Chevron and Hess have initiated a pivotal discussion with the Federal Trade Commission that could reshape the very landscape of energy industry mergers.
At a Glance
- FTC seeks public feedback on rescinding board membership bans for key executives of Pioneer and Hess.
- The Chevron-Hess merger faces final approval hurdles amidst ongoing disputes.
Public comment period continues until May 12, 2025. - Sheffield expects changes in FTC composition could result in a compromise.
The Regulatory Environment Under Scrutiny
The Federal Trade Commission (FTC) is reconsidering bans preventing Scott Sheffield of Pioneer Natural Resources and John Hess of Hess Corp. from serving on boards of companies acquiring their respective Exploration & Production operations. These bans were enacted as part of a final order with concerns of market competitiveness in the Chevron-Hess merger and Exxon Mobil’s proposed $64.5 billion acquisition of Pioneer.
The public comment invitation, running until May 12, 2025, illustrates the federal landscape’s openness to revisiting these prohibitive measures, reflecting evolving market conditions. Chevron and Hess have filed to reopen the case, seeking to lift the ban on John Hess, while Sheffield pursues a similar path.
Market Dynamics and Legal Challenges
The Chevron-Hess merger, valued at $53 billion, is approved but unresolved due to disputes involving Exxon Mobil over shared interests in an offshore Guyana E&P venture. The orders in question were issued before President Trump’s tenure, reflecting past FTC concerns over CEOs’ dialogues with OPEC members about global oil supply, suspecting possible “collusive activity.”
Sheffield told Hart Energy in March, “We’re hoping, with the third Republican coming on [to the FTC] here in the next 60 days, the FTC will be all Republican and there’ll be hopefully a compromise between the federal court and the new FTC to vacate the order. That’s what I’m hoping happens.”
Sheffield has challenged the FTC’s decision, terming it illegal and baseless. Additionally, dissent within the FTC is evident, with two commission members voting against the order and questioning its legality.
The Path Forward for Chevron and Hess
Chevron and Hess assert that the FTC failed to present a valid theory of competitive harm, emphasizing the need for clarity in policy changes affecting board memberships. Public commentary remains crucial, as the FTC will vote post-comment period to resolve the petition.
The future of energy industry mergers may hinge on this pivotal dialogue, with the public’s voice playing a decisive role in reshaping the regulatory landscape. As such, industry stakeholders remain engaged, tracking developments that might impact business operations and market dynamics.
