BOURBON 3rd Quarter 2013 Revenues

Signs of continued improvement in offshore vessel demand.
Revenues up 8.6% vs. 3rd quarter 2012 and up 12.2% vs. first nine months 2012 partly as a result of contract renewals at improved rates.

Paris, November 6, 2013,

• Revenue increased 8.6% versus third quarter 2012 benefiting from fleet increases and steady utilization rates
• Average utilization rates for the supply fleet remain high versus the same period last year with offsetting impacts of several vessels in transit and stronger demand in several markets
• Average daily rates for the supply fleet were +3.7% versus the same period last year partly due to renewal of contracts at higher levels
• West Africa demand improving sequentially over 2nd quarter 2013

 “Increases in the BOURBON fleet and improvements in demand have partly contributed to growth in revenues for both the quarter and year to date period,” says Christian Lefèvre, Chief Executive Officer of BOURBON. “During the 3rd quarter 2013, vessels in transit between Regions compared to 2012 in Deepwater and Shallow water offshore vessel segments contributed to declines in average utilization rates. Foreign exchange rates in the 3rd quarter 2013 had a negative impact on BOURBON’s revenues of approximately €11 million compared with the 2nd quarter of 2013.
BOURBON will continue to implement the reduction of its debt as per the Asset Smart portion of the “Transforming for Beyond” action plan with the sale of the next 15 vessels during the coming weeks and the remaining 27 vessels in batches as they are delivered and before the end of June 2014, for a total of US$1.5 billion, including the nine vessels sold in early September.”

OPERATIONAL HIGHLIGHTS

MARINE SERVICES

• In line with clients’ investment strategy, demand for supply vessels continues to improve, enabling high utilization rates and favorable average daily rate momentum by region, by vessel type

 

• Deepwater offshore
• The deepwater market benefited from steadily improving demand with a large number of new drilling rigs commencing operation, especially in West Africa
• Average daily rates maintained their growth momentum of the last quarters, especially driven by good summer activity in the North Sea and the impact of renewal of older contracts in West Africa
• BOURBON’s deepwater fleet was stable overall with 2 more vessels operational for the period compared with 2012 due to timing of vessel deliveries and vessel sales
• Two Brazilian AHTS terminated their 8-year contracts and were idle during the quarter, and two large PSVs moved from the North Sea to West Africa

 

• Shallow water offshore
• There has been high growth in Asia mainly due to increased shallow water drilling activity and growth in Mediterranean/Middle East/India due to the strength of the replacement market in the Persian Gulf area
• Deliveries of vessels to the shallow water market fuelled a steady increase of revenues in that segment during the first nine months of 2013 compared to the corresponding period in 2012, with 8 vessels delivered in the 3rd quarter 2013 alone

 

• Crewboats
• Spot activity in West Africa has been affected by the rainy season in the 3rd quarter, when activity typically is reduced
• During 2013, customers in Asia increasingly required BOURBON’s services for safe and reliable operation
• The stability of the fleet of BOURBON crewboats during the last several quarters is a combination of the disposal of older vessels and an increase of the number of large FSIV. This translates positively in the comparison of average daily rates

SUBSEA SERVICES

• BOURBON Subsea Services operations are maturing in a favorable market:
• Vessel availability is the result of a reduction of unplanned maintenance and classification dry-docks compared with last year, driving utilization rates higher
• Contracts have been renewed at better terms
• With 3 Bourbon Evolution 800 vessels in operation, the suitability and interest in vessel specifications is building up, contributing positively to the average daily rate of the fleet and average utilization rate

 

• Subsea Services performance indicators of the first nine months show steady growth and operational excellence, with Q3 2013 illustrating a high point in this respect 

MARINE SERVICES

Marine Services revenues were up 4.9% year on year to €267.0 million, in line with the rate of increase in the size of the fleet. The decline in the average utilization rate was compensated by the increase in average daily rates in both the Deepwater and Crewboat segments. Daily rate increases were seen for both new contracts as well as renewal of existing contracts. In addition, there was an impact on each of the Marine Services segments from the change in consolidation scope that became effective on January 1, 2013.

Marine Services indicators by segment

• Deepwater offshore vessels

The average daily rate increased almost 10% while the average Deepwater offshore utilization rate was impacted by several vessels being in transit between Regions during the period. There was a positive effect on revenues partly due to contract renewals at higher average daily rates and partly due to the timing of vessels deliveries/sales, the latter of which resulted in an effective increase in the operational fleet by 2 vessels compared with 2012.

• Shallow water offshore vessels

Shallow water offshore revenues increased slightly to €93.0 million while utilization rates were stable year on year and increased more than 1 point sequentially despite the delivery of 16 vessels since 3rd quarter 2012, including 8 vessels in the 3rd quarter of this year. The reduction of the average daily rate for the segment is partly explained by the end of contracts in Australia and by a geographic mix effect, as the majority of the new vessels were deployed in order to follow the high growth in Asia and Mediterranean/Middle East/India, where average daily rates and operating costs are generally lower than in West Africa.

• Crewboats

Average daily rates increased in the Crewboat segment partly due to improved market activity and new large FSIVs entering the market at high rates. Average utilization rates were adversely impacted by the seasonal effect in West Africa.

SUBSEA SERVICES

Subsea Services revenues were driven by the addition of 2 new Bourbon Evolution 800 series vessels. The delivery of one of these vessels took place at the end of the 2012 period and hence, it had almost no impact on the prior year revenues and full impact on the current period.

OTHER

Using chartered vessels has two advantages for BOURBON: it makes it possible to meet client demands and generate contracts while new vessels are being built and added to the fleet. Using chartered vessels also enables BOURBON to offer vessels that are not part of its regular line of services when needed for global calls for tenders. Volatility of “Other” revenues is largely due to the variation in the number of chartered vessels during the period.

OUTLOOK

The stability of oil prices since 2011 is supporting investments in Exploration/Production. The resulting activity will continue to stimulate the demand for offshore vessels.

In deepwater offshore, the demand for medium size PSVs is expected to increase next year, boosted by development of deepwater projects mainly in Africa and in Southeast Asia. Activity in harsh and remote areas (Canada, Barents Sea and the Santos Basin in Brazil) is expected to pick up, having a positive impact on the market for the high end range of PSV and AHTS vessels.

In shallow water offshore, the market is expected to be positively impacted by both the increase of jack-up rigs in operation (there are 128 jack-up rigs under construction) and by the acceleration of the substitution of the aging fleet, especially in South East Asia and in the Middle East, driven by clients looking for quality offshore vessels. Fewer vessels are expected to be coming out of shipyards, further contributing to an improvement in the market.

Subsea activity is expected to remain high driven by the increase of number of Subsea wellheads. The Bourbon Evolution 800 series design (100M length) is well recognized in the subsea IMR market. Interest is foreseen for the capabilities of vessels to support the upcoming growing subsea installation and deepwater field maintenance.

The strategy of fleet standardization, the focus on crew training through the use of simulators, and the systematization of maintenance and procurement procedures aim to continue to underpin BOURBON’s operational and financial performance.

BOURBON is fully committed to reducing its debt in order to build future high value-added growth.

MAJOR OPERATIONS AND HIGHLIGHTS

BOURBON sold 3 vessels, including a tug, an MPSV (Multi-Purpose Supply Vessel) from the Subsea Services fleet and a PSV (Platform Supply Vessel), for an approximate total amount of US$ 38 million generating a total capital gain of approximately US$ 18 million. These were three traditional diesel propulsion vessels 10, 14 and 21 years old, respectively.

CHANGE IN BOURBON CONSOLIDATION SCOPE

As of January 1, 2013, certain companies that were previously consolidated proportionally have been fully consolidated. The impact of this change in consolidation scope is not significant for the Group. Consequently, and in accordance with regulations, no pro forma financial statements have been established for the current period.

ADDITIONAL INFORMATION

• While there was some hedging activity in the first half of 2013, since the beginning of the 3rd quarter of this year, BOURBON no longer has any hedging in place. At constant exchange rates, 3rd quarter 2013 revenues rose 14.3% compared with the same period last year while revenues for the first 9 months of 2013 rose 14.5% compared with the same period for 2012
• BOURBON’s results will continue to be affected by the €/US$ exchange rate