Chesapeake Energy, the one time king of the shale oil and gas boom in the U.S., has fallen on hard times as the price of oil and gas has dropped by more than 50% in the last few quarters. Despite having already laid off close to half of the firm’s workforce over the last year or so, the Oklahoma City-based company filed a report late Tuesday saying it was laying off another 740 employees, close to 20% of its current workforce.
After the most recent reduction in force, Chesapeake will have around 4,000 workers throughout the U.S. The beleaguered company noted in its filing that a $55.5 million, one-time charge related to the layoffs will be taken in the third quarter.
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Statement from Chesapeake CEO Doug Lawler
“While this was extremely difficult, we are acting decisively and prudently to enhance the long-term competitiveness and strength of Chesapeake,” Chief Executive Officer Doug Lawler commented in an internal memo seen by Bloomberg on Tuesday. “Over the past year, we have taken significant actions in response to the low commodity prices by reducing our costs and decreasing our capital spending.”
More on problems at Chesapeake
Lawler has reduced the total number of employees at Chesapeake by over half in his almost two-year tenure, and has cut investment on drilling rigs and oil leases and halted dividend payouts. Chesapeake, which was largest U.S. gas producer until late 2010, is facing twin headwinds in high debt expenses and low gas prices.
According to consensus analyst estimates, the troubled firm will run in the red by a net $5.4 billion this year. That figure would represent its largest annual loss in six years.
Former CEO Aubrey McClendon was responsible for hiring most of the employees who have been let go, as he added staff and acreage during the early 21st century shale boom. Back in the peak of the shale oil frenzy 2012, four giant construction cranes were involved in the construction of eight new buildings on a 120-acre campus for Chesapeake in Oklahoma City.
Chesapeake is certainly not alone in having to terminate valuable employees due to budgetary constraints. Industry analysts report close to 200,000 layoffs by global energy firms over the last 15 months.