SEPARATION AGREEMENT AND RELEASE

Exhibit 10.1 SEPARATION AGREEMENT AND RELEASE      This Separation Agreement and Release ("Separation Agreement") is entered into by and between Randal R. Reed ("Executive" or "you") and Hercules Offshore, Inc. (with its affiliates and subsidiaries, including Hercules Liftboat Company LLC, the "Company"), and confirms the agreement that has been reached with you in connection with your resignation from the Company.      1.  Termination of Employment . You agree to resign from the Company and to cease to be employed by the Company in any capacity and to resign from all executive positions you then hold with the Company and its subsidiaries, in each case effective as of December 15, 2008 (the "Separation Date"). You further agree to execute any additional documents necessary to effectuate the foregoing.      2.  Separation Pay and Benefits . In consideration of your execution of this Separation Agreement and your compliance with its terms and conditions, the Company agrees to pay or provide you (subject to the terms and conditions set forth in this Separation Agreement) with the benefits described in this paragraph 2 and to adhere to the nondisparagement restrictions set forth in paragraph 5b below. The benefits below shall be in full satisfaction of the Company’s obligations under the terms of the Executive Employment Agreement dated as of October 3, 2006, as amended (the "Employment Agreement"), by and between you and the Company, and all applicable cash or equity incentive compensation plans and agreements under which you have any rights or benefits, and in consideration of your additional agreements in this Agreement. In addition, you acknowledge and agree that, except as provided herein, you are no longer eligible to participate in and shall not receive any further payments or benefits under any stock option, bonus, incentive compensation, employment contract, or medical, dental, life insurance, retirement, perquisite and other compensation or benefit agreements, plans or arrangements of the Company.           a. The Company shall continue to pay you at your current rate of base salary and benefits through the Separation Date, in accordance with the Company’s payroll practices.           b. The Company shall pay you an aggregate of $312,401 (the "Separation Amount"), which you acknowledge equals one times the sum of (i) your current annual base salary ($200,000) and (ii) the bonus paid to you in respect of the Company’s 2007 fiscal year ($112,401). The Separation Amount shall be paid to you on June 15, 2009. There shall be deducted from the payment of the Separation Amount all applicable federal, state and local withholding taxes and other appropriate deductions.           c. Beginning on the Separation Date and continuing until June 15, 2010 (the "Benefit Continuation Period"), the Company shall provide you and your dependents with continued coverage under the Company’s welfare benefit plans, described in Schedule A attached hereto, at the cost in effect at the Separation Date; provided that, to the extent you become eligible for medical insurance from a subsequent

employer, the Company’s medical insurance shall become secondary to such subsequent employer’s medical insurance; and provided, further, however, that with respect to health and medical benefits, to the extent such coverage cannot be extended or provided, the Company will pay during the period described above the applicable premium under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), associated with such benefits.           d. The parties acknowledge and agree that you are party to Stock Option Agreements (the "Option Agreements") under which you have been granted options to purchase shares of common stock of the Company (the "Options") pursuant to the terms of the Hercules Offshore 2004 Long-Term Incentive Plan (the "2004 LTIP"), as follows:

          In accordance with, and subject to, the terms and conditions of the Option Agreements, all unvested options as of the Separation Date will vest on the Separation Date and you shall be entitled to exercise all vested Options held by you as of the Separation Date until the earlier to occur of the third anniversary of the Separation Date or the original expiration date of the Options as set forth in the 2004 LTIP or applicable Option Agreements.      3.  Accrued Benefits . You will be paid for any accrued but unused vacation days, and for unreimbursed business expenses (in accordance with usual Company policies and practices, and in no event later than the calendar year following the year in which the expenses are incurred), to the extent not theretofore paid. In addition, following the Separation Date, you will be entitled to receive vested amounts payable to you under the Company’s 401(k) plan and other retirement and deferred compensation plans in accordance with the terms of such plans and applicable law. Except as specifically set forth herein, your participation in all Company plans shall remain subject to the terms and conditions of such plans as in effect from time to time and you agree that such terms and conditions are binding on you and the Company.      4.  Return of Company Property . You agree that, on or before the Separation Date, you will have returned to the Company any physical or personal property that is the property of the Company, its subsidiaries and its affiliates that you have in your possession, custody or control, including without limitation all Company files, memoranda, records and other documents in whatever form, and all copies thereof, and all Company badges, keys and credit cards.

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     5.  Nondisparagement .           a. You agree that you will not, with intent to damage, disparage or encourage or induce others to disparage any of the Company, its subsidiaries and affiliates, together with all of their respective past and present directors and officers, as well as their respective past and present managers, officers, shareholders, partners, employees, agents, attorneys, servants and customers and each of their predecessors, successors and assigns (collectively, the "Company Entities and Persons").           b. The Company agrees that neither the Company formally nor any director or officer, with intent to damage you, will disparage you or encourage or induce others to disparage you.           c. For the purposes of this Separation Agreement, the term "disparage" includes, without limitation, comments or statements adversely affecting in any manner (i) the conduct of the business of the Company Entities and Persons or of your business or (ii) the business reputation of the Company Entities and Persons or of you. Nothing in this Separation Agreement is intended to, or shall, prevent either party from providing truthful testimony in response to a valid subpoena, court order, regulatory request or other judicial, administrative or legal process or otherwise as required by law.      6.  Cooperation .           a. The parties agree that they will reasonably cooperate with each other, and their respective counsel, in connection with any investigation, inquiry, administrative proceeding or litigation relating to any matter in which you were involved or of which you have knowledge as a result of your service with the Company by providing truthful information, provided that in your case, such cooperation does not unreasonably interfere with your then current professional and personal commitments. The Company agrees to promptly reimburse you for reasonable out-of-pocket expenses reasonably incurred by you in connection with your cooperation pursuant to this paragraph.           b. You agree that, in the event you are subpoenaed or otherwise required by any person or entity (including, but not limited to, any government agency) to give testimony or produce documents (in a deposition, court proceeding or otherwise) which in any way relates to your employment by the Company, you will, to the extent not legally prohibited from doing so, give prompt notice of such request to the General Counsel of the Company so that the Company may contest the right of the requesting person or entity to such disclosure before making such disclosure. Nothing in this provision shall require you to violate your obligation to comply with valid legal process.           c. You agree to provide, upon request, the Company with any information regarding discussions you have held with third parties regarding p