Occidental Cuts Jobs and Trims Spending Plans : Oil Price Decline Cited as 2,000 Workers Let Go
Occidental Petroleum said Monday that it has eliminated 2,000 more jobs and carved another $150 million out of its 1986 spending plans in what the company called a reaction to the decline in oil prices and a consolidation at its recently purchased natural gas pipeline company.
Occidental said the action was part of a belt-tightening process intended to reduce the company’s payroll by about 3,500 over the 15-month period ending this December. The company had earlier announced the elimination of 700 oil and gas jobs.
The retrenchment would amount to about 8% of the company’s overall work force. If concentrated in its oil and gas operations, the cutback would slash the oil and gas work force by nearly one-third.
About 800 of the 2,000 jobs are in the Chicago and Houston areas served by Midcon, the pipeline subsidiary, and most of the rest are in Occidental’s overseas operations, according to officials at Midcon and Los Angeles-based Occidental.
The cut in capital spending will leave Occidental with about $600 million to spend this year on oil and gas exploration and production, a 40% decline from its original plans.
Streamlining Move
Chairman Armand Hammer said the retrenchment “will significantly streamline oil and gas and pipeline operations,” but Occidental offered few specifics on what projects will be affected or where the most jobs will be cut.
Analyst M. Craig Schwerdt, with the Los Angeles brokerage firm of Morgan, Olmstead, Kennedy & Gardner, said Occidental is cutting back on exploration in Britain’s North Sea and other high-cost areas. It costs the industry about $20 to find a barrel of oil there, or twice the average exploration cost.
Schwerdt said Occidental and other companies are continuing to show new cutbacks in their capital budgets as their majority partners in joint ventures decide to halt projects. Occidental, for instance, is a partner in a newly developed Alaskan oil field whose expansion was recently halted by Conoco, the manager of the project.
An Occidental spokesman said the employment and spending cutbacks aren’t related to the company’s operations in Libya.
