Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS—D.D.C.: Final judgment imposing record $5.6 million penalty for oil-driller merger ‘gun jumping’ entered, (Feb 5, 2026)

By Kenneth H. Ryesky, M.B.A., J.D.

Record-setting civil penalty resolves complaint for practices that led to supply shortages resulting in nationwide skyrocketing gasoline prices at the pump.

The federal district court in Washington, D.C. has issued a memorandum opinion and final judgment that imposes a $5.6 million civil penalty upon oil drillers who failed to comply with the requisite waiting period following a corporate acquisition transaction. The crude oil producers XCL Resources Holdings, LLC (XCL), Verdun Oil Company II LLC (Verdun), and EP Energy LLC (EP) will pay the record civil penalty to settle allegations they engaged in illegal pre-merger coordination, known as “gun jumping,” in violation of the Hart-Scott-Rodino Act (HSR Act). The court conducted a Tunney Act review, and entered the stipulated order for enforcement (U.S. v. XCL Resources Holdings, LLC, No. 1:25-cv-00041-TSC (D.D.C. Feb. 4, 2026)).

Background. XCL is a crude oil driller and seller that operates in Utah's Uinta Basin. Verdun, XCL's sister company, conducts its operations in the Eagle Ford region of Texas. EP operates in both the Uinta and Eagle Ford areas. On July 26, 2021¸the three entities agreed that XCL and Verdun would acquire EP for approximately $1.4 billion, an amount that surpassed the relevant threshold set forth in the HSR Act that required (1) prior notification filings with the FTC and the DoJ Antitrust Division; and (2) a 30-day premerger waiting period, beginning with such filings, during which, inter alia, the acquirers could not exercise operational or decision-making control over the acquired entity.

The HSR notification filings were properly tendered, but XCL and Verdun personnel almost immediately began wielding control over EP. The FTC investigation triggered by the notification filings resulted in a finding that the transaction would have anticompetitive effects, which could be adequately ameliorated by the divestiture of EP's operations in Utah to a third-party entity. On March 25, 2022, the FTC entered into a consent agreement with XCL, Verdun, and EP regarding the terms of the merger transaction. While this settlement agreement resolved the corporate structures of the involved entities, there remained the matter of the HSR Act violations.

On January 7, 2025, the FTC, XCL, Verdun, and EP reached a settlement regarding the HSR Act pre-merger waiting period violations; an action was filed in federal district court by the DoJ on behalf of itself and the FTC to enter the proposed final judgment for enforcement. On February 4, 2026, after the publication, public comment, and court review terms of the Antitrust Procedures and Penalties Act of 1974 (Tunney Act) [15 U.S.C. § 16] were fulfilled, the court entered a final judgment to activate and enforce the stipulated order.

Tunney Act. The judge made a finding that the Tunney Act provisions have been complied with, and that the proposed Final Judgment is consistent with the public interest. The proposed judgment had clarity, and a "degree of precision necessary for the court to resolve any subsequent disputes that might arise concerning the Final Judgment’s implementation. It also entailed "sufficient enforcement mechanisms to ensure that its remedies are implemented," these included but were not limited to (1) EP, XCL, and Verdun would each designate a compliance officer to oversee and ensure that the terms of the judgment would be fulfilled; (2) annual certifications by the compliance officers to be provided to the government; (3) distribution of copies of the final judgment to current and future employees and other parties who would be involved in certain enumerated business activities; and (4) training programs for relevant personnel.

The court found that the provisions of the final judgment "appear reasonably tailored to the alleged violations so as to prevent reoccurrence." Although the civil penalty was less than the maximum imposable under the HSR Act, it was a record-setting dollar sum that would likely deter violations by others; the willingness of EP, XCL, and Verdun to agree to the settlement and thereby spare the government the time, trouble, and hazards of litigation of going to trial was a factor that warranted a settlement amount below the maximum provided under the statute. Only one public comment was submitted, to which the FTC did not see fit to alter the published settlement agreement because none of the defendants were publicly-traded companies implicated in the comment received.

The final judgment. The court found that the HSR Act waiting period lasted from July 26, 2021 to March 25, 2022; the period was prolonged by the defendants' commencement of control before the prescribed normal 30-day waiting period had elapsed. The terms of the final judgment provide that XCL and Verdun are jointly and severally liable to pay a civil penalty of $2,842,188.50, while EP is liable for the same amount, bringing the total civil penalty payable to $5,684,377. The defendants are required to institute compliance programs and make periodic reports and certifications to the government as noted above; the government has a right to conduct inspections to ascertain and ensure that the terms of the agreement are followed, including unrestricted and unmonitored interviews of company personnel.

The court retains jurisdiction over the matter so that it can resolve any disputes that might arise during its implementation; the government " retains and reserves all rights to enforce the provisions of this Final Judgment, including the right to seek an order of contempt from the Court."

The final judgment expires after 10 years, with the government having the right to file an action against any or all of the parties if, within four years after expiry, the government obtains evidence that the agreement was breached during the 10-year period.

The Case is No. 1:25-cv-00041-TSC.

Judge: Chutkan, T.

Attorneys: Kenneth A. Libby, Federal Trade Commission, for the U.S. Jeremy J. Calsyn (Cleary Gottlieb Steen & Hamilton LLP) for XCL Resources Holdings, LLC.

Companies: XCL Resources Holdings, LLC

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