- Energy services company, Shawcor (TSX:SCL) has implemented further measures to maintain liquidity as global oil and gas prices continue to disappoint
- The company has reduced capital spending for 2020 to between C$40 million and $50 million
- Some salaries have been reduced, and a restructuring is underway to permanently reduce the company’s workforce by roughly 5 per cent
- By the end of this year, some facilities will have been shut down, including four pipe coating plants
- Shawcor (SCL) is currently down 3.41 per cent to $1.70 per share, with a market cap of $119.28 million
Toronto-based Shawcor (TSX:SCL) has implemented further measures to maintain its liquidity as global oil prices continue to disappoint.
The company specialises in the provision of various services to the pipeline sector of the oil and gas industry.
However, with the recent and significant downturn in the demand for oil as a result of COVID-19, Shawcor is experiencing a proportionate decline in its business. As such, the company is adding to its existing self-preservation strategies in an effort to make it through to a more profitable economic climate.
Capital spending for the year has been reduced to between C$40 million and $50 million. This will focus primarily on essential maintenance, with a small portion going towards the delivery of firm orders, particularly within Showcor’s Composite Systems Tank sector.
Compensation packages for the Board of Directors have been cut by 30 per cent, the CEO’s salary has been cut by 20 per cent, and other senior executive figures will receive a 10 per cent reduction to their pay.
Similarly, Shawcor’s wider salaried workforce has been reduced by roughly 7.5 per cent. This is expected to save $15 million on an annualised basis, despite severance costs of approximately $6 million.
The reduced staff base is part of a wider restructuring effort, which will result in a permanently reduced workforce by about 5 per cent.
In addition, Shawcor plans to shut down several of its facilities by the end of this year, including four pipe coating plants.
According to today’s announcement, the company is taking a disciplined approach to the dual challenges of COVID-19 and the changes within the oil and gas market.
“Shawcor has emerged from challenging periods and economic downturns in the past and we expect that the dedicated leaders and staff working at our facilities, in the field and in remote operations will see us through today’s challenges,” the company said.
An updated business outlook is expected to be included with the release of its financial results for the first quarter of 2020.
Shawcor (SCL) is currently down 3.41 per cent to $1.70 per share at 11:05am EST.