Denver-based DCP Midstream LLC, the largest natural gas processor in the country, has reduced its workforce by 10% and slashed capital spending for 2016.
The job reductions announced on Monday eliminate 300 operational and corporate roles across DCP's 17-state footprint, but the "magnitude" of the losses was decreased after management evaluated the need for new hires and consolidated offices in Denver and Houston. DCP early last year laid off 20% of its workforce and closed its Oklahoma City office (see Daily GPI, Jan. 30 2015).
"DCP Midstream recognized the signposts of a challenging cycle in 2014 and implemented measures to reduce our breakeven cost by 50% through simplifying and re-aligning contracts, optimizing our systems and taking cost out of the business, all the while operating safely and reliably and ensuring ample liquidity," CEO Wouter van Kempen said. "This is a challenging environment that we are managing through, and we continue to execute on our strategy to reset our breakeven cost to ensure we are the most reliable, safe, low-cost midstream services provider sustainable in any environment."
Capital spending for 2016 has been reduced to $250 million, but most of the "planned capital program" was completed in 2015. The company plans to "continue to match pace" with its producer customers and be prepared to respond when the recovery occurs.
"This is clearly a very tough cycle and it is difficult to say goodbye to friends and colleagues who have contributed to DCP's success," van Kempen said. "They have our respect and gratitude, and we will support them in their transition through offering severance and outplacement counseling."
DCP, Denver's largest oil and gas company and its largest privately held company, now employs about 2,900 people with the job reductions. Phillips 66 and Spectra Energy Corp., which each own half of the master limited partnership, implemented some measures last fall to help it weather the current commodity downturn (see Daily GPI,Oct. 22, 2015).