February 6, 2009 / 1:58 PM / 11 years ago

UPDATE 1-Allis-Chalmers cuts 235 jobs

Feb 6 (Reuters) - Oil services company Allis Chalmers Energy Inc ALY.N announced a slew of cost cutting measures, including eliminating 235 jobs in the United States, reducing certain day rates and employee benefits, but said it expects its international business to grow in the second half of 2009.

The company said it was taking these steps because of a fall in its active rig count in the United States, which began hurting its oilfield services segment in Dec. 2008.

It said it will also terminate two yard leases and consolidate operating yards by converting certain facilities to satellite status or yards with reduced functions.

Allis-Chalmers expects the measures to reduce annual costs by about $21.7 million, but continues to see limited visibility on drilling activity in the U.S. in the second half of 2009.

The Houston, Texas-based company, which expects to realize the benefits of these measures by the middle of this month, said it will continue to monitor its cost structure and make further adjustments depending on future business conditions.

The company expects its offshore drilling business to grow in Mexico in 2009, but sees some pricing pressure in Argentina, adding that it will be able to maintain rig utilization rates close to 90 percent.

Shares of the company, which touched their lifetime low at $2.95 Thursday, closed at $3.20 on the New York Stock Exchange.

For the alerts, please double click [ID:nWNAB9478] . (Reporting by Shradhha Sharma in Bangalore; Editing by Jarshad Kakkrakandy)

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