Lafayette-based Frank’s International has joined a growing group of energy services companies feeling the pain of low-price oil, announcing Tuesday it will lay off 400 to 600 employees.
The layoffs represent 9 to 13 percent of Frank’s 4,500 workers worldwide.
Frank’s did not elaborate on where the affected employees are based. The company said only that the workforce reductions will be “in areas and functions where we are experiencing the sharpest decline in activity levels,” according to a statement released late Tuesday afternoon.
A call seeking comment at Frank’s Houston office late Tuesday was not returned. In an email, Frank’s spokesman Josh Grodin said, “We have no other information to provide that wasn’t included in the statement that was just released.”
Frank’s joins other oilfield services firms including Schlumberger, Halliburton, Baker Hughes, Parker Drilling and Hercules Offshore, which together have laid off thousands worldwide. The layoffs are a result of vastly reduced exploration and production budgets by oil companies wrestling with sub-$50 per barrel oil.
“Frank’s International’s management team has been developing and implementing cost savings opportunities while continuing to focus on our strategic growth plan,” the company said in Tuesday’s statement.
The layoffs are coming on the heels of Frank’s announced purchase of Timco Services Inc., a Lafayette oil services company that competed with Frank’s in the tubular services and rental sector. The Timco purchase is slated for the second quarter of 2015.
According to a filing with the Securities and Exchange Commission, Frank’s agreed to pay $75 million cash for Timco, with up to $20 million more due in two installments based on industry conditions through the second quarter of 2017. Frank’s also will provide $8 million to the owner of Timco for taxes related to the sale.
Gary Luquette, a former Chevron executive who last year was tapped to succeed Keith Mosing as Frank’s president and chief executive officer, said the Timco purchase gives Frank’s a bigger presence where Timco was strong — in the Eagleford Shale in south Texas, the Permian Basin in west Texas and in the Haynesville Shale natural gas fields of northwest Louisiana and in Texas.
New drilling techniques in America’s shale formations have increased U.S. production more than 70 percent since 2008, flooding a world market that currently doesn’t have the appetite for it. Although worldwide production had been rising for years, the drop in the per-barrel price of crude was sudden: Oil that cost over $100 a barrel in June 2014 sank to around $50 a barrel before the year was over.
“Frank’s has been impacted by the sudden and dramatic drop in energy prices and rig count that we have seen over the last seven to eight months,” Frank’s statement says.
Shallow water and inland drilling contractor Parker Drilling announced in February it planned to furlough 50 to 297 employees. And late last year Hercules Offshore told the Louisiana Workforce Commission it was going to lay off up to 450 workers.
Halliburton and Baker Hughes, which are seeking to merge, also said they planned to lay off hundreds.
The hardest hit areas of oil drilling have been in onland shale operations and in the shallow waters of the Gulf of Mexico.
On Tuesday, a barrel of U.S.-produced West Texas Intermediate oil was priced at $47.69, according to Bloomberg.com. On June 30, the price was $105.37, according to the Energy Information Administration.