About a year ago, the company, headquartered at 625 E. Kaliste Saloom Road, employed approximately 400 people, and today it has closer to 300, he says.
The affected employees were given severance packages that include extensions of insurance benefits. Welch declined to say how many employees were part of the Sept. 29 layoff.
With rig counts down more than 50 percent and the price of oil hovering in the $45-$50 per barrel range — down from about $100 in mid-2014 — layoffs have been occurring nearly daily in the oil patch.
“We waited as long as we could to do this, but it looks like the lower price scenario is going to be with us for a while,” Welch says.
The cuts impacted every location and every department at the company. “We had a few reductions inMorgantown (W. Va.), Houston, New Orleans, as well as Lafayette,” he notes.
The most recent downsizing is part of an overall 2015 streamlining strategy that included a 50 percent reduction in capital expenses and an almost 40 percent cut in lease operating expenses. Welch called the latter reduction “pretty remarkable,” noting it was the result of “some portfolio restructuring and just doing a better job in terms of managing expenses.” He also says service costs are going down.
Overall, general and administrative expenses have been cut by about 20 percent over the course of the year.“I hope that’s a good enough number,” Welch says.
“We can survive in the $50 [per barrel] world for a couple of years.”
He continues: “We have positioned ourselves over the last several years to be in the two lowest-cost basins outside of OPEC, and that is the Appalachian Utica [shale] formation and the deepwater Gulf of Mexico. So we have just about sold our shallow water shelf activities out and are now almost exclusively in deepwater or [the Appalachian Basin]. Long term in the commodity business, low price is going to win. We’re fortunate to be in that position. We have a lot of development opportunities to get us through this low-cost cycle where we’re not taking a lot of risk, but we can still grow our production next year, so that’s going to be a positive for us.”