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Hiring Is Bottoming in Oil & Gas


We believe industry-wide O&G hiring is arriving at minimum replacement levels. Data from Oilpro’s jobs platform suggest new open position listings are finally finding a floor after a severe decline over the past 18 months (chart). A landing (even if it is a hard landing) in new openings is a leading indicator of workforce stabilization.

Oil workers have faced a two-edged sword over the past 18 months: i) layoffs and ii) fading opportunities. On the one hand, we estimate over 350,000 industry workers have been let go. Meanwhile, the number of new job listings has been declining rapidly for several reasons including i) the growth hiatus, ii) hiring freezes, iii) less turnover/less competitive poaching, iv) attrition as a substitute for layoffs (in other words, companies stopped replacing retirees/resignations).

While layoffs continue, the number of openings listed by O&G companies each month is bottoming at what we believe is close to operational maintenance hiring levels. In other words, industry-wide hiring is bottoming at levels needed to offset regular attrition. Because our jobs service spans the industry, there is also some support from midstream and downstream expansion padding the landing.

From the 2014 peak in the O&G job market, the number of new jobs opening each month fell 61%. But in the past 12 months, new listings are down only 26% – the rate of decline is slowing. And over the past four months, new listings are actually flat. Industry-wide hiring is stabilizing at about 1/3rd of peak levels. This doesn’t mean more positions will suddenly be available to sponge up dislocated O&G workers, but it is the first step towards stability.

Unfortunately, the other edge of the sword, layoffs, isn’t back in the scabbard just yet. Layoffs are still occurring, and they are evolving. Early layoffs were about adjusting to what many hoped was a temporary slump (i.e. laying off roughnecks alongside rig count declines). The layoffs we are hearing about now attempt to adapt to the new paradigm (i.e. cuts to mid- and high-level management).

Initial adjustment downsizing impacted more workers, but ongoing adaptation downsizing impacts higher value workers. And adaptation downsizing will continue to be a theme for the rest of the year as O&G companies solve for the cost basis that generates profit at sub-$40 oil. That said, the positive inflection in the second derivative of new hiring should bring some hope as it improves visibility on workforce stability.

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