Houston-based ION Geophysical Corporation, a geoscience company which provides technology-driven solutions to the oil and gas industry, plans to cut 25 percent of its global workforce as part of an aggressive cost reduction initiative due to low oil prices.
“The difficult cost reduction initiative we are undertaking today is necessary to prudently scale the company during this period of significantly decreased revenues, which we believe will extend into 2017,” Brian Hanson, ION’s chief executive officer, said in a release.
ION, which operates globally in 20 cities on six continents, will incur $5-$6 million in termination costs, a majority of which will be incurred in 2015. The company’s job cuts are expected to be substantially completed by Sept. 30.
According to the company’s 2014 annual report, as of December 31, 2014, ION had 879 full-time employees, 569 of those located in the United States. The decline in global commodity prices prompted the company to begin restructuring initiatives in 4Q of 2014, with further restructuring efforts in 1Q 2015. These efforts resulted in a reduction of the company’s full-time workforce by 20 percent as well as a 10 percent salary reduction program for the majority of its U.S. and U.K. employees.
James C. West of Evercore stated in a Sept. 2 analyst report that they “expect the bulk of cost reduction initiatives to be realized by the end of 4Q, though a relatively small portion may not be baked into results until 1Q 2016.”
“When commodity prices and consequently the business’ revenues recover, we will rescale our workforce to meet the demand,” Hanson said.
Editor's Note: Calls and emails to ION Geophysical Corporation were not returned as of press time.
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