SBM and Aker Announce Staff Overhead Cuts

FPSO

By MarEx 2016-02-11 20:45:32

Two offshore services firms have announced staffing cost reductions in the wake of falling rig utilization and oil prices.

In its 2015 full year earnings statement, FPSO firm SBM Offshore announced earnings of $460 million, down by roughly half from 2014, and staff cuts totalling to 3,200 positions over the course of 2015 – including full time employees, contractors and yard staff – for yearly savings of $80 million.

Additionally, SBM announced that there would be 400 more layoffs in 2016 for another $40 million in annual savings.

The firm said that the changes were a response to the prolonged market downturn, and added that it did not see potential for improvement before 2018, consistent with analyst predictions.

However, while it will keep an eye on overhead and market conditions, SBM said that it will keep the talent it needs to stay positioned for a recovery – even if that means losses. “The Company will maintain an engineering overcapacity to position itself for a future market upturn. This leads to cumulative . . . EBIT losses of approximately $150 million over 2016 and 2017.  Should the industry downturn persist additional steps will be considered to manage the Company’s cost base.”

Separately, Norwegian offshore engineering and maintenance firm Aker Solutions announced “tough but necessary” salary cuts for maintenance, modifications and operations (MMO) staff, in what it described as a move to maintain the firm's competitiveness.

The cuts, of five percent for most staff and ten percent for senior management, will be reviewed after 12 months, Aker said.

“Reducing salary costs is one of multiple measures needed to safeguard our competitiveness and reinforce our ability to win more work in a market with unprecedented challenges," said Per Harald Kongelf, head of Aker Solutions Norwegian operations.

Knut Sandvik, head of MMO, added that the measures were supported by labor unions.

Aker said that up to 900 positions could be eliminated if the firm can't win additional MMO work offshore Norway, as previously announced.

The firm lost a key $2.7 billion MMO contract bid from Statoil in December, and announced in January that it would shed 450 of its 3,600 Norwegian maintenance positions, in addition to its 1,300 layoffs over the last year, with the potential for more.

In related news, on Wednesday, Texas-based jackup rig and liftboat contractor Hercules Offshore announced that it was considering selling itself. The company filed for Chapter 11 protection in August and emerged from bankruptcy in November. As of January 26, the firm's fleet status report showed three of its 18 rigs on active contracts, with the balance in layup.

Hercules Offshore said the move to explore alternatives was not in response to any proposal received by the company.

The company had about $514 million in cash and $450 million in total debt as of February 9.