Occidental Petroleum Acquires Carbon Engineering for $1.1 Billion to Accelerate Carbon-Capture Projects

Occidental Petroleum, a major U.S. oil and gas producer, has announced its agreement to acquire technology supplier Carbon Engineering Ltd for $1.1 billion. The move is aimed at helping Occidental develop a series of carbon-capture sites that will contribute to efforts in combating climate change.

Occidental plans to construct approximately 100 plants using direct air capture (DAC) technology, which involves removing carbon dioxide (CO2) from the atmosphere and either burying it underground or utilizing it in the production of various products, such as concrete and aviation fuel.

While DAC technology is still in its early stages of commercialization, it requires significant investments to demonstrate its economic viability and profitability. Roth MKM brokerage firm noted that the acquisition is not a major deal for Occidental but raises concerns about cash burn at its Low Carbon Ventures division.

The payment for the acquisition will be spread over three annual installments, with the first payment due at closing, expected before the end of 2023.

Carbon dioxide is a greenhouse gas, and the Biden administration sees DAC technology as a crucial tool in achieving its goal of neutralizing emissions by 2050, provided it can be successfully commercialized and implemented on an industrial scale. Unlike carbon capture, which is applied to emissions from industrial facilities, DAC actively removes CO2 from the air.

Last week, the U.S. Department of Energy announced that sites in Texas and Louisiana would receive over $1 billion in federal grants, some of which will fund Occidental’s 30 proposed DAC plants in Kleberg County, Texas. These sites will be the first to receive funding from the $3.5 billion authorization for regional DAC hubs, which was included in the bipartisan infrastructure bill passed by Congress.

Occidental has been collaborating with Carbon Engineering on DAC deployment since 2019. The acquisition will enable Occidental to establish broader development partnerships for DAC deployment in a capital-efficient and valuable manner, according to Occidental CEO Vicki Hollub.

The acquisition of Carbon Engineering is a significant step for Occidental Petroleum in its commitment to addressing climate change and developing sustainable solutions for the energy industry.

What challenges and concerns does the Roth MKM brokerage firm have regarding Occidental’s Low Carbon Ventures division and the expenses associated with the acquisition of Carbon Engineering Ltd

Occidental Petroleum, one of the leading oil and gas producers in the United States, has recently made a big move towards combatting climate change. The company has announced its agreement to acquire technology supplier Carbon Engineering Ltd for a whopping $1.1 billion. Occidental’s goal with this acquisition is to develop a series of carbon-capture sites that will play a crucial role in the fight against climate change.

The plan is for Occidental to construct around 100 plants that will utilize direct air capture (DAC) technology. This innovative approach involves removing carbon dioxide (CO2) from the atmosphere and either disposing of it underground or utilizing it in the production of various products like concrete and aviation fuel.

Although DAC technology is still in its early stages of commercialization, it requires significant investments to prove its economic viability and profitability. Roth MKM brokerage firm has expressed concerns about cash burn at Occidental’s Low Carbon Ventures division, given the expenses associated with this acquisition.

The payment for the acquisition will be spread out over three annual installments, with the first payment expected at closing, which is anticipated to occur before the end of 2023.

Carbon dioxide is a greenhouse gas, and the Biden administration recognizes DAC technology as a crucial tool in achieving its emissions-neutral goal by 2050. However, for this technology to be effective, it needs to be successfully commercialized and implemented on an industrial scale. Unlike carbon capture, which targets emissions from industrial facilities, DAC actively removes CO2 directly from the air.

Just last week, the U.S. Department of Energy announced that sites in Texas and Louisiana would receive over $1 billion in federal grants, some of which will go towards funding Occidental’s proposed DAC plants in Kleberg County, Texas. These sites will be the first to benefit from the $3.5 billion authorization for regional DAC hubs, which was approved through the bipartisan infrastructure bill.

Occidental has been working closely with Carbon Engineering on deploying DAC since 2019. With this acquisition, Occidental will have the opportunity to establish more extensive development partnerships for DAC deployment in an efficient and valuable manner, as stated by Occidental CEO Vicki Hollub.

Overall, this acquisition marks a significant step for Occidental Petroleum in its commitment to addressing climate change and finding sustainable solutions for the energy industry.