The FTC Starts Probe of Exxon’s Pioneer Acquisition

Funny how people notice when you do something like announce the biggest oil merger in 20 years.

Exxon’s $60 billion planned acquisition of Pioneer Natural Resources, announced in October, has attracted the attention of the Federal Trade Commission, which now wants additional information from the companies ahead of a potential lawsuit to block the deal, according to Pioneer filings on Tuesday.

There’s Monopolistic Potential In Them Hills

The Permian Basin in West Texas and New Mexico is a major hub for the US fracking industry. And real estate for drilling has become so tight, smaller players reap more value from selling the land than drilling themselves. Pioneer, which owns more land in the region than any other player, did just that, selling its business at a nearly 18% premium compared to when rumors of a deal sprouted weeks earlier.

In adding Pioneer, Exxon is effectively doubling its drilling capacity in the region — and that’s enough to attract the attention of Lina Khan’s ever-vigilant FTC. Exxon and Pioneer, for their parts, are already packing loads of anti-antitrust counterarguments:

• Oil companies have long avoided antitrust scrutiny on the grounds that they compete in a truly global industry. Exxon and Pioneer are likely to argue that a marriage barely makes any worldwide impact.
• In fact, though the deal would make Exxon the largest producer in the Permian Basin, it’d still only control about 15% of drillable real estate. Exxon says the deal’s synergies could save billions in costs, which could, theoretically, save consumers money.

Juggling Act: The FTC has its hands full. In addition to myriad Big Tech antitrust lawsuits already underway, the agency may soon turn its attention toward Chevron’s $53 billion acquisition of Hess, or Occidential’s potential scoop-up of CrownRock, the Permian’s largest private driller. So far, Exxon and Pioneer say they are cooperating with the FTC’s requests and still expect the deal to close in the first half of 2024. They may as well be reciting oil baron Daniel Planview’s “I Drink Your Milkshake” monologue from There Will Be Blood.