ConocoPhillips, a significant player in the oil and gas industry, announced plans to reduce its workforce by 20% to 25%. This decision is part of a larger restructuring strategy outlined by CEO Ryan Lance in a video message earlier this week, communicated to Reuters.
In response, the company’s stock dipped by 4.4%, reaching $94.68.
“These changes can lead to uncertainty and anxiety,” Lance remarked.
The current downturn in oil prices has also pressured other industry rivals, prompting them to downsize and limit their capital investments. For instance, Chevron revealed it would lay off up to 20% of its employees in February, while oil services company SLB is also undergoing workforce reductions.
Earlier this year, BP declared job cuts affecting about 5% of its more than 7,000 strong workforce.
“As we refine our organizational structure and eliminate certain roles, we find ourselves needing fewer positions,” Lance stated during the video.
He noted that operational costs have surged, with expenses rising by $2 per barrel, complicating competitiveness. Specifically, controllable costs have jumped from $11 in 2021 to $13 per barrel expected by 2024.
This year alone, US crude oil futures have dropped by approximately 11%.
Last month, ConocoPhillips revealed plans to identify over $1 billion in cost-saving opportunities, in addition to savings from last year’s Marathon Oil acquisition.
With around 13,000 employees globally, the cuts could impact between 2,600 and 3,250 positions. A spokesperson mentioned that most layoffs would occur by year-end.
The company is expected to unveil the new organizational structure and management by mid-September, with the reorganization set to wrap up by 2026, according to sources.
A City Hall meeting is scheduled for Thursday morning to address these changes.
In April, reports indicated that ConocoPhillips had engaged the Boston Consulting Group to assist in its internal restructuring initiative, dubbed “competitive.”
In the second quarter, the company saw its net profit decline to roughly $2 billion. As of the latest update, the company’s stock has decreased by 4% this year, contrasting with a 5% rise in the S&P 500 Energy Index.
