- Exxon warned last week that there’s “significant potential” for additional spending reductions, which could include job cuts.
- The cuts would take place next year and affect management positions.
- “The company is undertaking a comprehensive look at additional cost reductions, based on long-term structural efficiencies, reduced activity, and an evaluation of workforce requirements,” Exxon said in a statement to Business Insider.
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On a call with investors last week, Exxon said there could be further cuts to overhead and to management positions at the company, which would take effect next year.
The potential cuts are linked, in part, to lower levels of activity, said Neil Chapman, an SVP on Exxon’s corporate management committee, on the call last Friday. In a regulatory filing Wednesday, Exxon said that if oil prices stay low for the rest of the year, as much as 20% of the oil and gas in the company’s reserves would not be economical to extract.
“The company is undertaking a comprehensive look at additional cost reductions, based on long-term structural efficiencies, reduced activity, and an evaluation of workforce requirements,” Exxon said in a statement to Business Insider. “We do see the potential for further reductions, including in overhead and management positions.”
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The warning comes after Exxon, headquartered in Irving, Texas, began shrinking its workforce through its annual performance review cycle, as Business Insider previously reported. The company made changes to its employee ranking system in April — the month oil markets bottomed out — exposing a much larger chunk of its workforce to cuts.
The company also suspended several employee benefit programs to cut costs, according to documents seen by Business Insider. Exxon had about 75,000 workers at the end of 2019.
Exxon, like other oil giants, has been losing money in the wake of the oil market collapse. On Friday, the company reported a $1.1 billion loss for the second quarter, citing “global oversupply and COVID-related demand impacts.”
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Exxon is cutting costs
On Friday, Chapman said there’s “significant potential for additional reductions,” which include job cuts.
“Our plan is to continue looking at reductions business by business and country by country,” he said on the call, adding that the company would have finalized plans to share early next year. “We believe the long-term fundamentals are not changed, and we don’t see any evidence that changed at this stage.”
On Thursday afternoon, the price of Brent crude oil, the international benchmark, was down about 32%, relative to the start of the year. Exxon has a market value of $184 billion.