Exxon Mobil announced Thursday it agreed to purchase Denbury for nearly $5 billion, in a deal the U.S. energy giant touts as integral to carbon emission cutting efforts. Shares of XOM and DEN both edged down Thursday.
Exxon valued the all-stock transaction at $4.9 billion, based on Denbury stock's July 12 closing price of 89.45. Denbury shareholders will receive 0.84 shares of Exxon Mobil for each Denbury share under the purchase deal. The companies expect the transaction to close in the fourth quarter of 2023.
This is Exxon Mobil's biggest acquisition since a $5.6 billion deal in 2017.
In a press release, Exxon Mobil said the deal provides the energy giant with the largest U.S. pipeline network, 1,300 miles, dedicated to transporting carbon dioxide. XOM also highlighted Denbury's 10 onshore carbon sequestration sites as keys to the deal.
In addition, the deal gives Exxon Mobil access to oil and natural gas assets along the Gulf Coast and in the Rocky Mountain region. These operations report reserves totaling more than 200 million barrels of oil equivalent, with 47,000 oil-equivalent barrels per day of current production.
"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 Exxon Chief Executive Darren Woods in a statement.
Exxon Mobil stock fell 1.8% to 104.52 Thursday during market trade. Meanwhile, Denbury stock edged down 1.3% to 86.60. XOM is currently in consolidation and sitting around 12% below a 119.92 buy point, according to MarketSmith analysis.
Exxon Mobil Stock: Betting On Carbon Capture
A long list of energy industry leaders have lined up to both use and provide carbon capture services. Among them are Exxon, Occidental Petroleum.
Fueling Carbon Capture In the Oil Industry: Production, Net Zero And ESG
Companies are pouring billions of dollars into developing a carbon capture market estimated at a modest $2 billion in 2021. Occidental estimates the carbon capture market will hit $50 billion a year by 2030. Exxon sees it going as high as $4 trillion by 2050.
Carbon capture is nothing new. Oil and natural gas producers for decades have reinjected production site exhaust. It's a means to pressurize reservoirs and coax additional product out of the ground.
However, now it is being billed as a way to capture exhaust emissions from industry and for energy companies to clean and capture their own emissions.
Exxon Mobil stock has a 59 Composite Rating of 99. XOM shares have a 49 Relative Strength Rating and a 76 EPS Rating.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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