Newfield Exploration Co. (NYSE: NFX) is pulling back from its onshore Gulf Coast and Rocky Mountain office locations as it tries to trim costs, the company said April 29.
Newfield plans to close its offices in Denver, Colo, and North Houston (Greenspoint area) as part of a reorganization of the regional operating units. The company said the move will better align Newfield's workforce with near-term drilling and asset management plans and create future cost efficiencies.
Newfield will continue to manage its operations in the Midcontinent from its regional office in Tulsa, Okla.
"We are aggressively pushing for cost efficiencies in our operations and working to improve our margins in today's lower oil price environment," said Lee K. Boothby, Newfield chairman, president and CEO. "The combination of two operating regions into one will reduce our future G&A costs, increase collaboration between teams and allow us to quickly transfer key technical expertise to our most active projects.”
Newfield’s near-term plans continue to be focused on drilling in the Anadarko Basin's Scoop and Stack plays “where we are fortunate to have strong and improving returns at today's oil prices," Boothby said.
In a conference call in February, Boothby said Newfield would be on the lookout for ways to add to its position in the Anadarko Basin.
“We are hopeful that there will be opportunities for us to consolidate through bolt-on deals in the Anadarko Basin and we want the financial strength to do so,” he said. “Newfield is a leader in the area and we are building scale in a region where we have a proven and distinct competitive advantage.”
Closures
Newfield said onetime its restructuring cost will total about $20 million.
Newfield’s Rocky Mountain region is focused on oil production concentrated in the Uinta Basin of Utah and in North Dakota, in the Williston Basin.
In the Uinta Basin, Newfield’s largest Rocky Mountain asset is the Greater Monument Butte field area, where it owns interest in about 225,000 net acres. However, Newfield’s drilling operations in the Uinta Basin were temporarily suspended in early 2015 despite encouraging production of 25,000 barrels of oil equivalent per day (boe/d), 78% oil.
In the Williston Basin, Newfield controls about 92,000 net acres in North Dakota and Montana, with a focus on the Bakken and Three Forks of North Dakota.
For 2015, the company plans to run a single-rig program in the basin.
Newfield has been liquids-focused in the conventional onshore Gulf Coast. Newfield opened up the play after decreasing activities in conventional natural gas plays and selling non-strategic assets.
A company press release did not address any possible job losses. In the first quarter of 2015, the company reported a $10 million severance expense related to a 15% reduction in workforce.
In recent weeks, several companies have gone through another round of cuts—most notably large service companies such as Schlumberger Ltd. (NYSE: SLB) and Baker Hughes Inc. (NYSE: BHI).
On April 22, Weatherford International Plc (NYSE: WFT) also increased by 2,000 its total layoff count of 10,000 personnel.
During the first quarter of 2015, Baker Hughes closed or consolidated about 140 facilities worldwide and announced it would lay off 7,000 people. On April 21, Martin Craighead, Baker Hughes’ chairman and CEO, said that the company would cut another 3,500 positions.
And in mid-April, Schlumberger increased its announced staff reductions by 11,000 to 20,000.
Newfield, based in The Woodlands, principally operated in the Midcontinent, Rocky Mountains and onshore Texas. The company also has offshore oil developments in China.
Contact the author, Darren Barbee, at dbarbee@hartenergy.com.
