Occidental’s $1.1bn acquisition of Carbon Engineering: A step towards global carbon capture

Occidental (NYSE: OXY) recently confirmed the acquisition of all outstanding equity of Carbon Engineering Ltd. The definitive purchase agreement details a total cash consideration of approximately $1.1 billion, split into three almost equal yearly payments, starting with the initial payment at the transaction’s closing. This acquisition is anticipated to finalize by the end of 2023, pending Canadian court reviews, regulatory approvals from both Canadian and U.S. bodies, and other standard closing prerequisites.

Carbon Engineering’s Innovative Technology

Known as a forerunner in climate solutions, Carbon Engineering (CE) is centralizing its efforts on the global deployment of Direct Air Capture (DAC) technology. This technology allows for the capture of carbon dioxide directly from the atmosphere, enabling its underground storage or conversion into clean transportation fuels. CE, alongside its collaborators, envisions establishing commercial DAC units in several international markets.

Carbon Engineering’s Direct Air Capture Technology Set to Boost Occidental’s Net-Zero Strategy. Photo courtesy of Marcin from Pixabay.

Strategic Collaboration since 2019

The rapport between Occidental and Carbon Engineering isn’t new, having collaboratively explored DAC deployment opportunities since 2019. This strategic move syncs with Occidental’s comprehensive net-zero vision. Through its subsidiary, 1PointFive, Occidental aims to spearhead DAC technology innovations and bolster its worldwide roll-out as an efficient carbon elimination solution. Carbon Engineering’s DAC-driven solutions stand out due to their standardized processes and trusted industrial equipment.

What Industry Leaders Have to Say

Occidental President and CEO, Vicki Hollub, articulated her optimism: “We expect the acquisition of Carbon Engineering to deliver our shareholders value through an improved drive for technology innovation and accelerated DAC cost reductions. The technology partnership also adds new revenue streams in the form of technology licensing and royalties.” She added that the union would empower Occidental to catalyze more expansive DAC deployment collaborations, maximizing capital efficiency.

Sharing her excitement, Hollub remarked, “Together, Occidental and Carbon Engineering can accelerate plans to globally deploy DAC technology at a climate-relevant scale.”

Carbon Engineering CEO, Daniel Friedmann, echoed Hollub’s sentiments, highlighting their shared commitment to DAC-based climate solutions in the U.S. and globally.

The Future Vision: Stratos and More

Post-acquisition, Carbon Engineering will operate under Oxy Low Carbon Ventures as a fully owned subsidiary. Its personnel will further DAC technology endeavors, liaising with Occidental and 1PointFive to usher DAC solutions to the marketplace. Additionally, 1PointFive is in the midst of constructing Stratos, the largest DAC plant globally, set to commence operations in 2025 in Ector County, Texas. Both companies are also collaborating on a DAC plant at King Ranch in Kleberg County, which is part of the South Texas DAC Hub, recognized by the U.S. Department of Energy’s Office of Clean Energy Demonstrations.