Street View: Exxon gets leg up in carbon storage with Denbury deal

Denbury

14/07/2023 10:49

** Exxon Mobil Corp  XOM.N  on Thursday agreed to buy
Denbury Inc  DEN.N  for $4.9 billion to accelerate its energy
transition business with an established carbon dioxide (CO2)
sequestration operation
    
    'FIRST MOVER ADVANTAGE'
    ** Piper Sandler views the deal as "reasonable, relatively
low-risk" move to solidify XOM's dominant position in a business
with significant potential long-term upside
    ** RBC Capital Markets says while price point suggests
essentially "zero" premium to last close for Denbury
shareholders, the implications of XOM buying DEN will have
positive read-throughs for other E&Ps with carbon capture and
storage (CCS) opportunities
    ** TD Cowen believes the deal gives XOM a "first mover
advantage" in offering an integrated carbon capture service
along the U.S. Gulf Coast (USGC) emissions assets, enabling it
to grow volumes and capture a large portion of the potential
$85/t CCS credit offered by Inflation Reduction Act (IRA)
    ** Jefferies believes the combination addresses key issues
for XOM, such as removing the need for pipeline infrastructure,
and makes co even more "entrenched as the go-to provider of CO2
transport and storage" on the USGC

 (Reporting by Roshan Abraham)
 ((Roshan.Abraham@thomsonreuters.com))