As the oil price collapse continues, Southwestern Energy Co. (NYSE: SWN), plans to cut 1,100 jobs, the company noted in an SEC filing Thursday. The company, the third-largest natural gas producer in the Lower 48, currently has approximately 2,500 employees, and the layoffs, which are to be completed by the end of the first quarter, will affect almost 45% of its workforce.
The job cuts will save the company $150–$175 million a year, and, related to these cuts, Southwestern expects to record $60 million to $70 million in pre-tax charges to its first-quarter earnings. According to the filing, the charge to earnings includes a one-time cash severance payments and payment of taxes totaling approximately $45 to $50 million and costs associated with the elimination of service requirements for equity awards to certain terminated employees of approximately $15 to $20 million.
At the start of 2016, the company had no drilling rigs in operation. While the capital budget and operating plan for the year are yet to be finalized, the company cited "anticipated lower drilling activity" as the primary driver for the workforce reduction.
On Wednesday, Fitch Ratings said that it had affirmed Southwestern's long-term issuer default rating (IDR) at “BBB-,” and revised the company’s rating outlook from Stable to Negative. The Negative outlook considers the effect that persistently low oil and gas prices will have on the forecasted leverage profile following the December 2014 leveraged acquisition of the Southwestern Appalachia assets.
The company last reduced its staff during the third quarter of 2015. Earlier this month, the Houston, TX-based company appointed Bill Way to succeed Steve Mueller as CEO.