Colorado’s top two oil and gas producers are cutting employees’ pay and hours and placing workers on furlough as they cope with an extraordinary drop in demand due to the coronavirus-fueled economic clamp-down.
Noble Energy, the state’s second-largest oil and gas producer, said Tuesday that it will place roughly 30% of its U.S. workforce on furlough or part-time starting April 6. Employees placed on unpaid furlough and those reduced to half-time will continue to receive full health benefits, company spokeswoman Paula Beasley said in an email.
The cutbacks are designed to be temporary, focusing on the next 90-180 days, Beasley said. Employees can use their accrued paid time off before starting their furlough.
Noble Energy, based in Houston, has a total of 2,300 employees. It was unclear how many of the 650 Colorado workers would be affected by the reductions. In February, when the company announced plans for capital spending in the U.S., it said 60% it was allocated for the DJ Basin.
The company initially stopped recruiting new employees and cut its contractor workforce by approximately 75%.
Houston-based Occidental Petroleum, the dominant player in Colorado’s Denver-Julesburg Basin, has notified employees of a number of measures to respond to “this unprecedented time impacting our industry, and the global economy,” spokeswoman Jennifer Brice said in an email. The measures include cutting pay, which Brice said will affect everyone, from the management team on down.
The company didn’t specify the size of the pay reductions or the other actions.
“We deeply value our employees and want to keep them working for the health of their families, the communities we serve, and the overall economy,” Brice said.
Occidental, which acquired Anadarko Petrolum in 2019 and took over the Colorado operations, has about 600 employees in the state.
Both companies announced earlier this month that they would significantly reduce spending in the face of plunging oil prices. Oil prices, already on the way down, plummeted 24% March 10, shaking the stock market, when a price war broke out between Saudi Arabia and Russia.
As a result, Saudi Arabia has flooded the saturated market with low-price oil, further depressing prices. Adding to the industry’s woes is the global impact of the coronavirus, which has driven down demand for oil.
“We have a demand collapse that is just unfolding. The worst is probably going to be in the quarter ahead,” Ed Morse, managing director and global head of commodity research with Citigroup said in a call with reporters Tuesday.
Oil prices, which are at about $20 a barrel, will likely drop more, added Morse, speaking on the call organized by the National Association for Business Economics.
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