As part of a “renewed” capital program, Southwestern Energy plans to reboot hiring and bring back employees laid off earlier this year – including a boost of activity in Arkansas’ Fayetteville Shale Play.
“Our exact needs will depend on how our capital spending evolves, which itself depends on commodity prices, geographic location of projects and other factors,” Southwestern Energy spokeswoman Christina Fowler told Talk Business & Politics on Friday.
The company on Thursday reported second quarter losses of $620 million. But Southwestern President and CEO Bill Way said the Texas natural gas producer had recently strengthened its balance sheet and liquidity profile through a combination of extended bank agreements, successfully issuing equity, launching and concluding tender offers for debt and negotiating long-dated inventory monetization.
Southwestern said the improved financial position will also allow the Texas driller to activate a plan to accelerate investment of $500 million into “high-return” projects within each of the company’s core assets, including the Fayetteville Shale. Nearly $375 million of that capital is expected to be invested by the end of 2016, officials said.
“The second quarter was a defining time at Southwestern Energy, where we delivered on our strategic commitments of strengthening our balance sheet, enhancing margins and optimizing our portfolio,” Way said in a statement. “As promised, we took significant and deliberate steps this quarter to strengthen our balance sheet that, when combined with the continued outperformance by our assets, positions us to reinitiate drilling and completion activities and accelerate our path to value-adding growth. We are excited as we drive into the second half of the year and build momentum toward the future.”
Fowler would not provide additional details on the number of employees the company plans to rehire in the Fayetteville Shale, but the second quarter earnings report shows the company only spent $13 million thus far in 2016, just enough to keep the lights on. However, the company’s new guidance shows that Southwestern plans to reinitiate a companywide drilling and completion program that will bring five new drilling rigs back into operation for the rest of 2016, including one new rig and a healthy $73 million in capital spend in the Arkansas shale play.
In late January, Southwestern laid off around 1,100 workers companywide with 600 of those jobs to cut in Arkansas. The Texas driller’s Fayetteville Shale operations in Arkansas had more than 1,500 workers nearly two year ago when production peaked, and well before all the company’s drilling rigs were mothballed at the end of 2015.
Jacob Bundrick, research associate for the Arkansas Center for Research in Economics at the University of Central Arkansas, said he believes hiring in the state’s oil and gas sector will essentially follow the money, such as Southwestern’s announcement on Thursday that it would dramatically increase spending in the Fayetteville Shale play for the remainder of the year.
“The oil and gas industry is a national labor market. Drilling crews and oilfield workers left the state of Arkansas because the earnings opportunity disappeared,” Bundrick said. “If commodity prices rebound enough to renew the Arkansas oil and gas industry, that same earnings opportunity would return to the state. By offering nationally competitive wages, employers would be able to attract labor back to the state, too.”