Select Energy Services, Inc. (Select) is a leading provider of comprehensive water management and chemical solutions to the oil and gas industry in the United States
Select Energy Services, Inc. (NYSE: WTTR) (“Select” or “the Company”), a leading provider of water management and chemical solutions to the U.S. unconventional oil and gas industry, today announced immediate strategic actions that the Company has taken in response to the significant decline in activity following the rapid decline in commodity prices this month and the operational disruption and market volatility resulting from the COVID-19 pandemic.
In order to better align the Company’s operating footprint and cost structure with current market conditions and to protect its strong financial position and debt-free balance sheet, Select has taken the following actions:
Expect to realize annualized SG&A savings of $25-30 million, or approximately 25-30% relative to the annualized fourth quarter SG&A of $98.7 million (and a further reduction from 2019 total SG&A of $111.6 million), due to headcount and wage reductions across the employee base, including executive management, as well as significant curtailment or renegotiation of other internal and third-party expenses, with initial benefits realized in the first quarter of 2020, and full realization by the third quarter of 2020;
Reduced total Select headcount by 31% since March 1, 2020, including field operations and corporate positions; and
Significantly reducing the previously announced 2020 capital expenditures guidance from the prior range of $55 million to $70 million by at least 50%.
Holli Ladhani, President and CEO, commented, “First and foremost, Select is closely monitoring the impact of COVID-19 and taking active precautions to help protect the health and well-being of our employees and the communities in which we work, in accordance with local, state and federal health authority recommendations. We are also working closely with our customers and vendors on business continuity plans. The significant and sudden pullback in commodity prices has forced our customers to meaningfully reduce their operational plans for 2020, requiring us to take immediate actions to reduce our operating expenses and capital expenditures. Agility and financial strength will be key to successfully navigating this rapidly evolving market landscape. While our cash flow will be impacted by current market conditions, we believe the actions we are taking, and will continue to take, will enable us to continue to generate solid positive free cash flow during 2020.
“With a current cash balance in excess of $100 million and no debt on our balance sheet, we are well prepared to manage through this difficult market. We will continue to closely monitor macro conditions, making further adjustments to our cost structure as necessary, until we have a better understanding of global oil demand, the activity levels of our customers and the near- and longer-term impact of COVID-19. While we undertake these difficult but necessary steps, we will continue delivering best-in-class service to our customers,” concluded Ladhani.
Source: Company Press Release