HOUSTON (Realist English). ConocoPhillips chief executive Ryan Lance acknowledged on Thursday that the U.S. oil and gas producer’s aggressive acquisition strategy had undermined its competitiveness, forcing the company to cut as much as a quarter of its global workforce.
Speaking at a town hall meeting in Houston, a day after announcing the restructuring in a company-wide video, Lance told employees that job reductions — affecting between 2,600 and 3,250 staff and contractors — would begin as early as November 10.
“We probably backslid a little bit in the cost effort… maybe we should have been smarter about how we did it,” Lance said, according to a recording of the session. He admitted prioritising acquisitions such as the $22.5bn takeover of Marathon Oil in 2024 over cost control, adding: “I fault myself for not paying attention… I have to pay more attention to the sustainable structure and health of the company.”
Conoco’s controllable costs have risen by about $2 per barrel since 2021, reaching $13, a level Lance described as unsustainable. “Unit cost is rising faster than our production and our revenue, which is eating into our margin, and obviously you can’t let that go on forever,” he said.
The company is targeting $2bn in savings by 2026, half of which it expects to achieve through layoffs and operational cuts across lease operations, transport and processing. The cost-cutting drive, internally dubbed “Competitive Edge”, is being advised by Boston Consulting Group.
Despite employee frustration and concerns over transparency, Lance stressed the cuts were necessary for long-term stability. “There is a lot of weight in this decision… I don’t underestimate the impact that it has on people, on families and on the workforce,” he said.
Shares in ConocoPhillips, the third-largest U.S. oil producer, fell 3.7% to $92.22 on Friday, underperforming the S&P 500 Energy Index. Analysts said the scope of the cuts surprised the industry, already under pressure from falling oil prices and rising costs as OPEC+ increases production.
Management changes are expected later this month, though no alterations are planned for the executive leadership team.