Weatherford to cut 5,000 jobs as it fights oil slump

CNBC / Reuters ^ | February 5, 2015

[2ndDivisionVet]

Weatherford International plans to cut 5,000 jobs, or about 9 percent of its workforce, by the end of the first quarter as the oil services company tries to save costs amid sinking oil prices and budget cuts.

The job cuts will focus on both operating and support positions and a majority of the reductions will be in the Western Hemisphere, the company said in a statement.

Weatherford, which currently employs about 56,000 people across the world, expects the job cuts to result in annualized savings of over $350 million.

"Due to the quickly changing market conditions, we are aligning and reducing our cost as well as organizational structures to match the new environment," the company said....

[PistolPaknMama]

I wish I could find something somewhere that explains this to me. Prices at the pump now are about what they were eight years ago before The Won. People use about the same amount of heating fuel and gasoline as they always do, maybe even more when it costs less. So the demand doesn’t change, and maybe even rises with lower costs. There I don’t understand these layoffs. It’s not because of decreased demand. Will they just shut down facilities until they get the price they want?

[Repeal The 17th]

“...It’s not because of decreased demand...”
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Yes.
It is.

[umgud]

What I’m seeing in the oilfields is most expansion projects and new exploration has come to a schreeching halt. Marginal wells and more costly production is also being shut down.

Existing production is still chugging along.

[Gene Eric]

Oil is an investment commodity subject to trade and speculation. It is NOT valued as a direct production cost to the consumer.

[Dusty Road]

The problem is we met the demand in fact we over produced causing a 2 million barrel a day surplus. While that sounds like allot it’s actually very little when we look at the world market. It doesn’t take much of a slow down to eat that up quick as we’re already seeing.

[Dusty Road]

When it costs more to operate than it makes the answer is simple. I’ve got 8 wells that would fall into that category if not for the gas they produce. The gas has almost zero operating expense.

[thackney]

Prices at the pump now are about what they were eight years ago

Eight years ago, Feb 2007, the price of gasoline was 2.28 a gallon and rising every month with a strong, growing economy.

People use about the same amount of heating fuel and gasoline as they always do, maybe even more when it costs less.

Because of the prices 7~8 ago, gasoline consumption began to fall after decades of climbing. Driving less, more economical vehicles, more alternative fuel vehicles started a decline in gasoline consumption that only recently began to turn around.

But US gasoline consumption is only 10% of global oil consumption. The drop in growing demand over the past half year has mostly come from Europe and Asia.

There I don’t understand these layoffs.

The past staffing was support a very fast growing supply in the US. That supply grew faster than demand and needs to slow down or will continue to drive prices down. Drilling rig counts are down significantly in the US.