Chevron Names Michael Wirth Chairman, CEO as Watson to Retire -- Update
By Bradley Olson
Chevron Corp. on Thursday named Michael Wirth as its next chief executive, choosing an engineer experienced at finding efficiencies and cutting costs as it copes with a prolonged period of lower oil prices.
Mr. Wirth, 56, a Chevron lifer who has overseen the company's vast network of refining and pipeline assets, will become chairman and chief executive on Feb. 1, replacing John Watson.
Mr. Watson, 60, has led Chevron through a tumultuous era defined by high and low prices, one in which the company made several multibillion-dollar investments that surged over cost expectations.
The Wall Street Journal first reported the executive change was expected last month.
The ascendancy of Mr. Wirth follows a pattern at big oil companies as they adapt to an oil glut and corresponding slump in prices brought about by the U.S. shale boom. Exxon Mobil Corp., Royal Dutch Shell PLC and French oil giant Total SA are all run by former refining chiefs.
The largest five Western oil companies slashed spending 30% in the last three years, or about $50 billion, as oil prices fell by more than half from $100 a barrel. While much of the Big Oil cost-cutting is already done, success in a new era of plentiful supply will be defined by keeping costs down, operating efficiently and focusing on developments that can pay off quickly.
Finding new oil at any cost is no longer a primary objective. The move to executives with experience in finding efficiencies and reigning in costs reflects a profound shift in thinking from optimism to a kind of pessimistic realism, said William Arnold, a former energy banker and Shell executive who teaches at Rice University.
The optimists, a swaggering, big-dreaming group of risk takers who would not blanch at drilling six straight dry holes as long as the seventh found oil or gas, are being replaced by disciplined, pragmatic engineers, he said.