ION to cut 25% of workforce in cost cutting initiative

HOUSTON -- ION Geophysical has announced an aggressive cost reduction initiative as part of an overall plan to align its operating expenses with business conditions and recent declines in the commodity price environment for crude oil and natural gas. The company believes this cost reduction program will more appropriately scale its operations to the current price environment. 

The initiative is expected to result in an approximate 25% decrease in the company's global workforce and is expected to be substantially completed by Sept. 30. ION expects to incur $5-6 million in termination costs, all of which are expected to require cash expenditures, and the majority of which are expected to be incurred in the current fiscal year.  

In connection with this plan, the company expects to reduce annual operating costs by approximately $40 million. Such cost savings will consist primarily of payroll reductions and reductions in discretionary spending associated with a smaller workforce, as well as additional cost control measures. 

When combined with the cost savings undertaken since December 2014, ION will have achieved total estimated annual savings of $80 million and a 50% reduction in its workforce.  The cost savings initiatives were across all groups within the company, but ION is maintaining key capabilities in all of its groups, including Ocean Bottom, and its readiness to rescale the business as revenues increase.

"The difficult cost reduction initiative we are undertaking today is necessary to prudently scale the company during this period of significantly decreased revenues, which we believe will extend into 2017," Brian Hanson, the company’s CEO said.  "We are an asset light company and have the ability to adjust our cost structure to align with revenue levels. When commodity prices and consequently the business's revenues recover, we will rescale our workforce to meet the demand."