Facing pressure from investors for its disappointing performance since merging with neighbor Rice Energy in 2017, Appalachian shale gas driller EQT Corp. laid off managers and workers Jan. 7 in a bid to streamline its operations and deliver free cash flow with modest growth, EQT's new CEO, Robert McNally, said in a letter to shareholders.
EQT CEO Robert McNally
Source: EQT Corp.
McNally's letter did not say how many employees were let go, only that the company expects to save $50 million per year after the restructuring, which he said involved stripping out "layers" of management and a reduction in the workforce.
"We understand that our recent operational performance was disappointing to shareholders," said McNally, who was previously EQT's CFO. "This morning we announced a reduction in our workforce, removing management layers, streamlining functions and reducing shared services and contractor expenses. This action, which was completed today, demonstrates our ongoing commitment to one of our key strategic priorities, reducing costs."
"The decision to reduce headcount was a difficult but necessary step in our ongoing effort to enhance performance," a company spokesperson said in an email. "EQT will provide additional details associated with its targeted savings plan in the coming weeks as part of its 2019 capital program announcement."
A pair of brothers from the Rice family who remained large stakeholders in EQT after the Rice merger have publicly challenged EQT to cut its bureaucracy and to hire one of them to direct operations, a move they claim would result in cost cuts and better well results.
In the 13 months after the November 2017 merger, an EQT CEO quit in a pay dispute, the company fired its chief of exploration and production after attempts to drill longer laterals became disappointing, and costs increased without any gain in production volumes.