U.S. offshore support vessel provider Seacor Marine has started implementing cost-reducing measures, including reduction of the workforce and closure of certain facilities at several locations, to save at least $8 million amid slower than expected market recovery.
Seacor said in its quarterly report published earlier this week that, following the end of the second quarter of 2019, the company had initiated cost-reduction initiatives aimed at better aligning its operating expenses with its view of current and prospective market conditions.
These cost-reduction measures include a reduction of the workforce, reorganization of the management structure, and closure and/or consolidation of certain facilities in the U.S. Gulf of Mexico, Middle East, and Europe.
The company expects that, upon completion of these initiatives, it will realize annualized recurring administrative and general savings of at least $8 million, representing approximately 17% of the company’s total administrative and general expense over the last twelve months.
The company anticipates that the initiatives will impact all of its reportable segments and expects the bulk of the initiatives to be completed by the second quarter of 2020. These initiatives will result in a one-time restructuring charge in the third quarter of 2019.
Chief Executive Officer, John Gellert, commented on Seacor Marine’s second quarter results: “Our fleet continued to experience an upward trend in utilization and dayrates, reflecting consistent improvement for assets since the offshore cycle trough in the first quarter of 2017. Activity levels in the U.S. Gulf of Mexico remain tepid as customer demand is highly sensitive to oil and gas prices. Tendering activity, especially in international markets served by our asset portfolio, points to a continuing recovery. Unfortunately, the pace of the recovery is slower than we had hoped, leading us to implement our aggressive cost-cutting initiative.”
Gellert also said: “We are focused on returning to profit and generating cash, while remaining vigilant in positioning ourselves to take advantage of opportunities in any market conditions. We have proactively reassessed our cost structure and regional footprint and initiated efforts to optimize both. I am confident that these efforts, and our continued emphasis on core assets, regions, and services with the highest potential for improved margins, allow us to chart our own path to profitability without depending on a full market recovery in oil and gas services.”
When it comes to the company’s 2Q 2019 financial performance, net loss attributable to Seacor Marine was $28.4 million, and operating loss was $16.5 million. Net loss attributable to Seacor Marine for the second quarter of 2018 was $25 million and operating loss was $21 million.
Seacor Marine recorded revenues of $64.3 million in 2Q 2019 compared to $60.7 million in the same period last year.
According to the company, a 6% increase in total operating revenues, as compared with the second quarter of 2018, was primarily due to a 10% increase in utilization. The improved utilization reflects a 7% increase in on hire days despite an 8% decrease in the number of available days as a result of asset sales during the last twelve months, compared with the second quarter of 2018 Operating loss decreased by $4.5 million to $16.5 million compared with $21 million in the second quarter of 2018.
Spotted a typo? Have something more to add to the story? Maybe a nice photo? Contact our editorial team via email.
Also, if you’re interested in showcasing your company, product, or technology on Offshore Energy Today, please contact us via our advertising form where you can also see our media kit.