Chevron Corp (CVX) intends to reduce its workforce by 10 to 15% worldwide as part of the restructuring being carried out by the second-largest U.S. oil company. It will be the largest workforce reduction among global oil companies since the COVID-19 pandemic.
Earlier, the company reported a 30% spending cut in 2020 and optional job cuts amid falling oil prices this year and lower demand for oil and gas due to the pandemic.
Chevron was one of the first companies to implement significant budget cuts due to the fall in demand for oil. The company foresees to lay off between 10 and 15 percent of its workforce to "meet projected activity levels," the spokesperson affirmed.
The 4,500-6,750 job cuts will "address current market challenges," with different implications for each division and region. Most of the cuts should be done by the end of 2020. Chevron currently employs 45,000 people who are not employed at gas stations. The company also said it will reduce its planned oil shale production in the United States by approximately 125,000 barrels per day.
Crude oil costs in the U.S. have almost halved this year to about $33 per barrel as the crisis has destroyed demand for travel. The demand for oil fell by as much as two million barrels per day.
US leading oil company Exxon Mobil Corp (XOM) said on Wednesday that it has not yet taken measures to cut its the number of employers, even though it has reduced the projected spending by 30%.
Chevron's cuts will be "ubiquitous, but tough on corporate and support functions," CFO Pierre Breber stated in an interview.
UBS analyst Jon Rigby lately deprecated Chevron from Buy to Hold, noting that stocks rose about 70% from their March low. Rally speaks of "a leading reputation for capital discipline and a highly resilient yet flexible financial model, which is managed by CVX," as per Rigby.
Chevron shares plummeted with the coronavirus pandemic, but have recovered most of their losses in the past two months. For the year as a whole, Chevron shares have fallen by 21 percent and are currently trading at $92.
Analysts are determined to be bullish on the stock and the average price of the analyst - $101.