Chesapeake moving workers to OKC office

[metro]

The Journal Record - Article

Chesapeake sends workers to OKC office
by Marie Price
The Journal Record February 27, 2009

OKLAHOMA CITY – Chesapeake Energy Corp. is reorganizing its Eastern Division, based in Charleston, W. Va., from a regional corporate headquarters to a regional field office, consolidating management of most of its departments into the company’s Oklahoma City headquarters.

Chesapeake said Thursday that about 215 of the 255 Charleston workers will either be moved to Oklahoma City or eliminated. Severance packages and employment outplacement services will be provided to affected workers.Company officials said the main reason for the move is to merge certain functions for Chesapeake’s Marcellus Shale program.

Chesapeake CEO Aubrey McClendon said consolidating key positions in Oklahoma City dedicated to developing the Marcellus Shale “will enable us to more aggressively and efficiently implement our exploration and production program across the region.”

McClendon said a separate factor leading to reduction in the company’s West Virginia presence was its decision last year not to build a $40 million regional headquarters in Charleston after the West Virginia Supreme Court refused to consider Chesapeake’s appeal in a court case.

The jury in Tawney v. Columbia Natural Resources awarded the plaintiffs in the case $404.3 million, including $270 million in punitive damages.

“At that time, we realized that until West Virginia’s judicial system provides fair and unbiased access to its courts for everyone, a prudent company must be very cautious in committing further resources in the state,” McClendon said.

Tawney was a class-action lawsuit regarding royalties. Chesapeake acquired Columbia Natural Resources four years ago for $2.2 billion.

McClendon said the court’s ruling was not the primary reason for the reorganization, but played a significant role in Chesapeake’s decision.

Management of the eastern division’s land, legal, accounting, information technology, geoscience and engineering department will move to Oklahoma City. Corporate development, midstream and some human resources and land functions will remain in Charleston.

Chief Operating Officer Stephen C. Dixon said moving key disciplines to Oklahoma City will provide some cost savings over time, but will mainly help Chesapeake more quickly develop the potential of the Marcellus Shale.

“The management structure utilized in our other major shale plays – the Barnett, the Fayetteville and the Haynesville – has proven to be very successful,” Dixon said. “We believe that the collaboration afforded by having our teams of landmen, geoscientists, engineers and senior management working in close proximity on our Oklahoma City campus will promote quicker and improved decision making and improve execution and responsiveness as we move forward with the nation’s highest-potential drilling program.”

He said that is particularly important and timely due to the need to ramp up activity in the Marcellus Shale under Chesapeake’s $3.375 billion joint venture with StatoillHydro.

Martha A Burger, senior vice president of human and corporate resources, said Chesapeake has been considering the reorganization as tightening credit markets and dropping energy prices have dictated a cut in capital spending and elimination of cost redundancies.

She said Chesapeake will still have more than 400 employees in West Virginia after the change, which the company expects to complete by June 30.

[OKCMallen]

Bad for CHK and OKC, but still mildly good for OKC.

“At that time, we realized that until West Virginia’s judicial system provides fair and unbiased access to its courts for everyone, a prudent company must be very cautious in committing further resources in the state,” McClendon said.

Love it. Hope they like their ridiculous punitive damages now that CHK is pulling a good portion of their long-term, well-paying jobs out of the region, in addition to cutting capital improvements.

[bombermwc]

It's about time that someone pulls back employees to OKC rather then moving to Houston or whatever.

[ImTheDude]

This has a lot more to do with the court ruling than the article would leave you to believe. WV screwed themselves out of a lot of great paying jobs that most cities would love to have.

[OKCMallen]

This has a lot more to do with the court ruling than the article would leave you to believe. WV screwed themselves out of a lot of great paying jobs that most cities would love to have.

Why do you say that? Seems like gas prices hovering right above 4.00/mmcf would be a bigger factor and the economy doing a nosedive would be bigger factors than Aubrey wanting to give WV the middle finger.

Now, supposedly, the $40MM regional HQ wasn't built because of the verdict...but CHK's decision on that was well before this pullout.

[Midtowner]

In other news, they just got hit with a pretty serious looking derivative suit... looks like a 10-b-5 violation, i.e., they made material misrepresentations of fact to investors. I read the news release from the law firm and I'm not too sure how much success these guys are going to have. Most of these 'material misrepresentations' were things which were fairly well known.

[ImTheDude]

Why do you say that? Seems like gas prices hovering right above 4.00/mmcf would be a bigger factor and the economy doing a nosedive would be bigger factors than Aubrey wanting to give WV the middle finger.

Now, supposedly, the $40MM regional HQ wasn't built because of the verdict...but CHK's decision on that was well before this pullout.

I should have said that the jobs being pulled out of WV had to do with the court ruling and because of the market they are being moved to OKC. From what I was told, WV was not going to be keeping these jobs no matter what.

[OU Adonis]

Well CHK has cut a ton of contract positions so at best this offsets some of those losses.

[jbrown84]

Interesting times for CHK...

[OU Adonis]

Interesting times for CHK...

I know they had approximately 480 regular IT positions in OKC and 160 contract. Last I heard they had cut down to around 30 contractors. I would be surprised if there was any IT contractors left.

I have heard the Landmen have had it rough as well.

[bombermwc]

Contractors - the jobs of hell and the first to be screwed. It's like a federal job, if you're a contractor, you get the shaft of it all, whereas the federal jobs get the silk pillow.

[adaniel]

I know they had approximately 480 regular IT positions in OKC and 160 contract. Last I heard they had cut down to around 30 contractors. I would be surprised if there was any IT contractors left.

I have heard the Landmen have had it rough as well.

The land brokerages they had partnerships with in the Barnett Shale have endured nothing short of a bloodbath, so I can imagine their contract landmen are probably getting axed. My company gets tons of resumes from former CHK contactors. I'm actually trying to help a friend who lost his job at a land service company when Chesapeake pulled back from the Marcellus play. IMO CHK had too many landmen, company or contract, to begin with.

Glad to hear that they are moving jobs to OKC though. From a state perspective will help replentish the jobs that ConocoPhillips is shipping off to Houston.

[okcpulse]

ConocoPhillips drank the Houston cool-aid. Write 'em off, my good friend. Write 'em off.

[metro]

We already knew about ConocoPhillips months ago, that was no surprise really. Sucks cuz they moved my uncle to Ponca City last year and weeks after they bought a house there they were told almost everyone would be moving to Houston within 2 years. This was before the media announcement. At least they are moving some workers to Bartlesville, hope they don't close that one in the near future.