Oilfield services company Archer is to cut staff and close some bases as part of a restructuring plan.
The firm, which provides drilling and well services, said to accelerate margin improvements and adapt to the “highly competitive North American land market”, it would carry out a restructuring plan.
The restructuring plan will include staff reductions, mainly in management and support functions, rationalization of offices and operational bases, closure of businesses or locations with negative margins and a reduction in other costs, said Archer.
Archer was formed in 2011, through the combination of Seawell and Allis-Chalmers Energy, and a number of other businesses.
Explaining the situation in North America, Archer said the average US land-based rig count for Q3 remained flat compared to Q2, but reduced by 150 rigs, or 8%, compared to the same period in 2012. “The average rig count directed towards natural gas for the third quarter dropped by 15 rigs, or 4% compared to Q2, and reduced by 103 rigs, or 23%, compared to Q3 2012," said Archer. "Our results are negatively impacted by the reduction in rig count, and the shift in activity has resulted in significant pricing pressure and decreased utilization throughout most of our business lines and in all geographic regions in which Archer operates.”
Announcing its Q3 results, the firm said total revenues were $522.6 million in Q3, compared to $519.3 million in the same period in 2012. Operating income was $7.3 million in Q3, compared to a loss of $290.9 million in the same period in 2012. Net losses were $24.2 million in Q3, compared to $341 million losses in Q3 2012.
Archer said it had seen a decline in its earnings before interest, tax, depreciation and amortization, with the largest declines in its North America and Emerging Markets & Technologies business areas, which reported US$22.6 million (a 36.5% decrease) and $29.4 million (38.8% down), respectively.Archer said revenues are expected to decline in North America in Q4, while remaining flat in Latin America and the North Sea, in the same period.
“The restructuring actions are expected to be substantially complete by the end of Q1 2014, and we expect a return of less than one year,” added Archer, which recently agreed to sell its North American underbalanced drilling business.
Archer is publicly traded on the Oslo Stock Exchange under the ticker ARCHER.