On and offshore drilling giant Nabors Industries announced Tuesday the company has cut 12 percent of its workforce as a result of rig losses due to lower oil prices, FuelFix reported. The 12 percent loss in workforce accounts for approximately 3,500 jobs. The company employs about 29,000 people. Of the 12 percent cut, 10 percent include cuts to its sales staff and a 20 percent reduction in its U.S. drilling workforce.
Nabors, a Bermuda-based company which has its main offices in Houston, has fallen victim to the drop in oil prices to the tune of a 32 percent rig count reduction from its peak last year. In the fourth quarter alone, it saw an average utilization for its U.S. rigs fall to 78 percent. William Restrepo, Nabors chief financial officer, says he expects the U.S. rig count to decline 50 percent from its peak.
In a conference call to investors, Nabors CEO Anthony Petrello touched on how the company is preparing for potential long-term downturn in oil prices.
“We are not counting on the V,” Peterello said, referring to a potential V-shaped, or rapid, recovery in oil prices that would alleviate much of the industry’s ongoing pain in lost profits and jobs. Nabors executives added that the company may not be stopping at 12 percent and that they are looking at potentially being forced to cut up to 15 percent of its workforce in 2015. That 15 percent would account for 4,350 jobs.
Nabors’ announcement of job cuts comes at a time when the company is still involved in a potential merger with Houston-based C&J Energy Services. In early February, C&J Energy announced that the cash portion of its merger with Nabors’ production and completion businesses dropped from $938 million to $688 million and that the debt incurred to fund the cash consideration would also be proportionally reduced. Pending stockholder approval and closing conditions, the deal is expected to be competed in March.