DALLAS-Rumor became reality here last week when dozens of workers lost their jobs at Laredo Petroleum Inc. The Oklahoma-based energy outfit said it closed its regional office to cope with plunging oil prices.
The layoffs were "kind of like a death in the family," says Robert Silver, age 62, a geophysicist who had helped Laredo decide where to drill in the Permian Basin in West Texas.
Trouble has been looming over the oil patch since crude prices began falling last summer, from over $100 a barrel to under $50 today. But only now are the long-feared effects of a bust starting to ripple through the complex energy ecosystem, affecting Houston executives, California landowners and oil old-timers in Oklahoma.
Many big energy companies have said they plan to slash billions of dollars in spending along with thousands of jobs; energy giant ConocoPhillips told employees Thursday to expect a salary freeze and layoffs. Indicators like drilling permits in Texas have fallen sharply.
Cutbacks aren't yet reflected in broad data on employment, home sales or tax collections. For example, the federal Bureau of Labor Statistics says that employment in oil and gas extraction rose in December to 216,100, the highest level since 1986.
But fallout is beginning to affect people, starting with the legions working as suppliers to the energy industry.
Eric Herschap is chief operations officer at Exclusive Energy Services LLC, a private company in Orange Grove, Texas, that offers services, including equipment rentals, to exploration companies. His customers are demanding price cuts of 15% to 25%
Laredo, the company that closed its Dallas office, said it was laying off 75 employees, about 20% of the workforce at the company, which has a stock-market value of about $1.3 billion.
"While it is a necessary step due to the substantial drop in commodity prices and the resultant reduction in the company's drilling activities, we do not take such actions lightly," it said.
This post was edited on 1/30 6:35 AM by brahmanknight
WSJ
