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Exxon cutting 1,900 US jobs in response to virus-driven slump

Kevin Crowley
Bloomberg

Exxon Mobil Corp. plans to cut 1,900 jobs in Houston and other U.S. locations as the oil titan struggles to conserve cash and preserve dividends.

“These actions will improve the company’s long-term cost competitiveness and ensure the company manages through the current unprecedented market conditions,” the company said in a three-paragraph statement on Thursday.

No additional details on affected business divisions or timing were disclosed. The company had already eliminated some positions through performance reviews earlier this year and previously announced plans to lay off 1,600 people in Europe and make reductions in Australia.

Exxon’s Big Oil rivals are also cutting thousands of jobs in response to the pandemic-induced demand slump. BP Plc plans to slash 10,000 jobs, Royal Dutch Shell Plc will cut as many as 9,000 roles and Chevron Corp. has announced around 6,000 reductions.

Exxon’s move appears to be smaller both in absolute terms and as a proportion of its larger workforce, which stood at 74,900 people as of Dec. 31, according to data compiled by Bloomberg. However, the fact that it’s cutting at all is a sign of its weakened financial position compared to its former status as the S&P 500 Index’s biggest company less than a decade ago and a profit powerhouse used to riding out oil-price cycles.

This year’s downturn has been particularly painful because it affected refining, usually a cushion in times of low oil prices, and because it came at a time when Exxon was already increasing borrowing to fund a large expansion program. The company was forced to retreat on these plans in April, reducing capital spending by $10 billion and delaying or scaling back most of major projects.

The stock has plunged 54% this year. Its dividend yield is now more than 10%, indicating that investors are anticipating a cut. Exxon maintained the quarterly payout on Wednesday, and is expected to post its third consecutive quarterly loss when it reports earnings tomorrow.