The largest oil company in the United States is preparing to let go between 5% and 10% of its US-based employees subject to performance reviewed, anonymous sources told BNN Bloomberg.
Exxon's job cuts will be characterized as performance-based, and not considered layoffs, technically speaking. Employees who are not subject to performance reviews will not be affected, the source said.
Exxon told Bloomberg in a statement that there was no specific reduction target.
Exxon has not been immune to the drastic effects of the coronavirus pandemic and the oil price war that has destroyed demand for crude oil and eaten into profit margins for that reduced demand, and it has attempted to tighten its belt in response.
In Q1, Exxon swung to a $640 million loss-its first loss in a decade after a $2.9 billion market-related charge. It also cut 2020 capex by a staggering $10 billion-a 30% cut. It has also cut its production from the Liza field in Guyana, although that was related to the risk of excessive flaring and not the coronavirus or prices.
In addition to offloading some lower-performing employees, the oil giant is preparing to rid itself of its UK North Sea assets, for which it can no longer expect as much money thanks to the downturn.
The news comes as Minnesota and D.C. launch climate-related lawsuits against Exxon-and others--alleging that they have deceived oil consumers for years about the effects of climate change, and about their role in causing climate change.
Exxon, headquartered in Irving, Texas, employed nearly 75,000 people globally at the end of 2019.
Shares in Exxon fell on Friday by 3.43% by 4:11 pm EDT, to $43.62.
By Julianne Geiger for Oilprice.com
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Comments
This means getting rid of shale oil production which is hardly making money for ExxonMobil, drastically cutting dividends and investments and also trimming the number of its work force. The global oil market is passing through unusual circumstances and therefore unusual measures have to be taken.
The COVID-19 pandemic has forced the global oil industry to defer as much as $131 billion worth of oil and gas projects slated for approval in 2020.
The industry is set to see its total annual revenues plunge by $1 trillion this year from $2.47 trillion in 2019 to $1.47 trillion this year. The projection for 2021 is $1.79 trillion.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London