NEW YORK Nov 30 Freepoint Commodities has laid off staff in its natural gas group, the first pull-back for the upstart trading house founded last year by the former top executives at Sempra.
The Stamford, Connecticut-based firm, which began trading last June with the backing of private equity funds and quickly grew to more than 130 employees worldwide, will remain active in natural gas and other commodity markets, a spokesman said.
Structurally low natural gas prices have forced it to let go of some employees in line with reduced staffing needs, the spokesman said in an emailed statement.
The online publication SparkSpread.com, which initially reported the news, reported that five natural gas traders and one crude oil trader are thought to be leaving. The spokesman would not confirm the number of departures.
Freepoint was started by David Messer, who serves as its chief executive, along with other executives that built Sempra Energy Trading, the utility-owned enterprise that moved into a joint venture with Royal Bank of Scotland in 2008.
The RBS Sempra venture was sold off mostly to JPMorgan Chase & Co two years later after RBS was forced to divest its interest in the firm when it took U.K. government bailout money.
Freepoint embarked on an aggressive hiring spree, scooping up dozens of traders, some of them former Sempra alumni. Many were fleeing jobs at investment banks that are slashing bonus payments and imposing new curbs on proprietary trade.
The hiring continued as recently as last month, when Freepoint hired Volker Goerman, former director of power and gas from Barclays Plc, as a senior vice president of business development, according to Principal Search Ltd.
The U.S. natural gas market has not been kind to many trading companies lately, with persistently low gas prices bouncing back and forth in a narrow range.
Volatility that once afforded large peaks and valleys and the opportunity to reap big profits has yielded to hydraulic fracturing technology that extracts mounting supplies of the fuel embedded in layers of shale rock miles below ground.
"Following a periodic review of our business and an assessment of the substantial and, we believe, structural shift in the North American natural gas market, staffing levels related to this segment have been aligned with the current market environment," a Freepoint spokesman said in an emailed statement.
New York Mercantile Exchange natural gas futures prices sunk to a 10-year low under $2 per million British thermal units (mmBtu) in April. They have doubled since then, but few traders have been able to correctly call the turns.
Freepoint's traders are not the first casualties of mass supply and low prices. Legendary Houston-based natural gas trader John Arnold, who made billions of dollars trading the fuel, officially retired and shuttered his Centaurus fund in May after slowly and quietly winding it down.