Marathon Oil Co., a unit of USX Corp. unit USX-Marathon Group, Pittsburgh, plans to consolidate parts of its US upstream organization in an effort to cut costs by $75 million/year and provide the company the footing to expand its business globally.
While Marathon has a "solid reputation" as a low-cost producer, Pres. Clarence Cazalot said that, due to the competitiveness of the US market, Marathon needs to ensure that its general and administrative costs are also competitive.
About 200 positions will be eliminated as the result of these consolidation plans, which are expected to be complete by yearend. In addition, a full review of Marathon's business practices is under way, and it is anticipated that additional efficiencies will be identified, resulting in further job reductions.
As part of its plan, Marathon will relocate its technology research and development activities from its Petroleum Technology Center in Littleton, Colo., and close that facility. Upstream components will be streamlined and merged into a single Houston-based organization, while downstream activities will be integrated within Marathon Ashland Petroleum LLC at its refining analytical department in Catlettsburg, Ky.
Marathon's former Rocky Mountain and Central Region units will be merged into a single unit based in Oklahoma City. Marathon's Cody, Wyo., office will continue to oversee production operations in the Rocky Mountain region, however, and will report to the Oklahoma City office.
Marathon's former Southern and Midcontinent region operations also will be merged into a single unit, based in Midland, Tex. It will close its Tyler, Tex., office and shift responsibility for production operations in the former Southern region to Midland but maintain outlying field offices around Tyler.
Certain accounting functions and business development activities, currently carried out at all regional offices, will be centralized in Houston, said the firm.
The total number of job losses will be determined later in the year when this work is completed and the outcome of a voluntary early retirement program being offered to certain US employees is known. Under the terms of that program, 970 employees have until mid-October to choose to retire.
"We are sensitive to the impact decisions like these have on employees and their families," said Cazalot. "Regrettably, consolidation into a more streamlined and profitable operation will mean job losses for some of our dedicated employees and a period of continuing uncertainty for others until we reposition the company. However, a stronger, more competitive Marathon is in the best long-term interest of employees and shareholders alike."
New appointments
As part of its upstream reorganization, Marathon has appointed a new leadership team. The new appointments are:
Philip G. Behrman has been appointed senior vice-president, worldwide exploration. Before joining Marathon, Behrman served as exploration manager, deepwater Gulf of Mexico, for Vastar Resources Inc. Behrman started his career in 1978 with Unocal Corp.'s geothermal division and has over 15 years experience with then-British Petroleum PLC in a variety of exploration and production assignments throughout the US.
G. David Golder has been named to a newly formed position: senior vice-president, commercialization and development. Before his appointment, Golder served at Marathon as vice-president, international production. Prior to that, Golder was executive vice-president of Sakhalin Energy. Golder joined the company in 1969 as a petroleum engineer. He has held numerous management positions in the UK, the US, and Russia over the course of his career.
Steven B. Hinchman has been named senior vice-president, production operations. Since 1996, Hinchman has served with Marathon as regional manager, Mid-Continent region. Hinchman joined the firm as a field engineer in 1980.
John T. Mills continues in his current position of senior vice-president, finance and administration, which he has held since 1998. In 1976, Mills joined Marathon as a tax specialist.
Marathon will also appoint someone currently outside the organization to the newly created position of senior vice-president, business development, in coming weeks.
Cazalot said, "The new organization structure is based on global portfolios for all segments of the upstream value chain, each headed by a senior vice-president."