ConocoPhillips may dismiss as much as one-fourth of its Houston headquarters staff as the largest independent oil explorer cuts costs and prepares for the takeover of Concho Resources Inc.
Affected employees will be notified as early as Feb. 1 and will receive 60-days advance notice, severance pay and help finding new jobs, Conoco said in an email on Tuesday. The company agreed to buy Concho in October and the $11.4 billion deal is expected to close next year.
“The process to determine the exact number of impacted employees is ongoing,” the company said. “However, we anticipate the number of reductions in Houston could meet the threshold of 500 or more.”
Conoco emerged as one of the stronger independent oil producers from this year’s pandemic-driven price crash with almost $7 billion of cash on hand at the end of the third quarter. But the company is not immune from the slump and has reduced production 22% over the past year, meaning fewer employees are needed.
“We have been transparent with employees that targeted workforce reductions in certain areas of our business may be necessary from time to time to align organizational capacity with expected future activity levels,” Conoco said.
The acquisition of Concho will make Conoco a major player in the Permian Basin, the world’s biggest shale field, and gives the company the option of growing production in the future. But so far CEO Ryan Lance has given no indication of a major ramp up. Last month he pledged to only reinvest 70% of the company’s cash flow in capital spending, indicating a conservative approach to new drilling.