XOM - Exxon is buying Denbury for $4.9 billion: CEO Woods explains why

2023-07-13 11:39:51 ET

Shares of Denbury Inc ( NYSE: DEN ) inched down today after Exxon Mobil Corp ( NYSE: XOM ) said it will buy the carbon-capture company for $4.9 billion.

What’s in it for Exxon Mobil?

The all-stock deal values each share of the New York listed firm at $89.45 – about a 2.0% premium on their previous close.

Exxon is making the acquisition to get its hands on the largest carbon-dioxide pipeline network in the United States. Speaking with CNBC this morning, its CEO Darren Woods said:

This pipeline allows us to accelerate and grow that business [low-carbon solutions business], do it at a lower cost, do it a lot faster, with very large opportunity to further reduce emissions.

The stock market news arrives a couple weeks before Exxon Mobil is scheduled to report its second-quarter financial results. At writing, its stock is roughly flat for the year.

What else is included in the deal?

Exxon expects the announced agreement to complete before the end of 2023. The merger could reduce emissions by more than 100 million metric tons per year, as per the press release . According to CEO Woods:

That’s a lot of emissions being sequestered. In fact, that would be the largest step reduction in CO2 emissions that we’ve seen anywhere in the world.

Note that the transaction also includes some oil and natural-gas assets of Denbury as well. The deal that will replace each share of Denbury with 0.84 shares of Exxon Mobil is yet to secure regulatory approval.

Boards of both companies have already greenlit the merger, though.

The post Exxon is buying Denbury for $4.9 billion: CEO Woods explains why appeared first on Invezz .