UK-based drilling specialist Archer reported a 22.5% drop in 2Q 2015 that will lead to cutting 700 jobs in its global workforce.
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Image from Archer. |
Revenue for 2Q was US$388.9 million, nearly a quarter down compared to 1Q 2015 at $501.6 million, and 36% down from 4Q 2014, with all businesses and geographic areas impacted.
“The resulting market pressure has led in most parts to unsustainable pricing levels and significant capacity being idled. The North Sea Drilling activity has also been curtailed by many operators, which have extended their plans to keep platforms in maintenance mode. Further reductions in spending have also impacted Argentina and Bolivia, where global and local customers are reducing their spent in order to preserve cash flow,” Archer noted in its 2Q report.
Due to reduction activities, the company announced cuts to its workforce by an additional 400 during 2Q 2015. In addition, Archer said it does not expect activity levels to resume in the short- or medium-term, and the company is making further adjustments to its workforce by reducing another 300 employees. The 700 job cuts lead to a total reduction of more than 21% compared to December 2014, and approximately $4 million of additional restructuring costs in 3Q.
Other cuts the company has done include adjusting compensation levels throughout the organization to remain competitive in a lower price environment; and reduced operating assets as well as the number of locations as part of a larger effort to adjust the cost base to the lower activity as well as pricing levels.
Archer’s North Sea revenue came in at $114.5 million, a 35.9% drop from 1Q 2015 of $64 million. Revenue from platform drilling services fell 18.3%, and reflected lower drilling activity combined with lower reimbursable revenue in Brazil, Norway, and the UK. Its engineering services also decreased 33.9% that the company attributed to modification and maintenance work being continuously delayed in both Norway and the UK.
Archer has been able to reduce its capital expenditures to an estimated $135 million for the year.
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