Houston-based Shell Oil Co. plans to reduce its U.S. work force by as many as 4,650 employees in response to disappointing financial results.
ARCO Oil and Gas, a large employer in Dallas and Plano, Texas, also said yesterday that it is analyzing company operations in a bid to boost its financial performance. But the company declined to speculate on the possibility of employee layoffs.
A growing number of U.S. oil companies may be forced to consider layoffs or other cost-cutting measures if natural gas prices remain deeply depressed and oil prices continue at moderate levels, said Steve Smith, an energy analyst for Bear Stearns in New York.
In energy futures trading yesterday on the New York Mercantile Exchange, a barrel of light sweet crude closed at $20.82 in contracts for August delivery. Natural gas closed at $1.17 per 1,000 cubic feet for August delivery.
The majority of U.S. oil companies will report "pretty disappointing" financial results for the second quarter, primarily because of weak energy prices, Mr. Smith said. Exceptionally low natural gas prices are the No. 1 reason for the sharply reduced earnings, he said.
In January, many oil companies reported strong fourth-quarter profits as a result of crude prices jumping to $40 a barrel during the Persian Gulf crisis.
But oil prices quickly declined and have been in a moderate range of about $20 a barrel for most of this year.