The energy giant is undergoing a major change.
ExxonMobil has had a problem over the past few months. The oil and gas giant has seen a drastic downturn in energy prices, which has wiped hundreds of millions of dollars off its bottom line.
Year-to-date returns for crude oil:
West Texas Intermediate Crude Oil: -10%.
Brent Crude Oil: -12.4%.
The declines have put ExxonMobil under Wall Street’s microscope, prompting management to make significant changes affecting workers.
The company is restructuring and will lay off 3% to 4% of its employees. While it doesn’t have a return-to-office policy, it plans to close smaller offices to consolidate its footprint, affecting where many remaining employees do their work.
“The changes we’ve announced today will further strengthen our advantages and grow the gap with our competition, helping to keep us in the lead for decades to come,” said CEO Darren Woods in a memo to employees.
ExxonMobil makes drastic changes amid downturn
Woods has been at the helm of ExxonMobil (XOM) since 2017, so he’s seen some tough periods, including the oil-price collapse during Covid.
The company is far from dealing with a Covid-era hit to sales and profit. Still, regulatory shifts provide the perfect rationale for its restructuring, particularly in the European Union.
The passage of the EU’s corporate sustainability due diligence directive last year has drawn sharp criticism from Woods. The law mandates that companies address environmental and human rights problems lurking within supply chains or risk a 5% fine on global sales.
Regulations in the EU are more burdensome than in other parts of the world and drive up costs, making it more difficult to compete.
“The business and regulatory environment in Europe is challenging and this transformation will help us compete into the future,” said ExxonMobil Europe President Philippe Ducom in a statement regarding the changes.
Woods told Reuters in mid-September that Europe’s law could lead U.S. companies to exit the EU. The company had already paused a planned investment of 100 million euros ($117.4 million) before announcing its restructuring.
In Europe, ExxonMobil will close smaller offices and consolidate workers within a new office at its Antwerp refinery in Belgium.
We plan to bring the majority of our office and home-based employees together at or closer to our manufacturing sites in the region (including, for example, in Germany and Italy) and we intend to close a number of smaller offices in the region.
ExxonMobil says 1,200 workers “across the EU and Norway” will be let go by the end of 2027. It labeled 600 of those jobs redundant; a common problem in sprawling multinational companies like ExxonMobil.
The company is also making changes in Canada at Imperial Oil Ltd.
ExxonMobil owns nearly 70% of Imperial Oil, and on Sept. 29 it said it would eliminate 20% of its workers and consolidate many remaining employees outside of Calgary.
Imperial Oil employed roughly 5,100 workers at the end of 2024, and management estimates the move will save more than $150 million annually.
“The changes are designed to fully leverage globally available expertise to maximize the benefits of current technology and accelerate the cost-effective deployment of new technologies,” said Imperial Oil.
Hardly the first change at ExxonMobil under its CEO
The changes will eliminate about 2,000 jobs, representing more than 3% of ExxonMobil’s workforce.
ExxonMobil facts at a glance:
Q2 Sales and Operating Revenue: $79.5 billion, down 12% from nearly $90 billion a year earlier
Q2 Earnings: $7.08 billion, down 23% from $9.24 billion
Q2 Earnings Per Share: $1.64, down 23% from $2.14
Employees: 61,000
These are hardly the first layoffs made by the company or CEO Woods. The workforce was 84,000 in 2010, so the latest changes will mean that about 23,000 jobs have been cut over the past 15 years.
ExxonMobil noted the savings from its most recent actions in its second-quarter earnings release:
Since 2019, the company has delivered $13.5 billion of cumulative Structural Cost Savings, more than all cost savings reported by other [international oil companies] combined. The company expects to deliver $18 billion of cumulative savings through the end of 2030 versus 2019, also exceeding the total targets disclosed by other IOCs.
Those are significant savings, and ExxonMobil isn’t alone. Major international rivals have also announced workforce reductions.
Chevron in February announced plans to lay off as much as 20% of its workforce, while ConocoPhillips in September said it planned to cut 20% to 25% of its workers.
https://www.thestreet.com/employment/exxonmobil-ceo-quietly-issues-stern-warning-to-employees