Subsea 7 S.A. confirmed Wednesday in its 2015 results that it has axed almost 4,000 positions since 2014 in an effort to cope with the declining oil price.
The oilfield services firm, which implemented a cost reduction and resizing program in May last year, set out plans to deliver approximately $550 million of annualised cost savings through a workforce reduction of 2,500 and the removal of 12 vessels from its active fleet by early 2016.
The company’s resizing actions exceeded this guidance and Subsea 7 ended 2015 with a workforce of approximately 9,800 people, down from around 13,400 a year earlier, and as at the end of February, 13 vessels have been removed from the active fleet, with an additional chartered vessel due to be returned to its owner before the end of the first quarter 2016. The restructuring charge of $136 million related to the resizing program was broadly offset by its cost savings, according to a company statement.
Subsea 7 posted revenues of $4.75 billion in 2015 (2014: $6.87 billion) and had a backlog of $6.11 billion at the end of last year. Despite registering impairment charges of $521 million relating to goodwill and $136 million relating to vessels and equipment, following a downward revision of forecast activity levels, the services company recorded an operating profit of 144 million in 2015 (2014: $254 million loss).
Commenting on the future of the subsea industry, Subsea 7 said in a company statement:
“The low oil and gas price continues to depress industry activity as clients delay and cancel new projects. The timing of market recovery remains highly uncertain…Despite the difficult near to medium-term outlook, the fundamental long-term outlook for deepwater subsea field developments remains intact and industry activity is expected to recover when the oil and gas market rebalances. Subsea 7 has already implemented a number of initiatives to strengthen its position and will continue to actively adapt to industry conditions without losing its focus on long-term strategic priorities.”
In a separate statement released Wednesday, Subsea 7 revealed that it had secured a “sizeable extension” to an existing contract with BP Exploration Operating Company Limited for the provision of Subsea Construction, Inspection, Repair and Maintenance (IRM) services in the North Sea. Under the terms of this agreement, Subsea 7 will provide BP with an additional two years of IRM delivery, extending the contract to 2019. The contract covers the maintenance of the Schiehallion, Loyal, Foinaven and East Foinaven fields west of Shetland.
Commenting on the award, Phil Simons, Subsea vice president of UK and Canada, said in a company statement:
“We are pleased to extend our delivery of IRM services for BP’s west of Shetland developments. In the current commercial environment our track record in IRM and in-house capability for remote tooling design, build and operation, ensure we continue to offer low-cost solutions and respond to our client’s challenges and needs. We look forward to working with BP on maximizing the production objectives for their operated fields.”
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