Houston-based energy major ConocoPhillips COP is among the string of oil companies to lay off staff in an attempt to counter the volatile oil prices. The American oil firm, which has already cut 1,000 jobs this year, says it will eliminate around 1,810 more positions.
The decision followed last month’s plunge that took oil prices to their lowest levels in years. Some hope was seen in the middle of last week, when a strong three-day rally till Monday made oil rebound from its six-and-a-half-year lows. The trigger for the rally was a report that Venezuela may be pushing the OPEC cartel to hold an emergency meeting to discuss the possibility of production cuts to halt the oil price rout. The latest weekly U.S. government report showing a surprise decline in crude supplies and the recent turn of events in Yemen – raising concerns over stability in the Middle East – also provided support.
However, all these went astray on Tuesday, when worries about the Chinese economy dragged the commodity down again.
ConocoPhillips plans to eliminate almost 10% of its workforce. The biggest proportion of the cuts will be in North America. ConocoPhillips plans to eliminate more than 500 jobs in Houston, where it is based. ConocoPhillips had 18,100 employees on Jun 30, 2015. The difficult macro backdrop has forced ConocoPhillips to some tough calls, which might however prove beneficial for its business going forward. The steps undertaken are expected to position the company for long-term success in any price environment.
With leading positions in both natural gas and heavy crude oil in North America, as well as a legacy position in the North Sea and growing exposure to lucrative international regions, ConocoPhillips expects to replace reserves and sustain production growth over the long term. For 2015, ConocoPhillips expects 2–3% production growth. For the third quarter of 2015, production from continuing operations is expected at 1,510–1,550 MBOED, excluding Libya.
ConocoPhillips currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Alon USA Partners, LP ALDW, Braskem S.A. BAK and Mitcham Industries Inc. MIND. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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Click to get this free report CONOCOPHILLIPS (COP): Free Stock Analysis Report BRASKEM SA (BAK): Free Stock Analysis Report ALON USA PTNRS (ALDW): Free Stock Analysis Report MITCHAM INDS (MIND): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research