Devon Energy Corp. has announced on Tuesday laying off around 1,000 employees including 700 in Oklahoma City. Continuous downtrend in oil and natural gas prices is weighing on Oklahoma City Companies and the broader economy.
The Oklahoma City oil and natural gas company is going to reduce its workforce by 20% during the first quarter of 2016. This marks the total cut to around 25% over the past 12 months. The company has 5,000 as of the end of 2015, reports Tulsa World.
Current commodity price environment has forced Devon to adopt cost cutting measures which include workforce reduction. The company needs to reduce expenses across the entire organization to maintain its financial flexibility and competitiveness, reports NewsOK citing a Devon statement as the source.
Notification serving to the Devon employees will be initiated on Wednesday on an individual basis. The procedure is expected to be done by Thursday. All Oklahoma City employees have been instructed to remain nearer to their primary office location for the next two days, reports NewsOn6. Sale of noncore upstream assets will affect another 600 employees. However, most of the cuts will be in the field level position. Following the announcement, Devon's share has slipped $0.43 or 2% to $21.26 on Tuesday which is 70% lower compared to a year earlier. Oil and gas companies in Oklahoma have cut more than 12,000 jobs in 2015 since the industry remains upset due to lower commodity prices. Companies have continued job cuts in 2016 since oil prices have been witnessed at 20 months low. Sandridge Energy Inc. has cut 440 jobs so far this year including 170 in Oklahoma City. Devon's announcement appears around two weeks after Sandridge's action. Domestic benchmark for West Texas Intermediate crude has fallen another $0.40 on Tuesday to close at $29.04 a barrel. The price is 73% lower compared to 20 months earlier. Devon's workforce cut has been triggered followed by revelation of its quarterly earnings report. The company has recorded a net loss of $4.5 billion or $11.12 against each share during the fourth quarter. The accounted loss has been driven largely by noncash asset impairment charge of $5.3 billion. Devon has witnessed a loss of $408 million or $1.01 a year ago. Meanwhile, Devon has slashed its current year drilling budget by $900 million to $1.1 billion. The budget is 75% lower than a year ago. It has also planned to sell $2 billion to $3 billion in noncore assets during this year.
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