U.S. regulators granted approval on Thursday for Exxon Mobil’s $60 billion acquisition of Pioneer Natural Resources, Reuters news report said.
However, the approval came with a significant caveat – the former CEO of Pioneer, Scott Sheffield, was barred from joining Exxon’s board amidst allegations of attempting to collude with OPEC to manipulate oil prices.
The Federal Trade Commission (FTC) accused Sheffield of orchestrating efforts with U.S. shale oil producers to limit output, thereby inflating energy prices. Sheffield’s purported aim was to synchronize oil production across the Permian Basin in West Texas and New Mexico with OPEC+, according to the FTC.
Kyle Mach, deputy director of the FTC’s Bureau of Competition, emphasized the unsuitability of Sheffield for Exxon’s board, citing his past conduct. However, Pioneer refuted the allegations, asserting that Sheffield’s communications aimed neither to circumvent market competition laws nor principles.
While the FTC consented to the deal, it attracted criticism from lawmakers, including Sen. Sheldon Whitehouse and U.S. Senate Majority Leader Chuck Schumer, who voiced concerns over industry consolidation and its adverse effects on consumers and the environment.
Exxon, planning to finalize the acquisition on Friday, affirmed its decision not to include Sheffield on its board. The company stated that while it became aware of the collusion allegations during the antitrust review, the FTC investigation did not raise concerns about its business practices.
The acquisition will cement Exxon’s position as the largest oil producer in the Permian Basin, with over 1.3 million barrels of oil equivalent per day. The deal’s approval frees Exxon to concentrate on a dispute with Chevron over its proposed acquisition of Hess Corp, which owns a significant stake in a joint venture in Guyana.
Sheffield retired as Pioneer’s CEO on December 31 but retained his seat on the board, slated to transition to Exxon’s board upon the deal’s closure. Despite the FTC’s complaint, Pioneer expressed surprise and reaffirmed its commitment to the acquisition, arguing that Sheffield’s public commentary on the industry should not disqualify him from a board position.
The FTC’s allegations shed light on Sheffield’s participation in discussions with OPEC members at private dinners, where industry dynamics, market trends, and production strategies were reportedly deliberated. Attendees included prominent shale executives, and Sheffield’s advocacy for production cuts aligned with then-President Donald Trump’s stance and raised concerns about anti-competitive behavior.