Chesapeake Energy Corp. says job cuts not due to pending merger with Southwestern Energy
Chesapeake Energy Corp. cut jobs Tuesday, but not because of its pending multibillion-dollar merger with a Texas company.
The natural gas giant told The Oklahoman on Tuesday that it laid off 80 employees, or about 10% of its workforce, because it sold off its crude oil holdings last year in a previously announced planned divestment.
OKC-based Chesapeake divested of its Eagle Ford shale assets in south Texas in 2022-2023, making it a "pure-play" natural gas producer, Reuters reported.
Chesapeake is proceeding with its merger with Southwestern Energy Co. in Spring, Texas, announced in January.
Trade publication Offshore Technology suggested another possible reason for the layoffs.
"Natural gas producers including Chesapeake Energy have faced challenges this year due to low prices," Offshore Technology reported Tuesday. "The first quarter saw a 20% drop in prices due to high inventories and softer-than-expected demand. Chesapeake Energy missed Wall Street’s profit estimates and, like many in the industry, has scaled back production."
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OKC-based Chesapeake Energy merger with Southwestern Energy in Houston will make the largest natural gas producer in the United States
The $7.4 billion transaction with Southwestern Energy will create the largest natural gas producer in the United States. The combined company will operate under a new name after the deal is closed, Chesapeake said earlier this year.
Nick Dell'Osso, the current president and CEO of Chesapeake, will retain that role with the combined company, which will be headquartered in Oklahoma City. The company will also maintain its suburban Houston offices.
Neither Chesapeake nor Southwestern indicated how combining resources would affect staffing, but Chesapeake did emphasize the new company would return to Chesapeake's roots in natural gas.
"This powerful combination redefines the natural gas producer, forming the first U.S. based independent that can truly compete on an international scale. The union creates a deep inventory of advantaged assets adjacent to high demand markets, allowing for the application of proven operational practices and the power of an Investment Grade quality balance sheet to drive significant synergies benefiting energy consumers and shareholders alike," Dell'Osso said in a news release.
"The world is short energy and demand for our products is growing, both in the U.S. and overseas. We will be positioned to deliver more natural gas at a lower cost, accelerating America's energy reach and fueling a more affordable, reliable, and lower carbon future. I look forward to leading the talented workforce of the combined organization to accelerate the long-term value opportunity for our shareholders, employees, and all stakeholders."
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Senior Business Writer Richard Mize has covered housing, construction, commercial real estate and related topics for the newspaper and Oklahoman.com since 1999. Contact him at rmize@oklahoman.com. Sign up for his weekly newsletter, Real Estate with Richard Mize. You can support Richard's work, and that of his colleagues, by purchasing a digital subscription to The Oklahoman. Right now, you can get 12 months of subscriber-only access for $1 a month.
This article originally appeared on Oklahoman: Chesapeake Energy in OKC lays off 80 employees amid merger
