Calgary

Alberta oilfield companies switch to variable pay to help weather downturn

Oilfield service companies are turning to hourly and daily pay for workers in order to stay afloat during the downturn, instead of the usual fixed salaries.

Employees can have 5 or 6 pay rates, depending on what they're doing, says CFO

Trican Well Service mentions variable pay in its investor presentation released in April 2016. (tricanwellservice.com)

Oilfield service companies are turning to hourly and daily pay for workers in order to stay afloat during the downturn, instead of the usual fixed salaries.

It means daily rates for workers, says CFO Bharat Mahajan of Aveda Transportation and Energy Services, which has shrunk its Alberta workforce from 130 to about 75 during the downturn.

"You might be working as a day-rated employee one day. You might be working as an hourly-rated employee another day," Mahajan said.

Aveda CFO Bharat Mahajan says the variable pay model is new to the industry. (Aveda Transportation and Energy)

"We've got some employees that have five or six different pay rates now, depending on what they're doing."

Mahajan says reaction from employees is mixed.

"Some people are absolutely thrilled that, 'Hey, you know what, at least I've got a job.'... At the same time some people have been saying, 'You know, I'm not thrilled about having to take a lower rate of pay than what I've been used to.'"

Trying to keep qualified labour

Aveda isn't the only oilfield company adopting a variable pay model. Canyon Services and Trican Well Service are too.

Aveda bills itself as the largest rig-moving company in North America. (Aveda Transportation and Energy)

"Their strategy is to keep a qualified labour force for when things do recover," said Jason Zhang, a research analyst with Cormark Securities.

Zhang says contract drillers have always worked under variable pay structures, but now fracking companies are adopting the model as well.

​It's not clear whether companies will stick with variable pay after the downturn.

Aveda says it anticipates going back to its regular pay structure — for the most part.

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