Calfrac Well Services lays off up to 70% in Canada, U.S. as oilpatch activity dries up

One of Canada's largest oil and gas well completion companies is laying off more than two-thirds of its North American field employees as oilpatch activity slows dramatically. 

Calfrac Well Services announced Tuesday it is reducing the number of field staff by 70 per cent, pointing to a "rapid and unforeseen deterioration in business conditions" due to COVID-19 and an international oil price war.

The Calgary-based company did not release a precise number of staff affected, but the company had about 1,600 field personnel working in North America last year, with about a third of those employed in Canada.

The double-blow of the pandemic and the price war has seen "essentially all" of Calfrac's clients make reductions in their planned spending, the company said in a release.

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"The production cut announced by OPEC+ members on April 12 … has to date been insufficient to counterbalance the combined impact of the demand destruction," the company said.

The oil industry worldwide has been under increasing strain due to the collapse in demand and worries about a lack of storage for all of the excess crude, particularly in the United States.

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Last week, the U.S. benchmark price for oil went negative for the first time.

Oil companies have made steep cuts to this year's spending plans and production, meaning there is less work for business such as drillers and oilfield services firms.

Calfrac had already announced last month it was cutting this year's capital program to $55 million from $100 million. It also said it was taking several other steps to reduce fixed costs, including salary cuts. 

"It is difficult to predict how the COVID-19 pandemic will continue to affect the demand for Calfrac's services," it said.  

However, Calfrac said its management will monitor and assess the evolving circumstances to determine what further measures will need to be taken to mitigate the impacts "of this unprecedented market challenge."

Earlier this month, Calgary rival Trican Well Service said it had cut its employee costs by half through salary reductions, layoffs and job sharing in reaction to a severe slowdown in drilling activity.