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ConocoPhillips Fires 10% Of Global Workforce, Warns Of "Dramatic Downturn" To Oil Industry
Remember when the oil crash was supposed to be "unequivocally good" for the global economy and the US consumer, only for this to be disproven as the biggest macroeconomic lie since "QE is good for the people"? We do - quite vividly - which is why in December of last year we presented "150 Billion Reasons Why Low Oil Prices Are Not Good For The Global Economy" and countless other articles subsequently explaining why the great oil collapse of 2014 (and 2015) is actually "unambiguously bad." It took the so-called experts the usual 6-8 months to catch up, and admit they were wrong or at least stay silent this time.
In fact, 10 months after our first exposition on the death of the Petrodollar, the massive upcoming reserve liquidation (read Treasury selling) that is about to be unleashed as a result of the soaring dollar and plunging price of oil, has finally become a topic du jour at such banks as Bank of America and Deutsche Bank, who have finally grasped that the great oil crash precipitated nothing short of the world's first Reverse QE episode in history as some $10 trillion in accumulated reserves start being sold.
That, however, mostly impacts the uber-wealthy: those whose net worth is invested in financial assets which are about to be sold en masse by some of the world's biggest central banks. Where it hits much closer to home is when firms such as Houston based ConocoPhillips announce that the E&P giant is about to terminate 10%, or 1,800 people, of its global workforce, in the next several weeks as it copes with low oil prices.
As the Houston Chroncile's FuelFix blog writes, "Daren Beaudo, a company spokesman, confirmed that an internal communication was sent to employees earlier this week informing them of the upcoming staff reductions. Most of those affected workers will receive layoff notifications next month."
But don't worry: the great(ly fabricated) US jobs recovery myth will not be impaired: all these formerly highly-paid engineers, technicians, drillers and chemists will find minimum wage jobs flipping burgers at their local recently IPOed Shake Shack.
FuelFix adds that "the largest portion of the job cuts will come from North America, he said, where the Houston oil producer drills for crude from the oil sands in northern Canada to the shale plays in South Texas. The firm will also trim about 1,000 core contractors from its workforce."
Beaudo said ConocoPhillips has informed employees, city and state agencies that more than 500 of the firm’s 3,750 employees in Houston will also be cut. In Canada, the firm is cutting 400 employees and 100 contractors.
And just in case there is still any confusion about the real impact of the great oil crash, here is Conoco again warning it will certainly not be the last to engage in mass layoffs: “We’ll know more in the next several weeks as we work through our formal process,” Beaudo said in an emailed statement. “Our industry is undergoing a dramatic downturn, which has caused us to look at our future workforce needs. As we have assessed the implications of lower prices on our business, we’ve made the difficult decision that workforce reductions will be necessary.”
But before anyone panics and gets worried that while thousands are losing their jobs, there is a threat to the luxurious living standards of the 1% of Americans who alone benefit from the Fed's policies and corporate cash flow generosity, fear not: COP may be firing thousands, but at least the dividend is safe, for now.
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Kinda odd all these oil blowups happening in spite of our rapid economic expansion?
pods
LMAO. Obama's economic expansion? We hired some folks, then we fired some folks.
No. Too few wars.
But. But. But, Joe and Barry said we are living the life of Awesomeness, no?
Zerohedge logic: oil going up is bad for the economy, oil going down is bad for the economy.
While gold going up means you should buy more, and gold going down means you should buy more.
LOL
That's because both are true. If oil is too expensive, people cannot afford to buy as much random crap in this "consumer economy," and if oil is too cheap, well, there's always the $550 billion in energy sector junk bonds floating around that aren't going to get repaid. This is the result of years upon years of economic manipulation.
El Vaq- that requires critical thinking
"that requires critical thinking"
Always, unfortunately, a very rare commodity... which explains why we're where we're at.
“Five percent of the people think, ten percent of the people think they think, and the other eighty-five percent would rather die than think.” - Thomas A. Edison
And Texas leads the way:
http://www.washingtonpost.com/blogs/answer-sheet/post/texas-gop-rejects-...
Yep, the wicked price swings are not "market" forces. Nothing happens and oil drops x%.
This is all a sympton of the value of currency, and very little to do with oil. Now oil news can change the amount of currency flooding the oil market (or leaving) but this is basically a currency market PRICED in oil.
pods
Read the earlier article, "China--Doomed if they do, and doomed if they don't"...
HIGH PRICED OIL DESTROYS GROWTH According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf
HOW HIGH OIL PRICES WILL PERMANENTLY CAP ECONOMIC GROWTH For most of the last century, cheap oil powered global economic growth. But in the last decade, the price of oil production has quadrupled, and that shift will permanently shackle the growth potential of the world’s economies. http://www.bloomberg.com/news/articles/2012-09-23/how-high-oil-prices-will-permanently-cap-economic-growth
THE END OF CHEAP OIL Global production of conventional oil will begin to decline sooner than most people think, probably within 10 years
Feb 14, 1998 |By Colin J. Campbell and Jean H. Laherrre http://www.scientificamerican.com/article/the-end-of-cheap-oil/
BUT WE NEED HIGH OIL PRICES: Marginal oil production costs are heading towards $100/barrel http://ftalphaville.ft.com/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/
The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth. http://ftalphaville.ft.com/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/
Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html
Sanford C. Bernstein, the Wall Street research company, calls the rapid increase in production costs “the dark side of the golden age of shale”. In a recent analysis, it estimates that non-Opec marginal cost of production rose last year to $104.5 a barrel, up more than 13 per cent from $92.3 a barrel in 2011. http://www.ft.com/intl/cms/s/0/ec3bb622-c794-11e2-9c52-00144feab7de.html#axzz3T4sTXDB5
If we had a real, workng economy, a drop in oil prices would be great...if we had a real, working economy......
exactly knuck. Nobody making enough money to drive anymore anyways
Will the last person out of North Dakota please turn off the lights?
Maybe Obama can hold a presser in Houston, hot dog in hand, to announce how this 1,800 employee cut in Conoco workforce is a good economic sign.
And the Iraq war and 1 Million dead - for nothing. Need another war.
That was the slam dunk war that was going to pay for itself. Reminds me of the cat and rat ranch- the rats will eat the cats, the cats will eat the rats, and we'll get the skins for nothing.
... and Jeb is sticking to his story that the Iraq war was a success.
Is he daft?
Yes. A son-of-a-Bush.
Yup and unenployment will soon reach record lows lolololol
Well, with China on the skids, the New Zealand financial press runs stories regularly on how the US economy is poised to be the engine of world economic growth. We're counting on ya, so don't let us down!
Oh, and while you're at it, buy more cheese.
Steven Harper is spouting the same short term myopia so don't think it's just the arseholes in your Government. They are all full-of-shit and playing extend & pretend.
Obama's war on oil to hurt Russia and Iran having unintended consequences. Maybe he can drone short-sellers of US stocks
No doubt to be replaced by 100 "Bender" type robots.
long booze, cigars, and hookerbots.
gee what a coincidence. Uncle Warren- all you can eat Buffett just bought 4.4 billion worth of COP. Its amazing how he always has such foresight.
i remember a certain television station telling me how it was nothing but good, great, hopium for oil prices to trade lower.
GOOG changes its name, up 65.00
GOOG changes its logo, down 18.00
"fundamentals"
Only 10%!!?
Since oil is over 60% up to 70% down, shouldn't they fire the same??!
:)
Good paying oil workers going to get jobs at Chili's and Flingers....talk about a recovery! Drinks on me!
Rooster, meet roost.
This is a good thing people....now they will be able to spend quality time with their families.
Remember funemployment?
No more "job lock" for Conoco employees. There are lots of part time barista jobs available and we have ACA. It's all good. Pelosi told me
Is this the condition that Buffet imposed in return for buying the company?
THE PERFECT STORM (see p. 59 onwards)
The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy.
But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel.
http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf
ConocoPhillips Fires 10% Of Global Workforce, Warns Of "Dramatic Downturn" To Oil Industry
"Dramatic Downturn", really? These morons are in the energy business and they just figured this out now? Or, are they simply justifying the layoffs?
All those ex-oil industry workers will soon get discouraged looking for another 6 figure job. The official unemployment rate will go even lower.
Quoting from article above "told to buy but never when to sell," if there is no "dramatic downturn," in X timeframe, will they get their lost jobs back?
Quoting from article above "told to buy but never when to sell," if there is no "dramatic downturn," in X timeframe, will they get their lost jobs back?
I work in the prospecting area as a landman. If there are no new prospects, no new drilling.
There are no new prospects, all we do these days is review the next BK filer to see if they have anything worth buying.
It's over, simply put.
Boy am I glad I didn't plunk down $30k for commercial diving school this past spring.
Better off putting 30K in TZA...
Long Vegas, hookers, blow.
CdRoxi
Rothschilds better up my FAFSA this year or I'm threatening to go back to work.
Sorry. The ancient prophecy is now in play. If you're lucky, you'll be mulch.
"...COP may be firing thousands, but at least the dividend is safe, for now."
Phew. That is a relief. I would hate to think that some 1% elitist might have to make do with only half of a normal ration of mint jelly with their lamb chops...
OilPatchFUBAR.
Gotta pay Warren his dividend checks somehow.
the massive upcoming reserve liquidation (read Treasury selling) that is about to be unleashed as a result of the soaring dollar
Don't discount Russia in this treasury sell off. No they are not a player like China, but they have a roll to play, they were sitting on 350 billion dollars in FX if you believe some, of 450 billion to believe others. They have been bullsih gold for ages. But if China sells treasuries, Russia will continue to sell theirs also. The economic war on Russia is already worthy of WWIII, thus Russia should have only one goal, "To kick T-Bills in the balls when they get the most kick for their efforts." America lives by the Dollar, prints it and buys a consumer bonanza, energy and the greatest military on earth. I suggest to you that fully 1/2 of that spending is deficit, money printing or T-Bill selling. China, Russia and Iran should likely do what they can to hurt the dollar, as the dollar is America's primary support, 1/2 our federal spending is borrowed.
These jobs should have never gone to Oil in the fist place. Fossil fuels are a dead end. Let the talented employees find jobs in renewable and other productive ventures. Since when do we applause "jobs" created in the biggest money pit in history, OIL? Lower oil prices are good for the industrial world period. Lower oil prices are only bad for nations that have failed to diversify their revenue away from fossil fuels!! And most of these countries are run by less then worthy leaders that basically deprive their citizens of a future by not diversifying and most of these counties rank very high on the corruption, inbred dictatorship rulers list!! I wish Zero Hedge would stop crying about lower oil!! Its damn good thing economically! Period!
From magooo post, http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf i highly recommend everyone read that report or have one of the tylers post it, very comprehensive report