While the White House has criticized Exxon Mobil for its role in rising energy prices, preventing the top U.S. oil producer’s potential $60 billion acquisition of Pioneer Natural Resources presents significant challenges, according to five antitrust lawyers and experts.
The Exxon-Pioneer Deal
Negotiations between Exxon and Pioneer have advanced, though no agreement has been reached yet. If successful, this acquisition would grant Exxon ownership of the largest producer in the largest U.S. oilfield.
U.S. President Joe Biden has been critical of energy companies for their surging profits amid increasing gasoline prices. Exxon, in particular, has faced scrutiny for not increasing production despite record earnings.
In 2021, the White House urged the Federal Trade Commission (FTC) to scrutinize deals in the sector for “anti-consumer behavior,” leading to a slowdown in approval processes. However, the FTC has not sued to block an oil and gas production deal since 2000.
Challenging the Acquisition
Antitrust lawyers and experts believe that the FTC would encounter difficulties in challenging Exxon’s attempt to acquire Pioneer. They argue that oil and gas mergers related to production and exploration are easier to defend under antitrust law compared to refinery or retail deals.
Political pressure is mounting on the FTC to investigate any agreement between Exxon and Pioneer. Democratic Senator Sheldon Whitehouse criticized Exxon’s use of earnings and its environmental impact.
While Exxon and Pioneer have a good chance of completing their deal, it is expected to undergo a lengthy antitrust review due to the controversies surrounding it.
Experiences with Oil and Gas Deals
Recent court cases have emboldened companies like Exxon to pursue major mergers, as regulators have lost some high-profile attempts to block megadeals.
Exxon’s potential acquisition of Pioneer would make it the largest producer in the Permian basin, spanning West Texas and eastern New Mexico. The FTC’s tolerance for consolidation in other oil fields, like the Denver-Julesburg basin, suggests they may adopt a similar stance for this deal.
The significance of the Permian basin in energy production will play a crucial role in regulators’ decisions regarding Exxon’s acquisition of Pioneer. The outcome of this deal will be closely watched, given its potential impact on the energy sector.