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US regulators are poised to approve ExxonMobil’s $60bn acquisition of Pioneer Natural Resources on condition that the smaller oil company’s chief executive does not join the supermajor’s board.
The Federal Trade Commission had raised concerns about potential anti-competitive behaviour if Scott Sheffield joined Exxon’s board, according to a person with knowledge of an agreement struck between regulators and the companies to approve the acquisition.
The FTC is expected to allege that Sheffield engaged in collusive activity in the past aimed at reducing oil production and raising prices by exchanging messages with senior officials at the oil cartel Opec and its broader producer alliance Opec+, said the person.
A formal announcement by the FTC approving the takeover is expected later this week.
Exxon’s deal to buy Pioneer, announced in October, is the biggest US oil company’s largest since it was formed through the merger of Exxon and Mobil in 1999. It is also the first of any significant size under chief executive Darren Woods, who has led Exxon since 2017.
Sheffield was originally expected join Exxon’s board as a director after the deal closed.
The combination of the companies’ shale assets hands Exxon a dominant position in the Permian Basin, the vast field in western Texas and New Mexico that has helped the US become the world’s largest oil and gas producer.
The deal with the FTC preventing Sheffield from joining Exxon’s board raises questions about the actions of an executive who played a critical role in reviving the fortunes of the US oil industry over recent decades. The dates of his alleged messages with Opec could not be immediately determined.
Sheffield was a significant figure in the shale revolution that unfolded as enterprising wildcatters employed hydraulic fracturing and horizontal drilling techniques to blast open previously unreachable oil and gas.
Pioneer’s sale was announced shortly after Sheffield, who is 71, had announced plans to retire for a second time at the end of 2023. He had stepped down in 2016 before returning to the helm of Pioneer three years later.
Sheffield has long shared his views on the oil market — and Opec — in public. In early April 2020, as global oil demand was crashing at the start of the pandemic, he was among the US oil executives publicly urging the cartel and Russia to rein in supply.
After oil prices had recovered thanks in part to Opec output cuts three years later, he told the Financial Times that Saudi Arabia, the United Arab Emirates and Kuwait would “be in charge the next 25 years” in the oil market.
The FTC declined to comment. Exxon, Pioneer and Sheffield did not immediately respond to requests for comment.
Additional reporting by Myles McCormick in Houston
