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Exxon said it is purchasing an experienced developer of carbon capture, utilization and storage (CCUS) solutions and EOR for $89.45 per share, representing a roughly 2% premium compared to Denbury’s July 12 closing price of $87.75.
Under the terms of the agreement, Denbury shareholders will receive 0.84 shares of Exxon Mobil for each Denbury share.
Exxon said the transaction synergies are expected to drive strong growth and returns for the super major, including Denbury's annual operating cash flow of about $600 million.
The acquisition of Denbury provides Exxon with the largest owned and operated CO2 pipeline network in the U.S. at 1,300 miles, including nearly 925 miles of pipelines in Louisiana, Texas and Mississippi. The infrastructure is located within one of the largest U.S. markets for CO2 emissions, as well as 10 strategically located onshore sequestration sites.
A cost-efficient transportation and storage system accelerates CCS deployment for Exxon Mobil and third-party customers over the next decade and underpins multiple low carbon value chains, including CCS, hydrogen, ammonia, biofuels and direct air capture.
“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, Exxon chairman and CEO. “The breadth of Denbury’s network, when added to Exxon Mobil’s decades of experience and capabilities in CCS, gives us the opportunity to play an even greater role in a thoughtful energy transition, as we continue to deliver on our commitment to provide the world with the vital energy and products it needs.”
Chris Kendall, Denbury’s president and CEO said the 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 program.”
“Over the last few years, Denbury has made significant progress executing our strategic plan, strengthening our enhanced oil recovery operations and capitalizing on our unrivaled infrastructure to accelerate the growth of our CO2 transportation and storage business,” he said.
Kendall said that Denbury’s board of directors and management team undertook a thorough review process and considered a number of alternatives to maximize long-term value.
“Through this process, it became clear that the transaction with Exxon Mobil is in the best interests of our company, our shareholders and all Denbury stakeholders,” he said. “Importantly, given the significant capital and years of work required to fully develop our CO2 business, Exxon Mobil is the ideal partner with extensive resources and capabilities. The all-equity consideration will allow Denbury shareholders to participate in the upside of Exxon Mobil’s stock while benefitting from its strong capital return strategy. We look forward to bringing together our highly complementary cultures and teams to realize the long-term value and benefits of this combination.”
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