Megadeals between Chevron and Hess and Exxon and Pioneer Natural Resources are under intensified scrutiny but the oil and gas firms say they will cooperate in the U.S. Federal Trade Commission’s “second request” for information. (Source: Shutterstock.com)
Chevron and Hess Corp. intend to promptly respond to the Dec. 7 inquiry by the U.S. Federal Trade Commission (FTC) for additional information about the $53 billion merger they announced in October.
Both companies received an FTC “second request” notification on Dec. 7, Chevron reported in a filing the same day with the U.S. Securities Exchange Commission (SEC).
“Issuance of the Second Request extends the waiting period imposed by the HSR Act until 30 days after Chevron and Hess have substantially complied with the Second Request, unless that period is extended voluntarily by Chevron and Hess or terminated sooner by the FTC. Both Chevron and Hess expect to promptly respond to the Second Request and to continue to work cooperatively with the FTC in its review of the Merger,” Chevron told the SEC.
This FTC solicitation comes just says following a similar request issued to Exxon Mobil and Pioneer Natural Resources regarding their $60 billion deal, which was also announced in October. Both firms intend to fully cooperate, according to regulatory filings.
Pioneer’s incoming CEO Rich Dealy told Hart Energy that the firms had anticipated heightened FTC scrutiny of their transaction based on the transaction’s size and scope. At close, the deal will give Exxon control of 15% of Permian Basin production, 5% of U.S. production and 3% of global production.
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Exclusive: Exxon, Pioneer Expect Tough Federal Scrutiny of $60B Deal
Consolidation is entering the U.S. domestic political sphere as an election year looms and the FTC has recently scrutinized high-profile deals beyond oil and gas, including technology, aviation and healthcare transactions.
Senate Democrats led by U.S. Senate Majority Leader Chuck Schumer are taking clear aim at the oil and gas industry. Schumer and 22 colleagues fired off a letter to the FTC on Nov. 1 asking the FTC to specifically investigate whether the Exxon-Pioneer and Chevron-Hess mergers violate antitrust laws.
Both acquisitions are all-stock transactions.
The deal value of Houston-based Exxon’s purchase of Pioneer, which is headquartered in Dallas, comes in close to $59.5 billion, or $253 per share. Terms of the agreement grant Pioneer shareholders 2.3234 shares of Exxon stock for each Pioneer share at closing. Including net debt, the approximate total enterprise value of the deal is $64.5 billion.
The deal between San Ramon, California-based Chevron and New York-based Hess is worth roughly $53 billion, or $171 per share. Agreement terms assign Hess shareholders 1.0250 shares of Chevron for each Hess share. The total enterprise value of the deal, including Hess’ net debt, is $60 billion.
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