Slowly but surely, we're starting to see drilling start to pick up in the Gulf of Mexico even if profits haven't returned. Deepwater operators like Noble (NYSE: NE) saw rough results because of the drilling moratorium, but drilling has also been affected at Hercules Offshore (Nasdaq: HERO) as well.

Hercules owns rigs that operate in shallow water where permitting slowed to a screeching halt hurting domestic business. This followed a rough year dealing with fallout from the financial crisis. For the third quarter, revenues were $168.5 million, and the company had a net loss of $15.1 million, or $0.13 per share. These aren't great numbers, but the loss was smaller than the $0.15 that Wall Street expected and revenue also beat expectations of $161.3 million.

The domestic offshore segment continues to be the weakest area, but revenue was up 32% as the industry recovered slightly and permitting showed signs of picking up. Of course, that didn't stop a loss of $32.1 million for the segment, but at least Hercules is headed in the right direction.

As much as domestic conditions struggled, international operations continued to shine. International offshore rigs posted $26.9 million in operating income, up $150,000, despite a dramatic 30% decrease in operating days. International liftboats posted a solid 24.4% increase in revenue, and operating income more than tripled to $9.4 million.

As companies begin to adjust to the new regulatory environment in the Gulf of Mexico, investors are becoming more confident that drilling will eventually return to normal. Hercules Offshore echoed Noble's positive comments about drilling in the Gulf and sees a light at the end of the tunnel approaching. Hercules shares have been pounded this year so even a loss that was smaller than expected can be a welcome sight for investors.

Shallow water is obviously struggling, but next week the big dog, Transocean (NYSE: RIG) may be able to give us some more insight on how it is faring in ultra deepwater drilling after the moratorium.

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