Offshore seismic services provider Polarcus is reducing its headcount further by 20 percent, the company said Monday, citing the market uncertainty and bleak near-term outlook caused by low oil prices and COVID-19.
Oslo-listed Polarcus had on March 31 announced cost-cutting measures which were planned to save it $15 million in 2020. These included reductions in headcount and employees' salaries and vessel stacking. Polarcus at the time did not say how many people exactly it would let go.
On Monday, June 22, Polarcus announced it a new round of headcount reductions "to streamline the organization and adjust operational capacity to align with current market conditions and the near-term outlook while preserving the Company's established foundations."
Polarcus said that new measures would realize an additional annualized reduction in Polarcus' operating costs of more than USD 7 million.
The measures include a 20% reduction in headcount, principally through redundancies, both in its offshore and onshore organizations.
Offshore Engineer reached out to Polarcus for clarification if the cuts had already been made, and asking for an exact number of people laid off.
A Polarcus spokesperson said redundancies are still ongoing and said the company would not communicate an exact number.
Apart from the job cuts, Polarcus announced "a range of permanent and temporary compensation and benefit adjustments, including a permanent salary reduction of 10% in base salary at senior levels with effect from 1 October 2020."
Activity levels in marine seismic acquisition over the near-term remain low with limited visibility on future projects, Polarcus said.
"The measures taken will enable the Company to scale up when market improvement allows, whilst continuing to ensure safe and efficient marine seismic operations executed in the most environmentally responsible manner," it added.
Polarcus CEO, Duncan Eley said: "The extent of the global economic crisis over the past three months has been profound. The further organization changes we have made responding to the deteriorated market conditions and position the Company for the future. Based on regular conversations with our client base across the globe, I am confident that the industry will see activity levels increase through 2021. Polarcus will enter this phase as a leaner and more responsive organization with an established foundation for future success."
Earlier this month, PGS, another Oslo-listed seismic survey company, said it would reduce office-based personnel count by approximately 40%, including reductions already implemented, to address the lower market activity and to cut costs.
Offshore seismic contractors, especially the owners of survey vessels, are the ones who will suffer the most from low oil prices and COVID-19 when it comes to the oil and gas supply chain, Rystad Energy said in its recent analysis.
The energy intelligence company last week said that the seismic services demand was poised to decline to $12 billion in 2020 from $15 billion in 2019.
While Polarcus said it expected an increase in activity in 2021, Rystad sees the seismic demand dropping to $10 billion in 2021, before rebounding to $11 billion in 2022 and to $13 billion a year later.