Calfrac Well Services announced on Tuesday that it was reducing the number of its field agents by 70%, indicating a “rapid and unexpected deterioration in business conditions” due to COVID-19 and an international oil price war.
The Calgary-based company did not release a specific number of affected employees, but the company had approximately 1,600 field workers working in North America last year, including about a third of the employees in Canada.
The double blow of the pandemic and the price war have seen “essentially all” Calfrac customers reduce their planned spending, the company said in a statement.
“The drop in production announced by OPEC + members on April 12 … has so far been insufficient to offset the combined impact of the destruction of demand,” the company said.
The world’s oil industry is under increasing strain due to the collapse in demand and fears of a lack of storage for all excess crude, particularly in the United States.
Last week, the US benchmark oil price turned negative for the first time.
Oil companies have cut their spending plans and production significantly this year, which means there is less work for companies such as drillers and oil service companies.
Calfrac had already announced last month that it would cut this year’s capital program to $ 55 million from $ 100 million. He also said he was taking several other steps to reduce fixed costs, including salary cuts.
“It is difficult to predict how the COVID-19 pandemic will continue to affect demand for Calfrac services,” he said.
However, Calfrac has stated that its management will monitor and assess changing circumstances to determine what additional measures will need to be taken to mitigate the impacts of “this unprecedented market challenge”.
Earlier this month, Calgary rival Trican Well Service said it had cut personnel costs in half through pay cuts, layoffs and job sharing in response to a severe slowdown. drilling activities.