Subsea 7, the London-based seabed to surface construction company that is listed in Oslo, said that it will cut 2,500 jobs and a quarter of its fleet.
The decision has been made against the background of the difficult business and economic conditions in the oil and gas market and declining workload, so that a programme of cost reduction measures will be implemented including a re-sizing of the fleet and workforce, and the restructuring of its corporate organisation, the company said in a statement.
“It is envisaged that the overall reduction in the global workforce would be approximately 2,500 by early 2016, down from the 13,000 reported at the end of 2014. Consultation with employees and employee representatives will continue to take place on a local basis and consultation processes have begun in Norway and the UK,” Subsea 7 said.
The global fleet will be reduced by up to 11 vessels from the current 39 units, including five newbuildings, based on a mixture of non-renewal of charter vessels and either disposal or stacking of owned vessels. “It is intended that the reshaping of the fleet will be phased during the next 12 months, commensurate with the projected global workload as well as continued effective execution of projects,” the company said.
Jean Cahuzac, chief executive officer said, “These cost reduction plans will allow us not only to adapt to present market challenges but also to maintain our competitiveness and the long-term viability of our business. This will enable us to emerge stronger once the downturn ends. Reducing employment is not a decision we take lightly but one that is necessary in today’s difficult oil and gas environment.
“Deepwater oil and gas production remains a significant market with long-term growth potential. While implementing the restructuring of our organisation, we remain committed to preserving our core capabilities and investing in key enabling technologies to deliver cost-effective solutions to our clients through all stages of the oil price cycle,” Cahuzac concluded.
On 29 April Subsea 7 said group net profit rose to USD151 million in 1Q15 from USD131 million a year earlier, while revenues decreased to USD1.18 billion from USD1.67 billion.
The continuation of challenging market conditions resulted in subdued order intake of USD1.0 billion and order backlog consequently declined to USD7.6 billion by the period end, which included an adverse foreign exchange impact of USD0.4 billion, the company said in a statement.
“Net debt increased by USD283 million from the 2014 year-end position, reflecting the timing of payments for the new-build vessel programme and movements in working capital in the quarter, largely due to the normal phasing of project-related cash receipts and payments,” said Cahuzac, in the statement at the time.
“Contract awards to the market continue to be delayed, reflecting the low oil price environment and resultant capital expenditure reductions by oil companies. Subsea 7 is positioned competitively for the projects that are still expected to be awarded to the market in 2015,” he continued.