Yet another POV...
Consolidation is k–ling jobs in US shale industry
https://www.dhtnews.com/consolidation-is-k–ling-jobs-in-us-shale-industry-dht-business-news/
- Consolidation is k–ling jobs in US shale industry — DHT Business News
The long-awaited consolidation in the US shale patch is well underway, with several high-profile multi-billion-dollar deals announced in the span of just a few weeks.
Granted, the oil industry had already started shedding jobs at a fast pace as early as in March, when oil prices crashed in the pandemic, and the brief but very ill-timed Saudi-Russia spat over OPEC+ policies further crushed the market. The US industry has already lost thousands of jobs in the upstream and oilfield services sectors because companies curtailed production at oil prices lower than break-evens and slashed capital spending for this year and next.While signs have emerged that the worst for employment and rig counts could be over, the M&A mania is leading to another wave of job losses in the US oil sector. However, many of those layoffs could take place in corporate functions and support services.
As firms announce deals, they are also announcing layoffs at the new entities. Those redundancies add to an already high number of jobs lost due to the pandemic-inflicted crisis.Analysts and the market welcomed the latest US oil deals as win-win transactions and perfect fits for the pairs involved. But there is a loser in those mergers and acquisitions – the oil industry jobs.Job losses have been hefty even without the consolidation, but the merger mania is accelerating layoffs.Consolidation continuesM&A activity picked up pace in recent weeks after US companies shook off the initial shock from the fastest slump in oil prices in recent memory.Chevron acquired Noble Energy in the first major post-COVID deal. Devon Energy and WPX Energy announced their merger in September.
ConocoPhillips recently announced that it was buying Permian-focused Concho Resources in an all-stock deal valued at US$9.7 billion. A day later, Pioneer Natural Resources said it would buy Parsley Energy in an all-stock transaction valued at US$7.6 billion, including Parsley’s debt.Analysts see those deals as natural fits, expecting the resulting larger companies to fill the gaps in the portfolios of the stand-alone firms.The ConocoPhillips-Concho deal is “remarkable,” said Robert Clarke, vice president, Lower 48 upstream, at Wood Mackenzie.”Just in scale, ConocoPhillips is adding enough Permian production to nip at the heels of ExxonMobil’s massive programme,” Clarke commented on the deal.
Jobs lost to M&A waveAfter the merger with Devon Energy, some employees at Tulsa-based WPX Energy will move to Oklahoma City, but others will lose their jobs.”We recognize that synergies and redundancies between the two companies will impact jobs, but we’re going to be very thoughtful and respectful of people as we move through that process,” WPX Energy chairman and CEO Richard Muncrief said on the Q3 earnings call last week.Chevron, which has already announced job cuts of up to 15 percent of its workforce, will also lay off around 25 percent of Noble Energy’s staff – equal to around 570 positions – who join the US supermajor in the merger, Chevron said in an email to Reuters last week.
Yet, layoffs are by no means limited to companies involved in mergers.US oil industry loses jobs even without consolidation Everyone is cutting workforce numbers, from the oilfield services providers to the biggest oil corporations.ExxonMobil, for example, announced last week around 14,000 job cuts, or 15 percent of its workforce, including some 1,900 jobs in the United States.In the US oilfield services sector, 106,218 jobs have been lost since the pandemic began, according to the Petroleum Equipment & Services Association (PESA). Texas has been hit the hardest, with nearly 60,000 jobs lost. The industry is estimated to have added 1,400 jobs in September, but compared to September 2019, oilfield services employment is down by 15.7 percent, PESA said last month.