Chevron Corporation CVX recently announced plans to cut up to 20% of its global workforce by 2026. The move is part of the company’s strategy to simplify its organizational structure, stay competitive for a longer term and achieve $3 billion in cost savings.

At the end of 2023, Chevron employed more than 40,212 people across its operations, and a reduction of 20% of employees would lead to a layoff of about 8,000 people. The employees would be given an option of voluntary buyout through April or May as Chevron prepares for internal reorganization.

Industry Pressures and the Setbacks in Major Projects

Chevron, currently carrying Zacks Rank #3 (Hold),is taking these cost-cutting measures amid industry challenges. The company is facing weaker refining margins along with declining oil prices. The company’s major acquisition of Hess, which would provide access to Guyana’s oil-rich fields, is currently on hold due to legal disputes with Exxon Mobil Corporation XOM. Over the last few years, the company also faced a major decline in its oil and gas reserves, raising concerns about its long-term growth prospects.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Layoff Scenario in the United States

Despite a rise in domestic oil and gas production in the United States, the number of jobs in the oil and gas industry is facing a setback of approximately 10% below pre-pandemic levels. The rising frequency of mergers and acquisitions, efficiency in drilling activities and a focus by management on profitability over production growth have led to job cuts and slow hiring.

Since 2019, Exxon Mobil’s global workforce has been reduced by about 17% despite an increase in production. Chevron’s move also aligns with the broader industry trends and decides to cut jobs to strengthen its competitiveness.

Key Picks

Investors interested in the energy sector might look at some top-ranked stocks like SM Energy Company SM and Sunoco LP SUN.

Denver, CO-based SM Energy Company is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition and production of natural gas and crude oil in North America. The Zacks Consensus Estimate for SM’s 2024 earnings indicates 15.11% year-over-year growth.

Dallas, TX-based Sunoco LP is a master limited partnership that deals with the distribution of motor fuel to roughly 10,000 customers, including independent dealers, commercial customers, convenience stores and distributors. The Zacks Consensus Estimate for SUN’s 2024 earnings indicates 83.17% year-over-year growth.

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Chevron Corporation (CVX) : Free Stock Analysis Report

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