Polarcus COVID-19 response and 2020 cost reduction plan
31 Mar 2020
Polarcus Limited (“Polarcus” or the “Company”) (OSE: PLCS) announces enhanced business continuity measures and a USD 15 million cost reduction plan to navigate the current uncertainty facing the marine seismic acquisition market due to the combined impacts of the COVID-19 pandemic and oil price volatility. These initiatives will ensure Polarcus maintains efficient operations, in addition to strengthening the financial resilience of the Company through 2020.
Mitigating the impact of COVID-19
Polarcus’ ongoing priority is the safety, health and wellbeing of all our people, their families and the communities in which we operate.
The entire Polarcus onshore support organization has been operating its smart-working model since 16 March 2020. All onshore personnel have been working from home with seamless connectivity, full functionality and maintaining the high-quality level of support to offshore operations, clients and suppliers for which Polarcus is well-known.
Offshore, Polarcus has implemented a robust regime of health screening for all field crew prior to travelling from home, immediately before joining a vessel and thereafter at regular intervals throughout operations offshore. All Polarcus vessels carry medical teams onboard with fully equipped hospital facilities and the ability to isolate crew members if required.
Polarcus has performed a detailed COVID-19 pandemic risk assessment and has prepared a response plan, customised for each project, that is shared with clients and provides assurances for the continuity of ongoing operations.
2020 cost reduction plan
The main elements of the plan that will deliver cash savings of over USD 15 million in 2020 include:
- Reducing personnel cost onshore and offshore by approximately USD 6.5 million through a combination of redundancies and a reduction in base salary for Polarcus employees for six months effective 1 April 2020. This entails a 25% reduction in base salary at senior levels and a 15% reduction applied to the remainder of the organization. In addition, the decision has been taken not to pay the 2019 annual bonus;
- Reducing G&A cost by approximately USD 1.5 million as a result of anticipated lower activity levels and implementation of focused cost reduction measures across the organization; and
- Reducing cash capex by approximately USD 7 million through the freezing of uncommitted expenditure.
Further cash savings are expected to be realised through warm stacking vessels in between projects and associated, disciplined reduction in offshore operating cost. This will mitigate the anticipated elevated idle time of the Polarcus fleet in the coming months.
The combination of these business continuity and cost reduction initiatives provides a robust framework for Polarcus to navigate the current uncertainty and to position the Company to capture an increased level of activity going in to 2021.
Duncan Eley, CEO
+971 4 43 60 915
Hans-Peter Burlid, CFO
+971 50 559 8175
Polarcus (OSE: PLCS) is a focused geophysical service provider of safe and environmentally responsible marine acquisition services globally. Our geophysical offering is driven by innovation and collaboration to provide clients with better seismic data faster. Polarcus operates a fleet of high performance seismic vessels with 3D and 4D imaging capabilities, which incorporate leading-edge technologies for improved environmental performance and operational efficiency. Polarcus offers contract seismic surveys and multi-client projects with advanced priority processing solutions including Cirrus, a suite of cloud-based applications and services designed to bring clients closer to acquired seismic data, enabling faster and better informed exploration decisions. The Company services its clients globally from its head office in Dubai and regional offices located in Houston, London, Singapore and delivers Group asset management services from Oslo. For more information, visit www.polarcus.com
This information is subject to the disclosure requirements pursuant to section 5 -12 of the Norwegian Securities Trading Act.