The founder and former CEO of Pioneer Natural Resources, Scott Sheffield, was accused by federal regulators of colluding with OPEC and its allies to inflate oil prices. The Federal Trade Commission alleged that Sheffield exchanged hundreds of text messages with OPEC officials discussing pricing and production. Sheffield was accused of trying to align oil production in the Permian Basin with that of OPEC and OPEC+ in order to benefit Pioneer’s bottom line. Unlike OPEC nations, US oil production is meant to be determined by the free market, not through coordination among major players. Sheffield retired in December 2023 as CEO of Pioneer, the largest producer in the Permian Basin.
The FTC approved the sale of Pioneer to ExxonMobil for $60 billion, but Sheffield is prohibited from sitting on Exxon’s board or serving as an advisor due to the allegations of collusion. The FTC claimed that Sheffield campaigned to organize anticompetitive output reductions between US oil producers and OPEC and OPEC+. Sheffield allegedly lobbied the Railroad Commission of Texas to impose output restrictions on Permian oil production at the start of the Covid pandemic to increase crude oil prices. Global oil prices dropped by about 50% in early 2020 due to pandemic lockdowns, leading OPEC+ to slash production.
Pioneer defended Sheffield, stating that it was not his intent to circumvent laws protecting market competition. Pioneer disagreed with the FTC’s complaint, stating that it reflected a misunderstanding of the US and global oil markets. Despite their disagreement, Pioneer and Sheffield indicated that they would not contest the FTC’s findings and would not prevent the merger with Exxon from proceeding. Exxon expressed surprise at the allegations and stated that they were inconsistent with their business practices. Exxon confirmed that Sheffield would not be added to their board in response to the FTC’s concerns.
The FTC’s accusations against Sheffield include private conversations with OPEC representatives assuring them that Pioneer and other Permian Basin rivals were working to keep oil output artificially low. Sheffield also discussed efforts to coordinate output with other Texas producers and hoped to get OPEC to cut production by leading the way with output restrictions in Texas. The FTC indicated that there was potential for criminal charges to be recommended against Sheffield, emphasizing their responsibility to refer potential criminal behavior. The FTC claimed that Sheffield’s actions were not limited to public signaling and included private conversations with OPEC representatives. Exxon stated that they had addressed the FTC’s concerns and expected the deal to acquire Pioneer to close as planned.
