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ConocoPhillips (COP) to Sack 25% Houston Workers by Early 2021

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ConocoPhillips (COP - Free Report) plans to downsize its Houston workforce by 25%, post the acquisition of upstream company Concho Resources Inc. at the beginning of 2021. However, the process to identify the precise number of affected workers is yet to be determined.

The Houston-based company plans to dismiss a minimum of 500 local workers at its Houston headquarters as part of its strategy to reduce costs by beginning as early as Feb 1. The redundant workers, leaving the merged company, are expected to receive 60-day advance notice along with severance packages. ConocoPhillips further added that it will assist the laid-off workers to find employment outside the company.

Several oil and gas companies are bidding farewell to hundreds of workers as the entire energy sector is trying to survive the economic downturn from the pandemic. While it appears that the rate of workforce reduction, owing to the pandemic, is decelerating; recent mergers could result in further layoffs. Most importantly, energy companies like Chevron Corporation (CVX - Free Report) , who acquired Noble Energy in October, fired one-fourth of the latter’s workforce to reduce expenses for consultants, office buildings, technology and insurance.

Although ConocoPhillips is a leading oil and gas explorer, with strong footprints in prolific shale plays like Permian, Eagle Ford and Bakken; the company has to bear the brunt of the coronavirus-induced oil price slump. This has resulted in a 22% production curtailment over the past year, indicating that a limited number of employees is required for the upstream player.

Notably, the company remains transparent with employees that their decision of workforce reductions in a certain portion of its business could be worthwhile to align organizational capacity and hopes that the acquisition of Concho will result in increased production in the future.

Company Profile & Price Performance

Headquartered in Houston, TX, ConocoPhillips is an upstream energy company. Its shares have underperformed the industry in the past six months. The company’s stock has lost 10.6% against the industry’s 7.4% growth.

 

 

Zacks Rank & Stocks to Consider

ConocoPhillips currently carries a Zack Rank #4 (Sell).

One better-ranked player in the energy space is Hess Midstream Partners LP (HESM - Free Report) ,currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hess Midstream is expected to see earnings growth of 137% in 2021.

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