Energy job cuts continue across Texas

OREANDA-NEWS. February 03, 2015.Texas oil and gas industry layoffs continued last week as service firms and exploration companies continue to cut costs and scale back spending amid the largest slump in global oil prices since 2009.

GE Oil & Gas will lay off 330 workers at its Lufkin Industries subsidiary, according to a filing through the Texas Worker Adjustment and Retraining Notification (WARN) Act. Headquartered in Lufkin, Texas, the company specializes in manufacturing pumping units, enclosed gear drives, and castings for heavy equipment, values and machine tools.

GE Oil & Gas said it has started restructuring projects to reduce the cost structure of the Lufkin business.

"This includes reducing employment, which is a decision we don't take lightly but one we must undertake for the long-term health of the business," the company told Argus.

Last week, US Steel Tubular Products announced it would lay off 318 people in Morris county, in northeast Texas, marking that company's second round of layoffs in a month. In early January, the company said it would lay off 142 workers at its pipeline manufacturing facility in the Houston area.

Other layoff announcements include Trican Well Service, which said it would lay off 125 workers in Gregg county, in east Texas; independent explorer Sandridge Energy, which is cutting 25 workers in Ector county in the Permian basin; and oil services company Lariat Services, which is cutting 26 workers, also in Ector county.

Breakeven costs for oil production in the Permian Basin are higher than other shale plays, such as the Bakken, and are estimated to stand slightly under \\$80/bl in the Midland basin, and slightly over \\$80/bl in the Delaware basin, according to Macquarie Research.

Layoffs in the energy industry have accelerated in the past month as the US crude benchmark has fallen to its weakest level in six years. Midstream operator Enbridge in December cut 100 jobs in its US gas pipelines and processing business. In January, oil services firms Schlumberger, Baker Hughes, and Halliburton announced cuts totaling 17,000. Meanwhile, BP last week said it would cut an undisclosed number of jobs in Houston and was freezing salaries around the globe.

Enterprise Products Partners laid off approximately 90 workers in the Houston area, with more cuts expected sources said.

Last week, crude sank to \\$43.58/bl in intraday trade, a low not seen since March 2009, but rallied at the close of the week.

On Monday, the benchmark hit an intraday high of \\$50.56/bl, and at midday had gained 1.8pc over the prior session.