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Exxon To Purchase Plano Energy Company For $4.9 Billion

Denbury Inc faced bankruptcy in 2020
Photo: Kirkam | Shutterstock

In a move to expedite its energy transition efforts, Exxon Mobil Corp reached an agreement to acquire Denbury Inc for $4.9 billion. This acquisition aims to enhance Exxon Mobil's carbon dioxide sequestration operations by integrating Denbury's established expertise in the area.

After the acquisition, both Exxon and Denbury witnessed a decline in their share prices. But this deal grants Exxon immediate access to CO2 transportation infrastructure. According to Reuters, The availability of U.S. tax credits for reducing greenhouse gas emissions triggered a competition to construct carbon capture facilities. 

Denbury, headquartered in Plano, Texas, is an oil and gas producer renowned for its ownership and operation of a 1,300-mile CO2 pipeline network in the U.S. This extensive pipeline infrastructure encompasses the petrochemical industry hub on the Gulf Coast, an area of significant interest for Exxon in establishing a carbon hub.

Denbury CEO Chris Kendall said "significant capital and years of work" are required to develop the CO2 business, making Exxon "the ideal partner with extensive resources and capabilities."

After emerging from bankruptcy in September 2020, Denbury, primarily generating revenue from enhanced oil recovery through CO2 injection, experienced a remarkable surge in its stock price, nearly quintupling. This surge was a result of the growing acceptance of carbon sequestration among U.S. companies striving to reduce greenhouse gas emissions.

According to filings, Denbury had 765 employees at the end of 2022, including 351 at the company’s corporate headquarters in Plano.

"It's a very logical, very straightforward way for Exxon to build on its existing business strength in carbon management technology," Raymond James analyst Pavel Molchanov said, adding the deal is "very small for Exxon, relative to its size." 

By acquiring Denbury, Exxon will gain access to its extensive pipeline network and sequestration sites. This acquisition offers Exxon a rapid means to offer carbon removal services to clients engaged in carbon reduction, including companies like Linde AG and CF Industries. Meanwhile, Exxon's own offshore storage facilities are still years away from becoming operational.