Houston — US oil and gas producer ConocoPhillips would cut up to 25% of its workforce before year-end as part of a broad restructuring, a company spokesperson said on Wednesday, after CEO Ryan Lance detailed the plans in a morning video message.
Shares of the third-largest US oil producer declined 4.2% to $94.91, outpacing a 2.1% drop in the broader S&P 500 Energy Index.
“I know these changes create uncertainty, and they are unsettling,” Lance said.
A fall in oil prices has put ConocoPhillips and its rivals under pressure this year, forcing them to cut staff, curb capital spending and reduce drilling. US oil major Chevron announced it would lay off up to 20% of its staff in February, and oil service giant SLB is also cutting its workforce.
In January, British oil major BP said it would cut more than 7,000 staff, or 5% of its workforce.
“As we streamline our organisation and take work out of the system, we will need fewer roles,” Lance said in the video heard by Reuters.
Costs had risen by about $2 per barrel, making it harder for the company to compete, Lance said. He said controllable costs had risen to $13 per barrel in 2024 from $11 in 2021.
US crude futures have decreased by about 11% so far this year.
Last month, ConocoPhillips identified more than $1bn of cost reduction and margin enhancement opportunities, on top of the more than $1bn in cost savings from its acquisition of Marathon Oil last year.
The company has about 13,000 employees globally, meaning between 2,600 and 3,250 employees will be affected. Most of the cuts will be made before the end of the year, ConocoPhillips spokesperson Dennis Nuss said in an emailed response to Reuters.
The new structure and management would be made public in mid-September, and the reorganisation completed by 2026, two of the sources said.
The company planned to hold a town-hall meeting on Thursday morning, they said.
In April, two sources said Houston-based ConocoPhillips had hired management consulting firm Boston Consulting Group to advise on the restructuring and layoff programme.
ConocoPhillips’ net income shrank in the second quarter to about $2bn, the lowest since the quarter ended March 2021, when Covid-19 had ravaged demand.
As of Wednesday afternoon, the company’s shares have fallen 4% so far this year, compared with a 5% rise in S&P 500 Energy Index.
Reuters
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