TGS-Nopec, a Norwegian seismic surveyor, today will lay off over 10 percent of its global workforce, citing deteriorating demand for its services. This means that around 100 workers can expect to be laid off.
Announcing its cost reduction program, the company has said today it now expects to see a 23 percent drop in revenue for the first quarter of 2015, versus the same period of 2015. The 1Q revenue is now expected to be around $172 million.
“Net revenues were lower than management’s expectations due to weaker late sales from the data library in all geographic regions. Demand for seismic data has significantly deteriorated over the first three months of 2015 and the outlook for improvement in the market remains quite uncertain. TGS is in constant communication with its customers and many of those energy companies have not finalized their spending plans for 2015,” TGS said in a statement.
Responding to lower than originally expected results, TGS has said that the key factor to its cost cutting program is a reduction of more than ten percent of its global workforce, effective April, 2015. As a result, TGS will take restructuring charges of around $4 million on the second quarter of the year.
At the end of 2014, TGS had a total of 943 employees; 574 in the United States, 50 in Norway, 182 in the UK,.92 in Canada 40 in Australia and 5 in other countries.
The company expects to save $10 million per year as a result of the cost cutting initiative. TGS also would not rule out further cuts, saying it would, if necessary, work to slash costs even more should the market continue to weaken.
TGS has reduced the guidance for the full year 2015 revenue, saying it now expects to reach revenues of $630 million, down from the previously announced $750 million expected full year number.
“The Cost Reduction Program will position the company for the more challenging seismic market caused by the significant drop in oil price,” TGS said.
Offshore Energy Today staff