ConocoPhillips to Reduce Global Workforce By Up to 25%

ConocoPhillips plans to reduce its global workforce by between 20% to 25%, the company said Sept. 3.

The anticipated reduction will affect employees and contractors at ConocoPhillips, a company spokesperson told Hart Energy via email.

Houston-based ConocoPhillips employs approximately 13,000 workers and contractors globally. Based on that number the reductions, most of which will take place this year, will range between approximately 2,600 and 3,250 employees and contractors.

ConocoPhillips shares traded down by about 4% at $95.07 per share near midday trading on Sept. 3.

ConocoPhillips is working to reduce costs and debt after completing a $22.5 billion acquisition of Marathon Oil last year.

Beyond synergistic cost reductions from the acquisition, ConocoPhillips announced an additional $1 billion cost-reduction target in its second-quarter earnings in August.

“It's going to touch all pieces of the company,” ConocoPhillips Chairman and CEO Ryan Lance said in the company’s Aug. 7 earnings call.

“There is some workforce centralization, some things that we've learned over the last three to four years with all the transactions that we've done that we're going to be implementing kind of globally throughout the company,” he said.

ConocoPhillips reported a net income of $1.97 billion in the second quarter, down from $2.33 billion a year earlier.

The company plans to reduce its capital spending by approximately $1 billion in the second half of the year compared to the first half, CFO Andy O’Brien said.

Industry consolidation

Despite record output and increasing drilling efficiencies, U.S. oil and gas industry has seen a notable loss of workers driven by E&P consolidation.

The number of top public U.S. E&P companies has declined from 50 to just 40 over the past five years due to industry consolidation, according to an Ernst & Young report published in August.

As larger companies buy up smaller players, they’ve let go of accountants, engineers and other workers, according to an analysis by The New York Times.

Chevron is cutting the Hess Corp. workforce by more than one-third after closing its $53 billion acquisition of the E&P.

Chevron said it plans to cut 575 jobs at the Hess office at 1501 McKinney St. in Houston, according to a filing with the Texas Workforce Commission (TWC).

The oilfield services sector has also seen job declines as a result of customer consolidation upstream.

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Debt reduction

ConocoPhillips has inked over $2.5 billion in divestitures within nine months of closing the Marathon Oil acquisition.

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The company agreed to sell legacy Anadarko Basin assets in Oklahoma to private E&P Flywheel Energy for $1.3 billion. Flywheel is backed by investor Stone Ridge Energy.

The Anadarko Basin assets include approximately 300,000 net acres in Oklahoma’s SCOOP and STACK plays. Recent production from the assets averaged about 39,000 boe/d (~50% natural gas).

ConocoPhillips is increasing its divestiture target by another $2.5 billion to approximately $5 billion.

Lance said ConocoPhillips plans to divest additional upstream assets that no longer compete for capital within its portfolio, as it did with the Anadarko.

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ConocoPhillips Agrees to Sell Anadarko Basin Assets for $1.3B

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