ExxonMobil Corporation announced entering a definitive agreement to acquire Denbury. Denbury is a developer of carbon capture, utilization and storage (CCS) solutions and enhanced oil recovery.
The acquisition is an all-stock transaction which values at $4.9 billion.
Based on Exxon Mobil’s closing price on July 12, 2023, it is $89.45 per share. As per the terms of the agreement, Denbury shareholders will get 0.84 shares of ExxonMobil per Denbury share. The transaction is estimated to close in the 4th quarter of 2023.
The acquisition also covers oil and natural gas operations of the Gulf Coast and Rocky Mountain. These projects have reserves amounting to more than 200 million barrels of oil equivalent, with current production of 47,000 oil-equivalent barrels per day. These reserves are beneficial for CO2 offtake and implementation of the CCS business. They will provide instantaneous operating cash flow and optionality in the near future.
ExxonMobil Low Carbon Solutions, president, Dan Ammann, said, “Denbury’s advantaged CO2 infrastructure provides significant opportunities to expand and accelerate ExxonMobil’s low-carbon leadership across our Gulf Coast value chains,”
“Once fully developed and optimized, this combination of assets and capabilities has the potential to profitably reduce emissions by more than 100 million metric tons per year in one of the highest-emitting regions of the U.S.”
Denbury’s president and Chief Executive Officer, Chris Kendall, commented, “This transaction is a compelling opportunity for Denbury to join an admired global energy leader with a low-carbon focus, a robust balance sheet and a leading shareholder return program,”
“Importantly, given the significant capital and years of work required to fully develop our CO2 business, ExxonMobil is the ideal partner with extensive resources and capabilities. The all-equity consideration will allow Denbury shareholders to participate in the upside of ExxonMobil’s stock while benefitting from its strong capital return strategy.”
ExxonMobil’s benefit from the deal.
The largest CO2 pipeline network within the U.S., at 1,300 miles, will be available to the company. The pipeline includes approximately 925 miles of CO2 pipelines in Louisiana, Texas, and Mississippi. These are located within one of the largest U.S. markets for CO2 emissions. It also has 10 strategically located onshore sequestration sites.
Due to this, a cost-effective transportation and storage system may speed up CCS distribution for ExxonMobil and third-party clients. Though it may happen over the next decade.
It also supports several low-carbon value chains such as CCS, hydrogen, ammonia, biofuels, and direct air capture.
