Paris, November 5, 2014

BOURBON Third Quarter 2014: revenues up 5.7% year on year

• 3^rd quarter revenues increased by 5.7% as fleet growth and higher average daily rates were partially offset by lower utilization rates.
• Average daily rates increased in almost all segments and regions, owing in part to newer, larger vessels having higher day rates and also improved rates on some contract renewals and extensions.
• Utilization rates had mixed results across regions, with Asia and West Africa being adversely affected by increased supply of vessels and reduced activity, respectively.
• Cost reduction programs by oil companies had an overall impact on all segments.

(*) FTE: Full Time Equivalent.
(**) Vessels operated by BOURBON (including vessels owned or on bareboat charter).

(***) Effect of consolidation of jointly controlled companies using the equity method.
(a) See page 2.

"In the short term, we are entering a period in which the market will be more complex, taking into account cost reductions by clients and the decrease in the price of oil per barrel", says Christian Lefèvre, Chief Executive Officer of BOURBON. "In this context, BOURBON remains focused on excellence in client service execution and on  continued cost control. However, structurally the supply and demand for oil & gas will require recovery in the level of investment in the future."

(a) Consolidated revenues for the 3rd quarter of 2014 were established for the first time according to the new accounting standards IFRS 10, IFRS 11 and IFRS 12 relating to consolidation which became mandatory as of January 1, 2014. Specifically, joint ventures on which BOURBON has joint control are now consolidated using the equity method which replaces the proportionate consolidation method. Comparative figures are restated accordingly.
The adjusted financial information is presented by Activity and by segment based on the internal reporting system and shows internal segment information used by the principal operating decision maker to manage and measure the performance of BOURBON (IFRS 8). The principles of internal reporting do not reflect the application of the new IFRS 10, IFRS 11 and IFRS 12. Consequently, joint ventures are still proportionately consolidated, as in previous years.

MARINE SERVICES

* Vessels operated by BOURBON (including vessels owned or on bareboat charter).

Significant deliveries of vessels compared with the same period in 2013 helped to increase revenues by more than 6% despite a generally softening market as oil companies continue to be selective in their investments. Higher Average daily rates in Deepwater and Shallow water included a combination of a mix effect as new and/or larger vessels command higher rates as well as increases on extensions to some existing contracts.

Marine Services: Deepwater offshore vessels

* Vessels operated by BOURBON (including vessels owned or on bareboat charter).

The increase in revenues in Deepwater over the 3^rd quarter of 2013 was in line with the increase in the size of the fleet and features partially offsetting factors from a higher average daily rate and a reduced average utilization rate. The average utilization rate was most impacted in West Africa and Asia due to higher maintenance levels, partially offset as the North Sea and Mediterranean/Middle East/India regions both saw an increase in activity.

Marine Services: Shallow water offshore vessels

* Vessels operated by BOURBON (including vessels owned or on bareboat charter).

Revenues for the period increased by almost 19% largely due to an increase in the fleet (including 2 MPSV vessels transferred from the Subsea division), while the higher average daily rate was offset by a reduced average utilization rate. The utilization rate was negatively impacted by an increase in the supply of ships in Asia and in the Mediterranean/Middle East/India regions as many ships were delivered from shipyards in Asia.

Marine Services: Crew boat vessels

The average utilization rate in the 3^rd quarter decreased 3.5 points versus the same period one year ago. and was stable compared with the 2^nd quarter 2014 as softer conditions in certain West African countries continued. The size of the crew boat fleet remained stable overall, as 14 new vessels have been delivered during the past 12 months as the same number of older crew boats left the fleet.

Subsea Services

* Vessels operated by BOURBON (including vessels owned or on bareboat charter).

Revenues for the quarter increased 5.2% versus the same period last year, owing to the removal of 3 smaller vessels (two transferred to Shallow water segment and one sold) and the delivery of 3 new, larger vessels. This accounts for both the increase in average daily rate and the increase in revenues. The reduced utilization rate resulted from a combination of lower level of activity and higher number of drydocks than in the 3^rd quarter 2013.

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

After several years of stability, the price of oil has dropped and is currently fluctuating in the US$80-85 per barrel range (Brent). In this context, oil & gas companies have been engaged in cost reduction efforts throughout this year and that trend is expected to continue in the near term. This has meant more selective investment choices and a focus on existing well production. However, both the medium term and long term view yields a much more positive outlook. The time horizon for field development and production is often over 20 years and takes places over several business cycles. Therefore, while short term factors may influence decisions temporarily, there is still a need for companies to maintain and increase overall production. The demand for energy is still strong and with depletion rates of existing fields continuing, there is still a need for further exploration and production investments by the oil & gas companies throughout the world.

In addition, the rig count is expected to continue to increase. Only a portion of the approximately 200 rigs under construction will be replacing older rigs, which is favorable for the demand of offshore vessels (OSV). A high contractor backlog through 2016 could also have a positive impact on demand for OSVs. On average, we anticipate a stable demand for offshore support vessels.

On the supply side, the high number of large PSVs coming out of the shipyards could negatively affect the spot market. This should have only a small impact on BOURBON, taking into account the high contractualization rate of its PSVs.

BOURBON is focusing on excellence in client service execution and marketing of vessels utilizing its network with the support of its partners, with a strong commitment to cost reduction, thanks in part to the standardized fleet of 500 vessels.

MAJOR OPERATIONS AND HIGHLIGHTS

• In late October 2014, BOURBON successfully completed a €100 million perpetual, deeply subordinated bond issue; this issue is accounted for as equity under IFRS standards and the prospectus is available on BOURBON's web site under 'regulated information'
• As an update on BOURBON's sale of 51 vessels for up to US$1.5 billion to ICBCL the transfer of 45 vessels have been completed for total proceeds of US$1.4 billion, including 2 vessels that have been transferred since October 1, 2014
• To date, the vessels transferred to ICBCL comprise 8 Deepwater vessels, 31 Shallow water vessels and 6 Subsea vessels
• The $US150 million agreement with Standard Chartered Bank for the sale of 6 vessels remains on track and the remaining 3 vessels are targeted to be transferred before the end of 2014

ADDITIONAL INFORMATION

• BOURBON's results will continue to be affected by the €/US$ exchange rate

FINANCIAL CALENDAR

 

APPENDIX

Quarterly adjusted revenue breakdown

* Effect of consolidation of joint ventures using the equity method.
**Consolidated 2013 figures have been restated according to the implementation of the new accounting standards.

Quarterly average utilization rates for the BOURBON offshore fleet

Quarterly average daily rates for the BOURBON offshore fleet

Quarterly number of vessels (end of period)

* Vessels operated by BOURBON (including vessels owned or on bareboat charter).

Quarterly deliveries of vessels

Nine month adjusted revenue breakdown

* Effect of consolidation of joint ventures using the equity method.
** Consolidated 2013 figures have been restated according to the implementation of the new accounting standards.

Nine month average utilization rates for the BOURBON offshore fleet

Nine month average daily rates for the BOURBON offshore fleet

Nine month deliveries of vessels

Breakdown of BOURBON adjusted revenues by geographical region

 

 

Other key indicators

Quarterly breakdown

Nine month breakdown

About BOURBON

Among the market leaders in marine services for offshore oil & gas, BOURBON offers the most demanding oil & gas companies a wide range of marine services, both surface and sub-surface, for offshore oil & gas fields and wind farms. These extensive services rely on a broad range of the latest-generation vessels and the expertise of more than 11,000 skilled employees. Through its 28 operating subsidiaries the group provides local services as close as possible to customers and their operations throughout the world, of the highest standards of service and safety.

BOURBON provides two operating Activities (Marine Services and Subsea Services) and also protects the French coastline for the French Navy.

In the 1st half of 2014, BOURBON'S revenue came to €642.6 million and the company operated a fleet of 501 vessels as of June 30, 2014. Under the "BOURBON 2015 Leadership Strategy" plan, the group has built a vast fleet of innovative, high-performance mass produced offshore vessels.

The latest action plan "Transforming for beyond", financially provides for the sale of existing vessels or those under construction totaling $2.5 billion and then chartering these bareboat vessels over a period of 10 years. The first part of the program involved a contract for 51 vessels worth $1.5 billion with ICBC Financial Leasing. Through the "Transforming for beyond" action plan, BOURBON intends to expand its strategic scope to new possibilities beyond 2015 ensuring the creation of future value growth.

Placed by ICB (Industry Classification Benchmark) in the "Oil Services" sector, BOURBON is listed on the Euronext Paris, Compartment A.

Contacts

 

BOURBON

Investor Relations, analysts, shareholders
James Fraser, CFA
+33 491 133 545
james.fraser@bourbon-online.com

Corporate Communications
Christelle Loisel
+33 491 136 732
christelle.loisel@bourbon-online.com

 

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