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 & natural gas:
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 impacting 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, impacting 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
ExxonMobil’s (XOM) CEO Darren Woods has been at the helm since 2017, so he’s seen some tough periods, including witnessing the oil price collapse during Covid.
ExxonMobil is orchestrating a restructuring that will eliminate about 2,000 jobs over the coming year.
The company’s 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.
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According to ExxonMobil:
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 mid-September that Europe’s law could lead to U.S. companies exiting the EU. The company had already paused a planned investment of 100 million Euros 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 September 29, it announced it will 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 over $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 over 3% of ExxonMobil’s workforce.
ExxonMobil facts at a glance:
Q2 Revenue: $79.5 billion, down from $89,986 one year ago.Q2 Earnings: $7.1 billion, down $631 million year over year.Q2 Earnings per share: $1.64, down from $2.14 last year.Employees: 61,000.
Source: ExxonMobil earnings release.
These are hardly the first layoffs made by the company or CEO Woods. The company’s workforce was 84,000 in 2010, so the latest changes will mean that about 25,000 jobs have been cut over the past 15 years.
ExxonMobil called out the savings from its most recent actions during 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 IOCs 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 [international oil companies].
More labor:
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Those are significant savings, and ExxonMobil isn’t alone. Major international rivals have also announced workforce reductions, including Chevron and ConocoPhillips.
Chevron announced plans to lay off as much as 20% of its workforce in February, while ConocoPhillips revealed plans to similarly lay off 20% to 25% of its workers.
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