ConocoPhillips announces it will reduce its workforce by 20-25%. Shares fall
ConocoPhillips, the U.S. oil-and-gas producer, will reduce 20-25% its workforce in a broad restructuring. A company spokesperson confirmed this on Wednesday after five sources said that CEO Ryan Lance had detailed his plans in an early morning video message.
The shares of the third-largest U.S. oil company fell 4.2% to $94.91, compared with a drop of 2.1% in the S&P 500 Energy Index.
Lance: "I understand that these changes are creating uncertainty and unrest."
ConocoPhillips, and its competitors, have been under pressure to reduce staff, cut capital expenditure and reduce drilling this year due to the fall in oil prices. U.S. Oil Major
Chevron
Oil service giant announced that it would be laying off 20% of its employees in February.
It is also reducing its workforce.
British oil giant BP announced in January that it would be laying off over 7,000 employees, or 5%, of its staff.
Lance stated in the video that we would need fewer positions as we streamline our organization.
Lance stated that the cost of a barrel has risen by $2, which makes it more difficult for the company's competitors to compete. Lance said that controllable costs have risen from $11 per barrel to $13 in 2024.
The price of U.S. crude oil futures has fallen by approximately 11% this year.
Most job cuts to come before the end of the year
ConocoPhillips has identified over $1 billion worth of cost reductions and margin enhancements opportunities in the last month. This is on top of its $1 billion cost savings that it achieved from the acquisition of Marathon Oil.
Around 2,600 to 3,250 people will be affected by the company's global workforce of 13,000 workers. ConocoPhillips' Dennis Nuss, a spokesperson for the company, said that most of the cuts would be made by the end of this year.
Two sources stated that the new management and structure will be revealed in mid-September and that the reorganization would be complete by 2026.
Sources said that the company will hold a town-hall meeting at 9 am Central Time on Thursday.
Two sources reported in April that Houston-based ConocoPhillips hired Boston Consulting Group as a management consulting firm to provide advice on the restructuring program and layoffs, internally referred to as "Competitive Edge."
ConocoPhillips net income fell to $2 billion in the second quarter, the lowest level since March 2021 when COVID-19 ravaged the demand.
As of Wednesday, shares in the company had fallen by 4% this year, while S&P 500 Energy Index has risen 5%. Reporting by Georgina Mccartney, Arathy Sommesekhar, and Ernest Scheyder from Houston; Shariq Khan from New York. Editing by Nathan Crooks, and David Gregorio.
(source: Reuters)
