Marathon Oil Co., a unit of USX Corp. subsidiary USX-Marathon Group, Pittsburgh, announced plans Wednesday to consolidate parts of its US upstream organization in an effort to reduce costs by $75 million/year and give the company the footing to grow its business globally.
While Marathon Oil has a "solid reputation" as a low-cost producer, company 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 the end of this year. In addition, a full review of the 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."