ExxonMobil has inked its largest acquisition in six years with an agreement to buy Denbury, a Texas-based company, for $4.9 billion.
Denbury is the owner of a 1,300-mile pipeline system dedicated to transporting carbon dioxide (CO2), making it crucial infrastructure for capturing carbon emissions from heavily-polluting facilities such as refineries and chemical plants.
The deal solidifies Exxon's position as the owner of the largest network of CO2 pipelines in the United States.
This acquisition marks Exxon's most significant transaction since its $6.6 billion purchase of the Permian Basin acreage in 2017.
It’s also the largest single carbon-management investment since the Inflation Reduction Act was enacted in August, which introduced groundbreaking climate provisions and tax incentives for companies involved in capturing and storing CO2 underground.
The Denbury deal gives Exxon the necessary infrastructure to support its climate goals and enable it to capture carbon from its own operations as well as other, hard-to-decarbonize sectors.
For Denbury, this deal signifies a remarkable turnaround. Having filed for bankruptcy in 2020 due to plummeting oil prices during the COVID-19 pandemic, the company's expertise in enhanced oil recovery, utilizing CO2 to extract oil from aging fields, has gained newfound value as a method for carbon sequestration.
In addition to the pipeline network, Exxon will also gain approximately 47,000 barrels per day of oil production, equivalent to 1% of its total output.
Shares of Exxon were down 2% near the midday mark of Thursday’s trading session, while Denbury shares lost around 1.7% in New York.
Contact Angela at angela@proactiveinvestors.com
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