Oilfield Job Losses Intensifying, May Get Worse As Pandemic Wreaks Havoc On Industry

The oilfield services and equipment, or OFS, sector in the U.S. cut more than 9,300 jobs in July, while the overall economy added 1.8 million jobs during the month.

With energy demand sapped by the COVID-19 crisis and oil prices at depressed levels, oilfield jobs have been decimated.

The Petroleum Equipment and Services Association, or PESA, said on Monday that the sector has lost more than 99,000 jobs due to the pandemic and the size of the workforce is at its lowest level since March 2017.

PESA is a trade association representing the OFS sector.

OFS sector jobs have plunged from 764,189 in February to 664,936 in July, a 13% decline. April, with more than 59,306 job losses, marked the worst month this year.

The jobs lost this year represented annual wages of about $12.7 billion.

By state, the largest OFS job losses this year have occurred in Texas (59,200), Louisiana (10,200), Oklahoma (9,200) and Colorado (5,000).

PESA warned that industry analysts “anticipate additional job losses as the pandemic continues and jobs supported by emergency measures such as the Paycheck Protection Program are threatened by congressional inaction. Additionally, rising infection rates may depress economic activity as communities resume quarantines.”

PESA estimated that about 180,000 OFS jobs have been supported by loans from the Paycheck Protection Program.

Late last month, oilfield service provider Schlumberger (SLB) cut 21,000 jobs, about one-fifth of its total workforce, as it recorded a second-quarter net loss of $3.4 billion.

“This has probably been the most challenging quarter in past decades,” said Chief Executive Olivier Le Peuch.

Schlumberger’s peers Halliburton (HAL) and Baker Hughes (BKR) have also made significant job cuts this year.

Late last month, Morgan Stanley stated that these big three oilfield services firms —Schlumberger, Halliburton and Baker Hughes — wrote down $45 billion in assets over the past year.

“The industry now appears to be in a significant capacity reduction and repair phase that we think will not quickly reverse,” Morgan Stanley analysts wrote. “From a supply-side perspective, we think this effectively marks the bottom of the cycle.”