Exxon Mobil's $65 billion purchase of Pioneer Natural Resources got the green light from the Federal Trade Commission (FTC). Still, the Pioneer's ex-CEO is barred from joining the board after being accused of working with OPEC to hike prices.

FTC's Conspiracy Complaint Against Pioneer's Founder and OPEC

The FTC lodged a complaint claiming that Scott Sheffield, founder of Pioneer in 1997, tried to conspire with OPEC representatives to decrease crude oil and gas production, aiming to boost pump prices and Pioneer's profits. Sheffield, who retired in 2016, resumed his role as president and CEO in 2019, served as CEO from 2021 to 2023, and sits on the board since January 1, serving as a special adviser to the company's chief executive.

The FTC alleges that Sheffield attempted to coordinate oil production in the Permian Basin with OPEC+ through various means such as public statements, text messages, in-person meetings, WhatsApp conversations, and other communications. As part of its proposed resolution, the FTC suggested a consent order prohibiting Exxon from appointing any Pioneer employee to its board, with a few exceptions.

According to sources familiar with the situation who spoke to The Wall Street Journal, the federal regulator has opted to forward the allegations to the Justice Department for possible criminal investigation. FTC spokesman Doug Farrar said that the FTC bears the responsibility of referring potentially criminal behavior and approaches this obligation seriously.

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Exxon's Adherence to The Ruling

In response, Exxon said on Thursday that it would keep Sheffield off its board as it anticipates closing the deal with Pioneer on Friday.

The FTC claimed that Sheffield engaged in repeated private discussions with top OPEC officials, assuring them that Pioneer and its competitors in the Permian Basin were collaborating to maintain artificially low oil output, which was not a one-off event but a sustained and long-running strategy to coordinate output reductions, according to FTC Chair Lina Khan and the other commissioners. 

Pioneer's Counteracting The Allegations

Dallas-based Pioneer expressed disagreement with the allegations but affirmed its commitment to not obstruct the merger's closure. The merger was initially announced in October 2023, and neither the company nor Sheffield is taking any measures to prevent it from finalizing.

Pioneer countered the allegations in a statement on Thursday, asserting that the FTC's complaint indicates a fundamental misunderstanding of the US and global oil markets and that Sheffield never aimed to circumvent laws and principles safeguarding market competition.

Senate Majority Leader Chuck Schumer expressed disappointment at seeing the FTC repeat the same mistake they made 25 years ago when he had previously warned about the Exxon and Mobil merger in 1999. Schumer, along with 22 other Democratic senators, had urged the FTC to investigate both the deal and a separate merger between Chevron and Hess, saying it could result in higher prices, diminish competition, and impose additional financial burdens on families at the pump.

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