Reuters are reporting that Chevron Corp Chief Executive John Watson will step down by the end of next month and likely be replaced by Vice Chairman Mike Wirth.
The unexpected shake-up at the company comes as pressure grows on the industry to further cut costs and control spending.
In Wirth, Chevron would pivot to a leader with experience in refining, where costs are regularly scrutinised down to the fraction of a penny.
The move would copy rival Exxon Mobil Corp, which earlier this year named refining expert Darren Woods as its own CEO, a step widely seen as prioritising cash generation to protect payouts to shareholders above pricy exploration projects.
The CEOs of rivals Total and Royal Dutch Shell also have experience in refining.
Chevron’s shares are up about 35% since Watson took over as CEO in January 2010, but the Dow Jones industrial average has more than doubled in that time. The company’s shares are trading at the same level they were in early 2011.
The California-based company is emerging from a global commodity price slump and is beginning to reap the fruits of a multibillion-dollar expansion spree.
The exit is not acrimonious and Watson sees it as an opportunity to hand over the reins of a growing enterprise to Wirth.
The company’s growth under Watson has not been painless. Chevron has struggled with cost overruns at two Australian LNG projects, faced major engineering challenges at its US Gulf of Mexico expansions, and is now contending with growing uncertainty about its operations in strife-torn Venezuela, where it is the only remaining major US oil producer.
One of the Australian LNG projects has now come online, and the other is expected to by next month. Combined, the two are expected to fund half the company’s dividend by 2019.
Watson made no major acquisitions during his leadership, ceding growth opportunities to rivals. Former Exxon CEO Rex Tillerson, for example, bought natural gas producer XTO Energy during his tenure and rapidly expanded into Qatar’s LNG sector.
Watson, who has five years remaining before he hits Chevron’s mandatory retirement age of 65, stuck to projects already in the planning stages when he became CEO in January 2010, rather than coming up with new deal or expansion ideas. Watson’s predecessor, David O’Reilly, retired at 62.