US-based oil and gas producer ConocoPhillips plans to cut its global workforce by 20–25% as part of a comprehensive restructuring programme, reported Reuters, citing five sources.

The decision was communicated by CEO Ryan Lance in a video message to employees, where he expressed concern over rising expenses leading to the company falling behind its competitors.

In a video heard by the news agency, Lance said: "As we streamline our organization and take work out of the system, we will need fewer roles."

The company employs approximately 13,000 people worldwide, meaning that between 2,600 and 3,250 employees will be affected by the layoffs.

In an email received by Reuters, ConocoPhillips spokesperson Dennis Nuss confirmed that most of the cuts are expected to be made before the end of the year.

The reorganisation, scheduled for completion by next year, will announce its new structure and management in mid-September, according to two sources familiar with the matter.

In his message, Lance highlighted that the company's controllable production expenses were $2 per barrel higher than its peers, having risen from $11 in 2021 to $13 last year.

The restructuring initiative, internally referred to as "competitive edge", has involved the services of Boston Consulting Group, which was hired in April to advise on the restructuring and layoff programme.

ConocoPhillips has been seeking ways to enhance its competitiveness and identified more than $1bn in additional cost reduction and margin improvement options.

These efforts come on top of the savings realised from its purchase of Marathon Oil last year.

ConocoPhillips' financial performance has also been under pressure, with its net income dropping to around $2bn in the second quarter, the lowest since the quarter ended March 2021, when the Covid-19 pandemic severely impacted demand.

Other industry players including oil major Chevron and service company SLB also announced layoffs earlier this year.