Exxon unveils sweeping restructuring in latest cost cutting move

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Exxon unveils sweeping restructuring in latest cost cutting move
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Economy3 hours ago (Jan 31, 2022 01:51PM ET)

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Exxon unveils sweeping restructuring in latest cost cutting move
© Reuters. FILE PHOTO: Darren Woods, Chairman & CEO of Exxon Mobil Corporation, attends a news conference at the New York Stock Exchange (NYSE) in New York, U.S., March 1, 2017. REUTERS/Brendan McDermid/File Photo

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By Sabrina Valle

HOUSTON (Reuters) – Exxon Mobil Corp (NYSE:) on Monday disclosed a sweeping restructuring of its global operations that will combine its refining and chemicals businesses into one, and put its energy transition business on the same footing as its other operations.

The broad restructuring marks its latest cost-cutting effort after activist investors seeking to boost returns and address the energy transition won three seats last spring on its board. Exxon vowed to cut $6 billion from operating costs by next year after suffering a historic, $22.4 billion loss in 2020.

The changes were first considered around 2017, Exxon Senior Vice President Jack P. Williams told Reuters. Around that time, Exxon combined its fuels and lubricants division with supply and refining.

“It’s an evolution,” said Williams. “We have been working on it now for a while.”

Putting its low carbon business, which is seen as a response to the investor demand for lower emissions fuels and technology, on the same level as its other two businesses will give Exxon more flexibility to redirect investments as the company adjusts to the energy transition, Williams said.

NO JOB CUTS ANTICIPATED

The restructuring will not impact fourth quarter financial results, which the top U.S. producer reports on Tuesday. Exxon does not anticipate cutting any jobs as a result of the restructuring, said spokesperson Erin McGrath.

Linda DuCharme, former president of Exxon Mobil Upstream Integrated Solutions and Upstream Business Development, has been appointed to lead Exxon’s Technology and Engineering unit, the company said.

Karen McKee, former president of Exxon Chemical, will run the combined petrochemicals unit, called Exxon Mobil Production Solutions.

Exxon’s upstream, or oil and gas production units, will be consolidated into a single organization, Exxon Mobil Upstream Company led by Liam Mallon, former president of Upstream Oil and Gas, the company said.

“Aligning our businesses along market-focused value chains and centralizing service delivery, provides the flexibility to ensure our most capable resources are applied to the highest corporate priorities and positions us to deliver greater shareholder returns,” Chief Executive Officer Darren Woods said.

PROFIT REBOUND

Effective April 1, Exxon will be organized along three business lines: its upstream oil and gas production unit, the combined downstream refining and chemicals business, and its latest energy transition business, called Low Carbon Solutions, the company said in a filing.

Past cost-cutting moves and higher oil prices are expected to deliver a quarterly per share profit of $1.93, up from an adjusted profit of three cents a share a year-ago.

The restructuring will combine its technology operations, some of which had been assigned under the individual units. The new, single technology organization will be called Exxon Mobil Technology and Engineering, Exxon said.

Exxon also will relocate its corporate headquarters from Irving, Texas, to its campus north of Houston. That move is expected to be completed in mid 2023.

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