The founder and former CEO of Pioneer, Scott Sheffield, is facing accusations from the Federal Trade Commission (FTC) for his alleged attempts to coordinate with OPEC and OPEC+ to reduce oil production. The FTC claims that this collusion would have led to higher prices at the pump for American consumers, benefiting the company’s profits. Despite Pioneer rejecting the accusations, Sheffield will not be allowed to join Exxon’s board or provide advisory functions once the oil giant completes the purchase of Pioneer.
Exxon agreed to acquire Pioneer for approximately $60 billion last year, with regulatory approval pending. One of the conditions set by the FTC to close the deal is that Sheffield must be prevented from engaging in activities that could artificially raise crude oil prices. The FTC accuses Sheffield of violating antitrust laws by coordinating with OPEC representatives to keep production low.
Sheffield’s alleged actions included exchanging hundreds of text messages with OPEC representatives and officials, as well as discussing production cuts with Texas producers. The FTC argues that allowing Sheffield to join Exxon’s board would give him a platform to further advocate for coordination in the industry, which could be anticompetitive.
Pioneer has responded to the accusations, stating that Sheffield’s actions were meant to raise awareness of the challenges facing the US energy industry during the pandemic. The company believes that the allegations against Sheffield are based on a misunderstanding of the oil markets and his intentions. Despite the controversy, Pioneer has decided not to block the merger with Exxon.
The operation between Exxon and Pioneer would create the largest oil producer in the Permian Basin, with significant implications for the US energy industry. The FTC has imposed restrictions on Exxon from appointing any Pioneer employee or director as a company director for five years, with some exceptions.
Sheffield, who founded Pioneer in 1997 and led it through the shale oil boom in the US, is nearing retirement. The company has become a major player in the oil industry, leveraging fracking technology to extract oil from unconventional sources. The merger with Exxon would further solidify Pioneer’s position in the industry and expand Exxon’s drilling capabilities in the basin.
Overall, the accusations against Sheffield and the implications for the Exxon-Pioneer merger highlight the complexities and competition in the oil sector. The FTC’s actions aim to ensure fair competition and protect consumers from potential price manipulation in the market.