This excerpt taken from the HERO 10-Q filed Aug 3, 2007.
Hercules ability to timely and effectively complete rig upgrade, refurbishment and repair projects within budget could materially impact financial performance.
Three of Hercules rigs, Rig 26, THE 205 and THE 208, continue undergoing major upgrades, refurbishments or repairs. Rig upgrade, refurbishment and repair projects are subject to the risks of delay and cost overruns, which have been previously described by Hercules and TODCO in their respective annual reports on Form 10-K, as amended. Hercules may be subject to financial penalties and contract cancellation fees if it fails to timely complete the repair of THE 205 and the refurbishment of THE 208. THE 205 sustained damage in a previously disclosed incident in 2006, and Hercules believes that the rig may have additional damage. Presently, Hercules cannot predict the extent of damage to, or the costs or time required to repair, THE 205, or the extent to which such costs will be recovered from its insurers or third parties. If Hercules incurs unexpected repair, upgrade or refurbishment costs with regard to these or other projects, is unable to recover certain of such costs from its insurers or third parties, or incurs financial penalties to customers under drilling contracts, or such customers cancel the drilling contracts because of shipyard delays, the financial condition or results of operations of Hercules could be materially adversely affected.