Low prices force WPX to cut back
11 workers in Parachute lose their jobs to layoffs
Responding to low oil and gas prices, WPX Energy on Monday announced an 8 percent workforce reduction that includes 11 jobs in Parachute — although that office was spared a major downsizing occurring at its Denver location.
WPX is laying off 25 people in its Denver office, which will be sharply downsized because another 120 or so Denver employees have received offers to relocate to company headquarters in Tulsa, Oklahoma, under a consolidation.
WPX spokesman Kelly Swan said the decision doesn’t affect the company’s plans to operate three drilling rigs this year in a $200 million capital development program in western Colorado’s Piceance Basin. It continues to employ 220 people in Parachute.
Eighty-three employees are being laid off altogether. These also include 44 in Tulsa, two in New Mexico and one in North Dakota.
“These are tough decisions that impact good people — people who have worked hard and done their best for WPX. We do not take that lightly,” WPX Chief Executive Officer Rick Muncrief said in a news release.
In making its move, WPX cited an approximately 50 percent drop in oil prices and 33 percent drop in natural gas prices over the last half year.
“We’ve evaluated many options to adjust our cost structure, and no solution is perfect. Decisions are especially difficult when they affect people’s lives,” Muncrief added.
The company is offering laid-off employees six weeks to one year of pay based on years of service, a cash payment equal to six months of COBRA health insurance premiums for laid-off employees, outplacement assistance and other transition help.
With the layoffs, WPX retains about 900 employees supporting its primary operations.
WPX said the office consolidation “is designed to reduce costs, achieve efficiencies and bring the company’s technical professionals — such as engineers and geologists — together in one office to enhance how people work together.”
WPX plans to keep fewer than 15 people in Denver to do legal, environmental compliance, safety and government affairs work.
WPX operates in Colorado, North Dakota and New Mexico. It operates more than 5,800 wells altogether, most of them in the Piceance Basin.
“The Parachute office physically oversees 4,700 natural gas wells and is the hub of our activity in the basin,” Swan said. “The economics of running two large offices in metro areas (Denver and Tulsa) are very challenging in an environment like this where commodity prices have dropped so much. Hence, the need to reduce costs and consolidate those offices.”
WPX’s three-rig plans for this year in the Piceance are down from the nine it was operating locally at the end of the year. It spent about $500 million on new development in the Piceance Basin last year. It also has deferred hydraulic fracturing on recently drilled local wells and asked well development service providers for price concessions.
WPX also cut costs last year by offering a voluntary early-exit program accepted by about 100 people. It reduced general and administrative expenses by 11 percent in the fourth quarter compared to the same period a year earlier.
“Doggone, I hate to hear that,” Parachute Mayor Roy McClung said when told of WPX’s layoff plans.
He expressed no relief that most of the impacts were being felt in Denver rather than Parachute.
“It’s bad that somebody’s losing a job. I hate to hear that whether it’s here or Denver,” he said.
He said even 11 jobs is a big hit to a small community like Parachute.
“Even if it’s just a few that are affected here, it’s still a few too many. I’d like to see everybody be able to keep their jobs.”
He said he knows the layoffs were the kind of thing WPX has been trying to avoid.
“It’s something that’s just going to happen; it’s just the nature” of a business influenced by global factors, he said.
Another oil and gas company with a large Parachute office, Encana, laid off a handful of western Colorado employees in December 2013 as part of 25 percent corporate-wide layoffs that were part of a reorganization. It also suspended its local drilling then, but Encana spokesman Doug Hock said it continues to employ about 200 people between the Parachute and Rangely offices. He said that as a result of the reorganization in 2013, “we’re not contemplating any further staff reductions at this time.”