M&A Moves

Newly Houston-headquartered ExxonMobil acquires carbon capture company in $4.9B deal

ExxonMobil has placed a big bet on the carbon capture market. Photo via exxonmobil.com

Spring-based energy giant ExxonMobil is making a nearly $5 billion bet on its future in the carbon capture sector.

ExxonMobil announced July 13 that it has agreed to buy Plano-based Denbury, a publicly traded company specializing in carbon capture, utilization, and storage (CCUS), in an all-stock deal valued at $4.9 billion. The deal’s value is based on ExxonMobil’s July 12 closing stock price — $89.45 per share.

Darren Woods, chairman and CEO of ExxonMobil, says the pending acquisition of Denbury “reflects our determination to profitably grow” his company’s low-carbon business unit.

The deal will give ExxonMobil the largest CO2 pipeline network in the U.S. at 1,300 miles, including nearly 925 miles in Texas, Louisiana, and Mississippi, along with 10 onshore carbon sequestration sites.

Dan Ammann, president of ExxonMobil Low Carbon Solutions, says Denbury’s CO2 infrastructure “provides significant opportunities to expand and accelerate ExxonMobil’s low-carbon leadership across our Gulf Coast value chains.”

“Once fully developed and optimized,” Ammann adds, “this combination of assets and capabilities has the potential to profitably reduce emissions by more than 100 million metric tons per year in one of the highest-emitting regions of the U.S.”

ExxonMobil explains that CCUS — when carbon dioxide is captured and stored deep underground instead of being released into the atmosphere — is viewed as critical to meeting net-zero goals. The company forecasts the global market for CCUS will catapult to $4 trillion by 2050. Houston-based consulting firm Rystad Energy predicts total spending on CCUS projects in 2023 will reach $7.4 billion.

In addition to Denbury’s CCUS assets, the deal with ExxonMobil includes Gulf Coast and Rocky Mountain oil and natural gas operations. These assets consist of reserves exceeding the equivalent of 200 million barrels of oil, with 47,000 oil-equivalent barrels per day of current production.

Directors at ExxonMobil and Denbury have unanimously approved the deal, which is expected to close in the fourth quarter of 2023.

Denbury, founded in 1951, posted $1.7 billion in revenue last year, up from 36 percent from 2021.

Chris Kendall, president and CEO of Denbury, launched his oil and gas career at Mobil Oil. Mobil merged with Exxon in 1999 to form the country’s largest oil and gas company, which just made official its headquarters relocation from Irving to Spring.

ExxonMobil generated revenue of nearly $413.7 billion in 2022, making it one of the country’s biggest publicly traded companies.

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A View From HETI

CenterPoint, NVIDIA and Palantir have formed Chain Reaction. Photo via Getty Images

Houston-based utility company CenterPoint Energy is one of the founding partners of a new AI infrastructure initiative called Chain Reaction.

Software companies NVIDIA and Palantir have joined CenterPoint in forming Chain Reaction, which is aimed at speeding up AI buildouts for energy producers and distributors, data centers and infrastructure builders. Among the initiative’s goals are to stabilize and expand the power grid to meet growing demand from data centers, and to design and develop large data centers that can support AI activity.

“The energy infrastructure buildout is the industrial challenge of our generation,” Tristan Gruska, Palantir’s head of energy and infrastructure, says in a news release. “But the software that the sector relies on was not built for this moment. We have spent years quietly deploying systems that keep power plants running and grids reliable. Chain Reaction is the result of building from the ground up for the demands of AI.”

CenterPoint serves about 7 million customers in Texas, Indiana, Minnesota and Ohio. After Hurricane Beryl struck Houston in July 2024, CenterPoint committed to building a resilient power grid for the region and chose Palantir as its “software backbone.”

“Never before have technology and energy been so intertwined in determining the future course of American innovation, commercial growth, and economic security,” Jason Wells, chairman, president, and CEO of CenterPoint added in the release.

In November, the utility company got the go-ahead from the Public Utility Commission of Texas for a $2.9 billion upgrade of its Houston-area power grid. CenterPoint serves 2.9 million customers in a 12-county territory anchored by Houston.

A month earlier, CenterPoint launched a $65 billion, 10-year capital improvement plan to support rising demand for power across all of its service territories.

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