CALGARY — A fresh wave of layoffs is hitting the energy sector as two oil and gas companies cut a total of 900 jobs, mostly in Calgary.
Penn West Petroleum is cutting its workforce by 35 per cent for a loss of over 400 full-time employees and contractors.
And ConocoPhillips Canada plans to lay off 400 employees and 100 contractors, for a 15 per cent workforce reduction.
Penn West (TSX:PWT) says most of the job cuts it announced Tuesday are effective immediately, while ConocoPhillips told its employees on Monday that its workforce reduction will happen by mid-October.
"We don't see a lot of correction in the short-term . . . It's really kind of changing the way we work and that's resulting in, unfortunately, some staff reductions," ConocoPhilips spokesman Rob Evans said Tuesday.
Evans said the ConocoPhilips cuts are part of a 10 per cent staff global reduction by the U.S. major producer.
Penn West chief executive and president Dave Roberts also said Tuesday on a conference call with analysts that he expects the current cycle to be "prolonged and increasingly volatile."
Penn West estimates that its workforce cuts will reduce spending by about $45 million a year.
The company has also suspended its dividend after the October payment, for $20 million in annual savings, cut board compensation by 40 to 50 per cent, and further reduced this year's capital budget by $75 million.
The reduction brings Penn West's capital spending plan to $500 million — a 40 per cent reduction from its original plan to spend $840 million in 2015.
For 2016 the company says it will cut capital spending by as much as half ($150 million to $250 million) from this year's level as it aims to keep its capital spending within cash flow generated from operations.
North American crude has been trading below US$50 a barrel in recent weeks compared with more than US$100 a barrel last summer.
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