Nearly a month after cutting its budget by nearly 30% Houston-based Noble Energy, the second-largest oil and gas producer in Colorado started notifying hundreds of its employees they’ll be placed on unpaid furlough or moved to part-time work.
The Houston-based company is reducing 30% of its work force to half-time hours or placing them on furlough. The company will continue to fund the employees’ benefits in full, Noble Energy said.
The furloughs will start April 6, Noble Energy said.
The workforce changes are designed to be temporary, the company says, and it hopes to be able to reverse the changes some time after 90 days to six months.
“We expect to return people to full-time, and we want to stay connected to the talent pool that we have,” said Paula Beasley, a Noble Energy spokeswoman.
Noble Energy employs about 2,300 people overall, meaning the changes announced Tuesday will affect about 690 of its staff companywide.
The oil and gas company also is reducing its contract work force by 75%.
Noble Energy has hundreds of employees in Denver and working in its field operations in northeast Colorado.
The moves are in proportion with the company’s effort to slash spending amid an oil-price crash and the economic slowdown triggered by the COVID-19 pandemic. Domestic crude oil prices have tumbled from a per-barrel price in mid $50 range to around or below $20 per barrel in recent days as an already glutted global crude oil market sees demand evaporate.
Noble Energy said March 9 that it would reduce its planned 2020 capital expenditures by $500 million, or about 30% of what it had previously budgeted. The company now forecasts spending between $1.1 billion and $1.3 billion for the year.
“In light of the recent commodity price downturn, we are sharply reducing capital expenditures,” said David Stover, Noble Energy CEO, in a statement. “Deferring activity until commodity prices recover protects our investment returns, maintains free cash flow and strengthens the balance sheet.”
The hope is that when the oil market recovers, Noble Energy can begin to return to its pre-crisis staffing levels. How soon it will do that will depend on amount of work the company has, Beasley said.
Noble Energy has offshore and international oilfield production as well as domestic shale oil production in the Denver-Julesburg Basin of northeast Colorado and in the Permian Basin of West Texas.
About 80% of its spending reduction will be from its domestic onshore oil business, more than half cut from its Permian Basin operations, Noble said.
Noble Energy averaged a record 163,000 barrels of crude oil, natural gas and liquids production daily from its wells in the Denver-Julesburg Basin during the fourth quarter of 2019. That was 45% of Noble Energy’s worldwide total.
The company was focusing a majority of its 2020 investment on the Denver-Julesburg Basin because it has a low-cost “high-return, high-quality inventory” of wells and potential drilling sites, said Brent Smolik, Noble’s president and COO, during the company’s first-quarter conference call.
Source: Denver Business Journal