Exxon Mobil Corp. has entered into a definitive agreement to acquire Denbury Inc. The deal includes the largest owned and operated CO2 pipeline network in the US at 1,300 miles, including nearly 925 miles of CO2 pipelines in Louisiana, Texas, and Mississippi; one of the largest US markets for CO2 emissions and location of 10 onshore sequestration sites.
ExxonMobil said it expects transaction synergies to enable more than 100 million tonnes/year of emissions reductions. Denbury last month added two sequestration sites in Louisiana, bringing its total US potential storage capacity to about 2 billion tonnes (OGJ Online, June 27, 2023).
ExxonMobil’s acquisition of Denbury is an all-stock transaction valued at $4.9 billion, or $89.45/share based on ExxonMobil’s closing price on July 12, 2023. Under terms of the agreement, Denbury shareholders will receive 0.84 shares of ExxonMobil for each Denbury share.
“The deal means ExxonMobil can likely sidestep a potentially difficult process of building its own CO2 pipeline in service of its CCS ambitions, including the near-term desire to build out a blue hydrogen project at Baytown,” said investment bank TD Cowen. “Moreover, by controlling more of the value chain, ExxonMobil will most likely be able to capture additional credit value under the Inflation Reduction Act.”
ExxonMobil earlier this year let contracts for its proposed greenfield low-carbon hydrogen production plant at its 561,000-b/d refining and petrochemical complex in Baytown, Tex. (OGJ Online, Feb. 15, 2023).
In addition to Denbury’s carbon capture and storage assets, the deal includes Gulf Coast and Rocky Mountain oil and natural gas operations totaling more than 200 million boe, with 47,000 boe/d production.
The boards of directors of both companies have unanimously approved the transaction, which is subject to customary regulatory reviews and approvals. It is also subject to approval by Denbury shareholders. The transaction is expected to close fourth-quarter 2023.