(VOR News) – Approximately 6,000 to 8,000 Chevron workers, or 1.37% of the workforce, were notified on Wednesday that 15% to 20% of their jobs would be lost at Chevron CVX.
A senior business official told Barron’s that the layoffs are part of a larger effort to decrease costs and don’t point to any underlying problems within the company.
During an interview, Vice Chairman Mark Nelson said, “This is about us continuing to improve and positioning us to accelerate all of the cash-generation that you’ve heard us talk about here over the past few years.”
“This is about Chevron’s ongoing improvements.”
Nelson said that layoffs will take place in every nation in the world and in all of the company’s major divisions at the same time. The company has simultaneously boosted the number of share repurchases and dividends in an attempt to increase the returns it offers to its shareholders.
The overall number of Chevron’s shares has decreased by 10% as a result of the company’s $30 billion share repurchases during the last two years. The company currently boasts a 4.4% dividend yield and has increased its payout several times.
There are other hydrocarbon businesses that have been cutting employees besides Chevron. The efficiency of oil and gas firms’ oil generation has been significantly improved by the extraction and processing of increasing amounts of natural gas and oil.
Despite its rise to the top of the world’s oil production rankings and a boom in oil output, the United States of America has not seen a similar gain in employment.
The United States has been able to reduce its workforce by about 40% and boost its oil production by 60% per day over the last ten years.
Chevron announced that it was going to create a more effective organization. According to the company’s most recent earnings call, it expects to have implemented structural cost reductions of $2 to $3 billion by the end of 2026.
It has also sold properties and ceased business in several parts of the world, including Alaska, Canada, and the Republic of Rwanda. Chevron is focusing more on high-growth areas, such as the Permian Basin in Texas and New Mexico, a big oil find in Kazakhstan, and new projects in the Gulf of Mexico.
Nelson also said that in an effort to save costs, the company is now working to standardize its practices globally.
If the company is successful in creating a new technique in one of its shale basins, “we do not need to solve that problem three or four times across many basins,” the company said. “We need to find a solution to it once, and then implement it more rapidly across the entire system,” he said.
With the exception of the roughly 5,000 service station employees the company employs, Chevron’s workforce has been steadily declining over the last ten years, going from over 61,000 at the end of 2014 to just under 40,000 worldwide at the end of last year.
Just over half of Chevron’s employees are based in the United States.
Additionally, Exxon Mobil XOM -2.46% is presently working on cost-cutting projects. In addition to the $12.1 billion reduction in costs that has already taken place, it is projected that costs will have dropped by $18 billion from current 2019 levels by 2030.
In recent months, Exxon has not revealed any cuts that are equal to those made by Chevron. With the exception of recent hires brought on by acquisitions, the company’s workforce has been declining. Between 2013 and 2023, the company’s workforce shrank from 75,000 to 62,000.
Artificial intelligence, one of the most cutting-edge technologies, is being used by both businesses to assess and decide on drilling operations.
Many fear that humans will eventually be replaced by artificial intelligence, leading to layoffs like the ones Chevron is announcing. In response, Nelson said that AI is “not a substitute for humans,” but rather a way for people to actively work with technology to “generate more value.”
SOURCE: BN
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