ProPetro Holding Corp.’s PUMP top brass comprisingboard of directors and executive staff has decided to forego up to 20% of their salaries in the light of the coronavirus-induced economic downturn. Management at this Midland, TX-based oilfield service provider realized that in order to enhance its operating efficiency despite the challenging market conditions, it has to curtail costs substantially.
ProPetro is not the only oilfield services company to trim the incomes of its top officials. Oilfield behemoths like Halliburton HAL and Schlumberger (NYSE:SLB) Limited SLB are also enforcing salary cuts of its employees as well as economizing workforce. Apart from slashing pays, Halliburton is planning to halt certain contributions made to employee retirement accounts.
Companies across the globe are facing unprecedented crisis and taking stringent measures to tackle the same amid the coronavirus-caused demand contraction. Suspension of production, compulsory leaves/layoffs and cost cutting are becoming commonplace. Despite policymakers’ best efforts, companies are finding it difficult to stay afloat amid such trying times.
Last month, ProPetro announced plans to lessen an unspecified number of jobs as it struggles with a weak industry environment and the coronavirus-triggered demand reduction. Management further informed that it will lower its maintenance capex and field costs significantly while looking to strike a bargain with suppliers for pricing concessions on materials and replacement parts.
ProPetro declared that it has no big growth capital spending lined up for the remainder of 2020. As of Mar 20, the company had zero net debt with $178 million in total liquidity.
Notably, this Zacks Rank #3 (Hold) company’s strategic capex decrease pushes it into the bracket of other oilfield service players like Oceaneering International OII and Core Laboratories N.V. These industry players aim to tide over the tough times while sustaining financial flexibility and operational efficiency. On a significant note, it is imperative to solidify the companies’ capital position during a dull phase when oil prices are yielding zero profits to most producers. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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