The distress in the oil industry has finally caught up with Civeo Corp (NYSE:CVEO), a provider of bedroom services to oil companies. A number of energy companies in the oil and gas sector have had to cut their spending in 2015 because of unfavorable oil pricing environment. In the same manner, oil industry support companies such as Civeo are moving to cut cost as well.
The company announced various cost-saving measures that including closure of certain facilities, withdrawal of dividends and job cuts. The lodging and accommodation company said it closed two of its facilities near Fort McMurray, of which one of the facilities was permanently closed.
More facilities may go
Civeo Corp (NYSE:CVEO) temporarily closed doors at the Athabasca Lodge, but permanently shuttered the Lakeside Lodge facility. According to a company statement, the two shutdowns may just be the beginning of more facility closures amid price fallout in the oil sector. The closure of facilities is expected to preserve cash.
Jobs and dividends cut
In other moves, Civeo Corp (NYSE:CVEO) announced job cuts that affected its workforce in the U.S. and Canada. The company announced 45% reduction of its U.S. workforce and 30% reduction in Canada. Civeo also has operations in Australia. In addition to the job cuts, the company further moved to suspend dividends and move aimed at saving funds. It said its board of directors unanimously approved the decision to withdraw dividends at this time.
The other measure by the company to preserve cash is a reduction in spending in 2015. Although the company spent a lot this year, it lowered budget for 2015 as oil prices continue to fall while oil companies suspend capital projects to assess the situation. As such, for 2015, Civeo Corp (NYSE:CVEO) plans to spend about $75-$85 million, down from $260-$280 million spent in 2014.
Civeo Corp (NYSE:CVEO) recently refused to convert to REIT, but instead decided to relocate its headquarters to Canada from the U.S.