Ensco to close Atwood headquarters

The British company Ensco said it plans to cut about 80 jobs and shutter the Houston headquarters of Atwood Oceanics after the two offshore drilling companies completed their merger last week.

Ensco, which has its operational headquarters in Houston, acquired Atwood for about $850 million in a deal that closed Friday. Ensco said it will cut back on office space at the Atwood headquarters at the Energy Crossing II building along Houston’s Energy Corridor and eventually vacate the building.

“Ensco intends to conduct a mass layoff of most of the employees who currently work at, and eventually close, the headquarters of Atwood Oceanics,” the company said in a letter to the Texas Workforce Commission that was filed Monday.

The initial 79 job cuts at the old Atwood space will span from October until March, Ensco said. Ensco’s Houston operations are based in the San Felipe Plaza building near the Galleria area.

The offshore drilling industry has consolidated recently as the sector continues to struggle even as lower-cost shale drillers have recovered over the past year, following the worst oil bust in a generation.

Still, more than one-third |of Ensco shareholders opposed the merger, contending that the deal was too expensive and spread the company too thin in a difficult market.

Ensco CEO Carl Trowell countered that the deal positioned his company to thrive as the industry rebounds.

“Ensco has used timely acquisitions to grow into one of the leading offshore drilling companies, and the acquisition of Atwood is another major milestone in our progression,” Trowell said Friday after the deal closed. “We are excited to complete this transaction and to

welcome our new employees, customers and shareholders to an even stronger Ensco.”

Prior to the deal, Atwood was bringing in enough money to stay afloat from contracts signed before the oil bust and by dramatically cutting costs and idling rigs. Atwood slashed its workforce by about 60 percent in two years, from nearly 2,000 workers to just about 800 before the merger announcement in May.

In a similar deal, Transocean, the Swiss offshore drilling rig company that operates largely out of Houston, is set to buy Norway’s Songa Offshore for $1.1 billion.

Byron Pope, an energy analyst with Tudor, Pickering, Holt & Co. in Houston, said most of the job cuts will come among back office operations, such as human resources or tech support. Each of the companies had these operations; with the merger, only one human resources or tech support department is needed.

After a wave of offshore bankruptcies, the more recent deal-making means companies are optimistic enough to pursue growth strategies, Pope said.

“We’re now at the point in the cycle where there’s confidence we’ve at least hit the cyclical trough — the rock bottom,” he added.