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Conoco to cut 975 jobs
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December 29, 1998: 11:51 a.m. ET
Oil-and-gas giant to take $50 million 4Q charge, reduce '99 capital budget
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NEW YORK (CNNfn) - Conoco on Tuesday announced plans to eliminate 975 jobs, take a fourth-quarter charge of $50 million, and reduce its 1999 capital budget by 21 percent as the energy giant grapples with continued low crude oil prices.
The move comes a day after Halliburton Co., an oil field services company, said it would cut 2,750 employees from its Energy Services Group and record a pretax charge of $95 million in the fourth quarter.
Houston-based Conoco, the former oil-and-gas subsidiary of chemical giant DuPont Co. (DD), went public in October. Today, Conoco is the world's eighth-largest oil-production company, with annual sales totaling $22 billion.
Shares of Conoco (COC) were off 1/8 at 20-11/16 on the New York Stock Exchange Tuesday morning.
Conoco said the planned workforce cuts and organizational realignments would result in annual cost reductions of about $60 million. The charge to earnings will amount to about 8 cents a share.
The company said the job cuts would fall mostly in its upstream operations, resulting in a worldwide reduction of 975 positions. Conoco employs about 16,000 regular employees and more than 27,000 full-time equivalent contractors worldwide.
The company also said it planned to trim its capital budget in 1999 by about $500 million, to $1.8 billion, as it strives to streamline its operations in the face of dwindling crude oil prices, which are hovering around 12-year lows.
In 1999, Conoco said it will direct about $1.3 billion of the company's capital budget toward exploration, production, and natural gas activities. - $500 million less than in 1998.
Archie Dunham, Conoco's president and chief executive officer, said the capital budget will support a growth rate of around 6 percent next year when compared with 1998, taking into account current oil prices.
He noted that the 1999 capital budget would not affect longer-term growth prospects.
DuPont still owns a majority stake in Conoco, but plans to spin off the rest of the business in the near future as the chemical maker focuses more on the life sciences business.
Conoco's realignment comes against a backdrop of broader consolidation across the oil industry as depressed oil prices and flagging customer demand keep companies on their toes.
Spurring the trend, Exxon Corp. (XON) and Mobil Corp. (MOB), the number-one and number-two oil companies in the United States, agreed to merge earlier this month in an $80 billion marriage that reunites fragments of John D. Rockefeller's Standard Oil company.
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