Denbury (NYSE:DEN) shares soared to an all-time intraday high $104.05 before settling for a 6.8% gain Monday after Bloomberg reported Exxon Mobil (NYSE:XOM) has expressed preliminary interest in buying the company, but no final decision has been made.
Denbury (DEN) owns more than than 1,300 miles of pipelines dedicated to transporting carbon dioxide, while buying the company would provide critical and hard-to-replicate infrastructure to support Exxon’s (XOM) carbon capture ambitions.
A takeover also would comprise the biggest carbon management investment since the August passage of the Inflation Reduction Act, which raised tax credits for carbon capture by 70% to $85/ton; executives including Exxon (XOM) CEO Darren Woods have praised the act for its financial support for carbon capture.
Denbury (DEN) also has the most aggressive net zero target of any large U.S. oil company, aiming to be carbon negative on a Scope 3 basis, which includes customers’ emissions, by 2030.
The company’s Rocky Mountain assets are connected to Exxon’s (XOM) Shute Creek gas facility near LaBarge, Wyoming, which has captured more carbon than any other asset in the U.S.
Denbury (DEN) recently was praised by Jinjoo Lee in The Wall Street Journal‘s Heard On The Street column, which touted the company’s carbon dioxide gathering infrastructure as being “in just the right place at the right time.”
Denbury’s (DEN) carbon solutions business “may provide significant upside,” Elephant Analytics wrote in an analysis published early this summer on Seeking Alpha.