In a stark reminder of the volatile energy landscape and the relentless drive for operational efficiency, ConocoPhillips has confirmed plans to cut staff later this year. The announcement comes on the heels of its $23 billion acquisition of Marathon Oil—a deal that transformed ConocoPhillips into an even more formidable player in U.S. shale but now requires the company to make tough choices amid turbulent market conditions.
Although ConocoPhillips has not specified the number of job cuts, sources close to the matter say the reductions will be significant and are expected to hit sometime in the fourth quarter. The restructuring effort, internally dubbed “Competitive Edge,” is being orchestrated with the assistance of Boston Consulting Group, a firm known for streamlining operations across various sectors.
The move reflects broader struggles in the oil and gas industry, where even giants like Chevron and SLB have already shed jobs in 2025. With crude prices sitting at approximately $63 per barrel—below the $65 breakeven level many shale producers cite as the threshold for profitable drilling—pressure is mounting on producers to cut costs, consolidate resources, and rethink growth strategies.
A Familiar Cycle of Boom and Retrenchment
The energy industry is no stranger to boom-and-bust cycles, but the post-pandemic era has ushered in a particularly disorienting chapter. After roaring back from the COVID crash with record profits in 2022 and early 2023, U.S. producers now face stubborn inflation, elevated service costs, investor pressure for returns, and weaker-than-expected global demand.
“The shale revolution was built on the premise of fast growth, but that era is closing,” said Raoul LeBlanc, a vice president at S&P Global Commodity Insights. “We’re moving into a phase where companies are being judged more on their capital discipline and less on their ability to flood the market with barrels.”
ConocoPhillips, now one of the largest U.S. independent producers by volume, has added scale rapidly in recent years. The 2021 acquisition of Concho Resources gave it a dominant footprint in the Permian Basin, and its $10 billion purchase of Shell’s Permian assets soon after added even more prime acreage in West Texas and New Mexico. With the 2024 Marathon Oil buyout, ConocoPhillips inherited significant positions in Oklahoma’s STACK and SCOOP plays, the Bakken in North Dakota, and international holdings—adding both opportunity and organizational complexity.
That complexity is now the focus of intense scrutiny. The company previously operated through six separate business segments—Alaska; Lower 48; Canada; Europe, Middle East and North Africa (EMENA); Asia Pacific; and Other International. According to two people familiar with the matter, the first step in the company’s restructuring plan involves consolidating some of these divisions and centralizing key functions.
In a statement, ConocoPhillips acknowledged that workforce reductions are part of a broader internal review.
“We are always looking at how we can be more efficient with the resources we have,” a company spokesperson said. “As part of this process, we have informed employees that workforce reductions are anticipated.”
Layoffs in the Wake of Megamergers
Historically, large mergers in the energy sector have often triggered sizable job cuts. ConocoPhillips laid off up to 500 employees in Houston during the depths of the 2020 COVID downturn. Similarly, Marathon Oil reportedly let go of more than 500 workers in Texas last year ahead of its acquisition.
“This is part of the consolidation playbook,” said Jennifer Rowland, an energy equity analyst at Edward Jones. “You buy scale, you reduce overlap, and then you deliver cost synergies to the Street. It’s never easy for employees, but shareholders tend to reward it.”
What’s different this time is the context. The energy sector is battling declining investor sentiment, exacerbated by falling share prices and growing fears of a recession in Europe and China—two major consumers of oil. Global inventories have been climbing despite OPEC’s recent efforts to curb production, and the U.S. has once again become a swing producer in a market that isn’t rewarding growth.
The layoffs also mirror what’s happening across the broader oilfield. Chevron began shedding jobs in its shale business earlier this year, citing similar pressures. SLB (formerly Schlumberger), the world’s largest oilfield services firm, also implemented cuts across multiple service lines, pointing to diminished demand and a slow start to the 2025 drilling season.
What Happens to Marathon’s Legacy Assets?
With the integration of Marathon now underway, questions are swirling about the fate of its legacy assets. Reuters recently reported that ConocoPhillips is shopping around some of the Oklahoma properties it acquired in the deal. These include positions in the Anadarko Basin—long considered a legacy asset class that no longer commands the capital intensity or enthusiasm of higher-return plays like the Permian.
“They’re being smart about it,” one Houston-based energy banker said under condition of anonymity. “You can’t keep everything. You have to prune, especially when the oil price is teetering like this.”
Still, any asset sales will take time. Buyers are wary, financing is tight, and the window for M&A in oil and gas is increasingly narrow outside of stock-for-stock mega-deals like Exxon’s recent acquisition of Pioneer Natural Resources and Chevron’s pending buyout of Hess.
Internal Morale and External Messaging
Behind closed doors, the restructuring is expected to impact both field-level operations and corporate offices—especially in Houston, where the company maintains its headquarters and where Marathon’s administrative team was also based.
Company insiders say morale has been shaky since the acquisition closed. “People are unsure about their roles and what comes next,” one employee said. “We’ve seen this movie before, and it usually ends with a lot of empty desks.”
Externally, the company is still projecting confidence. On its most recent earnings call, ConocoPhillips CEO Ryan Lance touted the long-term benefits of the Marathon acquisition and reiterated the company’s commitment to shareholder returns, including its quarterly dividend and ongoing share repurchase program.
“We are focused on delivering value—not just barrels,” Lance said.
But in today’s market, delivering value means trimming fat. And when service costs are up, global demand is soft, and capital markets are skeptical, companies like ConocoPhillips have little choice but to tighten their belts.
Industry Outlook: More Cuts Ahead?
ConocoPhillips is likely not alone. Analysts expect more U.S. producers to follow suit as the price of West Texas Intermediate (WTI) struggles to find footing above $65. Inflationary pressures on everything from frac sand to rig rentals have slashed margins, particularly for smaller operators who lack scale or hedging protection.
“Cost inflation hit the service side hard in 2023 and now it’s coming for the E&Ps,” said Chris Wright, CEO of Liberty Energy, a Denver-based pressure pumping company. “It’s not just about oil prices—it’s about efficiency across the board.”
For ConocoPhillips, the story now is one of integration, streamlining, and survival in a pricing environment that is as much psychological as it is economic. Investors will be watching closely not just for cost savings but for how the company navigates morale, talent retention, and strategic focus.
As the dust settles, what’s clear is that consolidation in the oil patch is far from over. But every merger leaves a trail, and this one is beginning to show its.
