ConocoPhillips Faces Stock Dip Amid Major Downsizing and Marathon Oil Acquisition

Amid ongoing challenges in the energy sector, ConocoPhillips finds itself navigating turbulent waters. The company announced plans for significant cost-cutting measures, including layoffs, as part of its broader strategy to streamline operations.

The decision to downsize comes in the wake of a persistent decline in oil prices, which hover around $63 per barrel. Industry-wide, firms express concerns about profitability thresholds, emphasizing the critical need for prices above $65 per barrel to sustain viable operations. ConocoPhillips joins a roster of oil companies, including Chevron and Schlumberger, that are executing layoffs in response to similar economic pressures.

ConocoPhillips has enlisted the consultancy firm Boston Consulting Group to provide strategic advice for its restructuring and downsizing efforts, internally dubbed "Competitive Edge." The company plans to concentrate certain operational functions as part of this restructuring process, which will see the current six operational divisions potentially revamped.

While specific details regarding the number of layoffs remain undisclosed, implementation is expected by Q4 of this year. Currently, ConocoPhillips employs approximately 11,800 individuals globally in 14 countries, according to the company's annual report projections for the end of 2024.

The impetus for these cost-cutting strategies gains further context following ConocoPhillips' acquisition of its competitor Marathon Oil for $23 billion in an all-stock transaction. This move promises to bolster the company's U.S. onshore portfolio by adding complementary resources, anticipating over 2 billion barrels at an average supply cost below $30 per barrel.