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Royal Caribbean orders Oasis 4 at STX France (**updated**)

Surinder Manku
Fain - 'thrilled to announce the order of a fourth Oasis-class ship'
Update: Adds newbuild cost estimate. Royal Caribbean Cruises Ltd. has reached an agreement with STX France to move forward on the order of a fourth Oasis-class ship for delivery in 2018.

Royal Caribbean chairman and CEO Richard Fain and president and COO Adam Goldstein, along with STX France CEO Laurent Castaing, signaled the planned order at the keel-laying ceremony for the third Oasis-class ship at STX France in Saint-Nazaire Friday.

'We are thrilled to announce the order of a fourth Oasis-class ship during the keel-laying milestone of the third,' Fain said.

He added: 'The Oasis class was a revolution in maritime design when it was launched in 2009. Oasis of the Seas and Allure of the Seas continue to be in a class by themselves both in terms of guest satisfaction and financial returns. Today's announcement is a reflection of their success.'

The order is subject to documentation and financing. No price was disclosed. Oasis 3 was ordered for approximately €1.3bn.

UBS Investment Research estimated the all-in cost at $1.35bn to $1.49bn or $250,000  to $275,000 per berth, similar in range to the all-in cost of Oasis of the Seas and Allure of the Seas, ordered in 2006 and 2007, of $259,000 per berth and $260,000 per berth, respectively.

In Wells Fargo Securities' view, Oasis 4 could cost approximately $1.54bn or $285,000 per berth, based on Thursday's $1.38/euro rate. This compares with the brokerage's Oasis 3 estimate of $1.47bn or $273,000 per berth, with the difference driven by the foreign exchange rate ($1.32/euro) at the time of announcement.

According to Wells Fargo analyst Tim Conder, the Oasis order fits into the context of Royal Caribbean's stated long-term 4% annual growth goal and 'further strengthens RCL's innovative leadership positioning in the industry.'

Conder thinks that over the next 12 to 18 months, the company could announce the deployment of an Oasis-class ship to Asia, at least for part of the year.

Oasis 4 is expected to build further on the efficiency of Oasis 3, which will be approximately 20% more energy-efficient than Oasis of the Seas and Allure of the Seas, which are cutting-edge in efficiency.

Castaing expressed his excitement about Royal Caribbean's decision to move forward on Oasis 4 which, he said, demonstrates the company's confidence in STX France.

Oasis of the Seas and Allure of the Seas were built at STX Finland in Turku.

For the Oasis 3 keel-laying, a 1,000-ton block measuring 32 feet by 154 feet (10 meters by 47 meters) was lifted by crane into the building dock.

Newly minted coins were placed under the keel and will stay in place until the end of construction. Once the ship is near to completion, the coins will be retrieved and presented to the ship's captain and crew to be placed on board.

Still to be named, the third Oasis-class ship, 227,700gt, will be delivered in spring 2016.

Royal Caribbean put projected capital expenditures for 2014, 2015, 2016, 2017 and 2018 at $1.4bn, $1.4bn, $2.2bn, $0.3bn and $1.5bn, respectively, taking into account this order and existing ship orders.