DOB’s Pandemic Survey Results, Part 2: Cost Cutting Happening Rapidly Across Industry

The Daily Oil Bulletin surveyed over 600 people — ranging from field workers to executives representing companies of all sizes from across the oil and gas supply chain — from March 30 to April 3 to get an understanding of how industry is responding to the dual challenges of the COVID-19 pandemic and the resulting collapse in oil prices. 

We asked the survey respondents about how the pandemic has affected their work environment, how their organizations are responding to the dire economic challenges industry is facing, and how financial institutions and governments can help the industry survive through the downturn. We also asked how long they expect the current downturn to last, and what the industry will look like when the dust settles. 

In this, the second part of a four-part series based on the survey results, we look at how companies are managing their finances in the face of the massive downturn in commodity prices. Part 1 is here.


Canadian oil and gas companies are rapidly adjusting their cost structures to remain viable as the collapse in oil prices resulting from the drop in demand from the COVID-19 pandemic hammers cash flows, according to the results of the Daily Oil Bulletin Pandemic Survey.

The survey respondents said capital expenditure cuts are already underway and headcount and salary reductions are quickly following. Oilfield service companies are reporting increased pricing pressures as well, as operators look to once again restructure to survive the third downturn in the last five years.

Eighty-five per cent of companies reporting cutting capital expenditures in response to the price collapse, with almost a quarter of companies reporting cutting by over 50 per cent. Sixty per cent of companies cut capital expenditures by over 25 per cent. Based on the magnitude of recent corporate announcements these numbers are likely to increase substantially in the coming weeks and months. Survey respondents from gas-weighted companies reported a lower reduction in capital expenditures than oil-weighted companies. However, even companies tilted heavily towards gas production reported reductions.

At the time of the survey, a little over half of companies reported reducing headcounts in response to the downturn. However, 12 per cent of respondents indicated their organizations have already made significant cuts in excess of 25 per cent of staff. This group includes smaller oilsands and upstream producers and all sizes of oilfield services companies.  With large reductions in capital spending under way, it is likely layoffs and furloughs will pick up pace in April and May. Given cash flow constraints, it is likely many companies will rely on furloughs rather than layoff as furloughing employees does not require any employee payouts.

Around 30 per cent of survey respondents reported their companies have reduced salaries to help preserve cash flow.

Seventy-five per cent of suppliers have been approached by customers for pricing concessions with over 40 per cent being asked for reductions of more than 20 per cent, said the respondents. Pricing pressures have been a major viability concern for the oilfield services and manufacturers through the last five years as operators have adapted their cost structure to a long-term lower price environment. With oilfield services margins already very tight, this strategy will result in significant contraction of the supplier base going forward.