Whiting shares drop, cuts staff and output target

HOUSTON (Bloomberg) --Whiting Petroleum plunged as much as 23% in early trading Thursday after it fired one-third of its workforce, scaled back its full-year production target and posted a surprise quarterly loss.

The Denver-based oil explorer said the elimination of 254 jobs will result in $50 million in annual cost savings, according to figures released on Wednesday.

“We aim to be as efficient as possible and that is why we made the difficult decision to reduce our workforce in order to realize significant annualized cost savings,” CEO Brad Holly said in a statement Wednesday.

Whiting joins industry peers Pioneer Natural Resources, Laredo Petroleum and Devon Energy in cutting headcount as investors increasingly focus on general and administrative budgets.

At many oil producers, executive compensation can amount to as much as 20% of general and administrative costs, Evan Lederman, a partner at New York-based Fir Tree Partners, said in an interview earlier this year. The Whiting job cuts included 94 executive and corporate-level positions.

The company posted a second-quarter loss of $0.28 per share, while the average of analysts’ estimates compiled by Bloomberg was for a $0.27 profit. The miss was due to a combination of weak natural gas liquids pricing, higher-than-expected operating costs, and disappointing oil volumes, analysts at Raymond James said in a note.

Whiting traded 23% lower at $13.76 in New York.