Newpark Shrinks Workforce, Salaries
Newpark Resources Inc. recently released an operational and financial update, along with a corresponding COVID-19 action plan.
“The significant pullback in U.S. customer drilling plans requires us to take swift actions to right size our business for the new market reality, including reducing operating expenses and capital expenditures to help ensure continued free cash flow generation," Paul Howes, President and Chief Executive Officer, said in a written statement.
The following specific actions taken to-date have focused primarily on operations supporting the deteriorating U.S. land oil and gas market:
- The implementation of cost reduction programs, including workforce reductions
- The suspension of matching contributions to the U.S. contribution plan
- Temporary salary reductions effective April 1 for a significant portion of U.S. employees including a 15% pay cut for executive officers and the annual cash retainers paid to all non-employee board members
- The initiation of additional actions to further reduce the operational footprint of the Fluids Systems business in U.S. land
- The elimination of all non-essential capital investments, which reduces expected full year 2020 capital expenditures to approximately $15-$20 million
Howes continued, "With the 17% decline in U.S. land market rig count over the past three weeks, along with the market uncertainty and logistical limitations associated with COVID-19 impacting the timing of product sales in our Mats & Integrated Services business, our first quarter 2020 consolidated revenues are expected to be approximately $165 million. Looking forward, we expect revenues from U.S. land E&P markets will decline in the near term, driven by the anticipated reductions in E&P drilling and completion activity.”
"Looking beyond the COVID-19 disruptions, consistent with our historical experience, we expect our Fluids Systems business units in the Gulf of Mexico and international markets will demonstrate greater stability than U.S. land, benefitting from our IOC and NOC customer base. With roughly half of our Fluids Systems segment revenue generated outside of U.S. land, our global footprint provides us with improved revenue stability to help navigate the volatile U.S. land market environment."
The company ended the first quarter of 2020 with a cash balance of $49 million and total debt of $163 million, which includes the remaining $85.5 million of convertible notes maturing in December 2021.
Newpark is a worldwide provider of fluids and chemistry solutions in the oilfield, and engineered worksite and access solutions used in various commercial markets.
To contact the author, email bertie.taylor@rigzone.com.
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