Denver-Based Whiting Petroleum Slashes A Third Of Its Workforce
July 31, 2019
Whiting Petroleum Corp. said Wednesday that it has eliminated 254 positions or a third of its workforce, including 94 executive and corporate positions at its Denver headquarters, as part of a cost-cutting effort.
The oil and gas company, which also released second-quarter corporate earnings on Wednesday, said the restructuring should result in $50 million in annual cost savings and require the company to take a one-time charge of $8 million in the third quarter.
“We aim to be as efficient as possible and that is why we made the difficult decision to reduce our workforce in order to realize significant annualized cost savings,” said Bradley Holly, Whiting’s chairman, CEO and president, in a news release on Wednesday.
Holly said investors’ focus has shifted to predictable capital returns.
“The decision to reduce headcount is always a difficult one as it impacts talented colleagues and friends, but it is a necessary step in our company’s transformation. I want to express my sincere appreciation for the employees affected by today’s announcement and their many contributions to Whiting,” he said.
Although the unemployment rate remains at a historic low, U.S. companies are shedding about 35 percent more workers this year than last, according to a tally kept by the placement firm Challenger Gray & Christmas.
Employers have announced 330,987 job cuts in the first half of this year compared to 245,179 cuts in the same period of last year. The first half total is the highest since 2009, when 896,675 job cuts were announced.
The energy sector is seeing an especially big jump in announced layoffs nationwide, which have gone from 5,088 in the first half of 2018 to 14,527 in the first half of this year.
Whiting’s earnings report shows the financial pressures the company, which is primarily focused on drilling in North Dakota, faces. Although Whiting produced a similar volume of oil and gas in the second quarter as it did a year ago, the value of that output fell from $310.4 million to $233.4 million, due primarily to a 14 percent decline in the price of oil.
Lower commodity prices helped turn what was a $57.3 million net profit in the second quarter last year into a $25.7 million loss in the second quarter of this year.
Bernadette Johnson, vice president of strategic analytics at Drillinginfo in Denver, said Whiting’s name isn’t among those raised in discussions of oil and gas producers “in trouble.”
“While there are numerous reasons for announced, strategic layoffs, we believe this is simply a result of lower crude prices, weak equity markets for oil and gas in general, and the continued pressure from Wall Street to cut costs and live within cash flow,” she said.
Drilling activity is down and operators appear to be looking at personnel cuts to help them adjust to a tougher financial climate. If so, Whiting may represent the opening act in another cycle of industry layoffs.
“It’s an unfortunate reality right now, but not something unfamiliar to the oil and gas industry,” she said.
Source: Denver Post