The oil giant says “necessary restructuring” is crucial to optimize operations post-merger.
The Acquisition
ExxonMobil recently acquired Pioneer Natural Resources, an independent oil and natural gas exploration and production company, in a $60 billion acquisition. In light of this, the company is making changes that are hitting the workforce.
Largest Deal in ExxonMobil’s History
This acquisition marks the largest deal in ExxonMobil’s history since acquiring Mobil in 1999. It’s also the biggest deal ever in the U.S. shale upstream sector.
The Layoff After the Acquisition
According to a filing with the Texas Workforce Commission, Mobil has issued layoff notices to 59 employees. These layoffs are just one of the many steps ExxonMobil is taking to integrate Pioneer into its operations.
Las Colinas Takes the Hardest Hit
Among the 59 employees affected, 39 are based in Las Colinas, a suburb of Dallas that used to be the headquarters for Pioneer. This location saw the most significant impact as ExxonMobil began to consolidate its workforce.
Other Workers Impacted
The layoffs didn’t happen in Las Colinas alone. In Midland, 18 employees also received layoff notices. Two workers from the Concho Valley in West Texas were equally let go as part of this restructuring.
Pioneer Employees Offered Positions
In a statement released by Jared Young, public and government affairs manager for ExxonMobil, 1,500 employees from Pioneer were offered jobs as part of the merger.
Success Dependent on Retained Employees
“Our employment strategy has not changed — the success of this merger depends heavily on the retention of Pioneer’s talented workforce, and more than 1,500 Pioneer employees were offered jobs as part of the merger,” he said in a letter to the State of Texas.
Strategic Retention
The company has strategically retained as many employees as possible while still working towards streamlining its operations. Some were given transition roles for those who were not kept on board, while others chose not to continue with the company.
What the Layoffs Mean for ExxonMobil
These layoffs are part of a larger plan to optimize ExxonMobil’s operations post-merger. The acquisition brought together Pioneer’s 850,000 net acres in the Midland Basin with ExxonMobil’s 570,000 net acres in the Delaware and Midland Basins. This gives Exxon an estimated 16 billion barrels of oil equivalent resource in the region.
The Long-Term Shale Strategy
ExxonMobil is playing the long game here. Despite the layoffs, the company is committed to expanding its presence in the U.S. shale market, and the Permian Basin will be key to that strategy.
Boosting Productivity and Profitability
The combination of resources from the merger is expected to improve the company’s production capabilities and increase long-term profitability.
Energy Sector Woes
The energy sector has been facing numerous challenges. As natural gas prices hit their lowest levels since June 2020, many oilfield service companies and drillers have stopped hiring and slashed spending on new wells.
Over 5,000 Jobs Lost
Since December of last year, around 4,680 oilfield jobs have been lost. This is a sharp contrast to the 7,700 jobs added during the same period last year, according to data from the Energy Workforce & Technology Council.
Positioning for Growth
ExxonMobil’s layoffs reflect this economic pressure affecting the sector as the company adjusts to the current market realities while still positioning itself for future growth.
Investor Reactions
ExxonMobil’s stock (XOM) hasn’t seen any drastic movements following the layoff news. Investors are waiting to see how the company’s long-term strategy plays out.
Other Energy Sector Players
While ExxonMobil is restructuring, other companies in the energy sector are also making waves. SM Energy, which focuses on oil operations in the Permian Basin and Eagle Ford regions, has been labeled a strong buy. The company’s 2024 earnings per share (EPS) is projected at $7.09, showing strong potential.
What’s Next for Exxon?
The consolidation of Pioneer’s Permian Basin assets is expected to double ExxonMobil’s barrels of oil equivalent per day (MOEBD) in the region.
Net-Zero Goals
ExxonMobil is also accelerating its net-zero goals in the Permian, aiming to reduce emissions by 2030.
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