The US Federal Trade Commission (FTC) is currently reviewing the proposed acquisition of Utah-based Altamont Energy by oil and gas company XCL Resources. This review takes place amidst a noticeable increase in consolidation within the oil and gas sector, which has already prompted related federal antitrust investigations.
The FTC made an announcement on Thursday, stating that they are seeking public commentary regarding the proposed transaction. This is in line with the provisions set by settlement requirement that necessitates Houston-based XCL and its private equity owner EnCap Investments to secure agency approval prior to purchasing waxy crude oil producers in northeastern Utah. This announcement was made just a day after certain lawmakers pressed the FTC to conduct a wholly comprehensive investigation into the recent spate of oil and gas acquisitions. They argued that this growing consolidation potentially threatens competition and could subsequently lead to inflating prices.
The FTC had already requested additional information back in December about two prominent oil and gas deals; Exxon Mobil Corp.’s proposed $60 billion acquisition of Pioneer Natural Resources Co., and Chevron Corp.’s proposed $53 billion acquisition of Hess Corp.
“Even further consolidation is still on the horizon,” lawmakers like Senate Majority Leader Chuck Schumer (D-N.Y.) stated in a letter they released on Wednesday as they urged the FTC to expand their ongoing investigations. “This industry is already overly concentrated, leading to anti-competitive behavior which harms businesses throughout the supply chain, as well as Americans looking to fuel their vehicles and heat their homes.”
Permian Basin drillers Diamondback Energy Inc. and Endeavor Energy Resources LP also declared a $26 billion merger in February—an agreement that may pose a challenge to the FTC’s scrutiny of industry-wide consolidation.
Earlier in 2022, EnCap had also faced FTC scrutiny when it sought to acquire EP Energy Corp., sparking concerns that the deal could stifle competition among producers in Utah’s Uinta Basin. As a result, EnCap agreed to divest EP’s assets in Utah and was mandated to obtain FTC approval for any potential future deals in the region.
The public has a 30-day period to submit comments to the FTC regarding the proposed XCL and Altamont deal.