Exxon Mobil Corporation’s XOM acquisition of Pioneer Natural Resources was given the final approval by the U.S. regulatory body, the Federal Trade Commission (“FTC”), on Jan. 17, 2025. In the same round of consolidation surrounding the U.S. oil and gas sector, the $53 billion merger between Chevron Corporation CVX and Hess Corporation HES was also approved by the FTC.

However, the decision was not unanimous, implying that there was a difference of opinion among the commissioners. The regulatory body approved the decision with a 3-2 vote.

The FTC, however, restricted former members of the executive committees of the acquired companies from joining the board of the merged companies. The FTC Chair noted in her statement that the regulatory body had unfurled certain disturbing shreds of evidence pointing toward the oil executives, including high-level executives from the companies involved, directly communicating with OPEC representatives. The conversations include conspiring with rival companies to cut back on the production of oil that may increase prices for American consumers.

The FTC believes that these restrictions would allow the merged companies to operate and make decisions independently while cooperating with other major oil producers without being influenced by the decisions of a cartel aiming to drive up fuel prices. The regulatory authority’s decision was intended to promote fair competition among rivals within the oil and gas industry.

Exxon-Pioneer Merger

While approving Pioneer Natural Resources' $64.5 billion merger with Exxon Mobil, the FTC proposed certain conditions that barred Pioneer’s CEO Scott Sheffield from holding a position within XOM’s board or serving as an advisor to the company’s management team.

The FTC was divided in its decision to approve the transaction. Republican commissioners opposed the theory that Scott Sheffield had engaged in unfair practices. In its initial complaint against Sheffield’s involvement in collusion, the Republicans described the FTC’s concern as being “ludicrous’ in its entire history of merger enforcement.

The Republican commissioners also argued that the complaint against Sheffield did not have any concrete legal or economic justification. Further, they alleged that this move was based on a political agenda, calling for a re-evaluation of the FTC’s order under the new administration.

Chevron-Hess Merger

In the case of the Chevron-Hess merger, the FTC placed a similar restriction on John Hess, the CEO of Hess Corporation, banning him from serving as a board member for Chevron after the merger was concluded. However, in this case, a small exception was made later. The U.S. FTC changed the initial order by including a clause allowing John Hess to act as a consultant in two specific areas. This included interacting with the government of Guyana regarding its oil-related and health ministry-related operations. Further, John Hess can advise CVX’s board on the Salk Institute’s Harnessing Plants Initiative. This project is focused on reducing the carbon impact of Hess’ operations. CVX’s merger with HES should expand its portfolio in the prolific Stabroek Block offshore Guyana and add its Bakken acreage to the company’s asset base.

XOM, CVX and HES currently carry a Zacks Rank #3 (Hold) each.

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