Sept 18 (Reuters) - Occidental Petroleum Corp may still be headquartered in Los Angeles, as it has been since being founded nearly a century ago, but its center of gravity is shifting to Houston, capital of the U.S. energy industry.
While the fourth-largest U.S. oil company would not disclose the number of employees based in either city, a LinkedIn search reveals 286 people who list Oxy as their current employer in Los Angeles, compared with 1,491 in Houston.
Occidental’s Texas presence is growing larger still. A search of 287 U.S. jobs listed by the company on www.oxy.com found 65 in Houston - ranging from senior engineers to software administrators. Most of the rest were at field operations in California and elsewhere in Texas.
As for Los Angeles, there was a single opening last month, for a security officer, and now there is one for an accountant.
The trend suggests just how far the California corporate stalwart has strayed from its roots in order to grab the deep oil-industry talent available in Houston. It also highlights a shift in jobs growth generally in Texas over the Golden State.
“The geologists, the geophysicists, the petroleum engineers - they tend to concentrate in one place. If you’re looking for those skills and want to compete for those skills, you have to go to that spot,” said Robert Gilmer, director of the Institute for Regional Forecasting at the University of Houston’s Bauer College of Business. “If you want people who have film and movie skills, you go to Hollywood.”
So the head of Oxy’s Americas unit, Bill Albrecht, has worked out of Houston since last year, and its recently appointed general counsel, Marcia Backus, will be “primarily based in Houston,” an Oxy spokeswoman said.
With U.S. energy companies ramping up their hiring to tap the country’s fast-growing new oil and gas resources, ensuring access to skills clearly outweighs a firm’s legacy in any given location. Oxy is just one of several energy companies expanding their presence in Houston, helping fuel an office property boom not seen in years.
Exxon Mobil Corp and Phillips 66 are building new office developments in Houston. And California’s largest and oldest energy company, Chevron Corp, made headlines late last year with plans to relocate 850 jobs to Houston while it builds a brand-new tower to complement its already substantial presence there.
Other energy-focused companies have moved headquarters out of California entirely, bound for Texas. Fluor Corp, an engineering company now based outside Dallas, had called California’s Orange County home until 2006. Calpine Corp , now a Houston-based power company, abandoned San Jose three years later.
“We do not have any current plans to move our corporate headquarters out of Los Angeles,” the Oxy spokeswoman said.
Yet when Oxy extended its lease in Houston in March, a leasing executive for the owner of the complex said in a statement that its ability to “provide space for Occidental to grow over the years and our flexibility to accommodate future growth were important considerations for the lease renewal.”
Allen Good, who follows Oxy for Morningstar, an independent research outfit, said the deeper talent pool in Houston is not the only reason behind the shift of employees - there are also factors like lower living costs and income taxes. The average price of a home in Houston, for one, is less than half the Los Angeles average, and any such savings are attractive both to workers and the people who have to pay their wages.
Other data indicates that many Californians, and not just oil industry employees, have already made the move. A Tax Foundation analysis of personal income moving in and out of states found Texas was the most popular destination for California income over the period from 1993 to 2010.
Occidental is still ranked as the third-most-valuable company in Southern California, and the name of Armand Hammer, who oversaw its global expansion after a big California discovery in 1961, adorns a popular West Los Angeles art museum.
Even so, the company is busy shoring up local relations in Houston. Last month the Houston Astros baseball team hosted more than 2,000 Occidental employees and family members at Community Leader Occidental Night to celebrate a new partnership with the Astros Foundation to refurbish Houston playing fields.
Occidental, whose chief executive officer is a Vietnam veteran, is even sponsoring a salute to the military at every Astros home game this year.
CEO Steve Chazen has his own roots in Texas as a University of Houston alumnus who, according to public records, also owns a condominium in Galveston on the Texas coast.
Oxy’s California connection may soon disappear in any case. The company is exploring a potential spinout of its California operations into a separate company - which would leave its U.S. focus largely in the Permian basin that straddles New Mexico and Texas.
California represents a third of Oxy’s U.S. oil and gas production, while the Permian accounts for about 45 percent.
Morningstar’s Good expects more clarity by the end of this year on plans for a California spinoff and any deal for the company’s Middle East operations, which should both at least be set in motion before Chazen steps down at the end of 2014.
Oxy is looking to sell a minority stake in holdings that range from Libya to Iraq to Yemen and could be worth as much as $20 billion, according to two sources familiar with the matter.
For a Breakingviews column on the sale: