Electromagnetic Geoservices ASA (EMGS) is implementing further cost reductions reflecting the challenging market conditions in the oil service industry.

According to the press release, EMGS initiated cost reduction measures in the beginning of the first quarter and these measures have proven successful.

However, due to further delays in contract negotiations and lower than expected demand for EM data, EMGS Management has decided to implement an additional cost reduction program, the press release further reads.

The key elements of the program include a reduction of EMGS global headcount including consultants by 20% and a reduction of the vessel capacity by one vessel (from four to three). In addition, the company expects to reduce its capital expenditures by approximately 50% in 2015 compared to the guidance given in the fourth quarter 2014 report.

The company expects annual cost savings of a total of approximately $35 million compared to 2014 cost level, as a result of the cost programs initiated. Restructuring charges of approximately $1.3 million, in addition to a provision related to loss on the EM Leader charter agreement of $1.5 million will be booked in the second quarter 2015. The key elements of the program will be effective from the beginning of the third quarter 2015.

Source: www.offshoreenergytoday.com

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