Ensco Announces Additional Cost Saving Measures

(RTTNews) - Ensco plc (ESV), a provider of offshore contract drilling services to the oil and gas industry, on Tuesday said it has taken additional steps to improve efficiencies and reduce expenses.

The company said it will streamline global operations reporting structure from five to three business units, as the market downturn has disproportionately impacted two regions: Brazil and Asia-Pacific.

Ensco will also 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.

The company will 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, and will further reduce average warm-stack costs per day for marketed rigs.

Excluding severance costs and related expenses of about $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 $435 million - $440 million. Fourth quarter 2015 reported fleet utilization is estimated to increase from third quarter 2015 to the high-60% range.