U.S. shale oil and gas producer Chesapeake Energy Corp. plans to cut 15% of its workforce, an email sent to employees revealed, as it closes on new financing that will allow it to emerge from bankruptcy court protection next week.
Once the second-largest U.S. natural gas producer, Chesapeake was felled by a long slide in gas prices. The company is “resetting our business to emerge a stronger and more competitive enterprise,” according to the email to employees by CEO Doug Lawler dated Feb. 2, and reviewed by Reuters.
Most of the 220 layoffs will happen at the Oklahoma City headquarters, the email said.
Chesapeake on Feb. 2 said it planned to raise $1 billion in notes to complete its bankruptcy exit.
The company’s bankruptcy plan was approved by a U.S. judge last month, giving lenders control of the firm and ending a contentious trial.
Chesapeake filed for court protection in June 2020, reeling from overspending on assets and from a sudden decline in demand and prices spurred by the coronavirus pandemic.
“As we prepare to conclude our restructuring, we continue to prudently manage our business and staffing levels to adapt to challenging market conditions and position Chesapeake for sustainable success,” company spokesman Gordon Pennoyer said by email, when asked about the planned layoffs.
People losing their jobs will be given severance packages and career assistance, according to Lawler's email. The company’s headquarters was closed on Feb. 3 and workers were notified by phone about layoffs “because of the current health concerns known to all,” the email said.
Scott Sheffield said dealmaking in the Permian Basin would also temper U.S. shale producers’ responses to rising oil prices.
Offshore operations in the Gulf of Mexico will thrive with improving economics, while in the shale fields ... not so much; a new generation of leaders takes over following the retirement of a slew of industry icons, and just in time to tackle investor pressure on ESG issues, continuing consolidation and the pursuit of capital; and then there's the 2020 U.S. presidential election, in which the subject of energy is likely to play a prominent role.
Even for the leanest, meanest oil and gas producer sitting on the best assets in the land, fate hinges on the nature of the recovery.