Exxon Mobil Corp. (NYSE: XOM) has reached a deal with Plano, Texas’s Denbury Resources Inc. (NYSE: DNR) worth $1.6 billion, wherein it will purchase acreage in North Dakota and Montana’s Bakken field. The deal will allow it to expand oil production even as individual fields begin to produce lower volumes.
Denbury specializes in rejuvenating aging fields by injecting carbon dioxide into them. The company will gain Exxon’s interests in two fields located in Texas and Wyoming that could benefit from the carbon dioxide injection treatment. It will also either buy a stake in Exxon’s Wyoming CO2 reserves or buy CO2 from the field.
Bloomberg reports:
“This transaction also allows our team to sharpen our focus on what Denbury does best, CO{-2} enhanced recovery, which we believe offers one of the most compelling rates of return in oil industry today,” said Denbury chief executive Phil Rykhoek on a call with analysts.
This deal is part of Denbury’s continued effort to trim holdings to just fields that it can successfully rejuvenate via CO2 injections, while Exxon can acquire additional reserves that it likely needs. In the second quarter, for example, Exxon’s production was 5.6 percent less oil and gas than 2011. Now, Exxon has more than 600,000 acres in the Bakken shale. The acreage was previously acquired by Denbury back in 2010, when it bought out Encore.
Amid all this talk of expanded production, Exxon’s XTO President Jack Williams spoke in Philadelphia about the prospects of the U.S. exporting liquefied natural gas.
Exxon mentioned that it has thought about exporting XTO-produced gas, since the company has liquefaction facilities to export from Qatar, and Exxon possesses a regasification plant near the Sabine Pass for imports. As natural gas prices have fallen ever further over the past few years, the industry has increasingly been trying to find and develop new markets.
