Dire market conditions with lower commodity prices have forced another major oil and gas company to let go employees to rein in costs.
San Ramon, Calif.-based Chevron said it will reduce its staff by about 1,500 positions, just more than 2% of its worldwide workforce, as the company targets reductions of about $1 billion with additional cost savings expected.
The news comes as the industry continues to grapple with oil prices that have essentially been sliced in half within a year’s time as ample supplies outpace demand. The situation has caused companies to cut back spending, sell assets, form partnerships and reduce staff to soften blows on bottom lines.
“In light of the current market environment, Chevron is taking action to reduce internal costs in multiple operating units and the corporate center,” spokeswoman Melissa Ritchie told Hart Energy. “These initiatives, which are currently underway, are focused on increasing efficiency, reducing costs and focusing on work that directly supports business priorities.”
Of the positions that will be eliminated 950 are in the Houston, where Chevron has about 8,000 employees. The company plans to reduce its nearly 3,200 San Ramon staff by 500 positions.
“Additionally, there will be a reduction of approximately 600 staff augmentation contractors from the 24 groups in the corporate center,” Ritchie said.
The cuts are not limited to the United States. Fifty positions are international.
However about 270 of the 1,500 positions are currently vacant and will not be filled, Ritchie said.
“Initiatives are currently underway in the corporate center and will continue over the coming months with the goal of completing the majority of employee reductions by mid-November with cost saving initiatives in place by the first quarter of 2016,” Ritchie said.
The announcement comes as Chevron prepares to deliver its second-quarter 2015 earnings July 31.
Chevron saw its first-quarter earnings fall $1.9 billion to $2.6 billion, compared with first-quarter 2014. At the time, Chevron CEO John Watson attributed to decline to lower oil prices that reduced upstream revenue and earnings.
“We’re responding to the current price environment by capturing cost reductions, pacing new project approvals and further streamlining our portfolio as planned,” Watson said in a news release about the earnings. “We’re taking a number of deliberate actions to lower our cost structure, and I expect these efforts to increasingly show through in our financial results as the year progresses.”
Chevron is not the only company that is cutting back. Anglo American said this week that it is targeting $500 million in cost savings through the reduction of 6,000 jobs, including from businesses that it is divesting. Also, this week BHP announced it was cutting about 100 jobs at its Melbourne headquarters, Reuters reported. Earlier this month, Technip announced plans to cut 6,000 jobs.
Oilfield service companies are also letting go of employees in the thousands. By the end of June, Baker Hughes had eliminated about 11,000 of 13,000 planned position cuts. Halliburton Co. is eliminating about 16% of its workforce. Schlumberger reduced its headcount by about 11,000 employees in first-quarter 2015.
Velda Addison can be reached at vaddison@hartenergy.com or via Twitter @veldaaddison.
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