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The Energy Layoffs Resume: Shell Fires 6,500, Whiting Cuts 2015 Budget 2 Weeks After Raising It
Yesterday it was US and Italian energy giants Chevron and Saipem which announced a total of over 10,000 new job cuts in the aftermath of oil sliding back under $50 and resuming its downward trend. This is how we framed it: "in Q2, after the price of oil staged a substantial rebound of about 50% from the year to date lows in the $40's, energy-related layoffs trickled to a halt as corporations hoped the worst is behind them, and as a result would merely bide their time before redeploying their workforce toward exploration and production. Alas, this was not meant to be, and as the events of the last month have shown, oil has resumed its downward slide. And, as expected, so have layoffs."
Today, we got more confirmation of this when Royal Dutch Shell, still basking in the glow of its proposed $70 billion mega-acquisition of BG Group, announced it would axe 6,500 jobs this year and step up spending cuts, responding to an extended period of lower oil prices which contributed to a 37 percent drop in the oil and gas group's second-quarter profits.
In addition, the Anglo-Dutch company is also increasing asset disposals to $50 billion between 2014 and 2018 as it pushes ahead with its proposed $70 billion acquisition of BG Group.
Reuters reports: "We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery," Chief Executive Officer Ben van Beurden said.
Shell said it anticipated 6,500 staff and direct contractor reductions globally in 2015 from a total of nearly 100,000 employees, as it grapples with a halving in oil prices to around $55 per barrel in a year.
Like rivals BP, Statoil and Total it announced reductions in capital investments for a second time this year, shaving another $3 billion off its 2015 budget to bring it to $30 billion.
Shell will only make two major investment decisions this year, with many projects scaled back, delayed or canceled, van Beurden said. He hinted at further spending cuts if economic conditions worsen, including a steeper drop in oil prices.
So firing thousands as it onboards tens of thousands of new BG Group workers? Clearly those about to be let go will be scratching their heads over this, but for the company only the shareholders matter: Shell reassured wary investors its bumper BG buy will not break the bank. If the deal goes through in early 2016 as planned, capital investments in 2016 will be $35 billion, Shell said, lower than the $42 to $40 billion analysts had expected.
Remember: as long as the stock ends up green on the day, nothing else matters.
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And to show just how complicated budgeting has become for energy companies in an environment where oil has entered two bear markets in one year, yesterday Whiting Petroleum Corp cut its 2015 budget on Wednesday less than two weeks after raising it, a flip-flop which Reuters said "underscores the uncertainty engulfing the energy industry while crude prices sit roughly 50 percent below last year's levels."
Reuters adds that Whiting, which is North Dakota's largest oil producer, tends to be seen as a key barometer of the health of the U.S. shale industry. Its spending trepidation is sure to have ripple effects on drilling contractors and other oilfield service providers.
Whiting now plans to spend $2.15 billion this year, running eight drilling rigs instead of a previous plan for 11, and mulling small divestments to bolster the company's balance sheet.
Just 12 days ago the company had boosted its budget by 15 percent to $2.3 billion, citing "strong results" from its second quarter.
As crude prices plunged below $50 per barrel, the Whiting board of directors met and decided to adjust the budget, yet again.
"We decided given the oil price environment we would trim that (budget) back," said Whiting spokesman Eric Hagen.
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And some wonder why the Fed is s confused: when corporate Treasurers are forced to change budget plans every two weeks, and in the process either hire or fire thousands of people, because underlying commodities have become too volatiles, it probably makes sense.. if not justify it - after all it is the reflexivity behind the Fed's own central-planning actions that have made the Fed's job impossible.
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Gotta be nimble, doncha know.
Unfortunately rolling heads is the quickest and easiest thing that the MBAs can come up with as a CMOT solution.
The money guys aren't doing a proper fluffing job in low revenue enhanced times.
Just don't forget to reach out to the bloated overhead costs.
pitty, they fucked up The Gulf for nothing, some years ago.
Now, that was an overhead cost.
When will gas be under $2 gallon?
Oh that''s right...
Gotta keep fucking the middle class until there's no middle class at all.
Almost there however.
Almost
Layoff / Closing : http://www.dailyjobcuts.com
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Obama Oil. Low price.
Vote Republican and the price comes roaring back.
Fail
Two sides of the same coin, moron.
Go back to MSNBC
The Gulf is fine, don't fall for the lies.
No wonder the GDP is predicted higher for Q2; it's all to ticklishly bullish.
Even UAE is laying off people in the oil and gas sector.
'Job cuts' reported in oil and gas industry in UAE
Last month even Qatar laid off several hundreds..or thousands...
Qatar Petroleum in staff cuts in bid to reduce costs amidst oil price uncertainty
Then we have Australia….
HPA to Cut Almost Half of Its Workforce, MUA to Fight Back
About 30,000 fresh job cuts, more mine closures expected in Australia
No wonder USDAUD currency is down 33% from its peak! Expect it to go towards 50 cents....
If you want to see the entire collapse of the oil and energy complex over the last 7 months at one place, then Reuters has done a great job of tabulating all the job losses thus far in 2015.
FACTBOX-U.S. energy companies slash jobs as oil prices weakenCNA also cutting 6000 jobs.
Yep....here it is....
British Gas owner Centrica cuts 6,000 jobs as profits risemark zandi, is bullish- says Fed will raise rates cause well Jobs are swell...he does say except energy were he sees loss of jobs, but thats ok, everyone else is doing OK. a capex is exploding except in energy..he does still look like the church lady of SNL
http://www.gettyimages.com/detail/news-photo/episode-14-pictured-jan-hoo...
ENI - Saipem is also axing 6000
Luckily unemployment is only 5.3% in the land of the free. Every laid off worker can find two jobs.
Double, secret employment, sir?
https://www.youtube.com/watch?v=Y0cF2piwjYQ
Hedge - Wish I could post more. My biggest client is still rolling in the QSR market and BP is still paying the Deepester Horizon claims. Still, you can feel the economic and social devolution. Looks like Elaine Benes's hell of ragged clothing out there and there is a huge crime spree in my town. Been robbed twice in the last 18 months. The glory days were yesterday.
Well, this news should help those in the repo business...
Now would be a good time to advance oil exploration, however the Government $$ gravy train of subsidized labor force spicket has been turned off.
jub cuts?? isn't that against the law? it's not job cuts is relocating to .gov pay via social services, private sector jobs are for robots and executive suite.
Today is the perfect day to start self reliance, innovation, bootstrapping, and planning for the independent future.
(shut the hell up voice #37)
(yes, what is it voice #1?)
Beer.
(that's why you're #1)
My six month look ahead.
http://www.skolaiimages.com/stock/displayimage-6727-Polar-Bear-Ursus-mar...
It’s only people and if the dividend gets raised by it, nobody will give a fuck.
But on the other side, 6500 jobs at a oil giant means 65000 in the contracting sector.
Bingo. BLS will need to pencil whip favorable numbers.
"6500 jobs at a oil giant means 65000 in the contracting sector."
Not this time around. This is NOT the 90s .. IT is not contracting as much as most are led to believe. There is still too much production offshore ..
The next plan of attack is to claim peak oil crisis. The negro from the White House will use this to pass Climate Change requirements/ mandates.
Mr. Owl, how many part-time bartender jobs does it take to replace the loss of 6,500 good-paying energy company jobs?
The world may never know.
Obama don't care unless the media starts reporting how many black jobs were lost and what the black unemployed rate is. (Hint: 39%)
As usual not mentioned 4% drop in 2016 prod and 5-7% in 3q prod while cap ex next yr gets cut in half.....glut fool..no
It is just possible that the economies built on cheap oil cannot be maintained even with moderately expensive oil. It is amazing how long systemic collapse has been avoided by the simple artifice of conjured money. Now that the energy bubble is popping around the world, there is one last bubble to be inflated, the welfare state.
It's paradoxical the hundreds of thousands of layoffs in this vibrant rekovery!
So I guess all the laid off oil workers will now vote for Obomba and help him secure a third term, right?
Who needs to feed their families when we've got the first bi, mom jeans wearing, selfie taking, Reggie loving narcissist in the white house right?
Irrelevant.
Energy companies are the most ruthless companies. They pollute the land, sea, underground water, for their huge profit. And they will cut workers off massively.. I guess it is also karma thing... These workers works for the profit for all companies and they should know better their jobs are extremely expendable.
ZORG
I think unemployment just dropped some moar.
Short term thinkers always opt for the reinforcement and hedonistic short term money grab at the expense of all the long term gains that could be made if they could delay gratification. Unfortunately, the Ponzi Casino Capitalist cannot think past the perennial GreedscumBernankeYellen put, and systemically fatal CB interest rates if they are getting short term reinforcement, and payoffs. The incentive structure is actually a self perpetuating Hegelian Spiral of negative feedback that reinforces Corporate self destruction, but the Corporatists are collectively too stupid to follow through with the equation and take it to a logical conclusion.