Financial Times Europe - 20.03.2020

14 ★ FINANCIAL TIMES Friday 20 March 2020

COMPANIES

JA M E S F O N TA N E L L A- K H A N A N D

G R E G O RY M E Y E R— NEW YORK

D E R E K B R OW E R— LONDON

Independent US energy producers are

restructuring billions of dollars of debt

or discussing new ways to stay afloat as

collapsing oil prices and soaring bond

yields threaten bankruptcies across

the beleaguered shale sector.

Whiting Petroleum, an oil driller in

North Dakota and Colorado, andAntero

Resources, a gas-focused producer in

the Appalachian region, are among

companies that have begun exploring

restructuring options and sounding out

potential advisers, according to sector

expertsandbankers.

Meanwhile,California Resources, the

largest oil and gas producer in the

Golden State, and Ohio- and Oklahoma-

focusedGulfport Energy, have both

hiredPerella Weinberg, a financial serv-

ices group, to help restructure their

debt,saypeoplebriefedonthematter.

Chesapeake Energy, once a shale gas

pioneer, has hired law firm Kirkland &

EllisandfinancialadvisersRothschild&

Coto help manage its $9bn debt pile. Its

troubles are evident in debt markets,

where its $2.2bn bond maturing in 2025

fell from over 80 cents on the dollar on

February20to18centsonWednesday.

Occidental Petroleum, the largest oil

producer in the US, last week cut its div-

idend by 90 per cent and slashed capital

expenditure.Vicki Hollub, chief execu-

tive, said those actions would help it

generate cash in a world with oil prices

in the low $30s per barrel. Since then oil

hasfallentothelow$20s.

The US shale industry was already

struggling to generate cash and retain

investor support in 2019, when West

Texas Intermediate crude oil averaged

$57 a barrel. Last year 42 oil companies

with $26bn in debts filed for US bank-

ruptcy protection, according to the law

firm Haynes & Boone, up from 28 com-

panieswith$13bnofdebtin2018.

But the 67 per cent plunge in crude

prices since January has devastated the

outlook for producers, which are now

curtailing drilling plans as the industry

battles an unprecedented collapse in oil

demand due to coronavirus and a price

warbetweenSaudiArabiaandRussia.

Whiting on Tuesday cut its invest-

ment budget by 30 per cent as it consid-

ers how to deal with $2.9bn of debt. It

has a $770m bond maturing next year

thattradesat24centsonthedollarfrom

almost100centsinmid-January.

Antero’s bonds maturing next year

and the year after have held up better

but a $750m bond maturing in 2023 has

dropped to 32 cents on the dollar, from

over 70 cents. California Resources on

Tuesday terminated a complex

exchange with note holders that would

have relieved it of $895m in debt and

interest obligations, citing “recent

developments in the commodity and

financial markets”. One of its bonds

maturing in 2022 was trading on

Wednesdayat4centsonthedollar.

Whiting, Antero, California

Resources and Gulfport did not respond

to requests for comment. Chesapeake

declinedtocomment,asdidOccidental.

Additional reporting by Joe Rennison in

London

Oil & gas

Price collapse leaves US shale groups battling to restructure debt

PAT R I C K M C G E E— SAN FRANCISCO

Tech companies are still hiring fever-
ishlyastheymovetotakeadvantageofa
world shifting increasingly to digital as a
result of the coronavirus, despite mass
lay-offs elsewhere and growing con-
cernsoverplummetingglobalmarkets.
In California alone, tech companies
werelookingtofill15,852jobsinthesec-

ond week of March — down only slightly

from the week before and nearly three

times the level from a year ago,

ZipRecruiterdatashow.

Even on Tuesday, one day after six

counties in the Bay Area announced a

“shelter in place”, 2,414 new tech jobs

were posted, down only 9.6 per cent

from2,671aweekbefore.

“We don’t see any drop-off in tech —

the job patterns are pretty much

what we’d expect if there were no coro-

navirus,”saidJuliaPollak,labourecono-

mist at ZipRecruiter, an employment

marketplace.

Apple,Lyft,Uber,Adobe andTwitch

were also among the companies posting

newlistingsonWednesday.

The hiring spree contrasts with a dra-

matic slowdown in other industries. Job

postings in aviation collapsed 44 per

cent last week from a year ago, while

catering tumbled 39 per cent, hotels fell

24 per cent and restaurants were down

26percent,accordingtoZipRecruiter.

As companies “radically rethink”

how they operate in light of escalating

restrictions, the need for software skills

is also likely to extend well beyond the

tech sector, said Stuart Carlaw, chief

researcher at ABI Research. “The mar-

ket for technology jobs is likely to

remain strong in the face of Covid,” he

said. “Labour intensive companies have

to increasingly embrace digital compo-

nentstoremainsolvent.”

For Ms Pollak, the virus outbreak is

accelerating trends that were already

brewing in the economy. “This is clearly

a time when bricks-and-mortar stores

will shift to ecommerce... when res-

taurant meals will shift to delivery,” she

said. “So this is actually a breakout

momentfortechcompanies.”

Some start-ups said they planned to

increase headcount even as the pan-

demic forces more employees to work

from home — in part because many of

the challenges of a distributed work-

forcearelesssevereforthetechsector.

“Thebeautifulthingabout[coding]is

you can write software from your quar-

antine,” saidMark Groden, chief execu-

tive ofSkyryse, a helicopter automation

start-up.

Still, there are some difficulties in

interviewing applicants without getting

withinsixfeetofthem.

“The candidate hiring experience is

totally bizarre right now,” saidJason

Boehmig, chief executive of legal auto-

mationsoftwaregroupIronClad.

On Sunday he made an offer to some-

oneforaseniorroleafteraremoteinter-

view process. “Now,” he said, “we’re

goingtohavetofigureouthowthisactu-

allyworks.”

Technology

Silicon Valley hires to gain from mass shift online

California groups buck

virus trend with push to

take on 15,000 workers

R I C H A R D WAT E R S— SAN FRANCISCO
T I M B R A D S H AW— LONDON

Slack andMicrosofthave reported big
jumps in the number of new users and
business from their workforce collabo-
ration platforms, as the coronavirus cri-
sis reignites one of the software indus-
try’sfiercestrivalries.
Slack’s group messaging app has
notched up a net increase of 7,000 pay-
ing customers since the start of Febru-
ary, or 40 per cent more than it nor-
mally has in an entire quarter,Stewart
Butterfield, chief executive, said in an
interview.
At the same time, Microsoft said the
number of people using its rival Teams
service on a single day early this week
reached a record 44m. It first surpassed
20monlyfourmonthsago.
“Ithinkit’sgoingtogodownasaturn-
ing point in history for the way people
work,” saidJared Spataro, head of
Microsoft 365. “I don’t think we’re ever
goingbacktotheoldwayofworking.
“In some respects, we were made for
this,” added Mr Butterfield of the sud-
dendislocationinworklife.
The emergence of a new generation of
group messaging and collaboration
tools for workers has been given a huge
boost by the present crisis, according to
industryobservers.
“This may have jump-started the
market by seven years,” said Wayne
Kurtzman, an analyst at tech research
firm IDC. Forcing millions of people to
change their everyday work practices
“is a perfect opportunity for companies
to become the digital businesses they
havewantedtobe”,headded.
Along with video conferencing
start-upZoom, Slack was initially seen
by Wall Street as a beneficiary of the
explosioninremoteworking.
But its share price has since fallen
back nearly 40 per cent on worries
that the surge in remote working would
not translate into new customers, and
only a week ago Slack executives
sounded a cautious note on a call with
WallStreetanalysts.

Mr Butterfield said that at the time he

was less certain about generating new

sales from the crisis, and did not want to

sound “ghoulish” about profiting from a

public health emergency. But since

then,thereservationshavedissipated.

Referring to the soaring use of his

company’s app over the past week, he

said: “We’ve seen hockey sticks become

vertical lines — that’s good for the busi-

ness.” As companies become more cau-

tious in a crisis, “the one hole that might

bepunchedinthatwallofnospendingis

tools that make it easier for organisa-

tionstokeepoperating”,headded.

Microsoft and Slack have pushed

ahead with long-planned updates of

their services this week. New features

announced by Microsoft yesterday

includeartificialintelligencetofilterout

background noise during video confer-

ences, and a way for users to keep using

amessageservicewhileoffline.

Slack, meanwhile, unveiled a rede-

sign of its app on Wednesday to make it

easier to use. While activity on Teams

revolves mainly around simple video

conferencing and document sharing

tasks, Slack is a more complex platform

based around group messaging and

tying together a company’s different

software applications — something that

has slowed its adoption, according to

analysts.

“Slack is still encumbered by having

to explain what it is, the full capabilities

of the platform,” said Mike Facemire, an

analystatForresterResearch.

“The intent [of the redesign] is to

make Slack much less daunting; we’re

pulling back the sophisticated features

thatpeopledon’tneedintheearlydays,”

Mr Butterfield said. The company last

announcedadailyusernumberinOcto-

ber,whenitreached12m.

The explosion of work on the new col-

laboration platforms has put a strain on

the services, with Teams suffering an

outage in Europe at the start of this

week.

Mr Spataro said Microsoft had

increased capacity for the service six-

fold in the past 30 days, but struggled to

balance demand across its various data

centres as the pattern of traffic shifted

dramatically. “We just have seen tre-

mendous, tremendous demand as peo-

plehavemovedtoworkfromhome.”

In a video released to coincide with

Microsoft’s update to Teams,Satya

Nadella, chief executive, predicted the

coronavirus crisis would have a lasting

impact. “We’re going to learn a tremen-

dous amount, transform how we work

together.There’sreallygoingtobeafun-

damental structure change in how we

transcend some of these geographic

boundaries.”

Technology.Group messaging apps

Microsoft and Slack tussle for millions of remote workers

Rival platforms reel in record

user numbers in ‘turning point’

for how workplaces function

Slack’s group messaging app has seen a net increase of 7,000 paying customers since the start of February— Michael Nagle/Bloomberg

Free cash flow, trailing  months (bn)

Sources: company; Refinitiv

Slack benefits from sudden

surge in home working

Customers (m)

Share prices and index rebased

Paid

Additional













 

















Jan  Mar

Slack

Microsoft

S&P 

Outbreak of coronavirus in China

prompts talk about more home working

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Fiscal years  Q

‘It’s a perfect opportunity

for companies to become

the digital businesses they

have wanted to be’

Oil and gas companies in the UK North

Sea are facing an “unprecedented”

crisis that threatens some with

collapse and will mean sweeping

spending cuts this year, according to a

bleak report released yesterday.

OGUK, a trade body for the North

Sea operators, said the combination of

the oil price war triggered by Russia

and Saudi Arabia and pressures on

commodity prices from the global

spread of coronavirus were creating a

situation “we have really never seen

before”.

Companies, especially those in the

oil and gas supply chain still struggling

to recover from the last price crash of

2014, are once again facing “severe

pressures”, OGUK said in a report on

the state of the market that also

warned “this sector is now in a paper-

thin position”.

Oil and gas explorers and producers

are expected to slash their capital

investment budgets by up to 30 per

cent this year.

Nathalie Thomas in Edinburgh

North Sea report

Sector faces ‘paper-thin’

chances of survival

Occidental chief

Vicki Hollub says

cutting the group’s

dividend and

capex will help to

generate cash

‘Bricks-and-mortar stores

will shift to ecommerce...

this is a breakout moment

for tech companies’

Business Opportunities

Readers are strongly recommended to take appropriate

professional advice before entering into obligations.

Legal Notices

Contracts & Tenders

MARCH 20 2020 Section:Companies Time: 19/3/2020 - 17: 49 User: cathy.pryor Page Name: CONEWS3, Part,Page,Edition: USA, 14, 1