ExxonMobil is buying pipeline operator Denbury, the beneficiary of changes in U.S. climate policy that intended to reduce the amount of emissions released into the atmosphere.
The all-stock deal valued at $4.9 billion puts Denbury's capabilities related to carbon capture front and center.
Carbon capture and storage involves removing carbon dioxide, either from the source of pollution or from the air at large, and storing it deep underground. In some instances, the carbon dioxide is transported across states through pipelines and stored at facilities and used for other things.
The Inflation Reduction Act signed into law last year by President Joe Biden infuses nearly $375 billion over the decade in climate change-fighting strategies that could put the country on a path to cut greenhouse gas emissions 40% by 2030, including carbon capture operations.
ExxonMobil Corp. said Thursday that the acquisition gives it the largest owned and operated carbon dioxide pipeline network in the U.S. at 1,300 miles, including nearly 925 miles of CO2 pipelines in Louisiana, Texas, and Mississippi – located within one of the largest U.S. markets for CO2 emissions, as well as 10 strategically located onshore sequestration sites.
"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," Exxon CEO Darren Woods said in a prepared statement.
Aside from Denbury's carbon capture and storage assets, the acquisition includes Gulf Coast and Rocky Mountain oil and natural gas operations. The operations consist of proved reserves totaling over 200 million barrels of oil equivalent, with 47,000 oil-equivalent barrels per day of current production.
The boards of both companies have signed off on the deal, which is expected to close in the fourth quarter. It still needs approval from Denbury shareholders.
Both companies are based in Texas.