Exxon-Pioneer deal greenlit by US FTC, Pioneer exec barred from board By Reuters

By Sabrina Valle and Liz Hampton

WASHINGTON (Reuters) -U.S. regulators on Thursday gave the go-ahead to Exxon Mobil (NYSE:)’s $60 billion buy of Pioneer Pure Assets (NYSE:), however barred Pioneer’s former CEO from Exxon’s board on allegations he tried to collude with OPEC to lift oil costs.

Former Pioneer CEO Scott Sheffield coordinated efforts with U.S. shale oil producers to constrain their output manufacturing and lift power costs, the U.S. Federal Commerce Fee alleged.

Sheffield, broadly thought of the dean of the U.S. shale enterprise due to his lengthy tenure and blunt feedback on trade output and spending, used his place “to align oil manufacturing throughout the Permian Basin in West Texas and New Mexico with OPEC+,” the FTC claimed.

The settlement frees Exxon to formally shut the deal on Friday and permits it to concentrate on a dispute with rival Chevron (NYSE:) over its proposed acquisition of Hess Corp (NYSE:), which owns a 30% stake in a prized Exxon three way partnership in Guyana.

Exxon stated it plans to shut the Pioneer buy on Friday. Its shares gained as a lot as 1%, to $117.26, in morning buying and selling.

“Mr. Sheffield’s previous conduct makes it crystal clear that he must be nowhere close to Exxon’s boardroom,” stated Kyle Mach, Deputy Director of the FTC’s Bureau of Competitors.

When requested whether or not the FTC was referring the collusion allegations to the U.S. Division of Justice for additional investigation, a FTC spokesperson stated solely: “The FTC has a accountability to refer probably felony conduct and takes that obligation very severely.”

The DOJ didn’t instantly reply to a request for remark.

The inexperienced mild for Exxon is a optimistic signal for a number of different power merger evaluations. The FTC has individually requested extra data on billion-dollar power offers involving Chevron, Diamondback (NASDAQ:) Power, Occidental Petroleum (NYSE:), and Chesapeake Power (NYSE:).

Pioneer stated it was “stunned” by the FTC’s grievance however needed the deal to shut. Its former CEO’s feedback on the trade have been “issues of public curiosity” and shouldn’t disqualify him from a board seat, a spokesperson stated.

Exxon stated it is not going to add Sheffield to its board. It discovered of the collusion allegations through the antitrust assessment, however the prolonged FTC investigation “raised no considerations with our enterprise practices,” a spokesperson stated.

FTC says the collaboration between OPEC and American companies would result in manufacturing progress charges under what would sometimes be noticed in a aggressive market, sending power costs up.

That was noticed, for example, following Russia’s invasion of Ukraine in 2022, which resulted in oil value spikes, and President Biden approved the discharge of 180 million barrels of crude from the U.S. Strategic Petroleum Reserve to stabilize the market. Republicans accused him of dangerously depleting the oil stockpile.

The acquisition will make Exxon the most important oil and gasoline producer within the high U.S. shale basin, doubling its output there to greater than 1.3 million barrels of oil equal per day (boepd).

SHALE – OPEC TALKS

Sheffield was among the many shale executives who attended near-annual dinners with OPEC members at a Houston power convention. The non-public get-togethers started late final decade with invites to Sheffield and others by OPEC’s late Secretary Normal Mohammed Barkindo.

OPEC had did not halt U.S. shale’s speedy market share good points, and its members have been stunned at how rapidly U.S. firms have been in a position to get better after a punishing oil-price struggle that spanned 2014 by means of 2016. The struggle ended when OPEC curbed its manufacturing and costs rebounded.

CERAWeek power convention dinner attendees at instances included shale executives John Hess, Vicki Hollub, Rick Muncrief, and Domenic Dell (NYSE:)’Osso. They’d typically focus on the oil market, spare capability, oil demand and shareholders’ expectation for returns, some attendees have stated.

Sheffield informed Reuters throughout a March 2023 interview on OPEC de facto chief Saudi Aramco (TADAWUL:)’s curiosity in growing its home shale reserves that his firm twice hosted officers and defined the corporate’s operations and enterprise practices.

Pioneer stated on Thursday Sheffield had “neither the intent nor an impact of his communications to avoid the legal guidelines and rules defending market competitors.”