On 3/9, a ConocoPhillips spokesperson announced the company's plan to reduce its workforce by 20-25% as part of a large-scale restructuring. This follows an internal video announcement by CEO Ryan Lance, as reported by Reuters.
"I know these changes will create uncertainty, and they are concerning," Lance acknowledged in the video.
He explained that rising production costs, which have increased by 2 USD per barrel, are impacting the company's competitiveness. In 2021, controllable costs were 11 USD per barrel, but this figure rose to 13 USD last year.
"As we streamline the organization, we will need fewer positions," Lance stated. With approximately 13,000 employees globally, the cuts will affect between 2,600 and 3,250 workers.
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The ConocoPhillips logo at an exhibition booth in Canada in 2023. Photo: Reuters |
The ConocoPhillips logo at an exhibition booth in Canada in 2023. Photo: Reuters
The new company structure will be revealed mid-this month, with the restructuring expected to be completed before 2026. In April, ConocoPhillips hired the Boston Consulting Group to advise on the restructuring and layoffs.
ConocoPhillips' second-quarter profits fell to 2 billion USD, the lowest since Quarter I/2021. The company's stock price has also declined by 4.7% since the beginning of the year.
Declining crude oil prices have pressured ConocoPhillips and its competitors, forcing staff reductions, investment cuts, and reduced drilling activity. In February, Chevron, the second-largest US oil company, announced a 20% workforce reduction. Other energy companies, including SLB and BP, are also cutting jobs.
The price of US crude oil has dropped 11% to 63 USD per barrel. This decline is attributed to increased production by OPEC+ (Organization of the Petroleum Exporting Countries and allies) in an effort to gain market share from the US. The group has steadily increased oil production since April.
"Companies are looking for ways to reduce resources while still improving business results," observed Dan Pickering, chief investment officer at Pickering Energy Partners.
Ha Thu (via Reuters, CNBC)
