Select Energy Services, whose subsidiaries include Tidal Logistics, a fluid hauler for the oil and gas industry, recently made several strategic moves in response to the operational disruptions and market volatility caused by the ongoing COVID-19 pandemic, including reducing employee headcount and slashing capital expenditures by at least 50%.
Select said the actions better align its operating footprint and cost structure with current market conditions, and protect its financial position.
“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,” said Holli Ladhani, Select president and CEO. “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.”
Select’s actions in response to the coronavirus outbreak include:
- Reducing total Select headcount by 31% since March 1, including field operations and corporate positions
- Significantly reducing the previously announced 2020 capital expenditures guidance from the prior range of $55 million to $70 million by at least 50%.
The company said it expects to realize annual savings of $25-$30 million, or approximately 25%-30% relative to the annualized fourth-quarter expenses of $98.7 million due to headcount and wage reductions across its employee base, including executive management, as well as significant curtailment or renegotiation of other internal and third-party expenses.
“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,” Ladhani said. “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.”