Norway’s Petroleum Geo-Services (PGS) has announced a restructuring plan to streamline the company’s business structure.
According to the company, the new centralized, simplified and streamlined organization will build on two business areas – sales & services and operations & technology.
Going forward, PGS intends to operate a fleet of eight vessels, of which two will be used selectively to address demand swings and market seasonality. The flexible capacity will be managed and crewed by a combination of regular and temporary employees.
“This downturn has been longer and lower than anyone anticipated. We think the worst is behind us, but I cannot bet the Company on a market recovery. We need to change what we can control ourselves. The reorganization, combined with more flexible vessel capacity makes us better positioned to address the current market environment and improve cash flow and profitability,” said Rune Olav Pedersen, president & CEO of PGS.
PGS plans to implement the new structure by the end of this year at a cost of $40-50m.
The company expects the overall gross cash cost for the company to be reduced by at least $100m in 2018, which it expects will deliver it a positive cash flow after debt servicing.
The restructuring will also result in a reduction of the executive management team, from six to four.