ExxonMobil Corp. (XOM) shares jumped higher Thursday after the biggest U.S. oil company said it plans to cut some 1,900 jobs at home, while reducing its global headcount by around 15% over the next two years.
Exxon said that the impact of COVID-19, which has slashed energy demand in key economies around the world, has increased the need for urgent changes in the company's efficiency.
"The workforce reductions are the result of ongoing reorganizations and work-process changes that have been made over the past several years to improve efficiency and reduce costs," Exxon said. "These actions will improve the company’s long-term cost competitiveness and ensure the company manages through the current unprecedented market conditions."
CEO Darren Woods warned employees of impending job cuts last week, saying in an internal memo that 'tough decisions" need to be made, "some of which will result in friends and colleagues leaving the company."
ExxonMobil shares were marked 2.3% higher in late-morning trading following the job cut news to change hands at $32.30 each.
WTI crude prices have fallen more than 42% from their pre-pandemic peak, and are down some 6% this week to $36.02 per barrel as investors trim bets on near-term demand amid new lockdown orders in Europe and slumping gasoline consumption in the United States.
The move to eliminate around 3% of its U.S. headcount follows a similar reduction by Royal Dutch Shell, which announced 9,000 jobs cuts last month and said earlier today that the severance payments will likely cost between $1.5 billion and $2 billion over the next two years.
Woods also said Exxon had exceeded its targeted reductions in spending that it committed to in March, deferring more than $10 billion in capital and cutting 15% of cash operating expenses.
"I wish I could say we were finished, but we are not," he said. "We still have some significant headwinds, more work to do and, unfortunately, further reductions are necessary."
Exxon will publish its third quarter earnings prior to the start of trading Friday, with analysts looking for a loss of 25 cents per share, down 66% from last year's 75 cents per share profit, on revenues of around $43.7 billion.