo@primeclerk.com. Employee 11. How does this announcement affect my job and day-to-day responsibilities? As of today, all employees should continue to report to work as scheduled and will be paid as usual. Employees onshore and offshore are expected to continue to perform their jobs safely and in full compliance with all Company policies and procedures. Looking ahead, Hercules intends to operate all of its rigs and liftboats currently under contract as usual throughout the sale process. Employees associated with these rigs and vessels should see little change. The Company will continue to assess its needs for onshore employees to ensure it is operating its business as efficiently as possible. 12. Will I continue to be paid as usual? Yes. All employees should expect to be paid as usual for all hours worked. 13. Will there be any changes to Hercules benefit programs? No. Hercules is taking all of the necessary steps to ensure its employee benefit programs continue without interruption. We do not expect that you will see any interruption in your pay or benefits. 14. Will I be reimbursed for business expenses? Yes. Hercules has taken the necessary steps to ensure it is able to repay qualifying business expenses. All of the usual policies still apply. 3 of 6
15. Will the Company s severance policy be honored? Pending Court approval of its First Day Motion regarding the continuation of employee wages and benefits, Hercules expects to continue all of its benefit programs, including its severance programs. All of the usual eligibility requirements will still apply. 16. If I am an employee working outside of the U.S., how does this process affect me? Hercules s international businesses are not part of the filing. These businesses are operating as usual, which means employees should report to work as scheduled and will be paid as usual. 17. What should I say if I m asked about the Chapter 11 or sale process? There are two key places to direct people for additional information about this process. The first is the restructuring section of the Hercules website, http://www.herculesoffshore.com. The second is a dedicated hotline, which may be reached at +1 (855) 628-7532 (International: +1 (917) 651-0320) or via email at herculesinfo@primeclerk.com. If you are uncertain about how to direct a question, please speak with your manager. Supplier 18. Will Hercules continue to purchase supplies? Yes. Hercules expects to operate all of our rigs and liftboats currently under contract as usual until they are sold. Accordingly, we also will continue to purchase related supplies. 19. Will suppliers be paid? The Chapter 11 Plan allows suppliers to be paid in full for everything they are owed. The Company has also filed a First Day Motion that, once approved by the Court, will allow suppliers to be paid in the normal course, rather than waiting until the end of the Chapter 11 cases. 20. How will the wind-down vehicle be funded? How can I be sure the Company will have the financial resources to pay for future deliveries? Hercules has the necessary cash on hand to fund operations throughout the Chapter 11 cases and sale process. Appropriate funding will be transferred to the wind down-vehicle when it is established and suppliers will be paid from these accounts. 4 of 6
21. Can I change the terms to require cash on delivery (COD)? There is absolutely no reason for suppliers to seek modifications to current contract terms. All suppliers are expected to be paid in full under the normal terms of their agreements with Hercules. 22. Is there anything I need to do to ensure my Company is paid for goods and services already delivered to Hercules Offshore? All suppliers are expected to be paid in the normal course of business. There is nothing extra you need to do. 23. Why should I continue doing business with you now? All suppliers are expected to be paid in full under the normal terms of their agreements with Hercules. Accordingly, there is no reason for suppliers to stop shipping. You may also have the opportunity to continue to do business with the future owners of the asset by continuing your shipments. Customer 24. Can I exit my contract with Hercules based on the anticipated change in ownership? Hercules is operating as usual and is working diligently to ensure a smooth transition for our customers. There is no reason to change service providers. 25. How will you be able to maintain the same standards for customer services throughout this process? We are maintaining our current offshore workforce and operating our rigs and vessels as usual. As a result, there is no reason to expect any change in your day-to-day interactions with or services from our Company. Investor 26. What happens to the remaining value of my Hercules shares? Shareholders will receive an upfront payment at the conclusion of the Chapter 11 cases as well as a share of the subsequent sale proceeds proportional to their holdings, assuming shareholders as a class vote to approve the Chapter 11 Plan. If shareholders vote to reject the Plan, they will have to wait for all other creditors to be paid in full in cash before they receive 5 of 6
any recovery on their shares. Please refer to the Company s 8-K filed on May 27, 2016 for more detail on shareholders recovery waterfall. The Company strongly encourages shareholders to vote in favor of the Chapter 11 Plan because the Company believes shareholders will receive greater value if they accept as opposed to reject the Plan. The Company cannot say with certainty what the total recovery will be until the asset sales are complete, but we are fully committed to ensuring that we maximize value for all stakeholders, including equity investors. 27. Can I still trade my shares? The Company expects shares will continue to trade through the completion of the Chapter 11 process on the OTC Market. Upon the effective date of the Plan, the Company s assets will be transferred to a wind-down vehicle. Interests in the wind-down vehicle are not expected to be transferable. 28. Should I sell my shares? The Company cannot advise you in these decisions. Please contact a financial and tax advisor if you have questions about managing your portfolio. These are for information purposes only and are not a solicitation to accept or reject any proposals herein or an offer to sell or a solicitation of an offer to buy any securities of the Company. Cautionary Statement Statements above that are not historical fact are forward-looking statements, including the matters related to the restructuring and the impact of the restructuring on our investors, operations, customers, vendors and employees. Forward-looking statements by their nature involve substantial risks, uncertainties and assumptions, including without limitation, market conditions, government and regulatory actions and other factors described in the risks and uncertainties described in our periodic reports filed with the Securities and Exchange Commission. Many of these factors are beyond our ability to control or predict. 6 of 6