Exxon Mobil Corp. will spend $4.9 billion to acquire Plano, Texas-based pipeline operator Denbury Inc., a move the world’s largest energy company says it will use to further its carbon solutions business.
The deal, announced early Thursday before trading markets opened, is the latest consolidation in the oil and gas industry as the biggest players look to add scale with cash reserves accumulated during last year’s price runup.
Denbury owns more than 1,300 miles of pipelines used to transport carbon dioxide from industrial sources oil and gas-rich areas, where it can be pumped into the ground to store emissions and release fossil fuels. That includes 925 miles of pipeline in Louisiana, Texas and Mississippi, as well as ten sites offshore.
Denbury had 765 employees at the end of 2022, including 351 at the company’s corporate headquarters in Plano’s Legacy area, according to regulatory filings.
Exxon Mobil recently relocated its corporate headquarters from Irving, Texas, to its sprawling 10,000-employee megacampus nearer to other industry players in the suburbs of energy-rich Houston.
The companies did not disclose details on what would happen to the offices and workers in Plano.
“What we’re buying with Denbury is 20-plus years of experience in sequestering CO2, storing CO2, but also the assets that move that CO2 and the storage sites strategically located along that corridor of high emissions sources so that we can cost-effectively capture the CO2, transport it and sequester it underground,” Exxon Mobil CEO and chairman Darren Woods said on CNBC’s Squawk Box Thursday morning.
The purchase is a dramatic turnaround for Denbury, a company that was in bankruptcy three years ago, including shedding $2.1 billion in debt under a court-supervised reorganization. But the firm has found new life with the growing focus on climate change, shifting strategy from using their CO2 pipelines to release fossil fuels to using it to sequester carbon underground.
Denbury, which is publicly traded on the New York Stock Exchange, had a market value of about $4.65 billion before the deal was announced.
“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 CO(2) transportation and storage business,” Denbury CEO and President Chris Kendall said in a statement.
