Diane Bartz & David French

NEW YORK/WASHINGTON – The approval process has been extended by U.S. antitrust officials for at least five mergers or acquisitions of oil and natural gas in the past three months. This is as President Joe Biden’s government scrutinizes transactions in an effort to combat rising energy prices. According to corporate lawyers and regulatory filings,

As futures prices hit multi-year highs, policymakers are under increasing pressure to reduce consumer anxiety. This is despite the slowdown. Last week, Reuters reported that the White House had been calling U.S. petroleum producers in an effort to lower oil prices.

This is an emblem of the Federal Trade Commission’s (FTC), new efforts to protect workers, consumers, the environment, and the society as a whole. Lina Khan has become the chair of antitrust regulator. She is adamant about protecting consumers, workers and the environment.

This type of scrutiny is uncommon in the oil and natural gas industry, which has deals that often sail past regulators. More than 12 industry sources including bankers and lawyers advising on deals in this sector said so in interviews.

Because these businesses sell their products to global markets, regional consolidation does not have an impact on the energy prices that are determined by demand and supply 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 the previous Democratic FTC Commissioners desired active enforcement, industry was informed what the standards were. Deals got reviewed, and things moved forward. Ohlhausen explained that it is very different.

“I think the FTC Chair would be interested in deterring mergers”

A spokesperson for the FTC declined to comment.

According to deal advisors, more deals are being subjected to second requests by the FTC, which seek additional documents and information. Deal approval can be delayed by multiple months due to second requests.

“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. The names of the deals were not provided by Tucker.

The regulatory filings reveal that HollyFrontier Corp received second requests for September’s $2.6B purchase of Sinclair Oil and Vertex Energy. (NASDAQ:) Inc sold $140M worth of motor oil collection and recycling assets to Safety Kleen Systems Inc.

People familiar with the matter say EnCap Investments, a private equity firm, requested another $1.5 million to acquire EP Energy, an oil and gas producer.

EnCap and EP Energy didn’t respond to comments requests.

Sources claimed that there have been second requests for transactions in the last few weeks, but they declined to name them.

A second request involving oil or gas producers is uncommon. It’s more common for FTC inspectors to examine deals involving gas stations and pipelines. Pipeline operator Energy Transfer (NYSE:] LP stated in May that it had received a second request for information on the proposed $7.2 million takeover of Enable Midstream. (NYSE:] Partners LP).

DEALMAKING RISES

According to Enverus data analytics firm Enverus, the FTC is likely to halt oil industry dealmaking. The third quarter saw $18.5 billion worth of oil producer mergers and acquisitions, down from $33.4 million in the second quarter.

Graphic: U.S. oil and gas producer M&A, https://graphics.reuters.com/USA-ENERGY/DEALS-FTC/gdvzywbblpw/chart.png

White House made it public by asking the FTC for assistance in restoring economies across the globe following the COVID-19 epidemic. This has resulted in increased energy consumption. Brian Deese is the director of National Economic Council and asked Khan to examine the rising energy prices.

Khan replied that while the FTC would scrutinize the consolidation of gas station operators but will also examine dealmaking within the energy sector more generally.

The Biden White House already upsets the oil industry by making climate changes a top priority on its administrative agenda. Temporarily, it stopped issuing new leases to drill on federal land. Additionally, the Biden White House proposed that fossil fuel subsidies be ended. These moves, according to energy companies, will increase the cost of electricity.

It is unclear whether or not the FTC will try to stop any energy contracts it has submitted to its second requests.

After the $27 billion purchase of Atlantic Richfield Co by BP Plc in 2000, the regulator never challenged a major oil and gas producer merger. After BP made an offer to acquire Alaska oil production acreage, the regulator stopped blocking the merger.

Royal Dutch Shell Plc (LON:), which is attempting to acquire ConocoPhillips’ Permian Basin assets for $9.5 billion, will prove to be a major test for FTC. The acquisition was made public last month and the FTC will make a second request in the next few weeks.

Shell and ConocoPhillips have declined to comment.