Energy & Environment

Houston And The Oil Market Crash: Exxon Says No Layoffs; Chevron To Cut 10% To 15% Of Worldwide Workforce

As the oil market crash impacts the Houston and Texas economies, we’ll continue to follow the story and provide updates at Houston Public Media.

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ExxonMobil Baytown Refinery

The price of Texas oil remains low as COVID-19 has halted demand and an international price dispute has caused an oversupply. More than many places, Houston is feeling the brunt of the downturn. Follow our updates here.

Updated 11:15 a.m. CT Thursday

Top U.S. oil producer Exxon Mobil told shareholders this week no layoffs are planned at the moment, even as the entire industry is suffering from low oil prices. Reuters reports shareholders for the Irving-based company also rejected climate-related proposals and splitting the chairman and chief executive’s roles at Wednesday’s meeting.

Chevron is taking a different approach: it’ll cut 10% to 15% of its worldwide workforce. Reuters reports the second-largest U.S. oil producer didn’t specify where it would make trims to its 45,000 employee workforce. A Houston Chronicle survey shows Chevron has about 7,000 workers in the city, Exxon employs about 16,000 locally. 

Chevron shareholders also approved a proposal to issue a report on its climate change related lobbying activities.

Updated 1:50 p.m. CT Tuesday

Before the price of oil crashed, Texas was seeing record revenue from the oil and gas industrya total of $13.4 billion dollars last year. That’s according to a new report from industry group the Permian Basin Petroleum Association. The Permian Basin in West Texas contributed about $9 billion in taxes and royalties to the state coffers in 2019. Overall the oil and gas industry contributed about $1.7 billion more than the previous year, and beat the record set in 2014. 

The increased revenue is mostly because of new technology making oil recovery more profitable in West Texas. At least, that was true last year before COVID-19 and an international price war drove the price of West Texas Crude to historic lows. The report acknowledges that while last year set records, this year’s price crash has, quote, “put the Texas Miracle on hold.”

Updated 11:05 a.m. CT May 20

Oilfield services company Halliburton is sharply cutting the amount of money it will return to shareholders, citing market conditions and “uncertainties regarding the depth and duration of this downturn.” The Houston-based company says for the second quarter of 2020 it will pay a dividend of 4.5 cents per share. That’s down from 18 cents per share last quarter. 

With drilling down and oil exploration nearly at a standstill, Houston-based oilfield services companies have taken a big hit. This week Flotek Industries reported a first-quarter loss of $64 million, after reporting a profit in the same period last year. Others, including Halliburton, have reported losses of $1 billion or more for the first quarter. 

However, nearly every part of Houston’s oil industry has been touched by the price crash. Earlier this week exploration and production company Oasis Petroleum recorded a more than $4 billion loss in its first quarter. Also, Reuters reports production company Gavilan Resources filed for Chapter 11 bankruptcy late last week. Experts say as long as prices remain below $40 per barrel, Houston will continue to see bankruptcies and layoffs.

A pump jack sits idle on a South Texas ranch near Bigfoot, Texas.

Updated 9:50 a.m. CT May 19

The monthly trading deadline that helped push oil prices below zero in April did not create the same panic among traders this month. That same deadline is today, but West Texas Crude has been trading around $32 per barrel since markets opened on Monday. However, even though oil isn’t heading into negative territory, experts say prices are still bad news for Texas companies. Most companies say they need $40 per barrel or more to at least break even. Economists say companies carrying a lot of debt are especially vulnerable if prices don’t go up soon.

Updated 6 a.m. CT May 18

When Texas oil traded in negative territory on April 20, many experts said one of the reasons why prices went so low was because of a trade deadline. That same deadline is coming up tomorrow, May 19th, but prices aren’t expected to dip below zero again

Updated 11:20 a.m. CT May 14

The World Petroleum Conference has postponed its Houston gathering until December 2021. It was originally scheduled for December of this year. The City of Houston says that event had an estimated economic impact of $60-80 million. Because of the COVID-19 pandemic a slew of energy conferences normally held in Houston have been cancelled this year, including CERAWeek and Offshore Technology Conference.

Updated 12:10 p.m. CT May 12

Experts say more bankruptcies for oil companies could be on the way. Houston energy companies are reporting billions in losses for the first quarter of 2020, and the next few months are not looking much better. 

“It’s a common aspect of the industry that an exploration and production company borrows money,” says Charlie Beckham, oil and gas bankruptcy lawyer with Haynes and Boone. “I think many, many of the oil companies here in Houston and across the country have been caught with a decrease in the price for the oil that they sell compared to the amount of debt they’re carrying on their books.” Read more from our interview with Beckham here. 

Halliburton facility, located on Heathrow Forest Parkway.

Updated 11:20 a.m. CT May 7

Another 1,000 Houstonians in the energy industry are out of work. Houston-based oil field services giant Halliburton will lay off that many people at its corporate headquarters. That’s on top of the 3,500 hundred people furloughed back in March.

In a statement Halliburton said the cuts were necessary because of low oil prices and a dramatic drop in demand due to the coronavirus. Many companies, including Halliburton, have posted losses of $1 billion or more for the first quarter of 2020, and most have said they’ll drastically cut spending. Meanwhile, thousands of oil and gas workers in Houston have been laid off or furloughed since mid-March.

This week Houston-based Apache Corporation also added its name to the list of companies reporting losses. Apache reported a $4.5 billion loss for the first quarter.

Updated 10:50 a.m. CT May 6

The same week Texas oil and gas regulators declined to cap how much oil companies can produce, one of the companies that had asked them to consider the idea posted billions in losses. Austin-based Parsley Energy reported a more than $3 billion dollar loss for the first quarter of 2020.

Parsley along with Pioneer Natural Resources had asked the Railroad Commission to consider state-mandated production cuts as part of a solution to plunging oil prices. Commissioners on Tuesday chose not to enact such restrictions.

Additionally, Houston-based Occidental Petroleum and Plains All American Pipeline both reported losses of more than $2 billion for the first few months of the year.

Updated 12:10 p.m. CT May 5

As expected, Texas oil and gas regulators today declined to force companies to reduce oil production. The Railroad Commission had considered the controversial idea as a way to help stabilize historically low oil prices, but ahead of a potential vote, two out of three Commissioners had come out against it.

Ryan Sitton was the only commissioner to publicly support the proposal.

“The primary message in the statute, in the natural resources code, is that we have to consider waste,” Sitton said during the meeting. “My disappointment is that we never really did that. We didn’t calculate how much was out there, we didn’t determine if proration could prevent waste and if so how.”

Commissioners did waive some storage and permit fees in an effort to help companies during the pandemic.

Chairman Wayne Christian also asked the newly formed Blue Ribbon task force to study solutions to flaring, the practice of burning off un-captured natural gas. Environmental groups have been pushing the state to take more action on the issue. Christian provided an overview of what the task force had done since its formation at the April 21 meeting, which can be read here

Updated 9:45 a.m. CT May 5

The Texas Railroad Commission, which regulates oil and gas, is meeting this morning, but is no longer expected to vote on a controversial proposal to limit oil production in the state. The Commissioners may still discuss the proposal, but two out of three members have already said they do not support it. Watch the meeting here

Updated 5:20 p.m. CT May 4

In a statement to Houston Public Media, Railroad Commissioner Christi Craddick says she does not support proration. The three member Commission regulates oil and gas in the state. A proposal to mandate companies cut oil production has been under consideration, but Craddick now joins Wayne Christian in opposing the measure. Ryan Sitton, the only Commissioner in favor of the cuts, said earlier today he believed the proposal to be dead. 

Here’s Commissioner Christi Craddick’s full statement:

“My focus is and has been on jobs and the strength of Texas producers. The Railroad Commission continues to provide operators regulatory certainty in uncertain times. We have done this by reducing regulatory burdens, extending deadlines and having an open door, albeit digitally, to work with operators to resolve challenges they are facing. That work is ongoing. Individual operators have moved swiftly to respond and have done so better than any top down control of the market that some have called for. I will not support proration. All producing states, including the federal government, have a role to play and I have not seen concrete action to do more than what the market is already doing.”

Updated 4:25 p.m. CT May 4

It appears the Texas Railroad Commission, which regulates oil and gas, will not vote on a controversial proposal that would force some companies to limit oil production.

Commissioner Ryan Sitton took to Twitter and TV today to say he doesn’t think a vote will take place at the May 5 meeting, proclaiming to Bloomberg TV “proration is now dead.” Sitton was the only one of the three member Commission to publicly come out in favor of the production cut proposal.

The production cuts proposal was originally brought to state regulators by two exploration and production companies. It was the topic of the Commission’s first ever virtual publicly hearing on April 14. It garnered a full day of, at times heated, testimony for and against the measure, with most large companies and industry groups in opposition. Some small producers were among those to speak in favor. 

Last week in a Houston Chronicle op-ed Commissioner Wayne Christian said he would vote against proration, the process of mandating certain companies reduce production at a certain rate, in this case by 20 percent. Christi Craddick did not publicly share how she’ll vote, but she expressed legal concerns at the April 21st meeting.

Sitton says it’s probably too late at this point—companies will have to reduce production because of the drop in demand due to COVID-19.

A previous price war between Russia and Saudi Arabia made things even worse for Texas producers. That disagreement resulted in a global oversupply of oil that, on its own, was driving down prices. That plus the hit in demand from the coronavirus has led to historically low prices for West Texas Crude, at one point trading in negative territory.

On Monday West Texas Crude was trading around $20 per barrel.

Updated 11:20 a.m. CT May 1

More oil and gas companies are posting big losses as a halt in demand due to COVID-19 plus a global oversupply of oil continues to keep prices low. Companies have laid off or furloughed more than 4,000 Houston workers in the last handful of weeks. Halliburton has closed two of its locations in Texas and announced hundreds more layoffs in multiple states.

Today Phillips 66 reported a $2.5 billion loss for the first quarter of 2020. ExxonMobil says it lost $610 million. Chevron had more positive news: it made $3.6 billion in the first few months of the year, but in its report says, “future periods are expected to be depressed as long as current market conditions persist.” West Texas Crude oil was still trading at less than $20 per barrel this morning. 

A sign is displayed outside the ConocoPhillips corporate headquarters Tuesday, Jan. 25, 2011, in Houston. (AP Photo/Pat Sullivan)

Updated 1:45 p.m. CT April 30

ConocoPhillips is reporting a $1.7 billion loss for the first part of 2020. The Houston-based oil exploration and production company posted about that much in earnings at this time last year. It’s the latest oil and gas company to report a loss of more than $1 billion for the first quarter. ConocoPhillips has also said it will voluntarily cut back on production because of weak oil prices.

Updated 12:45 p.m. CT April 29

State oil and gas regulators will take up a controversial proposal to mandate production cuts at their May 5 meeting. It would require a cut in statewide oil production by about one million barrels per day. Emailed public comments on the proposed order will be accepted through May 4.

The Railroad Commission regulates oil and gas. They’ve already held a virtual public hearing at which most larger companies and industry trade groups opposed the idea. Some small producers and environmental groups support it.

The Commissioners then discussed the topic at their April 21 meeting. Ryan Sitton was ready to raise his hand in favor of cuts, but Christi Craddick and Wayne Christian wanted more information before taking a vote.

The proposed order would exempt small companies that produce less than 1,000 barrels per day. Experts say they’ve been hit especially hard by the historically low prices. Other companies would need to restrict their production. The goal is to cut production statewide by 20 percent each month. If a company doesn’t comply, it could face a $1,000 fine for each barrel it produces over the limit. 

The order would also require the Railroad Commission to meet each month to determine if the mandated cuts are still needed.

If the order passes it would be the first time regulators enacted such restrictions in the state since the 1970s.

An offshore oil rig.

Updated 9 a.m. CT April 27

BANGKOK (AP) — Contract driller Diamond Offshore has filed for bankruptcy with debts of $2.6 billion, as the energy industry is hammered by crashing oil prices.

Court documents seen Monday show Houston-based Diamond Offshore Drilling Inc. filed the petition in Houston on Sunday, citing the downturn that accelerated with a recent oil price war between Russia and other major producers.

The global economic crisis caused by the coronavirus pandemic has devastated the oil industry in the U.S., which pumps more crude than any other country. Both offshore and onshore oil companies have been laying off hundreds of people. 

Updated 12:10 p.m. CT April 24

Oil and gas companies have laid off more than 350 Houston workers over the last two weeks, according to notices filed with the state. Companies reported more than 2,000 layoffs in oil and gas statewide since April 13, although some took place earlier in the year and are just now being filed. The layoff announcements come as oil reached its lowest price ever this week. In Houston, Baker Hughes and Diamond Offshore Drilling have both laid off more than 100 workers in April. Find more of our coverage on Houston area jobs here

Updated 2 p.m. CT April 23

How does Texas oil trade at less than $0 a barrel? We found out this week as prices plummeted, and for the first time ever, West Texas Intermediate (WTI) traded in negative territory. Listen as News 88.7’s Kyra Buckley and Eddie Robinson break down this astonishing week in oil prices.

The logo for Baker Hughes appears above a trading post on the floor of the New York Stock Exchange, Tuesday, June 26, 2018.

Updated 11:25 a.m. CT April 22

Baker Hughes is the latest Houston-based oilfield services company to report billions of dollars lost in the first few months of the year. Today the company announced a net loss attributable to Baker Hughes at more than $10 billion, compared to a $32 million net income at this time last year. It comes after Halliburton and Schlumberger also announced big losses for the first quarter of 2020.

Updated 10:55 a.m. CT April 21

Texas oil and gas regulators will not vote today on a proposal to cut oil production statewide. They will continue to research proration, along with other methods, to help Texas producers. They could take the issue up again at their May 5th meeting.

Updated 10:10 a.m. CT April 21

The Texas Railroad Commission, which regulates oil and gas, is set to discuss the proposal to mandate oil production cuts during this morning’s meeting. Watch the live feed here

FILE – In this Wednesday, April 8, 2020, file photo, the sun sets behind an idle pump jack near Karnes City, Texas. Demand for oil continues to fall due to the new coronavirus outbreak. (AP Photo/Eric Gay, File)

Updated 9:20 a.m. CT April 21

After West Texas Crude traded below $0 a barrel for the first time ever on Monday, prices are back in the positive, but not by much. Traders are still concerned that storage space is running out as worldwide oil demand remains low because of the pandemic. 

Updated 2:50 p.m. CT April 20

NPR is reporting that for the first time ever West Texas Intermediate (WTI) is trading below $0 a barrel. That means some in the oil trade are paying to offload their barrels amid a concern that storage space is getting low. Overall demand for oil has dropped significantly due to the Coronavirus pandemic, and international price disputes have contributed to an oversupply.

Updated 1:25 p.m. CT April 20

NEW YORK (AP) — Stocks are mixed in midday trading on Wall Street, while the price of oil cratered to never-before seen lows. A barrel of benchmark U.S. oil for May delivery fell below $1.50 per barrel Monday. While the plunge was largely due to technical reasons, prices for other oil contracts also plummeted on the same fear. Demand for oil has collapsed so much due to the Coronavirus pandemic that facilities for storing crude are close to running out of room. 

Updated 12:15 p.m. CT April 20

The price of West Texas Crude continues to fall on Monday to less than $5 a barrel at times. One reason: oversupply of oil is leading to fears that there’s not enough storage space. Experts do say that futures are back in the $20 a barrel range. 

Updated 11:45 a.m. CT April 20

Houston-based oil giant Halliburton says it suffered a $1 billion net loss for the first quarter of this year. Halliburton has already furloughed 3,500 workers in Houston and announced layoffs in other states. The announcement comes as Texas oil hits a 20 year low. West Texas Crude traded at less than $12 a barrel at times Monday morning, the lowest it’s been since the late 1990s. Experts say futures are doing okay, though, and prices are expected to go back up slightly in coming weeks. 

Prices at the gas pump are also down. On average drivers in Houston will pay $1.57 per gallon according to gasbuddy.com. That’s down more than $1 from this time last year. 

The logo for Schlumberger appears above a trading post on the floor of the New York Stock Exchange.

Updated 11:40 a.m. CT April 17

Oilfield services company Schlumberger will furlough workers, cut jobs, and slash spending to try and keep up with the historically low price of oil. The Houston-based giant reported a loss for the first quarter of 2020. The company says it will close some facilities and lower salaries but did not provide details.

Updated 1:25 p.m. CT April 16

As Texas oil and gas regulators decide if they should mandate production cuts to stabilize the price of oil, Houston-based ConocoPhillips says it will do so voluntarily. The company says it will start curtailing production in Canada and the contiguous U.S. by 225,000 gross barrels per day in May. ConocoPhillips says it will also cut spending by an additional $3 billion for a total of more than $5 billion.

The Texas Railroad Commission holds first ever virtual public hearing on a proposal to cut oil production by 1 million barrels a day in May. Clockwise from top left: Commissioners Wayne Christian, Ryan Sitton, and Christi Craddick. April 14, 2020.

Updated 10:15 a.m. CT April 15

In a rare move, some oil and gas companies are asking the state to regulate them more. They want the Texas railroad commission to put a cap on production for all companies in the state, saying it will help stabilize historically low prices.

However, not everyone agrees, and the commission heard both sides in a virtual hearing on Tuesday April 14. Listen to our coverage of the hearing, and read more from our Texas Newsroom partners here.

Updated 10 a.m. CT April 14

Texas oil and gas regulators are discussing mandatory production caps at a virtual public hearing today. Watch the livestream meeting here. Supporters say the move would help stabilize the now-plunging price of oil; opponents say they don’t want state intervention in the market. Pioneer Natural Resources and Parsley Energy asked the Railroad Commission, which regulates oil and gas, for the meeting last month. Company leaders, economists, and other industry experts are expected to weigh in, and a vote could come as early as next week. The Commission hasn’t capped production since the 1970s. Find more of our coverage here

Updated 4 p.m. CT April 13

Houston oil and gas workers have experienced price crashes before. However, with the global pandemic and international supply squabbles both driving down the price for Texas oil, is this downturn different than ones in the past? Find our coverage of how Houston workers are feeling here

Mohammed Sanusi Barkindo, Secretary General of OPEC, gives opening remarks Thursday at the OPEC and non-OPEC Ministerial Meeting, via webinar.

Updated 9:20 a.m. CT April 10

DUBAI, United Arab Emirates (AP) — The OPEC oil cartel and nations including Russia have agreed to boost oil prices by cutting as much as 10 million barrels a day in production. Even more countries, including the United States, were discussing Friday their own cuts in what would be an unprecedented global pact to stabilize the market. The agreement between OPEC and partner countries aims to cut 10 million barrels per day until July, then 8 million barrels per day through the end of the year, and 6 million a day for 16 months beginning in 2021. Mexico had initially blocked the deal but said Friday that the U.S. will take on some of its cuts.

Updated 11 a.m. CT April 9

OPEC will hold an emergency meeting today to talk about production cuts. Listen to this preview from NPR’s Jackie Northam, and find more coverage on how the dispute between Saudi Arabia and Russia has impacted Houston here

Updated 1:15 p.m. CT April 8

Marathon Oil will join the growing number of companies that are cutting spending due to market conditions. The Houston-based exploration and production company says its 2020 capital spending is going to be about 50 percent below actual capital spending in 2019.

North American exploration and production companies are set to reduce spending by more than 35 percent relative to 2019, according to research firm IHS Markit. Of the 44 companies that have made public spending announcements, 41 are cutting levels.

A drilling rig near Kennedy, Texas.

Updated 12:40 p.m. CT April 7

Houston-based pipeline operator Plains All American says it will also slash its capital expenditure budget as companies react to plunging oil prices. In a statement the company said it will reduce its capital program by 33 percent. It also said Plains has completed a $165 million asset sale.

Updated 11:05 a.m. CT April 7

Texas-based ExxonMobil will cut spending by 30 percent this year. It’s the latest oil and gas company to announce cuts due to COVID-19 and low oil prices. The company said it will also slash operating expenses by 15 percent. Most of the spending reductions will be in the Permian Basin in west Texas.

Updated 2:45 p.m. April 6

Houston-based oilfield services firm Halliburton will lay off 350 employees in Oklahoma, according to a state filing. Reuters reports staff cuts could begin this week as COVID-19 and international price disputes continue to hurt oil prices. Last month Halliburton placed more than 3,000 Houston employees on mandatory furlough

Petrochemical plants and refineries are shown in this aerial view Friday, Jan. 21, 2011 in Deer Park, Texas near downtown Houston.

Monday, April 6, 2020

Oil prices are at a historic low, and the impacts are being felt in Houston and across Texas. 

The COVID-19 pandemic and a dispute between Saudi Arabia and Russia are keeping West Texas crude at around $20 per barrel. On average, producers in west Texas told the Dallas Fed Survey they need to make around $30 to cover expenses.

The coronavirus health crisis means demand for oil is down as more people stay home, and supply is filling up in Texas and other oil-producing states. That alone would drive down the price.

But the disagreement between Russia and Saudi Arabia further complicates things, as both countries have threatened to flood the market with cheap oil, which some experts say will hurt U.S. producers

Because the oil and gas industry is being hit from two different sides, experts say we could see layoffs and bankruptcies. Small and mid-size producers are especially vulnerable

As oil prices plunge, Houston Public Media is following the story, and providing updates here and on the air.

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Kyra Buckley

Kyra Buckley

Energy Reporter

Kyra Buckley is an Energy Reporter with Houston Public Media. Before joining the News 88.7 team she was the Morning Edition Host and a reporter at KUNC in Northern Colorado. She started in public radio in her hometown of Eugene, Oregon where she hosted Weekend Edition and reported for KLCC....

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