Scott Sheffield, the former CEO of Pioneer Natural Resources, helped reverse America’s fading energy fortunes. But the feds have accused him of padding his pockets by working with the powerful OPEC cartel.
The oilman who brought the Permian Basin back from the dead was eating a Chick-fil-A salad and feeling persecuted. There were countless things Scott Sheffield would rather have been doing than lunching with his lawyer. Like playing tennis, or teaching one of his eleven grandchildren to fly-fish at his New Mexico ranch. Or attending a meeting of the Exxon board of directors, using the wisdom he’d collected over four decades as a chief executive to help guide the energy giant.
Not so long ago, the West Texas oil patch was washed up, decades past its glory days. Then, in 2011, Sheffield’s company, Pioneer Natural Resources, figured out the trick—a combination of horizontal wells and fracking—to unlock billions of barrels of overlooked oil from a subterranean shale layer known as the Wolfcamp formation. When politicians talk of American energy dominance, their rhetoric is built on a foundation laid by Sheffield.
“He gets credit more than anyone else for the discovery of the new Permian,” said Daniel Yergin, an energy-industry consultant and the Pulitzer Prize–winning author of several books that chronicle the modern energy business. Before Pioneer’s discovery, Permian production totaled a million barrels a day. Now it’s six million daily barrels and rising. Before, Americans relied on imports to fuel cars, planes, and warships. Today the U.S. is an exporter. The oil patch’s rebirth, Yergin told me, “changed the global balance of oil and, in fact, has changed the geopolitics of oil.”
Yet instead of garnering accolades for his role in this and other achievements, Sheffield is an industry pariah. Many of his former colleagues avoid him. “My name has been smeared,” he said, sitting at a small, round table off the kitchen of his expensive but plainly decorated condo in the affluent Dallas–Fort Worth suburb of Southlake. A large black and white, artsy photograph of a horse’s head hung above a nearby sofa opposite a television on a credenza. Sheffield wore jeans, a short-sleeved Orvis fern-print shirt, and slip-on shoes. “I’ve had nothing but a few phone calls from other CEOs. They’re afraid to email me and text me.”
His reputation was sullied in May, when the Federal Trade Commission accused Sheffield of colluding with the Organization of Petroleum Exporting Countries, a cartel of nations operating state-owned companies, to drive up the price of oil. The aim of the conspiracy alleged in the government’s civil complaint was simple. Every time you filled up your tank with gasoline, you would pay more than you should have. Some of that extra cash would go to Saudi Arabia, some to Nigeria, some to the nine other OPEC members, and some to Scott Sheffield.
Sheffield faces the possibility of criminal charges, in addition to a class action lawsuit that has portrayed him as a participant in a plot to corral his fellow oilmen into the global price-setting scheme. He regularly meets with his lawyer, a thousand-dollar-and-up-per-hour partner at a Washington, D.C., law firm, to plot his defense.
The 72-year-old Sheffield exudes a friendly gruffness and an endearing lack of polish. His eldest son, Bryan, describes him as an “introverted engineer” who grew into his role as a corporate leader. Former colleagues praise his photographic memory for oil-production figures, a valuable skill when he joined the company that would become Pioneer, in 1979, as the fifth employee. He led the business’s growth into an industry behemoth.
In late 2023, Sheffield oversaw the sale of Pioneer to ExxonMobil for $64.5 billion. Shortly after announcing the deal, he appeared on CNBC with Exxon CEO Darren Woods. The tanned Woods looked like he’d gotten a $200 haircut that morning. Sheffield appeared tired by comparison as he expressed excitement about joining Exxon’s board of directors.
But as part of their scrutiny of the proposed merger, FTC investigators soon went through Sheffield’s cellphone, reviewing his texts and emails. What they found, the government complaint states, was “voluminous evidence” of attempts to coordinate with other domestic producers. “American consumers shouldn’t pay unfair prices at the pump simply to pad a corporate executive’s pocketbook,” wrote Kyle Mach, deputy director of the FTC’s Bureau of Competition, in an agency press release about the complaint. Before regulators would allow the merger, Woods had to bar Sheffield from sitting on the Exxon board or advising the company’s executives. Woods agreed, and the deal was approved. Exxon has not publicly defended Sheffield.
“I know I didn’t do anything wrong,” Sheffield told me during a two-hour interview in September. From his perspective, he simply helped American oil interests survive difficult times, including the disastrous COVID-pandemic years. “I’m an industry leader,” he said. “You got to be able to speak out when you need to.”
The government has not released most of its evidence, even to Sheffield or his lawyers, nor does it plan to. Such disclosure, the agency said in response to a Texas Monthly open-records request, “could reasonably be expected to interfere with the conduct of the Commission’s law enforcement activities.” If Sheffield is charged with a crime, the evidence would be released to him and presumably be made public. But if he ultimately is not, much of the basis for the FTC complaint could remain hidden. The allegations might solidify into accepted facts without the benefit of a fair hearing before a judge or jury.
Sheffield believes he was a “political scapegoat.” If gasoline prices had become an issue during the presidential campaign, he says, the Biden administration could have touted his case as an example of the greed of oilmen and the steps being taken to bring them to heel. (The complaint was issued two months before President Biden dropped out of the race.) “If you go back every four years, the price of oil and the price of gasoline comes into play at every election, going back probably twenty years, maybe even thirty years,” he said.
Is Scott Sheffield an American hero who strengthened the nation by providing it with vital energy, or a schemer who raised petroleum prices to pad his corporate bottom line? Was he a pawn in a political operative’s cynical chess match or the engineer of a complex international conspiracy? The answers may lie in the redacted material in the government’s complaint—or perhaps the document’s many thick black blocks are covering up thin innuendo.
The stucco walls, stone pilasters, and red roof tiles of the Houston Public Library’s stunning Julia Ideson Building are surrounded by towering, glass-sheathed downtown skyscrapers. Inside the 1926 building, figures from Spanish history gaze down from New Deal–era murals. On the second floor, a three-story gallery with marble columns and a frieze decorated with a floral pattern is available for weddings and corporate events.
It was here, in March 2017, that Sheffield first met Mohammad Barkindo, the Nigerian-born, U.S.-educated secretary-general of OPEC. According to the FTC’s account, Barkindo had “organized a private dinner for U.S. shale producers.” To encourage intimate conversations, the roughly thirty attendees broke into groups around smaller tables to eat. Barkindo sat next to Sheffield and asked a lot of questions. He seemed to be “trying to understand where U.S. shale is going,” Sheffield told me. “He wanted to understand the Permian.”
Since OPEC’s founding, in 1960, the organization’s membership has expanded and contracted. Angola joined and left. Nigeria joined and stayed. But the five founding members—Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela—have remained constant, as has the cartel’s purpose: to steer global oil prices. When prices are too low, the group seeks to cut output to drive them up. When prices climb too high, straining the global economy and potentially boosting conservation measures and alternative energy sources, OPEC members open their spigots and supply more oil.
In the early 2010s, OPEC’s hold on the market began to slip, thanks in part to the billions of barrels Sheffield and Pioneer had unleashed in West Texas. Faced with this new threat, the cartel responded by expanding. Russia and several other large oil producers were brought into the group’s orbit in 2016. The expanded OPEC+, as it’s known, controls more than half of global oil production. The largest producer outside the expanded cartel was the United States, and thanks to the Permian, its output was growing quickly.
During his trip to Houston in 2017, Barkindo met the CEOs of BP, ConocoPhillips, Hess—and Exxon. OPEC released a photograph of him shaking hands with Woods at the time. It isn’t unusual for the cartel’s officials to hobnob with leaders of globe-spanning Western oil companies, or for representatives of U.S.-based firms to send observers to OPEC meetings. But Barkindo did something unusual—he also reached out to the so-called independents. These are companies, including Pioneer, focused on drilling in the United States. Many of the largest are based in Midland, Dallas–Fort Worth, or Houston.
Barkindo’s overtures to Sheffield at the Ideson library were part of this outreach. The dinner marked the start of an ongoing relationship, the government alleges, in which OPEC and Sheffield worked together in a bid to raise oil prices. The FTC complaint describes a global conspiracy that reads like something out of a Hollywood script. A rich and powerful Texan embraced OPEC and tried to turn his fellow Texans, wittingly or not, into the cartel’s collaborators.
But there’s at least one problem with the government’s story. The library dinner wasn’t organized by Barkindo. It was convened by former Houston Mayor (and former Deputy Secretary of Energy) Bill White. A few months earlier, White had met Barkindo at Columbia University’s Center on Global Energy Policy, in New York City. There, the newly appointed OPEC secretary had talked about his desire to understand what drove U.S. oil growth. White offered to set up a dinner for him the next time he was in Houston. “I thought, personally, it would be more useful for the U.S. independents to understand how decisions were made within OPEC,” White told me. “And what the dynamics were.” Barkindo died in 2022. Texas Monthly’s efforts to interview other OPEC officials were unsuccessful.
A small group of executives received White’s invitations to a “confidential, private discussion.” White told me that the evening began with the managing partner of Vinson & Elkins, a large Houston-based law firm, warning the CEOs not to discuss prices or any individual company’s drilling plans. To do so could be a violation of antitrust law. The meeting itself wasn’t secret. Sheffield talked to a Bloomberg reporter about it shortly afterward, noting that he had never before seen OPEC reach out in this manner. The cartel alluded to the gathering in a magazine it publishes.
The FTC alleges that after the meeting, OPEC officials courted Sheffield by “reaching out and spending more time” with him, and that Sheffield “exchanged hundreds of text messages with OPEC representatives” to discuss the global oil market. Nearly all evidence of this ongoing relationship is redacted in the complaint.
By the time he met Barkindo, Sheffield was nearing the end of a long, successful career. He was born in Dallas and raised in Houston. His father was a petroleum engineer for Arco, a company eventually acquired by BP. The family lived for a time in Tehran, Iran, where Sheffield played high school football on the grounds of the U.S. embassy. His first instinct wasn’t to follow in his father’s footsteps. “I rebelled,” he told me. “I read a lot of books, CIA thrillers, and so I wanted to do prelaw, go into government, become a CIA agent.”
He enrolled at the University of Texas at Austin, but his grades were so poor that he was placed on academic probation. He was required to take a semester off, during which his father got him a job on an offshore drilling rig. Working as a roughneck was tough and dangerous, but he made good money. His rebellion ended. When he returned to school, he switched his major to petroleum engineering.
Several years after graduation, he went to work for his father-in-law at Parker & Parsley, a small Midland-based company that was an incubator of executive talent. Tim Leach and Tim Dunn, who both went on to found billion-dollar oil companies—Concho Resources and CrownQuest, respectively—worked there alongside Sheffield. Even among these future industry leaders, Sheffield’s star burned bright, and in 1985, before his thirty-third birthday, he became CEO. Known for his conservative approach, he favored drilling low-risk wells and minimizing debt.
In 1997, Parker & Parsley merged with T. Boone Pickens’s Mesa Petroleum. The combined company, led by Sheffield, was renamed Pioneer Natural Resources. Whipsawed by volatile prices, other Texas oil companies came and went, while Pioneer slowly became one of the largest producers in the state. By the end of 2016, when Sheffield stepped down as CEO, the company was valued at $31 billion.
But the board of directors, including Sheffield, who remained chairman, clashed with Sheffield’s successor, and in 2019, the rest of the board asked Sheffield to retake the helm. “I wanted to come back and fix the company,” he told me. “I had a lot invested.” Nine months after his return, Mohammad Barkindo sent a text message wishing Sheffield a happy Thanksgiving. It was, Sheffield and his lawyers say, the first text between the two since their meeting at the library dinner more than two years earlier.
Sheffield was back to running Pioneer for about a year when the COVID-19 pandemic paralyzed global commerce. Demand for crude oil—and the products distilled from it (gasoline, diesel, and jet fuel)—cratered. A barrel of West Texas intermediate started the year priced at $61; less than three months later, it was below $15. At OPEC+ meetings, Saudi Arabia and Russia attempted to negotiate an emergency cut to oil production.
Pioneer wasn’t at immediate risk of bankruptcy. Unlike many others, it had locked in the price at which it would sell its oil, through financial hedges put in place prior to the pandemic. Even so, Sheffield worried that an entire generation of new oil companies could be wiped out. “Over the past few years, the energy renaissance in the United States has been nothing short of remarkable,” he cowrote in a letter to the Texas Railroad Commission during this period. “All of those achievements are now at stake.” He and Parsley Energy CEO Matt Gallagher called on the commission, which, despite its name, regulates the state’s oil and gas industry, to look into limiting oil production and requiring Texas producers to cut back.
Sheffield wasn’t the only business leader urging such action. “Our industry is being decimated with each day that passes,” Michael Foster Jr., president of BĀSA Resources, then the seventy-first-largest oil producer in the state, wrote in one of hundreds of similar letters sent to the commission’s offices in Austin. “Texas cannot accomplish market stability alone—production cuts must be coordinated with other states, the Federal government, and other oil-producing countries.”
In the weeks leading up to an April 2020 meeting of the Railroad Commission to consider Sheffield and Gallagher’s request, there was a flurry of activity. President Trump got involved, urging Saudi Arabia’s powerful crown prince, in a private phone call, to work out a deal with Russia. Mohammad Barkindo reached out to Sheffield to get the personal phone number of Railroad Commissioner Ryan Sitton, whom he then called. Afterward, Sitton posted on Twitter, “We all agree an international deal must get done,” and thanked Barkindo for an invitation to the next OPEC meeting.
In the midst of these interactions, Barkindo sent a text to Sheffield, urging him to stay the course with the Railroad Commission. “Please don’t give up,” the message read, according to a person with knowledge of the unredacted complaint. The federal government regarded this as an example of coordination between OPEC and Sheffield. Sheffield defended his actions as having been driven by a desire to prevent the industry from imploding. “We saw no help in sight,” he told me. “We decided to go to the Texas Railroad Commission and asked for help. . . . As simple as that.”
The day before the commission met to consider taking a step toward limiting oil production for the first time since 1973, OPEC+ agreed to cut 10 percent of the global oil supply. Texas didn’t act. Sitton was ready to approve the proposal, but the other two commissioners weren’t convinced it was needed or feasible. They were also leery of this level of government interference in the industry. Within a few months, the OPEC+ cuts began to have an impact, and the world slowly restarted. Oil prices crept back up.
Sheffield talked about what he was trying to do in an interview that appeared in the July 2020 issue of Texas Monthly. “If Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi and Russia will follow. That was our plan,” he said. “I was using the tactics of OPEC+ to get a bigger OPEC+ done. Let’s get the price of oil back into the $30s as quickly as possible.” The FTC complaint cites this quote as evidence of Sheffield’s attempt to replicate OPEC in Texas.
In 2022, not long after Barkindo’s sudden death, the Saudi energy minister, Abdulaziz bin Salman, asked a banker for Sheffield’s private number. After getting Sheffield’s approval, the banker obliged. Bin Salman added Sheffield to a group text thread and, over the next couple of years, blasted him with oil-industry articles, press releases, advertisements for tourism in Saudi Arabia, and complaints about energy journalists. Other people on the thread told me he sent as many as three messages a day.
On a couple of occasions, bin Salman exchanged direct messages with Sheffield. In December 2022, the Saudi minister saw an online headline referencing an interview Sheffield gave to the Financial Times in which Sheffield had pushed back on White House claims that oil operators were profiteering from high prices. “Can you send the article?” bin Salman asked, since it was behind a paywall. (This raises the question of why one of the wealthiest men in the world was apparently unwilling to pay for a newspaper subscription, which may not bode well for the future of journalism.) Sheffield complied. Bin Salman thanked him and wished him a happy New Year, and Sheffield wished him one back.
Sheffield was deposed by FTC lawyers for four hours as part of the commission’s examination of Exxon’s acquisition of Pioneer. Most of the questions were about how Pioneer forecast oil production and handled its output. He told me he wasn’t asked about his texts with bin Salman or anyone else. He was blindsided by the charges of collusion in the federal complaint.
In 1982, the president of American Airlines called his counterpart at Braniff International Airways. They represented the two largest carriers based at Dallas Fort Worth International Airport, and their intense competition was sapping both companies’ profits. “Neither one of us is making a f—ing dime,” American’s president said, which we know because the Braniff president secretly recorded the conversation.
What do you suggest? asked the Braniff president. “Raise your g—damn fares twenty percent. I’ll raise mine the next morning,” was the reply. Federal law enforcement officials charged American’s president, Bob Crandall, with attempting to fix ticket prices. Few antitrust cases are so clear-cut—even if the government ultimately settled the matter with Crandall without any finding of guilt.
One grayer area involves what’s called signaling. Executives are allowed to talk to one another on the phone, have dinner, speak on conference panels, and serve in industry trade groups with competitors. They just can’t make agreements about prices. CEOs also can’t make statements about pricing that they intend to be heard and acted upon by competitors. That’s signaling, and it’s grounds for a criminal referral to the Department of Justice.
Prosecution of signaling is relatively rare and controversial. In 2016, three corporate lawyers wrote an article in Antitrust, an American Bar Association magazine, that asked two questions: “Is signaling unlawful under the antitrust laws? Should it be?” Their answers were maybe—and a qualified no. After all, aren’t companies allowed to tell their own investors and customers about future plans? Why can’t their competitors hear those plans too, so long as there’s no subsequent agreement to act in concert? The FTC, under Biden appointee Lina Khan, has disagreed. Khan has been described as an “antitrust warrior” for her willingness to take on corporate power. Her critics say she has been overly aggressive.
I asked the FTC to walk me through its evidence and decisions, but my requests were declined. Spokesman Douglas Farrar said in a written statement that the commission “redacts information in legal filings to protect competitively sensitive commercial or financial information or sensitive personal information.”
In the last few years of his career, Sheffield saw himself as an industry elder. He spoke out publicly on matters he believed his fellow oilmen needed to hear about, such as overspending and reducing waste. It was in that capacity that he may have crossed the line into signaling.
In January 2021, Sheffield appeared on a panel at an energy conference organized by the New York investment bank Goldman Sachs the day after Saudi Arabia announced it was cutting oil production. Pioneer, he said, planned to grow its production at a relatively modest 5 percent for the next few years. It didn’t plan to increase spending just because prices were likely to go up. “Whether oil is $50, $60, $70, $80, or $40,” he said, “We’re really not going to change our plans.” Then he expressed concerns about the ramifications if even a couple of oil companies didn’t do the same. “We can’t have outliers, whether it’s the majors or whether it’s one or two independents, because it will create a chain reaction” that could lead prices to collapse.
The push for what was called “capital discipline” goes back at least to 2017. That was when several large institutional investors began pressuring Pioneer and other U.S. oil companies to stop chasing rapid growth and instead return more of their profits to shareholders. While frackers had changed the nation’s energy fortunes, they hadn’t yet yielded much of a return for investors. In the decade prior, an index of U.S. oil producers had fallen 31 percent, while the broader market had risen 80 percent.
At the time, few industry observers took note of Sheffield’s comments at the Goldman Sachs conference. That could be because Sheffield spoke shortly after noon on January 6, 2021, while President Trump was urging his supporters to march on the Capitol as Congress certified the 2020 presidential-election result. Just about when Sheffield had finished, protesters broke through the first police line defending the building.
One person who did notice was Phil Verleger, an eighty-year-old energy economist whose career has included helping end federal oil-price controls in the seventies. These days, from his home in Boulder, Colorado, he publishes a weekly report on energy markets and topics. A couple days after the Goldman Sachs conference, he wrote: “The statement by Pioneer’s Sheffield could border on a violation of US antitrust law regarding signaling.”
Verleger reached out to FTC economists and advised them to look into it. “ ‘This is so flagrantly bad,’ ” he recalls telling them. When I asked Sheffield about this claim, he told me, through his lawyer, “I was simply saying what, by then, anyone paying attention to investor feedback already knew about growth prospects in this industry—namely, that chasing production was a great way to destroy shareholder value.”
Public comments by Sheffield—similar to his Goldman Sachs remarks—figure in separate class action lawsuits filed in the first months of 2024, prior to the release of the FTC complaint, and later consolidated into a single case. The litigation alleges a conspiracy by U.S. oil companies, including Pioneer, to work with OPEC to drive up prices. Sheffield was personally named as a defendant, and he describes the suit as an effort by plaintiff lawyers to secure a lucrative private settlement.
Writing about the class action, Matt Stoller, research director of the American Economic Liberties Project—which favors more-muscular antitrust action by the government—estimated that while it was ongoing, the alleged collusion cost every American between $500 and $1,000 a year. Stoller believes Sheffield went much further than simply suggesting that oil frackers needed to give more back to investors. “The guy was saying publicly, we’re not going to invest even if oil prices go up,” he told me. “The evidence is sufficient to show that this guy was engaged in sort of collusive behavior.”
If that is true, Sheffield certainly hasn’t acted like a guilty man caught in the act. A day after one of the federal lawsuits seeking class action status was filed, he continued speaking his mind, at a conference at Columbia University. “Even if oil gets to two hundred dollars a barrel,” he said, “the independent producers are going to be disciplined,” by which he meant they’d refrain from profligate spending in pursuit of rapid growth.
Sheffield argues that the FTC’s complaint defies the facts. “Pioneer outgrew any large independent during this whole time frame that they’re claiming that we restricted production,” he told me. “If we were restricting production, why would we become the largest independent in the state of Texas? Why would we outgrow everybody else in the U.S.?”
A few minutes after 5 p.m. on the Friday before President Biden left office, the FTC finalized its order in the Exxon-Pioneer case. Sheffield remains barred from advising Exxon in any capacity. While it’s unclear whether criminal charges may yet come, the two Republican commissioners issued a dissent claiming that the FTC had “maligned him as the central figure in a cartel, and then performed a victory dance on his metaphorical grave in its press release.” One of those commissioners, Andrew Ferguson, took over from Khan as chair when Donald Trump returned to the White House, and the commission will soon have a Republican majority. Sheffield filed a federal lawsuit this week in a U.S. district court in Fort Worth asking the court to vacate the commission’s prohibition against his serving on Exxon’s board.
Regardless of what comes of this legal bid to clear his name, the damage to Sheffield’s reputation has been done. He remains an extremely wealthy man—his Exxon shares alone are worth more than $150 million. Yet he’s unlikely to enjoy the sort of retirement he might once have realistically imagined, with accolades from peers, invitations to deliver keynote speeches at oil conferences, and, who knows, maybe even a Presidential Medal of Freedom. He still faces the class action lawsuit, which could drag on for years. A trial date has yet to be set. For Sheffield, the only thing that appears certain is many more sad salads with his lawyer.
https://www.texasmonthly.com/news-politics/scott-sheffield-exxon-pioneer-opec-price-fixing-allegations/
