OKLAHOMA CITY (AP) — Citing low energy prices, Chesapeake Energy Corp. said Tuesday it was laying off 740 employees, most of them at its Oklahoma City headquarters, after the company reported a second-quarter loss of more than $4 billion in August.
The company said the layoffs represent about 15 percent of its workforce, cuts that will hit hardest at the company's Oklahoma City office, where more than 560 people lost their jobs. Following the layoffs, the oil and natural gas producer will still employ about 4,000 people, including about 2,500 in Oklahoma City.
In a letter to Chesapeake employees, CEO Doug Lawler said, "The current commodity price environment continues to be a challenge for our industry and for Chesapeake."
"Over the past year, we have taken significant actions in response to the low commodity prices by reducing our costs and decreasing our capital spending," Lawler said. While the layoffs were "extremely difficult," Lawler said they will enhance the long-term competitiveness and strength of Chesapeake.
The company said affected employees will receive up to a year's pay depending on their age, pay level and years of service.
The company, which also has sold assets to save money, didn't return emails and phone messages seeking comment.
The layoffs are the latest among Oklahoma-based energy companies attributed to low oil and natural gas prices. Earlier this year, Oklahoma City-based SandRidge Energy announced it was laying off more than 100 workers from its headquarters, reducing headquarters staffing by about 20 percent. At the time, SandRidge employed 661 in Oklahoma City.
Oklahoma Gov. Mary Fallin said she was saddened by the layoffs but understands that low energy prices are putting producers in a financial crunch.
"Oklahoma does get hit because we've had such a rich resource in oil and gas," Fallin said. "It helped to build a strong economy. But now we're seeing a downturn. We've see these downturns before. And we'll get through it."
Chad Warmington, president of the Oklahoma Oil and Gas Association, said the Chesapeake layoffs are probably not the last round of cuts in the state's energy sector.
"With these commodity prices, our companies just can't compete," Warmington said. "It's just a tough day, and with prices not looking to make a rebound any time in the near future, these effects are going to permeate throughout our economy."
Warmington said many oil and gas drilling operations are shutting down in Oklahoma because of low commodity prices and competition with better drilling sites in Texas and North Dakota.
U.S. Rep. Steve Russell, a Republican from Oklahoma, urged President Barack Obama's administration to allow domestic producers to export oil and natural gas overseas to help put the industry back on its feet and restore lost jobs.
Associated Press writers Justin Juozapavicius in Tulsa and Sean Murphy in Oklahoma City contributed to this report.