May 3, 2024 - Energy & Environment

Exxon deal approval may signal how FTC sees other oil mergers

Illustration of the ExxonMobil logo with eyes looking side to side in each O

Illustration: Natalie Peeples/Axios

A big thing to watch now that the FTC placed a major condition on the Exxon-Pioneer deal: whether it reveals anything about how the regulators see other oil mergers.

State of play: The FTC forced Exxon to bar former Pioneer CEO Scott Sheffield from the board, alleging "collusive" messages with OPEC+ members years ago aimed at limiting production.

Why it matters: While allowing Exxon-Pioneer, the FTC is still reviewing other planned mergers, including Chevron-Hess. It faces pressure from many Democrats to adopt a tough stance on consolidation.

What they're saying: Capital Alpha Partners' James Lucier said Thursday's action signals the end of the FTC's "relative hands-off policy" on oil mergers.

  • "Now, investors and management will have to look over their shoulders before contemplating a deal," Lucier, who thinks the FTC move against Sheffield is spurious, writes in a note.
  • Pioneer says Sheffield did nothing wrong.

Between the lines: ClearView Energy Partners muses that White House political sensitivities around gas prices could have influenced the Sheffield action.

  • The FTC may be "implicitly encouraging domestic operators seeking the Commission's approval for transactions to increase their production."
  • ClearView's note doesn't see a clear quid pro quo, but argues FTC authority over mergers "could give the Administration leverage over upstream producers."

Yes, but: The counterpoint? There are no tea leaves to read here, because the FTC step was so case-specific.

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