US regulator approves ExxonMobil-Pioneer deal, bans Pioneer CEO from board

The US Federal Trade Commission (FTC) on May 2 banned Pioneer Natural Resources chief executive officer Scott Sheffield from ExxonMobil Corp.’s board as a condition of its approval of the $64.5-billion merger deal.

The merger, announced last year, more than doubles ExxonMobil's Permian basin production, and is the operator's largest since buying Mobil decades ago (OGJ Online, Dec. 6, 1999). The deal gives the combine 1.3 MMboe/d of Permian basin production, with 2027 output growing to an estimated 2 MMboe/d (OGJ Online, Oct. 11, 2023).

In its order, the FTC said Sheffield could not advise ExxonMobil nor serve on its board to “prevent Sheffield from engaging in collusive activity that would potentially raise crude oil prices, leading American consumers and businesses to pay higher prices for gasoline, diesel fuel, heating oil and jet fuel.”

The FTC alleged that Sheffield attempted to collude with OPEC and OPEC+ representatives to constrain oil and gas production to inflate profits for his company.

“Mr. Sheffield’s past conduct makes it crystal clear that he should be nowhere near Exxon’s boardroom,” said Kyle Mach, Deputy Director of the FTC’s Bureau of Competition.

The FTC’s complaint outlined actions that Sheffield took – through public statements, text messages, in-person meetings, WhatsApp conversations and other communications – “to align oil production across the Permian basin in West Texas and New Mexico with OPEC+.”

While at Pioneer, Sheffield exchanged “hundreds of text messages with OPEC representatives and officials” discussing crude oil market dynamics, pricing and output, the FTC said.

The antitrust regulator claimed the chief executive was working to coordinate with the Texas Railroad Commission to cap Texas production. The FTC noted that Sheffield said: “If Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi and Russia will follow. That was our plan.”

The commission could pursue a criminal referral against Sheffield. “The FTC has a responsibility to refer potentially criminal behavior and takes that obligation very seriously,” said FTC spokesman Douglas Farrar.

The FTC said Sheffield's ban also relates to his board seat on The Williams Companies Inc., which operates natural gas pipelines, gathering systems, and other businesses that “directly overlap” with ExxonMobil’s operations. “Sheffield’s appointment would facilitate a board interlock among competitors,” the commission said.

As a condition of its approval, the regulator also required ExxonMobil to agree to additional attestations and reporting obligations for 10 years and barred the company from appointing any other Pioneer employee or director to the Exxon board for 5 years.