Exxon Mobil Corp said on Thursday it would buy Denbury Inc in an all-stock transaction valued at $4.9 billion, giving the oil major access to the largest carbon dioxide pipeline network in the United States.
Plano, Texas-based Denbury specializes in using carbon dioxide to extract oil from old wells and thus is seen as an attractive asset for oil majors and other large-cap energy companies that are starting to make bigger bets on the environmental, social and corporate governance strategy.
Exxon, the largest U.S. oil producer, aims to cut its operational emissions by 2050 and plans to develop technologies that are currently not commercial such as carbon capture and storage, hydrogen power and biofuels from algae.
Exxon's acquisition also includes Denbury's Gulf Coast and Rocky Mountain oil and natural gas operations.
"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's CEO Darren Woods said in a statement.
Under the terms of the deal, Denbury shareholders would get 0.84 Exxon shares for each Denbury share they hold.
The deal, expected to close in the fourth quarter, represents a premium of 1.9% to Denbury's last close, according to Reuters calculation. Its shares were up about 1% at $88.35 in premarket trading.
Denbury exited bankruptcy in September 2020 and its stock has jumped nearly fivefold since then.