Exxon Mobil has agreed to acquire carbon capture developer Denbury in an all-stock transaction valued $4.9 billion or $89.45 per share. Denbury shareholders are to receive 0.84 shares of ExxonMobil for each Denbury share.
The transaction is anticipated to drive growth and returns to ExxonMobil, as the acquisition of Denbury provides ExxonMobil access to its 1,300-mile US-owned and operated CO2 pipeline. This network includes 925 miles of CO2 pipelines in Texas, Louisiana, and Mississippi, as well as 10 sequestration sites.
The merger aims to make cost-efficient transportation and storage systems speed up CCS deployment for ExxonMobil and its third-party customers, underpinning multiple low carbon value chains like CCS, hydrogen, ammonia, biofuels, and direct air capture.
Darren Woods, chairman and chief executive of ExxonMobil said the merger “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.”
“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.”
Denbury’s Gulf Coast and Rocky Mountain oil and natural gas operations will be included in the acquisition, which consist of proved reserves with a combined 200 million barrels of oil equivalent and 47,000 oil-equivalent barrels of daily production currently, the deal’s provision of immediate operating cash flow plus near-term optionality for CO2 offtake and CCS business execution.
Though the boards of directors for both ExxonMobile and Denbury have unanimously approved the transaction, it is still subject to regulatory reviews and approvals, as well as subject to approval by Denbury shareholders. Closure for the transaction is anticipated for the final quarter of 2023.
President and chief executive of Denbury, Chris Kendall, said of the deal: “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. 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.”
Recently, Denbury teamed up with Lapis Energy in a joint venture to design, implement, and operate a carbon dioxide (CO2) sequestration site at Lapis Energy’s carbon storage facility in St Charles Parish, Louisiana (PFR, 6/2023). The deal gave both parties a 50% interest stake in the project company Libra CO2 storage solutions. If the Class VI injection approval and project sanction is successful, necessary testing will commence, with an eventual first injection slated for 2027.
At the close of 2022, Denbury signed an agreement with the Weyerhaeuser Company for exclusive rights to develop and operate 16,000 acres of subsurface pore space in Simpson and Copiah counties as part of its initiative to evaluate and develop CO2 sequestration sites in Mississippi and Louisiana(PFR, 12/2022). The Mississippi project was sited adjacent to Denbury’s NEJD pipeline and hold a total sequestration capacity of 275 million metric tons of CO2 with its earliest anticipated injection date in 2026.
During 2021, Exxon announced its Scope 1 and 2 greenhouse gas emission-reduction plans for 2030 for operated assets, in comparison with 2016 levels. It plans for the following: a 20-30% reduction in corporate-wide greenhouse gas intensity; a 40-50% drop in greenhouse gas intensity of upstream operations; a 70-80% downward trend in corporate-wide methane intensity, and a 60-70% reduction on corporate-wide flaring intensity.
Denbury is an independent energy company with over two decades operating its assets focused on Carbon Capture, Utilization, and Storage (CCS), and Enhanced Oil Recovery (EOR) in the Gulf Coast and Rocky Mountain regions. Strategically, the business has been focused on utilization of CO2 within EOR operations since 2012, pursuing CCS with the injection of captured industrial-sourced CO2. Annually, the company injects four million tons of captured industrial-sourced CO2, aiming to meet a goal of zero Scope 1, 2, and 3 emissions by 2030 via raising the amount of captured CO2 used in companywide operations.