HOUSTON — Marathon Oil Corp. will shed 200 jobs this month as part of a plan to restructure its upstream business into two distinct units, with one encompassing its key U.S. shale plays and another for its conventional drilling fields in the Gulf of Mexico and elsewhere, the company confirmed Friday.
That brings its job cuts this year to 19 percent of its workforce.
The move shuffles Houston-based Marathon’s Bakken Shale, Eagle Ford Shale and Oklahoma assets into one division as the company attempts to consolidate employees with similar skills sets and engineering know-how. The shale business will get the lion’s share of the company’s sharply reduced $2.2 billion capital budget next year as the firm plans to concentrate on profitable and prolific shale fields.
Related: Marathon details spending cuts
“Our current structure does not reflect the need to better match competencies and skills within each of our business lines,” Marathon CEO Lee Tillman said in an internal memo sent to employees on Thursday.
The company previously split its upstream unit between North American oil fields and international plays. The company’s new conventional business, the company said, will encompass its assets in the Gulf of Mexico, Equatorial Guinea, Gabon, the Kurdistan region of Iraq, Libya and the United Kingdom, as well as its fields in Wyoming and its oil sands mines.
“In an increasingly difficult market that is not going to get any easier, we must adapt our organizational design for a competitive advantage,” Tillman said.
Marathon is set to put more muscle behind its shale wells at a time when U.S. shale oil production is wavering as producers succumb to a punishing oil bust. The industry’s wells in the Eagle Ford pumped an extra 25,000 barrels a day in September, a small 2 percent increase from the previous month, according to Platts. And in North Dakota’s Bakken Shale, output increased less than 1 percent in September.
Marathon expects its 200 job cuts to be complete Nov. 30, and the restructuring will go into effect the following day. Marathon had cut up to 400 jobs in February and announced another 40 job cuts in September. Tillman said the restructuring comes as “the result of an extensive, thoughtful review of our business that involved many leaders across the organization.”
Marathon had 3,300 employees at the end of last year.
Related: Marathon says asset sales coming soon
It’s only the latest effort by U.S. oil companies to curb costs amid an oil-price downturn that has lasted longer than many producers and investors expected when it began last year. Anemic crude prices have forced oil companies, their equipment suppliers, drillers and manufacturers to cut more than 200,000 jobs around the world.
Marathon officials told investors this week they plan to cut capital spending next year by 29 percent to $2.2 billion, a level that would keep its production level with its run rate at the end of this year.
It said its scaling back its search for oil and gas in conventional plays and plans to sell at least $500 million in non-core oil-production and midstream assets “that simply do not compete for capital today given the depth and breadth of our U.S. resource play,” Tillman said on a conference call with investors on Thursday.
The firm said it would spend about 75 percent of its budget next year on its U.S. resource plays. Marathon also announced last week it would cut its shareholder dividend from 21 cents to 5 cents a share in a bid to save $425 million it can pour into its shale drilling. It reported a third-quarter loss of $749 million, largely because of its $611 million in impairment charges on some of its oil assets.