Oil workers have faced a two-edged sword in the past 18 months: 1) layoffs; and 2) fading opportunities, according to the Oilpro news service.
Oilpro estimates more than 350,000 industry workers have
been let go. Meanwhile, the number of new job listings has been declining rapidly for several reasons including: 1) the growth hiatus; 2) hiring freezes; 3) less turnover/less competitive poaching; 4) attrition as a substitute for layoffs (in other words, companies stopped replacing retirees/resignations).
From the 2014 peak in the oil and gas job market, the number of new jobs opening each month fell 61 percent. But in the past 12 months, new listings are down only 26 percent - the rate of decline is slowing. And in the past four months, new listings are actually flat. Industry-wide hiring is stabilizing at about one-third of peak levels.
Layoffs are still occurring, and are evolving, according to Oilpro. Early layoffs were about adjusting to what many hoped was a temporary slump (laying off roughnecks alongside rig count declines). Layoffs now involve cuts to mid- and high-level management.
“The worst may be over”
Paal Kibsgaard, the chief executive of Schlumberger Ltd., characterized the state of the market this way: The worst may be over for the industry, but that doesn’t mean the impact of the oil bust is fully in the rearview mirror,” The Wall Street Journal reported.
“We aren’t expecting a uniform V-shaped recovery here,” Mr. Kibsgaard told investors . Schlumberger, which helps oil-and-gas producers tap new wells and coax more fuel out of old ones, has clients from Oklahoma to Oman, but in the last two years it has reduced its world-wide workforce by 50,000 people.
The Journal reported Halliburton Chief Executive Dave Lesar as saying that his company’s customers, oil and gas companies, believe the clouds are lifting and “they are getting back to business.”
“There is a growing survivor mentality out there, and you can’t underestimate the positive change in attitude that we are seeing in our North American customers,” he said. “There is a spring in their step that I didn’t see earlier in the year.”
Still, Halliburton continued to pare its ranks in the second quarter. Its workforce has now been cut by about 40 percent since 2014, when its staffing levels were highest, and now stands at over 50,000 employees.
The big disconnect coloring oil’s recovery is that oil producers need lower costs to drill profitably at current crude prices, which are hovering around $40 a barrel. But service companies have to start raising their prices again to bring rigs and fracking equipment out of storage and rehire experienced crews to run them.
That will require an even higher crude price in order for oil operations to break even, according to the Journal article.
“The heart of what both Schlumberger and Halliburton are trying to message to their customer base is the severity of this downturn. In many instances these service companies are going through rounds five, six, seven of headcount reductions over last two years,” Byron Pope, an analyst at energy investment bank Tudor, Pickering, Holt & Co., told the Journal.
“It feeds on itself,” he added. “If those oilfield services costs end up being inflationary, that break even
[oil price] level you need as an operator goes up.”
ConocoPhillips, a prolific producer in the U.S. and Canada, confirmed further job cuts , according to the Journal. It is making targeted layoffs in specific areas that aren’t projected to be economic for several years, including certain portions of Alberta’s oil sands, according to a person familiar with the matter.
The company has already cut 3,400 jobs, or roughly 18 percent of employees, since September 2014 when the oil bust first set in, according to filings with regulators. The new cuts amount to another 6 percent of its global workforce, spokesman Daren Beaudo told the Journal.