US-based oil & gas industry communication services provider RigNet has announced a resource reallocation plan as it seeks growth outside of a domestic market suffering from the sharp decline in oil prices. RigNet said that it will shift resources from…
US-based oil & gas industry communication services provider RigNet has announced a resource reallocation plan as it seeks growth outside of a domestic market suffering from the sharp decline in oil prices.
RigNet said that it will shift resources from its US land rig communications business, alongside certain back office support functions, to expand its global sales team and boost its business development and global expansion initiatives.
The expense reduction component of the plan is scheduled to be carried out and complete by 31 March, while the expansion of the global sales team, business development and global expansion activities will continue through 2015.
The company expects to take a one-time charge of US$6.2m in the first quarter of 2015 for the facilities closures, employee severance expenses and related matters.
Commenting on the plan, Mark Slaughter, RigNet’s CEO and president, said: “During this oil and gas industry downturn, RigNet sees opportunities to dedicate additional resources toward growth areas of the business, which can be funded by shifting resources from our US land rig communications business and generating better efficiencies in our back office functions.
“This increased investment in the front end of our business will help ensure we maintain our superior customer service levels and allow us to pursue new sales opportunities, build market share and expand geographic presence.
“We believe that reallocating investment from the back office to the front office strikes the right balance between sizing the company for today’s market environment while continuing to strengthen our capabilities and positioning for the future.”
As part of the restructuring, RigNet has combined the leadership of its Eastern and Western Hemisphere operations into a single position. Hector Maytorena, who headed up the Easter Hemisphere business, has been appointed to the new position of Group Vice President, Managed Services. The manager of the Western Hemisphere division, James Crenshaw, has left the company with immediate effect.
The downturn in the oil and gas industry has also forced RigNet to record a pre-tax goodwill impairment charge of around US$2.7m in Q4 2014. This is mainly related to its telecommunications systems integration business.
In August 2014, RigNet acquired Inmarsat’s retail energy operations for US$25m. The business included the MSS operator’s microwave and WiMAX networks in the US Gulf of Mexico that serve drillers, producers and energy vessel owners, its VSAT interests in Russia, the UK, US and Canada and an M2M VSAT network in the continental US serving the pipeline industry.
As part of the deal, RigNet became a key Global Xpress distribution partner for the global energy sector and will offer Global Xpress and L-band services to its customers. The agreement included a significant four-year pre-purchase of Global Xpress capacity by the company.
