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EXCLUSIVE US slows mergers of oil and gas sources

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NEW YORK / WASHINGTON, Oct.21 (Reuters) – U.S. antitrust regulators have extended the approval process for at least five oil and gas mergers and acquisitions in the past three months, as President Joe’s administration Biden is reviewing deals in a bid to tackle soaring energy prices, according to regulatory documents and corporate lawyers.

The slowdown comes amid increasing pressure on policymakers to respond to consumer angst over skyrocketing retail gasoline prices, as U.S. crude futures peak multi-year. The White House has called U.S. oil and gas producers to ask how they can help lower prices, Reuters reported last week.

The move is also emblematic of a new push by the Federal Trade Commission (FTC) to protect consumers, workers, the environment, and society as a whole. Under her new presidency Lina Khan, the antitrust regulator has taken a strong stance on deals ranging from tech to healthcare.

Such scrutiny is rare in the oil and gas industry, where deals typically pass through regulators, more than a dozen industry sources, including lawyers and bankers advising on energy deals, said at the meeting. ‘interviews.

Indeed, these companies sell their production on a global market and regional consolidation has no impact on the energy prices dictated by supply and demand in the world.

Maureen Ohlhausen, president of antitrust and competition law at Baker Botts LLP, who served as interim president of the FTC from January 2017 to April 2018 under the previous Trump administration, called the review unprecedented.

“Even though the previous Democratic FTC commissioners wanted active enforcement, the industry has been made aware of the standards, the agreements have been reviewed and things have evolved. It’s really different,” Ohlhausen said.

“I believe the chairman of the FTC, indeed, would like to deter mergers.”

An FTC spokesperson declined to comment.

The FTC is submitting more deals to so-called second requests, seeking additional information and documents, the business advisers said and the documents show. Second requests can delay regulatory approval of transactions by several months.

“I am aware of two mergers in the past two months where FTC staff did not see the need to issue a second request but were rejected by their management,” said Darren Tucker, chairman of the antitrust practice of the law firm Vinson & Elkins LLP. . He declined to name the two agreements.

Among the proposed deals that received a second request in September, HollyFrontier Corp (HFC.N) bought Sinclair Oil for $ 2.6 billion and Vertex Energy Inc (VTNR.O) sold assets for $ 140 million. collection and recycling of motor oil at Safety-Kleen Systems Inc., regulatory filings show. Read more

Private equity firm EnCap Investments proposed the $ 1.5 billion acquisition of oil and gas producer EP Energy has also received a second request in recent weeks, according to people familiar with the matter. Read more

EnCap and EP Energy did not respond to requests for comment.

Sources said there were other transactions that received a second request in recent weeks, but declined to identify them.

Second claims involving oil and gas producers are rare, and it’s more common for the FTC to review transactions involving pipelines and gas stations. Pipeline operator Energy Transfer LP (ET.N) said in May it had received a second request regarding its proposed $ 7.2 billion buyout of Enable Midstream Partners LP (ENBL.N).

TRADING RISKS

FTC scrutiny threatens to put the brakes on deals in the oil sector, which had already fallen to $ 18.5 billion in mergers and acquisitions between U.S. oil and gas producers in the third quarter, from 33 $ 4 billion in the second quarter, according to data analysis. Enverus farm.

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The White House has publicly called on the FTC to act as the reopening of economies around the world in the wake of the COVID-19 pandemic increases energy use. Brian Deese, director of the National Economic Council, wrote to FTC Chairman Khan in August ask him to investigate soaring energy prices.

Khan responded that the FTC would look carefully at consolidation among gas station operators, but would also look at making deals in the energy sector more broadly. Read more

The White House Biden has already angered the oil and gas industry by making climate change a priority on its administrative agenda. He temporarily suspended the issuance of new leases for drilling on federal lands and proposed to end some fossil fuel subsidies. Energy companies argue that these measures will drive up energy costs. Read more

Admittedly, it’s not clear whether the FTC will seek to block any of the energy deals it has submitted for a second request.

The regulator has not challenged a major merger of oil and gas producers since the acquisition of Atlantic Richfield Co by BP Plc (BP.L) in 2000 for $ 27 billion. production area in Alaska.

A major test for the FTC will be the proposed $ 9.5 billion ConocoPhillips (COP.N) acquisition of the Permian Basin assets of Royal Dutch Shell Plc (RDSa.L). This was announced last month, and any second FTC requests would be made in the coming weeks. Read more

Shell and ConocoPhillips declined to comment.

(This story corrects the reference to the Shell / ConocoPhillips agreement in the penultimate paragraph)

Reporting by David French in New York and Diane Bartz in Washington; Additional reporting by Valerie Volcovici in Washington and Shariq Khan in Bengaluru; Editing by Greg Roumeliotis and Richard Pullin

Our standards: Thomson Reuters Trust Principles.


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