Amazing that we are near the end of the year and our November/December issue is already here. This year went by super fast for me. I hear the same from industry associates who also point out the virus, subsequent lockdowns, election year campaigns, and an uncertain future all played a role in consuming the direction of our daily lives.
As a result of the pandemic, the oil and gas industry took a strong hit this year. The price per barrel sank to an all-time low, and is now hovering in the low $40s, after starting the year above $60. As of September, $84 billion in debt has been brought to the bankruptcy court for the Southern District of Texas alone, nearly double the amount in 2016, the last major oil and gas downturn. The Haynes and Boone, LLP, Oil Patch Bankruptcy Monitor, compiled a list of notable companies with significant bankruptcy filings across the country, such as BJ Services, HI-Crush, Noble Corporation, California Resources, and the largest, Chesapeake Energy. There has been industry discussion for several years that oil and gas companies need to consolidate, and the prolonged pandemic may have forced that position. As a result of M&A activity, the companies merging may see costs savings, a larger, competitive footprint, and free cash flow for investors.
Naturally, bankruptcies, coupled with a slowdown in commerce, meant virtually every industry had to furlough or layoff employees, and the oil and gas industry was no different. In a recent Deloitte report, the industry lost 107,000 jobs this year or seven percent of the 1.5 million employed in the U.S. Texas, the nation’s largest oil producing state lost 39,900 jobs, followed by Louisiana with 12,300, and Oklahoma with 10,700, according to August employment data from the Bureau of Labor Statistics. For perspective, in Texas, the industry employed 297,100 workers 2014. Now 162,350 are employed as reported by the Texas Alliance of Energy Producers. Almost every major producer announced layoffs this year: Chevron plans to cut 6,000 employees globally; Shell 9,000; BP 10,000; and Exxon Mobil mentioned potential layoffs reviewed by country.
Several oil and gas companies announced mergers; presumably, a result of the pandemic and the subsequent oil price crash, along with the declining demand for oil. Chevron acquired Noble Energy; Pioneer Natural Resources agreed to buy Parsley Energy; two Oklahoma-based companies, Devon Energy and WPX Energy, merged; ConocoPhillips is acquiring Concho Resources; and Canadian oil sands producer, Cenovus Energy and Husky Energy agreed to merge. There have been several smaller acquisitions in every pocket of the oil and gas industry, from technology and software to equipment and services. Like our own personal finances, companies do what is needed to survive. Many will thrive and, unfortunately, some will not. Overall, the industry has seen this playbook before; it is a resilient market and will bounce back.
We close out the year on a positive note. OILMAN Magazine has expanded and now has a companion publication called OILWOMAN. I invite you to read our new magazine, on the flip side of the print edition, and online at OilwomanMagazine.com. We are excited to offer our readers the perspective women and other minorities bring to the oil and gas industry.
Here’s hoping 2021 with be better and brighter for us as individuals and for the industry as a whole. Happy holidays!