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Chevron said it would slash up to a fifth of its global workforce by the end of 2026 as part to a cost-cutting drive designed to simplify the oil major’s business and boost growth.
Vice-chair Mark Nelson said the changes would involve optimising the $280bn group’s vast portfolio, utilising technology to enhance productivity, and changing how and where work is performed.
“We expect these actions to result in workforce reductions of 15 to 20 per cent, beginning in 2025 with most complete before the end of 2026,” Nelson said.
The deep cost-cutting plans by Chevron come in spite of President Donald Trump’s call for producers to “drill, baby, drill” and generate another oil boom that could push down energy prices.
The plans were signalled in November when Chevron said it would target $2bn-$3bn in targeted “structural” cost savings from asset sales, the use of technology and workflow changes. It follows the company’s relocation of its headquarters last month from San Ramon, California, to Houston, Texas.
Chevron had about 46,000 employees, including those who work at petrol stations, at the end of 2023, according to its annual report.
The workforce reductions follow publication of disappointing fourth-quarter results last month, with weak margins dragging down performance at its refinery business. The group reported adjusted earnings of $2.06 a share that were below Wall Street estimates of $2.11.
“I’m not going to call it the perfect storm, but it was a quarter where there were a lot of things that all went in one direction, and it was a negative direction,” chief executive Mike Wirth told analysts on a results call.
Paul Sankey, an oil analyst, said Chevron’s steep cuts in headcount were a surprise but reflected a “proactive move” by the company, rather than a “crisis action”. Chevron was in no rush to grow oil production further because it has accelerated two big expansions in the Permian Basin in the US and Tengiz in Kazakhstan, he said.
Sankey said Chevron was also banking on growth from its $53bn acquisition of Hess, an US oil company with operations in Guyana. Exxon has launched arbitration proceedings, delaying the closure of the deal.
Chevron’s shares fell 1.5 per cent following Wednesday’s announcement.
Analysts said the oil industry was readjusting following bumper profits in 2022 and 2023 after Russia’s full-scale invasion of Ukraine prompted a surge in prices.
There are now moderating with Brent crude prices forecast to average $74 a barrel in 2025 and $66 a barrel in 2026, down from $81 a barrel last year, according to the US Energy Information Administration.
ExxonMobil, the largest western oil company, reiterated last month its target of achieving $18bn of cumulative savings through to the end of 2030 versus 2019.
