Second-largest U.S. oil company Chevron Corp. (CVX), Tuesday said it would cut around 2,000 jobs by 2011 and sell some of its downstream operations, including the Pembroke refinery in the U.K., in an effort to streamline its loss-making downstream portfolio. The company revealed that it would record severance charges in the range of $150-200 million after tax in the first quarter. Additionally, Chevron said it expects a substantial production increase mid-decade as its portfolio shifts towards natural gas and Asia.
In addition to soliciting bids for downstream operations in Europe, the Caribbean, and select Central American markets, San Ramon, California-based Chevron said it would review operations in Hawaii and Africa, and outside of South Africa as part of its plans to improve returns and further streamline downstream operations.
In the downstream business, Chevron plans to improve returns by aggressively lowering costs, exiting markets, and streamlining the organization. Staff reductions announced by Chevron today would take place through 2011, with reduction of 2,000 positions slated for this year itself.
Commenting on plans to deal with a challenging environment, Mike Wirth, executive vice president of Global Downstream at Chevron said, "Downstream market conditions are likely to be difficult for the next several years. We intend to further concentrate our downstream portfolio in North America and Asia-Pacific. These are markets in which we have our greatest competitive strength. We are also rapidly and aggressively lowering costs, reducing capital spending, improving efficiency, and simplifying our organization."
For the recent fourth quarter, Chevron reported a slide in its profit, reflecting losses in its downstream business due to lower sales margins for gasoline and other refined products, amid weak demand and excess supply worldwide.
The company's refining, marketing, and transportation business, which as a whole constitutes the downstream segment, reported a fourth-quarter net loss of $613 million, compared with a profit of $2.08 billion last year. The U.S. downstream operations incurred a loss of $345 million in the fourth quarter, compared with earnings of $1.03 billion a year earlier, hurt by weaker margins on the sale of gasoline and other refined products.
Chevron expects cost reduction momentum to continue and stressed that its financial capacity and discipline continue to be a competitive advantage. In 2009, the company had lowered operating expenses by $3.9 billion, or 15%. Pat Yarrington, chief financial officer of Chevron said, "We plan to sustain and grow our dividend, fund our deep queue of capital projects, and maintain our financial strength and flexibility."
Revealing that the company is focusing on upstream growth at present, Chevron said it has held a long-term view favoring aggressive upstream investment. John Watson, chief executive officer said, "We have momentum, an advantaged portfolio and proven capabilities that will continue to deliver value to our stockholders." Predicting that Chevron is poised for another decade of upstream growth, Watson said, "We expect a substantial production increase mid-decade as our portfolio shifts toward natural gas and Asia."
Chevron's Upstream segment, which includes exploration and production, has been performing well recently. The company reported total exploration and production earnings of $4 billion for the fourth quarter, up from $3.15 billion a year ago, benefiting from higher crude oil prices.
Chevron's upstream and natural gas business had delivered a strong performance in 2009 too. Oil and gas production increased 7% in 2009 due to the successful start up and ramp up of major capital projects. Chevron also had a 57% success rate in exploratory drilling in 2009. The company added 1.1 billion barrels of net proved reserves, replacing 112% of its production.
CVX is losing $0.11 or 0.15%, and is currently trading at $74.54 on a volume of 1.77 million shares on the New York Stock Exchange.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.