Chevron to cut up to 15% of staff amid restructuring
Chevron Corp will cut 10% to 15% of its worldwide workforce as part of an ongoing restructuring at the second-largest U.S. oil producer.
The oil producer previously disclosed a 30% reduction in its 2020 spending and some voluntary job cuts amid this year's sharp drop in oil prices and lower demand for oil and gas due to the COVID-19 pandemic.
Chevron has been widely seen as the standard bearer of financial discipline in the oil industry and was among the first to make significant budget cuts as oil demand plummeted. Last year, it abandoned a takeover bid for Anadarko Petroleum Corp rather than get into a bidding war with Occidental Petroleum Corp . Chevron pocketed a $1 billion break fee while Occidental has faced investor wrath for its ill-timed deal.
Chevron, which has 45,000 employees, expects to remove about 10% to 15% of its global staff to "match projected activity levels," spokeswoman Veronica Flores-Paniagua confirmed.
U.S. crude oil prices have nearly halved this year to about $33 a barrel as the COVID-19 pandemic slashed travel and led to stay-at-home orders that have cut oil demand by as much as 2 million barrels per day. Chevron this month said it would reduce planned U.S. shale output by about 125,000 bpd.
The about 4,500 to 6,750 job cuts envisioned are to "address current market conditions," with varying impact on each business unit and region, said Flores-Paniagua. Most reductions will take place this year. "This is a difficult decision and we do not take it lightly," she said.
At its annual shareholder meeting on Wednesday, No. 1 U.S. oil producer Exxon Mobil Corp said it had not yet taken steps to reduce its workforce. "Today, we have no layoff plans," Chief Executive Darren Woods said. Exxon also cut its planned spending 30% for the year.
Both companies have outlined deep cuts in investments in the Permian shale basin, the top U.S. oilfield where growth in recent years made America the world's top oil producer and a net exporter for the first time in decades.
Chevron's proposed job cuts match those at oilfield service companies and many smaller producers amid the price collapse.
"Most companies are looking to cut 10% of staff at a minimum," said Jennifer Rowland, an energy analyst at Edward Jones.
A next round of selections for outplacement will take place in June, according to a memo from Chevron Executive Vice President Joseph Geagea viewed by Reuters. Reorganization at his technology, products and services operation could be finished by the end of October, he wrote.
Additional severance pay, a medical benefits subsidy and education services will be available to U.S. employees who lose their positions, he wrote.
In March, Chevron began offering severance payments to some of its U.S. oil exploration and production employees.
It last year launched a major cost-cutting overhaul that has already pared the number of units.