September 01, 2015 - 4:30 PM
CALGARY - A fresh wave of layoffs is hitting the energy sector as two oil and gas companies cut a total of 900 jobs, mostly in Calgary.
Penn West Petroleum is cutting its workforce by 35 per cent for a loss of over 400 full-time employees and contractors.
And ConocoPhillips Canada plans to lay off 400 employees and 100 contractors, for a 15 per cent workforce reduction.
Penn West says most of the job cuts it announced Tuesday are effective immediately, while ConocoPhillips told its employees on Monday that its workforce reduction will happen by mid-October.
"We don't see a lot of correction in the short-term... It's really kind of changing the way we work and that's resulting in, unfortunately, some staff reductions," ConocoPhilips spokesman Rob Evans said Tuesday.
Evans said the ConocoPhilips cuts are part of a 10 per cent staff global reduction by the U.S. major producer.
Penn West chief executive and president Dave Roberts also said Tuesday on a conference call with analysts that he expects the current cycle to be "prolonged and increasingly volatile."
Penn West estimates that its workforce cuts will reduce spending by about $45 million a year.
The company has also suspended its dividend after the October payment, for $20 million in annual savings, cut board compensation by 40 to 50 per cent, and further reduced this year's capital budget by $75 million.
The reduction brings Penn West's capital spending plan to $500 million — a 40 per cent reduction from its original plan to spend $840 million in 2015.
For 2016 the company says it will cut capital spending by as much as half ($150 million to $250 million) from this year's level as it aims to keep its capital spending within cash flow generated from operations.
North American crude has been trading below US$50 a barrel in recent weeks compared with more than US$100 a barrel last summer.
News from © The Canadian Press, 2015