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Bloomberg: Bourbon Spends $2 Billion to Double Fleet of Offshore Oil Ships

By Tara Patel

April 25 (Bloomberg) — Bourbon SA, owner of the world’s biggest fleet of supply ships for deepwater oil exploration, plans to double the number of its vessels in three years, Chief Executive Officer Jacques de Chateauvieux said.

“We will soon be taking delivery of a new vessel every 15 days,” de Chateauvieux said in an interview at the company’s Paris headquarters. “We have invested massively to build innovative vessels in low-cost countries with the idea of getting them on the market as quickly as possible.”

Bourbon will spend 1.45 billion euros ($1.96 billion) through 2010 on 158 ships built in China, India, Norway, France and Nigeria to add to its fleet of 265, which also includes tugboats working at French ports and bulk carriers plying coal and minerals around the world.

Oil companies will increase spending on deepwater exploration 44 percent to $18 billion by 2011, according to Douglas-Westwood Ltd., a Canterbury, U.K.-based oil-research company. That’s increasing demand for Bourbon, founded in 1948 by sugar plantation-owning families on Reunion, the French island east of Madagascar.

Bourbon’s clients including Exxon Mobil Corp., Chevron Corp., BP Plc, Royal Dutch Shell Plc and Total SA are stepping up exploration amid near-record-high oil prices. Oil traded at an average of $63 a barrel in the past 24 months compared with $39 in the two previous years.

`Unusual Order’

Bourbon profit rose 38 percent last year to 152.9 million euros, helped by higher shipping rates. Revenue rose 17 percent to 717.6 million euros.

The company’s shares fell as much as 7 percent after one of its ships capsized in the North Sea on April 12, killing eight of 15 crew members. They closed yesterday at 50.7 euros, giving the company a market value of 2.5 billion euros.

The shares have gained 23 percent in the last six months, more than the 21 percent increase in the Bloomberg oil-services index that includes companies from France, the U.S., Hong Kong and elsewhere. Eleven of the 15 analysts covering the stock rate it a “buy” or “accumulate,” according to Bloomberg data.

“Bourbon is ahead of the competition because it got its ship orders in early,” said Antoine Leurent, an analyst with KBS Securities in Paris who has an “accumulate” rating on the stock. “It’s unusual for a company to order such a large series of new vessels.”

Bourbon’s biggest competitors in deep waters include Copenhagen-based A.P. Moeller-Maersk A/S and Edison Chouest Offshore Ltd.

Family Business

“Our market is growing 15 percent annually,” de Chateauvieux said in the April 3 interview.

De Chateauvieux, whose family was among the founders of the company, took charge at 28, with an MBA from Columbia University in New York and experience at the Boston Consulting Group in Paris. He began buying Bourbon shares with borrowed money in 1979 and now holds a 24 percent stake.

He diversified the group from the island’s sugar and rum specialties into fishing, retail, dairy and shipping.

“No investor was interested in us as a conglomerate,” he said. “We decided to put all our eggs in one basket.”

The group plans to sell the rest of its stake this year in Vindemia, which owns shopping malls and supermarkets on Reunion island, and half of its sugar holdings in Vietnam.

`Full of Pipes’

The company’s offshore division has 110 supply vessels on order. It will begin testing this year the first in a series of 78 ships designed for oil exploration projects, both in shallow waters and at depths of up to 3,000 meters (9,840 feet).

Bourbon’s new offshore vessels have more cargo space and can remain in place without mooring, a feature previously required only by deepwater oil explorers.

“It’s safer to have this ability even in shallow waters,” he said. “Sea bottoms in the Middle East are so full of pipes, like a plate of spaghetti, that anchoring is a problem.

The first of the new ships, he said, will likely be used by the state-owned Saudi Arabian Oil Co., called Aramco.

“We look at indicators such as demand for rigs, drills and well heads and we can see that order books are full until 2011,” he said. “The current cycle will be longer than previously thought.”

To contact the reporters on this story: Tara Patel in Paris [email protected]

Last Updated: April 25, 2007 01:56 EDT

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