Danish oil firm Maersk Oil will lay off 40 workers, citing the continued low oil price environment and ongoing efforts to reduce costs by 20% across the business by end of 2016.

The changes will affect employees in Copenhagen, Aberdeen and Stavanger, the oil company said on Monday.

Despite significant cost reductions across the business in the past 18 months, the oil price in Q1 (average $34) continues to put pressure on earnings and led to a small loss in the quarter, Maersk Oil said.

“The company has continued to improve operational performance and has reduced the breakeven price of its portfolio from USD 45-55 to USD 40-45 per barrel. However, the business is continuing to look for ways to reduce exposure to investments that deliver high break even costs,” the company said.

Maersk Oil said that Monday’s announcement on staff reductions aligns the Growth organisation to current activity levels with a short term focus on business development through targeted M&A.

M&A focus

Maersk Oil says it has already significantly cut exploration activities over the past 12 months to focus more on M&A opportunities. The company reported 65% lower exploration costs of USD 57 million in the Q1 2016 result, compared to USD 162 million for 2015.

While Exploration will remain a key driver of long term growth into the 2020’s and beyond, the current business environment forces Maersk Oil to continue to limit its exploration activity levels in the near term, the company added.

Commenting on the decision, Maersk Oil CEO Jakob Thomasen said: “Any reduction in staff is deeply regrettable, and we recognise this will be unsettling for our employees. Today’s changes are necessary to ensure our organisation reflects the current market and aligns our costs to our activities. We must continue to balance the realities of the tough market conditions with the growth agenda for Maersk Oil.”