Journal Record editor Russell Ray discusses Devon Energy's plans to lay off about 200 employees. Most of the job cuts are connected to the sale or spinoff of assets in North Texas and Canada.
Full Transcript:
Katelyn Howard: You're listening to the Business Intelligence Report, a weekly conversation about business news in Oklahoma. I'm Katelyn Howard. With me is Russell Ray, editor of The Journal Record. Last week we learned about Devon Energy's continued transformation and plans to lay off about 200 employees. Your reporter Daisy Grant writes that most of the layoffs are related to the sale or spinoff of assets in North Texas and Canada and that the cuts will be to both in state and out of state jobs. Can you tell us more about these job cuts?
Russell Ray: Yes, Devon is letting go 200 workers. Most are tied to the company's assets in Canada and the Barnett Shale in North Texas. Some jobs at the company's headquarters here in Oklahoma City will be cut, but the company didn't say exactly how many. The 200 layoffs will be executed this month and next month. And the affected employees will be getting severance. Altogether, Devon employs more than 2,800 people company wide.
Howard: And the story suggests that these layoffs are part of Devon's plans to focus on its "top tier high return U.S. oil assets." Will you explain this ongoing transformation and the reasons Devon's giving for these changes?
Ray: Well, this realignment is meant to redirect more of the company's resources and energy toward its core business, which is U.S. oil production. This is part of the company's long term strategic plan to maximize earnings and shareholder value. And we're told the company expects to complete the separation of its Canadian and Barnett Shale assets by the end of 2019.
Howard: The story offers differing reactions from two experts in related fields. Can you elaborate on this?
Ray: That's right. One analyst told us Devon is doing what a lot of large energy companies have done in the past: They're reassessing their assets and adapting to their strength. Williams has done this. Oneok has done this. So it's really not unusual for a large energy company to narrow its focus on what's working. But an OU professor told us he didn't really see a need for Devon to make these job cuts. He pointed to the company's stock performance and the company's financial results as proof.
Howard: In general, and since this latest announcement by Devon Energy, how has the market reacted?
Ray: Well, the stock price on Tuesday was hovering around $28 to $29 a share. That's up from around $20 in late December. The energy giant reported net income of $1.1 billion in the fourth quarter. Also, Devon said it plans to cut annual costs by $780 million by 2021.
Howard: Russell Ray is editor of The Journal Record. Thanks for joining us today, Russell.
Ray: My pleasure, Katelyn. Thank you.
Howard: KGOU and The Journal Record collaborate each week on the Business Intelligence Report. You can follow us both on social media. We're on Facebook, Instagram and Twitter @journalrecord and @kgounews. You'll find links to the stories we discussed during this episode at journalrecord.com. And this conversation, along with previous episodes of the Business Intelligence Report, are available on our website, KGOU.org. While you're there, you can check out other features and podcasts produced by KGOU and our StateImpact reporting team. For KGOU and the Business Intelligence Report, I'm Katelyn Howard.
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