The largest deal in the emerging carbon capture industry was announced earlier today, with ExxonMobil Corporation (NYSE: XOM) announcing that it has agreed the terms of the acquisition of Denbury Inc. (NYSE: DEN), one of the most prominent carbon capture, utilization and storage companies.
The all-stock transaction values Denbury’s shares at $89.45 for a total price of $4.9 billion. Denbury shareholders will receive 0.84 shares of Exxon with expectations that the deal will be finalized in Q4 of this year.
“Acquiring Denbury reflects our determination to profitably grow our Low Carbon Solutions business by serving a range of hard-to-decarbonize industries with a comprehensive carbon capture and sequestration offering,” said Darren Woods, Chairman and CEO. “The breadth of Denbury’s network, when added to ExxonMobil’s decades of experience and capabilities in CCS, gives us the opportunity to play an even greater role in a thoughtful energy transition, as we continue to deliver on our commitment to provide the world with the vital energy and products it needs.”
Perhaps the most notable asset of Denbury is its 1,300 mile CO2 pipeline network – the largest in operation in the US. The main hub of the netowrk is located in Texas, Louisiana and Mississipi, ideally placed to support the Low Carbon Solutions business of Exxon.
Denbury has previously stated that they expect their carbon capture business to break even in 2026, which was likely one of the factors that de-risked the deal from Exxon’s perspective.
The economies of scale will reduce carbon capture and storage costs for Exxon, as well as its customers like Nucor. The two companies announced several weeks ago that they have reached a 5 million ton threshold for captured CO2 from the steel maker’s operations.
Relevant: Denbury Expects Carbon Capture Business To Break Even In 2026
Chris Kendall, Denbury’s President and Chief Executive Officer commented, “Over the last few years, Denbury has made significant progress executing our strategic plan, strengthening our enhanced oil recovery operations and capitalizing on our unrivaled infrastructure to accelerate the growth of our CO2 transportation and storage business … 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.”
Denbury brings multiple other assets to the table with significant oil and natural gas assets in the Gulf Coast and Rocky Mountain areas, as well as relationships with promising carbon capture companies developing new technologies that could continue the trend of reducing the cost of the preventing CO2 from entering the atmosphere.
“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.,”said Dan Ammann, President, ExxonMobil Low Carbon Solutions.
Read more: Exxon Excited About $6 Trillion Decarbonization Business
