Southwestern Energy Lays Off 600 in Arkansas As Prices Fall

Southwestern Energy Lays Off 600 in Arkansas As Prices Fall
Southwestern Energy Co.'s office in Conway. (Wil Chandler)

Southwestern Energy Co. of Houston said Thursday it is laying off 1,100 employees, including 600 throughout its Fayetteville Shale operations in Arkansas, amid a steady decline in natural gas prices.

The cuts, set to be complete by the end of the first quarter, will leave 560 employees in the central Arkansas natural gas play, according Christina Fowler, a spokeswoman for the publicly traded company.

The cuts affect employees in Conway, Damascus, Cleveland and Judsonia, as well as Southwestern's sand plant in North Little Rock.

"Natural gas prices have steadily declined in the past year and it’s created a condition where cash flow to fund projects is significantly lower than it was in the past," Fowler told Arkansas Business.

In a statement, the company said the "organizational changes" are necessary to be competitive in a "low gas price environment."

Natural gas prices were trading around $2.13 per million British thermal units on Thursday, down from a 52-week high of $3.47.

"We regret having to make this decision, and we thank all of our employees who were affected by today’s announcement for their contributions to Southwestern Energy Company,” the company said. "[Southwestern] is providing outplacement services, employee assistance, severance and other benefits to support impacted employees and their families through the transition."

In a filing with the U.S. Securities and Exchange Commission, the company said severance packages include a one-time cash payment depending on length of service. Some workers will be in "reduced roles" with the company.

The action will result in a pre-tax charge to first-quarter earnings of between $60 million and $70 million, according to the filing. The company said it expects the cuts to save about $150 million to $175 million a year.

Southwestern laid off 80 workers in the play in August, citing falling commodity prices.

In October, the company reported a third-quarter net loss of $1.8 billion, or $4.62 diluted earnings per share. 

During the quarter, Southwestern reported net gas production from the Fayetteville Shale of 118 Bcf, down from 126 Bcf in the third quarter of 2014 and 121 Bcf in the second quarter of 2015.

Southwestern Energy opened a $25 million, 120,000-SF regional office in 2011 at The Village at Hendrix, a neighborhood development of Hendrix College in Conway.