Chevron names refinery specialist as CEO
Chevron, the nation’s No. 2 oil company, announced a new leader Thursday in a move signaling confidence in its ability to thrive in an era of lower oil prices.
Michael Wirth, a career employee with long experience in pipelines and refineries, will succeed John Watson as chairman and CEO in February, Chevron said. Watson has led the San Ramon company since 2010.
The choice was long expected and appears to mark continuity rather than a fundamental change in direction. Chevron has fared better than most oil companies in the face of slumping prices over the past three years.
Wirth, 56, has been with Chevron since 1982, and has served as vice chairman since February. He headed the refinery and chemical business for nearly a decade, and served as an executive vice president working closely with exploration and production managers worldwide.
“We’re going through a transition,
but I would say it’s a transition that has been planned for some time,” Watson said in an interview. “I hope you will see a lot of consistency in many ways, but I’m sure he’ll have his own thoughts.”
In recent years under Watson’s and Wirth’s leadership, Chevron has shifted gears from large capital-intensive projects to an aggressive drilling campaign in the West Texas Permian Basin shale fields. Its stock price plummeted by more than 40 percent from 2014 to 2015, but the shares have regained most of their value over the last two years. Its shares were slightly higher on Thursday after the leadership announcement.
The principal blemish on Watson’s time as CEO was billions of dollars in cost overruns on two liquefied gas projects in Australia.
Wirth’s rise continues the ascendancy of refinery specialists heading many of the largest integrated oil companies, including Exxon Mobil, Royal Dutch Shell and Total of France. With low oil and gas prices, chemicals and refining have become important profit centers that have served as ballasts for companies that were otherwise losing money.
Wirth has been credited with wringing costs out of Chevron’s bloated refinery business, and making it one of the most profitable refinery divisions in the industry.
“He has a very good track record,” said Fadel Gheit, a senior oil industry analyst at Oppenheimer & Co. Referring to the business of refining, processing, marketing and distributing, he added, “He basically turned around their downstream, which was pretty miserable for Chevron for a large number of years.” Gheit described the succession as “a layup.”
Watson, who will turn 61 next month, said when he beame CEO that he would stay seven to 10 years but would not leave until he found the right successor. By late last year, he said, he decided that Wirth was ready.
Watson will leave the board when he retires on Feb. 1, after 37 years with the company.