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October 11, 2008

Gulf Island expands into vessel building

Offshore drilling and production platform specialist Gulf Island Fabrication (NASDAQ:GIFI) is getting into shipbuilding, starting with towboats.

It is expanding its Houma, La., facility and adding a fifth subsidiary, Gulf Island Marine Fabrication LLC, with support from the Louisiana Economic Development Corporation (LEDC).

Louisiana Governor Bobby Jindal held a press conference in Houma to launch the expansion.

Already partially under way, it will see Gulf Island Fabrication invest approximately $27 million in the marine division, including putting in a $6 million fabrication shop, a new warehouse and a $15 million dry dock.

Over two years, the company will also use $2.3 million in performance-based financial assistance from LEDC's Economic Development Award Program to improve an industrial-grade surfaced roadway, a publicly owned sewage collection system, and a water line with fire hydrants and a drainage system.

The Thibodaux, La., Daily Comet reports Kerry Chauvin, CEO of Gulf Island Fabrication as saying the company sees vessel construction as an opportunity to diversify its business, particularly when there are fewer shallow-water construction projects as the offshore industry shifts to production in deeper and deeper water.

The Daily Comet says Gulf Island has already been doing some vessel construction, building some sections of boats for Edison Chouest Offshore, and is building a total of nine towboats, with the first expected to be delivered early next year.

"Later on, we'll probably develop into building maybe supply boats, tugboats," the Comet reports Chauvin as saying. Once the dry dock is finished sometime next year, he expects the company will turn out a minimum four to five vessels per year.

According to the Governor's office, the expansion will create at least 200 new, permanent jobs, with an average annual salary of $53,000 per year, not including benefits. In addition, the company will retain 1,300 jobs as part of this expansion.

Governor Jindal said, "This is exactly the kind of business success, job creation, and economic expansion that we must further in order to make Louisiana the best place in the world to raise a family, get a quality education, and pursue a great career."

"In 1985, the company chose to locate to Houma for several reasons -- two reasons were the Houma Navigation Canal, which allowed the company to be competitive in the oil and gas industry, and the work ethic of the people in south Louisiana," said Mr. Chauvin. "Today, the state of Louisiana has really stepped up to assist Gulf Island Fabrication. This administration is to be commended for reaching out to our company. The [EDAP] funding will help develop our infrastructure, which will in turn help grow our company. Because of the positive changes we see in Louisiana, our board of directors is committed to staying and expanding in Houma."

LED Secretary Stephen Moret said, "This is another great example of the value of prioritizing the growth and development of our existing employers. Gulf Island could have pursued this project in Texas or some other state, but they are doing it here in Louisiana because of the quality of our workforce and the high level of local and state support they continue to receive."

Gulf Island Fabrication is Terrebonne Parish's only publicly traded corporation as well as one of the area's largest employers.

Gulf Island Fabrication Inc. serves as a holding company and conducts all operations through its subsidiaries, Gulf Island LLC, Dolphin Services LLC, Southport LLC, Gulf Marine Fabricators LP and newly created Gulf Island Marine Fabricators LLC. Gulf Island Fabrication Inc., through its subsidiaries, fabricates offshore drilling and production platforms, hull and/or deck sections of floating production platforms and other specialized structures used in the development and production of offshore oil and gas reserves. Gulf Island Fabrication facilities are located in Texas and Louisiana, with headquarters located in Houma.


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