HOUSTON, April 6, 2020 /PRNewswire/ -- Independence
Contract Drilling, Inc. (the "Company" or "ICD") (NYSE: ICD) today
provided the following update regarding the Company's response to
current market conditions.
Demand for crude oil and related products has fallen
dramatically caused by the global response to the COVID-19 pandemic
in combination with production increases from OPEC+. These
forces have led to a significant deterioration in demand for
contract drilling services in the United
States which began to impact the Company's contracted rig
count during late first quarter 2020.
In response to the current market conditions, the Company has
commenced instituting the following steps:
- Salary or compensation reductions for substantially all
employees of the Company, including all members of executive
management;
- Suspension of all cash-based incentive compensation, including
all members of executive management;
- Reducing the number of executive management positions by
two;
- Reducing the number of directors from seven to five, which is
expected to become effective following the Company's 2020 Annual
Meeting of Stockholders;
- Annual compensation reductions for directors of the
Company;
- Reducing direct operating costs in line with activity
declines;
- Reducing headcount for non-field-based personnel by
approximately 40%;
- Reducing annual capital expenditure budget by 30%.
Anthony Gallegos, President and
Chief Executive Officer of the Company, stated "The safety and well
being of our employees remains our top priority as we navigate the
health threat associated with COVID-19. To date, the pandemic
has not affected our focus or impacted our ability to deliver safe
and efficient operations to our customers. Although our first
quarter contracted rig count was not materially affected by the
pandemic or deteriorating market conditions, we expect operating
rig counts for ICD and the industry to decline throughout the
second quarter based upon our customers' rapid reductions in
spending in response to deteriorating market conditions.
"In response to deteriorating market conditions, we have taken
various actions to address this lower level of activity, including
reducing headcount, salary, and other elements of compensation for
all personnel, including executive management and board of
directors. For our executive team, compensation reductions
range between 40% and 55% of cash compensation depending upon
position. On order of magnitude, we expect our actions to
result in approximately $5 million of
cash reductions to annualized targeted selling general and
administrative expense and a reduction in operating costs ranging
between $600 and $1,000 per operating day depending upon activity
levels. We also have suspended all future capital
expenditures except for maintenance-related items for our operating
rigs, which we expect will reduce our 2020 capital expenditure
budget by 30%."
About Independence Contract Drilling, Inc.
Independence Contract Drilling provides land-based contract
drilling services for oil and natural gas producers in the United States. The Company constructs,
owns and operates a fleet of pad-optimal ShaleDriller® rigs that
are specifically engineered and designed to accelerate its clients'
production profiles and cash flows from their most technically
demanding and economically impactful oil and gas properties. For
more information, visit www.icdrilling.com.
Forward-Looking Statements
This news release contains certain forward-looking statements
within the meaning of the federal securities laws. Words such as
"anticipated," "estimated," "expected," "planned," "scheduled,"
"targeted," "believes," "intends," "objectives," "projects,"
"strategies" and similar expressions are used to identify such
forward-looking statements. However, the absence of these words
does not mean that a statement is not forward-looking.
Forward-looking statements relating to Independence Contract
Drilling's operations are based on a number of expectations or
assumptions which have been used to develop such information and
statements but which may prove to be incorrect. These statements
are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict, and
there can be no assurance that actual outcomes and results will not
differ materially from those expected by management of Independence
Contract Drilling. For more information concerning factors that
could cause actual results to differ materially from those conveyed
in the forward-looking statements, please refer to the "Risk
Factors" section of the Company's Annual Report on Form 10-K, filed
with the SEC and the information included in subsequent amendments
and other filings. These forward-looking statements are based on
and include our expectations as of the date hereof. Independence
Contract Drilling does not undertake any obligation to update or
revise such forward-looking statements to reflect events or
circumstances that occur, or which Independence Contract Drilling
becomes aware of, after the date hereof.
INVESTOR CONTACTS:
Independence Contract Drilling, Inc.
E-mail inquiries to: Investor.relations@icdrilling.com
Phone inquiries: (281) 598-1211
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SOURCE Independence Contract Drilling, Inc.