Hercules Offshore, Inc. and TODCO entered into a definitive merger agreement that will give Hercules Offshore 100% of the outstanding stock of TODCO in a stock and cash transaction valued at approximately $2.3
billion. 
 The Company expects the transaction will:
  -- Create the world's fourth largest jackup fleet
 -- Establish Hercules Offshore as a leader in both barge drilling and
 liftboats
 -- Expand Hercules Offshore's geographic footprint, enhancing
 international growth opportunities and further diversifying the
 company's operations
 -- Provide for an improved competitive position in the U.S. Gulf of
 Mexico with greater economies of scale and increased operational
 flexibility
 -- Be accretive to earnings and cash flow per share
 -- Result in financial flexibility for future growth initiatives

 The combined company will operate a fleet of 33 jackup rigs, 27 barge
rigs, 64 liftboats, three submersible rigs, nine land rigs and one platform
rig and have operations in ten different countries on five continents.

 The boards of directors of Hercules Offshore and TODCO unanimously
approved the transaction. Closing of the transaction is subject to
regulatory approvals and other customary conditions, as well as both
Hercules Offshore and TODCO shareholder approval.

 Randy Stilley, chief executive officer, president and director of
Hercules Offshore, stated, "This transaction positions Hercules Offshore as one of the leading shallow water oil service providers globally. We intend to leverage the strong organizations of both Hercules Offshore and TODCO to create long- term value for our companies' shareholders, customers and over 3,900 employees. Looking forward, Hercules Offshore will continue to focus on seeking strategic growth opportunities, expanding our geographic diversity and maintaining our status as a low-cost provider, while preserving our conservative and disciplined financial management."
 
Jan Rask, president, chief executive officer and director of TODCO,
commented, "We are very pleased with the signing of this agreement with
Hercules Offshore and believe this transaction maximizes value for
shareholders. Shareholders have an opportunity to realize cash while
continuing to participate in a robust offshore drilling market through an
entity with a balanced capitalization. In addition, we believe the Hercules Offshore management team has proven acquisition and integration
capabilities and will continue to capitalize on growth opportunities that
exist in the fragmented offshore jackup drilling market."

 Following the transaction, the Hercules Offshore senior management team will continue, under the leadership of Randy Stilley, to be governed by the Hercules Offshore board of directors, which will include three TODCO directors. In addition to Randy Stilley, the following persons will
comprise the Hercules Offshore senior management team upon closing of the
transaction:
 John Rynd Senior Vice President and Chief Operating Officer
 Lisa Rodriguez Senior Vice President and Chief Financial Officer
 David Crowley Senior Vice President, Marketing and Technical Services
 Steve Manz Senior Vice President, Planning and Corporate Development
 James Noe Vice President, General Counsel
 J. Chris Bryan Vice President, Human Resources
 
 Under the terms of the agreement, TODCO shareholders will receive
average total consideration equal to 0.979 shares of Hercules Offshore and
$16.00 in cash for each share of TODCO common stock outstanding, or an
estimated 56.9 million shares of Hercules Offshore and cash of $930.7
million. This represents $42.01 per share of consideration to be received
by the TODCO shareholders based on the closing price of Hercules Offshore
on March 16, 2007, and represents a premium of approximately 28% to TODCO's closing price on March 16, 2007 and 25% to the average closing price over the last 30 days. The exact amount of the cash and stock consideration to be received by each TODCO shareholder will be determined by elections and an equalization formula.
 
It is anticipated that the transaction will be tax free to TODCO and
the stock portion of the consideration will be received tax free by its
shareholders. Upon completion of the transaction, which is expected to be
in mid-2007, it is anticipated that TODCO shareholders will own
approximately 64%, and that Hercules Offshore shareholders will own
approximately 36% of the combined company. 

 Hercules Offshore will fund its acquisition of TODCO through existing
cash on hand and a senior secured term loan facility which has been
underwritten by UBS Investment Bank. The Company plans to use cash from
operations in the years ahead to expeditiously repay the fully pre-payable
term loan.
Source: Hercules Offshore and TODCO