Line of succession: ConocoPhillips overhauls its executive ranks

ConocoPhillips announced a sweeping overhaul of its executive suite Wednesday, establishing a cabinet of possible successors to CEO James Mulva, who is expected to retire within two years.

The executive changes, which the Houston-based oil major said were effective immediately, include the departure of the president and chief operating officer, John Carrig, and the chief financial officer, Sigmund Cornelius, as well as two senior level vice presidents.

Former executives from Exxon Mobil Corp. and Chevron Phillips Chemical have joined the team as senior vice presidents, and two existing senior vice presidents will take on new roles, the company said. The position of chief operating officer has been eliminated.

ConocoPhillips spokeswoman Cathy Cram said the changes are part of a plan to provide for a smooth transition in anticipation of Mulva’s retirement.

“You can assume the next leader will come from this team,” Cram said.

Mulva, 64, has served as ConocoPhillips’ chairman and CEO since 2008. He was chairman and CEO of Phillips Petroleum when it merged with Conoco in 2002, and he became CEO of the merged company.

Mulva, a Wisconsin native, received two degrees from the University of Texas and started his career at Phillips in 1973.

While the extent of the shake-up is significant, most analysts said ConocoPhillips had telegraphed the restructuring amid a two-year plan to improve its financial performance.

The nation’s third-largest oil company behind Exxon Mobil Corp. and Chevron Corp. had annualized revenue of $181 billion and assets of $151 billion as of June 30.

Downsizing program

Last fall, the company announced an ambitious downsizing program, which included selling $10 billion in assets, paying down debt, repurchasing stock and curbing capital spending by some $11 billion.

The plan also involved sharpening ConocoPhillips’ focus on its highly profitable exploration and production activities, while reducing its exposure to the volatile refining sector.

Mulva’s successor

“They’ve been taking a lot of steps to position the company as well as they can for Mulva’s successor,” said Phil Weiss, an energy analyst with Argus Research who said he was pleased the company had lined up management with strong operations experience.

“One of the biggest issues that many people believe Conoco faces is a somewhat lackluster production portfolio, as compared to other large integrated companies,” he said. “I was of the opinion that to have someone with an operating background would be better than somebody that doesn’t.”

Blake Fernandez, an analyst who covers the company for New Orleans-based Howard Weil, said the company had indicated it would begin looking for internal and external candidates as Mulva neared retirement.

“This is probably just a move to begin grooming the next phase of management and determine who the best candidate is going to be,” Fernandez said.

The management team reporting to Mulva now consists of:

Alan Hirshberg, senior vice president, planning & strategy; formerly vice president, worldwide deep-water and Africa projects, for Exxon Mobil.

Greg Garland, senior vice president, exploration and production-Americas; formerly president and CEO of Chevron Phillips Chemical Co.

Jeff Sheets, senior vice president, finance and chief financial officer; formerly senior vice president, commercial and planning and strategy.

Willie C.W. Chiang, senior vice president, refining, marketing & transportation, adding responsibility for the company’s commercial business activities.

Ryan Lance, senior vice president, exploration and production, international, and Larry Archibald, senior vice president, exploration and business development, continuing in those roles.

Leaving the company are:

John Carrig, president and chief operating officer, retiring at the end of February and continuing until then as president to assist with the executive team transition.

Sigmund Cornelius, senior vice president, finance and chief financial officer; Stephen Brand, senior vice president, technology; and Kevin Meyers, senior vice president, exploration and production-Americas, all retiring at year’s end.