Streamline Global Operations Reporting Structure
Reduce Onshore
Workforce in Conjunction with Fleet Restructuring
Lower Offshore
Unit Labor Costs
Improve Expense Outlook
LONDON--(BUSINESS WIRE)--
Ensco plc (NYSE: ESV) announced today that it has taken additional
proactive steps to improve efficiencies and reduce expenses:
-
streamline global operations reporting structure from five to three
business units
-
reduce onshore support positions by an additional 14% to achieve an
incremental $30 million of annualized savings (full run rate to begin
fourth quarter 2015); total annualized run-rate savings from onshore
rightsizing increases to $57 million given previously announced
savings of $27 million annually reported in February 2015
-
increase offshore unit labor cost savings to 15% (full run rate to
begin first quarter 2016) from previous estimate of nine percent
reported in February 2015
-
further reduce average warm-stack costs per day for marketed rigs:
$40,000 for drillships, $32,000 for semisubmersibles and $20,000 for
jackups.
Based on these actions, the expense outlook has improved. Excluding
severance costs and related expenses of approximately $5 million, third
quarter 2015 contract drilling expense is estimated to be $450 million -
$455 million.
The initial contract drilling expense outlook for fourth quarter 2015 is
approximately $435 million - $440 million. The projected
quarter-to-quarter sequential decrease in contract drilling expense is
due to proactive expense management that more than offsets an estimated
increase in rig operating days. Fourth quarter 2015 reported fleet
utilization is estimated to increase from third quarter 2015 to the
high-60% range and will benefit from ENSCO DS-8 commencing its initial
contract in mid-November 2015.
Chief Executive Officer and President Carl Trowell said, “We recently
streamlined our global operations reporting structure and have taken
additional steps to reduce expenses. In total, the actions we have taken
year to date to reduce onshore support positions will generate a
combined savings of $57 million on an annual basis. Steps taken to
adjust discretionary compensation plans will reduce offshore unit labor
costs by a total of 15% compared to 2014 levels.” Trowell added,
“Disciplined expense management of marketed warm-stacked rigs will also
generate incremental savings.”
Streamlining Business Unit Reporting Structure
The market downturn has disproportionately impacted two regions: Brazil
and Asia-Pacific. As a result, we have consolidated our global
operations reporting structure from five business units to three:
-
Brazil will report to the North & South America Business Unit based in
Houston
-
Asia-Pacific will report to the Middle East, Africa, Asia & Pacific
Business Unit based in Dubai
-
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. In conjunction with this business unit
restructuring, we further reduced onshore positions and centralized
certain support functions.
Ensco plc (NYSE: ESV) brings energy to the world as a global provider of
offshore drilling services to the petroleum industry. For more than 27
years, the company has focused on operating safely and going beyond
customer expectations. Ensco is ranked first in total customer
satisfaction in the latest independent survey by EnergyPoint Research -
the fifth consecutive year that Ensco has earned this distinction.
Operating one of the newest ultra-deepwater rig fleets and the largest
premium jackup fleet, Ensco has a major presence in the most strategic
offshore basins across six continents. Ensco plc is an English limited
company (England No. 7023598) with its registered office and corporate
headquarters located at 6 Chesterfield Gardens, London W1J 5BQ. To learn
more, visit our website at www.enscoplc.com.
Statements contained in this press release that are not historical
facts are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward-looking statements include words or phrases such as
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,”
“project,” “could,” “may,” “might,” “should,” “will” and similar words
and specifically include statements regarding expected financial
performance and contract drilling expense and other expense outlook,
benefits derived from expense management actions, warm-stack costs,
fleet utilization, day rates and backlog; the timing of delivery,
mobilization, contract commencement, relocation or other movement of
rigs; and general market, business and industry conditions, trends and
outlook. Such statements are subject to numerous risks, uncertainties
and assumptions that may cause actual results to vary materially from
those indicated, including commodity price fluctuations, customer
demand, new rig supply, downtime and other risks associated with
offshore rig operations, relocations, severe weather or hurricanes;
changes in worldwide rig supply and demand, competition and technology;
future levels of offshore drilling activity; governmental action, civil
unrest and political and economic uncertainties; terrorism, piracy and
military action; risks inherent to shipyard rig construction, repair,
maintenance or enhancement; possible cancellation, suspension or
termination of drilling contracts as a result of mechanical
difficulties, performance, customer finances, the decline or the
perceived risk of a further decline in oil and/or natural gas prices, or
other reasons; the outcome of litigation, legal proceedings,
investigations or other claims or contract disputes; governmental
regulatory, legislative and permitting requirements affecting drilling
operations; our ability to attract and retain skilled personnel on
commercially reasonable terms; environmental or other liabilities, risks
or losses; debt restrictions that may limit our liquidity and
flexibility; our ability to realize the expected benefits from our
redomestication and actual contract commencement dates; cybersecurity
risks and threats; and the occurrence or threat of epidemic or pandemic
diseases or any governmental response to such occurrence or threat. In
addition to the numerous factors described above, you should also
carefully read and consider “Item 1A. Risk Factors” in Part I and “Item
7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in Part II of our most recent annual report on
Form 10-K, as updated in our subsequent quarterly reports on Form 10-Q,
which are available on the SEC’s website at www.sec.gov
or on the Investor Relations section of our website at www.enscoplc.com.
Each forward-looking statement speaks only as of the date of the
particular statement, and we undertake no obligation to publicly update
or revise any forward-looking statements, except as required by law.
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Source: Ensco plc