Subsea 7, an Oslo-listed offshore contractor and shipowner, has revealed deep cuts to its workforce and fleet to tackle the offshore slump.
The Kristian Siem-chaired company said that with clients cutting back budgets due to the oil price crash and the Covid-19 pandemic, it needs to save $400m per year from the second quarter of 2021.
The company is planning to axe 3,000 staff from its global total of 12,000 by the end of March next year.
About two-thirds of these redundancies will affect Subsea 7's temporary employees.
Discussions with unions will start soon, it said.
Subsea 7's active fleet of 32 vessels will be reduced by as many as 10 units through the non-renewal of chartered tonnage and the stacking of owned units.
"It is intended that the reshaping of the fleet would take place over the next 12 months commensurate with the evolution of the group’s workload," the company added.
Subsea 7 owns 22 cable-layers, multipurpose subsea vessels, diving support ships and a floatel, with the rest on charter.
'Significant deterioration'
In addition, capital expenditures will be reduced to "minimal" levels in 2021 and 2022, the outfit said.
"Faced with a significant deterioration in the oil and gas market, we are taking swift and decisive action to address the elements under our control," chief executive John Evans said.
"These measures to reduce our cost base will help preserve cash and protect our balance sheet strength, while maintaining our strong competitive position in core markets."
Subsea 7 had previously said its clients had been quick to reduce investment plans, cutting budgets for this year by between 20% and 25%, as well as largely pausing tendering activity.
The company said it was "fortunate" to start the year with a strong backlog and has benefited from $1.5bn of new orders in the first quarter.
But the offshore services outfit expects order flow to be low in the coming months and competition to increase, impacting the outlook for revenues and margins in the latter part of 2020 and beyond.
Subsea 7 posted a net loss of $38m in the first quarter, against $19m in 2019.
On 30 April, it revealed it temporarily stopped work on one vessel in Brazil to manage a number of confirmed Covid-19 cases on board.
Another Kristian Siem-backed offshore vessel player, Siem Offshore, said on Thursday it had agreed a $1bn debt standstill deal with Norwegian and other European lenders, but has still to seal similar agreements with bondholders, as well as banks in Brazil and Canada.
