On Thursday, Chevron, the oil and natural gas producer, announced that Mike Wirth, the Chevron Corp Vice Chairman, will become chief executive by next February, taking the place of the retiring John Watson.
The change brings an executive with an experience in the cost-cutting world of refining to Chevron’s corner office as the industry rises from a two-and-a-half year rout in crude prices that have squeezed revenue.
An engineer by training, Wirth, has worked at Chevron since 1982 and previously managed the pipeline and chemicals and refining businesses of the company.
“Mike was chosen for his track record of accomplishment,” said Watson in an interview. “He is well known for his time in our downstream portfolio and his work on cost control.”
The decision copies rival Exxon Mobil Corp, which named Darren Woods, a refining expert as its CEO this year, a move seen as prioritising the generation of cash to protect payouts to shareholders above pricy exploration projects.
The CEOs of rivals Royal Dutch Shell and Total and also have experience in refining.
On Wednesday, the board of Chevron officially voted to offer Wirth the CEO post in addition to his role as chairman.
Watson stated that late in 2016, he informed the company’s board that he was considering retirement as large expansion projects are already near completion in Kazakhstan and Australia and the company taps more of its low-cost shale properties in the Permian Basin.
“$50 oil is not easy. But we’re as well positioned as anyone else,” said Watson.
Chevron refused to make Wirth available for an interview.
Watson, who will not hit 65, the mandatory retirement age of the company for another four years, became CEO in 2010.
The growth of the company under him has not been painless. Chevron has experienced difficulty regarding cost overruns at two Australian liquefied natural gas (LNG) projects.
“It’s fair to say we’ve done some things well and there’s areas we can improve,” said Watson. “But we’ve dramatically outperformed our peers.”
He pointed out that one of the LNG projects, Gorgon, was already profitable and the other should be as it comes online later in 2017.
Wirth will also have to battle with growing uncertainty regarding the operations of Chevron in strife-torn Venezuela, where it is the only surviving major oil producer in the United States.
“We have every intention of staying there,” Watson said. “Venezuela is among the leaders in (oil) reserves worldwide.”
Watson stated that after retirement, he had no plans to work for the U.S. government or elsewhere in the oil industry. He refused to say what he would do next, though said that he was considering options.
In 2016, Watson earned $24.6 million in pay, bonuses, and share options, up from $22 million in 2015. On the other hand, Wirth was paid $9.1 million last year, up from $8.1 million in 2015.
Shares of Chevron were up by 0.4 percent at $117.91. The company is scheduled to report quarterly earnings on October 27.