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Chevron's Global Revamp Aims to Stay Competitive & Save $3B by 2026
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Key Takeaways
Chevron is consolidating global units and trimming management to save $3B by 2026.
Central hubs in Manila, Buenos Aires and Houston will anchor global support functions.
CVX is streamlining refinery tasks using AI and will scale its new centralized model.
Chevron Corporation (CVX - Free Report) is undertaking a sweeping corporate overhaul aimed at slashing costs and improving efficiency, making a bold shift from its traditionally decentralized model. The oil major is consolidating regional business units, trimming layers of management and relocating support functions to global hubs, all in a bid to save up to $3 billion by 2026.
With this structural shake-up, Chevron joins peers like Exxon Mobil Corporation (XOM - Free Report) and Shell plc (SHEL - Free Report) in adapting to investor demands for leaner, more profitable operations amid volatile oil markets and an evolving energy landscape.
ExxonMobil, on the last reported quarter's earnings call, stated that since 2019, it has reduced $12.7 billion in structural costs. This cost-saving move highlights ExxonMobil’s efforts to make its business more efficient and resilient.
Shell, too, in its corporate restructuring and cost savings drive, made several decisions on job cuts and business divestment. In 2024, the company announced a 20% cut in its workforce in order to focus on its profitability and meet investor demands. Recently, Shell reshaped its business strategy by divesting fuel retail operations in Indonesia.
Global Divisions, Local Strength
Chevron is merging various geographic units into centralized global divisions. For example, one offshore unit will now oversee assets in the U.S. Gulf, Nigeria, Angola and the Eastern Mediterranean. Similarly, shale operations across Texas, Colorado and Argentina will fall under a unified structure.
The company’s upstream operations will now have five divisions, shale & tight, offshore, base & emerging assets, exploration and Australia.
Chevron, currently carrying a Zacks Rank #3 (Hold), further intends to cut the number of upstream business units from around 18-20 to just three to five. This streamlined structure will allow for global coordination of drilling schedules and faster rollout of innovations across operations, eliminating the need to navigate multiple layers of management.
Despite the centralized model, the company insists it is not abandoning local expertise. Instead, Chevron aims to balance local adaptability with streamlined global coordination, allowing innovations to scale faster without bureaucratic delay.
Workforce Reductions & Global Hubs
The restructuring is part of a broader plan announced in February to cut the workforce by as much as 20%, or around 9,000 employees, by the end of next year. Thereby, support functions like finance, HR and IT are being shifted to service centers in Manila and Buenos Aires. Engineering operations will be centralized in Houston and Bengaluru, India.
Vice chairman Mark Nelson described these decisions as tough but necessary. While he did not confirm whether U.S. jobs would be lost as a result of overseas relocation, the direction is clear, Chevron is optimizing for global efficiency.
AI & Tech Power Transformation
Technology is playing a crucial role in Chevron’s revamp. At the company’s El Segundo refinery in California, artificial intelligence (AI) is already optimizing product mixes and pricing strategies in seconds, a task that once took hours.
Chevron believes that centralization offers the perfect foundation for deploying such technologies at scale. When the operations of a company are centralized and standardized, it can optimally utilize the technology to boost efficiency.
Staying Competitive in a Shifting Market
Persistently low oil prices and uncertainty around the future of fossil fuels have pushed investors to seek higher cash returns, prompting major energy companies to cut costs in order to sustain dividends and share buybacks.
Until recently, Chevron operated through a decentralized structure, with influential country managers overseeing major divisions tailored to local market conditions. However, in order to stay competitive, the company has undergone major changes in recent years, driven by its acquisitions of PDC Energy Inc. and Noble Energy Inc. in the United States, along with completing key projects like the Tengiz oil field expansion in Kazakhstan.
For Chevron, the path to future success is clear, become faster, leaner and more tech-driven, or risk falling behind.
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Chevron's Global Revamp Aims to Stay Competitive & Save $3B by 2026
Key Takeaways
Chevron Corporation (CVX - Free Report) is undertaking a sweeping corporate overhaul aimed at slashing costs and improving efficiency, making a bold shift from its traditionally decentralized model. The oil major is consolidating regional business units, trimming layers of management and relocating support functions to global hubs, all in a bid to save up to $3 billion by 2026.
With this structural shake-up, Chevron joins peers like Exxon Mobil Corporation (XOM - Free Report) and Shell plc (SHEL - Free Report) in adapting to investor demands for leaner, more profitable operations amid volatile oil markets and an evolving energy landscape.
ExxonMobil, on the last reported quarter's earnings call, stated that since 2019, it has reduced $12.7 billion in structural costs. This cost-saving move highlights ExxonMobil’s efforts to make its business more efficient and resilient.
Shell, too, in its corporate restructuring and cost savings drive, made several decisions on job cuts and business divestment. In 2024, the company announced a 20% cut in its workforce in order to focus on its profitability and meet investor demands. Recently, Shell reshaped its business strategy by divesting fuel retail operations in Indonesia.
Global Divisions, Local Strength
Chevron is merging various geographic units into centralized global divisions. For example, one offshore unit will now oversee assets in the U.S. Gulf, Nigeria, Angola and the Eastern Mediterranean. Similarly, shale operations across Texas, Colorado and Argentina will fall under a unified structure.
The company’s upstream operations will now have five divisions, shale & tight, offshore, base & emerging assets, exploration and Australia.
Chevron, currently carrying a Zacks Rank #3 (Hold), further intends to cut the number of upstream business units from around 18-20 to just three to five. This streamlined structure will allow for global coordination of drilling schedules and faster rollout of innovations across operations, eliminating the need to navigate multiple layers of management.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Despite the centralized model, the company insists it is not abandoning local expertise. Instead, Chevron aims to balance local adaptability with streamlined global coordination, allowing innovations to scale faster without bureaucratic delay.
Workforce Reductions & Global Hubs
The restructuring is part of a broader plan announced in February to cut the workforce by as much as 20%, or around 9,000 employees, by the end of next year. Thereby, support functions like finance, HR and IT are being shifted to service centers in Manila and Buenos Aires. Engineering operations will be centralized in Houston and Bengaluru, India.
Vice chairman Mark Nelson described these decisions as tough but necessary. While he did not confirm whether U.S. jobs would be lost as a result of overseas relocation, the direction is clear, Chevron is optimizing for global efficiency.
AI & Tech Power Transformation
Technology is playing a crucial role in Chevron’s revamp. At the company’s El Segundo refinery in California, artificial intelligence (AI) is already optimizing product mixes and pricing strategies in seconds, a task that once took hours.
Chevron believes that centralization offers the perfect foundation for deploying such technologies at scale. When the operations of a company are centralized and standardized, it can optimally utilize the technology to boost efficiency.
Staying Competitive in a Shifting Market
Persistently low oil prices and uncertainty around the future of fossil fuels have pushed investors to seek higher cash returns, prompting major energy companies to cut costs in order to sustain dividends and share buybacks.
Until recently, Chevron operated through a decentralized structure, with influential country managers overseeing major divisions tailored to local market conditions. However, in order to stay competitive, the company has undergone major changes in recent years, driven by its acquisitions of PDC Energy Inc. and Noble Energy Inc. in the United States, along with completing key projects like the Tengiz oil field expansion in Kazakhstan.
For Chevron, the path to future success is clear, become faster, leaner and more tech-driven, or risk falling behind.