U.S. oil and gas producers seek efficiencies and cost reductions amid lower oil prices this year compared to 2024 levels.
Fresh off multi-billion-dollar mergers and acquisitions in the 2023-2024 period, many major producers in the U.S. shale patch are restructuring businesses and operations.
The result so far has been a series of announcements and reports of workforce reductions across geographies and basins.
The latest such report came this week, by Reuters, which reported a memo it had seen regarding layoffs at the Canadian business of U.S. oil and gas giant ConocoPhillips.
The U.S. firm, one of the world’s largest independent exploration and production companies based on production and proven reserves, has its Canadian headquarters in Calgary, Alberta.
ConocoPhillips Canada develops the Surmont oil sands project in the Athabasca region of northeastern Alberta and opportunities in the unconventional liquids-rich Montney play in northeastern British Columbia.
According to the memo on workforce reductions, ConocoPhillips’ employees in Calgary will be notified virtually on November 5, and those in Surmont and Montney will be told in person on the following day, sources told Reuters.
“We will not be sharing area-specific workforce numbers for current or impacted employees and contractors,” ConocoPhillips spokesperson Dennis Nuss told Reuters via email.
At present, the company employs about 950 people in Canada.
The number will shrink later this year and next year as ConocoPhillips and other large oil and gas producers look to streamline structures, eliminate duplicate roles or inefficiencies, and save costs.
ConocoPhillips already has plans to slash workforce numbers by up to 25% across functions and geographies to simplify the organization and cut costs.
Last year, ConocoPhillips completed its acquisition of Marathon Oil Corporation, in an all-stock deal with an enterprise value of $22.5 billion, including debt.
The Marathon Oil transaction was viewed by analysts as ConocoPhillips pursuing scale and size and diversified exposure in several U.S. shale basins.
Months before the announcement of the deal, ConocoPhillips CEO Ryan Lance told CNBC in an interview in March 2024, “We have said our industry needs to consolidate.”
“There are too many players. Scale matters, diversity matters, and we are going through a natural cycle of that in the business,” Lance added.
“It’s healthy for our business. It’s the right thing to be doing for our business,” according to ConocoPhillips’ top executive.
The consolidation wave is now receding, and the wave of streamlining and cost-cutting is underway among the major U.S. and European oil firms.
The U.S. shale patch is seeing the deepest jobs cuts in three years as producers respond to lower oil prices with slowing drilling activity and greater efficiencies through consolidation and cost cuts.
The biggest producers are cutting headcount, in the thousands, following blockbuster acquisitions in recent months.
Chevron, which bought Hess Corporation for $53 billion, has said it would reduce its workforce by 20% by the end of 2026 as part of wide cost cuts. This includes 800 jobs in the Permian.
ExxonMobil will slash 2,000 jobs worldwide, with nearly half of these cuts at its Canadian business, Imperial Oil.
Exxon has already eliminated about 400 jobs in Texas since it acquired Pioneer Natural Resources in a $60-billion deal finalized in May 2024.
UK-based BP, which is under intense shareholder pressure to slash costs and reduce debt, said in August that it was accelerating the reduction of contractor numbers and office-based workforce.
“Across the supply chain, we’ve delivered around $900 million of savings. Over a third of our supply chain spend reductions seen so far reflect a reduction in contractors, significantly enabled by technology,” BP’s chief financial officer Kate Thomson said on the Q2 earnings call.
BP has already reduced contractor numbers by 3,200, and expects a further 1,200 contractors to exit by the end of 2025.
“Beyond that, we will continue to rigorously review the remaining contractor activity across our businesses and functions,” Thomson added.
An executive at an oilfield services firm said in comments to the latest Dallas Fed Energy Survey last month, “Operators are less prone to utilize outside services and continue to reduce their own workforces.”
By Tsvetana Paraskova for Oilprice.com
