Chevron Corp CEO John Watson announced he would step down by the end of September and his likely successor will be Mike Wirth the Vice Chairman, said a source, who is familiar with this ongoing matter.
The shake-up, which was unexpected, at the top of Chevron one of the largest natural gas and oil producers arrives at a time that pressure is growing across the industry to cut costs further and control spending.
Chevron with Wirth will have a leader that has strong experience in refining, an area where costs regularly are scrutinized to a fraction of one cent.
This move is a copy of Exxon Mobil, a big rival, which earlier in 2017 named Darren Woods, its refining expert, as its new CEO, a move widely considered as prioritizing the cash generation in order to protect payouts to its shareholders over pricy projects of exploration.
CEOs for rivals Royal Dutch Shell and Total also have a background in refining.
Shares of Chevron are up close to 35% since January 2010 when Watson became the CEO, but the Dow has increased more than double during that same period.
Shares of the company are currently trading at the level they traded during the early part of 2011.
Spokesperson with Chevron did not comment when asked, nor did Wirth or Watson respond when asked through emails.
The company, based in California, is emerging from a worldwide price slump for commodities and is starting to reap fruits of an expansion spree that was multibillion dollars in size.
The exit by Watson is not acrimonious as he sees it as the best opportunity to give the reins to Wirth of a business in growth said one source.
Under Watson, Chevron’s growth has not been without its problems. Chevron struggled with overruns in costs at two liquefied natural gas projects in Australia, faced huge engineering challenges with its expansions in the Gulf of Mexico, and is contending at this time with the growing uncertainty about its Venezuelan operations, where it’s the only remaining major oil producer from the U.S.
One of the projects in Australia is now online, while the other should be online during September. Combined, they are expected to fund 50% of the dividend of the company in two years.
Watson did not make any major acquisitions while the CEO as he ceded opportunities in growth to rivals. Rex Tillerson the former CEO at Exxon, for example, acquired XTO Energy a producer of natural gas while at the head of Exxon and rapidly expanded into the LNG sector of Qatar.