Calgary-based PHX Energy Services says it's releasing nearly half of its workforce, amounting to more than 500 employees.
Most of them live in Alberta.
"PHX Energy believes its actions will preserve the corporation's balance sheet and will enable it to gain market share in this difficult environment," the drilling company said in a release.
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PHX had already cut salaries up to 20 per cent earlier this year in the hopes of creating a buffer from the effects of low oil prices.
"Due to the current market challenges and uncertainty with respect to future oil commodity prices and drilling activity, PHX Energy has significantly reduced its cost structure to align with anticipated lower activity levels and reduced day rates," said the company's statement.
The layoffs are the latest announcement of job losses in Alberta's energy industry.
Other recent layoff announcements
Penn West announced last week that it let go 400 full-time employees and contractors — most of them working at company headquarters in Calgary
ConocoPhillips Canada also reduced its workforce by about 15 per cent, or 400 employees and 100 contractors.
Tervita — a company that specializes in environmental waste management — cut its corporate head count by 15 per cent because of the "prolonged downturn in the energy markets."
Other oil companies are also reducing staff wages to avoid layoffs. Canadian Natural Resources Limited announced on Thursday it would cut wages by up to 10 per cent.
The company reported a $405-million net loss in the second quarter of this year, saying it would have been profitable if not for an increase in Alberta's corporate tax rate put in place by the governing NDP.