Exxon-Pioneer deal approved by US FTC, Pioneer executive excluded from board By Reuters

By Sabrina Valle and Liz Hampton

WASHINGTON (Reuters) – U.S. regulators on Thursday gave the green light to Exxon Mobile (NYSE:) purchases for 60,000 million dollars of Pioneering natural resources (NYSE:), but excluded the former CEO of Pioneer from Exxon's board of directors over accusations that he tried to collude with OPEC to raise oil prices.

Former Pioneer CEO Scott Sheffield coordinated efforts with U.S. shale oil producers to limit their production and increase energy prices, the U.S. Federal Trade Commission alleged.

Sheffield, widely considered the dean of the U.S. shale business due to his long tenure and blunt comments on industry production and spending, used his position “to align oil production across the Permian Basin in West Texas and New Mexico with OPEC+,” the FTC stated. .

The agreement frees Exxon to formally close the deal on Friday and allows it to focus on a dispute with its rival. Chevron (NYSE:) regarding its proposed acquisition of Hess Corp. (NYSE:), which owns a 30% stake in a prized Exxon joint venture in Guyana.

Exxon said it plans to close its purchase of Pioneer on Friday. Its shares gained as much as 1% to $117.26 in morning trading.

“Sir, Sheffield's past conduct makes it abundantly clear that he should not be anywhere near Exxon's boardroom,” said Kyle Mach, deputy director of the FTC's Bureau of Competition.

When asked if the FTC was referring allegations of collusion to the U.S. Department of Justice for further investigation, an FTC spokesperson simply said: “The FTC has a responsibility to refer potentially criminal conduct and takes that responsibility.” obligation very seriously.”

The Justice Department did not immediately respond to a request for comment.

The green light for Exxon is a positive sign for other energy merger reviews. The FTC has separately requested additional information on multibillion-dollar energy deals involving Chevron, Diamondback (NASDAQ Energy, Occidental Petroleum (NYSE ) and Chesapeake Energy (NYSE ).

Pioneer said it was “surprised” by the FTC complaint but wanted to close the deal. Its former chief executive's comments about the industry were “matters of public interest” and should not disqualify him from a board position, a spokesman said.

Exxon said it will not add Sheffield to its board. It learned of the collusion allegations during the antitrust review, but the FTC's lengthy investigation “did not raise concerns with our business practices,” a spokesperson said.

The FTC says collaboration between OPEC and U.S. companies would result in lower production growth rates than would normally be seen in a competitive market, driving up energy prices.

This was seen, for example, following the Russian invasion of Ukraine in 2022, which caused increases in oil prices, and President Biden authorized the release of 180 million barrels of crude oil from the US Strategic Petroleum Reserve to stabilize the market. Republicans accused him of dangerously depleting oil reserves.

The acquisition will make Exxon the largest oil and gas producer in the major US shale basin, doubling its production there to more than 1.3 million barrels of oil equivalent per day (boepd).

SHALE – OPEC TALKS

Sheffield was among shale executives who attended nearly annual dinners with OPEC members at an energy conference in Houston. The private meetings began late last decade with invitations to Sheffield and elsewhere by the late OPEC secretary-general Mohammed Barkindo.

OPEC had failed to stop US shale's rapid market share gains, and its members were surprised at how quickly US companies were able to recover after a bruising oil price war that spanned from 2014 to 2016. The war ended when OPEC stopped its production and prices recovered. .

Attendees at the CERAWeek energy conference dinner at times included shale executives John Hess, Vicki Hollub, Rick Muncrief and Domenic Dell (NYSE:)'Osso. Generally, they would discuss the oil market, spare capacity, oil demand and shareholder return expectations, some attendees said.

Sheffield told Reuters during an interview in March 2023 about OPEC's de facto leader. Saudi Arabia (TADAWUL:) In developing its national shale reserves, his company twice hosted officials and explained the company's operations and business practices.

Pioneer said Thursday that Sheffield had “neither the intent nor the effect of its communications to circumvent the laws and principles that protect competition in the marketplace.”