We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
EQT Plans to Cut Jobs by 15%, Could Face Pre-Tax Charges Up to $185M
Read MoreHide Full Article
EQT Corporation (EQT - Free Report) , a U.S.-based natural gas producer, has planned to cut its workforce by 15% following the acquisition of Equitrans Midstream Corporation. This marks the second-largest round of layoffs by EQT since 2019, when it had reduced its manpower by 23% after the appointment of Toby Rice as its CEO.
The recent layoffs are a part of the process of combining the operations of the two companies, following Equitrans Midstream’s acquisition. This includes the termination of several senior-level employees and former executives of Equitrans Midstream. However, EQT has not disclosed any detail regarding the timeline of the layoffs.
Impact of Low Natural Gas Prices
In March 2024, EQT acquired Equitrans Midstream, its former pipeline subsidiary. This move was aimed at improving natural gas margins as the commodity’s price had collapsed to multi-year lows at the beginning of the year. Natural gas producers struggled due to low gas prices, and this acquisition was intended to improve EQT’s profitability.
EQT’s Decision to Reverse Production Cuts
The company had previously scaled back its natural gas production when prices dropped exponentially at the beginning of the year. However, following a surge in demand and an increase in gas prices, the company has decided to reverse its production cuts to some extent in October and November.
Charges Associated With Layoffs
EQT anticipates to incur $165-$185 million in pre-tax charges due to the job cuts. These charges include severance pay, stock-based compensation and other termination benefits. Furthermore, the company has mentioned in a regulatory filing that it expects to incur a majority of these charges, approximately up to $170 million, in the third quarter of this year. The job cuts are anticipated to render a reduction of $80 million in general and administrative costs annually, contributing to EQT's efforts to streamline operations and enhance efficiency following the Equitrans Midstream acquisition.
Other Energy Sector Players That Resorted to Job Cuts
Shell plc (SHEL - Free Report) announced its plan to cut jobs in its oil and gas exploration division, resulting in a 20% reduction in its workforce. The effect of the layoffs is anticipated to be felt in Shell’s offices in Houston and The Hague. The downsizing may also affect its offices across Britain, albeit to a lower extent.
Houston is likely to be significantly affected by the move. The oil and gas industry was one of the largest contributors to the city’s economy at its peak. Shell alone employed an estimated 9,000 workers in the region. However, the layoffs are not yet confirmed, as per Reuters.
Earlier in 2024, natural gas producer Chesapeake Energy had reduced its employee base by 10% after the sale of its oil assets in the Eagle Ford shale play. The company noted that the layoffs were not related to its merger with Southwestern Energy. Chesapeake Energy’s pending merger with Southwestern Energy is anticipated to be closed early in the fourth quarter of this year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
EQT Plans to Cut Jobs by 15%, Could Face Pre-Tax Charges Up to $185M
EQT Corporation (EQT - Free Report) , a U.S.-based natural gas producer, has planned to cut its workforce by 15% following the acquisition of Equitrans Midstream Corporation. This marks the second-largest round of layoffs by EQT since 2019, when it had reduced its manpower by 23% after the appointment of Toby Rice as its CEO.
The recent layoffs are a part of the process of combining the operations of the two companies, following Equitrans Midstream’s acquisition. This includes the termination of several senior-level employees and former executives of Equitrans Midstream. However, EQT has not disclosed any detail regarding the timeline of the layoffs.
Impact of Low Natural Gas Prices
In March 2024, EQT acquired Equitrans Midstream, its former pipeline subsidiary. This move was aimed at improving natural gas margins as the commodity’s price had collapsed to multi-year lows at the beginning of the year. Natural gas producers struggled due to low gas prices, and this acquisition was intended to improve EQT’s profitability.
EQT’s Decision to Reverse Production Cuts
The company had previously scaled back its natural gas production when prices dropped exponentially at the beginning of the year. However, following a surge in demand and an increase in gas prices, the company has decided to reverse its production cuts to some extent in October and November.
Charges Associated With Layoffs
EQT anticipates to incur $165-$185 million in pre-tax charges due to the job cuts. These charges include severance pay, stock-based compensation and other termination benefits. Furthermore, the company has mentioned in a regulatory filing that it expects to incur a majority of these charges, approximately up to $170 million, in the third quarter of this year. The job cuts are anticipated to render a reduction of $80 million in general and administrative costs annually, contributing to EQT's efforts to streamline operations and enhance efficiency following the Equitrans Midstream acquisition.
Other Energy Sector Players That Resorted to Job Cuts
Shell plc (SHEL - Free Report) announced its plan to cut jobs in its oil and gas exploration division, resulting in a 20% reduction in its workforce. The effect of the layoffs is anticipated to be felt in Shell’s offices in Houston and The Hague. The downsizing may also affect its offices across Britain, albeit to a lower extent.
Houston is likely to be significantly affected by the move. The oil and gas industry was one of the largest contributors to the city’s economy at its peak. Shell alone employed an estimated 9,000 workers in the region. However, the layoffs are not yet confirmed, as per Reuters.
Earlier in 2024, natural gas producer Chesapeake Energy had reduced its employee base by 10% after the sale of its oil assets in the Eagle Ford shale play. The company noted that the layoffs were not related to its merger with Southwestern Energy. Chesapeake Energy’s pending merger with Southwestern Energy is anticipated to be closed early in the fourth quarter of this year.