EMGS to keep only skeleton crew after entering into cost-saving mode
Sharp oil price drop and the global coronavirus pandemic have pushed Norwegian seismic survey company EMGS to operate in a low-cost setup to preserve sufficient liquidity. Due to these measures, EMGS will only keep a skeleton crew.
EMGS said on Friday that the oil price decline, uncertainty created by COVID-19 pandemic, with the associated impact on the global economy and, in particular, on oil company investment decisions influenced a rapid deterioration in the company’s backlog for 2020.
“The board of directors and management of the company have evaluated all possible measures to preserve and maximize shareholder value and safeguard the interest of the company’s other stakeholders in this situation,” EMGS stated.
Based on this review, EMGS decided to immediately start the transition to a low-cost set-up. The purpose of this low-cost set-up will be to preserve sufficient liquidity by reducing cash-burn to a minimum until the company can benefit from and scale up to meet an expected future increase in oil company investments.
Amongst other things, the company will redeliver the Petrel Explorer vessel at the end of the current fixed charter period – which ends on March 31, and cold stack the Atlantic Guardian as soon as practicable possible, and terminate all employees and consultants with the exception of a skeleton crew which will continue to service the multi-client late sales and consulting market and form the basis for a future scale-up.
EMGS will continue to deliver all existing and ongoing customer contracts as planned, honoring the company’s obligations under these contracts.
“Even with these decisive actions, no guarantees can be given that the company will be able to preserve sufficient liquidity. Continued operation will thus not only be dependent on the timely and successful implementation of the above measures but also that the company is able to identify and implement other material cost reduction measures, including by reducing interest-bearing debt and non-interest bearing liabilities,” EMGS concluded.