Ensco is planning furthure improve efficiencies and reduce expenses as part of cost saving measures.
streamline global operations reporting structure from five to three business units
reduce onshore support positions by an additional 14% to achieve an incremental $30 million of annualized savings (full run rate to begin fourth quarter 2015); total annualized run-rate savings from onshore rightsizing increases to $57 million given previously announced savings of $27 million annually reported in February 2015
increase offshore unit labor cost savings to 15% (full run rate to begin first quarter 2016) from previous estimate of nine percent reported in February 2015
further reduce average warm-stack costs per day for marketed rigs: $40,000 for drillships, $32,000 for semisubmersibles and $20,000 for jackups.
Based on these actions, the expense outlook has improved. Excluding severance costs and related expenses of approximately $5 million, third quarter 2015 contract drilling expense is estimated to be $450 million – $455 million.
The initial contract drilling expense outlook for fourth quarter 2015 is approximately $435 million – $440 million. The projected quarter-to-quarter sequential decrease in contract drilling expense is due to proactive expense management that more than offsets an estimated increase in rig operating days. Fourth quarter 2015 reported fleet utilization is estimated to increase from third quarter 2015 to the high-60% range and will benefit from ENSCO DS-8 commencing its initial contract in mid-November 2015.
Chief Executive Officer and President Carl Trowell said, "We recently streamlined our global operations reporting structure and have taken additional steps to reduce expenses. In total, the actions we have taken year to date to reduce onshore support positions will generate a combined savings of $57 million on an annual basis. Steps taken to adjust discretionary compensation plans will reduce offshore unit labor costs by a total of 15% compared to 2014 levels." Trowell added, "Disciplined expense management of marketed warm-stacked rigs will also generate incremental savings."
Streamlining Business Unit Reporting Structure
The market downturn has disproportionately impacted two regions: Brazil and Asia Pacific. As a result, we have consolidated our global operations reporting structure from five business units to three:
Brazil will report to the North & South America Business Unit based in Houston
Asia Pacific will report to the Middle East, Africa, Asia & Pacific Business Unit based in Dubai
Europe and the Mediterranean Business Unit is unchanged and continues to be based in Aberdeen.
This reporting structure consolidation does not change our commitment to the Brazil and Asia Pacific markets, both of which have significant long-term growth potential. In conjunction with this business unit restructuring, we further reduced onshore positions and centralized certain support functions.