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Marine Log

June 7, 2006

Hornbeck goes to Cianbro for MPSV conversions

Pittsfield, Maine, headquartered Cianbro Corporation has been awarded a contract by Hornbeck Offshore Services, LLC, a subsidiary of Hornbeck Offshore Services, Inc. (NYSE: HOS) of Covington, Louisiana, to complete the retrofit and conversion of two, coastwise, sulfur tankers into U.S.-flagged, new generation, 370-foot, multi-purpose supply vessels (MPSVs).

When completed, it is believed that these vessels will be the largest offshore supply vessels in the world.

Bath Iron Works, a subsidiary of General Dynamics (NYSE: GD) will be the primary subcontractor for the project.

Cianbro will also employ other local subcontractors in addition to Bath Iron Works, including heating, ventilation, and air conditioning (HVAC); fire protection; pipefitting and electrical suppliers; and more.

Over 300 skilled people are expected to work on the project performing structural fabrication and welding, pipefitting and pipe welding, and electrical work. A local naval architect has been hired to assist the project. Cianbro will also rent space at Portland Ocean Terminal.

Cianbro is scheduled to receive the first vessel this month. This vessel will dock at Ricker's Wharf, Cianbro's marine facility on Cassidy Point (beside Merrill's Marine Terminal) on Portland's waterfront.

Throughout the conversion process, activities will take place at four locations: Cianbro's Ricker's Wharf marine facility, the city's Portland Ocean Terminal, Bath Iron Works' fabrication facility in Brunswick, Maine, and Bath Iron Works' main shipyard in Bath, Maine.

With one vessel scheduled to be completed by mid-2007, the second vessel is scheduled to be completed by late 2007.

Todd Hornbeck, chairman, president and CEO of Hornbeck Offshore Services, said, "We are very excited about moving into the conversion phase of this innovative project. This represents the culmination of a three-year effort by our in-house engineering team to design a multi-purpose supply vessel with 'Swiss Army Knife' capabilities that, we believe, will revolutionize the offshore support services industry. The HOS 370s will be unlike any vessels currently working in the U.S. Gulf of Mexico, in that they are designed to have multiple U.S.C.G. certifications and ABS class notations. In addition to traditional offshore supply vessel capabilities, the HOS 370s are designed to support offshore construction, subsea well intervention, ROV operations, pipeline commissioning, pipe-hauling and flotel services, to name a few. We look forward to working with Cianbro and its team of sub-contractors in Maine to make this MPSV conversion project a huge success."

Last month Hornbeck said that the total project cost to acquire and convert the two vessels has increased from an initial estimate of $65.0 million to $110.0 million in the aggregate. It said the increase "is due to design enhancements requested by customers and higher than originally anticipated labor and material costs that are prevailing at U.S. shipyards, particularly since hurricanes Katrina and Rita. Since the inception of this program, the company has incurred approximately $13.4 million, with $1.5 million spent during the first quarter of 2006."

Hornbeck said last month that while its capital investment in our two MPSVs is expected to increase about 70%, the vessels' improved functional capabilities would support much higher dayrates and better utilization than was first projected.

Cianbro says it is excited to secure this offshore project, and the highly skilled jobs it requires, for Maine.

Peter Vigue, Cianbro president & CEO, said, "Maine's greatest asset is our people. Their work ethic, ingenuity, and determination are second to none. We are grateful to Hornbeck for this opportunity, which provides Maine workers the ability to export their knowledge and skill to make this project a success. The collaborative efforts of this project team will help energize and elevate Maine's visibility as a serious competitor in the global maritime construction market."

Dugan Shipway, president of Bath Iron Works, said, "We're very pleased Cianbro invited us to be a member of this project team. Our involvement is a direct result of the tremendous performance by the men and women of BIW on our existing Navy contracts. Their dedication, hard work, and innovative ideas are improving our processes, increasing our efficiency and making it possible for us to consider other types of work. Today, we are delighted to be a part of this new opportunity for Maine."

Capt. Jeff Monroe, Portland's director of ports and transportation, said, "The city is thrilled to once again partner with Cianbro on another important maritime project for our waterfront. This underscores our continuing need to have flexible marine infrastructure to meet the needs of our maritime community."

Cianbro is one of the East Coast's largest civil and heavy industrial construction companies. Employee-owned, Cianbro is one of the most diversified construction companies in the U.S. with gross annual sales in excess of $300 million.

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