Exxon's $60B Deal Gets Nod, Former CEO Barred Over OPEC Collusion Claims

Exxon Mobil's $60 billion acquisition of Pioneer Natural Resources has received FTC clearance, but with a condition: former Pioneer CEO Scott Sheffield is barred from joining Exxon's board. The FTC alleges Sheffield colluded with OPEC to raise oil prices, which Pioneer disputes.

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Exxon's $60Bdeal, gets, formerCEO Barred Over OPEC Collusion Claims

Exxon's $60Bdeal, gets, formerCEO Barred Over OPEC Collusion Claims

Exxon Mobil Corp.'s $60 billion acquisition of Pioneer Natural Resources has received clearance from the Federal Trade Commission (FTC) but with a significant condition: former Pioneer CEO Scott Sheffield is barred from joining the new company's board of directors.

Why this matters: This has significant implications for the oil and gas industry, as it raises concerns about consolidation and anti-competitive behavior, which could ultimately affect consumer prices and the global energy market. The FTC's scrutiny of the deal also highlights the need for regulators to closely monitor mergers and acquisitions to ensure fair competition and protect consumer interests.

According to the FTC, Sheffield engaged in anti-competitive behavior through various means of communication while at Pioneer. "Through public statements, text messages, in-person meetings, WhatsApp conversations, and other communications while at Pioneer, Sheffield sought to align oil production across the Permian Basin in West Texas and New Mexico with OPEC+," the FTC stated.

The FTC has proposed a consent order that prohibits Exxon from appointing any Pioneer employee, with a few exceptions, to its board. Pioneer Natural Resources, however, has disagreed with the allegations, stating that the FTC's complaint reflects a "fundamental misunderstanding of the U.S. and global markets and misreads the nature and intent of Mr. Sheffield's actions." Despite this, the company has chosen not to impede the closing of the merger, which was announced in October 2023.

Pioneer will significantly expand Exxon's presence in the Permian Basin, a massive oilfield that straddles the border between Texas and New Mexico. The combined company will have nearly contiguous fields, allowing it to reduce costs and increase efficiency. Pioneer's more than 850,000 net acres in the Midland Basin will be combined with Exxon's 570,000 net acres in the Delaware and Midland Basins.

The allegations against Sheffield have drawn criticism from lawmakers and industry experts. Senate Majority Leader Chuck Schumer, D-N.Y., expressed his disappointment, stating, "Disappointing that FTC is making the same mistake they made 25 years ago when I warned about the Exxon and Mobil merger in 1999." The deal has also raised concerns about the increasing consolidation in the gas industry and its potential impact on competition and consumer prices.

Scott Sheffield, who founded Pioneer Natural Resources in 1997, served from 2021 to 2023 in the capacity of CEO and currently holds the position of special adviser to the chief executive. He has been a prominent figure in the U.S. oil industry, known for his early exploration of shale deposits in Texas and his efforts to end the ban on exports during the Obama administration.

The Exxon-Pioneer deal is one of several large mergers and acquisitions in the oil and gas industry in recent years, as companies seek to consolidate operations and increase their market share. The Permian Basin has been a particular focus for many companies, given its vast reserves and relatively low production costs.

Key Takeaways

  • Exxon Mobil's $60B acquisition of Pioneer Natural Resources gets FTC clearance with conditions.
  • Former Pioneer CEO Scott Sheffield barred from joining Exxon's board due to alleged OPEC collusion.
  • Deal raises concerns about consolidation, anti-competitive behavior, and consumer prices.
  • Exxon-Pioneer merger will expand Exxon's presence in the Permian Basin, increasing efficiency.
  • Regulators and lawmakers will closely monitor oil and gas industry mergers to ensure fair competition.