ConocoPhillips, the third-largest U.S. oil and gas producer, announced Wednesday that it plans to reduce its global workforce by 20% to 25% as part of a sweeping restructuring initiative. The move, revealed to employees in a video message from Chief Executive Ryan Lance, is expected to affect between 2,600 and 3,250 workers out of the company’s 13,000 employees.
The news sent ConocoPhillips shares down 4.5% to $94.55, a sharper decline than the 2.6% drop in the broader S&P 500 Energy Index. The company said most of the layoffs will be completed before the end of 2025, with a new organizational structure to be unveiled in mid-September.
Rising Costs and Industry-Wide Strain
Falling oil prices and mounting operational costs have placed ConocoPhillips and other energy producers under growing financial pressure. Benchmark U.S. crude futures are down about 11% this year as OPEC and its allies have ramped up production, sparking increased competition with U.S. oil companies.
At the same time, the cost of producing each barrel has risen. Lance said controllable costs rose to $13 per barrel in 2024, up from $11 in 2021, making it more difficult to maintain profitability. ConocoPhillips reported net income of about $2 billion in the second quarter, its lowest since early 2021, when pandemic restrictions weakened global demand.
The restructuring is part of an internal program referred to as “Competitive Edge,” which has been in development since April with guidance from the Boston Consulting Group. The company said the changes are designed to streamline operations, remove redundancies, and strengthen long-term competitiveness.
Broader Energy Sector Cuts
ConocoPhillips is not alone in trimming staff. Chevron announced plans in February to lay off up to 20% of its workforce, while other major energy companies, including BP and SLB, have also initiated downsizing measures this year. Analysts say the industry is responding to a cycle of lower prices, tighter margins, and increased global competition.
“Companies are figuring out how to do more with less,” said Dan Pickering, chief investment officer at Pickering Energy Partners.
The Houston-based producer already identified more than $1 billion in potential cost reductions last month, in addition to savings from its 2023 acquisition of Marathon Oil. The restructuring, scheduled for completion by 2026, is aimed at delivering another $1 billion in efficiency improvements.
Outlook for Employees and Investors
A ConocoPhillips spokesperson confirmed that most layoffs will occur before year-end, with details about leadership changes to follow in September. The company will hold a town hall meeting Thursday to address employee concerns and outline next steps.
For investors, the immediate impact has been negative. Shares are down 4.7% year-to-date, even as the broader S&P 500 Energy Index has gained 5%. With oil markets uncertain and costs rising, ConocoPhillips’ ability to deliver on promised savings and efficiencies will be closely watched in the months ahead.
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