Chesapeake lays off 740 workers on low energy prices

30 Sep 2015 | Author: | No comments yet »

Chesapeake Energy just laid off hundreds of its employees.

Citing low energy prices, Chesapeake Energy Corp. said Tuesday it was laying off 740 employees, most of them at its Oklahoma City headquarters, after the company reported a second-quarter loss of more than $4 billion in August. The company said the layoffs represent about 15 per cent of its work force, cuts that will hit hardest at the company’s Oklahoma City office, where more than 560 people lost their jobs. Once the second-biggest private employer in its hometown of Oklahoma City, the company co-founded by McClendon will eliminate 740 jobs, leaving it with about 4,000 workers scattered around the U.S. The loss of jobs amounts to 15% of its total workforce, according to The Oklahoman. “The commodity price environment is extremely challenging for our entire industry,” CEO Doug Lawler in an interview with The Oklahoman. “Chesapeake today has had to take some steps towards improving our financial position to meet these challenging times.

It may be the Oklahoma oil producer’s first round of mass layoffs since the plunge in crude prices began last year, according to a tally of industry job cuts kept by consultancy Graves & Co. A $55.5 million, one-time charge will be booked for the third quarter, Chesapeake said in a filing Tuesday. “While this was extremely difficult, we are acting decisively and prudently to enhance the long-term competitiveness and strength of Chesapeake,” Chief Executive Officer Doug Lawler said Tuesday in an internal memo sent to Bloomberg News. “Over the past year, we have taken significant actions in response to the low commodity prices by reducing our costs and decreasing our capital spending.” Since taking over in 2013, Lawler has reduced the headcount by more than half through spin offs and asset sales, slashed spending on drilling rigs and oil leases and halted a 14-year run of dividend payouts to investors. Chesapeake, which held the crown as largest U.S. gas producer until 2010, confronts prices for the heating and power plant fuel that have slumped nearly 60 percent since February of last year. Energy consultant John Graves estimates oil producers have contributed about 15 percent to the oil industry’s job cuts since the slump began, but that portion is set to increase as drillers begin to plan their annual investment budgets for 2016 as the oil market shows no signs of an immediate recovery.

At the time, SandRidge employed 661 in Oklahoma City. “Oklahoma does get hit because we’ve had such a rich resource in oil and gas,” Fallin said. “It helped to build a strong economy. At one point in 2012, four construction cranes overlooked eight new buildings on a 120-acre (49-hectare) Georgian architecture campus as earth-moving equipment readied the land for more. Steve Russell, a Republican from Oklahoma, urged President Barack Obama’s administration to allow domestic producers to export oil and natural gas overseas to help put the industry back on its feet and restore lost jobs. While a difficult decision for any company, the move is seen as prudent to align Chesapeake’s cost structure with the low oil and gas prices, Scott Hanold, an analyst at RBC Capital Markets, wrote Tuesday in a note to investors.

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