Exxon unveils sweeping restructuring in latest cost cutting move – Reuters

HOUSTON, Jan 31 (Reuters) – Exxon Mobil Corp (XOM.N) 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 on the same level as its two major businesses allows Exxon more flexibility to redirect investments as the company adjusts to the energy transition, Williams said.

Exxon shares rose nearly 1% to $75.96 on Monday.

NO JOB CUTS ANTICIPATED

The restructuring will not affect 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.

Among the changes: Karen McKee, head of Exxon Chemical, will run the combined refining and chemicals unit, called Exxon Mobil Product Solutions. Those businesses contributed about a fifth of operating profit in 2019.

Linda DuCharme, president of Exxon Mobil Upstream Integrated Solutions and Upstream Business Development, will lead Exxon Technology and Engineering, the company said. That unit will develop new technologies to support the oil and gas, petrochemicals and low carbon businesses.

Exxon’s largest business, its oil and gas production, will be consolidated into a global organization called Exxon Mobil Upstream. It will be led by Liam Mallon, former chief of its Upstream Oil and Gas unit. That business accounted for $14.42 billion of operating profit in 2019.

Its energy transition business, called Low Carbon Solutions, shares equal stature with Exxon’s oil and gas and petrochemical operations. That business was formed last March to commercialize biofuels and carbon storage.

“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,” Chief Executive Officer Darren Woods said.

PROFIT REBOUND

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. Profit for the full year could be the highest since 2014, analysts estimate.

The restructuring also combines several technology and engineering operations which had been assigned to individual business 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.

Reporting by Sabrina Valle; editing by Marguerita Choy and Richard Pullin

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