Around 300 corporate office and field staff have been let go this week by Penn West Petroleum. – the new execs are trying to control costs and are cutting staff to reduce payroll costs.
The Calgary-based oil/gas company said last week that the total employee count was cut by 25% since the start of the year – 30% since last fall.
The head count is now less than 1,600 full-time equivalents, it said, down from 2,250 a year ago. It had earlier reported trimming 10 per cent, to 1,935, in the first six months of 2013.
“This week, Penn West has taken another series of focused steps to restore its competitiveness,” said Dave Roberts, who took over as president and chief executive July 1 from Murray Nunns, in a news release.
“With this week’s change, we have now reduced the number of staff across the enterprise by over 550 from the beginning of the year.”
He said the company is now staffed at “an appropriate level,” while adding he will continue to drive cost improvements.
Rick George, retired Suncor Energy Inc. president and CEO, was appointed chairman of Penn West in May and vowed to improve the company’s operational performance to lift its stagnant share price.
Analyst Gordon Tait of BMO Capital Markets said Thursday the company had hinted at further cuts while releasing its second-quarter results last month so the layoffs were not a total surprise.
“Remember they’ve also over the last couple of years sold off assets so they are a smaller company and, I think, they intend to sell more,” he said.
“So you can’t keep the same number of staff if you’re selling assets.”
Penn West reported production fell 14 per cent to 140,000 barrels of oil equivalent per day (63 per cent liquids) in the second quarter from 163,000 boe/d a year earlier.
Tait said if Penn West can keep its production up with fewer employees, it will improve its financial performance and balance sheet and that will likely be supported by investors.
Roberts said the company is “focused on stewarding Penn West toward achieving consistent, industry-leading metrics in the areas in which we operate.”
The company expects to record a charge from employee layoffs of about $25 million in the current quarter.