Image courtesy of Ensco.

UK-based Ensco said Wednesday that it will cut 14 percent of its onshore support positions as part of a cost reduction and streamlining effort.

The company said it expects the cuts to produce an incremental annualized savings of $30 million.

Further details about the job cuts have not been released yet.

The latest round of cuts follows a 50 percent reduction in onshore positions announced in February, Reuters noted.

Including annual savings of $27 million tied to the February job cuts, Ensco now expects its onshore headcount reductions to produce savings of about $57 million per year.

Ensco will also streamline its global operations reporting structure from five to three business units and increase offshore unit labor cost savings to 15 percent, up from 9 percent announced in February.

The company said its Brazil and Asia-Pacific regions have been “disproportionately impacted” by the market downturn.

The Brazil unit will now report to the North & South America Business Unit based in Houston and the Asia-Pacific Unit will report to the Middle East, Africa, Asia & Pacific Business Unit based in Dubai.

The Europe and the Mediterranean Business Unit is unchanged and continues to be based in Aberdeen.

“This reporting structure consolidation does not change our commitment to the Brazil and Asia-Pacific markets, both of which have significant long-term growth potential,” Ensco said.

Ensco will also further reduce average warm-stack costs per day for marketed rigs by $40,000 for drillships, $32,000 for semisubmersibles and $20,000 for jackups.

Excluding severance costs and related expenses of about $5 million, third quarter 2015 contract drilling expense is estimated to be between $450 million and $455 million.

The company’s initial contract drilling expense outlook for the fourth quarter is between $435 million and $440 million, a quarter-to-quarter sequential decrease Ensco said is tied to “proactive expense management.”

The company added that the expense management will more than offset an estimated increase in rig operating days.

Fourth quarter 2015 reported fleet utilization is expected to jump to the high 60 percent range from third quarter and will benefit from ENSCO DS-8 commencing its initial contract in mid-November 2015, the company added.


Leave a Reply