French oil industry engineering and construction group Technip will cut 6,000 jobs and book a 650 million euro (US $719 million) restructuring charge as it steps up cost-cutting.
With clients cutting projects due to low oil and gas prices, the company said it targeted cost cuts of 830 million euros ($919.31 million) with 700 million to be delivered in 2016 and the rest in 2017.
“The slowdown in the oil and gas industry is prolonged and harsh,” Chief Executive Thierry Pilenko said in a statement.
“Therefore we have decided to accelerate our cost reduction and efficiency measures—which I know will have tough consequences for employees across the group,” he added.
CFO Julian Waldron said on a conference call that the restructuring would focus on its underperforming onshore/offshore engineering and construction business.
The company would reduce the division's activities, close offices in unprofitable countries and sell non-essential assets. Its fleet of vessels would also be trimmed back by early next year.
The company cut its profit estimates for the onshore/offshore business, which builds oil rigs, refineries and LNG plants and accounts for more than half its revenue.
It said it now expected adjusted operating profit from the division this year in a range of 210-230 million euros, whereas in April it had expected a result towards the bottom of a range from 250 to 290 million euros.
It said it now expected adjusted operating profit in its subsea division to be around 840 million euros this year whereas previously it had said it expected at the top of a range from 810 to 840 million euros.
The charge would cover all of the costs related to the restructuring, such as severance and asset writedowns, with 80 to 90% to be booked in the second quarter, Waldron said.
Recommended Reading
Exxon, Chevron Tapping Permian for Output Growth in ‘24
2024-02-02 - Exxon Mobil and Chevron plan to tap West Texas and New Mexico for oil and gas production growth in 2024, the U.S. majors reported in their latest earnings.
Shell’s CEO Sawan Says Confidence in US LNG is Slipping
2024-02-05 - Issues related to Venture Global LNG’s contract commitments and U.S. President Joe Biden’s recent decision to pause approvals of new U.S. liquefaction plants have raised questions about the reliability of the American LNG sector, according to Shell CEO Wael Sawan.
BP Pursues ‘25-by-‘25’ Target to Amp Up LNG Production
2024-02-15 - BP wants to boost its LNG portfolio to 25 mtpa by 2025 under a plan dubbed “25-by-25,” upping its portfolio by 9% compared to 2023, CEO Murray Auchincloss said during the company’s webcast with analysts.
E&P Earnings Season Proves Up Stronger Efficiencies, Profits
2024-04-04 - The 2024 outlook for E&Ps largely surprises to the upside with conservative budgets and steady volumes.
Some Payne, But Mostly Gain for H&P in Q4 2023
2024-01-31 - Helmerich & Payne’s revenue grew internationally and in North America but declined in the Gulf of Mexico compared to the previous quarter.