Norwegian company Electromagnetic Geoservices (EMGS) is restructuring and cutting its workforce in the hope of riding out the recession successfully.
The survey company, which continues to win contracts, says the measures are designed to reduce costs, focus resources in key areas and improve financial performance. The vessel fleet will be “temporarily reduced” from three to two vessels, and the organisation will be scaled accordingly.
These actions will result in 29 temporary layoffs, 28 redundancies and four consultancy contracts being terminated. None of the lay-offs are in the UK.
Roar Bekker, EMGS acting chief executive officer, said: “Although we have been successful in our efforts to reduce operating costs in late-2008 and early-2009, we must now further reduce our operating expenses to match the current demand environment. Today’s reduction in workforce is a difficult decision as we realise the hardship this will impose on affected employees.
“However, we believe that the plan announced today is necessary and the right course of action to streamline our operations into a more efficient and commercially oriented business. These actions will secure a sustainable financial position short term while enabling the company to respond to increased demand in a profitable manner.”
EMGS anticipates that the measures will result in annual reductions in operating expenses of about $8-10million.
As a part of the restructuring, EMGS says, too, that it intends to further rationalise its product development efforts to focus on existing products and is working with its customers on potential new programmes that involve sharing of research and development costs and capital expenditures.
The Norwegian firm claims to operate the world’s largest EM (electromagnetic applications) survey-vessel fleet and has conducted more than 400 surveys to improve drilling success rates across the world’s mature and frontier offshore basins.
Main rival Offshore Hydrocarbons Mapping, of Aberdeen, is in even worse shape.
Energy’s parent, the Press and Journal reported in April that bosses at OHM had shouldered large pay cuts owing to mounting losses over the six months to February 28.
The company, which has said previously that it may not be able to continue without refinancing or a dramatic upturn in trading, said in April that it had completed a review resulting in significant reductions in cost, saving it about £13million a year.
It said it had renegotiated charter terms for the OHM Leader and OHM Express survey vessels, and some staff at all levels had been made redundant. OHM said in February that about 40 jobs would go, reducing its workforce to about 66.