Talisman Energy president and CEO Hal Kvisle has four cost-cutting goals. speaks at the Global Business Forum in Banff, Alta., Thursday, Sept. 20, 2012. THE CANADIAN PRESS/Jeff McIntoshJeff McIntosh/The Canadian Press
Talisman Energy Inc. has cut 90 people from its head office in Calgary, citing stubbornly low natural gas prices. This translates into a reduction of about 7 per cent.
"This is largely due to low North American natural gas prices, which have resulted in Talisman significantly reducing spending on dry gas plays," the company said in a short press release Wednesday.
Talisman did not cut any senior or executive positions, Berta Gomez, a Talisman spokeswoman, said. Instead, professionals such as engineers, geologists and administrative staff were let go. "The reorganization process will continue throughout 2013. As part of Talisman's objective to run the company more efficiently, we are looking at the right size and structure of the business," she said in an email.
Talisman wants to reduce its gross general and administrative expenses at the corporate level by at least 20 per cent by the end of 2013, said chief executive Hal Kvisle when the company released its fourth quarter results February 13.
The layoffs come as Moody's Investors Service trimmed its natural gas price prediction for 2013 and 2014.
"The revised [natural gas] price deck shows that Moody's expects North America's severe natural gas glut of 2011 and 2012 to continue easing slightly in 2013 and 2014," the agency said in a statement Wednesday.
Mr. Kvisle, in an interview February 13, said layoffs were on the way and a large part of the pain would come as the company pulled back on its global operations. Talisman ditched its aspirations in Peru in September and Mr. Kvisle said changes like that would affect its international employees as well as the ones who support those operations in the Calgary office. He also pegged far-flung and expensive operations in Sierra Leone as a target.
The former TransCanada Corp. boss also said head office would shrink due to its 10 per cent attrition rate. Talisman would be careful about filling those spots, he said.
Talisman, he said, would not implement a hiring freeze, but instead try to hire new graduates – folks who come cheaper than their experienced counterparts.
The executive, who moved into Talisman's corner office after John Manzoni abruptly left in October, said its North American operations would also be affected because of its reluctance to chase natural gas on the continent given low prices.
Talisman says it still employs 1,500 people in Canada, with 1,200 of those in Calgary.
John Rossall, Talisman's senior vice-president overseeing Canada, in the Wednesday announcement said: "These are difficult decisions, and we appreciate the contributions our colleagues have made. Talisman's focus now is investing in the liquids-rich part of our portfolio and maintaining a competitive cost structure relative to our Canadian peers."
Moody's on Wednesday said its new natural gas spot price for Henry Hub is $3.25 (U.S.) per million British Thermal Units in 2013 and $3.75 per mmBTU in 2014.
It made the alternation to reflect the agency's "sense that time is running out for a late-winter cold snap that could add meaningful strength to natural gas prices."