John S. Herold Inc. reports that employment by U.S. oil and gas companies dipped 4.1% in 2004-the 20th annual decline in 23 years. Of the top 25 companies the firm has followed since 1974, nearly 120,000 positions have disappeared since 1999. Since the 1981 oil-price peak, energy companies have dropped nearly 1.11 million employees. The industry's poor treatment of its employees is a situation that must be turned around, says Art Smith, Herold chairman and chief executive. "The oil industry faces a Herculean task in overcoming its reputation for brutal treatment of professionals during the past two decades of downsizing," says Smith. "Our finding suggests that unless oil and gas companies take drastic steps to reverse the 'brain drain' of the energy industry, a severe personnel crunch is preordained. Faced with unrelenting pressure to replace production and find and develop reserves...we wonder if the industry has the luxury of time to recover from its mistakes of the past." The U.S. Department of Labor estimates E&P employment will fall 28% between 2002 and 2012, reports Aliza Fan, co-author of the study. She disagrees and "sees strong growth prospects in the years ahead for oil and gas personnel in all facets of the industry, from the wellhead to the executive suite." ExxonMobil is one of the most effective among its peers in getting high productivity out of fewer workers, according to the study results. The company's EBITDA per employee grew 12.3% during the past 10 years, climbing to $444,000 in 2004. For more on this, see the June issue of Oil and Gas Investor. For a subscription, call 713-993-9325 Ext. 126. --Oil and Gas Investor This Week

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