Exxon boosts low-carbon efforts with $4.9 billion deal for Denbury Sources

Obtain free updates from Exxon Mobil Corp

we’ll ship you a myFT Each day Recap e mail rounding up the newest Exxon Mobil Company information each morning.

ExxonMobil is doubling down on its carbon administration enterprise, saying an almost $5 billion deal for Denbury Sources that may give the oil main entry to the biggest pipeline community within the US to move and retailer fuel from greenhouse impact.

Denbury, which was amongst dozens of US oil producers who succumbed to chapter through the 2020 value crash, is a specialist in carbon administration, through which emissions are transported and saved or used to extract extra oil.

Texas-based Denbury has additionally develop into an enormous beneficiary of the beneficiant carbon sequestration tax credit on provide in President Joe Biden’s administration. sweeping local weather invoice.

The all-stock transaction values ​​Denbury at $4.9 billion, roughly according to its Wednesday closing value, and can give exxons entry to America’s largest owned and operated CO₂ pipeline community, stretching 1,300 miles throughout the US, together with 925 miles in Louisiana, Texas and Mississippi.

“The breadth of Denbury’s community, when added to ExxonMobil’s many years of expertise and capabilities in [carbon capture and storage]it provides us the chance to play a fair larger position in a considerate vitality transition,” stated Exxon CEO Darren Woods.

Exxon’s drive towards low-carbon areas has targeted on carbon seize and storage, hydrogen, and biofuels. In contrast to European rivals akin to Shell and BP, nonetheless, it has prevented any transfer in direction of renewable vitality.

The supermajor has promised to spend $7 billion on its low-carbon enterprise by the tip of 2027, although critics have identified that that is solely a fraction of its spending on fossil fuels.

Denbury, a comparatively small oil producer, has accrued important expertise within the “enhanced oil restoration” extraction technique, through which it makes use of its CO₂ pipelines to pump greenhouse fuel into getting old oil fields and enhance their manufacturing.

For the reason that passage of Biden’s Minimize Inflation Act, which supplies beneficiant tax credit to corporations for locking carbon underground, Denbury has sought to remodel in an enormous participant in CCS to benefit from the brochures.

Chief govt Chris Kendall lately advised the Monetary Instances that his expertise managing greenhouse gases instantly put the corporate in a “utterly distinctive house” following the passage of the IRA and stated it was greater than doubling spending on early-stage CCS tasks to $150 million. .

Jason Gabelman, an analyst at TD Cowen, stated the deal would seemingly enable Exxon to “sidestep a probably troublesome technique of constructing its personal CO₂ pipeline in service of its personal CCS ambitions” and “seize further credit score worth underneath the IRA.”