ConocoPhillips (COP), a leading U.S. oil and gas producer, has announced plans for staff reductions as part of a broad restructuring effort aimed at streamlining operations and cutting costs following its recent $23 billion acquisition of rival Marathon Oil. The company confirmed the anticipated workforce reductions in a statement on Tuesday.

This move by ConocoPhillips underscores the growing pressure within the oil and gas industry, which is currently grappling with a challenging environment of elevated operating costs and diminished revenues due to oil prices lingering around the $63 per barrel mark. Many industry players have indicated that sustained prices below $65 a barrel make drilling operations economically unviable.

ConocoPhillips' decision follows similar layoff announcements earlier in the year from other industry giants such as Chevron and SLB.

According to media reports, ConocoPhillips has enlisted the expertise of management consulting firm Boston Consulting Group to advise on the restructuring and the ensuing layoff program, which is internally codenamed "Competitive Edge." The reports indicated that the restructuring process has already commenced with an overhaul of the company's operational structure.

Previously, ConocoPhillips operated through six distinct segments: Alaska; Lower 48; Canada; Europe, Middle East and North Africa; Asia Pacific; and Other International, as detailed in its latest annual report. The initial phase of restructuring involves centralizing certain functions within these operations. This operational reorganization is expected to be followed by similar streamlining efforts within the company's corporate and support functions.

ConocoPhillips has significantly expanded its footprint in recent years through substantial acquisitions. In addition to the recent takeover of Marathon Oil, the company bolstered its presence in the Permian Basin of Texas and New Mexico with a $10 billion acquisition of Shell's assets and its 2021 acquisition of Concho Resources.

This is not the first instance of workforce reduction for ConocoPhillips. In 2020, the company laid off up to 500 employees in Houston as the COVID-19 pandemic triggered a sharp decline in global energy demand and prices. Notably, Marathon Oil also implemented layoffs of over 500 workers in Texas prior to its merger with ConocoPhillips.

Furthermore, reports indicate that ConocoPhillips is actively pursuing the divestiture of certain assets. Earlier this month, the company was exploring the sale of oil and gas assets in Oklahoma that it acquired through its acquisition of Marathon Oil last year. This dual strategy of cost reduction through layoffs and strategic asset divestment underscores ConocoPhillips' comprehensive approach to navigating the current economic headwinds in the energy sector and integrating its recent major acquisition.