French shipping company Bourbon Offshore has made plans to sell 41 of its older vessels as part of its new action plan meant to enhance its competitiveness.
Bourbon announced its action plan, #BOURBONINMOTION, in a statement on Tuesday. The company explained that the plan would enable it to meet the need for competitiveness and to respond to customers’ new demands, in the context of a market that has challenged all market players in the oil & gas industry.
The board of directors approved the plan and its implementation on Monday, February 12, 2018.
Gaël Bodénès, Chief Executive Officer of Bourbon Corporation, said: “As the market cycle has bottomed out, Bourbon must focus more than ever on operational excellence, fleet utilization rates, cost reduction program and free cash flow preservation.
“However, we need to go even further, because market overcapacity is driving prices down sustainably and we believe that tomorrow will look very different from yesterday. The crisis has highlighted the need to change our model and this is what the #BOURBONINMOTION plan is all about.”
Three different units
The action plan is based on two priorities. The first one is better serving customers by reorganizing the activities of Bourbon Corporation into three distinct affiliates: Bourbon Marine & Logistics, Bourbon Subsea Services, and Bourbon Mobility.
These three entities will be able to implement their own strategies and will be supported by a dedicated governance structure (management team whose CEO will report to the board). They will focus on profitable growth changing their model to develop more integrated services, Bourbon said.
The second priority is capitalizing on the digital revolution to better differentiate by connecting the fleet. With the main objective of improving operational excellence at optimum cost, the “Smart shipping” program will connect the fleet of 132 modern supply vessels (known as the “smart fleet”) of Bourbon Marine & Logistics.
Bourbon stated that this program will represent an investment of €75 million ($92.6M) over three years and enable a sustainable reduction in vessel operating costs.
Ditching the “non-smart fleet”
Within Bourbon Marine & Logistics’ traditional fleet of 65 vessels, the 41 oldest vessels, which cannot be connected, (known as the “non-smart fleet”) will be sold at current market price. This planned disposal of 41 owned vessels is expected to generate an impairment loss of about €170 million in the 2017 financial statements.
These three new affiliates will benefit from privileged access to the market, thanks in particular to the many existing partnerships in the main countries where Bourbon currently operates.
Jacques de Chateauvieux, Executive Chairman of Bourbon Corporation, commented: “We are ready to meet the challenges of the transformation profoundly impacting the Oil & Gas industry and already driving major changes at our key customers.”