Layoffs in the Oil Patch 3

[Lubicon]

Originally Posted by GGG

I don’t really think the government should be throwing additional money at oil companies outside of what all other industries are getting in terms of salary support.

Where I think the government could help is to buy debt as it comes up for renewal in exchange for shares of the company. If a company fails on cash flow then it may not make sense throwing good money after it. If it is failing because of an inability to renew debt Because of current prices then getting it through that point would be helpful.

WCS is $30 US today. If you aren’t cash flow positive at this point you are in real trouble long term.

Buying debt (or backstopping debt) could be an effective solution. One issue I do see with debt in direct exchange for shares (if it's 1 for 1) is that shares for many service companies have fallen so low that the amount of cash injected would be so low that it would be almost meaningless unless the government purchased a large portion of the shares. Which is not idea. For example if the government ended up with 10% of my employers shares in exchange for debt it would mean about $300k to us which would barely keep us going another quarter, maybe less.

Second issue with this is that non public companies would not be able to participate in this either and they make up a large portion of the service industry too.

I don't know what the answer is. Debt purchase or backstopping would help but more is needed.

[GGG]

Originally Posted by Lubicon

Buying debt (or backstopping debt) could be an effective solution. One issue I do see with debt in direct exchange for shares (if it's 1 for 1) is that shares for many service companies have fallen so low that the amount of cash injected would be so low that it would be almost meaningless unless the government purchased a large portion of the shares. Which is not idea. For example if the government ended up with 10% of my employers shares in exchange for debt it would mean about $300k to us which would barely keep us going another quarter, maybe less.

Second issue with this is that non public companies would not be able to participate in this either and they make up a large portion of the service industry too.

I don't know what the answer is. Debt purchase or backstopping would help but more is needed.

I guess I see the government ending up with 50% stakes in businesses as a reasonably fair outcome rather than letting them fall into bankruptcy or the banks acquiring them. I think it could work in private business as well they would just aquire ownership stake. Harder to value though.

Any kind of bailout should be punitive to shareholders. The government should only be a slightly better option than the banks.

[Weitz]

Originally Posted by Lubicon

Buying debt (or backstopping debt) could be an effective solution. One issue I do see with debt in direct exchange for shares (if it's 1 for 1) is that shares for many service companies have fallen so low that the amount of cash injected would be so low that it would be almost meaningless unless the government purchased a large portion of the shares. Which is not idea. For example if the government ended up with 10% of my employers shares in exchange for debt it would mean about $300k to us which would barely keep us going another quarter, maybe less.

Second issue with this is that non public companies would not be able to participate in this either and they make up a large portion of the service industry too.

I don't know what the answer is. Debt purchase or backstopping would help but more is needed.

I think you are at a service company (as am I) but if you expect any money to come to service companies you will have a long wait. If money comes directly to the industry (it won’t) it will only be producers.

The site rehabilitation program is the result of heavy lobbying from CAODC and PSAC.

[Lubicon]

Originally Posted by Weitz

I think you are at a service company (as am I) but if you expect any money to come to service companies you will have a long wait. If money comes directly to the industry (it won’t) it will only be producers.

The site rehabilitation program is the result of heavy lobbying from CAODC and PSAC.

I am indeed at a service company and unfortunately I fear you are correct in that money likely won't come to the service industry (directly) which is unfortunate as they are possible in worse shape than the producers/operators and employ more people in the industry than producers do. Our sales meeting this morning mentioned yet another US based service company suspending it's Canadian operations and retreating from the Canadian market.

[Samonadreau]

Originally Posted by Lubicon

I am indeed at a service company and unfortunately I fear you are correct in that money likely won't come to the service industry (directly) which is unfortunate as they are possible in worse shape than the producers/operators and employ more people in the industry than producers do. Our sales meeting this morning mentioned yet another US based service company suspending it's Canadian operations and retreating from the Canadian market.

As much as that does suck, maybe it means less Canadian companies that will go under.

[Weitz]

Originally Posted by Samonadreau

As much as that does suck, maybe it means less Canadian companies that will go under.

I’ve always thought the larger multinationals on the service side aren’t cut out to be in Canada. In my line of business they can’t be remotely competitive.

[I-Hate-Hulse]

Peasant Boink with ~100 today I'm told.

Was Shell's the carnage we had heard about?

[Samonadreau]

Originally Posted by I-Hate-Hulse

Peasant Boink with ~100 today I'm told.

Was Shell's the carnage we had heard about?

As with everything else they do, long and drawn out, but about 50% of upstreams staff/contractors in Calgary and Houston. Last day end of Aug.

[dirk diggler]

Layoffs at CPG yesterday

[DFO]

Originally Posted by I-Hate-Hulse

Peasant Boink with ~100 today I'm told.

Was Shell's the carnage we had heard about?

Shell likes to play the musical chairs game. All unmapped unconventionals employees are now competing for a bunch of upcoming job postings. Of course there are a lot more people than chairs.

[CaptainCrunch]

Norway provides tax relief to their Oil and Gas industry in the face of industry struggles


https://www.oilandgas360.com/norway-...to-oil-sector/

OSLO – Norway’s parliament has agreed additional tax breaks for the oil industry on top of those proposed by the minority government to spur investment and protect jobs, the ruling Conservative Party said on Monday.


Equinor and other companies hit by low crude prices as the COVID-19 pandemic has destroyed demand, had said the government’s plan to postpone tax payments of 100 billion crowns ($10.8 billion) was not enough.


Conservative Prime Minister Erna Solberg had warned against more generous terms, saying it could lead to investment that did not yield sufficient returns. She relented after opposition pressure and industry lobbying.


The terms agreed by parliament will temporarily shield a greater portion of income from taxes, potentially saving jobs at oil companies and in the industry that serves them, negotiators said.


“This makes projects more profitable,” Conservative lawmaker Trond Helleland, who led negotiations for the government, said.


The new rules will cover projects sanctioned by authorities until the end of 2023, he added.
They do not change the headline tax rate of 78% that oil companies pay on profits, but increase deductions for any new investments, meaning taxable profits could be reduced for several yea

[Krovikan]

Originally Posted by CaptainCrunch

Norway provides tax relief to their Oil and Gas industry in the face of industry struggles


https://www.oilandgas360.com/norway-...to-oil-sector/

Wow, 78% tax, compared to the 30-50% we tax our O&G companies, no wonder their fund is 1 trillion.

[Lubicon]

Rumors only at this point but we are hearing:

Ovintiv doing layoffs today. Not sure what the Canada/US split is.

Chevron laying off up to 35% of Canadian staff in early July. They are relatively small in Canada but it still sucks.

Schlumberger shutting down a major portion of their Canadian business leaving a pretty skeletal operation and contracting out some of their remaining products.

[HockeyIlliterate]

Originally Posted by Lubicon

Ovintiv doing layoffs today. Not sure what the Canada/US split is.

As someone said on Reddit, they need to lay-off the person who came up with that name.

[Krovikan]

Originally Posted by HockeyIlliterate

As someone said on Reddit, they need to lay-off the person who came up with that name.

The support by the shareholders of the CEO and his dumb plans is mind-boggling. I entered the company last year looking at their book value, and the fact that they were profitable. But his wanting to move the company to the US was dumb, when the shares already traded on the NYSE; the move was a giant waste of people and cash making the move.

Luckily due to the COVID crash and buying more shares low, I got out of my position with a profit, but that CEO is a disaster.

[8sPOT]

Suncor made the decision to layoff about 70 people, which is actually a small number across the whole organization. Could be more in the future though...

[Tron_fdc]

Originally Posted by Krovikan

Wow, 78% tax, compared to the 30-50% we tax our O&G companies, no wonder their fund is 1 trillion.

Yep. It's pretty easy to tax the hell out of a state owned oil company. So not only are they taxed like a donkey, but they also pay a dividend to their shareholders. Who are:

"As of 2017, the Government of Norway is the largest shareholder with 67% of the shares, while the rest is public stock. The ownership interest is managed by the Norwegian Ministry of Petroleum and Energy."

I'm not a huge fan of state owned companies, but Norway seems to have figured it out.

[Yoho]

https://twitter.com/user/status/1273335236223516674

[Lubicon]

Not layoffs, but Enbridge had 800 takers on their voluntary buyout offer.

https://www.cbc.ca/news/business/enb...outs-1.5614888

[calgarygeologist]

Originally Posted by Lubicon

Not layoffs, but Enbridge had 800 takers on their voluntary buyout offer.

https://www.cbc.ca/news/business/enb...outs-1.5614888

It makes sense for people who are eligible for early retirement to take the package and run. The future is bleak and it is best to cash in now.