Bourbon resisting price pressure

PARIS (Reuters) - Strong demand for supply and crew boats in the offshore oil industry will continue to feed Bourbon's (GPBN.PA) earnings growth despite pressure from some clients to cut prices, the head of the oil services group said.

Offshore revenue, which makes up 72 percent of Bourbon's sales, will rise in 2009 at a much faster rate than the company anticipated in its 2012 strategic plan, Jacques de Chateauvieux told the Reuters Small- and Mid-Cap Energy Summit in Paris.

Under the plan, Bourbon is targeting annual average group sales growth of 17 percent, including 21 percent in offshore.

"We'll be probably above 17 percent in 2009, and we'll be well above what we had expected in the offshore business," the chairman and chief executive of Bourbon said on Wednesday.

Bourbon, originally a sugar and rum producer created in 1948 on the French island of La Reunion, sold that business to focus on marine services in 2000.

It entered offshore oilfield services in 2003, supplying tug boats that help to anchor oil production ships, platform supply vessels and submarine robots for maintenance operations.

Chateauvieux, whose family owns a quarter of Bourbon's capital, did not exclude selling its bulk division, which contributes less than a third of sales, to focus solely on services to the offshore oil field industry.

"If we were a pure offshore player, we would have a rather interesting profile for investors," Chateauvieux said.

"If you look at Bourbon's history, we've always been flexible and open to portfolio changes. We have no taboo on this. The most difficult decision for me has been to sell our sugar business in La Reunion. I was selling the family's history. Once you do that, the rest ... (can be done)."

Chateauvieux added, however, that the bulk business had been a significant element of financial stability for Bourbon when the company embarked on its new fleet program and had to pay hundreds of millions of euros upfront to the shipyard.

PRICING PRESSURE

Last year, Bourbon launched a 2 billion euro ($2.81 billion) plan to increase its fleet with new-generation boats offering lower fuel consumption and increased cargo capacity and boats carrying crews to offshore platforms at a lower cost than helicopters.

This has lured oil groups eager to cut costs, putting it in a better pricing position than some rivals, Chateauvieux said.

"These new vessels are very well received by our client ... To lower oil companies' costs, you can cut your prices or bring about solutions that will lower their costs," he said, adding that client pressure to lower its daily rates was strong but not "irrational."

"The very same vessels that went for $6,000 a day before the oil boom went up to $12,000 a day during the boom, so it's legitimate from clients to expect a price cut," he said.

Chateauvieux also said a recent rebound in oil prices to nearly $70 a barrel from just above $30 in February had improved the negotiating positions of Bourbon and its rivals.

"Clearly with a barrel above $50 or $60, we are back in serene operating conditions," he said.

Bourbon, which competes with Tidewater (TDW.N), is on track with its vessel program, taking delivery of one every 12 days on average, Chateauvieux said. Bourbon's fleet should grow to around 450 boats by 2012 from 293 at the end of 2008, he said.

In 2010, Bourbon will start communicating about its strategy beyond 2012, Chateauvieux said, declining to be more specific.

"If you don't do organic growth or lateral growth within new regions or businesses closely related to what we currently do ... you are left with a change in the composition of our portfolio, and we have proven in the past that we have already done it."

He added that it was difficult for Bourbon, which has a market capitalization of 1.6 billion euros, to make acquisitions as they could involve older boats than those in its fleet.

Bourbon shares have gained more than 60 percent since the start of the year, after a fall of nearly 60 percent in 2008 that was mainly linked to tumbling oil prices.

(Additional reporting by Michel Rose and Florent Le Quintrec; Editing by James Regan and Rupert Winchester)