ExxonMobil Corporation, a Texas-based multinational oil and gas exploration and production company founded in 1899, has announced plans to acquire Denbury, a company focused on carbon capture, utilization and storage (CCS) and enhanced oil recovery technologies. The $4.9 billion acquisition, or $89.45 per share, will bring shareholders 0.84 shares of ExxonMobil for every share of Denbury.[1]
This will expand ExxonMobil's footprint in low-carbon solutions and make it easier for the company to continue the decarbonisation to which it is committed. Over time, the transaction is expected to reduce emissions by more than 100 million metric tons per year. ExxonMobil CEO Darren Woods says the acquisition is part of their strategy to profitably grow their low carbon business, providing comprehensive carbon capture solutions to the industry. Denbury will provide Exxon with an extensive network of 1,300 miles of carbon dioxide pipelines in the US with 10 onshore sequestration sites and expertise in the CCS sector that will make the transition to efficient energy easier.
ExxonMobil Corporation's stock performance over the past five years. (Source: Google)*
Denbury CEO Chris Kendall expressed his excitement about the deal and highlighted ExxonMobil's low-carbon efforts. He stated that fully developing a carbon business requires years of work and significant capital, making ExxonMobil with its deep pockets an ideal partner. Denbury's management assessed the move as being in the best interests of shareholders as they will be able to participate in ExxonMobil's future growth while benefiting from its strong capital return strategy. The transaction is expected to close in the fourth quarter of 2023. The announcement of this transaction brought both companies' shares down slightly. In the long term, with both ExxonMobile and Denbury thriving, such a collaboration could cause their growth in the energy field to strengthen and together they will be able to take advantage of the carbon dioxide potential in this area.
Denbury’s stock performance since going public (Source: Google)*
* Past performance is no guarantee of future results
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
