(Bloomberg) — Chevron Corp. plans to cut its global workforce by 15% to 20% by next year, as part of efforts to reduce costs and raise profits.
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The US oil giant employed 46,500 people globally at the end of 2023, meaning the cuts could affect as many as 9,000 employees. The company recently moved its headquarters from San Ramon, California, to Houston, Texas, and is targeting $2 billion to $3 billion of structural cost reductions by 2026.
“Chevron is taking action to simplify our organizational structure, execute faster and more effectively, and position the company for stronger long-term competitiveness,” Vice Chairman Mark Nelson said in a statement Wednesday.
The cuts will put further pressure on US oil and gas job numbers, which are still about 10% below pre-pandemic levels despite domestic production rising close to a record high. A wave of mergers and acquisitions, improved drilling efficiency and a focus by management on profitability over production growth have all led to staff reductions and slow hiring.
Exxon Mobil Corp. has cut its global workforce by 17% since 2019 even as production boomed, helping its stock outperform Chevron’s over the past three years. Chevron has begun to make up some ground over the past year with strong growth from the Permian Basin and the recent start up of its long-delayed Tengiz development in Kazakhstan.
Chief Executive Officer Mike Wirth has expressed his desire to focus on harvesting cash-flow coupled with modest spending on new projects over the next few years, potentially lessening the need for staff. Growth post-2030 is likely to come through Chevron’s $53 billion deal to buy Hess Corp., which owns a 30% non-operated stake in Exxon’s massive Guyana discovery.
The stock dropped 0.75% by 12:46 p.m. in New York, compared with a 1.5% decrease in the S&P 500 Energy Index.
“We do not take these actions lightly and will support our employees through the transition,” he said. “But responsible leadership requires taking these steps to improve the long-term competitiveness of our company for our people, our shareholders and our communities.”
(Updates with oil and gas jobs in fourth paragraph.)
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