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The Shale Massacre: Chevron Fires Another 7,000 After Laying Off 1,500 Three Months Ago
Back in January, in the aftermath of the first plunge in commodity prices, and oil in particular, oil major Chevron had the unsavory distinction of being the first US oil giant to admit cash flow "constraints" when it was forced to scrap its buyback. And since oil's dead cat bounce fizzled just around the summer before resuming is slide, it was inevitable that Chevron would proceed with trimming even more cash outflows.
It did so for the first time in July, when as we reported at the time, Chevron would layoff 1,500 jobs globally, saying that "the cost reductions due to cuts in the corporate center are expected to total $1 billion with additional cost savings expected across the company."
And even though Chevron said in July that its cost-cutting initiatives would be "completed by mid-November of 2015" it decided to surprise everyone moments ago when on its earnings call it announced it would not only slash its capex by another 25%, but will shortly distribute another 7,000 pink slips. The reason: another terrible quarter in which the $2 billion in earnings were a 73% plunge from a year earlier.
From the company's press release:
“Third quarter earnings were down substantially from a year ago,” said Chairman and CEO John Watson. “While downstream earnings remained strong, lower overall earnings reflected weaker market prices for both crude oil and natural gas, which depressed upstream profitability. We are focused on improving results by changing outcomes within our control. Operating and administrative expenses are 7 percent lower than last year, and we expect further reductions in the quarters ahead.”
“We expect capital and exploratory expenditures for 2016 to be $25-28 billion, roughly 25 percent lower than this year’s budget,” Watson continued. “We expect further reductions in spending for 2017 and 2018, to the $20 to $24 billion range, depending on business conditions at the time. With the lower investment, we anticipate reducing our employee workforce by 6–7,000.”
The good news: shareholders have nothing to worry about: the dividend of $1.07 per share is safe and sound, even though nearly 10,000 people have lost their jobs at Chevron so far this year.
And while the US department of labor magically continues to report week after week that initial jobless claims have literally never been lower, don't tell that to US workers across the shale patch and especially in Texas where as the accurate report of what is really going on from Challenger Gray shows, it is nothing short of another great recession.
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Cost reductions due to the Saudi's... Maybe Obozo should kiss another hand.
Has Obozo yet kissed the Saudis on camera? Methinks those Saudis are rayciss.
Who are we kidding. Obozo is sucking their cocks.
Fuck I am having a construction industry nightmare now. Thanks ZH.
They're also cutting the number of weeks you can collect unemployment.
Down in Florida they've cut the number of weeks from 26 to 14.
Another great way to move people of the dole quicker and keep the unemployment numbers low.
Moar American layoffs surely has to hurt Putin, right? Barry's cheap oil policy is working like a charm!
Naw, Putin has this "Put the Russian boys to work in Syria" scheme that is going swimmingly. Lots of jobs for young Russian men in Syria, and training is in the job. I mean, how hard is it to learn to load rockets onto the bottom of an attack helicopter?
~"Chevron Fires Another 7,000 After Laying Off 1,500 Three Months Ago"~
Kind of puts a new meaning to "I'll be home for Christmas", doesn't it?
That's way much different than kissing. I wouldn't kiss Oprah but she can suck me for instance. Also, to answer the previous poster; yes, the Arabs are racist and considers black people as slaves. They we're also the slavers that sold slaves to the American colonies and still doing the practice to this time. You go to any Arab nation and see if you can find blacks amongst them or in their towns or villages or cities. If there are any, those are just imported workers or terrorist imports to fight for ISIS or Al Queda.
58,225 laid off in District of Columbia?
I can think of another 537+ that should be fired today. That's just the tip of the iceberg, doesn't even start in on all the departments and agencies.
Me thinks you meant ass not hand.
But next Thursday's number will still show 270,000 +/- in claims.
In 2030, new oll extraction won't be profitable anywhere. Maybe sooner than that for the USA.
huh?!?!??!
There is a good bit of discussion on this topic over on the Hills Group. http://www.thehillsgroup.org/
The bottom line is that we are burning through the high quality product leaving us with the difficult to process hydrocarbons. The misconception that every barrel of oil is the same leads analysts to conclude that shale oil, tar sands and heavy oil are on the same level with light sweet crude. They are not. There comes a point when the costs to extract and process these oils exceed their economic value. At that point, the oil in the ground is not economically viable to extract.
A classic example of this dilemma played out in the Monterey Shale formation.
http://bismarcktribune.com/bakken/breakout/technically-recoverable-oil-in-california-monterey-shale-severely-downgraded/article_b36fcf50-1751-11e4-8e1b-0019bb2963f4.html
To the newly unemployed Chevron dischargees: write your letter of thanks to the horseface aka Kerry, thanking him for convincing Saudi Arabia to flood the market with oil to screw Russia.
Isn't North Dakota supposed to be a shale oil dependant state?
Only 170 layoffs?
You don't layoff Independant Contractors, you simply don't renew their contracts. Avoids unplesantries like severance and/or unemployment payouts to the state...
Well, when oil shoots back up as the fuckery around ukraine/syria/yemen/temple mount flares up - they can get their jobs back.
2 month vacation, boys.
So... did DC actually shut down?
Nope, the clowns are still at the Circus.
About the size of the IRS.
Hope and Change.
Gold Cartel hits the market with naked shorts, tryin' to discourage oil investors from pulling their funds and taking physical delivery of gold and silver. There ain't enough ounces for delivery.
But balls to the wall Tepper was jus telling us on CNBS how great everything is in this country. Surely he can't be wrong can he?
Shale oil is not dead yet.
Over 58,000 laid off in the District of Columbia?
Well, I guess it's a start.
I wonder the RIG is drop why the production have not drop , it appear the efficiency are improved in the shale oil industral .
I think it is more a matter of over drilling (instead of efficiency). The industry drilled a lot more wells than they completed. Drilling a well is like building the shell of a house. Completing a well is like installing the carpet and furniture in the house. You can't produce the oil until you complete the well like you can't move into the house until you hook up the plumbing and the install the carpet, for example. So, while there aren't nearly as many wells being drilled there are still a bunch of wells that need to be completed. Production should continue to grow for a while longer as we work through that inventory and then drop a lot. At least, that's what I see happening.
Not all wells are created equal. Some are more efficient than others and thus cost less/bbl.
This is true. However, if I understand your implication correctly, efficiency is about how long it takes for a rig to drill a well more than it is about the quality of the rock and what a well may ultimately produce. We don't control geology, but we do control drilling and completion efficiency. So, when I say it is more about over-drilling than efficiency, I am saying that we have flat out drilled too many wells (given current demand) regardless of how efficiently we drilled them.
It is 100% true that a lot of wells were drilled into uneconomic rock and that there is a wide range of expected production results. The bottom line remains that there is too much oil for too little demand. And, once we work through this process of fracing all of the wells in inventory we will get to the end and realize, "oops...we haven't been drilling many wells for the last 2 years". That will be a fun moment. Because, as most of us know, shale oil wells decline very rapidly. There will be a gap between supply and demand that I believe will make the price of oil increase sharply.
Well, if this news doesn't catalyze a couple hundred point surge in the DOW, what will?
Dow is so so, but CVX is up 1.58% as I type.
Coulda shoulda went with coal.
Shale... seriously??
Wow magically we still have 5% unemployment and things are so good the Fed is going to raise rates...
When companies layoff 10,000...was there 10,000 too many before? Just asking... don't shoot the questioner.
Sometimes when there is a boom on, the big boys will jump in and lock up suppliers and specialized labor. They don't want to get caught short. I don't know if this is the case here , but I have seen it happen before.
"The reason: another terrible quarter in which the $2 billion in earnings were a 73% plunge from a year earlier."
Yes, the owners only made $2 billion—a great reason to cut 7000 workers' pay to $0.00...
I live in San Ramon by their HQ's,will give an update on the local housing market in a couple of months
One of my buddies works at their HQ. Do a lot of people live around Walnut Creek?
I laid off all but 1, yes just one left, of my employees last week. We manufacture and rent equipment for processing oil well drilling waste. Now, many states are just letting the drillers/operators dump the mud on site instead of processing it before being deposited in a pit next to the drilling rig or hauled to a landfill. I simply do not know what to do any more. www.solidifly.com I did check this morning though and propane to heat our small factory building is now being delivered for 89 cents a gallon; honestly I wish it was $2.00. I'm exhausted of this whole thing and I'm 60 years old---and wondering what next.
Sounds grim.
How many is all but 1?
I sure hope those employees have a solid 12 month (or moar) cash cushion to pay their bills because from what I hear from my engineer energy friends in Houston they ain't gonna be hired back soon. Even if oil picks up there'll be a big lag in hiring they said.
I <3 cheap gas. I wish they would stop ripping me off on #1 Kerosene, a product you get from oil Before it is refined into gasoline.
There were 192 active drilling rigs in North Dakota in 2014 as of today there are 69, according to the big three an average of seventy people are employed directly per rig and yet North Dakota has laid off 172 people?
Independent contractors are not human beings in the eyes of the State or the US government. They are non-people and dont count anywhere.
They could literally be killed and buried in a mass grave and that would be beneficial under the present way of thinking for these entities.
The Dept of Mineral Resources rig count is not accurate. I know for a fact that 3 of the rigs they listed this morning, and for the last 3 months, as being active are in fact laid down--in the weeds south of Watford City.
Thank God we have a whole pool of really talented Presidential candidates on hand that can right the ship when elected!
Not.
Livin' the dream. Cause that's what it was.