Two Major Shale Drillers Plan Layoffs
Two shale producers have plans to start cutting jobs, sources in the know who wished to remain unnamed have told Reuters.
Parsley Energy plans to cut 10 percent of all 496 jobs it has created. The number of layoffs at Pioneer Natural Resources remains a secret, but its total workforce is about 2,300 people.
Both companies, like most in the industry, swung to losses in the second quarter as the oil price collapse and the pandemic pummeled them into the ground and made it hard to get up again.
Parsley, which had earlier called for mandatory production cuts in Texas, reported a net loss of some $400 million for the second quarter of the year. On the positive side, the company boasted positive free cash flow during the quarter and a lease operating expense of just $3.69 per barrel. Still, this was not enough to make it optimistic for the immediate future and the company kept its oil price assumptions for the remainder of 2020 low, at $35 per barrel.
This is too low for most producers in the shale patch so the job cuts come as no surprise. They are only the latest additions to an already strong trend across the industry: the Texas Alliance of Energy Producers said earlier this year job losses since February exceeded 41,000. In April alone—the hardest month for oil prices—Texas oil shed as many as 25,000 jobs.
Pioneer is one of the companies that are already laying off staff. The company, which posted a net loss of $439 million for the second quarter, cut 50 jobs earlier this year in response to the crisis. Like its peers, Pioneer is planning lower oil production through the end of this year.
Shale producers have been among the hardest hit by the crisis, not least because of their heavy debt burdens, many of which have only gotten heavier amid the crisis. Pioneer recently issued $1.1 billion in new debt. Parsley has not issued new debt, but the price environment remains relatively hostile, even though the company boasts breakeven levels of $35 per barrel of crude.
By Irina Slav for Oilprice.com