Liberty Oilfield Services Makes Staff, Salary Cuts
Liberty Oilfield Services Inc. has reduced the size of its workforce, the number of active frac fleets deployed, capital expenditures and its general and administrative cost structure, due to reductions in customer activity.
“The COVID-19 pandemic has led to the world’s largest oil demand destruction that will reset oil and gas development activity levels over the next year or more,” Liberty CEO Chris Wright said in a written statement. “We have never before reduced our workforce, always charting a different path. We deeply regret that today’s circumstances necessitate that we make significant cuts to our workforce and restructure the compensation for those remaining.”
According to a WARN notice submitted to the Colorado Department of Labor and Employment, the layoff was effective April 2 and impacted 183 employees at its Adams location. A separate WARN notice was also submitted to Job Service North Dakota indicating 204 employees would be affected at its Williston, North Dakota location, effective April 2.
Liberty is also cutting 2020 total capital expenditures to $70- to $90 million, a 50% reduction from previous expectations. In addition to the significant staffed fleet reductions of about 50%, Liberty has adjusted variable and other compensation for employees to align cost structure with current market conditions.
Officers of the company have agreed to a base salary cut of 30% that is greater than the previously announced 20%, effective April 1. This is on top of the cancellation of cash variable compensation programs for the year which equate to a reduction of about 66% in annual cash compensation versus 2019. Liberty’s directors have also agreed to reduce their cash retainer for board service by 30%, effective April 1.
Finally, Liberty is suspending future quarterly dividends until business conditions favor reinstatement.
“These industry conditions are unprecedented. Hence, we are taking bold, decisive action to position Liberty to survive this downturn and come out in a stronger competitive position, just as we did during the previous downturn. We are playing the long game. The next few months are likely to be the most trying as storage constraints are blowing out differentials across all basins, leading to significant interruptions in frac activity.”
“We currently expect that industry-wide activity in the second quarter will be down more than 50% from first quarter levels. We are working closely with our customers to help them deal with these interruptions. There is likely to be an increase in industry activity from second quarter levels in the later part of the year, but it will be at a reduced level from the activity before the COVID pandemic.”
To contact the author, email email@example.com.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.