Bourbon SA Pulls Out 35 Vessels Due to Overcapacity, Widening Losses

Giant French ships supplier Bourbon SA, will pull out as many as 35 vessels in the second half of 2015 due to overcapacity in the market, which results to more losses. This came out after the company's first half net loss widened to 19.2 million euros. 

Bourbon, which supplies ships and crew to producers of oil and natural products, said that the slump in oil prices and the uncertainty of when the prices will recover, affect the deep water and shallow-water markets.

According to Bloomberg, Bourbon is just one of the oil-services companies that warned about how the drop in oil prices can hurt businesses as customer delays and cancelled projects. Besides Bourbon, billionaire John Fredriksen's Seadrill Ltd., also warned earlier that the rout will result to an industry consolidation wherein only the biggest offshore players will be left intact.

Last August 24, CNN reported that the futures for a barrel of West Texas Intermediate crude crashed below $39 a barrel, the lowest it has been since 2009.

As per Money Morning, WTI crude oil prices were still down 3.3% and trading at $44.55 a barrel as of 10 AM in September 8.

Bourbon's first-half net loss grew four times to 19.2 million euros, or $21.5 million, from last year's 4.8 million euros. Chief Executive Officer Christian Lefevre said that the second half of the year would be tougher, despite the company hitting its financial targets for the year.

Besides pulling out vessels from operation, the average daily rates the company can charge for each vessel will also continue to drop.

Bourbon came up with a vessel disposal plan that has raised $1.7 billion through the last six months. The company added one vessel during the first half of the year, bringing their ships to a total of 506. The average utilization rate fell 3.4 percent from last year's 78.1 percent.

Aside from Bourbon, Paris-based Oilfield surveyor CGG SA is another service provider badly hit by the rout.