PGS is implementing further cost reductions to bring expenditure to approx.
PGS is implementing further cost reductions to bring expenditure to approx. $460 million, down from the $600 million it planned to spend at the start of the year.
In response to the impact of the Covid- 19 pandemic, cuts will be made through staff reductions, reorganization, consolidation of offices, renegotiation of service agreements and other cost measures.
PGS has already announced that it is stacking three out of the eight 3D vessels that were operating at the start of the year.
The company will now reduce office-based personnel by approx. 40%, including reductions already implemented.
The corresponding gross cash costs for 2020 are estimated to be approx. $460 million, excluding severance and other restructuring costs of approx. $30 million expected to be recognized in Q2 and Q3 2020. The annual gross cash cost run rate is based on operating five 3D vessels. The company said that it is prepared to adjust operated vessel capacity and offshore crew levels further if required.
As part of streamlining of the organization, all commercial activities, including the current New Ventures unit, will be combined into one business unit, Sales & Services, which will be headed by Nathan Oliver. Berit Osnes, who currently leads New Ventures, will take a key management role in Sales & Services following the reorganization. The new organization is expected to be implemented on 1 August, 2020.
PGS president and CEO, Rune Olav Pedersen said: ‘We are addressing the activity reduction and low visibility by adjusting operations and cost. We will scale down our organization significantly while retaining our core capabilities and scalability to be in position to take advantage of what we believe will be an improving market following the current crisis.’
He added: ‘PGS has a strong market position and a resilient operating model and organization. I am proud of how our employees are responding to yet another challenging period for the industry. The PGS workforce has demonstrated strong commitment and ability to adapt during previous organizational restructures, and I am confident we will see the same during the weeks and months to come.
