In a major development that signals deep structural changes within the energy sector, ConocoPhillips has announced plans to reduce its global workforce by 20 to 25 percent by the end of 2026, with the majority of layoffs expected to occur by the close of 2025. The decision follows the company’s $23 billion acquisition of Marathon Oil and reflects a broader industry trend toward consolidation, cost discipline, and operational streamlining.
Key highlights of the announcement:
1. ConocoPhillips will cut between 20 to 25 percent of its workforce globally, impacting thousands of employees across its 14-country footprint
2. Most of the reductions will be completed by the end of 2025, with the remainder phased out by 2026
3. The restructuring is part of an internal initiative dubbed Competitive Edge, aimed at centralizing functions and eliminating redundancies post-merger
4. CEO Ryan Lance communicated the decision via a video message to employees, followed by a scheduled townhall meeting to address concerns
Strategic context and rationale
The workforce reduction is a direct consequence of ConocoPhillips’ aggressive expansion strategy, which culminated in the acquisition of Marathon Oil in late 2024. While the merger added valuable assets in shale-rich regions like the Permian Basin and Eagle Ford, it also introduced overlapping roles and inflated administrative costs.
To manage this complexity, ConocoPhillips has engaged Boston Consulting Group to oversee the restructuring process. The Competitive Edge initiative focuses on:
• Streamlining corporate and operational functions
• Centralizing procurement, HR, and IT systems
• Reducing administrative overhead by an estimated $250 million annually
• Generating total cost savings of up to $500 million per year
Financial pressures and industry dynamics
The oil and gas sector continues to grapple with volatile crude prices, which have hovered around $63 per barrel—below the profitability threshold for many producers. This environment has forced companies to prioritize efficiency over expansion. ConocoPhillips’ decision mirrors similar moves by industry peers such as Chevron, Shell, and BP, all of whom have announced layoffs in recent quarters.
At the end of 2024, ConocoPhillips employed approximately 11,800 people globally. The planned cuts could affect up to 2,950 employees, with a significant portion based in Houston, the company’s operational hub.
Employee impact and internal response
The announcement has triggered anxiety among staff, many of whom received the news via internal email and video communication. A townhall meeting scheduled for September 4 aims to provide clarity on the restructuring timeline, severance packages, and redeployment opportunities.
The company has stated that it will offer:
• Outplacement services and career transition support
• Severance packages aligned with tenure and role
• Internal mobility options for select roles within retained divisions
Market reaction and investor sentiment
While the news has sparked concern among employees, investors have responded with cautious optimism. Analysts view the restructuring as a necessary step to unlock post-merger synergies and improve shareholder returns. The company’s stock saw a modest uptick following the announcement, reflecting confidence in its long-term cost management strategy.
However, questions remain about the impact on operational continuity, especially in high-output regions like the Permian Basin. The company has assured stakeholders that production targets will not be compromised and that critical roles will be preserved.
Conclusion
ConocoPhillips’ decision to cut 20 to 25 percent of its workforce marks one of the most significant restructuring efforts in the energy sector this year. Driven by merger integration and financial discipline, the move is expected to reshape the company’s operational model and cost structure. As the layoffs unfold through 2025 and 2026, the industry will be watching closely to assess the broader implications for talent, innovation, and competitiveness in a rapidly evolving energy landscape.
Sources: Reuters, Offshore Technology, TechStory, Oil Monster, EnergyNow
