Shallow water offshore driller Hercules Offshore (UNKNOWN:HERO.DL) reported a big rise in first-quarer earnings this morning, but the market hasn't rewarded the stock in early trading. Shares are down about 2.5% as of 10:30 a.m. First-quarter revenue jumped 38% to $256.7 million but income from continuing operations fell by more than 50% to $19.9 million, or $0.12 per share, in the first quarter.  

Four new rigs in the international market helped drive the quarter's revenue growth, and operating income nearly tripled as a result. But Hercules reported a $15.2 million loss on extinguishment of debt, which isn't bad long-term, and didn't have a $39.0 million income tax benefit like it did a year ago, which is why bottom-line results were down.

The good news for long-term earnings is that average dayrates were up across the board, something we haven't seen recently in the shallow water market. Management is bullish on that trend continuing on high activity around the world.

Results fell slightly below expectations today, which is why Hercules Offshore's stock is down slightly, but investors should really be taking a longer-term view. The fundamental business is getting stronger and shares are trading at just 8 times this year's expected earnings. That's a good value in a growing offshore drilling market.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.