In line with an overhaul at Chesapeake Energy Corp. under a new CEO, the company has lain off its entire natural gas vehicle team, and more layoffs could be in the works.
Chesapeake was one of the leading players pushing for wider use of natural gas vehicles, and cutting the entire 7-member team likely signals another switch in focus for the natural gas giant.
The layoffs come after this team has helped Chesapeake to convert much of its commercial fleet to run on natural gas.
On 17 September, Chesapeake CEO Doug Lawler—formerly of Anadarko—sent a memo to employees warning of more potential natural gas layoffs.
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After having taken over Chesapeake in June, Lawler has reconfirmed that the company will undergo a “comprehensive review of all areas” by 1 November this year.
In a statement, Lawler also noted that “future staffing adjustments will likely be necessary to properly align resources and improve our overall operating and competitive performance”.
The new focus is on driving shareholder value and making sure things are “return-centric”, he said.
So far, it’s working. Chesapeake shares were up 2.4% on Tuesday and since Lawler took over the company has gained 30%, topping energy stocks on the S&P 500 Index.
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Earlier this year, an uncomfortable conflict of interest issue saw Chesapeake Energy Corp. (NYSE:CHK) move to replace its CEO Aubrey McClendon. Stock prices were down and investors were revolting. McClendon actually co-founded the company, but investors didn’t like his track record, and he had already lost his post as chairman in 2012, so it was only a matter of time before he was replaced as CEO.
Shareholders weren’t fond of McClendon’s management missteps and the company’s stagnating performance (which is only half of the story). McClendon had gone on an asset binge, gobbling up US shale basins. But the massive debt he amassed did no favors to Chesapeake. In 2008 we saw the worst of this start to hit when gas prices collapsed and the company was left with tons of assets that they couldn’t develop.
By. Joao Peixe of Oilprice.com