Dutch oil and gas services firm Fugro N.V. will cut hundreds of more jobs and sell one of its business units as it continues to grapple with a declining oil and gas market, the company reported Thursday.
Fugro’s 1H 2016 revenues were 904.9 million euros, a 24.5 percent decline.
Fugro already cut 585 workers in 1H 2016 and expects to cut a total of 1,000 this year as part of its ongoing restructuring efforts. The company cut more than 1,500 employees in 2015, making a reduced workforce of about 35 percent for its oil and gas businesses.
“In the first half of this year, budgets of our oil and gas clients again declined significantly, with new projects being deferred or cancelled and strong price pressure as a result of overcapacity,” Fugro CEO Paul van Riel stated in a release. “We are continuing to adjust our cost base and capacity to market reality. This enables us to largely counter the lower volumes; the strong rate reductions, however, result in severe margin pressure.”
In addition to personnel reductions, Fugro is also divesting its Asia Pacific subsea services business to Shelf Subsea Holding UK Ltd for 14 million euros and a 25 percent equity share in Shelf Subsea. This is part of the company’s strategy to focus on its core business of geotechnical and survey activities.
“The price reductions and efficiency gains throughout the supply chain are significantly lowering the oil price required to justify investments,” said van Riel. “In combination with increasing evidence that a balance between oil supply and demand will be achieved in the course of next year, this is expected to spur project approvals, also in a lower oil price environment. It is, however, still uncertain when this will have positive impact on our business.”
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