Advertisement
Canada markets closed
  • S&P/TSX

    22,167.03
    +59.95 (+0.27%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CAD/USD

    0.7383
    +0.0010 (+0.14%)
     
  • CRUDE OIL

    83.01
    +1.66 (+2.04%)
     
  • Bitcoin CAD

    95,844.30
    +2,551.30 (+2.73%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,242.00
    +29.30 (+1.32%)
     
  • RUSSELL 2000

    2,124.19
    +9.84 (+0.47%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • NASDAQ

    16,379.46
    -20.06 (-0.12%)
     
  • VOLATILITY

    12.98
    +0.20 (+1.56%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • CAD/EUR

    0.6841
    +0.0036 (+0.53%)
     

Oil jobs are drying up, but this CEO explains why frackers will survive

The U.S. oil boom quickly became a jobs boom.  But many of those jobs are now disappearing.

Halliburton, the oil field services giant, cut 9,000 jobs-- more than 10% of its global workforce-- during the last two quarters because of the sharp decline in oil prices.  The company's interim CFO told investors this week more layoffs may come by the end of June.

Other parts of the U.S. economy are growing, but the loss of energy jobs is now showing up in broader measures of the job market. Employers added just 126,000 jobs in March, the smallest tally since December 2013. That report ended a 12-month streak during which the economy created more than 200,000 jobs each month.

Energy states are now seeing some of the worst job-market declines. Job losses in March totaled 25,400 in Texas, 21,900 in Oklahoma and 3,000 in North Dakota--a sharp drop for a state with fewer than 740,000 residents.

ADVERTISEMENT

Workers who flocked to the oil patch for good-paying jobs are now moving on. “Some are being forced to if they are being laid off," says Gary Evans, CEO of Dallas-based Magnum Hunter Resources, in the video above. Many firms are firing people, while others, he says, "are moving their crews to other areas."

Evans’ company, Magnum Hunter, does the bulk of its work in Appalachia, drilling mainly Marsellus and Utica shale. Evans say his company “has probably seen the least amount of drop [in jobs] because we are mostly gas and gas prices haven’t dropped nearly as much as oil.”

Still, shares of Magnum Hunter are down more than 70% during the last year.  The stock took a further hit recently when the company received a Wells notice from the SEC, indicating that the government may pursue legal action related to accounting irregularities in 2012 and 2013, which the SEC has been investigating for two years. In a securities filing, Magnum Hunter said it has hired new auditors, replaced key personnel and "remediated all of the previously identified material weaknesses."

To deal with the energy downturn, Magnum Hunter shut down its entire drilling operation in January. Evans says the company made the decision after Thanksgiving when OPEC nations, led by Saudi Arabia, surprised markets by saying they weren't going to cut production to help prop up prices. “We’re still shut down,” he says. “A lot of companies didn’t take as dramatic a move.”

Get the Latest Market Data and News with the Yahoo Finance App

“What OPEC has tried to do is obviously to flood the market with oil to bring the prices down to slow down the United States,” says Evans. “I mean there is no question it’s a concerted effort for our industry.”

But, Evans says, “I think where they’ve made a mistake is our industry is very resilient…If we have to live with $50 oil, we will learn to live with $50 oil. It will take a while but we can do it. And so what you are seeing is everyone is kind of hunkered down. People aren’t spending money as they’ve done in the past."

U.S. oil inventories rose by 5.3 million barrels last week—almost twice as much as expected—according to the Energy Information Administration. That echoed a report from American Petroleum Institute on Tuesday that said U.S. crude stocks rose last week to a record 480.2 million barrels.

More from Yahoo Finance

Fmr. Treasury Secretary Paulson wants Jeb Bush for 2016

AT&T wireless store revamp to emphasize smartwatches, home security and more

Google unveils wireless service, but prices don't impress