Southwestern Energy to cut 40 percent of workforce

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HOUSTON — Southwestern Energy Co. will shed more than 40 percent of its workforce starting in the first quarter as it pauses its U.S. drilling program to cope with low natural gas prices, the company said Thursday.

The natural gas driller expects a $60 million to $70 million pre-tax charge for severance payments and other costs of cutting 1,100 jobs. About 300 of those are part of Southwestern’s Houston headquarters.

Falling natural gas prices over the past year has meant “cash flow to fund projects will be significantly lower than it has been the past few years,” Southwestern spokeswoman Christina Fowler said in an emailed statement. “These organizational changes are required to maintain competitiveness in this low gas price environment.”

Domestic gas prices have fallen 27 percent since this time last year, squeezing cash flows for shale gas drillers like Southwestern that put most of their drilling rigs in the gas-rich regions in West Virginia and Pennsylvania.

Southwestern said it hadn’t deployed any rigs at the beginning of the year and hasn’t set its annual investment budget or operating plan. The firm had cut roughly 100 jobs in August, and combined with the layoffs announced Thursday, Southwestern expects to cut its costs by $150 million to $175 million annually.