Chesapeake to cut headcount by 15pc
OREANDA-NEWS. September 30, 2015. US independent Chesapeake will cut 15pc of its workforce, adding to evidence of producers buckling under pressure from a plunge in crude prices.
"While this was extremely difficult, we are acting decisively and prudently to enhance the long-term competitiveness and strength of Chesapeake," chief executive Doug Lawler said in an email to all employees. The reduction is "part of our continued efforts to address this pricing environment head on," he said.
In the current market downturn, oilfield services companies such as Schlumberger, Halliburton and Baker Hughes have so far been at the forefront of the job cuts as oil companies sharply pullback drilling activities amid the fall in prices to six-and-a-half-year lows.
But recent announcements of cuts by top independent ConocoPhillips indicate that producers are also coming under severe strain as oil markets remain weak for a year now.
Chesapeake will incur a one-time charge of \\$55.5mn in the third quarter to settle all dues related to the reduction.
The company will have about 4,000 employees after today's reduction of 740.
Chesapeake had posted a net loss of \\$4.15bn in the second quarter compared with a profit of \\$145mn a year earlier, in part as it took an impairment of \\$4.03bn due to the fall in the value of its oil and gas assets.
North American producers are expected to reduce their capital expenditure by 35pc in 2015, leading a global decline, UK-bank Barclays said in its latest spending survey. That may fall by another 10-15pc in 2016, assuming the Nymex WTI contract stabilizes in the \\$50-\\$60/bl range. Global spending is expected to fall for two straight years for the first time since 1986-87, when oil had fallen below \\$20/bl.
ConocoPhillips earlier this month announced cutting 10pc of its total global workforce of 18,100.