Sparked by the retirement of CEO Ken Derr, Chevron Corp. followed up last week with a list of upper management job changes. The San Francisco, CA-based energy giant’s board of directors selected its current vice chairman and director, Dave O’Reilly, to succeed Derr as CEO effective Jan. 1, 2000.

Derr, 63, led Chevron for 11 years before announcing his retirement last week. The company announcement said during most of his tenure, Chevron led its oil competitors in total shareholder return. It was a period when Chevron’s market capitalization increased from $15 billion to about $60 billion and its annual cost structure was reduced by about $2.4 billion. Derr said his retirement would give him more time with his family after nearly four decades at Chevron. Mike Libby, a Chevron spokesman, confirmed Derr had undergone successful surgery for prostate cancer last year, saying that was not a factor in his decision to retire.

O’Reilly has worked in varying jobs at Chevron since 1968. He was selected to be vice chairman in 1998. In that capacity he was responsible for Chevron’s worldwide exploration and production activities. He has also been leading the successful effort to reduce the company’s cost structure by $500 million, the company said.

The move is occurring at an important time for Chevron, which has become a constant presence in teh rumor mill since other energy giants, such as British Petroleum, Amoco, Arco, Exxon and Mobil, have been involved in recent mergers. So far this year, Chevron has been rumored to be a party to two mergers: one with Texaco and another with Phillips Petroleum (see NGI, June 7; Sept. 27). In both cases, the other company has rejected Chevron as a merger partner.

For the most part, analysts approved of the announcement. “I think O’Reilly is the best man for the job and he has been the successor for quite a while,” said John Hervey, a Donaldson Lufkin and Jenrette Securities analyst. “It was a well thought out move, and O’Reilly will pretty much stay the same course. Derr was not the obstacle in the failed merger attempts, and O’Reilly should be no different.”

The promotion of O’Reilly caused a shuffling in Chevron’s upper management. Dick Matzke, a member of the board of directors and president of Chevron Overseas Petroleum Inc. (COPI), will succeed O’Reilly as vice chairman. He will be responsible for Chevron’s worldwide upstream activities, with a primary emphasis on formulating and implementing the growth component of the company’s exploration and production strategies.

Jim Sullivan will continue as vice chairman responsible for worldwide refining, marketing and chemical operations. Peter Robertson, will take over COPI once Matzke moves on. Robertson’s current job as the president of Chevron North America Exploration and Production will be handed to George Kirkland, current chairman and managing director of Chevron Nigeria Ltd.

John Norris

©Copyright 1999 Intelligence Press, Inc. All rights reserved.The preceding news report may not be republished or redistributed in wholeor in part without prior written consent of Intelligence Press, Inc.