On Wednesday, May 27, Chevron Corp. broke the news of plans to lay off between 10 to 15% of its global workforce of 45,000. According to Reuters, which was first to break the story, Chevron was among the first of the large oil companies to begin cutting its budget as oil demand began to dip.
The coronavirus pandemic and quarantine orders intended to contain it have hammered demand for oil as many consumers stay home. Oil prices made headlines in April by dipping into negative values as traders paid to have the commodity taken off their hands. At press time, oil is about $33 a barrel. Rival gas company Exxon Mobil Corp., also on March 27, currently has no plans to implement any layoffs, CEO Darren Woods confirmed during the company’s annual shareholding meeting.
During Chevron’s virtual stockholder meeting, CEO Michael Wirth said that the company activated its pandemic response plan back in January, and has continued to adapt since. “I am proud of the workers who show up every day to keep energy flowing into the economy,” he said.
Chevron’s cuts, according to spokesperson Veronica Flores-Paniagua, will mostly take place over the course of the year with varying impact on different units and divisions, depending on market conditions. “This is a difficult decision and we do not take it lightly,” she said. Chevron began offering severance payments to U.S. oil exploration and production employees in March, and according to Reuters, the company will offer additional severance pay, a medical benefits subsidy and education services to anyone who loses their job.
On May 1, Chevron reported first-quarter earnings of $3.6 billion and cash flow of $4.7 billion, up compared to last year’s results for the same time period, which saw Chevron earn $2.6 billion. CEO Wirth, in a statement, commented that the latest earnings were “driven by downstream margins and increased Permian production,” and that the dramatic March-April drop in oil prices due to COVID-19 continued into the second quarter.
The company is reducing its 2020 capital expenditure guidance by up to $2 billion for a total of $14 billion while aiming to decrease operating costs for the year by $1 billion. “Chevron is responding to these unprecedented challenges by making changes to what we control,” he said.