Trican Well Service said Wednesday it has cut 2,000 North American jobs since late 2014 as the company sank to a $60.3 million first quarter loss.
The Calgary-based company said in its first quarter results that it cut the jobs during the fourth quarter and expects the headcount reduction to result in a fixed annual cost savings of $115 million.
Trican also implemented a second salary reduction of 10 percent and reduced benefits for all of its Canadian and corporate employees that will be effective April 15 and remain in place “until demand and activity levels in Canada improve.”
The company warned it may breach its interest coverage ratio debt covenant during the second half of 2015 and first quarter of 2016 due to “current North American pressure pumping activity and pricing being at cyclical lows.”
“This material uncertainty may cast significant doubt with respect to the ability of the corporation to continue as a going concern,” the company said.
Trican said its negotiating covenant relief with all lenders on an expedited basis and is “optimistic” a deal will be reached before the covenant breach.
The company’s coffers took an especially hard hit from curbed North American drilling activity.
Trican’s Canadian operations generated $222.7 million in first quarter revenue, down from $353.3 million during the same period last year, while U.S. revenues plummeted 41 percent from the fourth quarter to $201.4 million.
The company booked $476.1 million in revenue during the first quarter, down from $643.2 million during the same period last year, and took a $5.1 million operating loss.
Trican reported a $19.2 million first quarter operating loss, a substantial fall from $104.6 million in operating income booked in the fourth quarter, while adjusted profit sank to a $60.3 million loss, or $0.40 per share, from $32.9 million in adjusted profit last quarter.
The company suspended its dividend on Tuesday and added it anticipates “weak” second quarter performance for its U.S. operations but said Canadian activity may pick up during the second quarter.
“Although current North American operating conditions are extremely challenging, we are seeing some opportunities and positive developments for our industry….Once moderate improvements to commodity prices occur, we expect completions demand to improve immediately,” the company said.