Consol Energy Inc. said it is cutting its Appalachian Basin workforce, confirming layoffs in its gas division and joining several of its peers across the country that have recently announced similar plans aimed at reducing costs amid the commodities downturn.
The 150 year-old company, which was once a traditional coal producer, has been intently focused on growing its gas division, CNX Gas Co., in recent years. Its acreage positions in the Marcellus and Utica shales have ballooned, while retrenchment in its coal operations has led to thousands of job cuts over the last decade on that side of the business. But as the price of oil has tumbled since last summer, and the price of natural gas in the Northeast has remained stubbornly low, more operators in the region are scaling back.
"Like many of our peers operating in the Marcellus play, we are evaluating our workforce and taking steps to streamline our organization as the industry is confronted by a potentially sustained period of low commodity prices," Consol said. "This workforce realignment is intended to ensure that the company remains strong through this challenging environment and is best positioned to emerge even stronger when the market returns."
The company is reportedly in the process of layoffs in West Virginia and Pennsylvania. Although company officials did not provide specifics, Consol said the cuts will amount to less than 5% of its total workforce. At the end of last year, the company employed 3,834 people, according to its annual report. A Consol representative added that more details about the realignment plan could be shared during the company's first quarter conference call with analysts, which has not yet been scheduled.
The company's core operations are in Ohio, West Virginia and Pennsylvania. Its exploration and production division produced 235.7 Bcfe last year, a 37% increase from 2013, with the Marcellus Shale contributing 47% of those volumes. During a fourth quarter conference call to discuss financial results, management highlighted a 2015 plan to rely on cost reductions and 30% production growth to keep its balance sheet intact during the downturn (see Shale Daily, Jan. 30). The company also announced last month that it would cut its E&P budget by another $80 million this year from a previously announced $1 billion (see Shale Daily, March 13).
News of Consol's realignment came just days after its joint venture partner in the Marcellus, Noble Energy Inc., announced a plan to cut more than 200 jobs in Texas, Pennsylvania and Colorado (see Shale Daily, April 9). Earlier in the year, Chevron Appalachia LLC said it would cut 162 positions in Pennsylvania to match a planned reduction in development in the region (see Shale Daily, Jan. 23). The latest announcements have come on top of similar cuts recently announced by producers, oilfield service companies and industry suppliers throughout the country.