ConocoPhillips will lay off 20-25% of its workforce, joining a growing number of oil and gas companies that have announced job cuts over the past year. The layoffs will affect up to 3,250 workers as the company restructures, according to Reuters.
The oil and gas workforce has been hit by layoffs at other major producers and oilfield service companies. In February, Chevron said it was cutting 15-20% of its workforce, and in 2024, Shell laid off 20% of its employees.
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“As we streamline our organization and take work out of the system, we will need fewer roles,” ConocoPhillips CEO Ryan Lance said in a company video reported on by Reuters.
Are low oil prices contributing to layoffs?
The trend of oil and gas industry layoffs reflects shifting market conditions that are causing a slowdown for U.S. oil production and exploration.
Oil and gas rig counts are on a steady decline. After hitting 780 active rigs in December 2022, the latest data from BakerHughes shows only 536 active rigs in August — down by 47 from a year ago.
Energy economist Ed Hirs from the University of Houston said oil producers are being squeezed from both directions. “The low oil price is first and foremost the primary driver [of layoffs],” Hirs told Straight Arrow News.
Aside from a few temporary spikes, the price of a barrel of oil has largely remained under $70 all year. According to a survey from the Federal Reserve Bank of Dallas, oil prices around $60 are too low to encourage drilling new wells. Moreover, at that price, 71% of large oil production companies told the Dallas Fed that they would decrease production.
Are tariffs affecting the oil and gas industry?
At the same time, Hirs said tariffs on steel and aluminum are pushing up the price of drilling new oil wells.
In the case of ConocoPhillips, Lance said the company’s production costs are typically $2 higher per barrel than their competitors.
Skip York, a nonresident fellow focused on energy and global oil at Rice University’s Baker Institute of Public Policy, said ConocoPhillips’ higher costs are linked to the company’s sensitivity to tariffs. This is because it operates a higher percentage of its oil and gas rigs in the U.S. compared to competitors like Chevron and ExxonMobil that are more active abroad.
“We are in a challenging price environment,” York said, in which the oil and gas industry is asking itself, “How can we be more efficient?”
How do mergers and acquisitions impact oil company staffing?
Amid market shifts, large oil and gas companies have been acquiring smaller competitors.
In November 2024, ConocoPhillips acquired Marathon Oil for $22.5 billion, but it was paid for entirely in the form of stock rather than cash. The deal generated $1 billion in “synergies,” according to a ConocoPhillips press release.
Some of that value comes from cutting costs after an acquisition. Hirs said, “Every contraction brings consolidation” and leads to “increased efficiencies” because consolidated companies do not need multiple teams of accountants, lawyers, geologists or other administrative staff.
York said about 60% of synergies, the new value created through mergers and acquisitions, typically comes from eliminating staffing redundancies. In some cases, mergers create “geographic consolidation,” so companies can also cut operations staff in the field.
In July, Chevron laid off 500 workers in the Houston area shortly after announcing the acquisition of Hess Corporation, a global oil exploration and production company. Last year, Exxon Mobil cut nearly 400 jobs in Texas following its purchase of Pioneer Natural Resources.
Where does the oil and gas industry go from here?
Oil prices are not expected to rebound to a sustained level, about $70 per barrel, in large part because Saudi Arabia and other countries that make up the OPEC+ block are increasing oil production. That’s leading to higher global supply.
“There’s this growing consensus that we may be seeing the end of production growth in the U.S.,” York said. With the exception of Alaska, York expects U.S. oil production to plateau in the coming years, while gas production is expected to sustain longer-term growth.
