Archer, a global oilfield services provider, does not feel the cards will turn for the better anytime soon in the sector pressured by low oil prices; or at least not in the fourth quarter of this year, nor the first half of 2016.
According to the company’s third quarter 2015 statement on Friday, the U.S. land market continued to experience a decline in activity, with pricing and activity levels being “extremely challenged”.
The company also said that the North Sea drilling activity as well has been sharply reduced as operators have extended their plans to keep platforms in maintenance or idle mode, leading to lower level of demand for all Archer’s services except for the Modular Rig.
Providing outlook for the fourth quarter and a part of 2015, Archer said: “We do not expect overall activity levels or pricing to improve during the fourth quarter or the first half of 2016, as a result of the low commodity price environment as well as the impact of an extended holiday period in certain parts of our business.”
It added: “In addition we are experiencing a higher level of uncertainty impacting future activity levels in Argentina, as some operators are evaluating investment decisions based on the potential changes should the subsidies for the local production of hydrocarbons be reduced or eliminated.”
In line with this reduction in activity, Archer laid off 236 employees during the third quarter 2015, with the total reduction in headcount of about 21% compared to the headcount at the end of December 2014.
The company previously reduced its headcount in the first quarter of 2015 by approximately 1,200 positions or 13.6% of its total workforce.
Archer’s headcount as of September 30, 2015, was approximately 6,900 compared to 7,150 at the end of the second quarter 2015.
3Q net loss, capex down
The company on Friday reported a net loss for the 3Q 2015 of $52.6 million, versus $13.3 million profit in the same period last year. Archer’s third quarter revenue from continuing operations was $376.2 million, as opposed to $593.1 million in 3Q 2014.
In its 3Q report, the company said that for 2015 it estimated capital expenditures for the entire year to total $110 million, a reduction of 33% compared to $165 million guidance given at the beginning of the year.
The company said it would continue to keep the spending low: “Although we have not yet finalized our budgets for 2016, capital expenditures next year will be significantly lower representing expenditures for critical maintenance projects only.”
Offshore Energy Today Staff