NEW YORK – Exxon Mobil is slashing 1,900 jobs from its U.S. workforce, and Chevron plans to cut a quarter of the employees at its recently-acquired Noble Energy as the pandemic saps demand for fuel.
Exxon said Thursday the reductions will be both voluntary and involuntary and will largely come from its management offices in Houston. The Irving, Texas oil giant had about 75,000 employees worldwide at the end of 2019.
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The oil industry was already struggling before the pandemic struck, with a weakened global economy decreasing demand for energy and producers flooding the market with cheap fuel. Then prices fell well below what producers need to break even. A barrel of the U.S. benchmark crude was selling for about $35 Thursday, and most producers need at least $50 a barrel to make ends meet. As the pandemic gripped the U.S. economy and demand for fuel plummeted, Exxon announced in March that it would cut expenses by 30%.
“It’s difficult to overstate the devastating impact of the pandemic on businesses big and small, in every community and country around the world," Exxon CEO Darren Woods said in a recent email to employees. “The impact has been especially severe on our industry as energy consumption contracted when economies shut down.”
In a meeting with employees last week, Woods said the company is exceeding the spending reductions it announced in March, deferring more than $10 billion in capital expenses and cutting 15% of cash operating expenses. The company recently announced it would cut about 1,600 jobs in Europe and it began a voluntary staff reduction program in Australia. It is also evaluating potential job cuts in Canada. Exxon said Wednesday it would pay a cash dividend of 87 cents per share in the fourth quarter, keeping the payment level flat.
Exxon is not the only oil producer reeling from plummeting demand and prices. Chevron confirmed Thursday it would slash jobs at Noble Energy, which it recently acquired, by 25%. Noble had 2,282 employees at the end of 2019, according to its annual report.
Chevron, which has about 44,000 employees worldwide, is working to reduce its headcount by 10% to 15%. The San Ramon, California-based company reduced its 2020 capital spending plan by 20%, or about $4 billion, in March.
The energy industry has been shrinking since the pandemic struck. The oil, gas and chemical industries laid off 107,000 workers between March and August, according to a recent study by Deloitte Insights.
The industry's troubles began well before the pandemic, when many shale producers racked up unsustainable levels of debt to find and extract oil from the ground using unconventional drilling techniques. As those debt payments came due, more than 200 oil and gas producers filed for bankruptcy protection in the past five years, including 17 filing who filed for bankruptcy protection in this year's third quarter, according to law firm Haynes and Boone.