(Bloomberg) — The U.S. Federal Trade Commission declined to challenge Exxon Mobil Corp.’s purchase of Pioneer Natural Resources Co. for $60 billion, but said Scott Sheffield, co-founder of Pioneer, should not sit on the supermajor’s board.
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The move, announced in a filing Thursday, will allay fears that the Biden administration is seeking to block a series of oil and gas mega-mergers, but it came at a steep price. The antitrust agency says it found evidence that Sheffield sought to communicate with OPEC and its U.S. peers about oil prices and production, which could raise costs for consumers.
“Mr. Sheffield’s past conduct makes it clear that he should not be anywhere near Exxon’s boardroom. American consumers should not pay unfair prices at the pump just to pad a man’s wallet. business executive,” Kyle Mach, deputy director of the FTC’s Bureau of Competition, said in a statement.
The FTC says its order will prevent Sheffield from engaging in “collusive activities” that could drive up crude prices and force U.S. consumers to pay higher fuel prices. The agency says he exchanged hundreds of text messages with OPEC representatives and officials about the oil market.
Exxon shares rose 0.4% as of 11:01 a.m. in New York. Pioneer shares rose 1.1%.
The proposed consent order also prohibits Sheffield from serving in an advisory role at Exxon and prohibits the oil giant from appointing a Pioneer employee or director to its board of directors for a period of five years.
Exxon learned of the FTC’s allegations about Sheffield from the agency and said in a statement that they were “completely inconsistent with the way we conduct our business.” Exxon has agreed to the terms of the consent agreement and plans to complete the acquisition on May 3.
Pioneer said it was surprised by the FTC’s allegations and disagreed with the agency’s findings.
“Mr. Sheffield and Pioneer believe that the FTC’s complaint reflects a fundamental misunderstanding of the U.S. and global oil markets and a misinterpretation of the nature and intent of Mr. Sheffield’s actions,” the company said in a statement. .
However, Pioneer and Sheffield are “taking no action to prevent the merger” according to the statement.
Selling his company to Exxon and gaining a seat on the board would have been the cornerstone of the career of Sheffield, who led Pioneer for more than 20 years and was an early proponent of fracking in the basin Permian. Once the merger is finalized, Exxon will be by far the largest oil and gas producer in the Permian Basin of Texas and New Mexico, which now pumps more oil than OPEC member Iraq.
Chevron Corp., Occidental Petroleum Corp. and Chesapeake Energy Corp. are among the companies with large ongoing buyout transactions that are under intense scrutiny before the FTC.
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