OIl giants' merger to cost 16,000 jobs

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The Independent Online

The merger of oil giants Exxon and Mobil, earlier this month, will result in deeper job cuts and greater cost savings than previously estimated officials claimed.

The merger of oil giants Exxon and Mobil, earlier this month, will result in deeper job cuts and greater cost savings than previously estimated officials claimed.

The world's largest publicly owned oil company will cut almost 16,000 jobs by the end of 2002, officials said - an increase from the 9,000 cuts estimated when the companies announced their plans to merge a year ago.

Of the job cuts, 6,000 will occur through early retirement, said Exxon Mobil vice chairman Lucio Noto.

Company officials declined to say where the cuts would take place, though about 2,000 people have already lost their jobs as a result of the combination.Chairman Lee Raymond said cost savings from the merger would be $3.8 billion instead of the $2.8 billion previously estimated.

As a result, the combined company will earn about $1 billion more in net income next year and $2.5 billion by 2003, Raymond said.

"The synergy benefits of the merger are expected to be greater than previously forecasted and are likely to be realised sooner," Raymond said.

Raymond made the comments Wednesday at a meeting here with Wall Street analysts who have widely expected the job cuts and savings estimates to be increased.In early afternoon trading on the New York Stock Exchange, Exxon Mobil shares were up $1.62 1/2 at $84.

Raymond and other officials detailed what they called the most exhaustive regulatory review ever for a merger - the $81 billion deal required approval from US federal and state officials and regulators in Europe and Canada.

The Federal Trade Commission required Exxon Mobil to sell about 2,400 service stations, a refinery and other assets, but Raymond minimised the impact of those moves.

The divestitures covered only 2 percent to 3 percent of Exxon Mobil's assets and between 4 percent and 5 percent of its sales, he said. The combined company retained all of its oil and gas reserves and producing assets.

He said the asset sales will reduce next year's earnings by $1.2 billion, but said earnings will rise by $1.5 billion in the year 2001 because of restructuring.

Despite the required sale of service stations Exxon Mobil will retain more than 45,000 stations worldwide. In the US, Exxon Mobil will sell 90 percent of its gasoline in states where it controls at least 10 percent of the market.

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