Independence Contract Drilling Shrinks Staff, Salaries
The steep drop in oil demand and related products continues to have a domino effect on oil and gas producers and service companies of all sizes, and Independence Contract Drilling Inc. is one of the latest oilfield firms to report a negative impact on its contracted rig count. In response to the current market conditions, the company has launched the following steps:
- Salary or compensation reductions for substantially all employees, including executive management;
- Suspension of all cash-based incentive compensation, including executive management;
- Reducing the number of executive management positions by two;
- Reducing the number of directors from seven to five, which will become effective at the next stockholder meeting;
- Annual compensation reductions for company directors;
- Reducing direct operating costs in line with activity declines;
- Reducing headcount for non-field-based personnel by approximately 40%;
- Reducing annual capital expenditure budget by 30%.
“Although our first quarter contracted rig count was not materially affected by the pandemic or deteriorating market conditions, we expect operating rig counts for ICD and the industry to decline throughout the second quarter based upon our customers' rapid reductions in spending in response to deteriorating market conditions,” Anthony Gallegos, President and CEO, said in a written statement.
"In response to deteriorating market conditions, we have taken various actions to address this lower level of activity, including reducing headcount, salary, and other elements of compensation for all personnel, including executive management and board of directors. For our executive team, compensation reductions range between 40% and 55% of cash compensation depending upon position.”
“On order of magnitude, we expect our actions to result in approximately $5 million of cash reductions to annualized targeted selling general and administrative expense and a reduction in operating costs ranging between $600 and $1,000 per operating day depending upon activity levels. We also have suspended all future capital expenditures except for maintenance-related items for our operating rigs, which we expect will reduce our 2020 capital expenditure budget by 30%."
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