Exxon Mobil Corporation XOM, the U.S.-based oil and gas giant, has announced its plans to lay off 397 Pioneer Natural Resources employees following the latter’s acquisition earlier this year. In May 2024, XOM acquired Pioneer Natural Resources in a transaction worth $63 billion.

Following this, Exxon Mobil became the largest oil and gas producer in the prolific Permian Basin. The company benefited from integrating Pioneer’s assets into its portfolio. XOM’s production reached an all-time high in almost 10 years due to contributions from the acquisition.

The layoffs will mostly affect Pioneer’s employees in Texas, particularly those in the Dallas suburb of Irving and Midland in West Texas. In a notice to the Texas Workforce Commission, XOM mentioned that job cuts will take place in seven stages. The layoffs are expected to continue until May 2026. Management mentioned that cost savings associated with the acquisition of the Permian Basin operator should be notably higher than that anticipated earlier.

The job cuts represent nearly 20% of Pioneer Resources’ pre-merger workforce. Exxon Mobil stated that it will provide an additional update regarding its plans for the Permian region and Pioneer’s integration into its portfolio in a presentation scheduled for Dec. 11, 2024.

XOM’s Zacks Rank and Key Picks

Currently, XOM carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the energy sector are Smart Sand, Inc. SND, FuelCell Energy FCEL and Nine Energy Service NINE, each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Smart Sand is a low-cost producer of high-quality Northern White frac sand, an ideal proppant for hydraulic fracturing and various industrial applications. The company provides proppant and other logistics services for several companies in the oil and gas industry. With sustained demand in the oil and gas market, SND is expected to see growing demand for its services, reflecting a positive outlook.

FuelCell Energy is a clean energy company offering low-carbon energy solutions. It produces power using flexible fuel sources such as biogas, natural gas and hydrogen. The company designs fuel cells that generate electricity through an electrochemical process that combines fuel with air, reducing carbon emissions and minimizing the environmental impact of power generation. As such, FCEL is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.