ExxonMobil, which is expanding its low-carbon business, said Thursday that it will pay $4.9 billion to acquire Denbury Inc., a leader in improved oil recovery and carbon sequestration.
In the industrially prosperous areas of the southern states of Texas, Louisiana, and Mississippi, where oil firms are planning significant carbon sequestration projects in response to climate change, ExxonMobil now has access to Denbury’s carbon dioxide pipeline network through the all-stock acquisition.
The transaction should be completed in the fourth quarter.
“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, chief executive of ExxonMobil.
Carbon sequestration has been promoted by the oil industry as a key countermeasure to climate change. In order to remove the heat-trapping gases from the atmosphere, the method entails capturing carbon dioxide released during industrial activity and transporting it via pipes to locations where it is buried below.
Through the enhanced oil recovery method, which involves injecting carbon dioxide gas into partially produced petroleum reservoirs in order to coax out more hydrocarbons, Denbury also produces oil and natural gas.
In comparison to ExxonMobil’s 3.8 million barrels per day, Denbury produced just roughly 48,000 barrels of oil equivalent per day in the first quarter of 2023.
Oil and gas production at Denbury is “not a strategic asset for us,” according to Woods in an interview with CNBC.
The assets and expertise in storing carbon dioxide, utilizing the infrastructure and pipeline system in this highly industrial corridor, are truly what give the sale its worth.
Early trading saw shares of Denbury drop 0.3 percent to $87.53, while ExxonMobil declined 1% to $105.44.