Forcenergy announces Alaska layoffs, spending cuts due to low oil prices

The Associated Press

Miami-based Forcenergy Inc. has laid off workers and cut its capital spending plans for Alaska in the face of continued weak oil prices, but the company said it is still on track to install its Osprey Platform at Redoubt Shoal in Cook Inlet next summer.

The company laid off two of its 25 Alaska workers and five contract employees Feb. 4 and plans to spend less than half as much on capital projects in Alaska this year as it did last year.

Construction is 80 percent complete on the $35-million platform Forcenergy Inc. expects to install on its Redoubt Shoal prospect this spring, said Gary Carlson, vice president for Alaska operations.

Forcenergy reported a loss of $19.8 million for the first nine months of 1998, down from profits of $18.9 million in the first nine months of 1997. The bad news comes even though oil and gas production was up 27 percent and revenues were up 6 percent.

Company officials said low oil prices hurt operating results. Year-end results are not yet available.

Its $20 million Alaska capital budget for 1999 includes $16 million for the new platform, $1 million for seismic work and $3 million for drilling. Last year, its Alaska capital spending totaled $54 million, including $16 million for the new platform, $8 million for seismic work and $30 million for drilling.

Developing Redoubt Shoal will cost $75 million to $150 million, Carlson said. If oil prices stay low, Forcenergy will have to consider whether to proceed with drilling, he said.

“It makes no sense to be doing what we’re out there doing with current oil prices. We have to assume we’ll get higher prices,” Carlson said.