Longtime readers know that I used to have Hercules Offshore's (NASDAQ:HERO) back. But by last summer, I'd come to regret the support I'd thrown the scrappy driller's way. Better to be in one of the higher-quality operators like Ensco International (NYSE:ESV) or Noble (NYSE:NE), I concluded.

By that time, the stock had tanked from nearly $40 per share down to the mid-$20s. My change of heart may have seemed like it came far too late at the time, but that was still a good time for investors to sell Hercules. The stock may never see those trading levels again.

For anyone who toughed out the subsequent plunge to just above $1 per share in March, or for the dice-rollers who picked up shares at those levels, another good opportunity to sell Hercules arose earlier this month, after Hercules presented at the Barclays Capital 2009 CEO Energy Conference.

In its presentation to the Street, Hercules pointed to the many improvements it has made in its capital structure and liquidity. The signs of a business on the skids were still abundant, however.

Hercules described the domestic offshore business environment as "challenging," which is one way to put it. I don't know how much time the presenters spent on the rig supply/demand slide, but it clearly shows that marketed jackup rig supply in the Gulf of Mexico is more than double present demand. This is one reason why I told Fools that Pride International (NYSE:PDE) spinoff Seahawk Drilling (NASDAQ:HAWK) is for the birds.

Hercules pointed out that its revenue balance has shifted in favor of international markets, but then conceded that business conditions abroad are weakening as well. While capital spending may improve next year, there will be a fresh slate of newbuild vessels to contend with, pressuring utilization and dayrates. There are 70 newbuilds on order, and construction has commenced on all but 14 of those.

The bottom line is that Hercules has a big pile of debt relative to its current earning power. To raise capital, the company can sell assets (the broker hired in April to sell 16 retired rigs appears to have found a buyer for two barge rigs for $600,000), issue new debt, or sell more shares.

Seizing the ebullient market sentiment of late, Hercules this week announced an offering of 17.5 million shares, which have been priced at $5 per share. If this offering caught you by surprise, you really haven't been paying attention. But if you think I'm being too harsh on Hercules or overly critical of dilutive share offerings in general, let me know in the comments below.