Devon Energy has become another major energy company in Oklahoma to blink in the midst of the oil price downturn. The Oklahoma City based company confirmed Wednesday it is preparing to make layoffs over the next few months, calling it a “necessary part of the company’s near-term cost-management efforts.”
“To maintain our financial flexibility while oil and natural gas prices remain weak, Devon continues to thoroughly examine all options to lower the company’s cost structure,” said the company in a Wednesday afternoon statement. The statement followed an announcement made to employees during a town-hall meeting at the Cox Convention Center earlier in the day.
But Devon is not giving any indication how many employees will become victims of the layoffs.
“The company has not determined the extent of the reduction but expects the majority of layoffs to occur by the end of the first quarter,” explained the statement.
It was eleven months ago when Devon announced during its fourth-quarter earnings report for 2014 that it planned a 20 percent cut in its exploration and production capital budget. It also came after Devon a year earlier had wrapped up a $6 billion purchase of 82,000 acres in the Eagle Ford play in south Texas.
During the third quarter 2015 announcement, Devon’s president and CEO Dave Hager said,” Devon delivered another oustanding operational performance in the third quarter.” The company had core earnings of $316 million in the quarter and generated cash flow from operations of $1.6 billion, which was a 41 percent increase compared to the second quarter of 2015.
Despite the challenging global energy prices, Devon executives indicated optimism.
“Devon’s financial position remains exceptionally strong with investment-grade credit ratings and excellent liquidity. The Company excited the quarter with net debt, excluding non-resource EnLink obligations, totaling just over $7 billion. Devon had cash balances of $1.8 billion at quarter end and has no borrowings under its 43.0 billion seior credit facility,” said the company in announcing third-quarter results.
Things obviously changed from the third quarter to the fourth.
