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Carl Icahn Darling Chesapeake Energy Fires 15% Of Its Workforce

Tyler Durden's picture




 

Remember when the commodity and gas plunge was supposed to be an "unambiguously good" tailwind for discretionary US spending, something which we warned over and over would never happen as the Obamacare "mandatory tax" surge pricing for healthcare insurance more than offset and discretionary savings?

Moments ago another 825 or so soon to be formerly paid workers just found out the hard way just how clueless the vast majority of the punditry was when Chesapeake energy just announced it would terminate 15% of its workforce, or about 825 of its 5,500 most recent employees, as a result of the "current oil and natural gas prices."

A longer-term chart of what unambiguously good looks like for US employees:

From the press release:

On September 29, 2015, Chesapeake Energy Corporation (the "Company") implemented a workforce reduction initiative as part of an overall plan to reduce costs and better align its workforce with the needs of the business and current oil and natural gas commodity prices. The plan resulted in a reduction of approximately 15 percent of its workforce. In connection with the reduction, the Company estimates it will incur an aggregate of approximately $55.5 million of one-time charges in the 2015 third quarter, including related employer payroll taxes, all of which will be paid in cash during 2015.

Surely the terminations will free up even more funds for such more important "use of proceeds" as stock buybacks and dividends, and make CHK's top shareholder, Carl Icahn, even happier. Because it is one thing to release videos "warning" of overvalued markets (yes, we knew that already, thanks), it is another to be a true activist when the time demands it, and urge management to halt buybacks instead of laying off nearly 1000 workers.

 

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Tue, 09/29/2015 - 16:33 | 6607898 Cognitive Dissonance
Cognitive Dissonance's picture

Intended unintended consequences. It is assumed no top executives were harmed during the firings.

Tue, 09/29/2015 - 16:42 | 6607957 Jethro
Jethro's picture

A few VP's were canned from what I've heard, but that is hearsay at this point.

Tue, 09/29/2015 - 16:46 | 6607979 kaiserhoff
kaiserhoff's picture

So when will the government fire a few million surplus, counterproductive "workers"?

  Oh right, never.

Tue, 09/29/2015 - 17:11 | 6608102 Chris Dakota
Chris Dakota's picture

if they are white they might be fired, the old leftovers from that other era.

Tue, 09/29/2015 - 17:16 | 6608119 Jethro
Jethro's picture

You're singing to the choir man. I expect to see the Four Horsemen riding around before government pink slips are handed out.

Tue, 09/29/2015 - 17:50 | 6608269 Kprime
Kprime's picture

in fact, they just posted more job openings for low I.Q., jack off, do nothing welfare job openings.  I believe they said about 2 million postions opening up this year.

Tue, 09/29/2015 - 18:06 | 6608347 Handful of Dust
Handful of Dust's picture

They're simply trying the best they can to force the BLS unemployment rate down to 3.5% by end of year.

Tue, 09/29/2015 - 17:10 | 6608100 troubledasset
troubledasset's picture

CHK did a good job of axing anyone who was too mcclendon-ish a few years ago.

Tue, 09/29/2015 - 16:42 | 6607958 SafelyGraze
SafelyGraze's picture

management 101:

hire people for less than they are worth

promise them pensions to justify underpaying them

dis-employ them

(see "pension stewardship 101")

Tue, 09/29/2015 - 19:54 | 6608846 jmack
jmack's picture

you dont know how right you are. i worked for CHK last year as a contractor, we made nearly twice what the employees did, for basically the same job duties.  when oil started tanking in november, suddenly you had a bunch of safety men running around gigging people for untucked shirts, not clean shaved etc, firing them on the spot in some cases.  

       That is when you know to move on down the road, cuz in the boom times, you didnt even see a safety man on location.

Tue, 09/29/2015 - 16:43 | 6607962 Tom Servo
Tom Servo's picture

Glad i didn't quit IT to study petroleum engineering in 2007 ...

 

Tue, 09/29/2015 - 17:58 | 6608317 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

I studied Chemical Engineering and got stuck in the crappy semiconductor industry. Oil would not hire me when I finished. Well, screw you big oil! 

Tue, 09/29/2015 - 18:11 | 6608362 Handful of Dust
Handful of Dust's picture

My cousin is in Houston as a petrol STEM grad with a 3.85 GPA and solid experience but he is still scared shitless. Many of his co-workers have already been fired even after years of experience. Just about every project at his company has been put on hold or cancelled.

 

All these folks bought fairly nice houses with hefty mortgages. I am surprised Houston economy has not reflected the bloodbath yet since he said energy is 35%-40% of Houston's GDP.

Tue, 09/29/2015 - 18:35 | 6608471 azusgm
azusgm's picture

Up here in East Texas, I was conversing with the manager of a discount retail store last weekend. He was back working in retail because he had been laidoff by an O&G company after 8 years. His job had taken him all over the country. When the music stopped, he had to find a way to feed his family. These guys who work in the oilfields are highly employable but there are not nearly enough appropriate jobs for them.

One of my cousins is back to coaching/teaching in a public school system 40-50 miles from his house. He has a masters and is certified in school administration. The pay and the availability of overtime were a whole lot better in the Eagle Ford. When he was laid off, he returned home and found a job driving a school bus for the rest of last spring then mowed lawns over the summer. At least he and his wife banked as much money as possible during the fat time.

Tue, 09/29/2015 - 18:37 | 6608477 NikoBellick
NikoBellick's picture

Yup, wife has a friend who just got hired on as a lab analyst year before last and is freaking out because she just got laid off. Really? You didn't see this coming? I believe her minor was something in petroleum as well....smh

Tue, 09/29/2015 - 17:10 | 6608095 Chris Dakota
Chris Dakota's picture

but he did say in that other video this morning "I love this country"

haha and lol

Tue, 09/29/2015 - 16:32 | 6607904 nope-1004
nope-1004's picture

Chesapuke

 

Tue, 09/29/2015 - 16:34 | 6607912 mtndds
mtndds's picture

TRANSITORY.

Tue, 09/29/2015 - 16:41 | 6607934 Dr. Engali
Dr. Engali's picture

Today Glencore was trying to reassure investor, vendors, and employees about the soundness of the company. Now anybody who belonged to a major firm during the banking crisis has heard these words before: "our company is on sound footing and we have plenty of liquidity. We are taking the appropriate steps to secure our company's future". For me those words came from Wachovia and most of us knows what happened to them. Well Glencore said the exact same thing today. If they survive a week they will be lucky.

Tue, 09/29/2015 - 16:51 | 6608005 wmbz
wmbz's picture

Same thing happened to my ex-wife at Blockbuster, in Ft.Lauderdale in 1991 when Wayne H. sold it. He held a huge meeting on stage telling all they were like family a tear down the cheek, etc...

When she told me, I said hurry up and get your resume out you will be looking soon. She didn't think so, bought into to his bullshit.

She was let go 4 months later!

Tue, 09/29/2015 - 17:19 | 6608139 thecondor
thecondor's picture

Yep, same here. My wife works for in the corp office of a tire and car service company that was sold to Bridestone.  When Bridgestone announced "shared services" I told my wife that she should get her resume ready and start thinking about looking for a new job.  Well that was in October of 2013.  I remember specifically the conversion.  We actually got into an argument about it in Fraunce's Tavern on Pearl St. in NYC.  I told her that big companies like that just wipe out employees with out care and she will be one of them.  Well Tomorrow is her last day.  Luckily she is a very smart person and has already found another job (pending a background check) in the accounting dept of a law firm relocating from NYC to here in my neck of the woods. 

Tue, 09/29/2015 - 18:14 | 6608386 Handful of Dust
Handful of Dust's picture

Be sure to take her pension plan or benefits with her if she can to the new place.

 

 

Tue, 09/29/2015 - 21:26 | 6609166 thecondor
thecondor's picture

Well they stopped giving pentions just before she started there 2000 so she missed that. We cashed in the 401k a while back because we ran in some hard times so that is gone too. But the new place is paying her more money per hour for less hours and good probability of over time. And she will be getting six months of severance. Company policy is OT is paid on hours worked over 35. Plus they also contribute 7% 401k per year and the health insurance so far looks fucking excellent! We just have to see how much the health insurance is going to cost us.

Tue, 09/29/2015 - 16:39 | 6607936 Sir SpeaksALot
Sir SpeaksALot's picture

funny since in the last 5 years the most of good jobs in US were started in energy industry :)

Tue, 09/29/2015 - 16:44 | 6607967 larz
larz's picture

course not CD

Tue, 09/29/2015 - 17:02 | 6608067 henry chucho
henry chucho's picture

They lose $44 dollars on every $44 dollar barril of oil they sell,which means a 200% loss on your business investment is a "sound" investment in todays world..

Tue, 09/29/2015 - 17:10 | 6608101 phoolish
phoolish's picture

They love debt.

Tue, 09/29/2015 - 17:44 | 6608240 Nothing Ever Happens
Nothing Ever Happens's picture

Icahned some folks.

Tue, 09/29/2015 - 18:03 | 6608339 Berspankme
Berspankme's picture

No worries, I saw Target was hiring seasonal workers. There are plenty of low wage shitty jobs out there- Obama cares

Tue, 09/29/2015 - 19:21 | 6608686 starman
starman's picture

Restructuring - benefit - share holders - 

Happily  ever after.

Tue, 09/29/2015 - 19:28 | 6608725 costa afuera
costa afuera's picture

These companies, since they try to cover so much ground when they're in high gear, have to hire hundreds of landmen, clerks, mappers, regulatory specialists, etc. They pay them pretty good, too, and they shouldn't be surprised when the ride comes to an end. Their methods of "exploration" are very employee-intense, and you can take my word for it that the exploration side show is over now. The companies are just trying to hold onto as much of what they've already gathered up as they can, at this point. That and dodging calls from the bank.

I talk to disenchanted oil company workers, rig hands and the like every day. The only response I have to their whining is, "I guess you haven't been in the oil bidness very long, eh?" That's seems like what an old fart ought to say to a young 'un going through his first bust. Don't know how many boom/bust cycles I've survived. More than a few. In the 80s, we were eating rock soup and mud pie out here. My kids thought that was the tits, until they figured it out. You want meat? Go snag a rabbit. Possum easy to catch, but way too gamey and greasy. I know this for a fact.

Tue, 09/29/2015 - 20:00 | 6608880 jmack
jmack's picture

possum is greasy, but  if you can cook the rue just so, its great in gumbo.

Wed, 09/30/2015 - 10:09 | 6610689 The Iconoclast
The Iconoclast's picture

No matter what the news you can count on ZH to say it's bad.  It's super tough in any business when prices fall by half in the span of a year. The airlines ain't hurtin' from low fuel prices, though.

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