French offshore services provider Bourbon has announced a new strategic plan that will involve reorganizing the company into three distinct business units and the sale of more than three dozen offshore vessels at a loss as the company positions itself for a recovery of the oil and gas market.
“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,” says Gaël Bodénès, Chief Executive Officer of BOURBON Corporation.
The plan, which the company calls Bourbon in Motion, was approved Monday by the Board of Directors and is based on two priorities: reorganizing the activities of Bourbon Corporation into three distinct affiliates and using “smart” technology reduce vessel operating costs.
As for the first priority, Bourbon says it will be able to better serve its customers by reorganizing the activities of Bourbon Corp into three individual units: Bourbon Marine & Logistics, Bourbon Subsea Services, and Bourbon Mobility. Each unit will assigned its own management team, including a CEO, and each will be able to implement their own strategies focusing on profitable growth.
For the second, Bourbon says it will focus on connecting its fleet of 132 modern offshore supply vessels via a “smart shipping” program. The program, which will be executed by the new Bourbon Marine & Logistics unit, will involve an investment of €75 million over three years and will focus on improving operations, thereby reducing vessel operating costs.
As a result of this plan, Bourbon Marine & Logistics plans to sell 41 of its oldest vessels which cannot be connected with the smart technology. The company says the disposal of the 41 owned vessels at the current marketing price is expected to generate an impairment loss of about €170 million in the 2017 financial statements, which are currently being finalized for release on March 15, 2018.
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. The #BOURBONINMOTION action plan unveils the new face of BOURBON, which is, as in the past, not afraid to reinvent itself and innovate with the commitment of the women and men who contribute to its development around the world. Indeed, beyond the technological revolution lies a personal revolution for all BOURBON team members.”
According to its website, Bourbon currently has 513 vessels operating in the global offshore oil and gas market.