Exxon Mobil Corp (XOM) Restructures Units to Cut Costs
Exxon Mobil Corporation XOM, an integrated energy major, has plans to merge some businesses, stemming from efforts of slashing annual costs by $9 billion in 2023, as compared with 2019. The news was reported initially by The Wall Street Journal.
ExxonMobil has a goal of reorganizing its operations into three businesses — Upstream, Product Solutions and Low Carbon Solutions. It has also said that it will merge smaller units to concentrate decisions pertaining to supply chain, procurement and acquisition of raw materials, among others.
The restructuring will give ExxonMobil more negotiating power on deals with third parties. It will do so by eliminating the possibility of more than one Exxon unit negotiating different deals with the same supplier.
In order to reduce costs in its supply chain, ExxonMobil will create a group called ExxonMobil Supply Chain, which will merge its logistics, materials management and other groups. All these developments are reflecting the company’s consistent effort at adapting to the ever-changing business environment.
However, ExxonMobil has stated that these developments"are not about headcount reductions". With some jobs becoming redundant over time, there will likely be some layoffs with the rehiring of workers for different assignments.
Zacks Rank & Key Picks
ExxonMobil (XOM) currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space include RPC Inc. RES and ProPetro Holding CorpPUMP both sporting a Zacks Rank #1 (Strong Buy) and Halliburton Company HAL carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
RPC Inc. is a leading oil field service provider with strong revenue generation from services like pressure pumping, coiled tubing and rental tools. Over the past 30 days, RES has witnessed upward earnings estimate revisions for 2023 and 2024.
ProPetro Holding Corp offers a wide spectrum of specialized, complementary services and equipment for the exploration and production of oil and natural gas, which has seen an upward revision in earnings estimates for 2023 over the past 30 days.
Halliburton Company, one of the largest oilfield service providers in the world, offers a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. Over the past 30 days, HAL has witnessed upward earnings estimate revisions.
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