Trinidad Drilling on Tuesday said executives have taken a 10-per-cent pay cut and board fees have been cut by the same amount. Salaried employees will also be paid less, with those cuts averaging 7 per cent across the company, according to the statement released Tuesday.Larry MacDougal/The Globe and Mail
Trinidad Drilling Ltd. has slashed paycheques for executives, board members, and salaried employees, while letting go staff and halving its 2015 budget, to cope with weak oil prices and sinking demand for its services.
The company on Tuesday said executives have taken a 10-per-cent pay cut and board fees have been cut by the same amount. Salaried employees will also be paid less, with those cuts averaging 7 per cent across the company, according to the statement released Tuesday. Trinidad has laid off at least 20 per cent of its salaried staff. This does not include employees who work on its rigs. Orders for new rigs have been shelved in favour of using older equipment, rigs are idle and its rates are down between 10 per cent and 20 per cent.
Trinidad's overhaul comes as its customers – oil and gas producers – trim their spending intentions for 2015. Energy firms around the globe are doing everything from stalling expansion plans to eliminating dividends to shield their balance sheets as oil trades around $53 (U.S.) a barrel in North America and $63 a barrel internationally. Producers have been reluctant to shutter production, but Trinidad's situation, along with the drilling industry's statistics, demonstrate how dramatically the oil patch has changed thanks to oil's seven-month slide.
The Canadian Association of Oilwell Drilling Contractors says 317 of the country's 778 drilling rigs are operating this week, or 41 per cent of the total fleet. This marks a 42-per-cent decrease compared with the same week last year, when 71 per cent of Canada's drilling rigs were spinning. Trinidad, in its statement, said roughly 55 per cent of its Canadian fleet is in use. Thirty-two of its 54 rigs are running in the United States.
Trinidad revised its 2015 budget to $175-million, down 50 per cent from its original plan of $350-million. It spent roughly $330-million in 2014.
"We feel that a prudent approach to the coming year is important and have chosen to lower our capital expenditure level from 2014," Lyle Whitmarsh, Trinidad's chief executive, said in the statement. "We have postponed some rig upgrades until demand increases and have worked with our customers to meet our commitments while also conserving cash generated from our operations."
Precision Drilling Corp. last week said it is running 200 rigs, down from 250 last year. This translates into at least 1,000 less jobs. Cenovus Energy Inc., the oil sands firm, cut 800 people from its payroll last week and froze salaries for those still on staff. Suncor Energy Inc. has let go about 1,000 employees. Husky Energy Inc. said it let go a "small" number of workers.
Lisa Ottmann, Trinidad's vice-president in charge of investor relations, said about 3,000 people work for the drilling company, but she does not know how many people will lose their jobs because the 20-per-cent staff reduction does not include the employees who work on the rigs. Trinidad's manufacturing facility at Nisku, Alta., will be one of the hardest hit areas, Ms. Ottmann said. Employees such as office staff and field administrators will also be trimmed, she said.
Trinidad operates in Canada, the United States, Mexico and Saudi Arabia. Most of the layoffs will happen in North America, she said.
"In order to reduce capital outlays, Trinidad and its customer have agreed to fulfill two US new build commitments with rigs from Trinidad's existing fleet," the Canadian company said in its statement. "In addition, the company has chosen to postpone upgrades previously scheduled for existing rigs and will review this decision as market conditions change throughout the year."
The drilling outfit said "capital items purchased for new builds and upgrades no longer required will be put into capital inventory for use on Trinidad's existing fleet."