Bourbon Announces Loss for 2015, but No Writedowns
Bourbon Offshore announced its 2015 full year financial results on Thursday, posting a net loss of $85 million, citing currency exchange rate factors and low utilization in a down market.
The firm put utilization at about 80 percent, on a lower day rate average of $17,000 as of the end of the year – low relative to prior years, but much better than global fleet performance. Worldwide, Bourbon put utilization of all firms' vessels older than 1991 at about 20 percent, and falling steadily.
On a positive note, Bourbon highlighted a competitive average fleet age of eight years. The firm now operates over 500 ships, with only three on order.
In 2013, Bourbon forecast contraction and aimed at selling a total of $2.5 billion of its vessels, while continuing to operate them under bareboat charter. CEO Christian LeFevre said that as of 2015 the firm has hit $1.7 billion of this goal.
Looking forward, LeFevre said that the firm will continue to stack 20 percent of its fleet if business does not improve. As the average age of the fleet is young, he said, the stacked vessels will be fit for renewed operations once the market returns.
Unlike other offshore operators' recent results announcements, Bourbon's 2015 statement did not list an impairment on the value of its fleet. One of the first investor questions during the earnings conference call Thursday focused on whether the firm sees a writedown hurting profitability in the near future.
The firm has an independent expert review the value of the fleet every six months, Mr. LeFevre said. The assessment gives a margin of “[$540 million] of potential value relative to net carrying value in our accounts, so there is a comfortable buffer in the market value of the vessels relative to their value in our accounts, so we do not see a risk of impairments for quite some time.”
Bourbon forecast improvements in the price of oil in the second half of the year, and improvement in the outlook for work related to well stimulation and offshore installation maintenance, suggesting a “slight increase in demand for vessels.” The firm did not forecast any improvement in exploration and development activity.