Oil field lodgings firm Civeo Corporation will cut its workforce and suspend dividends as the company braces itself for slumping occupancy rates amid upstream capital expenditure cuts.
The company will cut its workforce in the United States by 45 percent and its Canadian workforce by 30 percent.
Headcount and cost reductions have already started and have included closing locations that were unprofitable at the expected low levels of occupancy, including the temporary closure of the Athabasca Lodge and the permanent closure of the Lakeside Lodge.
The company is currently assessing the profitability of two more U.S locations.
Houston-based Civeo was spun off services player Oil States International in June and currently employees over 4,000 people at its various operations.
The company has also suspended its quarterly dividend “in order to maintain the company’s financial flexibility.”
Shares of Civeo plunged 52 percent in early trading Tuesday on the news.
Entering 2015, the company has 35 percent to 40 percent of its lodge rooms contracted in Canada, down from over 75 percent contracted for 2014 at the beginning of last year.
Civeo now expects a 2015 Canadian occupancy rate of 44 percent to 47 percent with an average daily rate of $119 to $124.
The company’s Australia lodgings are also taking a hit as low coal pries curb mining activity and demand for lodgings.
In Australia, the company has 35 percent to 40 percent of its village rooms contracted, down from over 55 percent contracted for 2014 at the beginning of 2014.
Civeo expects 2015 Australian occupancy rates of 55 percent to 57 percent with an average daily rate of $72 to $77.
“Management is actively seeking short term accommodations agreements to augment contracted room revenue and maintain market share and providing certain services to third parties for a fee,” Civeo said.
The company also warned it may have to take impairment charges related charges related to the “carrying value of its assets and/or goodwill.”