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FTC to Probe Exxon’s Record-Breaking $60 Billion Pioneer Acquisition

 |  December 5, 2023
The Federal Trade Commission (FTC) has initiated an investigation into Exxon Mobil’s proposed $60 billion acquisition of Pioneer Natural Resources. According to securities filings, the deal, if approved, would mark the largest oil-and-gas merger in two decades.

According to The Wall Street Journal, the regulatory body has requested additional information from both Exxon Mobil and Pioneer as part of its standard procedure to assess the potential anticompetitive implications of the merger under U.S. law. Pioneer Natural Resources disclosed this development in a filing on Tuesday, shedding light on the ongoing scrutiny of the landmark deal.

Merger investigations of this magnitude typically take around 10 months to complete, as indicated by data compiled by law firm Dechert. The FTC, in conjunction with the Justice Department, holds the authority to either file a lawsuit to block the merger or give its clearance, effectively allowing the deal to proceed. In some instances, companies opt to cancel proposed mergers when they become aware of impending antitrust actions.

Exxon Mobil’s October proposal to acquire Pioneer in an all-stock deal worth $59.5 billion aims to position Exxon as the leading oil producer in the Permian Basin, encompassing West Texas and New Mexico, which is currently the most active U.S. oil field. If successful, this would mark Exxon’s largest deal since its $75 billion merger with Mobil in the late 1990s.

Related: The Case for an Exxon-Chevron Merger

The oil and gas industry has recently witnessed a series of high-profile acquisitions, prompting speculation about potential antitrust scrutiny from federal regulators. Chevron, in response to Exxon’s move, announced a $53 billion all-stock deal to acquire Hess two weeks later. Additionally, Occidental Petroleum is reportedly in talks to purchase CrownRock, a prominent private oil company in the Permian, for over $10 billion, according to recent reports from The Wall Street Journal.

Despite industry expectations, antitrust regulators have historically been hesitant to intervene in oil producer deals, often adopting a global perspective on the competitive landscape of their products. Investors, anticipating continued consolidation in the sector, are closely watching these developments, with the Permian Basin becoming a focal point for major players seeking to expand their portfolios. As top-tier drilling opportunities become scarcer in the region, selling valuable land has proven to be a more lucrative strategy for executives compared to drilling operations. The outcome of the FTC investigation could have far-reaching implications for the future structure of the oil and gas market.

Source: WSJ