Energy giant Exxon Mobil plans to cut nearly 400 jobs in Texas as a result of its recent acquisition of Pioneer Natural Resources, a move expected to affect a more than 1 million-square-foot office campus in the Dallas area.
The nation's largest energy company bought rival Pioneer Natural Resources in an all-stock deal totaling nearly $60 billion this year, nearly doubling Exxon Mobil's land holdings in the Permian Basin.
Exxon Mobil said in a letter to the state it offered more than 1,900 Pioneer workers a job after the acquisition of the company but there are 397 employees "that are in scope for planned separations."
The majority of those jobs are at Pioneer's about 1.1 million-square-foot headquarters at 777 Hidden Ridge Drive in Irving, Texas, a suburb about 14 miles northeast of downtown Dallas.
"Our employment strategy has not changed — the success of this merger depends heavily on the retention of Pioneer's talented workforce, and more than 1,900 Pioneer employees were offered jobs as part of the merger, with well over a majority accepting their offer of employment," said Jared Young, public and government affairs manager for Exxon Mobil, in the letter.
Pioneer's build-to-suit headquarters was completed in 2019 and includes a large food hall, fitness center, day-care facilities and a six-story parking deck, according to the building's owner, PRP. PRP purchased the 10-story campus in a deal totaling $584.2 million in December 2019.
The campus is 100% leased to Pioneer until 2039 with no termination options, real estate manager PRP said on its website. Exxon Mobil did not immediately comment to CoStar News on its plans for Pioneer's headquarters.
If Exxon Mobil decides to put Pioneer's office space up for sublease, it would further inundate an already saturated office market. According to CoStar data, the Dallas-Fort Worth region has an office vacancy rate surpassing 18% as the area wrestles with fragile demand for space.
Even with the region's higher than average vacancy rate, real estate developers in Dallas-Fort Worth have about 5.9 million square feet of new office space in the pipeline, according to CoStar data. About 70% of that new construction is preleased, said Bill Kitchens, CoStar's director of market analytics, in his recent market report, leading to a persistent threat of vacancy on the horizon.
Other oil and gas companies have announced similar job cuts this year as a result of consolidations in the industry. Marathon Oil warned the state of a possible mass layoff involving at least 500 workers at its Houston headquarters as a result of the company being acquired by Houston-based ConocoPhillips for about $17 billion.
Affected workers “may reasonably expect to experience a permanent loss of employment” in the 12 months following the closing of the acquisition in the current fourth quarter, Marathon Oil said in a letter to the state. ConocoPhillips said it expects to reduce costs by about $500 million in the first year after the takeover.
Marathon Oil owns its custom built 15-story office tower that opened in 2021 at 990 Town and Country Blvd. in Houston's CityCentre area.
Meanwhile, Exxon Mobil's planned job cuts are expected to occur at rolling milestones between the end of the year and 2026. Exxon Mobil plans to layoff 110 employees by Dec. 31, including 103 employees tied to Pioneer's Irving headquarters, with the remaining workers being in Midland, Texas, and Big Lake, Texas.
Exxon Mobil had its headquarters in Irving for decades before selling the 290-acre campus at 5959 Las Colinas Blvd. to Capital Commercial Investments, based in Austin, Texas, at the end of 2022. Exxon Mobil relocated its headquarters to its massive corporate campus in the Houston area in Spring.
Capital Commercial Investments has been shopping Exxon's former home around to would-be tenants, as CoStar News has previously reported.
Updated Nov. 18 to correct the amount of new construction that is preleased.