Trican Well Service recently laid off 137 employees based in Odessa, according to a notice filed with state regulators, representing another sign the strain of low prices on workers in the oil patch.
The effective layoff date for the employees was March 20, according to a letter sent to the Texas Workforce Commission that was released to the Odessa American on Monday.
“Trican just learned Anadarko Petroleum is discontinuing operations with Trican at the Odessa facility,” reads the notice to the state, dated March 16. “As a result of these unforeseeable circumstances, Trican will lay off employees, with the layoff expected to be permanent.”
Anadarko Petroleum is an oil company focused mostly on other energy production regions, such as the Marcellus, Eagle Ford and D-J Basin, according to company reports.
It’s unclear the extent to which Trican will keep operating in the Permian Basin. Trican representatives did not respond Monday to a request for comment, but analysts for months had mentioned Trican as one of the companies likely to suffer from producers’ cutbacks, as the company was a relatively new entrant into the West Texas oil-patch.
The Canada-based company in 2012 chose Odessa for its regional facility at 8200 E. Interstate 20.
But in the Permian Basin, Trican competed against some 40 other service companies for business that includes hydraulically fracturing, or fracking wells.
Fracking, in both equipment and manpower, makes up the greatest cost of drilling and completing a new well. And oilfield service companies have been among the hardest hit by oil prices that dropped by more than half since the peak of June.
The regional benchmark Plains-West Texas Intermediate Posting ended at $45.50 on Monday.
“Everyone is taking hits, right, and obviously people that are less well established are going to get hurt worse than others,” said Chris Robart, director of unconventional resources with the analytics firm IHS Energy.
The cost reductions oil companies demand from service companies in many cases entail layoffs or cut hours, according to Wood Mackenzie, another analytics firm. A recent report from the firm found day rates on average had come down about 30 percent among service companies while casing, cement and sand services came down by up to 10 percent.
But the impact on service companies — which hydraulically fracture, or frack wells — spans the industry.
Wood Mackenzie anticipated further cuts, which could eventually spur more drilling, as service companies accept lesser margins in order to keep working in the Permian Basin and maintain market share so they can take advantage when prices rebound.
In January, Trican notified the Texas Workforce Commission that 125 employees in Longview faced layoffs this month as the company shut down its operation.
Trican executives had signaled in February they planned to scale back in the Permian Basin.
“We have already seen large declines in pressure pumping demand in our Canadian, Permian, Bakken and the Eagle Ford regions and I’m starting to adjust our operations accordingly,” Trican CEO Dale Dusterhoft told investors in a Feb. 26 conference call, according to a transcript.
Dusterhoft said the company “parked one fracturing crew” in the Permian and three other regions during the first quarter of the year. It was unclear how many that left in the Odessa area.
Local employment and industry officials estimate thousands of workers have been laid off in the area, but determining a precise figure is almost impossible to determine because not all companies have to release such information publicly.
Four of the major service companies earlier this year — Halliburton, Baker Hughes, Schlumberger and Weatherford — announced layoffs that amounted globally to a total of about 30,000 workers.
Many were expected in the Permian Basin, but the companies did not specify the amount of layoffs by region. Officials of other regionally prominent oilfield services companies, such as CUDD Energy Services, have also confirmed layoffs but declined to specify how many employees were affected.
“We are just doing what is in front of us,” said Clint Walker, the general manager for the well servicing company CUDD Energy Services in Odessa and Midland, in a recent interview. “And what’s in front of us is we are trying to reduce our costs and our labor structure in a way that we can go out there and keep the lights on.”
Officials at Workforce Solutions Permian Basin said they have yet to see many of the laid off workers coming in for assistance, in part because it takes weeks before they are eligible to receive unemployment insurance.
“We are definitely seeing more people in our office, but as far as those large layoffs we keep hearing about, we don’t have the feeling that we are seeing those large numbers yet,” said Remelle Farrar, the project director for Workforce Solutions based in Odessa. “We think we would start to really see some effects from those by the first of July.”
So far, Trican is the third company in Odessa to file a layoff notice with the state. In January, driller Lariat Services warned of 265 Permian Basin workers facing unemployment. Earlier this month, pipe company Ultra Premium Oilfield expected to lay off 78 workers in May.
In Midland, Advanced Stimulation Technologies announced a layoff of 69 employees, while Big Dog Drilling said it would let go 31 workers.
“My advice would be to job search,” Farrar said. “What we are seeing is there are more job posting in the Permian Basin than there are layoffs, and people who are aggressive in searching immediately are usually able to find employment. And that’s the best thing for all of us.”
This article was written by Corey Paul from Odessa American, Texas and was legally licensed through the NewsCred publisher network.