Oil prices are stabilizing and rigs are getting back to work, but there’s one downturn trend that will continue to bedevil the industry: all those layoffs have depleted the oil and gas workforce.
About 45 percent of oil and gas executives surveyed by Grant Thornton and Hart Energy said they intend to maintain current staffing levels. But 31 percent said they need to staff up.
And the demographics aren’t in their favor. Baby boomers are preparing for retirement, and the termination of hundreds of thousands of jobs during the last 18 months has taken a toll. As of May, the hit to oil and gas jobs around the world totaled 351,410, according to Houston-based Graves & CO.
“The deep cuts have left laid-off workers wary of recommitting to such a volatile business,” Grant Thornton said in the survey’s report. “While the first round of hiring may still be easy to recover, the second will be harder.”
One option for companies struggling to staff up in a hurry will be to outsource routine jobs, said John Laborde, Grant Thornton’s energy tax leader. Some large integrated energy companies have outsourced parts of their tax compliance work.
“Reducing infrastructure for routine functions makes it easier for companies to ramp up in recovery and keep the best talent focused on the highest value-add activities,” he said in the report.
And producers must be nimble to operate in the new oil market environment. But the study found that just 17 percent of respondents affirmed they will be ready to move quickly when the market recovers; 52 percent said their current cash flow would only maintain current operations; and 15 percent they will add additional rigs.
Grant Thornton said the combination of falling profit and tighter credit markets created an industry-wide focus on balance sheets. And any increase in investments puts working capital demand on struggling balance sheets.
“Maybe they’re raising $2 billion, but they are also spending about $2.3 billion each year,” said Kevin Schroeder, Grant Thornton’s national energy practice leader, in the report.
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