With oil prices still hovering around the $50 mark some firms are trimming salaries to avoid layoffs and safeguard high-skilled workforces.
According to Wall Street Journal, several firms are turning to wage cuts, hiring freezes and bonus caps to avoid the mass layoffs that have hit the industry since prices began free falling last year.
A June report from Swift Worldwide Resources concluded that over 150,000 jobs in the global oil and gas industry have been cut since the summer of 2014.
A survey conducted by Rigzone that month found that 51 percent of global hiring managers said they slowed down hiring efforts during the past three months.
Another 13 percent of respondents said they implemented recruitment freezes that quarter.
Houston-based Occidental Petroleum Corp. has been able to avoid large job cuts by capping bonuses this year and freezing salaries into early 2016.
In an email to employees seen by the paper, Occidental CEO Steve Chazen noted that the firm’s cash flow falls about $120 million for every $1 drop in oil prices, a state of affairs that could prompt deeper bonus cuts or force the company to eliminate bonuses all together if prices don’t rebound.
In January, Alberta-based Suncor Energy instituted a hiring freeze for roles not critical to operations and safety after laying off 1,000 employees and cutting $1 billion from its 2015 capital spending program.
Canadian Natural Resources has avoided layoffs by instituting graduated salary reductions in September that trim yearly salaries above $37,000 by 5 percent and cuts salaries above $77,000, or C$100,000, by 10 percent.
“Graduated salary reductions are the preferred way to reduce costs, as it allows everyone on the team to stay together, and more important, work together, to focus on creating value in these challenging times,” Canadian Natural Resources CEO Steve Laut said in an email to employees.
Those salary cuts followed a 10 percent salary cut taken by the company’s board of directors and senior executives and a five percent cut taken by the company’s vice presidents in the first quarter.
Both senior executives and vice presidents were included in the September cuts.
While low oil prices are squeezing bottom lines across the industry companies are also invested in preserving their high-skilled workforce to avoid shortages down the road.
“Everybody that went through this before all knows it really hurt oil companies in terms of not having a generation ready to move into management positions,” head of Texas A&M University’s petroleum engineering department Dan Hill told the paper.