Polarcus refers to its press release dated 31 March 2020 which provided details of enhanced business continuity measures and a USD 15 million cost reduction plan to navigate the market uncertainty caused by the combined impact of the COVID-19 pandemic and oil price volatility. A program of further action has been implemented to streamline the organisation and adjust operational capacity to align with current market conditions and the near-term outlook, while preserving the Company’s established foundations.
The Polarcus client-facing organization has been reshaped into an efficient and more scalable hemisphere structure. Sales and marketing presence will be maintained in Houston and London (Western Hemisphere) and in Dubai and Singapore (Eastern Hemisphere). In addition, the operational organization, both onshore and offshore, has been reduced with greater flexibility embedded, in order to manage the anticipated fluctuation in activity levels.
These actions are estimated to realize an additional annualised reduction in Polarcus’ operating costs of more than USD 7 million to further improve the financial resilience of the Company. A one-off associated cost of approx. USD 2 million is expected to be recognised in Q2 2020.
The main elements of the further measures taken include:
- A streamlined and reshaped onshore and offshore organisation with a 20% reduction in headcount, principally through redundancies;
- A range of permanent and temporary compensation and benefit adjustments, including a permanent salary reduction of 10% in base salary at senior levels with effect from 1 October 2020.
Activity levels in marine seismic acquisition over the near-term remain low with limited visibility on future projects. However, based on regular discussions with key clients and indications of a more robust oil price through H2 2020, seismic demand is expected to improve during 2021.
The measures taken will enable the Company to scale up when market improvement allows, whilst continuing to ensure safe and efficient marine seismic operations executed in the most environmentally responsible manner.
Polarcus CEO, Duncan Eley commented:
'The extent of the global economic crisis over the past three months has been profound. The further organisation changes we have made respond to the deteriorated market conditions and position the Company for the future. Based on regular conversations with our client base across the globe, I am confident that the industry will see activity levels increase through 2021. Polarcus will enter this phase as a leaner and more responsive organization with an established foundation for future success'.