Exxon Mobil to acquire Denbury in $4.9bn transaction

October 2023 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

October 2023 Issue

In a major move into carbon capture, multinational oil and gas corporation ExxonMobil is to acquire hydrocarbon exploration company Denbury Inc. in an all-stock transaction valued at $4.9bn.

Under the terms of the definitive agreement, Denbury shareholders will receive 0.84 shares of ExxonMobil for each Denbury share. The transaction is expected to close in the fourth quarter of 2023.

One of the largest publicly traded international energy and petrochemical companies, ExxonMobil’s primary businesses – upstream, product solutions and low carbon solutions – provide products that enable modern life, including energy, chemicals, lubricants and lower-emissions technologies and services. The corporation holds an industry-leading portfolio of resources, and is one of the largest integrated fuels, lubricants and chemical companies in the world.

“Acquiring Denbury reflects our determination to profitably grow our low carbon solutions business by serving a range of hard-to-decarbonise industries with a comprehensive carbon capture and sequestration offering,” said Darren Woods, chairman and chief executive of ExxonMobil. “The breadth of Denbury’s network, when added to ExxonMobil’s decades of experience and capabilities in carbon capture, utilisation and storage (CCS), gives us the opportunity to play an even greater role in a thoughtful energy transition.”

The acquisition of Denbury provides ExxonMobil with the largest owned and operated CO2 pipeline network in the US at 1300 miles, including nearly 925 miles of CO2 pipelines in Louisiana, Texas and Mississippi – located within one of the largest US markets for CO2 emissions, as well as 10 strategically located onshore sequestration sites.

In addition to Denbury’s carbon capture and storage assets, the acquisition includes Gulf Coast and Rocky Mountain oil and natural gas operations. These operations consist of proved reserves totalling over 200 million barrels of oil equivalent, with 47,000 oil-equivalent barrels per day of current production, providing immediate operating cash flow and near-term optionality for CO2 offtake and execution of the CCS business.

“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 programme,” said Chris Kendall, president and chief executive of Denbury. “Over the last few years, Denbury has made significant progress executing our strategic plan, strengthening our enhanced oil recovery operations and capitalising on our unrivalled infrastructure to accelerate the growth of our CO2 transportation and storage business.”

Indeed, for over two decades, Denbury has maintained a unique strategic focus on utilising CO2 in its enhanced oil recovery operations and since 2012 has also been active in CCS through the injection of captured industrial-sourced CO2.

Denbury currently injects over 4 million tonnes of captured industrial-sourced CO2 annually, with an objective to fully offset its scope 1, 2 and 3 CO2 emissions by 2030, primarily through increasing the amount of captured industrial-sourced CO2 used in its operations.

“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,” added Mr Kendall. “The all-equity consideration will allow Denbury shareholders to participate in the upside of ExxonMobil’s stock while benefitting from its strong capital return strategy.”

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.

Mr Kendall concluded: “We look forward to bringing together our highly complementary cultures and teams to realise the long-term value and benefits of this combination.”

Fraser Tennant