Oklahoma City, Oklahoma-based Devon Energy Corporation has announced that it will be laying off approximately 300 employees company-wide in response to an industry-wide slowdown and relatively low oil and gas prices.
The Corporate Speak …
Dave Hager, Devon CEO: “Our changing industry requires us to make some difficult decisions, and this one is the most difficult. The main feedback we heard from those affected in the 2016 workforce reduction was that they appreciated being treated with respect, transparency and dignity. I assure you that this will be no different. Through the good times and the difficult times, we will live the Devon values.”
Tony Vaughn, Devon COO: “Simply put, we have had too many people working on too many things — projects and otherwise — that are ancillary to our core business. In isolation, each of those projects adds value, but when taken as a whole, they are dilutive to our focus on the key value-creation activities of the company.”
John Porretto, Devon Spokesperson: “The oil and gas industry is in a lower-for-longer commodity price environment, which requires Devon to transform the way it operates The company must continue to sharpen its focus on core operations, increase its operating and financial efficiencies and align its workforce with this heightened focus to be as competitive and successful as possible in this environment."
These layoffs should come as no surprise to employees. Devon, in 2016, Devon publicly announced plans to reduce its workforce, cut-projects, and to lower operating costs in response to a low commodity price environment. Additionally, previous announcements of Devon’s continued restructuring under their “Vision 2020” plan were announced in February 2018. Basically, the company will be concentrating on its core competencies and eliminating superfluous personnel, projects, and assets. According to published reports, there will be severe cutbacks in spending for IT infrastructure, travel, sponsorships and charitable donations, and independent contractors and consultants.
And, in an effort to increase stock prices, the effort includes a billion-dollar stock repurchase and the pay-down of a billion dollars of accumulated debt.
According to Hager, “With our disciplined multi-year plan, Devon will accelerate value creation through the pursuit of capital-efficient cash-flow growth and portfolio simplification, not top-line production growth. Looking beyond our initial priority of reducing up to $1.5 billion of debt from our upstream business, we plan to return excess cash flow from operations or divestitures to shareholders through both opportunistic share buybacks and dividend growth.”