ExxonMobil To Move Its HQ, Reorganize Business Structure
ExxonMobil is moving its headquarters to the Houston area as part of a major reorganization that will put its engineering and technology support staff in one unit.
ExxonMobil is moving its headquarters to its huge campus in northwest Houston from Irving, Texas, as part of a reorganization it expects will create a tighter-knit, lower-cost operation. The changes announced Monday include merging its engineering and technology staff into a single unit, while also creating units for upstream, downstream, and carbon-emission reduction.
“Aligning our businesses along market-focused value chains and centralizing service delivery provides the flexibility to ensure our most-capable resources are applied to the highest corporate priorities,” said Darren Woods, chairman and chief executive officer.
The headquarters move is expected to be completed in the middle of next year. It will bring 400 jobs to the Houston area, making ExxonMobil the biggest locally based company.
Changes in the corporate structure will take effect April, creating three operating units: ExxonMobil Upstream; Exxon Mobil Product Solutions, which includes refining and chemicals; and ExxonMobil Low Carbon solutions. All will be supported by ExxonMobil Technology and Engineering. The changes are expected to reduce costs. The company’s announcement said it “is on track to exceed $6 billion in structural cost savings by 2023 compared to 2019.” The expected savings are due to the new business structure and measures such as centralizing procurement, digital transformation of processes, and reductions in the size of some programs announced in 2020. No job reductions were mentioned. The company has made deep cuts in recent years.
ExxonMobil’s management is likely to discuss the changes when it announces its earnings and holds an investor call on 1 February. With oil trading at more than $90/bbl, its stock price is up about 20% this year, closing on 31 January, at $75.96, up 68 cents for the day, which is near its 12-month high.
While the cost cutting is likely to be welcomed by investors, they also recently received a reminder of the environmental pressure facing ExxonMobil when a federal judge overturned a recent Gulf of Mexico lease sale in which the company was the winning bidder on nearly a third of the tracks. The judge in Washington, DC, said the environmental impact analysis for the sale failed to properly account for future carbon emissions if the blocks were to be developed.
The company’s efforts to manage its carbon emissions were evident throughout the announcement of the reorganization. For example, the priorities listed for the Technology and Engineering business line were to significantly lower the cost of reducing emissions arising from operations and byproduct users; to maximize oil and gas production and revenues; to develop high-value products; and to improve advances in recycling plastic.
The Technology and Engineering unit will be led by Linda DuCharme, formerly president of ExxonMobil Upstream Integrated Solutions and Upstream Business Development. Upstream will be merged into a single organization led by Liam Mallon, formerly president of ExxonMobil Upstream Oil and Gas. Product Solutions will make fuels, lubricants, plastics, and polymers and be led by Karen McKee, formerly president of ExxonMobil Chemical.
The release did not mention who would lead Low Carbon Solutions.