ExxonMobil's $60B Pioneer Dealpoised, billionApproved with Ex-CEO Ban

The FTC has approved ExxonMobil's $60 billion acquisition of Pioneer Natural Resources, but with a condition: Pioneer's former CEO Scott Sheffield will be barred from serving on ExxonMobil's board due to alleged collusive activity with OPEC+.

author-image
Rafia Tasleem
New Update
ExxonMobil's $60B Pioneer Dealpoised, billionApproved with Ex-CEO Ban

ExxonMobil's $60B Pioneer Dealpoised, billionApproved with Ex-CEO Ban

The Federal Trade Commission (FTC) has approved ExxonMobil's $60 billion acquisition of Pioneer Natural Resources, one of themajor, key, executivedeals in the history of the oil industry. However, the approval comes with a significant condition: Pioneer's former CEO, Scott Sheffield, will be barred from serving on ExxonMobil's board of directors on account of allegations of collusive activity with OPEC+.

Why this matters: This deal has far-reaching implications for the global oil market and could impact fuel prices for American consumers. The FTC's scrutiny of corporate mergers and alleged collusive activity with OPEC+ also sets a precedent for antitrust enforcement in the energy sector.

The blockbuster deal, announced in October 2023, is set to close on May 3, 2024. It represents a us, chief bet by ExxonMobil on the prolific Permian Basin, which spans parts of Texas and New Mexico and is the largest oil field in the United States. The acquisition is expected to more than double ExxonMobil's production in the region.

The FTC's approval comes with a stern warning about Sheffield's alleged conduct. The agency claims that Sheffield exchanged hundreds of text messages with OPEC representatives, discussing oil output, pricing, and market dynamics. The FTC alleges that these communications amount to collusive activity that could have raised prices for American consumers.

In one text message cited by the FTC, Sheffield wrote, "If Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi and Russia will follow. That was our plan." The FTC argues that Sheffield's installation on the ExxonMobil board would have allowed him to influence the company's decisions, potentially harming consumers.

Kyle Mach, the FTC's deputy director of competition, did not mince words in his assessment of Sheffield's actions. "Mr. Sheffield's past conduct makes it crystal clear that he should be nowhere near Exxon's boardroom," Mach stated. "American consumers shouldn't pay unfair prices at the pump simply to pad a corporate executive's pocketbook."

Pioneer Natural Resources has pushed back against the FTC's allegations. The company argues that the complaint reflects a "fundamental misunderstanding of the US and global oil markets" and that Sheffield's actions were motivated by a desire to strengthen the position of domestic energy producers and enhance security.

The ExxonMobil-Pioneer deal is just one of several major mergers in the Permian Basin that have drawn scrutiny from antitrust regulators. Over the past year, deals worth more than $200 billion have been announced in the region, including mergers involving Diamondback Energy, Hess Corp, and Williams Cos. The FTC has opened in-depth investigations into all of these transactions, focusing on how they will affect competition among companies in the industry.

The FTC's condition to bar Sheffield from ExxonMobil's board is an unusual way to resolve government concerns that a merger is anti-competitive. It reflects the agency's increased scrutiny of corporate mergers under chair Lina Khan, who has vowed to take a tougher stance on antitrust enforcement.

The allegations against Sheffield also come at a politically sensitive time, with Republicans accusing President Joe Biden's energy policies of driving up fuel costs for American motorists. Any solid evidence of energy price fixing could be politically explosive and undermine those claims.

The ExxonMobil-Pioneer deal moves forward, the FTC has set a 30-day public comment period before deciding whether to modify, withdraw, or finalize the proposed order barring Sheffield from ExxonMobil's board. For now, the $60 billion megadeal underscores the enduring importance of the Permian Basin and the high stakes involved in the competition for its vast oil reserves.

Key Takeaways

  • FTC approves ExxonMobil's $60 billion acquisition of Pioneer Natural Resources.
  • Pioneer's former CEO Scott Sheffield barred from ExxonMobil's board over OPEC+ collusion allegations.
  • Deal expected to more than double ExxonMobil's production in the Permian Basin.
  • FTC alleges Sheffield exchanged texts with OPEC reps, discussing oil output and pricing.
  • Deal sets precedent for antitrust enforcement in the energy sector.