Occidental Petroleum is initiating a broad layoff effort this week that will stretch from Houston to Denver as the Permian Basin’s leading oil producer aims to cut costs in the aftermath of its massive $38 billion acquisition of Anadarko Petroleum last year.
Photo: Reed Saxon, STF / Associated Press -This combo of file photos shows the logo for Anadarko Petroleum Corp. on the floor of the New York Stock Exchange, left, and a logo on the Occidental Petroleum building in Los Angeles.
Oxy has for months offered voluntary employee buyouts and worked to sell assets around the world – from the old Anadarko headquarters in The Woodlands to Anadarko’s entire Africa portfolio – but now the Houston energy firm is moving on to terminating jobs, according to an internal email from Oxy Chief Executive Vicki Hollub.
“While these (voluntary) programs have been successful and contributed significantly to our goals, we have determined that additional staff reductions are necessary,” Hollub stated. “A reduction in force program, based on business necessity by job, is being initiated with individual communications and exit dates.”
While Oxy would not immediately reveal job reduction numbers or goals, employees this week have cited cutbacks occurring at Oxy’s Greenway Plaza headquarters in Houston and its large hub in Denver, including new postings from workers on the website TheLayoff.com.
The merger would have created a combined company of well more than 15,000 employees, but many people already have accepted buyout deals or sought employment elsewhere.
All of the new layoffs could be announced by the end of this week, Hollub said in the email.
“Staff reductions are always difficult and we feel for those employees and their families who will be affected,” Hollub added. “However, for the long-term success of the company, we must take appropriate action to compete in our transforming industry and achieve the synergies announced at the time of the merger.”
She said Oxy would not have any layoffs within its petrochemical arm, called OxyChem, or in the Gulf of Mexico division that was acquired from Anadarko. And few jobs will be cut internationally.
That would make Texas and Colorado the most exposed to job reductions.
In a prepared statement Wednesday, Oxy spokeswoman Melissa Schoeb said Oxy’s integration team worked for months to identify the positions needed to successfully and safely operate its business while still achieving its cost reduction and synergy goals.
“We reduced the workforce significantly with voluntary separation packages, and to attain the integration goals, we implemented a non-voluntary program to further reduce staffing,” Schoeb said. “We recognize this will have an impact on our employees and will do what we can to provide assistance during through the process.”
Oxy’s stock value suffered after it successfully outbid Chevron to buy Anadarko, with shareholders concerned the company was overpaying, taking on too much debt and relying too heavily on higher oil prices moving forward. Famed activist investor Carl Icahn even waged a proxy war to oust Hollub and much of the Oxy board. Oxy took on about $40 billion in debt to close the deal, including new loans and the assumption of Anadarko’s existing debt.
Just this week, Oxy said it would make its pipeline arm, Western Midstream Partners, an independent company and reduce its ownership stake in the firm in order to cut its overall debt load. Oxy acquired Western as part of the Anadarko deal and the potential spinoff was considered one of the best ways to help Oxy pay off the deal. However, Western’s market value plunged by about 30 percent last year, putting any possible sale on hold. Western’s market value is currently about $10 billion.
Oxy said it would reduce its roughly 55 percent stake in Western to below 50 percent this year and make the pipeline firm fully independent. The deal would let Oxy take Western’s nearly $7.5 billion debt load off of its books and still allow Oxy to maintain an operational relationship with Western and its pipelines and processing capabilities.
Oxy said last week it would sell the twin-tower Anadarko headquarters in The Woodlands – while leasing back one tower – and the old ConocoPhillips campus in the Houston Energy Corridor for a combined $565 million to the Howard Hughes Corp. to help further reduce debt. Oxy had originally intended to move its headquarters to the Conoco campus but nixed those plans after buying Anadarko, deeming the campus too small to accommodate everyone.
Instead, Oxy will maintain a smaller presence in The Woodlands as well as its current headquarters in Houston’s Greenway Plaza.
But the biggest part of Oxy’s debt reduction thus far is the ongoing $8.8 billion sale of Anadarko’s Africa assets to the French energy major Total as part of a larger $15 billion divestment plan.
By Jordan Blum
