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Hess Cuts Workforce by Over 11% to Cope with Price Volatility

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Hess Corporation (HES - Free Report) has reportedly cut a number of jobs to combat the persistent oil price volatility.

According to sources, Hess has cut about 238 jobs – or a little more than 11% of its total workforce. Though a Hess representative confirmed that the retrenchment was executed to deal with the continued low oil price, the spokesperson did not reveal the exact number of employees that have been laid off.

The layoff is to better deal with reduced activity and efficiency gains. Notably, this is the first job cut announced by Hess since the downturn began in 2014.

In Apr 2015, the company had declared that it had not cut its activity as much as necessary to maintain efficiency gains made in plays like the Bakken in North Dakota. The main reason behind not abandoning activity in Bakken was to streamline manufacturing capability and maintain its human capital.

Per the securities filings, Hess had a total of 2770 employees at the end of 2015. Prior to the most recent round of layoffs, a website dedicated to industry layoffs showed that Hess had a headcount of about 2100. However, no official disclosure was received on the latest official workforce.

Hess’ priority remains investment in future growth with a balanced approach between unconventional, exploitation and exploration. Recently, the company divested several assets and is in the process of shedding its other assets. The amount raised through asset sale is expected to help fund E&P investments. We appreciate Hess’s cost-reduction initiatives. We note that such efforts resulted in the company’s narrower-than-expected loss in third-quarter 2016.

Hess currently has a Zacks Rank #3 (Hold). Some better-ranked players from the same sector are SunCoke Energy Inc. (SXC - Free Report) , Futurefuel Corp. and TransCanada Corporation (TRP - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SunCoke Energy posted a positive earnings surprise of 177.78% in the preceding quarter. It reported a positive earnings surprise in three of the four preceding quarters.

Futurefuel Corp. posted a positive earnings surprise of 20.83% in the preceding quarter. It reported a positive earnings surprise in all of the four preceding quarters.

TransCanada posted positive earnings surprise of 22.92% in the last reported quarter.

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