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Former Pioneer CEO Faces Antitrust Probe

The former chief executive of Pioneer Natural Resources, Scott Sheffield, is facing allegations of collusion by the Federal Trade Commission, for an attempt to co-ordinate production cuts to lift oil prices, the Wall Street Journal has reported, citing unnamed sources.

These say that Sheffield contacted other shale oil producers as well as companies from OPEC to try and coordinate a production policy that would have raised oil prices, thus benefiting Pioneer. The WSJ report mentioned “hundreds of messages to representatives of the Organization of the Petroleum Exporting Countries about market dynamics, including pricing and production levels.”

The allegations could be made official by the end of the week, the sources said. In the meantime, Sheffield has been banned from joining the board of Exxon after it completes the acquisition of Pioneer as a condition for the Federal Trade Commission to approve the $60-billion deal.

The news of Exxon’s plan to acquire Pioneer Natural Resources broke last October, with the company offering an all-stock tie-up worth some $58 billion. At the time, Exxon said that the proposed transaction “transforms ExxonMobil’s upstream portfolio, more than doubling the company’s Permian footprint and creating an industry-leading, high-quality, high-return undeveloped U.S. unconventional inventory position.”

The Federal Trade Commission, however, has kept a close eye on that deal along with a few others as the oil sector consolidated, after nearly 50 Democratic Senators and Representatives urged the agency to investigate the recent mergers in America’s oil and gas sector amid concerns that they would harm competition and hurt consumers.

Some legal professionals dismissed the scrutiny, saying that the oil industry has already argued successfully that a local merger, even between such large players as Exxon and Pioneer or Chevron and Hess Corp., would not represent a cause for antitrust concern because of the global nature and size of the oil market.

By Irina Slav for Oilprice.com

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