Oil Workers in Canada Find There’s No Free Lunch as Perks End


Canadian energy companies have cut thousands of jobs and scrapped projects in a drive to cut costs. Now they’re raiding workers’ perks.

Holiday parties, childcare benefits and Fridays off are being targeted as the rout in crude prices grinds into its 16th month, workers and company representatives say. The clampdown on perks comes as firms dig deeper for savings after eliminating about 36,000 oil and natural gas jobs in the crash, according to a tally by the Canadian Association of Petroleum Producers.

At Canadian Natural Resources Ltd.’s office in Aberdeen, Scotland, the only microwave is in overdrive after the cafeteria stopped serving hot meals and raised the price of sandwiches. The coffee cups are smaller, too. While the company has avoided job cuts, salary reductions of as much as 10 percent mean some workers are also earning less.

ConocoPhillips, which is cutting 500 workers in Canada this year, removed complimentary juice and soda from fridges in Calgary and canceled personal development benefits of up to C$1,500 ($1,153) a year that some employees used for sports training.

Cenovus Energy Inc. is weighing whether to end the practice of employees getting two Fridays off a month. The company already reduced its travel and training budgets and has eliminated 1,340 jobs.


“In times of fiscal prudence, it’s essential to see companies eliminating all unnecessary expenditures,” said Eric Nuttall, a portfolio manager at Sprott Asset Management LP in Toronto. “This whole every second Friday off thing, that’s the most egregious example.”

The changes to incentives at Canadian Natural and ConocoPhillips are according to people familiar with the moves, who asked not to be identified discussing private matters. Kristen Ashcroft, a spokeswoman at ConocoPhillips, said the company won’t confirm specific cost-reduction actions. Julie Woo, a Canadian Natural spokeswoman, declined to comment.

At Cenovus, “no stone is being left unturned” in a broad review of workforce policies, said Brett Harris, a spokesman. Employees currently work longer hours on other days to earn the Fridays off, he said.


Tobias Read, chief executive officer of staffing consultant Swift Worldwide Resources, said retirement and childcare benefits are also being scaled back along with social events, as companies offer unpaid leave and work-share programs on top of salary reductions and job cuts.

“You are seeing a radical change in the incentives,” Read said. “It’s a grim reality that if they don’t reduce costs in every area, the situation will be dramatically worse.”

Companies are driven to get rid of perks to prove to shareholders they’re serious about lowering costs, said Chris Feltin, an analyst at Macquarie Group Ltd. in Calgary.

“One of the only factors you can control is costs,” he said.


The Standard & Poor’s/TSX Energy Index has fallen 22 percent in the past year, compared with a 5.8 percent decline in the S&P/TSX Composite index. Prices for the U.S. crude benchmark are down 45 percent in the past 12 months. West Texas Intermediate futures rose 0.3 percent to $47.24 in New York at 8:09 a.m Tuesday.

Cenovus’s earlier cuts are already affecting its bottom line. The oil-sands producer’s general and administrative expenses fell 28 percent in the second quarter from a year earlier. Job cuts and reduced discretionary spending helped, along with lower compensation costs because of a drop in the company’s stock price.

Not all incentives are vanishing with the oil market crash.

Crescent Point Energy Corp. is keeping an in-house catering service, which it calls the bistro, to serve bagels, fruits and vegetables each day, Chief Operating Officer Neil Smith said by phone last month. The company canceled a summer golf outing and toned down plans for its upcoming Christmas party, however, as it avoids cutting jobs, he said.

“A happy crew will put out 20 to 40 percent more than a stressed, unhappy crew,” Smith said.

A surplus of qualified workers means the industry’s lost incentives probably won’t come back quickly, according to Swift’s Read.

“I don’t think there’s a worry that if the market returns, they’ll find a shortage of people,” Read said.







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