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NEW YORK/WASHINGTON – U.S. antitrust regulators have extended the approval process for at least five oil and gas mergers and acquisitions in the last three months, as President Joe Biden’s administration scrutinizes deals in a bid to tackle soaring energy prices, according to regulatory filings and corporate lawyers.

EXCLUSIVE U.S. slows down oil and gas mergers-sources- oil and gas 360

The slowdown comes amid growing pressure on policymakers to respond to consumer angst over skyrocketing retail gasoline prices, as U.S. crude futures hit multi-year highs. The White House has been calling 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 at large. Under its new chair Lina Khan, the antitrust regulator has taken a tough stance on deals ranging from technology to healthcare.

Such scrutiny is rare in the oil and gas sector, where deals typically sail past regulators, more than a dozen industry sources, including lawyers and bankers advising on energy deals, said in interviews.

This is because these companies sell their output to a global market, and regional consolidation has no impact on energy prices dictated by supply and demand worldwide.

Maureen Ohlhausen, chair of antitrust & competition law at Baker Botts LLP, who served as acting FTC chair from January 2017 until April 2018 under the previous Trump administration, called the scrutiny unprecedented.

“Even though previous Democratic FTC commissioners wanted active enforcement, the industry was told what the standards were, deals got reviewed and things moved along. This is really different,” Ohlhausen said.

“I believe the FTC Chair, effectively, would like to deter mergers.”

An FTC spokesperson declined to comment.

The FTC is subjecting more deals to so-called second requests, seeking additional information and documents, the deal advisers said and the filings show. Second requests can delay regulatory clearance of deals by several months.

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

Among the proposed transactions that received second requests in September were HollyFrontier Corp’s HFC.N $2.6 billion purchase of Sinclair Oil and Vertex Energy Inc’s VTNR.O $140 million sale of motor oil collection and recycling assets to Safety-Kleen Systems Inc, the regulatory filings show.

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

nCap and EP Energy did not respond to comment requests.

Sources indicated there were other transactions which have received second requests in recent weeks but declined to identify them.

Second requests involving oil and gas producers are rare, and it is more common for the FTC to scrutinize deals involving pipelines and gas stations. Pipeline operator Energy Transfer LP ET.N said in May it received a second request on its proposed $7.2 billion takeover of Enable Midstream Partners LP ENBL.N.

DEALMAKING RISKS

The FTC’s scrutiny threatens to put the brakes on dealmaking in the oil patch, which had already dropped to $18.5 billion of mergers and acquisitions between U.S. oil and gas producers in the third quarter, down from $33.4 billion in the second quarter, according to data analytics firm Enverus.


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