Nabors Industries Cuts Workforce by 12%
Nabors Industries, Ltd. has reduced its workforce by 12 percent, amid the downturn in the oil and gas industry, company representatives said in a Q4 2014 earnings conference call Tuesday afternoon. Additionally, the oil and gas company, which has corporate headquarters in Houston, is reducing General and Administrative (G&A) spending and reduced salaries at the senior executive level.
William J. Restrepo, Nabors’ Chief Financial Officer, stated that the 12 percent reduction in company workforce reflects a 20 percent decline in Nabors’ U.S. drilling workforce and a 10 percent decrease in the company’s SG&A (Selling, General & Administration) organization. Restrepo said during the 4Q, the impact of the downturn was most evident in Nabors’ U.S. operations.
Because of the state of the market, Nabors drastically cut back on its PACE-X newbuild schedule for 2015, which had previously been set at four per month.
“Our fourth quarter earnings were driven primarily by, first, end-of-year reductions in Lower 48 drilling activity which had a material impact on our results, starting in the month of December; second, a decline in volumes and margins in our Canrig and Ryan Directional drilling subsidiaries; and third, seasonal declines and the impact of lower oil prices in our Completion and Production Services business,” said Anthony G. Petrello, Nabors’ chairman, president and CEO, in the call.
Nabors joins a host of other oil and gas companies, who have recently reduced their workforce due to the current slowdown of the industry. Reuters recently reported the number of oil rigs active in the U.S. fell to 40 percent since October.
“The steep drop in oil prices and uncertain prospects have caused an extraordinary rapid drop in drilling activity in the U.S. The industry has shut approximately 35 percent of the rigs that were working at the Peak in the fourth quarter,” Petrello said. “Our Lower 48 rig count is down approximately 32 percent from our Peak. It currently stands at 138 rigs, including 21 stacked on rate. Thus far, the downturn has been largely indifferent to rig types and capabilities.”
Nabors’ executives remained optimistic about the future of the company and the eventual upturn of the O&G industry.
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