Rowan Companies PLC, (NYSE:RDC) a Houston-based global offshore contract driller, has announced plans to axe additional jobs on its Rowan Reliance drillship, which has been under contract to Cobalt International Energy, Inc. (NYSE:CIE).
In a recent filing with the Texas Workforce Commission, Rowan said it will cut another 50 jobs assigned to the Rowan Reliance drillship. The rig, which is managed from the company’s corporate headquarters in downtown Houston, will be idled once work for Cobalt is finished.
This is the second time in as many months that Rowan Companies has announced major layoffs. In May, the company said it is expected to eliminate 150 jobs tied to the Reliance around July 21. The latest round of cuts is scheduled for the two-week period beginning August 21.
The employees are being given their pink slips because of the termination of the drilling contract with Cobalt. Rowan said it will be retaining some employees to manage the rig while its idled.
These job cuts are expected to be permanent. Those employees affected do not have bumping rights, which means those with more seniority cannot take a job away from someone with less.
The work for Cobalt was expected to be completed in mid-June, according to both letters.
This is becoming a pattern for Rowan; back in November, Repsol E&P USA Inc., an arm of Spain-based Repsol SA, canceled a drillship contract assigned to the Rowan Renaissance.
The layoffs affected up to 110 employees and occurred in mid-January 2017. A notice to the Texas Workforce Commission stated that the layoffs were due to the customer terminating their contract early. The rig was on standby mode in the Gulf of Mexico near Grand Isle, Louisiana at the time.
The filing also noted that Rowan expects to collect payments from Repsol on a monthly basis through the original termination date of April 22, 2017 at a rate slightly below the current standby rate.
Since November, Rowan has terminated approximately 310 offshore employees, or almost 11% of its workforce.
Like many companies operating in the oil and gas industry, Rowan’s bottom line is getting hit. In the first quarter, the company’s net income fell more than 90% year-over-year to $10.3 million, or $0.07 per diluted share, from $122.8 million, or $0.98 per diluted share, in the first quarter of 2016.
First-quarter revenue fell by 25% to $374.3 million. The drop was driven by a 28% decrease in the Deepwater segment and a 23% drop in the Jack-up segment.
The decline in Deepwater revenues resulted from the Rowan Relentless remaining idle in the first quarter and the Rowan Resolute functioning at a reduced day rate compared to last year.
“Worker Adjustment and Retraining Notification (WARN) Notices,” Texas Workforce Commission, June 20, 2017.
“Rowan to Lay Off 150 Offshore Workers,” Rigzone, May 31, 2017.
“Rowan Companies To Cut Jobs Following Contract Cancellation,” Oilpro, November 21, 2016.
“Rowan Reports First Quarter 2017 Results,” Rowan Companies PLC, May 2, 2017.