ConocoPhillips (COP) plans to cut its global workforce by 20% to 25%, which could affect as many as 3,250 employees and contractors, Reuters reported. The layoffs are part of a broader restructuring program to improve margins and reduce costs. Following the news, COP stock declined about 4% on Wednesday.
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The move will impact both employees and contractors across ConocoPhillips’ global operations. Most of the job reductions are expected to happen before the end of this year.
Importantly, COP’s new organizational structure and management team will be revealed in mid-September. Also, a company-wide town hall meeting is scheduled for Thursday morning to discuss the changes.
Reasons Behind the Cuts
The cuts follow ConocoPhillips’ $17 billion acquisition of Marathon Oil in 2024, which already led to more than 500 job losses at Marathon. At the time, the company projected over $1 billion in cost savings from the merger.
Further, last month, the company identified scope for an additional $1 billion in cost reductions and margin improvements.
Mounting cost pressures could also be driving the restructuring. ConocoPhillips’ controllable production costs rose to $13 per barrel in 2024, up from $11 in 2021, and remain $2 higher than industry peers. Higher costs, along with a drop in second-quarter net income to its lowest level since 2021, likely raise the need to lower costs.
Industry-Wide Trend of Job Cuts
ConocoPhillips is not alone in its efforts to cut costs. The restructuring is part of a wider trend in the oil and gas industry as it faces ongoing challenges from fluctuating oil prices. Lower crude prices and expectations of peaking U.S. shale output are causing producers to cut costs.
Other energy giants, such as Chevron (CVX) and service company SLB (SLB), have also announced layoffs in 2025.
Is COP a Buy, Sell, or Hold?
Turning to Wall Street, COP stock has a Strong Buy consensus rating based on 17 Buys and two Holds assigned in the last three months. At $115.47, the average ConocoPhillips stock price target implies a 21.53% upside potential.
