KUALA LUMPUR (June 25): Sapura Energy Bhd plans to cut about 800 or 20% of its 4,000 full-time employees, in an attempt to adapt to the double whammy of volatile oil prices and the coronavirus-induced economic slowdown.

The latest move came on the heels of multiple other attempts by Sapura Energy to adjust its cost structure recently, including salary cuts and other initiatives out of 136 cost-cutting initiatives identified and assessed by the company.

In a message to staff announcing the down-sizing this afternoon, which it shared with the media, it also hinted at the difficult way forward for the loss-making oil and gas outfit, which has continued to struggle with high gearing and cash-flow squeeze ever since the oil market downturn in 2014-2015.

“With a heavy heart, we would like to inform you that we are currently meeting several colleagues, at every job level, to discuss their departure from the company,” said Sapura Energy president and group chief executive officer Tan Sri Shahril Shamsuddin.

“We have spoken previously about the need to implement austerity measures to sustain our business.

"While a lot of work has been done to grow revenue and improve the way we operate, the economic slowdown brought by Covid-19 and oil price volatility continues to bear upon our financial strength,” he said.

“In our previous announcement, we had mentioned the need to reduce the workforce. As much as we tried to delay this decision, it is inevitable at this point,” Shahril added.

Back in April, Sapura Energy effected a salary reduction that impacted one-third of its workforce, including a 50% pay cut for the leadership team — although those earning under RM10,000 per month were not affected then. The salary cut managed to lower its manpower cost by 7.5%.

In its latest announcement, Shahril said Sapura Energy is also finalising the details of a mutual separation scheme for non-affected employees as part of ongoing efforts to further optimise manpower costs.

Including the full-timers, Sapura Energy currently employs 10,000 people. Of the 800 staff that will be impacted by the downsizing, 63% are contract workers while the remaining 37% are permanent staff.

Shahril assured that the company will do “as much as we can” to assist the retrenched employees, including providing a severance package, as well as allocating an additional RM1 million to help them transition into their next careers.

“We have created a dedicated team, which includes external experts, to deliver a comprehensive career transition programme to support your growth beyond employment with the company,” Shahril said.

The allocated fund will also be used to support the continuation of medical coverage for the next three months; assist with personal branding, resumes, and interview skills; networking and job-leads for new career opportunities; personal financial management advice; and entrepreneurial workshops for those planning to start their own business.

On Sapura Energy’s way forward, Shahril said the company will introduce other voluntary measures to optimise manpower costs for those who will remain in the company.

This includes flexible work arrangements like a reduced work week, permanent work-from-home and sabbaticals.

“On behalf of the management, I wish to thank everyone for their commitment, understanding and endurance during these difficult times. The journey ahead will require resilience, resolve and perseverance,” Shahril said.

“My deepest gratitude is reserved for our colleagues who will be leaving us, whose careers with us have been our privilege.

“You contributed time, energy and knowledge to help build this company. You are part of the Sapura family and always will be,” he added.

Shares of Sapura Energy closed unchanged at 9.5 sen today, valuing the group at RM1.44 billion.