Filed by Exxon Mobil Corporation
(Commission File No.: 001-02256)
Pursuant to Rule 425 of the Securities Act of 1933
Subject Company: Denbury Inc.
(Commission File No.: 001-12935)
ExxonMobil Second Quarter 2023 Earnings Call
Q&A
This abridged transcript presents questions related to ExxonMobil’s
announced Denbury acquisition during ExxonMobil’s second quarter 2023 earnings call held on July 28, 2023.
***
Roger Read (Wells Fargo): Great. Thank
you. A follow up question on the carbon capture side of the business. If we look, we've got global coal demand hitting a record in
‘23. Global oil demand is going to hit a record in ’23, if it hasn't already. Just curious, Darren, you've already
laid out your strategy. All that makes sense. The Denbury acquisition certainly fits well in that. Just curious if you're
getting any additional sort of outside pressure to maybe accelerate something on this, given that if you think about it from an energy
transition standpoint, you know, two or three years ago everybody was saying we would have already had peak demand for this. Peak
demand for that clearly not happening if we're going to have a lot more carbon emissions. Are you getting any additional pressure
to accelerate carbon capture?
Darren Woods: Yeah, I think what you're
seeing today is a reflection of the challenge that the world faces. And, frankly, an incomplete solution set. And I think,
you know, unfortunately, the focus, if you go back several years and I would say the exclusive focus on wind, solar and EVs and the fact
that other alternatives and other solutions that, frankly, at the time we were advocating for and, in fact, trying to develop internally
weren't considered or actually weren't actually accepted has slowed society's progress and its emissions reductions and capturing. I
think today there's this recognition that we need more solutions and that, frankly, the industry can bring those solutions to bear. And
at this stage of what is going to be a very complicated and expensive transition, we need as many solutions on the table as possible,
not eliminating any of them. And staying focused on emissions reductions, I think that's starting to resonate. And so, the challenge
here is this is a very nascent – the areas that we're focused on – which are the molecule oriented
parts of the business that that, you know, are very consistent
with our capabilities and expertise and advantages. We’re in the very early stages, frankly. We're in the lead in that
space. There aren't any other companies that have secured the kind of third party emission reduction opportunities that we have,
there aren't any parties out there that have got the scale of the investments that we're progressing. And so I think generally people
recognize that we're delivering on our ambition to lead the industry, and more than anything else, they’re supportive. Obviously
there's a desire to make things go faster, and frankly, that's a function of the opportunity set and, if you think about the IRA and the
role that it plays, that legislation hasn't even been translated into regulations yet, and that's going to be a critical step. And
I think there are many governments around the world who are working on appropriate legislation to incentivize and create a market for
carbon that hasn't come to be yet. We're very early in this process and there are a number of players in here who have a role to
deliver. We feel like we're delivering on our part, but there are other elements that have to come together for this to be successful. And
then, ultimately, we're going to need advances in technology to keep driving that cost down so that we can get to more and more dilute
streams of CO2 and we're doing a lot of work in that space. And frankly, again, I think our pipeline of opportunities, our technology
pipeline, I feel pretty good about and I hope to, in the next several years, to hopefully commercialize some technologies that further
reduce the cost of emissions reduction. So I think it’s early, a lot of work going on. I think we're making a lot
of good progress. We feel good about the role that we're playing and the leadership position that we have
Roger Read: Great. Thank you.
Operator: We'll go next to Sam Margolin
with Wolfe Research.
Sam Margolin (Wolfe Research): Hello. Is
that… is that better?
Darren Woods: That is better. That's
better. Sam, welcome back.
Sam Margolin: I’m okay. So the
question is about EOR as it pertains to Denbury, I think, you know, there's some optimism that EOR barrels might be credited with carbon
attributes
because it buries more CO2 than the associated emissions
of the oil. And so, you know, maybe that's option value, but I was just wondering where you stand on that topic and if it was at
all a factor. You know, as you look at different asset classes and saw that EOR was available.
Darren Woods: Yeah. So I would
say obviously that's the core business today of Denbury and it facilitated the infrastructure that they have in place …that frankly
for us was not a key driver or strategic driver of the opportunity. I think EOR, certainly in the short term, can play a role. But
if you think about the broader opportunity, it's really around carbon capture, storage, and sequestration and keeping the carbon under
the ground. So that's the longer term play for us. I mean, as I just commented here about the challenges with the regulation
and the translation of IRA into regulation, you know, we've got a class six well permitting that's going to be required for sequestration. That's
a fairly slow progress to date. So there's a lot of work that has to go into putting these pieces together so that we're successful. I
see EOR as providing a lot of optionality in the short term that as we're bringing on carbon capture facilities, working with third parties,
and we start capturing the CO2, if we don't have everything lined up on the sequestration side, the EOR gives us an opportunity to
progress these things and not lose schedule. So I think right now that's the way I would think about it. Certainly, it’s
not a strategic thrust for us as a company.
Sam Margolin: Understood. Thank
you so much.
Darren Woods: You bet. Thank you.
***
Operator: We'll go next to Paul Cheng
with Scotiabank.
Paul Cheng (Scotiabank): Hi. Thank
you. Good morning, guys.
Darren Woods: Good morning, Paul.
Paul Cheng: Thank you. You previously
had set a soft target to spend $17 billion in the low carbon business through 2027. Denbury sale, the acquisition is about 30%. And
you're
also saying that you're seeing a lot more opportunities. Should
we interpret that your 17 billion, that number, will be increased perhaps quite substantially?
Darren Woods: Thanks, Paul. I think
as you rightly point out, the Denbury acquisition was not part of the $17 billion. Maybe just a little bit of perspective on that. We,
given we're just starting that business up, as you can imagine, very early in the opportunity set and progressing the opportunities. I
think Dan and his team in the Low Carbon Solutions business have made tremendous progress in bringing those opportunities to
bear and manifest in contracts with customers. As we've talked about with the three big customers that we now have and demonstrating
that we can decarbonize some of these hard-to-decarbonize industries that don't have a lot of good alternatives. We've also got a
very significant investment opportunity in Baytown to bring on the world's largest hydrogen plant, and then we've got opportunities
for low carbon ammonia associated with that. So think a pretty robust portfolio. And with the announcements of the deals that
we've got to date, the commercial deals that we struck with the announcement of Denbury, I think a lot of recognition and interest
by outside potential customers that there's a real opportunity here and that ExxonMobil provides a real solution. So that's
the context I would say the $17 billion as we that was a looking at a portfolio of opportunities and in trying to assess how those how
quickly those opportunities would manifest themselves in the capital that would be required to do that. We're continuing that work. There's
a lot. And so as we continue to develop and make progress on these projects, some of the capital becomes more discrete and we can
see it a lot clearer. Other deals move out. And so I'd say right now it's a portfolio approach. We're not changing the
$17 billion to date. Frankly, the Denbury acquisition, if that goes through, will allow us to pull back on some of the grassroots
investments that we were making in logistics and substitute that with the assets that we've brought in from Denbury. So it's a, I'd
say kind of an evolving space. I think the thing to stay focused on, we're not going to compromise on our return criteria or the
advantaged criteria that we're insisting on for the projects that we bring to bear. We have to be low cost suppliers in this space. We
have to be leveraging the advantages the corporation has, and we have to be generating good, competitive returns. And that's going
to dictate the pace of how quickly that Capex manifests itself and, frankly, the size of it. And as we go through this year's plan,
I know, Dan and his
team's very focused on based on, you know, having a year
under their belts of continuing to execute and drive this business will develop more detailed plans and update that number. I don't know
if you have anything you want to add for Paul.
Kathy Mikells: Yeah, just the other
thing I want to mention is, especially as it relates to the CCS business, you know, what you're going to see over time is that we're building
a backlog and that backlog is what's going to support the future growing Capex kind of over the longer term and the profitable growth
of that business. So today, I would describe ExxonMobil's backlog as, you know, 5 million tons annually supported by three very large
industrial customers, one in the industrial gas sector, one in the steel sector, one that makes ammonia that that's used for fertilizer. Right. And,
you know, if you just think about what that does for society, those 5 million tons annually, that translates into the conversion of about
2 million cars from gas powered vehicles to electric vehicles. That's about all the [electric] cars that are on the road in the United
States today. And when we talk about the overall CCS opportunity across the Gulf Coast, we talk about 100 million tons annually. You
know, that's 20 times that number. But I'm going to go back to the fact that it will be supported by customer backlog that supports
a growing profitable business. So that's how you should think about it.
Paul Cheng: Great. Thank you.
***
Important Information about the Transaction and Where to Find It
In connection with the proposed transaction between Exxon Mobil Corporation
(“ExxonMobil”) and Denbury Inc. (“Denbury”), ExxonMobil and Denbury will file relevant materials with the Securities
and Exchange Commission (the “SEC”), including a registration statement on Form S-4 filed by ExxonMobil that will include
a proxy statement of Denbury that also constitutes a prospectus of ExxonMobil. A definitive proxy statement/prospectus will be mailed
to stockholders of Denbury. This communication is not a substitute for the registration statement, proxy statement or prospectus or any
other document that ExxonMobil or Denbury (as applicable) may file with the SEC in connection with the proposed transaction. BEFORE MAKING
ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS OF EXXONMOBIL AND DENBURY ARE URGED TO READ THE REGISTRATION STATEMENT,
THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS
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INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and security holders may obtain free copies of the registration
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Copies of the documents filed with the SEC by Denbury will be available free of charge on Denbury’s internet website at https://investors.denbury.com/investors/financial-information/sec-filings/
or by directing a request to Denbury Inc., ATTN: Investor Relations, 5851 Legacy Circle, Suite 1200, Plano, TX 75024, Tel. No. (972) 673-2000.
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These risks, as well as other risks associated with the proposed transaction,
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