FTC Launches ‘Baseless’ Investigation into Hess, Oxy, Diamondback, OPEC Collusion Allegations

FTC investigators are looking for evidence that the executives tried to collude with OPEC officials about oil-market dynamics, according to people familiar with the matter, who asked not to be named discussing nonpublic information. Such communications, particularly about prices and production, could be illegal under U.S. antitrust laws.

The FTC has opened several in-depth merger reviews amid a wave of dealmaking by oil and gas companies, particularly those in the Permian Basin, North America’s most productive oil field. As part of one of those reviews, which focuses on whether the deal would harm competition, antitrust officials uncovered communications with OPEC officials.

“These accusations of inappropriate communications are baseless and without merit,” Hess said in an emailed statement.

OPEC did not respond to multiple requests for comment. Occidental, Diamondback and the FTC declined to comment on the matter.

Antitrust regulators often treat executive communications as part of deal reviews. In recent oil mergers, the agency was given permission to search executive texts and emails for specific keywords, such as “OPEC” or “shale,” one of the people said.

The agency is seeking what it calls “compelling evidence” to refer the shale cartel case to the Justice Department, the person said. The FTC enforces antitrust and consumer protection laws and must refer any potential criminal activity it uncovers to the Justice Department.

OPEC, as a sovereign entity, is not subject to U.S. antitrust law, but U.S.-based companies are.

The FTC gained access to the communications after negotiations between the agency and the company’s lawyers. Antitrust enforcers reiterated in January that companies are required to turn over communications made on chat and messaging apps, such as WhatsApp and Meta Platforms Inc.’s Signal, as part of the regulator’s normal review process.

The oil and gas industry has largely criticized the Biden administration’s policies, even as the country pumps more oil than ever before. But this is one of the most aggressive moves the administration has taken against the sector just months before the presidential election.

The FTC’s interest in communications from executives from Hess, Occidental and Diamondback relates to transactions each of the companies intends to enter into.

Occidental said in a statement Thursday that it plans to close on the big acquisition next month, now that the government’s formal 30-day review period has ended. The FTC reserves the right to intervene until the close, though it rarely does so.

The Justice Department declined to comment on the matter.

The searches come after the FTC alleged in May that it found hundreds of text messages between Pioneer Natural Resources Co. founder Scott Sheffield and OPEC officials related to oil markets. The messages came to light as part of the agency’s review of Exxon Mobil Corp.’s $63 billion purchase of Pioneer.

The FTC allowed the Exxon deal to proceed on the condition that Sheffield be removed from the nominee’s board. Sheffield has denied any wrongdoing and accused the FTC of “publicly and unjustifiably defaming me.”

OPEC officials began meeting with U.S. shale executives for informal dinners in 2017 after years of increasingly tense competition. The emergence of a North American shale sector has challenged the group’s decades-long dominance of the global oil market, prompting OPEC leaders to adopt a strategy of détente in closed meetings on the sidelines of industry conferences in Houston.