Hornbeck Announces Construction Contracts in $720m Newbuild Program

Photo: HOS Bluewater, a 240ED-Class Offshore Supply Vessel, courtesy Hornbeck Offshore

Hornbeck Offshore Services, Inc. (NYSE: HOS) announced today the winners of construction contracts for sixteen high-specification offshore supply vessels as part of its latest newbuild construction program announced earlier this month.  The U.S.-flagged newbuild program marks the Hornbeck’s eighth newbuild vessel program since the company’s inception in 1997, and its fifth newbuild program involving state-of-the-art, technologically advanced new generation OSVs.

Hornbeck has awarded the construction contracts separately to VT Halter Marine, Inc. of Pascagoula, Mississippi and Eastern Shipbuilding Group, Inc. of Panama City, Florida for eight 300 class vessels each with options to build additional vessels if Hornbeck decides to do so.

VT Halter Marine will construct eight vessels based on the Super 320 design that it developed for Hornbeck Offshore.  These DP2 OSVs are designed to have 6,200 long tons of deadweight capacity, approximately 20,900 bbls of liquid mud carrying capability, 11,863 sq. ft. of deck area and a fire-fighting class notation.  The Super 320 design is based on a larger version of the HOS Coral, an existing 290 class DP-2 OSV which the Company has successfully operated since her delivery in early 2009.  The Super 320 design has been developed with particular attention to the most stringent regulations for environmental stewardship, including a double-hull that eliminates any fuel storage adjacent to the sideshell, and propulsion machinery that meets the requirements of EPA Tier 3 for stack emissions.

The eight OSVs to be constructed by Eastern Shipbuilding Group will be DP-2 classed and consist of four vessels based on the STX Marine SV 300 design and four vessels based on the STX Marine SV 310 design.  Features of the STX design include over 20,000 bbls of liquid mud carrying capacity and a fire-fighting class notation.  In addition, the SV 300 design calls for 5,500 long tons of deadweight capacity and 10,976 sq. ft. of deck space, while the SV 310 design calls for 6,144 long tons of deadweight capacity and 11,536 sq. ft. of deck space.  The STX designs meet the same environmental standards mentioned above for the Super 320 design and will also carry the ENVIRO class notation by the American Bureau of Shipping.

The total cost of the first sixteen vessels under this new program is expected reach $720 million.  Hornbeck says that construction costs will be funded by cash on-hand (including the net proceeds of the company’s recently completed equity offering), projected free cash flow from operations and, if necessary, available capacity under the company’s currently undrawn and recently expanded $300 million revolving credit facility.