As filed with the Securities and Exchange Commission on August 29, 2023

Registration No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

EXXON MOBIL CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

New Jersey		2911		13-5409005
(State or Other Jurisdiction of		(Primary Standard Industrial		(I. R. S. Employer
Incorporation or Organization)		Classification Code Number)		Identification Number)

22777 Springwoods Village Parkway

Spring, Texas 77389-1425

(972) 940-6000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Craig S. Morford

Vice President, General Counsel and Secretary

Exxon Mobil Corporation

Spring, Texas 77389-1425

(972) 940-6000

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

 

 

Copies to:

 

Louis L. Goldberg, Esq. H. Oliver Smith, Esq. Shanu Bajaj, Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 (212) 450-4000		James S. Matthews Executive Vice President, Chief Administrative Officer, General Counsel and Secretary Denbury Inc. 5851 Legacy Circle, Suite 1200 Plano, Texas 75024 (972) 673-2000		Stephen M. Gill Douglas E. McWilliams D. Alex Robertson Vinson & Elkins LLP 845 Texas Avenue, Suite 4700 Houston, Texas 77002 (713) 758-2222

 

 

Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective and upon completion of the merger of EMPF Corporation, a wholly owned subsidiary of Exxon Mobil Corporation, with and into Denbury Inc.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.

 

Large accelerated filer		☒		Accelerated filer		☐
Non-accelerated filer		☐		Smaller reporting company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Securities Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Securities Exchange Act Rule 14d-l(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.

 

 

 

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. The attached proxy statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED AUGUST 29, 2023

 

TRANSACTION PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Stockholders of Denbury Inc.:

On July 13, 2023, Denbury Inc. (“Denbury”), Exxon Mobil Corporation (“ExxonMobil”) and EMPF Corporation, a wholly owned subsidiary of ExxonMobil (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), under which, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into Denbury, with Denbury surviving as a wholly owned subsidiary of ExxonMobil (the “Merger”).

If the Merger is completed, Denbury stockholders will receive, in exchange for each share of Denbury common stock, par value $0.001 per share, held immediately prior to the Merger, 0.840 of a share of ExxonMobil common stock, without par value (such consideration, the “Merger Consideration”).

Denbury’s board of directors has unanimously approved the Merger Agreement and recommends that Denbury stockholders vote in favor of approving and adopting the Merger Agreement.

Based on ExxonMobil’s closing stock price on             , 2023, the most recent practicable date for which such information was available, the Merger Consideration represented approximately $         in value per share of ExxonMobil common stock, which represents a premium of approximately            % over the closing price of the Denbury common stock on July 12, 2023, the last trading day before the public announcement of the execution of the Merger Agreement with ExxonMobil. The value of the Merger Consideration to be received in exchange for each share of Denbury common stock will fluctuate with the market value of ExxonMobil common stock until the Merger is complete. The Denbury common stock is listed on The New York Stock Exchange (the “NYSE”) under the symbol “DEN”. The ExxonMobil common stock is listed on the NYSE under the symbol “XOM”.

The Merger cannot be completed without approval of the proposal to adopt the Merger Agreement by the affirmative vote of holders of a majority of the outstanding shares of Denbury common stock entitled to vote thereon. Because of this, Denbury is holding a special meeting of its stockholders on             , 2023 (the “Special Meeting”) to vote on the proposal necessary to complete the Merger. Information about the Special Meeting, the Merger, the Merger Agreement and the other business to be considered by stockholders at the Special Meeting is contained in this proxy statement/prospectus. Denbury’s board of directors has fixed the close of business on            , 2023 as the record date for the determination of Denbury stockholders entitled to notice of, and to vote at, the Special Meeting. Any stockholder entitled to attend and vote at the Special Meeting is entitled to appoint a proxy to attend and vote on such stockholder’s behalf. Such proxy need not be a holder of Denbury common stock. We urge you to read this proxy statement/prospectus and the annexes and documents incorporated by reference carefully. You should also carefully consider the risks that are described in the “Risk Factors” section beginning on page 30.

The Denbury board of directors has unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to and in the best interests of Denbury and its stockholders, approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger in accordance with the requirements of the Delaware General Corporation Law and directed that the Merger Agreement be submitted to the Denbury stockholders for adoption at a meeting of such stockholders. The Denbury board of directors unanimously recommends that Denbury stockholders vote “FOR” the proposal to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger.

Your vote is very important regardless of the number of shares of Denbury common stock that you own.

Whether or not you plan to attend the Special Meeting virtually, please submit your proxy as soon as possible by following the instructions on the accompanying proxy card to make sure that your shares are represented at the meeting. If your shares are held in the name of a broker, bank or other nominee, please follow the instructions on the voting instruction form furnished by the broker, bank or other nominee. You must provide voting instructions by filling out the voting instruction form in order for your shares to be voted.

The Special Meeting will be held in a virtual meeting format only. You will not be able to attend the Special Meeting physically in person.

Thank you for your continued support.

Very truly yours,

Christian S. Kendall

President and Chief Executive Officer

Denbury Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Merger or the other transactions described in this proxy statement/prospectus or the securities to be issued in connection with the Merger or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated             , 2023, and is first being mailed to stockholders of Denbury on or about             , 2023.

ADDITIONAL INFORMATION

The accompanying document is the proxy statement of Denbury for the Special Meeting and the prospectus of ExxonMobil for the shares of ExxonMobil common stock to be issued to Denbury stockholders as consideration in the Merger. The accompanying proxy statement/prospectus incorporates by reference important business and financial information about Denbury and ExxonMobil from documents that are not included in or delivered with the accompanying proxy statement/prospectus. You can obtain the documents incorporated by reference into the accompanying proxy statement/prospectus (other than certain exhibits or schedules to these documents), without charge, by requesting them in writing or by telephone from Denbury or ExxonMobil at the following addresses and telephone numbers, or through the Securities and Exchange Commission website at www.sec.gov:

 

Denbury		ExxonMobil
5851 Legacy Circle, Suite 1200		22777 Springwoods Village Parkway
Plano, TX 75024		Spring, Texas 77389-1425
Attention: Investor Relations		Attention: Investor Relations
(972) 673-2000		(972) 940-6000 (General)
IR@denbury.com		Investor.relations@exxonmobil.com

In addition, if you have any questions concerning the Merger Agreement or the Merger or the other transactions contemplated by the Merger Agreement, or the accompanying proxy statement/prospectus, or if you would like additional copies of this proxy statement/prospectus or documents incorporated by reference herein, or if you need help voting your shares of Denbury common stock, please contact Denbury’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York, New York 10022

Stockholders May Call Toll-Free: (877) 717-3905

Banks & Brokers May Call Collect: (212) 750-5833

If you would like to request documents, please do so no later than five business days before the date of the Special Meeting (which date is      , 2023).

See “Where You Can Find More Information” beginning on page 177 of the accompanying proxy statement/prospectus for further information.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD                , 2023

To our Stockholders:

You are hereby notified that a Special Meeting of Stockholders of Denbury Inc., a Delaware corporation (“Denbury”), will be held virtually at    www.virtualshareholdermeeting.com/DEN2023SM at                 Central Time (CT) on                 , 2023, for the following purposes:

 

a.

to vote on a proposal to approve and adopt the Agreement and Plan of Merger, dated July 13, 2023, by and among Exxon Mobil Corporation, a New Jersey corporation (“ExxonMobil”), EMPF Corporation, a Delaware corporation and wholly owned subsidiary of ExxonMobil (“Merger Sub”), and Denbury (as it may be amended from time to time, the “Merger Agreement”), which is further described in the section titled “The Merger Agreement” beginning on page 111, and a copy of which is attached as Annex A to the proxy statement/prospectus of which this notice forms a part (the “Merger Agreement Proposal”); and

 

b.

to hold an advisory vote to approve the compensation that may be paid or become payable to Denbury’s named executive officers that is based on or otherwise related to the merger (the “Advisory Compensation Proposal”).

Denbury will transact no other business at the Special Meeting except such business as may properly be brought before the Special Meeting or any adjournment or postponement thereof by or at the direction of the Denbury board of directors. Please refer to the proxy statement/prospectus of which this notice forms a part for further information with respect to the business to be transacted at the Special Meeting.

Only stockholders of record as of            , 2023 are entitled to notice of, and to vote at, the Special Meeting. The Special Meeting will be held at                 .

To be admitted to the Special Meeting at www.virtualshareholdermeeting.com/DEN2023SM, stockholders must enter the control number found on their proxy card, voting instruction form or notice. Once properly admitted to the Special Meeting, stockholders of record as of the record date may vote their shares by following the instructions available on the meeting website during the meeting and may also view the complete list of stockholders entitled to vote at the annual meeting. To ask a question pertaining to the business of the Special Meeting, stockholders must submit it in advance of the Special Meeting by visiting     . Questions may be submitted until 11:59 p.m., Central Time, on        , 2023. Each stockholder will be limited to no more than one question. Technical support will be available on the meeting platform at                beginning at                a.m. Central Time on             , 2023 or by calling             (US) or             (International). The technical support offered through this service is designed to address difficulties related to the virtual meeting website, and it is recommended that you contact your broker should you be unable to locate your control number.

Completion of the Merger is conditioned on adoption of the Merger Agreement by the Denbury stockholders, which requires the affirmative vote of holders of a majority of the outstanding shares of Denbury common stock entitled to vote thereon.

The Denbury board of directors has unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to and in the best interests of Denbury and its stockholders, approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger in accordance with the requirements of the

Delaware General Corporation Law and directed that the Merger Agreement be submitted to the Denbury stockholders for adoption at a meeting of such stockholders. The Denbury board of directors unanimously recommends that Denbury stockholders vote “FOR” the proposal to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger.

Your vote is very important regardless of the number of shares of Denbury common stock that you own. If you plan to attend the Special Meeting virtually, please follow the instructions as outlined in this proxy statement/prospectus. Whether or not you expect to attend the Special Meeting virtually, we urge you to submit your vote in advance of the meeting. If your shares are held in the name of a broker, bank or other nominee, please vote by following the instructions on the voting instruction form furnished by the broker, bank or other nominee. If you hold your shares in your own name, submit a proxy to vote your shares as promptly as possible by (i) visiting the internet site listed on the accompanying proxy card, (ii) calling the toll-free number listed on the proxy card or (iii) submitting your proxy card by mail by using the self-addressed, stamped envelope provided. Submitting a proxy will not prevent you from voting virtually at the meeting, but it will help to secure a quorum and avoid added solicitation costs. Any eligible holder of Denbury common stock may vote virtually at the Special Meeting, thereby revoking any previous proxy. In addition, a proxy may also be revoked in writing before the Special Meeting in the manner described in the proxy statement/prospectus of which this notice is a part.

The proxy statement/prospectus of which this notice is a part provides a detailed description of the Merger and the Merger Agreement and the other matters to be considered at the Special Meeting. We urge you to carefully read this proxy statement/prospectus, including any documents incorporated by reference herein, and the annexes in their entirety. In particular, we urge you to carefully read the section entitled “Risk Factors” beginning on page 30.

If you have any questions concerning the Merger or this proxy statement/prospectus, would like additional copies or need help voting your shares of Denbury common stock, please contact Denbury’s proxy solicitor: Innisfree M&A Incorporated at (877) 717-3905.

By order of the Board of Directors,

James S. Matthews

Executive Vice President, Chief Administrative Officer,

General Counsel and Secretary

Denbury Inc.

            , 2023

TABLE OF CONTENTS

 

		Page
QUESTIONS AND ANSWERS			1
SUMMARY			12
The Companies			12
The Merger			13
The Special Meeting			13
What Denbury Stockholders Will Receive in the Merger			15
No Dissenters’ or Appraisal Rights			15
Treatment of Denbury Equity Awards			16
Recommendation of the Denbury Board of Directors			16
Opinions of Denbury’s Financial Advisors			16
Ownership of Shares of ExxonMobil Common Stock After the Merger			18
Interests of Denbury’s Directors and Executive Officers in the Merger			18
Listing of Shares of ExxonMobil Common Stock and Delisting and Deregistration of Denbury Common Stock			19
Completion of the Merger is Subject to Certain Conditions			19
The Merger May Not Be Completed Without All Required Regulatory Approvals			20
No Solicitation by Denbury			21
Termination of the Merger Agreement			23
Specific Performance; Remedies			25
U.S. Federal Income Tax Consequences of the Merger			25
Accounting Treatment			26
Rights of Denbury Stockholders Will Change as a Result of the Merger			26
Risk Factors			26
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION			28
Market Prices			28
Dividends			28
RISK FACTORS			30
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			40
THE COMPANIES			42
Exxon Mobil Corporation			42
Denbury Inc.			42
EMPF Corporation			42
THE SPECIAL MEETING			43
Date, Time and Place of the Special Meeting			43
Purposes of the Special Meeting			43
Recommendation of the Denbury Board of Directors			43
Record Date; Stockholders Entitled to Vote			44
Quorum			44
Required Vote; Treatment of Abstentions and Broker Non-Votes			44
Share Ownership; Voting by Denbury’s Directors and Executive Officers			45
Voting of Denbury Common Stock			45
Revocation of Proxies			46
Inspector of Elections; Tabulation of Votes			47
Solicitation of Proxies			47
Adjournments and Postponements			47
Other Matters			47
Householding of Proxy Statement/Prospectus			48
Questions and Additional Information			48
THE MERGER			49

 

i

		Page
General			49
The Parties			49
Background of the Merger			50
Certain Relationships between ExxonMobil and Denbury			71
Recommendation of the Denbury Board of Directors and Reasons for the Merger			72
ExxonMobil’s Reasons for the Merger			78
Certain Denbury Unaudited Prospective Financial Information			79
Opinions of Denbury’s Financial Advisors			86
Regulatory Approvals Required for the Merger			107
No Dissenters’ or Appraisal Rights			109
U.S. Federal Income Tax Consequences of the Merger			109
Accounting Treatment			110
Listing of Shares of ExxonMobil Common Stock and Delisting and Deregistration of Shares of Denbury Stock			110
THE MERGER AGREEMENT			111
Explanatory Note			111
Structure of the Merger			111
Completion and Effectiveness of the Merger			111
Merger Consideration			112
Fractional Shares			113
Procedures for Surrendering Denbury Stock Certificates			113
Treatment and Quantification of Denbury Equity Awards			114
Listing of Shares of ExxonMobil Common Stock			115
Governance Matters Following Completion of the Merger			115
Conditions to Completion of the Merger			116
Representations and Warranties			117
Definition of “Material Adverse Effect”			118
Conduct of Business Pending the Merger			119
Obligations to Call Stockholders’ Meeting			123
Obligations to Recommend the Approval and Adoption of the Merger Agreement			124
No Solicitation			124
Reasonable Best Efforts Covenant			127
Proxy Statement/Prospectus and Registration Statement Covenant			128
Indemnification and Insurance			129
Employee Matters			130
Tax Matters			131
Other Agreements			131
Termination of the Merger Agreement			132
Exclusive Remedy			134
Other Expenses			134
Specific Performance; Remedies			135
Third Party Beneficiaries			135
Amendments; Waivers			135
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER			136
INTERESTS OF DENBURY’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER			139
Certain Assumptions			139
Background for Certain Denbury 2020 Equity Awards			139
Treatment and Quantification of Denbury Equity Awards			140
Severance Agreements			142
Golden Parachute Compensation			143
PROPOSAL I—APPROVAL AND ADOPTION OF THE MERGER AGREEMENT			146

 

ii

		Page
PROPOSAL II—NON-BINDING ADVISORY VOTE ON TRANSACTION-RELATED COMPENSATION FOR CERTAIN DENBURY EXECUTIVE OFFICERS			147
DESCRIPTION OF EXXONMOBIL CAPITAL STOCK			148
Authorized Capital Stock			148
Description of Common Stock			148
Description of Preferred Stock			148
Transfer Agent and Registrar			149
COMPARISON OF STOCKHOLDER RIGHTS			150
SECURITY OWNERSHIP OF CERTAIN DENBURY BENEFICIAL OWNERS AND MANAGEMENT			171
EXPERTS			174
LEGAL MATTERS			175
FUTURE DENBURY STOCKHOLDER PROPOSALS			176
WHERE YOU CAN FIND MORE INFORMATION			177
ANNEXES
Annex A: Agreement and Plan of Merger			A-1
Annex B: Opinion of J.P. Morgan Securities LLC			B-1
Annex C: Opinion of TPH & Co.			C-1
Annex D: Opinion of PJT Partners LP			D-1
PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS			II-1

 

iii

QUESTIONS AND ANSWERS

The following are some questions that you, as a stockholder of Denbury, may have regarding the Merger and other matters being considered at the special meeting of Denbury stockholders (the “Special Meeting”) and brief answers to those questions. To better understand these matters, and for a description of the legal terms governing the Merger, Denbury urges you to carefully read the remainder of this proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the Merger and the other matters being considered at the Special Meeting. Additional important information is also contained in the annexes to this proxy statement/prospectus and the documents incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 177 of this proxy statement/prospectus.

Q: Why am I receiving this document?

A: Exxon Mobil Corporation, a New Jersey corporation (“ExxonMobil”), EMPF Corporation, a wholly owned subsidiary of ExxonMobil (“Merger Sub”), and Denbury Inc., a Delaware corporation (“Denbury”), have entered into an Agreement and Plan of Merger, dated as of July 13, 2023 (as it may be amended from time to time, the “Merger Agreement”), providing for the merger of Merger Sub with and into Denbury (the “Merger”), with Denbury surviving the Merger as a wholly owned subsidiary of ExxonMobil. In order to complete the Merger, Denbury stockholders must approve the proposal to adopt the Merger Agreement and all other conditions to the Merger must be satisfied or waived.

Denbury will hold the Special Meeting to obtain approval of the Merger Agreement proposal and approvals with respect to certain other related matters. This proxy statement/prospectus, which you should read carefully, contains important information about the Merger and other matters being considered at the Special Meeting.

This document is being delivered to you as both a proxy statement of Denbury and a prospectus of ExxonMobil in connection with the Merger. It is the proxy statement by which the Denbury board of directors is soliciting proxies from Denbury stockholders to vote at the Special Meeting, or at any adjournment or postponement of the Special Meeting, on the approval of the Merger Agreement Proposal and the approval of the Advisory Compensation Proposal, each as described more fully herein. In addition, this document is the prospectus by which ExxonMobil will issue shares of ExxonMobil common stock to Denbury stockholders in the Merger in accordance with the Merger Agreement.

Your vote is important regardless of the amount of shares of Denbury common stock that you own. We encourage you to vote as soon as possible.

Q: What is the purpose of the Special Meeting?

A: At the Special Meeting, holders of Denbury common stock will act upon all the matters outlined in the Notice of Special Meeting of Stockholders. These include:

 

1.

a proposal to approve and adopt the Merger Agreement (the “Merger Agreement Proposal”); and

 

2.

to approve, on an advisory basis, the compensation that may be paid or become payable to Denbury’s named executive officers in connection with the Merger (the “Advisory Compensation Proposal”).

Q: What is a proxy and how does it work?

A: The Denbury board of directors is asking for your proxy. A “proxy” is your legal designation of another person to vote the stock you own in the manner you direct. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. By giving your proxy to the persons named as proxy holders in the proxy card accompanying this proxy statement/prospectus, you authorize them to vote your

 

1

shares of Denbury common stock, $0.001 par value per share, at the Special Meeting in the manner you direct. You may cast votes “FOR,” “AGAINST” or “ABSTAIN” with respect to all, some or none of the matters we are submitting to a vote of holders of Denbury common stock at the Special Meeting.

If you complete and submit your proxy in one of the manners described below, but do not specify how to vote, the proxy holders will vote your shares “FOR” each of the proposals described below.

Q: What will Denbury stockholders receive for their shares of Denbury common stock in the Merger?

A: At the effective time of the Merger (the “effective time”), each share of Denbury common stock issued and outstanding immediately prior to the effective time (including the unvested restricted stock of Denbury, but excluding shares of Denbury common stock held (1) in treasury (excluding Denbury common stock subject to or issuable in connection with a Denbury employee benefit plan) or (2) by ExxonMobil or Merger Sub, which are to be cancelled at the effective time (collectively, the “excluded shares”)) will be converted into the right to receive 0.840 shares of ExxonMobil common stock (the “share consideration”). No fractional shares of ExxonMobil common stock will be issued and each Denbury stockholder who would otherwise have been entitled to receive a fraction of a share of ExxonMobil common stock in connection with the Merger shall receive in lieu thereof a cash payment (together with the share consideration, the “Merger Consideration”), without interest and subject to any applicable withholding taxes, in accordance with the Merger Agreement.

Although the number of shares of ExxonMobil common stock that Denbury stockholders will receive in the Merger is fixed, the market value of the Merger Consideration will fluctuate with the market price of ExxonMobil common stock and will not be known at the time that holders of Denbury common stock vote to adopt the Merger Agreement. Based on the closing price of ExxonMobil’s common stock on the New York Stock Exchange (“NYSE”) on July 12, 2023, the last trading day before the public announcement of the Merger, the 0.840 exchange ratio represented approximately $89.45 in implied value for each share of Denbury common stock. Based on ExxonMobil’s closing price on      , 2023 of $        , the 0.840 exchange ratio represented approximately $         in implied value for each share of Denbury common stock. The market price of ExxonMobil common stock when Denbury stockholders receive those shares after the Merger is completed could be greater than, less than or the same as the market price of shares of ExxonMobil common stock on the date of this proxy statement/prospectus or at the time of the Special Meeting.

Q: If I am a holder of Denbury common stock, how will I receive the Merger Consideration to which I am entitled?

A: The conversion of Denbury common stock into the right to receive the Merger Consideration will occur automatically upon the completion of the Merger. Promptly after the effective time and in any event within five (5) business days of the completion of the Merger, an exchange agent will mail to each holder of record of Denbury common stock (whose shares were converted into the right to receive the Merger Consideration pursuant to the Merger Agreement) a letter of transmittal and instructions for use in effecting the surrender of certificates representing shares of Denbury common stock (“Certificates”) and book-entry shares representing shares of Denbury common stock (“Uncertificated Shares”) in exchange for the Merger Consideration and any dividends or other distributions to which such Certificates or Uncertificated Shares become entitled to pursuant to the Merger Agreement.

Upon receipt by the exchange agent of (i) either Certificates or Uncertificated Shares and (ii) a duly completed and validly executed letter of transmittal, and such other documents as may be required pursuant to the instructions in the letter of transmittal and otherwise by the exchange agent, the holder of such Certificates or Uncertificated Shares will be entitled to receive the Merger Consideration in exchange therefor.

Q: Who will own ExxonMobil common stock immediately following the transactions?

A: ExxonMobil and Denbury estimate that, as of immediately following completion of the Merger, holders of ExxonMobil common stock as of immediately prior to the Merger will hold approximately      % and holders of

 

2

Denbury common stock as of immediately prior to the Merger will hold approximately         % of the outstanding shares of ExxonMobil common stock (or, on a fully diluted basis, holders of ExxonMobil common stock as of immediately prior to the Merger will hold approximately         % and holders of Denbury common stock as of immediately prior to the Merger will hold approximately         % of the shares of ExxonMobil common stock).

Q: How important is my vote?

A: Your vote “FOR” each proposal presented at the Special Meeting is very important regardless of the number of shares of Denbury common stock that you own, and you are encouraged to submit a proxy or proxies as soon as possible.

Q: What vote is required to approve each proposal at the Special Meeting?

A: Approval of the Merger Agreement proposal requires the affirmative vote of holders of a majority in voting power of the outstanding shares of Denbury common stock, at the Special Meeting present (via the Denbury meeting website) or by proxy, entitled to vote on the Merger Agreement proposal. Any abstention by a holder of Denbury common stock and the failure of any holder of Denbury common stock to submit a vote will have the same effect as voting “AGAINST” the Merger Agreement proposal.

Adoption of the Advisory Compensation Proposal requires the affirmative vote of the majority of the voting power present (via the Denbury meeting website) or represented by proxy and entitled to vote on such proposal. Abstentions from voting by a Denbury stockholder attending the Special Meeting via the Denbury meeting website or voting by proxy will have the same effect as a vote “AGAINST” the Advisory Compensation Proposal. A failure to attend the Special Meeting via the Denbury meeting website or by proxy will have no effect on the outcome of the vote on the Advisory Compensation Proposal. Because the Advisory Compensation Proposal is non-binding, if the Merger Agreement is approved by Denbury stockholders and the Merger is completed, the compensation that is the subject of the Advisory Compensation Proposal, including amounts Denbury is contractually obligated to pay, would still be paid regardless of the outcome of the non-binding advisory vote.

See “The Special Meeting—Required Vote; Treatment of Abstentions and Broker Non-Votes” beginning on page 44 of this proxy statement/prospectus.

Q: How does the Denbury board of directors recommend that I vote?

A: Denbury’s board of directors, after considering the various factors described under “The Merger—Recommendation of the Denbury Board of Directors and Reasons for the Merger” beginning on page 72 of this proxy statement/prospectus, the comprehensive process conducted by the Denbury board of directors and the alternatives to the Merger (including Denbury remaining as a standalone company), unanimously (i) determined that it is in the best interests of Denbury and its stockholders, and declared it advisable, for Denbury to enter into the Merger Agreement, (ii) approved the execution, delivery and performance by Denbury of the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, and (iii) resolved to recommend the adoption of the Merger Agreement by holders of Denbury common stock and that the adoption of the Merger Agreement be submitted to a vote at a meeting of holders of Denbury common stock.

Accordingly, the Denbury board of directors unanimously recommends that holders of Denbury common stock vote “FOR” the adoption of the Merger Agreement and “FOR” the approval on an advisory (non-binding) basis of certain compensation that may be paid or become payable to Denbury’s named executive officers in connection with the Merger.

 

3

Q: Are there any Denbury stockholders who have already committed to voting in favor of the Merger Agreement Proposal at the Special Meeting?

A: Denbury’s directors and executive officers have the right to vote approximately shares of the then-outstanding Denbury common stock at the Special Meeting, collectively representing approximately        % of the Denbury common stock outstanding and entitled to vote on that date. We currently expect that Denbury’s directors and executive officers will vote their shares “FOR” the Merger Agreement Proposal and “FOR” the Advisory Compensation Proposal, although no director or executive officer has entered into any agreement obligating him or her to do so.

Q: Will the ExxonMobil common stock received at the time of completion of the Merger be traded on an exchange?

A: Yes. It is a condition to the consummation of the Merger that the shares of ExxonMobil common stock to be issued to Denbury stockholders in connection with the Merger be authorized for listing on the NYSE, subject to official notice of issuance.

Q: How will ExxonMobil shareholders be affected by the Merger?

A: Upon completion of the Merger, each ExxonMobil shareholder will hold the same number of shares of ExxonMobil stock that such stockholder held immediately prior to completion of the Merger. As a result of the Merger, ExxonMobil shareholders will own shares in a larger consolidated company with more assets. However, because in connection with the Merger, ExxonMobil will be issuing additional shares of ExxonMobil common stock to Denbury stockholders in exchange for their shares of Denbury common stock, each outstanding share of ExxonMobil common stock as of immediately prior to the Merger will represent a smaller percentage of the aggregate number of shares of ExxonMobil common stock outstanding after the Merger.

Q: What are the U.S. federal income tax consequences of the Merger to holders of Denbury common stock?

A: The Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and ExxonMobil and Denbury intend to report the Merger consistent with such qualification. Each of ExxonMobil and Denbury has agreed in the Merger Agreement to use its reasonable best efforts (i) to cause the Merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code and (ii) not to, and not permit or cause any of its respective subsidiaries or affiliates to, take or cause to be taken any action reasonably likely to cause the Merger to fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes. The receipt of an opinion from counsel on the qualification of the Merger as a “reorganization” within the meaning of Section 368(a) of the Code is not a condition to either party’s obligation to complete the Merger. ExxonMobil and Denbury have not sought, and will not seek, any ruling from the U.S. Internal Revenue Service (the “IRS”) regarding any matters related to the transactions, and, as a result, there can be no assurance that the IRS would not assert, or that a court would not sustain, a position contrary to the treatment of the Merger as a “reorganization” within the meaning of Section 368(a) of the Code. Assuming that the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, U.S. holders (as defined in “U.S. Federal Income Tax Consequences of the Merger”) generally will not recognize gain or loss for U.S. federal income tax purposes, except with respect to cash received in lieu of fractional shares of ExxonMobil common stock. If the Merger does not qualify as a “reorganization”, the Merger generally would be a taxable transaction to U.S. holders, and each U.S. holder generally would recognize gain or loss in an amount equal to the difference, if any, between (i) the sum of the value of the ExxonMobil common stock it receives in the Merger plus the amount of any cash it receives in lieu of fractional shares of ExxonMobil common stock and (ii) such holder’s adjusted tax basis in its shares of Denbury common stock exchanged in the Merger.

The U.S. federal income tax consequences described above may not apply to all holders of Denbury common stock. You should read “U.S. Federal Income Tax Consequences of the Merger” beginning on page 136 of this

 

4

proxy statement/prospectus for a more complete discussion of the U.S. federal income tax consequences of the Merger. Tax matters can be complicated and the tax consequences of the Merger to you will depend on your particular tax situation. You should consult your own tax advisor to determine the tax consequences of the Merger to you.

Q: When do ExxonMobil and Denbury expect to complete the Merger?

A: ExxonMobil and Denbury currently expect to complete the Merger in the fourth quarter of 2023, subject to timing of satisfaction of closing conditions to the Merger. However, neither ExxonMobil nor Denbury can predict the actual date on which the Merger will be completed, nor can the parties provide any assurance that the Merger will be completed. See “Risk Factors,” “The Merger—Regulatory Approvals Required for the Merger” and “The Merger Agreement—Conditions to Completion of the Merger” beginning on pages 30, 107 and 116, respectively, of this proxy statement/prospectus.

Q: Is the completion of the Merger subject to any conditions?

A: Yes. ExxonMobil, Merger Sub and Denbury are not required to complete the Merger unless certain conditions are satisfied (or, to the extent permitted by applicable law, waived). These conditions include, among others, the approval and adoption of the Merger Agreement by holders of a majority of Denbury common stock and the expiration or termination of any applicable waiting period, or any extension thereof, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) (in the case of ExxonMobil and Merger Sub’s obligation to complete the Merger, without the imposition of a Burdensome Condition (see “The Merger Agreement – Reasonable Best Efforts Covenant” beginning on page 127 of this proxy statement/prospectus)). For a more complete summary of the conditions that must be satisfied (or, to the extent permitted by applicable law, waived) prior to completion of the Merger, see “The Merger Agreement—Conditions to Completion of the Merger” and “The Merger—Regulatory Approvals Required for the Merger” beginning on pages 116 and 107, respectively, of this proxy statement/prospectus.

Q: What happens if the Merger is not completed?

A: In the event that the Merger Agreement is not adopted by Denbury’s stockholders at the Special Meeting or the Merger is not completed for any other reason, Denbury’s stockholders will not receive any consideration for shares of Denbury stock they own. Instead, Denbury will remain an independent public company, Denbury common stock will continue to be listed and traded on the NYSE and registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Denbury will continue to file periodic reports with the Securities and Exchange Commission (the “SEC”) on account of Denbury’s common stock. If the Merger is not completed for any reason, including as a result of Denbury stockholders failing to approve the necessary proposals, the ongoing businesses of Denbury may be adversely affected, and the anticipated benefits of having completed the Merger will not be realized. See “Risk Factors—Failure to complete the Merger could negatively impact the stock price and the future business and financial results of Denbury” beginning on page 36 of this proxy statement/prospectus.

Under specified circumstances, Denbury and/or ExxonMobil may be required to pay a termination fee upon termination of the Merger Agreement, as described under “The Merger Agreement—Termination of the Merger Agreement” beginning on page 132 of this proxy statement/prospectus.

Q: When and where is the Special Meeting?

A: The Special Meeting will be held virtually at www.virtualshareholdermeeting.com/DEN2023SM on      , 2023, at         , Central Time. On or about         , 2023, Denbury commenced mailing this proxy statement/prospectus and the enclosed form of proxy to its stockholders entitled to vote at the Special Meeting.

 

5

The Special Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DEN2023SM , where Denbury stockholders will be able to participate and vote online. Denbury encourages its stockholders to access the meeting prior to the start time leaving ample time for check-in. Please follow the instructions as outlined in this proxy statement/prospectus. This proxy statement/prospectus is first being furnished to Denbury’s stockholders on or about                 , 2023.

Denbury has chosen to hold the Special Meeting solely via live webcast and not in a physical location. Denbury has adopted a virtual format for the Special Meeting to make participation accessible for stockholders from any geographic location with Internet connectivity.

Q: Who can vote at the Special Meeting?

A: All holders of shares of Denbury common stock who hold such shares of record at the close of business on          , 2023, the record date for the Special Meeting, are entitled to receive notice of, and to vote at, the Special Meeting.

Q: How many votes may I cast?

A: Each outstanding share of Denbury common stock entitles its holder of record to one vote on each matter considered at the Special Meeting. Only Denbury stockholders who held shares of common stock of Denbury of record at the close of business on are entitled to vote at the Special Meeting and any adjournment or postponement of the Special Meeting.

Q: What is the record date in connection with the Special Meeting?

A: The record date for the determination of holders of Denbury common stock entitled to notice of and to vote at the Special Meeting is .

Q: What constitutes a quorum at the Special Meeting?

A: A quorum is necessary to conduct business at the Special Meeting. A quorum requires the presence at the Special Meeting, by attending the Special Meeting or being represented by proxy, of one-third of the outstanding shares of Denbury common stock entitled to vote on each matter considered at the Special Meeting.

Q: What do I need to do now?

A: After you have carefully read and considered the information contained in or incorporated by reference into this proxy statement/prospectus, please submit your proxy via the Internet or by telephone in accordance with the instructions set forth on the enclosed proxy card, or complete, sign, date and return the enclosed proxy card in the postage-prepaid envelope provided as soon as possible so that your shares will be represented and voted at the Special Meeting.

Additional information on voting procedures can be found under “The Special Meeting” beginning on page 43 of this proxy statement/prospectus.

Q: How will my proxy be voted?

A: If you submit your proxy via the Internet, by telephone or by completing, signing, dating and returning the enclosed proxy card, your proxy will be voted in accordance with your instructions.

Additional information on voting procedures can be found under “The Special Meeting” beginning on page 43 of this proxy statement/prospectus.

 

6

Q: Who will count the votes?

A: The votes at the Special Meeting will be counted by an individual designated by the Denbury board of directors to serve as inspector of election.

Q: How do I vote my shares if I am a stockholder of record?

A: If you are a stockholder of record of Denbury common stock at the close of business on      , you may vote your shares in any one of the following ways:

 

•

You may vote by mail. To vote by mail, you need to complete, date and sign the proxy card that accompanies this proxy statement/prospectus and promptly mail it in the enclosed postage-prepaid envelope. You do not need to put a stamp on the enclosed envelope if you mail it from within the United States.

 

•

You may vote by telephone. To vote by telephone through services provided by Broadridge Corporate Issuer Solutions, Inc., call 1-800-690-6903, and follow the instructions provided on the proxy card that accompanies this proxy statement/prospectus. If you vote by telephone, you do not need to complete and mail your proxy card.

 

•

You may vote over the Internet. To vote over the Internet through services provided by Broadridge Corporate Issuer Solutions, Inc., please go to the following website: www.proxyvote.com and follow the instructions at that site for submitting your proxy. If you vote over the Internet, you do not need to complete and mail your proxy card.

 

•

You may vote at the virtual Special Meeting. All stockholders of record may vote online during the Special Meeting via the Internet at www.virtualshareholdermeeting.com/DEN2023SM. Street name holders may vote online during the Special Meeting if they receive a voting instruction form with a 16-digit control number. You may cast your vote electronically during the Special Meeting using the 16-digit control number found on your proxy card or voting instruction form. If you do not have a control number, please contact your broker, bank or other nominee as soon as possible so that you can be provided with a control number.

If you are a beneficial holder of Denbury common stock, you are invited to attend the Special Meeting; however, because you are not a stockholder of record, you may not vote your shares at the Special Meeting unless you receive a voting instruction form with a 16-digit control number from your bank, broker or other nominee that is the stockholder of record with respect to your shares of Denbury common stock.

Q: How can I vote during the Special Meeting?

A: All stockholders of record may vote online during the Special Meeting. Street name holders may vote online during the Special Meeting if they have a voting instruction form with a 16-digit control number, as described below. You may cast your vote electronically during the Special Meeting using the 16-digit control number found on your proxy card or voting instruction form. If you do not have a control number, please contact your broker, bank or other nominee as soon as possible so that you can be provided with a control number.

Whether you plan to attend the Special Meeting or not, we encourage you to vote by proxy as soon as possible.

Q: How can I submit a question at the Special Meeting?

A: Stockholders may submit questions during the Special Meeting. As part of the Special Meeting, we will hold a live question and answer session during which we intend to answer questions submitted during the meeting in accordance with the Special Meeting procedures which are pertinent to Denbury and the meeting matters, as time permits. Questions may be submitted during the Special Meeting through www.virtualshareholdermeeting.com/DEN2023SM. Questions and answers will be grouped by topic and substantially similar questions will be grouped and answered once.

 

7

Q: What if I need technical assistance?

A: We encourage you to access the Special Meeting before it begins. Online check-in will start shortly before the meeting on      , 2023         at Central Time. If you encounter any difficulties accessing the meeting during the check-in or meeting time, please call         (toll free) or         (international).

Q: What should I do if I receive more than one set of voting materials for the Special Meeting?

A: You may receive more than one set of voting materials for the Special Meeting, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction forms. For example, if you hold your shares of Denbury common stock in more than one brokerage account, you will receive a separate voting instruction form for each brokerage account in which you hold shares. If you are a holder of record of Denbury common stock and your shares are registered in more than one name, you will receive more than one proxy card. Please submit each separate proxy or voting instruction form that you receive by following the instructions set forth in each separate proxy or voting instruction form.

Q: What’s the difference between holding shares as a stockholder of record and holding shares as a beneficial owner?

A: If your shares of Denbury common stock are registered directly in your name with Denbury’s transfer agent, Broadridge Corporate Issuer Solutions, Inc., you are considered, with respect to those shares, to be the stockholder of record. If you are a stockholder of record, then this proxy statement/prospectus and your proxy card have been sent directly to you by Denbury.

If your shares of Denbury common stock are held through a bank, broker or other nominee, you are considered the beneficial owner of shares of Denbury common stock held in “street name.” In that case, this proxy statement/prospectus has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following their instructions for voting and you are also invited to attend the Special Meeting. But, because you are not the stockholder of record, you may not vote your shares at the Special Meeting unless you receive a voting instruction form with a 16-digit control number from your bank, broker or other nominee.

Q: If my shares are held in “street name” by my broker, bank or other nominee, will my broker, bank or other nominee automatically vote my shares for me?

A: No. If your shares are held in the name of a broker, bank or other nominee, you will receive separate instructions from your broker, bank or other nominee describing how to vote your shares. The availability of the Internet or telephonic voting will depend on your broker’s, bank’s or other nominee’s voting process. Please check with your broker, bank or other nominee and follow the voting procedures provided by your broker, bank or other nominee on your voting instruction form.

You should instruct your broker, bank or other nominee how to vote your shares. Under the rules applicable to broker-dealers, your broker, bank or other nominee has discretionary authority to vote on proposals that are considered routine but does not have discretionary authority to vote your shares on proposals that are considered non-routine, and each of the proposals to be voted on at the Special Meeting is considered non-routine. As a result, no broker will be permitted to vote your shares at the Special Meeting without receiving instructions from you. A so-called “broker non-vote” results when banks, brokers and other nominees return a valid proxy but do not vote on a particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of such shares.

 

8

Therefore, if you are a Denbury stockholder whose shares of common stock are held in street name and you do not instruct your broker, bank or other nominee on how to vote your shares:

 

•

your broker, bank or other nominee may not vote your shares on the Merger Agreement proposal, which will have the same effect as a vote “AGAINST” such proposal; and

 

•

your broker, bank or other nominee may not vote your shares on the Advisory Compensation Proposal, which will have no effect on the vote count for such proposal.

A quorum is necessary to conduct business at the Special Meeting. A quorum requires the presence at the Special Meeting of one-third of the outstanding shares of Denbury common stock entitled to vote on each matter considered at the Special Meeting, via the Special Meeting website or represented by proxy. For purposes of determining whether there is a quorum, all shares that are present will count towards the quorum, which will include proxies received but marked as abstentions and will exclude broker non-votes.

Additional information on voting procedures can be found under “The Special Meeting” beginning on page 43 of this proxy statement/prospectus.

Q: What do I do if I am a Denbury stockholder and I want to revoke my proxy?

A: Stockholders of record may revoke their proxies at any time before their shares of common stock are voted by proxy at the Special Meeting in any of the following ways:

 

•

sending a written notice of revocation to Denbury at 5851 Legacy Circle, Suite 1200, Plano, TX 75024, Attention: Investor Relations, which notice must be received before shares are voted at the Special Meeting;

 

•

properly submitting a new, later-dated, proxy card which must be received before shares are voted at the Special Meeting (in which case only the later-dated proxy is counted and the earlier proxy is revoked);

 

•

submitting a proxy via the Internet or by telephone at a later date, which must be received by 11:59 p.m. Central Time on         , 2023 (in which case only the later-dated proxy is counted and the earlier proxy is revoked); or

 

•

attending the Special Meeting and voting at the Special Meeting. Attendance at the Special Meeting will not, however, in and of itself, constitute a vote or revocation of a prior proxy.

Beneficial owners of Denbury common stock may change their voting instruction by submitting new voting instructions to the brokers, banks or other nominees that hold their shares of record or by following the instructions for voting set forth on the voting instruction form with a 16-digit control number provided by their brokers, banks or other nominees and voting at the Special Meeting.

Additional information can be found under “The Special Meeting” beginning on page 43 of this proxy statement/prospectus.

Q: What happens if I sell or otherwise transfer my shares of Denbury common stock before the Special Meeting?

A: The record date for holders of Denbury common stock entitled to vote at the Special Meeting is      , 2023, which is earlier than the date of the Special Meeting. If you sell or otherwise transfer your shares after the record date but before the Special Meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you transfer your shares and each of you notifies Denbury in writing of such special arrangements, you will retain your right to vote such shares at the Special Meeting but will otherwise transfer ownership of your shares of Denbury common stock.

 

9

Q: What happens if I sell or otherwise transfer my shares of Denbury common stock before the completion of the Merger?

A: Only holders of shares of Denbury common stock at the effective time will become entitled to receive the Merger Consideration. If you sell your shares of Denbury common stock prior to the completion of the Merger, you will not be entitled to receive the Merger Consideration by virtue of the Merger.

Q: Do any of the officers or directors of Denbury have interests in the Merger that may differ from or be in addition to my interests as a Denbury stockholder?

A: In considering the recommendation of the Denbury board of directors that Denbury stockholders vote to approve the Merger Agreement proposal and to approve the Advisory Compensation Proposal, Denbury stockholders should be aware that some of Denbury’s directors and executive officers have interests in the Merger that may be different from, or in addition to, the interests of Denbury stockholders generally. These interests may include, among others:

 

•

the treatment of outstanding equity awards described in the section entitled “The Merger Agreement—Treatment and Quantification of Denbury Equity Awards” beginning on page 114 of this proxy statement/prospectus;

 

•

the entitlement of a Denbury executive officer to receive certain severance benefits under the Denbury change in control severance plan upon a termination of employment by Denbury without cause, or a resignation by the executive officer for good reason, in either case, during the period commencing six months prior to the consummation of a change in control and ending on the two year anniversary of the consummation of a change in control; and

 

•

continued indemnification and directors’ and officers’ liability insurance.

The Denbury board of directors was aware of and considered these potential interests, among other matters, in evaluating and negotiating the Merger Agreement and the transactions contemplated thereby, in approving the Merger and in recommending the adoption of the Merger Agreement and the approval of the Advisory Compensation Proposal.

For more information and quantification of these interests, see “Interests of Denbury’s Directors and Executive Officers in the Merger” beginning on page 139 of this proxy statement/prospectus.

Q: Where can I find voting results of the Special Meeting?

A: Denbury intends to announce preliminary voting results at the Special Meeting and publish the final results in a Current Report on Form 8-K that will be filed with the SEC following the Special Meeting. All reports that Denbury and ExxonMobil file with the SEC are publicly available when filed. See “Where You Can Find More Information” beginning on page 177 of this proxy statement/prospectus.

Q: Do Denbury stockholders have dissenters’ or appraisal rights?

A: Denbury stockholders are not entitled to dissenters’ or appraisal rights in connection with the Merger. See “The Merger—No Dissenters’ or Appraisal Rights” beginning on page 109 of this proxy statement/prospectus.

Q: How can I find more information about ExxonMobil and Denbury?

A: You can find more information about ExxonMobil and Denbury from various sources described in “Where You Can Find More Information” beginning on page 177 of this proxy statement/prospectus.

 

10

Q: Who can answer any questions I may have about the Special Meeting, the Merger or the transactions contemplated by the Merger Agreement?

A: If you have any questions about the Special Meeting, the Merger or the other transactions contemplated by the Merger Agreement or how to submit your proxy, or if you need additional copies of this proxy statement/prospectus or documents incorporated by reference herein, the enclosed proxy card or voting instructions, you should contact Denbury or Denbury’s proxy solicitor:

Denbury Inc.

5851 Legacy Circle, Suite 1200

Plano, TX 75024

Attention: Investor Relations

(972) 673-2000

or

Innisfree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York, New York 10022

Stockholders May Call Toll-Free: (877) 717-3905

Banks & Brokers May Call Collect: (212) 750-5833

 

11

 

12

 

13

 

14

 

15

 

16

 

17

 

18

 

19

 

20

 

21

 

22

 

23

 

24

 

25

 

26

 

27

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

MARKET PRICES

The following table sets forth the closing price per share of ExxonMobil common stock and per share of Denbury common stock as reported on the NYSE on July 12, 2023, the last trading day prior to public announcement of the Merger by ExxonMobil and Denbury on July 13, 2023, and on      , 2023, the most recent practicable trading day prior to the date of this proxy statement/prospectus for which this information was available. The table also shows the implied value of the Merger Consideration for each share of Denbury common stock as of the same dates. This implied value was calculated by multiplying the closing price of a share of ExxonMobil common stock on the relevant date by the exchange ratio.

 

		ExxonMobil Common Stock								Denbury Common Stock								Implied Per Share Value of Merger Consideration
July 12, 2023		$					106.49			$					87.75			$					89.45
, 2023		$								$								$

The market prices of shares of ExxonMobil common stock and Denbury common stock have fluctuated since the date of the announcement of the Merger Agreement and will continue to fluctuate from the date of this proxy statement/prospectus to the date of the Special Meeting and the date the Merger is completed. No assurance can be given concerning the market prices of shares of ExxonMobil common stock and shares of Denbury common stock before completion of the Merger or shares of ExxonMobil common stock after completion of the Merger. The exchange ratio is fixed in the Merger Agreement, but the market price of shares of ExxonMobil common stock (and therefore the value of the Merger Consideration) when received by Denbury stockholders after the Merger is completed could be greater than, less than or the same as shown in the table above. Accordingly, Denbury stockholders are advised to obtain current market quotations for shares of ExxonMobil common stock and shares of Denbury common stock in deciding whether to vote for approval and adoption of the Merger Agreement.

DIVIDENDS

ExxonMobil currently pays a quarterly dividend on shares of ExxonMobil common stock and last paid a quarterly dividend on June 9, 2023 of $0.91 per share. ExxonMobil declared a dividend of $0.91 per share, payable on September 11, 2023, to shareholders of record of ExxonMobil common stock at the close of business on August 16, 2023. Under the terms of the Merger Agreement, during the period before completion of the Merger, ExxonMobil is permitted to pay regular quarterly cash dividends including increases that are materially consistent with past practices.

Denbury does not currently pay a quarterly dividend on shares of Denbury common stock. Under the terms of the Merger Agreement, during the period before completion of the Merger, Denbury is not permitted to declare, authorize, establish a record date for, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of Denbury capital stock (including Denbury common stock) other than dividends by any of its wholly owned subsidiaries.

After completion of the Merger, any former Denbury stockholder who holds ExxonMobil common shares into which shares of Denbury common stock have been converted in connection with the Merger will receive whatever dividends are declared and paid on ExxonMobil common shares. However, no dividend or other distribution having a record date after completion of the Merger will actually be paid with respect to any shares of ExxonMobil common stock into which shares of Denbury common stock have been converted in connection with the Merger until the certificates formerly representing shares of Denbury common stock have been surrendered (or the book-entry shares formerly representing shares of Denbury common stock have been transferred), at which time any accrued dividends and other distributions on those shares of ExxonMobil

 

28

common stock with a payment date prior to such date will be paid without interest. Subject to the limitations set forth in the Merger Agreement, any future dividends by ExxonMobil will be made at the discretion of the ExxonMobil board of directors. Subject to the limitations set forth in the Merger Agreement, any future dividends by Denbury will be made at the discretion of the Denbury board of directors. There can be no assurance that any future dividends will be declared or paid by ExxonMobil or Denbury or as to the amount or timing of those dividends, if any.

 

29

RISK FACTORS

In addition to the other information contained in or incorporated by reference into this proxy statement/ prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 40 of this proxy statement/prospectus, the following risk factors should be considered carefully in determining whether to vote for the approval and adoption of the Merger Agreement. You should also read and consider the risk factors associated with each of the businesses of ExxonMobil and Denbury because these risk factors may affect the operations and financial results of the combined company. These risk factors may be found under Part I, Item 1A, “Risk Factors” in each of ExxonMobil’s and Denbury’s Annual Reports on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 22, 2023 and February 23, 2023, respectively, Item 8.01, “Other Events” in ExxonMobil’s Current Report on Form 8-K filed with the SEC on July 13, 2023, Item 1.01 “Entry into a Material Definitive Agreement” in Denbury’s Current Report on Form 8-K filed with the SEC on July 14, 2023, and in ExxonMobil’s and Denbury’s subsequent filings with the SEC, in each case, which are incorporated by reference into this proxy statement/prospectus. For information on where you can obtain copies of this information, see “Where You Can Find More Information” beginning on page 177 of this proxy statement/prospectus.

Risks relating to the Merger.

Because the exchange ratio is fixed and the market price of ExxonMobil common stock has fluctuated and will continue to fluctuate, Denbury stockholders cannot be sure of the value of the consideration they will receive in the Merger, if completed.

If the Merger is completed, each share of Denbury common stock outstanding immediately prior to the Merger (except for the excluded shares) will automatically be converted into the right to receive 0.840 shares of ExxonMobil common stock, with cash to be paid in lieu of fractional shares. Because the exchange ratio is fixed, the value of the Merger Consideration will depend on the market price of ExxonMobil common stock at the time the Merger is completed. Prior to the completion of the Merger, the market price of ExxonMobil common stock is also expected to impact the market price of the Denbury common stock. The value of the Merger Consideration has fluctuated since the date of the announcement of the Merger Agreement and will continue to fluctuate from the date of this proxy statement/prospectus to the date of the Special Meeting and the date the Merger is completed and thereafter. The closing price per share of Denbury common stock as of July 12, 2023, the last trading day prior to public announcement of the Merger by ExxonMobil and Denbury, was $87.75, and the closing price per share has fluctuated as high as $         and as low as $ between July 12, 2023 and         , 2023, the most recent practicable trading day prior to the date of this proxy statement/prospectus. The closing price per share of ExxonMobil common stock as of July 12, 2023, the last trading day prior to public announcement of the Merger by ExxonMobil and Denbury, was $106.49, and the closing price per share has fluctuated as high as $         and as low as $        between July 12, 2023 and , 2023, the most recent practicable trading day prior to the date of this proxy statement/prospectus. Accordingly, at the time of the Special Meeting, Denbury stockholders will not know or be able to determine the market value of the Merger Consideration they would receive upon completion of the Merger. Stock price changes may result from a variety of factors, including, among others, general market and economic conditions, changes in ExxonMobil’s and Denbury’s respective businesses, operations and prospects, market assessments of the likelihood that the Merger will be completed, the timing of the Merger, regulatory considerations and COVID-19. Many of these factors are beyond ExxonMobil’s and Denbury’s control. You are urged to obtain current market quotations for each of ExxonMobil’s and Denbury’s common stock traded on the NYSE (trading symbols “XOM” and “DEN”, respectively). In addition, ExxonMobil has historically paid quarterly dividends. There is no guarantee that ExxonMobil will continue to do so or, if it does so, that the Merger will close prior to any particular record date by which Denbury stockholders must hold ExxonMobil stock in order to be entitled to an applicable dividend.

 

30

The market price of ExxonMobil common stock after the Merger may be affected by factors different from those affecting the market price of Denbury common stock.

Upon completion of the Merger, holders of shares of Denbury common stock will become holders of shares of ExxonMobil common stock. The businesses of ExxonMobil differ from those of Denbury in important respects, and, accordingly, the results of operations of ExxonMobil after the Merger, as well as the market price of ExxonMobil common stock, may be affected by factors different from those currently affecting the results of operations of Denbury. For further information on the respective businesses of ExxonMobil and Denbury and certain factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus and referred to in “Where You Can Find More Information” beginning on page 177 of this proxy statement/prospectus.

Additionally, the market price of ExxonMobil common stock may fluctuate significantly following completion of the Merger.

Moreover, general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, the ExxonMobil common stock, regardless of ExxonMobil’s actual operating performance.

After completion of the Merger, ExxonMobil may fail to realize the anticipated benefits of creating a new and emerging networked carbon capture and storage business and the cost savings of the Merger versus organically building this infrastructure, which could adversely affect the value of ExxonMobil common stock.

The success of the Merger will depend, in significant part, on ExxonMobil’s ability to realize the anticipated benefits of a new and emerging business providing carbon capture and storage services and cost savings from combining the businesses of ExxonMobil and Denbury in comparison to ExxonMobil building this infrastructure from greenfield projects. The ability of ExxonMobil to realize these anticipated benefits and cost savings is subject to certain risks including:

 

•

ExxonMobil’s ability to successfully combine the businesses of ExxonMobil and Denbury;

 

•

whether the new combined business will perform as projected in a new and developing market;

 

•

the possibility that ExxonMobil paid more for Denbury than the value ExxonMobil will derive from the new carbon capture and storage market; and

 

•

the assumption of known and unknown liabilities of Denbury.

If ExxonMobil is not able to successfully combine the businesses of ExxonMobil and Denbury within the anticipated time frame and successfully utilize Denbury’s assets in the development of a new and emerging carbon capture and storage business, or at all, the anticipated benefits of the Merger may not be realized fully, or at all, or may take longer to realize than expected, the combined business may not perform as expected and the value of the ExxonMobil common shares (including the Merger Consideration) may be adversely affected.

ExxonMobil and Denbury have operated and, until completion of the Merger, will continue to operate, independently, and there can be no assurances that their businesses can be integrated successfully. It is possible that the integration process could result in the loss of key Denbury expertise, the loss of clients, the disruption of either company’s or both companies’ ongoing businesses or in unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in integrating the operations of ExxonMobil and Denbury in order to realize the anticipated benefits of the Merger so the combined business performs as expected:

 

•

integrating the companies’ physical assets and technologies;

 

•

coordinating sales, distribution and marketing efforts;

 

31

•

harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

 

•

maintaining existing agreements with commercial counterparties and avoiding delays in entering into new agreements with prospective commercial counterparties;

 

•

identifying and eliminating redundant and underperforming functions and assets;

 

•

combining certain of the companies’ operations, financial, reporting and corporate functions;

 

•

addressing possible differences in business backgrounds, corporate cultures and management philosophies;

 

•

consolidating the companies’ administrative and information technology infrastructure;

 

•

managing the movement of certain businesses and positions to different locations;

 

•

coordinating geographically dispersed organizations;

 

•

consolidating offices of ExxonMobil and Denbury that are currently in or near the same location; and

 

•

effecting potential actions that may be required in connection with obtaining regulatory approvals.

In addition, at times, the attention of certain members of either company’s or both companies’ business or management and resources may be focused on completion of the Merger and the integration of the businesses of the two companies and diverted from day-to-day business operations, which may disrupt each company’s ongoing business and the business of the combined company.

Denbury may have difficulty attracting, motivating and retaining employees in light of the Merger.

Uncertainty about the effect of the Merger on Denbury employees may impair Denbury’s ability to attract, retain and motivate personnel prior to and following the Merger. Employee retention may be particularly challenging during the pendency of the Merger, as employees of Denbury may experience uncertainty about their future roles with the combined business. In addition, pursuant to change-in-control provisions set forth in Denbury’s employee plans, certain employees of Denbury are entitled to receive severance payments upon a constructive termination of employment. Such Denbury employees potentially could terminate their employment following specified circumstances set forth in Denbury’s employee plans, including certain changes in such employees’ position, compensation or benefits, and collect severance. Such circumstances could occur in connection with the Merger as a result of changes in roles and responsibilities. See “Interests of Denbury’s Directors and Executive Officers in the Merger” beginning on page 139 of this proxy statement/prospectus for a further discussion of some of these issues. If employees of Denbury depart, the integration of the companies may be more difficult and the combined business following the Merger may be harmed. Furthermore, ExxonMobil may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent relating to the businesses of ExxonMobil or Denbury, and ExxonMobil’s ability to realize the anticipated benefits of the Merger may be adversely affected. In addition, there could otherwise be disruptions to or distractions for the workforce and management associated with integrating employees into ExxonMobil.

Completion of the Merger is subject to certain conditions and if these conditions are not satisfied, waived or fulfilled in a timely manner, the Merger may be delayed or not be completed.

The obligation of each of ExxonMobil, Denbury and Merger Sub to complete the Merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of a number of conditions, including, among others: (i) the affirmative vote of the holders of a majority of the shares of Denbury common stock outstanding and entitled to vote at the Special Meeting approving and adopting the Merger Agreement (which condition

 

32

described in this clause (i) may not be waived), (ii) the expiration or termination of any applicable waiting period, or any extension thereof, under the HSR Act (in the case of ExxonMobil and Merger Sub’s obligation to complete the Merger, without the imposition of a Burdensome Condition (see “The Merger Agreement—Reasonable Best Efforts Covenant” beginning on page 127 of this proxy statement/prospectus)), (iii) absence of any injunction or other order or applicable law preventing or making illegal the consummation of the Merger (in the case of ExxonMobil and Merger Sub’s obligation to complete the Merger, without the imposition of a Burdensome Condition to the extent such law or prohibition relates to the matters in clause (i) above (see “The Merger Agreement—Reasonable Best Efforts Covenant” beginning on page 127 of this proxy statement/prospectus)), (iv) this registration statement being declared effective and no stop order suspending the effectiveness of this registration statement being in effect and no proceedings for such purpose pending or threatened by the SEC, (v) approval for the listing on the NYSE of the shares of ExxonMobil common stock to be issued in connection with the Merger, subject to official notice of issuance, (vi) accuracy of the representations and warranties made in the Merger Agreement by, in the case of ExxonMobil and Merger Sub’s obligations to complete the Merger, Denbury and, in the case of Denbury’s obligation to complete the Merger, ExxonMobil and Merger Sub, in each case, as of the date of the Merger Agreement and as of the date of completion of the Merger, subject to certain materiality thresholds, (vi) performance in all material respects by, in the case of ExxonMobil and Merger Sub’s obligations to complete the Merger, Denbury and, in the case of Denbury’s obligation to complete the Merger, ExxonMobil and Merger Sub, of the obligations required to be performed by it at or prior to the effective time of the Merger, (vii) the absence since the date of the Merger Agreement of a material adverse effect on, in the case of ExxonMobil and Merger Sub’s obligations to complete the Merger, Denbury and (viii) the absence since the date of the Merger Agreement of a material adverse on, in the case of Denbury’s obligations to complete the Merger, ExxonMobil and Merger Sub (see “The Merger Agreement—Definition of ‘Material Adverse Effect’” beginning on page 118, of this proxy statement/prospectus for the definition of material adverse effect).

For a more complete summary of the conditions that must be satisfied or waived prior to completion of the Merger, see “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 116 of this proxy statement/prospectus.

Many of the conditions to completion of the Merger are not within either Denbury’s or ExxonMobil’s control, and neither company can predict when, or if, these conditions will be satisfied. If any of these conditions are not satisfied or waived prior to July 13, 2024 (the “End Date”) (or January 13, 2025, if the End Date is extended in accordance with the terms of the Merger Agreement), it is possible that the Merger Agreement may be terminated. Although Denbury and ExxonMobil have agreed in the Merger Agreement to use reasonable best efforts, subject to certain limitations, to complete the Merger as promptly as practicable, these and other conditions to the completion of the Merger may fail to be satisfied. In addition, satisfying the conditions to and completion of the Merger may take longer, and could cost more, than Denbury and ExxonMobil expect.

Furthermore, the requirements for obtaining the required clearances and approvals could delay the completion of the Merger for a significant period of time or prevent the Merger from occurring. Any delay in completing the Merger may adversely affect the cost savings and other benefits that Denbury and ExxonMobil expect to achieve if the Merger and the integration of the companies’ respective businesses are not completed within the expected timeframe.

There can be no assurance that the conditions to the closing of the Merger will be satisfied, waived or fulfilled in a timely fashion or that the Merger will be completed. See “Risk Factors—Failure to complete the Merger could negatively impact the stock price and the future business and financial results of Denbury” beginning on page 36 of this proxy statement/prospectus.

 

33

In order to complete the Merger, ExxonMobil and Denbury must make certain governmental filings and obtain certain governmental authorizations, and if such filings and authorizations are not made or granted or are granted with conditions to the parties, the closing of the Merger may be jeopardized or the anticipated benefits of the Merger could be reduced.

The closing of the Merger is conditioned upon the expiration or termination of any applicable waiting period, or any extension thereof, under the HSR Act. Although ExxonMobil and Denbury have agreed in the Merger Agreement to use their reasonable best efforts, subject to specified limitations on remedies required to be accepted by ExxonMobil, to make certain governmental filings or obtain the required governmental authorizations, as the case may be, there can be no assurance that the relevant waiting periods will expire or that the relevant authorizations will be obtained. In addition, the governmental authorities with or from which these authorizations are required have broad discretion in administering the governing regulations. Adverse developments in ExxonMobil’s or Denbury’s regulatory standing or any other factors considered by regulators in granting such approvals; governmental, political or community group inquiries, investigations or opposition; or changes in legislation or the political environment generally could affect whether and when required governmental authorizations are granted. As a condition to authorization of the Merger, governmental authorities may impose requirements, limitations or costs or place restrictions on the conduct of ExxonMobil’s business after completion of the Merger. There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying the closing of the Merger or imposing additional material costs on or materially limiting the revenues of the combined company following the Merger, or otherwise adversely affecting ExxonMobil’s businesses and results of operations after completion of the Merger. In addition, there can be no assurance that these terms, obligations or restrictions will not result in the delay or abandonment of the Merger. See “The Merger Agreement—Conditions to Completion of the Merger” and “The Merger Agreement—Reasonable Best Efforts” beginning on pages 116 and 127, respectively, of this proxy statement/prospectus.

If the Merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, the Denbury stockholders may be required to pay substantial U.S. federal income taxes.

The Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and ExxonMobil and Denbury intend to report the Merger consistent with such qualification. However, it is not a condition to Denbury’s or ExxonMobil’s obligation to complete the Merger that the Merger be treated as a “reorganization” within the meaning of Section 368(a) of the Code or that ExxonMobil or Denbury receive an opinion from counsel to that effect. ExxonMobil and Denbury have not sought, and will not seek, any ruling from the IRS regarding any matters relating to the transactions, and as a result, there can be no assurance that the IRS would not assert, or that a court would not sustain, a position contrary to the treatment of the Merger as a “reorganization” within the meaning of Section 368(a) of the Code. If the IRS or a court determines that the Merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, a holder of Denbury common stock generally would recognize taxable gain or loss upon the exchange of Denbury common stock for ExxonMobil common stock pursuant to the Merger. See “U.S. Federal Income Tax Consequences of the Merger” beginning on page 136 of this proxy statement/prospectus.

The opinions of Denbury’s financial advisors will not reflect changes in circumstances between the signing of the Merger Agreement and the completion of the Merger.

Denbury has received opinions from its financial advisors in connection with the signing of the Merger Agreement, but has not obtained any updated opinions from its financial advisors as of the date of this proxy statement/prospectus. Changes in the operations and prospects of ExxonMobil or Denbury, general market and economic conditions and other factors that may be beyond the control of ExxonMobil or Denbury, and on which Denbury’s financial advisors’ opinions were based, may significantly alter the value of ExxonMobil or Denbury or the prices of the shares of ExxonMobil common stock or Denbury common stock by the time the Merger is completed. The opinions do not speak as of the time the Merger will be completed or as of any date other than

 

34

the date of each such opinion. Because Denbury does not currently anticipate asking its financial advisors to update their respective opinions, the opinions will not address the fairness of the Merger Consideration from a financial point of view at the time the Merger is completed. The Denbury board of director’s recommendation that Denbury stockholders vote “FOR” approval of the Merger Agreement Proposal and “FOR” the Advisory Compensation Proposal, however, is made as of the date of this proxy statement/prospectus.

For a description of the opinions that Denbury received from its financial advisors, see the section entitled “The Merger—Opinions of Denbury’s Financial Advisors” beginning on page 86. A copy of the opinions of each of J.P. Morgan Securities LLC, TPH & Co. and PJT Partners LP, Denbury’s financial advisors, is attached as Annex B, Annex C and Annex D, respectively, to this proxy statement/prospectus.

ExxonMobil’s and Denbury’s business relationships may be subject to disruption due to uncertainty associated with the Merger.

Parties with which ExxonMobil or Denbury does business may experience uncertainty associated with the Merger, including with respect to current or future business relationships with ExxonMobil, Denbury or the combined business. ExxonMobil’s and Denbury’s business relationships may be subject to disruption as parties with which ExxonMobil or Denbury does business may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than ExxonMobil, Denbury or the combined business. These disruptions could have an adverse effect on the businesses, financial condition, results of operations or prospects of the combined business, including an adverse effect on ExxonMobil’s ability to realize the anticipated benefits of the Merger. The risk, and adverse effect, of such disruptions could be exacerbated by a delay in completion of the Merger or termination of the Merger Agreement.

Denbury may waive one or more of the Closing conditions without re-soliciting stockholder approval.

Denbury may determine to waive, in whole or part, one or more of the conditions to Closing prior to Denbury being obligated to consummate the Merger. Any determination whether to waive any conditions to Closing, or to re-solicit stockholder approval to amend or supplement this proxy statement/prospectus as a result of such a waiver, will be made by Denbury at the time of such waiver based on the facts and circumstances as they exist at that time.

Completion of the Merger may trigger change in control or other provisions in certain agreements to which Denbury is a party.

Denbury is a party to certain agreements that give the counterparty certain rights following a “change in control,” including in some cases the right to terminate such agreements. Under some such agreements, the Merger may constitute a change in control and therefore the counterparty may exercise certain rights under the agreement upon the closing of the Merger. Any such counterparty may request modifications of its respective agreements as a condition to granting a waiver or consent under its agreement. There is no assurance that such counterparties will not exercise their rights under the agreements, including termination rights where available and/or requiring payment of substantial financial penalties.

Certain of Denbury’s executive officers and directors have interests in the Merger that may be different from your interests as a stockholder of Denbury or as a stockholder of ExxonMobil.

In considering the recommendation of the Denbury board of directors to vote for the approval and adoption of the Merger Agreement, Denbury stockholders should be aware that the directors and executive officers of Denbury may have interests in the Merger that are different from, or in addition to, the interests of Denbury stockholders generally, including potential accelerated vesting of equity awards and severance payments and certain arrangements and agreements with ExxonMobil. The Denbury board of directors was aware of these

 

35

interests and considered them, among other matters, in evaluating and negotiating the Merger Agreement and approving the Merger, and in making its recommendation that Denbury stockholders vote to approve and adopt the Merger Agreement.

For more information, see “Interests of Denbury’s Directors and Executive Officers in the Merger” beginning on page 139 of this proxy statement/prospectus.

The Merger Agreement limits Denbury’s ability to pursue alternatives to the Merger and may discourage other companies from trying to acquire Denbury for greater consideration than what ExxonMobil has agreed to pay pursuant to the Merger Agreement.

The Merger Agreement contains provisions that make it more difficult for Denbury to sell its business to a party other than ExxonMobil. These provisions include a general prohibition on Denbury soliciting any acquisition proposal or offer for a competing transaction. Further, subject to certain exceptions, the Denbury board of directors will not withdraw or modify in a manner adverse to ExxonMobil the recommendation of the Denbury board of directors in favor of the approval and adoption of the Merger Agreement, and ExxonMobil generally has a right to match any competing acquisition proposals that may be made. Notwithstanding the foregoing, at any time prior to the approval and adoption of the Merger Agreement by Denbury stockholders, the Denbury board of directors is permitted to withdraw or modify in a manner adverse to ExxonMobil the recommendation of the Denbury board of directors in favor of the approval and adoption of the Merger Agreement in certain circumstances if it determines in good faith that the failure to take such action would be reasonably likely to be inconsistent with its fiduciary duties to Denbury stockholders under applicable law. The Merger Agreement does not require that Denbury submit the approval and adoption of the Merger Agreement to a vote of Denbury stockholders if the Denbury board of directors changes its recommendation in favor of the approval and adoption of the Merger Agreement in a manner adverse to ExxonMobil and terminates the Merger Agreement in order to enter into an alternative acquisition agreement with respect to a competing transaction in accordance with the terms of the Merger Agreement. In certain circumstances, upon termination of the Merger Agreement, Denbury will be required to pay a termination fee of $144 million to ExxonMobil, including if Denbury terminates the Merger Agreement prior to obtaining Denbury stockholder approval in order to enter into an alternative acquisition agreement with respect to a competing transaction in accordance with the terms of the Merger Agreement. See “The Merger Agreement—Termination of the Merger Agreement” and “The Merger Agreement—Exclusive Remedy” beginning on pages 132 and 134, respectively, of this proxy statement/prospectus.

While both Denbury and ExxonMobil believe these provisions and agreements are reasonable and customary and are not preclusive of other offers, the restrictions, including the added expense of the $144 million termination fee that may become payable by Denbury to ExxonMobil in certain circumstances, might discourage a third party that has an interest in acquiring all or a significant part of Denbury from considering or proposing that acquisition, even if that party were prepared to pay consideration with a higher per-share value than the consideration payable in the Merger pursuant to the Merger Agreement.

Failure to complete the Merger could negatively impact the stock price and the future business and financial results of Denbury.

If the Merger is not completed for any reason, including as a result of Denbury stockholders failing to approve the Merger or any other condition not being satisfied or waived, the ongoing businesses of Denbury may be adversely affected, and without realizing any of the benefits of having completed the Merger, ExxonMobil and Denbury would be subject to a number of risks, including the following:

 

•

Denbury may experience negative reactions from the financial markets, including negative impacts on its stock price;

 

•

Denbury may experience negative reactions from its customers, vendors, joint venture and other business partners, regulators and employees;

 

36

•

Denbury will be required to pay certain costs relating to the Merger, such as legal, accounting, financial advisor and printing fees, whether or not the Merger is completed;

 

•

the Merger Agreement places certain restrictions on the conduct of Denbury’s businesses prior to completion of the Merger, and such restrictions, the waiver of which is subject to the written consent of ExxonMobil (in certain cases, not to be unreasonably withheld, conditioned or delayed), and subject to certain exceptions and qualifications, may prevent Denbury from taking certain other specified actions or otherwise pursuing business opportunities during the pendency of the Merger that Denbury would have made, taken or pursued if these restrictions were not in place (see “The Merger Agreement—Conduct of Business Pending the Merger” beginning on page 119 of this proxy statement/prospectus for a description of the restrictive covenants applicable to Denbury);

 

•

matters relating to the Merger (including integration planning) will require substantial commitments of time and resources by Denbury management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to Denbury as an independent company;

 

•

in the event of a termination of the Merger Agreement under certain circumstances specified in the Merger Agreement, Denbury may be required to pay a termination fee of $144 million to ExxonMobil. To the extent that a termination fee is not promptly paid by Denbury when due, Denbury will be required to pay ExxonMobil interest on such fee at the annual rate equal to the prime rate, as published in The Wall Street Journal in effect on the date such payment was required to be made, through the date such payment was actually received, or such lesser rate as is the maximum permitted by applicable law; and

 

•

litigation related to any failure to complete the Merger or related to any enforcement proceeding commenced against Denbury or ExxonMobil preventing the performance of their respective obligations pursuant to the Merger Agreement.

There can be no assurance that the risks described above will not materialize. If the Merger is not completed, these risks may materialize and may materially and adversely affect ExxonMobil’s and/or Denbury’s businesses, financial condition, financial results, ratings, stock prices and/or bond prices.

The shares of ExxonMobil common stock to be received by Denbury stockholders upon completion of the Merger will have different rights from shares of Denbury common stock.

Upon completion of the Merger, Denbury stockholders will no longer be stockholders of Denbury, a Delaware corporation, but will instead become stockholders of ExxonMobil, a New Jersey corporation, and their rights as stockholders will be governed by New Jersey law and ExxonMobil’s restated certificate of incorporation and by-laws. New Jersey law and the terms of ExxonMobil’s restated certificate of incorporation and by-laws may be materially different than Delaware law and the terms of the Denbury certificate of incorporation and bylaws, which currently govern the rights of Denbury stockholders. See “Comparison of Stockholder Rights” beginning on page 150 of this proxy statement/prospectus for a discussion of the different rights associated with ExxonMobil common shares.

After the Merger, Denbury stockholders will have a significantly lower ownership and voting interest in ExxonMobil than they currently have in Denbury and will exercise less influence over management.

Based on the number of shares of Denbury common stock and the Denbury equity awards outstanding as of the Denbury record date for the Special Meeting, ExxonMobil estimates that it will issue approximately      shares of ExxonMobil common stock pursuant to the Merger, provided that if the Merger is not completed as of March 7, 2024 and additional Denbury equity awards are granted to certain Denbury employees as permitted under the Merger Agreement, ExxonMobil may be required to reserve additional shares of ExxonMobil common stock for issuance (see “The Merger Agreement – Treatment and Quantification of Denbury Equity Awards –

 

37

Treatment of Denbury RSUs and Denbury Restricted Shares Granted on or after March 7, 2024). The actual number of shares of ExxonMobil common stock to be issued and reserved for issuance in connection with the Merger will be determined at completion of the Merger based on the exchange ratio and the number of shares of Denbury common stock and the Denbury equity awards outstanding at that time. ExxonMobil has a significantly larger market capitalization than Denbury. Based on the number of shares of Denbury common stock outstanding as of         , 2023, and the number of shares of ExxonMobil common stock outstanding as of         , 2023, ExxonMobil and Denbury estimate that, as of immediately following completion of the Merger, holders of ExxonMobil common stock as of immediately prior to the Merger will hold approximately         % and holders of Denbury common stock immediately prior to the Merger will hold approximately         %, of the outstanding shares of ExxonMobil common stock (or, on a fully diluted basis, holders of ExxonMobil common stock as of immediately prior to the Merger will hold approximately         % and holders of Denbury common stock as of immediately prior to the Merger will hold approximately         % of the shares of ExxonMobil common stock). Consequently, former Denbury stockholders will have materially less influence over the management and policies of ExxonMobil than they currently have over the management and policies of Denbury.

Denbury stockholders are not entitled to appraisal rights in connection with the Merger.

Appraisal rights are statutory rights that enable stockholders to dissent from certain extraordinary transactions, such as certain mergers, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the applicable transaction. Under Delaware law, holders of shares of Denbury common stock will not have rights to an appraisal of the fair value of their shares in connection with the Merger. See “The Merger—No Dissenters’ or Appraisal Rights” beginning on page 109 of this proxy statement/prospectus.

Potential litigation against ExxonMobil and Denbury could result in substantial costs, an injunction preventing the completion of the Merger and/or a judgment resulting in the payment of damages.

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if such a lawsuit is unsuccessful, defending against these claims can result in substantial costs.

Stockholders of Denbury may file lawsuits against ExxonMobil, Denbury and/or the directors and officers of either company in connection with the Merger. These lawsuits could prevent or delay the completion of the Merger and result in significant costs to Denbury and/or ExxonMobil, including any costs associated with the indemnification of directors and officers. There can be no assurance that any of the defendants will be successful in the outcome of any potential lawsuits.

ExxonMobil and Denbury will incur significant transaction and Merger-related costs in connection with the Merger.

ExxonMobil and Denbury expect to incur a number of non-recurring costs associated with the Merger and combining the operations of the two companies. The significant, non-recurring costs associated with the Merger include, among others, fees and expenses of financial advisors (which are described in “The Merger—Opinions of Denbury’s Financial Advisors” beginning on page 86 of this proxy statement/prospectus) and other advisors and representatives, certain employment-related costs relating to employees of Denbury (which are described in “Interests of Denbury’s Directors and Executive Officers in the Merger” beginning on page 139 of this proxy statement/prospectus), filing fees due in connection with filings required under the HSR Act and filing fees and printing and mailing costs for this proxy statement/prospectus. Some of these costs have already been incurred or may be incurred regardless of whether the Merger is completed, including a portion of the fees and expenses of financial advisors and other advisors and representatives and filing fees for this proxy statement/prospectus. ExxonMobil also will incur transaction fees and costs related to formulating and implementing integration plans with respect to the two companies, including facilities and systems consolidation costs. ExxonMobil continues to

 

38

assess the magnitude of these costs, and additional unanticipated costs may be incurred in the Merger and the integration of the two companies’ businesses.

The Merger is predicated on a developing market for carbon capture and sequestration and other services and may be dilutive in both the short-term, medium-term and long-run, to ExxonMobil’s earnings per share, which may negatively affect the market price of ExxonMobil common stock following completion of the Merger.

In connection with the completion of the Merger, ExxonMobil expects to issue approximately      ExxonMobil common shares, provided that if the Merger is not completed as of March 7, 2024 and additional Denbury equity awards are granted to certain Denbury employees as permitted under the Merger Agreement, ExxonMobil may be required to reserve additional shares of ExxonMobil common stock for issuance (see “The Merger Agreement – Treatment and Quantification of Denbury Equity Awards – Treatment of Denbury RSUs and Denbury Restricted Shares Granted on or after March 7, 2024). The issuance of new ExxonMobil common shares could have the effect of depressing the market price of ExxonMobil common shares in the short-term.

ExxonMobil currently projects that the Merger will result in a number of benefits, including enhanced competitive positioning and a platform from which to create an end-to-end regional carbon capture and storage business and accelerate growth in this emerging market. The predictions for the business, and the carbon capture and storage market in general, are based on, among other things, preliminary estimates of future consumer demand, companies’ emission-reduction and net zero pledges, future technology developments to enable this business to be developed cost-effectively and at scale, and government policies, including the implementation and administration of regulations under the U.S. Inflation Reduction Act, all of which may be insufficiently robust to develop the emerging carbon capture and storage market or may materially change. The outcome of these factors will determine the extent to which the Merger may be dilutive to ExxonMobil’s earnings per share in the medium-term or long-run, and may be further impacted by additional transaction and integration related costs and other factors such as the failure to realize some or all of the benefits anticipated in the Merger. Any dilution of ExxonMobil’s earnings per share could cause the price of shares of ExxonMobil common stock to decline or grow at a reduced rate.

Risks relating to ExxonMobil and Denbury.

ExxonMobil and Denbury are, and following completion of the Merger ExxonMobil will continue to be, subject to the risks described in (i) Part I, Item 1A, “Risk Factors” in ExxonMobil’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 22, 2023 and Item 8.01, “Other Events” in ExxonMobil’s Current Report on Form 8-K filed with the SEC on July 13, 2023, (ii) Part I, Item 1A, “Risk Factors” in Denbury’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 23, 2023 and Item 1.01 “Entry into a Material Definitive Agreement” in Denbury’s Current Report on Form 8-K filed with the SEC on July 14, 2023, and (iii) ExxonMobil’s and Denbury’s subsequent filings with the SEC, in each case, which are incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 177 of this proxy statement/prospectus.

 

39

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus, including the information included or incorporated by reference, contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act. In this context, forward-looking statements often address future business and financial events, conditions, expectations, plans or ambitions, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negatives of these words, but not all forward-looking statements include such words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the proposed transaction and the anticipated benefits thereof. All such forward-looking statements are based upon current plans, estimates, expectations and ambitions that are subject to risks, uncertainties and assumptions, many of which are beyond the control of ExxonMobil and Denbury, that could cause actual results to differ materially from those expressed in such forward-looking statements. Important risk factors that may cause such a difference include, but are not limited to: the completion of the proposed transaction on anticipated terms and timing, or at all, including obtaining regulatory approvals that may be required on anticipated terms and Denbury stockholder approval; anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the combined company’s operations and other conditions to the completion of the merger, including the possibility that any of the anticipated benefits of the proposed transaction will not be realized or will not be realized within the expected time period; the ability of ExxonMobil and Denbury to integrate the business successfully and to achieve anticipated synergies and value creation; potential litigation relating to the proposed transaction that could be instituted against ExxonMobil, Denbury or their respective directors; the risk that disruptions from the proposed transaction will harm ExxonMobil’s or Denbury’s business, including current plans and operations and that management’s time and attention will be diverted on transaction-related issues; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger; rating agency actions and ExxonMobil and Denbury’s ability to access short- and long-term debt markets on a timely and affordable basis; legislative, regulatory and economic developments, including regulatory implementation of the Inflation Reduction Act, timely and attractive permitting for carbon capture and storage by applicable federal and state regulators, and other regulatory actions targeting public companies in the oil and gas industry and changes in local, national, or international laws, regulations, and policies affecting ExxonMobil and Denbury including with respect to the environment; potential business uncertainty, including the outcome of commercial negotiations and changes to existing business relationships during the pendency of the Merger that could affect ExxonMobil’s and/or Denbury’s financial performance and operating results; certain restrictions during the pendency of the Merger that may impact Denbury’s ability to pursue certain business opportunities or strategic transactions or otherwise operate its business; acts of terrorism or outbreak of war, hostilities, civil unrest, attacks against ExxonMobil or Denbury, and other political or security disturbances; dilution caused by ExxonMobil’s issuance of additional shares of its common stock in connection with the proposed transaction; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; changes in policy and consumer support for emission-reduction products and technology; the impacts of pandemics or other public health crises, including the effects of government responses on people and economies; global or regional changes in the supply and demand for oil, natural gas, petrochemicals, and feedstocks and other market or economic conditions that impact demand, prices and differentials, including reservoir performance; changes in technical or operating conditions, including unforeseen technical difficulties; those risks described in Item 1A of ExxonMobil’s Annual Report on Form 10-K, filed with the SEC on February 22, 2023, and subsequent reports on Forms 10-Q and 8-K, as well as under the heading “Factors Affecting Future Results” on the Investors page of ExxonMobil’s website at www.exxonmobil.com (information included on or accessible through ExxonMobil’s website is not incorporated by reference into this communication); those risks described in Item 1A of Denbury’s Annual Report on Form 10-K, filed with the SEC on February 23, 2023, and subsequent reports on Forms 10-Q and 8-K; and those risks that are described herein under “Risk Factors.” References to

 

40

resources or other quantities of oil or natural gas may include amounts that ExxonMobil or Denbury believe will ultimately be produced, but that are not yet classified as “proved reserves” under SEC definitions.

While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. You are cautioned not to place undue reliance on ExxonMobil’s and Denbury’s forward-looking statements, which speak only as of the date of this proxy statement/prospectus or the date of any information included or incorporated by reference in this proxy statement/prospectus. All subsequent written and oral forward-looking statements concerning the Merger or other matters addressed in this proxy statement/prospectus and attributable to ExxonMobil or Denbury or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, ExxonMobil and Denbury undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.

 

41

THE COMPANIES

EXXON MOBIL CORPORATION

Exxon Mobil Corporation, which is referred to in this proxy statement/prospectus as ExxonMobil, was incorporated in the State of New Jersey in 1882. Divisions and affiliated companies of ExxonMobil operate or market products in the United States and most other countries of the world. Their principal business involves exploration for, and production of, crude oil and natural gas; manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals, and a wide variety of specialty products; and pursuit of lower-emission business opportunities including carbon capture and storage, hydrogen, and lower-emission fuels. Affiliates of ExxonMobil conduct extensive research programs in support of these businesses.

The principal trading market for ExxonMobil’s common stock (NYSE: XOM) is the NYSE.

The principal executive offices of ExxonMobil are located at 22777 Springwoods Village Parkway, Spring, Texas 77389-1425, its telephone number is (972) 940-6000 and its website is www.exxonmobil.com.

This proxy statement/prospectus incorporates important business and financial information about ExxonMobil from other documents that are not included in or delivered with this proxy statement/prospectus. For a list of the documents that are incorporated by reference in this proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 177 of this proxy statement/prospectus.

DENBURY INC.

Denbury Inc., which is referred to in this proxy statement/prospectus as Denbury, a Delaware corporation, is an independent energy company with operations focused in the Gulf Coast and Rocky Mountain regions of the United States. Denbury is differentiated by its focus on CO₂ EOR and the emerging CCUS industry, supported by Denbury’s CO₂ EOR technical and operational expertise and its extensive CO₂ pipeline infrastructure. The utilization of captured industrial-sourced CO₂ in EOR significantly reduces the carbon footprint of the oil that Denbury produces, making Denbury’s Scope 1 and Scope 2 CO₂ emissions negative today, with Denbury’s goal to reach Net Zero for its Scope 1, Scope 2 and Scope 3 CO₂ emissions within this decade, primarily through increasing the amount of captured industrial-sourced CO₂ used in its operations.

Denbury common stock is traded on the NYSE under the symbol “DEN.” Following the Merger, Denbury common stock will be delisted from the NYSE.

The principal executive offices of Denbury are located at 5851 Legacy Circle, Suite 1200, Plano, Texas 75024, its telephone number is (972) 673-2000 and its website is www.denbury.com.

Additional information about Denbury and its subsidiaries are included in documents incorporated by reference into this proxy statement/prospectus. For a list of the documents that are incorporated by reference in this proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 177 of this proxy statement/prospectus.

EMPF CORPORATION

Merger Sub is a wholly owned subsidiary of ExxonMobil. Merger Sub was formed solely for the purpose of completing the Merger. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the Merger.

Merger Sub was incorporated in the State of Delaware on July 3, 2023. The principal executive offices of Merger Sub are located at 22777 Springwoods Village Parkway, Spring, Texas 77389-1425, and its telephone number is (972) 940-6000.

 

42

THE SPECIAL MEETING

This proxy statement/prospectus is being provided to the Denbury stockholders as part of a solicitation of proxies by the Denbury board of directors for use at the Special Meeting to be held at the time and place specified below and at any properly convened meeting following an adjournment or postponement thereof. This proxy statement/prospectus provides Denbury stockholders with information they need to know to be able to vote or instruct their vote to be cast at the Special Meeting or any adjournment or postponement thereof and should be read carefully in its entirety. In addition, this proxy statement/prospectus constitutes a prospectus for ExxonMobil in connection with the issuance by ExxonMobil of ExxonMobil common stock pursuant to the Merger Agreement.

Date, Time and Place of the Special Meeting

The Special Meeting will be held virtually at www.virtualshareholdermeeting.com/DEN2023SM on         , 2023, at        , Central Time. On or about        , 2023, Denbury commenced mailing this proxy statement/prospectus and the enclosed form of proxy to its stockholders entitled to vote at the Special Meeting.

The Special Meeting can be accessed by visiting www.virtualshareholdermeeting.com/DEN2023SM, where Denbury stockholders will be able to participate and vote online. Denbury encourages its stockholders to access the meeting prior to the start time leaving ample time for check-in. Please follow the instructions as outlined in this proxy statement/prospectus. This proxy statement/prospectus is first being furnished to Denbury’s stockholders on or about          , 2023.

Denbury has chosen to hold the Special Meeting solely via live webcast and not in a physical location. Denbury has adopted a virtual format for the Special Meeting to make participation accessible for stockholders from any geographic location with Internet connectivity.

Purposes of the Special Meeting

The Special Meeting is being held to consider and vote upon the following proposals:

 

•

Proposal 1—the Merger Agreement Proposal: to approve and adopt the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus and the material provisions of which are summarized in “The Merger Agreement” beginning on page 111 of this proxy statement/prospectus, pursuant to which, among other things, Merger Sub will merge with and into Denbury and each outstanding share of Denbury common stock will be converted into the right to receive 0.840 shares of ExxonMobil common stock; and

 

•

Proposal 2—the Advisory Compensation Proposal: to approve, on an advisory basis, the compensation that may be paid or become payable to Denbury’s named executive officers that is based on or otherwise related to the Merger, the value of which is disclosed in the table in “Interests of Denbury’s Directors and Executive Officers in the Merger—Golden Parachute Compensation” beginning on page 143 of this proxy statement/prospectus.

Recommendation of the Denbury Board of Directors

At a meeting held on July 13, 2023, the Denbury board of directors unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to and in the best interests of Denbury and its stockholders, (ii) approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger in accordance with the requirements of the Delaware General Corporation Law and (iii) resolved to recommend approval and adoption of the Merger Agreement by the stockholders of Denbury. The Denbury board of directors unanimously recommends that the Denbury stockholders vote:

 

•

Proposal 1: “FOR” the Merger Agreement Proposal; and

 

•

Proposal 2: “FOR” the Advisory Compensation Proposal.

 

43

This proxy statement/prospectus contains important information regarding these proposals and factors that Denbury stockholders should consider when deciding how to cast their votes. Denbury stockholders are encouraged to read carefully this proxy statement/prospectus in its entirety, including the annexes to this proxy statement/prospectus and documents incorporated by reference into this proxy statement/prospectus, for more detailed information regarding the Merger Agreement and the Merger.

Record Date; Stockholders Entitled to Vote

Only holders of record of Denbury common stock at the close of business on      , 2023, the record date, will be entitled to notice of, and to vote at, the Special Meeting or any adjournment or postponement thereof.

On the record date, there were      shares of Denbury common stock outstanding and entitled to vote at the Special Meeting. Each share of Denbury common stock outstanding on the record date entitles the holder thereof to one vote on each proposal to be considered at the Special Meeting. Denbury stockholders may vote virtually at the meeting or by proxy through the Internet or by telephone or by a properly executed and delivered proxy card with respect to the Special Meeting.

A complete list of Denbury stockholders of record who are entitled to vote at the Special Meeting will be available for a period of at least ten days prior to the Special Meeting. If you would like to inspect the list of Denbury stockholders of record, please call the Investor Relations department at (972) 673-2000 to schedule an appointment or request access. A certified list of eligible Denbury stockholders will be available for inspection during the Special Meeting at www.virtualshareholdermeeting.com/DEN2023SMby entering the control number provided on your proxy card, voting instruction form or notice.

Quorum

A quorum is necessary to conduct business at the Special Meeting. A quorum requires the presence at the Special Meeting, by attending the Special Meeting or being represented by proxy, of one-third of the outstanding shares of Denbury common stock entitled to vote on each matter considered at the Special Meeting.

For purposes of determining whether there is a quorum, all shares that are present will count towards the quorum, which will include proxies received but marked as abstentions and will exclude broker non-votes. Broker non-votes occur when a beneficial owner holding shares in “street name” does not instruct the broker, bank or other nominee that is the record owner of such stockholder’s shares on how to vote those shares on a particular proposal.

Required Vote; Treatment of Abstentions and Broker Non-Votes

The votes required for each proposal are as follows:

 

•

Proposal 1—the Merger Agreement Proposal. The affirmative vote of holders of a majority of the outstanding shares of Denbury common stock on the record date and entitled to vote thereon is required to adopt the Merger Agreement Proposal. The required vote on Proposal 1 is based on the number of outstanding shares—not the number of shares actually voted. The failure of any Denbury stockholder to submit a vote (i.e., by not submitting a proxy and not voting at the Special Meeting) and any abstention from voting by a Denbury stockholder will have the same effect as a vote “AGAINST” the Merger Agreement Proposal. Because the Merger Agreement Proposal is non-routine, brokers, banks and other nominees do not have discretionary authority to vote on the Merger Agreement Proposal, and will not be able to vote on the Merger Agreement Proposal absent instructions from the beneficial owner of any Denbury shares held of record by them. As a result, a broker non-vote will have the same effect as a vote “AGAINST” the Merger Agreement Proposal.

 

•

Proposal 2—the Advisory Compensation Proposal. The affirmative vote of the majority of the voting power present or represented by proxy at the Special Meeting, where a quorum is present, and entitled

 

44

to vote thereon is required to approve the Advisory Compensation Proposal. The required vote on the Advisory Compensation Proposal is based on the number of shares present—not the number of outstanding shares. Abstentions from voting by a Denbury stockholder attending the Special Meeting or voting by proxy will have the same effect as a vote “AGAINST” the Advisory Compensation Proposal. A failure to attend the Special Meeting virtually or by proxy will have no effect on the outcome of the vote on the Advisory Compensation Proposal. Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal, and, as a result, broker non-votes will have no effect on the outcome of the vote on the Advisory Compensation Proposal. While the Denbury board of directors intends to consider the vote resulting from the Advisory Compensation Proposal, the vote is advisory only and therefore not binding on Denbury, and, if the proposed Merger is approved by Denbury stockholders and consummated, the compensation that is the subject of the Advisory Compensation Proposal will be payable even if the Advisory Compensation Proposal is not approved.

Share Ownership; Voting by Denbury’s Directors and Executive Officers

At the close of business on the record date for the Special Meeting, Denbury’s directors and executive officers had the right to vote approximately    shares of the then-outstanding Denbury common stock at the Special Meeting, collectively representing approximately                % of the Denbury common stock outstanding and entitled to vote on that date. We currently expect that Denbury’s directors and executive officers will vote their shares “FOR” Proposal 1 (the Merger Agreement Proposal) and “FOR” Proposal 2 (the Advisory Compensation Proposal), although no director or executive officer has entered into any agreement obligating him or her to do so.

Voting of Denbury Common Stock

Voting By Shareholders of Record

You are a stockholder of record if your shares of Denbury common stock are directly held by you and registered in your name with our transfer agent, Broadridge Corporate Issuer Solutions, Inc. If you are a stockholder of record, you may vote your shares via the Internet at www.proxyvote.com in accordance with the instructions in the Notice. You may also vote by touch-tone telephone from the United States by calling 1-800-690-6903, or by completing, signing and dating the proxy card and returning the proxy card in the prepaid envelope. In order to be valid and acted upon at the Special Meeting, your proxy must be received before 11:59 p.m. Central Time (CT) on      , 2023. Shares represented by proxy will be voted at the Special Meeting unless the proxy is revoked at any time prior to the time at which the shares covered by proxy are voted by: (i) timely submitting a proxy with new voting instructions via the Internet or telephone; (ii) timely delivering a valid, later-dated executed proxy card; (iii) delivering a written notice of revocation that is received by our Corporate Secretary at 5851 Legacy Circle, Suite 1200, Plano, Texas 75024, by 11:59 p.m. Central Time (CT) on         , 2023; or (iv) voting at the virtual Special Meeting by completing a ballot.

Attending the Special Meeting virtually without completing a ballot will not revoke any previously submitted proxy. If you properly complete and sign your proxy card but do not indicate how your shares should be voted on a matter, the shares represented by your proxy will be voted in accordance with the recommendation of the Denbury board of directors as discussed below.

Denbury stockholders are encouraged to submit a proxy promptly. Each valid proxy received in time will be voted at the Special Meeting according to the choice specified, if any. Executed but uninstructed proxies (i.e., proxies that are properly signed, dated and returned but are not marked to tell the proxies how to vote) will be voted in accordance with the recommendations of the Denbury board of directors.

 

45

Voting By Beneficial Owners

Denbury stockholders who hold shares of Denbury common stock in a stock brokerage account or through a bank, broker or other nominee (“street name” stockholders) who wish to vote at the Special Meeting should be provided a voting instruction form by the bank, broker or other nominee that holds their shares. If you are a street name stockholder and this has not occurred, contact the bank, broker or other nominee that holds your shares of record. A number of banks and brokerage firms participate in a program that also permits “street name” stockholders to direct their vote by telephone or over the Internet. If your shares are held in an account at a bank or brokerage firm that participates in such a program, you may direct the vote of these shares by telephone or over the Internet by following the voting instructions enclosed with the proxy form from the bank or brokerage firm. The Internet and telephone proxy procedures are designed to authenticate stockholders’ identities, to allow stockholders to give their proxy voting instructions and to confirm that those instructions have been properly recorded. Votes directed by telephone or over the Internet through such a program must be received by 11:59 p.m. Central Time (CT), on     , 2023. Directing the voting of your shares will not affect your right to vote at the Special Meeting if you decide to attend the Special Meeting; however, you must use the 16-digit control number set forth on the voting instruction form received from your bank, broker or other nominee to vote your shares held in “street name” at the Special Meeting. Voting at the Special Meeting using the 16-digit control number set forth on the voting instruction form received from your bank, broker or other nominee prior to the deadline described above will automatically cancel any voting directions you have previously given by telephone or over the Internet with respect to your shares.

In accordance with the rules of the NYSE, brokers, banks and other nominees who hold shares of Denbury common stock in “street name” for their customers do not have discretionary authority to vote the shares with respect to the Merger Agreement Proposal and the Advisory Compensation Proposal. Accordingly, if brokers, banks or other nominees do not receive specific voting instructions from the beneficial owner of such shares, they may not vote such shares with respect to these proposals. Under such circumstance, a “broker non-vote” would arise. “Broker non-votes,” if any, will not be considered present at the Special Meeting for purposes of determining whether a quorum is present at the Special Meeting, will have the same effect as a vote “AGAINST” the Merger Agreement Proposal and, assuming a quorum is present, will have no effect on the Advisory Compensation Proposal. Thus, for shares of Denbury common stock held in “street name,” only shares of Denbury common stock affirmatively voted “FOR” the Merger Agreement Proposal will be counted as a vote in favor of such proposal.

Revocation of Proxies

Shareholders of Record

Denbury stockholders of record may revoke their proxies at any time before their shares are voted at the Special Meeting in any of the following ways:

 

•

sending a written notice of revocation to Denbury at 5851 Legacy Circle, Suite 1200, Plano, Texas 75024, Attention: Corporate Secretary, which notice must be received before shares are voted at the Special Meeting;

 

•

properly submitting a new, later-dated, proxy card which must be received before shares are voted at the Special Meeting (in which case only the later-dated proxy is counted and the earlier proxy is revoked);

 

•

submitting a proxy via the Internet or by telephone at a later date, which must be received by 11:59 p.m. Central Time, on , 2023 (in which case only the later-dated proxy is counted and the earlier proxy is revoked); or

 

•

attending the Special Meeting and voting at the Special Meeting. Attendance at the Special Meeting will not, however, in and of itself, constitute a vote or revocation of a prior proxy.

 

46

Beneficial Owners

Beneficial owners of Denbury common stock may change their voting instruction by submitting new voting instructions to the brokers, banks or other nominees that hold their shares of record or by following the instructions for voting set forth on the voting instruction form with a 16-digit control number provided by their brokers, banks or other nominees and voting at the Special Meeting.

Denbury stockholders that hold their shares in “street name” through a broker, bank or other nominee will need to follow the instructions provided by their broker, bank or other nominee in order to revoke their proxies or submit new voting instructions.

Inspector of Elections; Tabulation of Votes

Voting results will be tabulated and certified by an individual designated by the Denbury board of directors to serve as inspector of election.

Solicitation of Proxies

Denbury will be responsible for the proxy solicitation costs related to the Special Meeting. This includes the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials to Denbury stockholders. In addition to sending and making available these proxy materials, some of Denbury’s directors, officers and other employees may solicit proxies by contacting Denbury stockholders by telephone, by mail, by e-mail or at the Special Meeting via the Special Meeting website. Denbury stockholders may also be solicited by press releases issued by Denbury and/or ExxonMobil, postings on Denbury’s or ExxonMobil’s websites and advertisements in periodicals. None of Denbury’s directors, officers or employees will receive any extra compensation for their solicitation services. Denbury has also retained Innisfree M&A Incorporated to assist in the solicitation of proxies for a fee expected not to exceed $60,000, plus reasonable out-of-pocket expenses. Denbury and ExxonMobil may also reimburse brokers, banks and other nominees representing beneficial owners of shares of Denbury common stock for their expenses in sending proxy solicitation materials to such beneficial owners and obtaining their proxies.

Adjournments and Postponements

In accordance with the Fourth Amended and Restated Bylaws of Denbury, whether or not a quorum is present, the chairman of the Special Meeting will have the power to adjourn the Special Meeting in order to provide more time to solicit additional proxies in favor of adoption of the Merger Agreement Proposal.

If a sufficient number of shares of Denbury common stock is present or represented by proxy at the Special Meeting, and have voted in favor of the Merger Agreement Proposal at the Special Meeting such that the requisite Denbury stockholder approval shall have been obtained, Denbury does not anticipate that it will adjourn or postpone the Special Meeting.

Any adjournment or postponement of the Special Meeting will allow Denbury stockholders who have already sent in their proxies to revoke them at any time before their use at the Special Meeting that was adjourned or postponed. If the adjournment is for more than 30 days or if after the adjournment a new record date is set for the adjourned meeting, a notice of the adjourned meeting must be given to each stockholder of record entitled to vote at the Special Meeting.

Other Matters

At this time, Denbury knows of no other matters to be submitted at the Special Meeting other than those listed in the Notice.

 

47

Householding of Proxy Statement/Prospectus

Under SEC rules, a single copy of this proxy statement will be delivered in one envelope to multiple stockholders having the same last name and address and to individuals with more than one account registered at Broadridge Corporate Issuer Solutions, Inc. with the same address, unless contrary instructions have been received from an affected stockholder. This procedure, referred to as “householding,” reduces the volume of duplicate materials that stockholders receive and reduces mailing expenses.

You may revoke your consent to future householding mailings or enroll in householding by submitting a written request to Denbury’s Corporate Secretary at Denbury’s principal offices located at 5851 Legacy Circle, Suite 1200, Plano, Texas 75024. You may also send an email to IR@denbury.com or call Denbury at (972) 673-2000.

Questions and Additional Information

Denbury stockholders may contact Denbury’s proxy solicitor, Innisfree M&A Incorporated, with any questions concerning the Merger Agreement or the Merger or the other transactions contemplated by the Merger Agreement, or the accompanying proxy statement/prospectus, or if they would like additional copies of this proxy statement/prospectus or documents incorporated by reference herein, or need help voting their shares of Denbury common stock:

Innisfree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York, New York 10022

Stockholders may call toll free: (877) 717-3905

Banks and Brokers may call collect: (212) 750-5833

Denbury stockholders should not return their stock certificates or send documents representing Denbury common stock with the enclosed proxy card. If the Merger is completed, the exchange agent for the Merger will send to Denbury stockholders a letter of transmittal and related materials and instructions for exchanging shares of Denbury common stock.

 

48

THE MERGER

GENERAL

This proxy statement/prospectus is being provided to holders of Denbury common stock in connection with the solicitation of proxies to be voted at the Special Meeting and at any adjournments or postponements of the Special Meeting. At the Special Meeting, Denbury will ask Denbury stockholders to consider and vote on (i) the Merger Agreement Proposal and (ii) the Advisory Compensation Proposal.

The Merger Agreement provides for, among other things, the merger of Merger Sub with and into Denbury, with Denbury continuing as the surviving corporation and a wholly owned subsidiary of ExxonMobil. The Merger will not be completed unless Denbury stockholders approve and adopt the Merger Agreement. A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus. You are urged to read the Merger Agreement in its entirety because it is the legal document that governs the Merger. For additional information about the Merger, see “The Merger Agreement—Structure of the Merger” and “The Merger Agreement—Merger Consideration” beginning on pages 111 and 112, respectively, of this proxy statement/prospectus.

If the Merger is completed, each outstanding share of Denbury common stock (with certain exceptions described in this proxy statement/prospectus) will be entitled to the right to receive the Merger Consideration, subject to any applicable withholding taxes for cash paid in lieu of fractional shares, in each case without interest. Although the number of shares of ExxonMobil common stock that Denbury stockholders will receive in the Merger is fixed, the market value of the Merger Consideration will fluctuate with the market price of ExxonMobil common stock and will not be known at the time that Denbury stockholders vote to adopt the Merger Agreement. Based on the closing price of ExxonMobil’s common stock on the NYSE on July 12, 2023, the last trading day before the public announcement of the Merger, the 0.840 exchange ratio represented approximately $89.45 in implied value for each share of Denbury common stock. Based on ExxonMobil’s closing price on          , 2023 of $        , the 0.840 exchange ratio represented approximately $         in implied value for each share of Denbury common stock. The market price of ExxonMobil common stock when Denbury stockholders receive those shares after the Merger is completed could be greater than, less than or the same as the market price of shares of ExxonMobil common stock on the date of this proxy statement/prospectus or at the time of the Special Meeting.

THE PARTIES

Exxon Mobil Corporation

Exxon Mobil Corporation, which is referred to in this proxy statement/prospectus as ExxonMobil, was incorporated in the State of New Jersey in 1882. Divisions and affiliated companies of ExxonMobil operate or market products in the United States and most other countries of the world. Their principal business involves exploration for, and production of, crude oil and natural gas; manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals, and a wide variety of specialty products; and pursuit of lower-emission business opportunities including carbon capture and storage, hydrogen, and lower-emission fuels. Affiliates of ExxonMobil conduct extensive research programs in support of these businesses.

The principal trading market for ExxonMobil’s common stock (NYSE: XOM) is the NYSE.

The principal executive offices of ExxonMobil are located at 22777 Springwoods Village Parkway, Spring, Texas 77389-1425, its telephone number is (972) 940-6000 and its website is www.exxonmobil.com.

This proxy statement/prospectus incorporates important business and financial information about ExxonMobil from other documents that are not included in or delivered with this proxy statement/prospectus. For a list of the documents that are incorporated by reference in this proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 177 of this proxy statement/prospectus.

 

49

Denbury Inc.

Denbury Inc., which is referred to in this proxy statement/prospectus as Denbury, a Delaware corporation, is an independent energy company with operations focused in the Gulf Coast and Rocky Mountain regions of the United States. Denbury is differentiated by its focus on CO₂ EOR and the emerging CCUS industry, supported by Denbury’s CO₂ EOR technical and operational expertise and its extensive CO₂ pipeline infrastructure.

Denbury common stock is traded on the NYSE under the symbol “DEN.” Following the Merger, Denbury common stock will be delisted from the NYSE.

The principal executive offices of Denbury are located at 5851 Legacy Circle, Suite 1200, Plano, Texas 75024, its telephone number is (972) 673-2000 and its website is www.denbury.com.

Additional information about Denbury and its subsidiaries are included in documents incorporated by reference into this proxy statement/prospectus. For a list of the documents that are incorporated by reference in this proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 177 of this proxy statement/prospectus.

EMPF Corporation

Merger Sub is a wholly owned subsidiary of ExxonMobil. Merger Sub was formed solely for the purpose of completing the Merger. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the Merger.

Merger Sub was incorporated in the State of Delaware on July 3, 2023. The principal executive offices of Merger Sub are located at 22777 Springwoods Village Parkway, Spring, Texas 77389-1425, and its telephone number is (972) 940-6000.

BACKGROUND OF THE MERGER

The Denbury board of directors and Denbury management regularly evaluate various strategic and financial alternatives to increase stockholder value. In that context, between early 2021 and July of 2023, Denbury held or authorized its advisors to hold discussions with over 28 parties, primarily related to a sale of the company, and Denbury signed confidentiality agreements with 17 of such parties. While a number of parties expressed various levels of interest at different points in time, ExxonMobil was the only party to provide an indication of interest above the current market price and submit a proposal to acquire Denbury. The implied value of ExxonMobil’s proposal of $89.45 per Denbury share represented an approximately 2% premium to Denbury’s closing price as of July 12, 2023, the day before announcement, and an approximately 17% premium to the unaffected 10-day average closing price on August 16, 2022, the day before the publication of the first of several news stories speculating on the potential sale of Denbury. Moreover, during the period from August 16, 2022 through July 10, 2023, Denbury’s indexed average trading performance was up 10%, compared to 1% for selected oil companies and negative 51% for selected energy transition companies, leading the Denbury board of directors to conclude that Denbury’s stock price was affected by takeover speculation. What follows is a detailed summary of the key events, meetings, and decisions that led the Denbury board of directors to approve the execution of the Merger Agreement on July 13, 2023.

Denbury Resources Inc. (the “Predecessor”) was an exploration and production company with operations focused in the Gulf Coast and Rocky Mountain regions of the United States, whose common stock traded publicly on the NYSE from 1997 until September 2020. During such time, the Predecessor focused its operations on a combination of exploitation, drilling and proven engineering extraction processes, with its primary focus on CO₂ EOR.

 

50

The Predecessor began its CO₂ operations in August 1999, with the acquisition of the Little Creek Field, followed by the acquisition of Jackson Dome CO₂ reserves and the NEJD CO₂ pipeline in 2001. Based upon successes at Little Creek and the ownership of the CO₂ reserves, the Predecessor began to transition its capital spending and acquisition efforts to focus more heavily on CO₂ EOR and, over time, transformed its strategy to focus primarily on owning and operating oil fields that are well suited for CO₂ EOR projects and building out an extensive CO₂ pipeline system in the Gulf Coast and Rocky Mountain regions to be utilized for transporting CO₂ for EOR. In 2010, the Predecessor completed construction of the Green Pipeline, a 320-mile CO₂ pipeline running from near Donaldsonville, Louisiana, to south of Houston, Texas, within close proximity to the highest concentration of industrial emissions in the United States. The Predecessor envisioned a day when CO₂ would be captured from those industrial emissions and utilized in EOR, hence the name “Green Pipeline”.

In February 2018, the United States Congress passed legislation, which was signed into law by President Trump on February 9, 2018, that increased so-called 45Q tax credits for qualifying enterprises undertaking CCUS activities. The Denbury board of directors and Denbury management recognized that Denbury’s deep CO₂ expertise and extensive CO₂ pipeline infrastructure could be increasingly valuable, particularly considering these tax law changes and increasing public and investor pressure to reduce industrial CO₂ emissions. In January 2020, the Predecessor formed a “Denbury Carbon Solutions” team to advance the Predecessor’s leadership in the anticipated high-growth CCUS industry, leveraging the company’s unique capabilities and assets that were developed over the prior 20-plus years through its focus on CO₂ EOR.

Beginning in 2020, the COVID-19 pandemic’s effect on economic activity across the globe resulted in a rapid and precipitous drop in demand for oil, which in turn caused oil prices to plummet beginning in the first week of March 2020, negatively affecting the Predecessor’s cash flow, liquidity and financial position. These events worsened an already-deteriorated oil market that followed the early-March 2020 failure by the group of oil producing nations known as OPEC+ to reach an agreement over proposed oil production cuts. As a result, on March 5, 2020, the Predecessor was notified by the NYSE that the average closing price of its common stock, par value $0.001 per share, over the prior 30-consecutive trading day period was below $1.00 per share, which is the minimum average closing price per share required to maintain listing on the NYSE.

In response, the Predecessor took significant action with respect to its operations, announcing on March 31, 2020, that (i) it planned to reduce its 2020 capital budget by approximately $80 million, or 44%, (ii) it would defer its Cedar Creek Anticline CO₂ tertiary flood development project beyond 2020, (iii) it would restructure certain of its hedges to increase downside protection against further declines in oil prices, and (iv) its Board of Directors would submit a proposal for approval at the Predecessor’s 2020 Annual Meeting of Stockholders, to effect a reverse stock split of the common stock and reduce its authorized common stock. On June 29, 2020, the Predecessor elected to draw $200 million under its credit facility. The Predecessor elected not to make the approximately $8 million interest payment due and payable on June 30, 2020 with respect to its 6³⁄₈% convertible senior notes due 2024 on the due date in order to evaluate certain strategic alternatives, none of which were ultimately implemented.

On July 30, 2020, the Predecessor and all of its wholly owned direct and indirect subsidiaries filed petitions for voluntary relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

On September 2, 2020, the Bankruptcy Court entered an order confirming that certain Joint Chapter 11 Plan of Reorganization of Denbury Resources Inc. and its Debtor Affiliates (the “Plan”), and on September 18, 2020 (the “Effective Date”), the Plan became effective in accordance with its terms and Denbury emerged from Chapter 11. As part of the transactions undertaken pursuant to the Plan, holders of the Predecessor’s approximate $2.1 billion in aggregate debt principal of previously issued notes were fully extinguished in exchange for Denbury common stock and/or warrants and holders of existing equity interests received warrants reflecting a maximum of 2.5% of the reorganized company’s equity interests.

 

51

Denbury Inc. (“Denbury”) became the successor reporting company of the Predecessor. On September 21, 2020, Denbury common stock, par value $0.001 commenced trading on the NYSE under the ticker symbol “DEN.” Since re-listing on the NYSE less than three years ago through July 12, 2023, Denbury delivered an approximately 385% return for investors.

The Denbury board of directors and Denbury management have regularly reviewed and assessed Denbury’s performance, strategy, financial position, leverage, opportunities and risks in light of current business and economic conditions, developments in the oil and gas exploration and production sector, the emerging CCUS industry, and potential future industry developments since its emergence from bankruptcy protection.

Shortly after relisting on the NYSE, Denbury began receiving inbound solicitations from third parties seeking to partner with Denbury in various ways around its CCUS infrastructure. On December 11, 2020, Chris Kendall, Denbury’s President and Chief Executive Officer and a member of the Denbury board of directors, and Mark Allen, Denbury’s Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary, accepted a meeting with the CCUS leadership team at Company A, an integrated, international oil and natural gas company, to discuss a potential joint venture centered around developing storage sites along the U.S. Gulf Coast.

In mid-December 2020, Denbury management provided the Denbury board of directors with an update on its strategy, vision and CCUS activities, including potential opportunities for storage sites and its CO₂ pipeline network and interest from third parties, including Company A, in potential CCUS joint venture opportunities with Denbury. Denbury management also provided an update on other strategic opportunities around its conventional oil business, including potential strategic merger combinations and acquisition opportunities, each of which were discussed and evaluated during this time. In connection with these evaluations, the Denbury board of directors and Denbury management recognized that Denbury was well positioned as an operator of CO₂ EOR assets and the largest owner and operator of CO₂ pipelines in the U.S. to capitalize on its strategic position in the emerging CCUS business. Denbury’s Board became increasingly convinced that Denbury’s CO₂ expertise and assets could be valuable to other parties. As such, the Denbury board of directors instructed management to continue to explore the universe of opportunities and develop its overall CCUS strategy while continuing to manage its baseline business, aligned with the Company’s vision to be recognized as the world leader in CO₂ EOR, significant in scale, financially secure, and strategically positioned through its expertise and assets to lead the industry in the emerging CCUS industry.

On January 25, 2021, Messrs. Kendall and Allen accepted an introductory meeting with a business development executive at Company B, an integrated, international oil and natural gas company. At the meeting, the Company B executive suggested that Company B would be interested in a potential CCUS joint venture with Denbury. On January 27, 2021, in a follow-up phone call with Messrs. Kendall and Allen, the Company B executive reiterated Company B’s interest in a CCUS joint venture with Denbury.

On February 2, 2021, Denbury entered into a customary confidentiality agreement with Company B related to the consideration of a CCUS joint venture between the parties. This confidentiality agreement did not include a standstill provision.

On February 8 and 9, 2021, several members of Denbury’s management, including Messrs. Kendall and Allen, met with several members of Company B’s management to allow each party to provide a high level overview of its history, operations, financial results, reserves, energy transition and ESG strategy, sustainability initiatives and other matters, as well as a discussion of the CCUS business in particular.

In addition to Company A and Company B, several other third parties reached out periodically to gauge Denbury’s interest in a joint venture or other collaboration, including Company C, an integrated, international oil and natural gas company. Given the various third party interests, Denbury management reached out to representatives of J.P. Morgan in early February 2021 to assist Denbury management in considering Company B’s interest in a potential CCUS joint venture with Denbury, as well as other potential strategic

 

52

alternatives. Representatives of J.P. Morgan suggested that, among other things, Denbury consider reaching out to ExxonMobil in light of ExxonMobil’s February 1, 2021 public announcement of its Low Carbon Solutions business to commercialize emission-reduction technology.

In late February 2021, at the direction of Denbury’s management, a representative of J.P. Morgan reached out to representatives of ExxonMobil to inquire as to whether exploring a strategic transaction with Denbury would further ExxonMobil’s Low Carbon Solution business goals.

On March 4, 2021, Company B provided Denbury with a non-binding term sheet for a potential CCUS joint venture. Thereafter on March 8, 2021, several members of Denbury’s management, including Messrs. Kendall and Allen, met with several members of Company B’s management to discuss Company B’s joint venture proposal.

The Denbury board of directors held a regularly scheduled meeting on March 31, 2021. As part of this meeting, Denbury management and representatives of J.P. Morgan provided the Denbury board of directors with a presentation covering, among other matters, an overview of the exploration and production market and Denbury’s positioning within that market, the role of CCUS and hydrogen in various decarbonization initiatives and an overview of potential strategic alternatives for Denbury, including acquisitions, joint ventures, and a sale of the company. Despite its conviction that Denbury was well positioned within the CCUS industry, the Denbury board of directors also recognized the challenges of optimizing its CCUS business and assets, including execution risks, regulatory risk and the need for significant capital expenditures to develop the CCUS business. Also at this meeting, members of Denbury’s management provided the Denbury board of directors with the results of management’s review of CCUS strategy, which included an aggressive expansion of the CCUS business. The Denbury board of directors approved management’s updated strategy that sought to aggressively grow a CCUS business led by Denbury to maximize stockholder value, while continuing to maintain its EOR-focused oil production business.

In furtherance of this strategy, on April 5, 2021, Denbury appointed Nik Wood as Senior Vice President and leader of the Denbury Carbon Solutions team, directly reporting to Mr. Kendall and charged with building out the team and executing Denbury’s CCUS strategy.

Throughout April 2021, Denbury and Company B held several due diligence and negotiation discussions. However, it was unclear to Denbury how the proposed joint venture could be in the best interest of Denbury stockholders. While a cash infusion would help funding for future capital needs, the total capital required to build out the CCUS business was unknown and it appeared too early in the evolution of the business to enter into such an arrangement. Moreover, Denbury management was concerned that the proposed joint venture with Company B would provide Company B with more control over the Denbury CCUS business and assets than Denbury management believed was appropriate, especially in light of the Denbury board of directors’ approval of an aggressive, “Denbury led” CCUS business.

On April 21, 2021, Denbury informed Company B that it was not interested in pursuing a joint venture and in May 2021, the parties returned or destroyed due diligence materials that had been provided by the other party.

On April 29, 2021, representatives of J.P. Morgan held a meeting with T.J. Wojnar, ExxonMobil’s Vice President, Corporate Strategic Planning. and Alex van Veldhoven, ExxonMobil’s then Senior Strategy Advisor, Corporate Strategic Planning, and provided an overview of Denbury, as directed by Messrs. Kendall and Allen. Messrs. Wojnar and van Veldhoven expressed interest in learning more about Denbury.

Given the interest of companies like Company A, Company B, Company C and ExxonMobil, in early May 2021, Denbury management reached out again to J.P. Morgan to assist the Denbury board of directors and management in evaluating strategic alternatives. J.P. Morgan was selected based on its industry experience and knowledge of Denbury and its assets and operations, as well as its knowledge of likely potential

 

53

counterparties. Denbury also engaged Vinson & Elkins L.L.P. (“Vinson & Elkins”) to act as its legal advisor related to the strategic alternative review process.

On May 10, 2021, Denbury entered into a customary confidentiality agreement with ExxonMobil. This confidentiality agreement did not include a standstill provision.

On May 21, 2021, Messrs. Kendall and Allen met with senior management of Company D, an oil and natural gas exploration and production company, at Company D’s headquarters to discuss, among other things, a potential for a strategic transaction.

The Denbury board of directors held regularly scheduled meetings on May 24 and 25, 2021. As part of these meetings, Denbury management, with the assistance of J.P. Morgan, discussed with the Denbury board of directors, among other matters, the details of potential strategic opportunities available to Denbury, potential counterparties to those opportunities and the mechanics of an exploratory process that would begin with organic discussions and general dialogue with potential counterparties to determine any genuine interest in a strategic transaction with Denbury. Following the discussion, the Denbury board of directors instructed Denbury management to work with J.P. Morgan to initiate the exploratory process.

On May 25, 2021, J.P. Morgan, on behalf of Denbury and as directed by the Denbury board of directors, began contacting and distributing marketing materials to potential counterparties identified by Denbury management with the assistance of J.P. Morgan, including exploration and production companies, integrated oil and natural gas companies, industrial gas companies, renewable energy companies, investment firms and companies interested in pursuing midstream/CCUS opportunities, among others. Throughout the entire process of exploring potential strategic opportunities involving Denbury, J.P. Morgan acted at the direction of Denbury management and regularly updated Denbury management regarding the process and its discussions with potential counterparties.

On June 2, 2021, Messrs. Kendall and Allen, together with other members of Denbury management, gave a presentation to ExxonMobil representatives, including Mr. van Veldhoven, Scott Darling, then Vice President, Finance, Marketing & Commercial Development of ExxonMobil’s Low Carbon Solutions business, and Guy Powell, then Vice President, Planning& Business Development, of ExxonMobil’s Low Carbon Solutions business, regarding Denbury’s history, operations, financial results, reserves, energy transition and ESG strategy, and sustainability initiatives and other matters. During the meeting, representatives of ExxonMobil provided ExxonMobil’s perspective regarding Denbury’s successes and management team, and indicated that an acquisition of Denbury would align with ExxonMobil’s focus on CCUS.

Between June 2 and June 7, 2021, Denbury entered into separate customary confidentiality agreements with Company E, a distributor of hydrogen and nitrogen products, Company F, an investment management organization with investments in midstream assets, and Company D. Denbury management directly interacted with Company E, whereas Companies D and F had been contacted by J.P. Morgan at the direction of Denbury. These confidentiality agreements did not include standstill provisions. Each of Company E, Company F and Company D were granted access to a virtual data room with due diligence materials about Denbury.

On June 7, 2021, a representative of J.P. Morgan discussed the merits of exploring a potential transaction involving Denbury with an executive of Company G, an integrated, international oil and natural gas company. The Company G executive advised that Company G would be very interested in Denbury because, in the executive’s view, there were very few opportunities other than Denbury that involved real CCUS assets. Following this discussion, at the direction of Denbury management, J.P. Morgan sent Company G a draft confidentiality agreement.

The Denbury board of directors met on June 11, 2021 to discuss the exploratory process. A representative of J.P. Morgan noted for the Denbury board of directors that, among other things, J.P. Morgan had contacted or

 

54

would soon contact at least 14 of the identified potential counterparties to gauge their interest in acquiring Denbury. The representative of J.P. Morgan summarized for the Denbury board of directors the details of recent discussions with ExxonMobil and Company G, as well as J.P. Morgan’s perspective on the interest levels of each of the other potential counterparties. The representative of J.P. Morgan also described an illustrative timeline and the potential due diligence process required by each potential counterparty. Following this discussion, the Denbury board of directors instructed Denbury management, with the assistance of J.P. Morgan, to request indications of interest from the potential counterparties in advance of the Denbury board of directors’ regularly scheduled July meeting. After representatives of J.P. Morgan exited the meeting, a representative of Vinson & Elkins reviewed with the Denbury board of directors a summary of directors’ fiduciary duties in considering strategic alternatives. The Denbury board of directors also discussed the terms of a proposed engagement of J.P. Morgan as its financial advisor.

Following the meeting, as directed by the Denbury board of directors, representatives of J.P. Morgan continued to contact potential counterparties and encouraged those who were interested to provide non-binding indications of interest in advance of the Denbury board of directors’ upcoming meeting scheduled for July 15, 2021.

On June 16, 2021, Messrs. Kendall and Allen met with the chief executive officer and other members of senior management of Company E. Senior management of Company E expressed interest in a joint venture with Denbury and its Gulf Coast CCUS assets. Messrs. Kendall and Allen explained why a joint venture was not desirable for Denbury at the current time but suggested that Denbury would be open to a considering a corporate transaction. The chief executive officer of Company E advised that they would consider it and would discuss the potential opportunity with Company E’s board of directors.    

On June 18, 2021, representatives of Company D advised J.P. Morgan that it was withdrawing from the process, citing valuation concerns and Company D’s unwillingness to issue common stock in an amount necessary to acquire Denbury.

On June 21, 2021, a representative of J.P. Morgan met with the chief executive officer of Company G to explore the merits of a potential transaction with Denbury. The chief executive of Company G reiterated that Company G was very interested in discussing the potential opportunity. Following this discussion, J.P. Morgan introduced the Company G chief executive officer to Mr. Kendall.

Between June 22 and June 30, 2021, Denbury entered into separate customary confidentiality agreements with Company H, a large midstream company, Company I, an industrial gas company, Company J, a large energy and power company, Company K, an industrial gas company, and Company C. These confidentiality agreements either did not include standstill provisions or included standstill provisions that would terminate if Denbury agreed to be sold to a third party. Company C and Company K were subsequently granted access to a virtual data room with due diligence materials about Denbury.

On June 24, 2021, Messrs. Kendall and Allen, and other members of Denbury management, gave a presentation to Company F management regarding Denbury’s history, operations, financial results, reserves, energy transition and ESG strategy, and sustainability initiatives and other matters.

Also on June 24, 2021, representatives of Company A, which had reached out to Denbury in late 2020 to discuss a potential CCUS joint venture, advised J.P. Morgan that Company A was not interested in acquiring Denbury because it was not interested in acquiring any U.S. oil and gas assets; however, the representatives of Company A expressed an interest in exploring future partnership opportunities.

On June 25, 2021, a representative of J.P. Morgan discussed the opportunity to explore a potential transaction with Denbury with Mr. van Veldhoven, including certain diligence matters, and encouraged ExxonMobil to provide an informal indication of interest in advance of the scheduled Denbury board of directors meeting on July 15, 2021.

 

55

On June 29, 2021, a representative of J.P. Morgan met with a business development executive at Company G to encourage Company G to enter into a confidentiality agreement with Denbury and schedule a management presentation. The Company G executive agreed to respond to the draft confidentiality agreement previously provided by J.P. Morgan and schedule a management presentation after the 4th of July holiday.

Also on June 29, 2021, representatives of Company E advised J.P. Morgan that it was withdrawing from the process because an acquisition of Denbury would either be highly dilutive to Company E’s shareholders or require the incurrence of substantial debt by Company E.

On June 30, 2021, a business development professional at Company B contacted Mr. Allen to advise that Company B had learned that Denbury was undergoing a strategic review process. Mr. Allen advised that if Denbury received serious interest from a third party regarding a combination or acquisition, Denbury would contact Company B.

On July 1, 2021, Messrs. Kendall and Allen and other members of management gave a presentation to representatives of Company C, regarding Denbury’s history, operations, financial results, reserves, energy transition and ESG strategy, and sustainability initiatives and other matters.

On July 7, 2021, Denbury entered into a customary confidentiality agreement with Company G. This confidentiality agreement included a standstill provision that would terminate if Denbury agreed to be sold to a third party. That same day, following the entry into the confidentiality agreement, Denbury management provided Company G management with a presentation regarding Denbury’s history, operations, financial results, reserves, energy transition and ESG strategy, and sustainability initiatives and other matters.

Also on July 7, 2021, Denbury management provided Company H management with a presentation regarding Denbury’s history, operations, financial results, reserves, energy transition and ESG strategy, and sustainability initiatives and other matters. Later that day, representatives of Company J advised J.P. Morgan that it was withdrawing from the process because Company J did not want to acquire Denbury’s EOR assets.

On July 8, 2021, a representative of J.P. Morgan met with Mr. van Veldhoven who advised that ExxonMobil was having difficulty valuing the CCUS business based on assumptions related to the number of emitters at an assumed $50 tax credit based on existing tax laws.

Also on July 8, 2021, representatives of Company I advised J.P. Morgan that while they were interested in Denbury’s CCUS business and assets, they did not want to acquire Denbury’s EOR assets.

On July 12, 2021, executives of Company F advised representatives of J.P. Morgan that given recent increases in the trading price of Denbury common stock, Company F was not in a position to acquire the entire company; however, Company F would be interested in providing growth capital to Denbury.

Also on July 12, 2021, Denbury entered into a customary confidentiality agreement with Company L, an international oil and natural gas exploration and production company. This confidentiality agreement did not include a standstill provision.

On July 13, 2021, representatives of Company H advised J.P. Morgan that they would not be making a proposal because recent increases in the trading price of Denbury common stock had pushed Denbury’s valuation too high in Company H’s view relative to the expected timing of Denbury’s first CCUS cash flows.

On July 14, 2021, Messrs. Kendall and Allen, and other members of Denbury management, gave a presentation to representatives of Company K regarding Denbury’s history, operations, financial results, reserves, energy transition and ESG strategy, and sustainability initiatives and other matters. Following the meeting, representatives of Company K indicated to J.P. Morgan that Company K was very impressed with Denbury’s CCUS business, which in Company K’s view would fit well with Company K’s strategy; however, Company K advised that it would need to find a potential partner to acquire Denbury’s EOR business and assets.

 

56

Also on July 14, 2021, an executive of Company G advised J.P. Morgan that while they were not yet prepared to make a formal indication of interest, Company G was very interested in Denbury and requested additional due diligence materials. Later that day, Company C delivered a letter to J.P. Morgan confirming that it was strongly interested in continuing to evaluate an all-cash acquisition of Denbury, but did not indicate a purchase price.

The Denbury board of directors held a regularly scheduled meeting on July 15, 2021. As part of this meeting, a representative of J.P. Morgan summarized the status of the outreach to potential counterparties, including a summary of the feedback from the counterparties contacted, noting that 12 of those parties had executed confidentiality agreements and that seven had confirmed their interest in participating in the process. The Denbury board of directors discussed whether to contact additional potential counterparties, including Company B, and the reasons for not contacting such parties, including the risk of leaks to the media and the unlikelihood that such counterparties would be interested in acquiring both Denbury’s CCUS assets and Denbury’s EOR assets. The Denbury board of directors also discussed the importance of preventing the process from being a distraction on management, especially given the Denbury board of directors’ focus on building the CCUS business, executing on the EOR business and continuing to build value for Denbury stockholders. Following discussion, the Denbury board of directors determined to contact Company B and invite it to participate in the process. The Denbury board of directors, management and its advisors then discussed the next steps in the process, including due diligence and management presentations. After discussion, the Denbury board of directors instructed J.P. Morgan to request that potential counterparties submit non-binding proposals by September 13, 2021. After the representatives of J.P. Morgan left the meeting, the Denbury board of directors discussed the proposed terms of an engagement letter with J.P. Morgan and instructed management to execute the J.P. Morgan engagement letter on the terms discussed with the Denbury board of directors.

On July 19, 2021, as directed by the Denbury board of directors, a representative of J.P. Morgan met with Mr. van Veldhoven to discuss next steps between Denbury and ExxonMobil. J.P. Morgan advised Mr. van Veldhoven that Denbury was in discussions with other potential counterparties and that the Denbury board of directors determined to formalize the process and seek proposals by September 13, 2021, the day before the scheduled Denbury board of directors meeting.

On July 22, 2021, Mr. Allen contacted a representative of Company B to advise that Denbury was gauging third party interest in acquiring the company and invited Company B to participate in Denbury’s process. On July 26, 2021, after Company B indicated they were interested in participating in the process, J.P. Morgan sent Company B a draft confidentiality agreement.

Also on July 22, 2021, representatives of Company L advised J.P. Morgan that it was withdrawing from the process because Company L was focused on permanent geological carbon dioxide storage only and that EOR as a transition to this focus area was inconsistent with Company L’s plans.

On July 26, 2021, Denbury formally engaged J.P. Morgan (effective as of May 20, 2021) to act as its lead financial advisor in connection with a possible transaction.

On July 30, 2021, Denbury entered into a separate customary confidentiality agreement with Company B, given the shift in focus from consideration of a CCUS joint venture to a corporate acquisition. This confidentiality agreement contained a standstill provision that would terminate if Denbury agreed to be sold to a third party. Company B was subsequently granted access to the virtual data room.

On August 3 and August 10, 2021, a representative of Company C contacted Mr. Kendall and a representative of J.P. Morgan, respectively, to discuss the timeline for submitting a non-binding proposal and indicated to J.P. Morgan that a September 13 submission timeline was reasonable.

On August 17, 2021, Messrs. Kendall and Allen and other members of Denbury management, together with J.P. Morgan, met with members of Company B management and its financial advisors to discuss prospective financial information.

 

57

On August 19, 2021, Messrs. Kendall and Allen and other members of Denbury management, together with J.P. Morgan, met with ExxonMobil representatives, including Mr. van Veldhoven and Mr. Powell, to discuss prospective financial information. Later that day, Mr. van Veldhoven met with a representative of J.P. Morgan and advised that there remained an internal debate within ExxonMobil as to whether to pursue a transaction with Denbury.

On August 23, 2021, Mr. Kendall met with a member of Company B management to discuss the potential transaction, in particular Company B’s diligence efforts on the EOR business.

On August 24, 2021, Messrs. Kendall and Allen and other members of Denbury management, together with J.P. Morgan, met with members of Company G management and its financial advisors to discuss prospective financial information.

On August 25, 2021, at the direction of Denbury management, J.P. Morgan distributed a bid procedures letter to each of the five potential counterparties who remained interested in acquiring Denbury outlining the procedures for submitting a non-binding proposal, on or before September 13, 2021, to acquire Denbury.

On August 30, 2021, executives of Company B contacted J.P. Morgan and advised that Company B would likely submit a proposal by September 13 but was not interested in Denbury’s EOR assets and would only bid on the CCUS business and assets.

On September 3, 2021, a representative of J.P. Morgan reached out to the chief executive officer of Company M, a large energy company backed by a large investment firm. Over several discussions, Company M’s chief executive officer said he thought Denbury was a very interesting company, but given the early stage nature and regulatory risk of the CCUS business, Company M thought the valuation was too high and it was not interested in the EOR assets. Company M therefore declined to pursue discussions further and did not enter into a confidentiality agreement.

On September 8, 2021, a representative of Company F informed a representative of J.P. Morgan that while Company F was highly interested in Denbury, it was not able to offer sufficient valuation, and therefore, Company F would not submit a proposal on September 13.

On September 9, 2021, Denbury entered into a customary confidentiality agreement with Company N, a major investment firm with focuses in the technology, energy, transportation and communications industries. This confidentiality agreement included a standstill provision that would terminate if Denbury agreed to be sold to a third party.

On September 13, 2021, J.P. Morgan received feedback from several of the potential counterparties. None of the counterparties submitted a conforming proposal. Company C advised that it was withdrawing from the opportunity because it could not provide an attractive premium given that the trading price of Denbury common stock had increased above $70 per share. Company K declined to submit a proposal because it was unwilling to acquire Denbury’s EOR assets. Both Company C and Company K advised that each would be interested in acquiring Denbury’s CCUS business and assets if Denbury were to consider such a transaction. Company G advised that it remained interested but was not prepared to submit a proposal. Company B advised that it required more time internally before it could submit a proposal and was not certain whether it would be willing to acquire the entire company. Mr. van Veldhoven similarly advised J.P. Morgan that ExxonMobil remained interested but was not prepared to submit a proposal.

The Denbury board of directors held a regularly scheduled meeting on September 14, 2021. Denbury management and representatives of J.P. Morgan provided the Denbury board of directors with a summary of the feedback provided by the potential counterparties.

 

58

On September 15, 2021, Messrs. Kendall and Allen, and other members of Denbury management, gave a presentation to representatives of Company N regarding Denbury’s history, operations, financial results, reserves, energy transition and ESG strategy, and sustainability initiatives and other matters.

On September 16, 2021, a representative of Company B informed J.P. Morgan and Mr. Kendall that it was not going to submit a proposal, citing Company B’s disinterest in the EOR assets due to concerns over asset retirement obligations, and Company B’s difficulty valuing the CCUS business and assets, which it stated would require significant capital expenditures in the future to fully develop.

On September 17, 2021, a representative of Company N informed J.P. Morgan that Company N was withdrawing from the process because it viewed Denbury as primarily an EOR business and believed Denbury would need a long time and significant capital to achieve its CCUS goals.

On September 23, 2021, a business development executive of Company G advised J.P. Morgan that Company G was not going to submit a proposal at this time given Company G’s desire to maintain a certain level of cash on its balance sheet.

On November 5, 2021, Mr. van Veldhoven advised J.P. Morgan that the ExxonMobil management committee determined not to move forward with an acquisition of Denbury because the trading price of Denbury common stock had increased beyond ExxonMobil’s view on valuation.

On November 10, 2021, Mr. Kendall and Mr. Allen accepted an introductory meeting with the chief executive officer and chief financial officer of Company Y, an independent oil and gas company with a smaller market capitalization than Denbury. At the meeting, the chief executive officer of Company Y suggested that the companies should consider a merger. On December 10, 2021, senior management from Denbury, including Mr. Kendall and Mr. Allen, met with the senior management of Company Y to share presentations and information on the respective companies. At a meeting of the Denbury board of directors on December 16, 2022, the Board determined not to pursue a potential merger with Company Y due to lack of strategic alignment, local regulatory concerns and diversity in operations between Denbury and Company Y.    

Denbury management and J.P. Morgan, at the direction of the Denbury board of directors and Denbury management, maintained contact with several parties throughout the remainder of 2021 and into 2022 who continued to conduct due diligence during such time. High level discussions regarding a potential transaction between Denbury and such parties continued, but no offer was received during such time.

On January 20, 2022, Mr. Kendall had dinner with Neil Chapman, a Senior Vice President of ExxonMobil, at which the two discussed Denbury’s and ExxonMobil’s common interests in CCUS and potential future collaboration.

In June 2022, a representative of TPH&Co., the energy business of Perella Weinberg Partners (“TPH”), who had previously worked for J.P. Morgan, met with Messrs. Kendall and Allen to discuss reinitiating discussions with potential counterparties who may be interested in acquiring Denbury.

On June 28, 2022, the representative of TPH had dinner with Mr. Chapman and suggested that ExxonMobil should reevaluate Denbury, given the progress Denbury had made with its CCUS business plan. Mr. Chapman agreed that Denbury was worth looking into again and suggested that TPH meet with Dan Ammann, who had recently been hired as ExxonMobil’s President, Low Carbon Solutions. Following the dinner, Mr. Chapman introduced Mr. Ammann to the representative of TPH.

On June 29, 2022, the representative of TPH had dinner with Mr. van Veldhoven who agreed that discussing Denbury with Mr. Ammann was an appropriate next step.

 

59

On July 6, 2022, the representative of TPH met with a senior executive of Company C, who advised that Company C remained interested in potential CCUS partnership opportunities with Denbury, but that due to senior executive changes at Company C, it would not be interested in acquiring Denbury.

On July 7, 2022, the representative of TPH had a videoconference with Mr. Ammann and provided Mr. Ammann with an overview of Denbury and the strategic rationale for a potential transaction. Mr. Ammann requested an introduction to Mr. Kendall and Mr. Allen. Thereafter, the representative of TPH coordinated a dinner between Denbury management and management of ExxonMobil’s Low Carbon Solutions business for the following week.

On July 14, 2022, Messrs. Kendall and Allen met with Mr. Ammann and Mr. Darling, during which Messrs. Kendall and Allen provided an overview of Denbury and its operations. Mr. Ammann expressed interest in conducting due diligence on Denbury.

On July 19, 2022, Mr. Ammann contacted Mr. Kendall to advise that he had spoken with Darren Woods, ExxonMobil’s Chairman and Chief Executive Officer, who agreed that ExxonMobil should undertake further due diligence in order to develop a deeper understanding of the potential opportunity. Over the course of the next few weeks, ExxonMobil and Denbury held a series of due diligence calls and Denbury provided ExxonMobil with due diligence materials via a virtual data room pursuant to the terms of the existing confidentiality agreement.

On July 27, 2022, Senators Chuck Schumer and Joe Manchin announced an agreement to pass legislation focused on climate change and taxes known as the Inflation Reduction Act (the “IRA”) that was signed into law by President Biden on August 16, 2022. The IRA was a landmark federal law that, among other things, increased the tax credit for capturing and storing carbon to $85 per ton. Given that Denbury owns the largest CO₂ pipeline network in the United States, the passage of the IRA had a dramatic impact on the trading price of Denbury common stock. On the day prior to the announcement by Senators Schumer and Manchin, Denbury’s trading price was $61.95 per share, and by August 16, 2022, the date President Biden signed the IRA into law, the trading price had increased to $78.90 per share, a 27.4% increase.

On July 29, 2022, an executive of Company B and Mr. Kendall exchanged emails noting the positive legislative movement supporting CCUS policy, and agreed to meet later in the summer about renewing consideration of a potential strategic transaction.

On August 2, 2022, representatives of TPH had dinner with Messrs. Ammann and Darling during which Mr. Ammann expressed ongoing interest in moving forward with discussions with Denbury. A representative of TPH conveyed to Mr. Ammann that given other interested parties, such a transaction would need to be at a meaningful premium to Denbury’s trading price.

Also on August 2, 2022, the Denbury board of directors approved, and Denbury entered into, an engagement letter with TPH as a financial advisor in connection with a possible transaction. TPH was selected based on its industry experience and its knowledge of Denbury, ExxonMobil and other interested parties, as well as Denbury’s prior working relationship with a representative of TPH who previously worked for J.P. Morgan. Denbury and J.P. Morgan also revised the existing J.P. Morgan engagement letter to provide for both J.P. Morgan and TPH to work together on Denbury’s behalf.

On August 10, 2022, TPH contacted executives at Company H to see if Company H would consider reevaluating a strategic transaction with Denbury. The Company H executives conveyed that Company H remained uninterested in acquiring Denbury.

On August 17, 2022, Bloomberg published an article stating that Denbury was working with an adviser to explore options, including a sale of the company. The trading price of Denbury common stock increased 12.4% to $88.72 per share in one day following the publication of the Bloomberg article.

 

60

Following the publication of the Bloomberg article and its impact on Denbury’s stock price, Messrs. Kendall and Ammann agreed to pause discussions.

Also following the publication of the Bloomberg article, several potentially interested third parties reached out to Denbury management to express interest in evaluating a strategic transaction, including Company O, a large midstream company, Company P, an oil and natural gas exploration and production company, and Company Q, an oil, chemical and alternative energy company.

In late August 2022, an executive of Company R, a large oil and gas exploration and production company, expressed some interest in Denbury; however, after discussions with Messrs. Kendall and Allen, and given recent news about Company R’s strategy, Denbury, with advice from TPH, determined the risk of further leaks was too high to engage in discussions with Company R. The Company R executive never followed up on the conversation or expressed further interest directly to Denbury.

On August 25, 2022, Company S, an oil and natural gas exploration and production company, reached out to a representative from J.P. Morgan to express interest in Denbury’s EOR assets.

On September 2, 2022, Mr. Kendall had lunch with an executive of Company B during which the Company B executive reiterated that Company B continued to struggle conceptually with a corporate acquisition that included Denbury’s oil and gas assets, particularly given abandonment liability concerns. Mr. Kendall suggested that a way to alleviate Company B’s concern would be to have representatives of Company B anonymously visit some of Denbury’s oil and gas properties and the two agreed to schedule such visits in the near term.

Later that afternoon, Mr. Kendall spoke with Mr. Ammann who advised Mr. Kendall that ExxonMobil was continuing to evaluate how a combination with Denbury could accelerate its CCUS efforts.

On September 20, 2022, Mr. Ammann conveyed to Mr. Kendall that ExxonMobil’s valuation was in line with Denbury’s current stock price, but Mr. Ammann stated that ExxonMobil was willing to do more work to understand if Denbury’s plans had additional value not yet reflected in ExxonMobil’s analysis. Mr. Ammann and Mr. Kendall agreed to hold a meeting on October 11, 2022 in Houston.

On September 21, 2022, a representative from Company S emailed a representative from J.P. Morgan to express that they would not be in a position to submit an indicative proposal for Denbury’s EOR assets.

On September 27, 2022, TPH contacted executives at Company G who advised that Company G remained uninterested in acquiring Denbury.

On October 6, 2022, Mr. Kendall had lunch with the chief executive officer of Company T, a large midstream company, who discussed a potential interest in a strategic transaction with Denbury; however, after further discussions with other executives, the chief executive officer of Company T called Mr. Kendall the next week and said that Company T was not interested in acquiring Denbury for valuation reasons.

Also on October 6, 2022, Mr. Allen met with representatives of Company U, a midstream company, to provide an overview of Denbury’s assets and operations.

On October 10, 2022, Bloomberg published an article stating that ExxonMobil was considering an acquisition of Denbury and that the talks were “at a preliminary stage.” Denbury’s common share price increased from $92.70 to $99.02, a 6.8% increase (in contrast, the market trading prices of both the selected oil companies and selected energy transition companies the Denbury board of directors reviewed were on average down 1.3% and 1.9%, respectively). In light of the news article, Mr. Kendall and Mr. Ammann agreed to cancel the meetings planned for the following day. An executive of Company B also contacted Mr. Kendall that day to inquire about the article and whether there was time for a transaction with Company B to be considered. Without confirming the contents of the article, Mr. Kendall replied that there was time, but that Company B should move quickly if it was serious about acquiring Denbury.

 

61

On October 13, 2022, representatives of TPH met with an executive of Company V, an oil and gas exploration company, and discussed whether Company V might have interest in Denbury given the recent Bloomberg articles. The executive of Company V indicated there might be interest and agreed to discuss with other Company V executives.

On October 14, 2022, an executive of Company B contacted Mr. Kendall and advised him that Company B had a valuation below Denbury’s current stock price due to its valuation of the EOR business. The executive of Company B requested additional due diligence information in the hopes of improving its valuation of Denbury.

From October 14 through October 26, 2022, executives of Company I, Company U and Company V all confirmed to TPH that they were not interested in considering an acquisition of Denbury.

On October 19, 2022, Denbury entered into a customary confidentiality agreement with Company W, a large energy company. This confidentiality agreement did not include a standstill provision. Thereafter, Company W was granted access to a virtual data room with due diligence materials about Denbury.

On October 26, 2022, members of Denbury’s CCUS management met with representatives of Company B to provide additional due diligence concerning Denbury’s CCUS business.

The Denbury board of directors met on October 27, 2022. A representative of TPH summarized for the Denbury board of directors an overview of 28 potential counterparties. Of these, 18 of the potential counterparties had indicated that they were not interested in acquiring Denbury, largely due to disinterest in Denbury’s EOR assets and valuation concerns given Denbury’s trading price. Two of the potential counterparties had not been contacted but, it was noted, neither had reached out to Denbury management or to TPH or J.P. Morgan to inquire about Denbury after either of the Bloomberg articles. The representative of TPH then summarized the engagement with each of ExxonMobil, Company B, Company O, Company P, Company Q, Company R, Company S and Company W, noting that of these, ExxonMobil and Company B were the only ones actively engaged.

On November 1, 2022, members of Denbury management and ExxonMobil management met by videoconference to discuss additional information needed by ExxonMobil related to Denbury’s CCUS business and assets. Throughout November, December and early January 2023, members of Denbury’s CCUS management met numerous times with ExxonMobil management to provide technical due diligence around Denbury’s CCUS business and assets.

On November 11, 2022, representatives from Denbury held an introductory meeting with Company W to discuss respective business strategies and operations. Subsequently, representatives from Company W conveyed to Denbury that while it was not interested in pursuing an acquisition of Denbury, they would be interested in working together commercially in the future.

On November 16, 2022, a representative of TPH met with an executive of Company H who had led Company H’s evaluation of Denbury in 2021 to inquire whether Company H might be interested in reevaluating Denbury in light of the recent news articles about a potential sale of Denbury. The executive of Company H noted that the Company H executive team had discussed Denbury recently and there was no interest in pursuing discussions again.

On November 17, 2022, an executive from Company B reached out to Mr. Kendall to request a meeting after Thanksgiving. Thereafter, on December 9, 2022, representatives of Company B met with Messrs. Kendall and Allen as a follow-up from Company B’s recently completed site visits. During the course of this meeting, a representative of Company B advised Messrs. Kendall and Allen that Company B could not offer a valuation at or above Denbury’s current trading price.

 

62

On December 13, 2022, Denbury hosted a CCUS business outlook event for public investors and analysts, during which Denbury management reviewed its CCUS strategy, accomplishments, growth plans and projected financial information that was broadly in line with projected financial information provided then and subsequently to potentially interested counterparties. During the presentation the Company highlighted its accomplishments to date, including 20 million tons per annum of CO₂ transport and storage agreements with eight different counterparties, with the largest contracts associated with proposed blue ammonia plants, and the approximately two billion tons of potential CO₂ storage spread across seven contracted sequestration sites. At various times following this event and through the spring of 2023, Denbury management and the Denbury board of directors heard concern from several existing stockholders about risks associated with development of several of the greenfield projects that Denbury had agreements with and the amount of capital Denbury would require to finance the expansion of the CCUS business. In particular, existing stockholders were concerned about the dilutive effect of issuing additional equity or equity-linked securities and its effect on Denbury’s stock price. Several stockholders urged Denbury to explore a sale of the company.

On January 12, 2023, during a CNBC broadcast, David Faber speculated that “Denbury might be something Exxon is still interested in.”

On January 18, 2023, Messrs. Kendall and Allen had a telephone call with Mr. Ammann. Mr. Ammann advised that he had recently discussed the potential acquisition with Mr. Woods and that ExxonMobil remained interested in Denbury. Mr. Ammann advised that ExxonMobil was still working on valuation but at the current trading price (mid $80s) it could only do a no-premium transaction.

On February 27, 2023, Mr. Kendall had a further conversation with Mr. Ammann, who continued to express interest and asked if it would be helpful if he put a proposal in writing. Mr. Kendall said that if it was on the right terms then a proposal in writing could be helpful. Mr. Ammann responded that he would work towards that.

On March 1, 2023, after the ExxonMobil management teams had substantially completed the diligence work on Denbury’s CCUS value potential, a representative of TPH contacted Mr. Ammann to discuss next steps, noting that any proposal would need to be at a decent premium to the then-stock price (low-to-mid $80s). Mr. Ammann advised that ExxonMobil believed that Denbury’s stock price still reflected an uplift due to takeover speculation and that a premium transaction would require ExxonMobil to give up a significant portion of the potential synergy value for an early stage business with meaningful execution risk, and would therefore not be something ExxonMobil would entertain. However, Mr. Ammann agreed to take into account the additional diligence information that Denbury’s CCUS team and TPH had provided and work towards making a proposal.

During an industry event in early March 2023, a senior executive of Company X, an oil and natural gas exploration and production company, met with a representative of TPH and mentioned a strategic interest in Denbury. A representative of TPH conveyed this interest to Messrs. Kendall and Allen and discussed the potential of Company X to undertake an acquisition of Denbury. Sensitive to recent leaks, Messrs. Kendall and Allen authorized TPH to have a highly confidential meeting only with Company X’s chief executive officer and the senior executive who had conveyed Company X’s interest.

At the same industry event, Mr. Kendall met with a senior executive at Company A, who expressed a rekindled interest in discussing an acquisition of Denbury. However, in subsequent conversations, after conferring with Company A’s chief executive officer, the Company A executive advised that while there was interest, it was not high enough to warrant executing a confidentiality agreement or seriously evaluating an acquisition proposal.

On March 21, 2023, representatives of TPH had a meeting with executives at Company X, using only publicly available information. Following the meeting, an executive of Company X contacted a representative of TPH to advise that Company X was willing to enter into a confidentiality agreement to further explore an acquisition of Denbury. On March 24, 2023, Denbury entered into a customary confidentiality agreement with Company X. This confidentiality agreement did not include a standstill provision.

 

63

On March 22, 2023, Mr. Kendall spoke with Mr. Ammann. Mr. Ammann indicated that ExxonMobil was prepared to make an all-cash offer to acquire Denbury. Later that day, ExxonMobil provided a written non-binding offer letter to Denbury proposing to acquire Denbury for $83.00 in cash per share of Denbury common stock (the “March 22 Offer”), which represented a 2.9% premium over Denbury’s trading day close price of $80.67. Management distributed the March 22 Offer to each member of the Denbury board of directors. Members of the Denbury board of directors requested that management and its advisors prepare an analysis of the March 22 Offer in advance of the regularly scheduled Denbury board of directors meeting scheduled for March 31, 2023.

In the days following receipt of the March 22 Offer, Denbury’s trading price, following the trend of other upstream companies during this period, increased to well above the proposed $83 per share price set forth in the March 22 Offer.

On March 27, 2023, Messrs. Kendall and Allen, and other members of Denbury management, gave a presentation to Company X management regarding Denbury’s history, operations, financial results, reserves, energy transition and ESG strategy, and sustainability initiatives and other matters.

The Denbury board of directors held a regularly scheduled meeting on March 31, 2023. As part of this meeting, a representative from Vinson & Elkins presented the Denbury board of directors with an overview of the fiduciary duties in considering a potential merger or sale of the company. Representatives of J.P. Morgan and TPH provided an overview of the current status of discussions with ExxonMobil, Company A, Company B, Company R and Company X. Mr. Kendall also provided a summary of his recent communications with Company A and ExxonMobil. The Denbury board of directors discussed the process and timeline for executing a potential transaction, including a discussion of the risk of a leak to the media in conducting a broad outreach, and the fact that prior outreach efforts with a number of potential counterparties did not generate other interest in an acquisition of Denbury. The Denbury board of directors and its advisors discussed that ExxonMobil, Company A, Company B, Company R, and Company X were the most logical potential acquirers of Denbury given their size, strategic fit and prior interest in a transaction with Denbury. In these discussions it was noted that Company B was unlikely to move quickly given Denbury’s prior experience with Company B and the fact that Company B stated it would need to partner with a private equity firm in order to acquire the EOR business. Additionally, it was noted that Company R was interested in acquiring a different upstream entity and unlikely to consider acquiring Denbury. The Denbury board of directors also discussed the receipt of the March 22 Offer and Denbury’s potential responses. The Denbury board of directors, management and their advisors discussed diligence materials and information required for the Denbury board of directors and management review, including, among other materials, updated and detailed financial projections and analyses, including detailed financial evaluations of Denbury and a detailed comparison of Denbury as a standalone company versus a strategic alternative. With respect to financial projections, the Denbury board of directors discussed the commodity price assumptions, noting that strip pricing was a more appropriate assumption, since Wall Street consensus pricing tends to be slow to change, is not normally considered by buyers and sellers in the market and public upstream companies trade at a discount to net asset valuations based on Wall Street consensus pricing (for more information on such financial projections, see section entitled “The Merger—Certain Denbury Unaudited Prospective Financial Information” on page 79). Following additional discussion and inquiry, and upon the recommendation of management with advice, guidance and input from J.P. Morgan, TPH and Vinson & Elkins, the Denbury board of directors determined that (i) TPH should advise ExxonMobil that the Denbury board of directors, management and their advisors required additional time to fully review, consider and inform themselves with respect to the March 22 Offer, and (ii) due to, among other factors and considerations, the potential risk of a leak to the media and timing considerations, current counterparty outreach by Denbury’s financial advisors should be limited to ExxonMobil, Company A and Company X.

Following the March 27, 2023 meeting with Company X, activities with Company X’s due diligence team slowed and Company X deferred a key meeting with Denbury management for several weeks.

 

64

On April 6, 2023, a meeting of the Denbury board of directors was held telephonically with members of senior management in addition to representatives of J.P. Morgan, TPH and Vinson & Elkins. Representatives of TPH and J.P. Morgan began the meeting by providing the Denbury board of directors with an update regarding recent communications with Company X, noting that Company X was moving slowly in evaluating a potential transaction and had deferred a key meeting with Denbury management for several weeks. Representatives of J.P. Morgan and TPH then reviewed certain preliminary financial information related to the March 22 Offer, which was by then at a discount to Denbury’s then-present trading price of $92.75 per share. Denbury senior management discussed expected synergies and introduced whether Denbury should seek all or a portion of the consideration in ExxonMobil Common Stock. The TPH representative noted for the Denbury board of directors that he had several recent conversations with Mr. Ammann, who acknowledged during these conversations that Denbury’s trading price now exceeded the March 22 Offer. The Denbury board of directors agreed that it would not accept a proposal at a price below the current trading price of Denbury common stock. The Denbury board of directors also discussed the significant amount of potential financing needed over the next several years to fund the CCUS operations, which the Denbury board of directors noted would likely be dilutive to Denbury’s stockholders. The Denbury board of directors also discussed the execution risks of operating the CCUS business as a smaller, independent company, including risks of delay, potential cost overruns and regulatory risks. Discussion ensued about, among other things, a counterproposal and a negotiating strategy for improving the March 22 Offer, with the Denbury board of directors ultimately authorizing a counteroffer of $97 per share of Denbury common stock, which represented a 5% premium over Denbury’s then-current trading price. The Denbury board of directors authorized and instructed Mr. Kendall to contact Mr. Ammann and deliver Denbury’s counteroffer.

Mr. Kendall delivered a counteroffer to Mr. Ammann later that day.

On April 8, 2023, Mr. Ammann indicated to Mr. Kendall that the counteroffer was significantly outside of the range of anything that ExxonMobil would consider; however, in the meantime, the parties agreed to progress various workstreams related to definitive documentation and confirmatory due diligence.

On April 10, 2023, Mr. Kendall had a breakfast meeting with an executive of Company B. The Company B executive reiterated to Mr. Kendall that it would consider a joint venture with Denbury related to the CCUS business but would not seek to acquire the entire company.

On April 11, 2023, the Denbury board of directors met telephonically with members of senior management, as well as representatives of J.P. Morgan, TPH and Vinson & Elkins. At such meeting, the financial advisors recounted conversations with ExxonMobil and Citigroup Global Markets Inc. (“Citi”), ExxonMobil’s financial advisor, over the past several days relating to valuation. Mr. Kendall also reported at such meeting that he had reached out to Company A and Company X regarding the potential for an acquisition of Denbury. Company X did not respond to Mr. Kendall’s inquiry. Moreover, a senior executive officer of Company A told Mr. Kendall that it would not be proceeding with an acquisition of Denbury. Mr. Kendall also advised the Denbury board of directors of his meeting with Company B and Company B’s position that it was only interested in a joint venture with Denbury, not an acquisition of the entire company. The Denbury board of directors further discussed the possibility of stock as merger consideration in a potential acquisition by ExxonMobil, noting that this would allow Denbury stockholders to participate in the upside of ExxonMobil’s stock and ExxonMobil’s attractive dividend. All members of the Denbury board of directors agreed that they would be open to stock as consideration if the exchange ratio was at a level that would be in the best interest of Denbury’s stockholders.

On April 12, 2023, a senior executive from Company X contacted Mr. Kendall to advise that Company X had discussed a potential transaction at length and found Denbury to be a very interesting company, but given the cash flow profile and investment required in the CCUS business, Company X was not in a position to proceed with an acquisition.

Over the next several weeks, ExxonMobil and Denbury engaged in ongoing confirmatory due diligence efforts.

 

65

On April 28, 2023, Mr. van Veldhoven delivered an initial draft of the Merger Agreement to a representative of TPH, who delivered the draft to Denbury, Vinson & Elkins and J.P. Morgan. This draft contemplated an all-cash offer. The draft expressly defined “Company Material Adverse Effect” to include any event, circumstance or condition that would reasonably be expected to cause ExxonMobil to be unable to realize the expected benefits and use of Denbury’s pipelines. The draft also expressly provided that ExxonMobil was not required to divest its own assets, accept any remedy with respect to its own assets, accept any remedy with respect to Denbury’s assets that materially restricted ExxonMobil’s ability to operate Denbury’s business going forward (with any remedy related to the CCUS business being deemed a material restriction), or otherwise take any action that would otherwise have a material adverse effect on Denbury in the event that U.S. antitrust authorities would require remedies of ExxonMobil under the HSR Act in order to complete the transaction. The Merger Agreement draft also contained a “force the vote” provision, requiring the Denbury board of directors to hold a stockholder vote on the ExxonMobil transaction even if the Denbury board of directors had subsequently changed its recommendation (to approve the ExxonMobil transaction) after receipt of a superior third party proposal. The draft also proposed a termination fee, payable by Denbury in certain circumstances, of 4% of the equity value of the proposed transaction.

On May 4, 2023, a representative of TPH had a telephone conversation with Mr. Ammann to encourage ExxonMobil to increase its offer and consider stock consideration, which, among other things, would allow for a tax-free deal for Denbury stockholders and enable them to participate in the upside of the combined company. As part of this conversation, Mr. Ammann agreed to have Davis Polk & Wardwell LLP (“Davis Polk”), legal counsel to ExxonMobil, and Vinson & Elkins discuss and seek to progress the Merger Agreement while ExxonMobil considered a revised offer.

On May 6, 2023, representatives of Vinson & Elkins and Davis Polk discussed the proposed Merger Agreement, including matters related to regulatory approval, interim covenants, representations and warranties, deal certainty and deal protections. Following the discussion, Vinson & Elkins delivered a list of material issues to Davis Polk.

On May 9, 2023, Vinson & Elkins sent a revised draft of the Merger Agreement to Davis Polk. Among other things, this draft provided ExxonMobil with a termination right in the event of a material adverse effect related to Denbury’s Green Pipeline system, but required that such termination right be exercised within 10 business days and result in a termination fee payable by ExxonMobil to Denbury. The draft also included a substantially stronger covenant on the part of ExxonMobil to obtain necessary regulatory approvals and proposed that ExxonMobil pay a “reverse” break-up fee to Denbury in the event the Merger Agreement was terminated due to failure to obtain such approvals. The draft further included a right of Denbury to terminate the Merger Agreement if it received a superior proposal, with a reduced termination fee payable by Denbury of 2% of the aggregate equity value of the transaction. Finally, the draft included cutbacks to the interim operating covenants to which Denbury would be subject during the pendency of the Merger.

On May 11 and 12, 2023, members of Denbury management, representatives of Vinson & Elkins and members of the Denbury board of directors discussed whether to engage an additional investment banking firm that was independent of ExxonMobil and that would not have any compensation dependent on the consummation of the proposed transaction. Thereafter, Denbury management and Vinson & Elkins contacted PJT Partners, who was chosen as a proposed additional financial advisor for Denbury based on its industry experience, familiarity with Denbury and independence from ExxonMobil.

On May 19, 2023, Mr. Ammann indicated to a representative of TPH that ExxonMobil was prepared to make a counteroffer and desired to move quickly towards execution of definitive documentation soon thereafter. On May 21, 2023, Denbury received a written non-binding counteroffer, contemplating an all-stock transaction, in which each share of Denbury common stock would be exchanged for 0.782 shares of ExxonMobil Common Stock (the “May 21 Offer”). The May 21 Offer implied a per share price for Denbury common stock of $83.10 based on the companies’ trading prices as of May 19, 2023, which represented a 8.8% discount over the trading day close price.

 

66

That same day, Davis Polk sent an updated draft of the Merger Agreement to Vinson & Elkins. The revised draft provided for an all-stock transaction and accepted the proposal of a termination right for ExxonMobil related to Denbury’s CCUS pipelines but lowered the standard from “material adverse effect” to “a material detriment in the ability to realize the benefits of or have the use of the Green Pipeline and NEJD Pipeline,” increased the time frame to exercise the termination right to 30 business days and rejected the obligation to pay Denbury a termination fee. The draft also reinstated ExxonMobil’s initial proposal on the various antitrust-related revisions, including removing the proposed reverse termination fee. The draft also reinserted the “force the vote” provision and 4% termination fee payable by Denbury.

On May 21, 2023, the Denbury board of directors approved the engagement of PJT Partners as an additional advisor to evaluate the fairness, from a financial point of view, of the consideration paid in a potential transaction to the Denbury stockholders.

On May 22, 2023, the Denbury board of directors met telephonically with members of senior management as well as representatives from J.P. Morgan, TPH and Vinson & Elkins to discuss the May 21 Offer and revised draft of the Merger Agreement. A representative of TPH summarized the terms of the May 21 Offer and the multiple calls that TPH had conducted with members of ExxonMobil management to attempt to increase ExxonMobil’s offer. The TPH representative noted that in these discussions, Mr. Ammann had reiterated that ExxonMobil’s offer was based on its view of Denbury’s intrinsic value. Representatives of J.P. Morgan and TPH then provided and discussed with the Denbury board of directors certain financial aspects of the May 21 Offer. The Denbury board of directors noted that while below Denbury’s then-current trading price, the May 21 Offer was within the range, and in several cases exceeded the range, of a reasonable valuation of Denbury based on customary valuation metrics. A discussion ensued with the Denbury board of directors regarding how a potential below-market transaction would be received by its stockholders. The representatives of J.P. Morgan and TPH then exited the meeting. A representative of Vinson & Elkins then provided the Denbury board of directors with a summary of the key issues within the Merger Agreement, including with respect to regulatory approval risk and deal protection, and an overview of the Denbury board of directors’ fiduciary duties in evaluating the May 21 Offer. Following discussion, the Board concluded that the May 21 Offer was unacceptable and instructed Mr. Kendall to communicate to Mr. Ammann that the Denbury board of directors was unwilling to enter into a transaction that did not have a premium to Denbury’s trading price.

Later that evening, Mr. Kendall called Mr. Ammann to advise him that given Denbury’s trading price, the Denbury board of directors had rejected ExxonMobil’s latest proposal. Mr. Kendall explained that the Denbury board of directors believed strongly in the merits of this combination, and the substantial synergies and value which could be achieved in completing a transaction in an all-stock deal, and accordingly, was hopeful the parties could find something that would work for both sides. Mr. Kendall indicated that he believed the Denbury board of directors would seriously consider an offer that was above the then-current market price and in the low-$90s per share trading price range based on recent trading activity. Mr. Kendall advised Mr. Ammann that while Denbury appreciated the change to all-stock consideration, the Denbury board of directors would likely be open to having a portion of the consideration in cash if it would help ExxonMobil in its internal valuation and would reflect an appropriate premium. Mr. Kendall also advised Mr. Ammann that the Denbury board of directors had reviewed the terms of the Merger Agreement draft and found several of the provisions to be imbalanced and off-market. As such, while valuation was an issue, it was also necessary for the business and legal teams to work together to find a compromise relative to certain of the matters, including appropriate risk allocation with respect to the antitrust provisions, as well as the treatment of alternative proposals and provisions concerning the impact of negative events related to the CCUS pipelines.

The following morning, a representative of TPH had a telephone call with Mr. van Veldhoven in which it was agreed that the parties should try to make progress on the Merger Agreement while ExxonMobil considered a revised proposal. Mr. van Veldhoven requested a list of Denbury’s key issues in the Merger Agreement to facilitate a small group discussion between each party’s management and legal counsel.

 

67

On May 25, 2023, Vinson & Elkins sent an issues list to Davis Polk summarizing the key open legal points on the Merger Agreement, including the antitrust covenant, events involving the Green Pipeline and the NEJD Pipeline, a fiduciary out for Denbury in the event of a superior proposal, the size of the termination fee, the interim operating covenants and the representations and warranties.

On May 30, 2023, Mr. van Veldhoven, a Senior Counsel at ExxonMobil, and Davis Polk held a videoconference with Mr. Allen and Mr. James Matthews, Denbury’s Executive Vice President, Chief Administrative Officer, General Counsel and Secretary, and representatives of Vinson & Elkins to discuss issues related to the representations and warranties and the interim operating covenants in the draft Merger Agreement.

On May 31, 2023 and June 1, 2023, the Denbury board of directors held regularly scheduled meetings. During these meetings, representatives of J.P. Morgan and TPH provided an updated financial analysis of the May 21 Offer. The representative of TPH updated the Denbury board of directors on his discussions with Mr. van Veldhoven and the parties’ agreement to try to make progress on the Merger Agreement while ExxonMobil was considering a revised valuation proposal. A representative of Vinson & Elkins then summarized for the Denbury board of directors the key open issues and the May 30 call with ExxonMobil and Davis Polk on representations and warranties and interim operating covenants. After discussion, the Denbury board of directors instructed management and Vinson & Elkins to continue to negotiate the Merger Agreement with ExxonMobil management and Davis Polk.

On June 2, 2023, Vinson & Elkins sent Davis Polk a draft of certain schedules related to the interim operating covenants and requested a further call to discuss additional issues in the Merger Agreement.

Between June 4, 2023 and June 8, 2023, Davis Polk sent revised drafts of the representations and warranties provisions, interim operating covenant provisions and covenants related to employee matters to Vinson & Elkins.

On June 15, 2023, a representative of Citi had a telephone call with a representative of J.P. Morgan to discuss logistics if ExxonMobil were to make a revised proposal. The representative of Citi noted that ExxonMobil’s proposal was likely to be in the $80s per share price range. The representative of J.P. Morgan reiterated Mr. Kendall’s prior communication with Mr. Ammann that Denbury was unwilling to transact at a below market price. J.P. Morgan informed Denbury management of the discussion with Citi on that same day.

Also on June 15, 2023, Mr. van Veldhoven, a Senior Counsel at ExxonMobil and Davis Polk held a videoconference with Messrs. Allen and Matthews and representatives of Vinson & Elkins to discuss matters related to regulatory approval, events concerning the Green Pipeline and the NEJD Pipeline and the deal protection provisions, including Denbury’s insistence on a termination right for a superior proposal and the size of the break-up fee payable by Denbury if the agreement were terminated in certain circumstances.

On June 20, 2023, Vinson & Elkins sent a partial revised draft of the Merger Agreement to Davis Polk, containing revisions to the representations and warranties and interim operating covenant sections only. Additionally, Vinson & Elkins sent a draft of disclosure schedules to Davis Polk.

On June 25, 2023, Mr. Ammann met with a representative of TPH to advise that ExxonMobil was close to coming back with a revised proposal but given the all-stock nature of the deal as requested by Denbury, ExxonMobil believed that both parties stock prices and ExxonMobil’s view of Denbury’s intrinsic value needed to align, noting that ExxonMobil’s stock had recently traded lower.

On June 27, 2023, Vinson & Elkins sent a further revised Merger Agreement draft to Davis Polk including comments on all areas of the Merger Agreement. This draft, among other things, reinserted the proposed antitrust-related reverse termination fee and covenants related to ExxonMobil’s M&A activities related to the CCUS business during the interim period, removed the “force the vote” provision and lowered Denbury’s termination fee to 3% of equity value.

 

68

On July 2, 2023, Davis Polk sent a revised draft of the Merger Agreement addressing only the representations and warranties and interim operating covenant provisions, as well as comments to various disclosure schedules.

On July 10, 2023, the ExxonMobil board of directors convened a meeting via videoconference to review and consider the proposed Merger Agreement and the transactions contemplated thereby including the Merger and the issuance of ExxonMobil common stock as consideration in the Merger. Present at the meeting were members of ExxonMobil’s senior management and representatives of Citi and Davis Polk. At the meeting, ExxonMobil’s senior management briefed the board of directors on the status of negotiations regarding the transaction, reviewed the strategic rationale for the proposed transaction and provided an overview of the economic analysis and use of ExxonMobil common stock as consideration in the Merger. Representatives of Citi reviewed with the board of directors certain financial aspects of the proposed transaction and a representative of Davis Polk discussed with the board of directors certain material terms of the Merger Agreement and certain legal matters relating to the board of directors’ consideration of the proposed transaction. Following consideration of the proposed terms of the transaction and discussion among the directors, senior management and ExxonMobil’s legal and financial advisors, the ExxonMobil board of directors unanimously approved the transaction and the related issuance of ExxonMobil common stock as consideration in the Merger, subject to resolution by senior management of final terms.

Later in the day on July 10, 2023, Mr. Ammann called Mr. Kendall to communicate that the ExxonMobil Board had met earlier that day and authorized an increase to a 0.840 exchange ratio as a final offer. Mr. Ammann advised Mr. Kendall that (i) Davis Polk would be sending a further revised draft of the Merger Agreement to Vinson & Elkins that day, which ExxonMobil considered as final, and (ii) ExxonMobil intended that the transaction would be announced no later than before the market opens on Thursday, July 13, 2023.

Following that call, Davis Polk sent a further revised draft of the Merger Agreement, containing comments outside of the previously transmitted representations and warranties and interim operating covenant sections. This draft deleted interim operating limitations on ExxonMobil’s ability to take certain actions in the CCUS space if such actions could reasonably be expected to result in increased antitrust scrutiny of the transaction and rejected an antitrust-related reverse termination fee, among other revisions. However, the July 10 draft accepted Denbury’s position with respect to the “force the vote” provision—providing the Denbury board of directors with the ability to terminate the transaction for a superior proposal. The draft further accepted Denbury’s requested termination fee of 3% of equity value and included a reverse termination fee (equal to Denbury’s termination fee) in the event ExxonMobil terminated due to the occurrence of certain events related to Denbury’s CCUS pipeline systems.

The Denbury board of directors met on July 11, 2023. Mr. Kendall provided the Board with a summary of his conversation with Mr. Ammann from the prior evening, including the proposed 0.840 exchange ratio and ExxonMobil’s desire to announce the transaction prior to market open on July 13, 2023. Representatives of TPH and J.P. Morgan summarized for the Denbury board of directors the history of Denbury’s strategic process over the last two years involving outreach to 28 potential counterparties, 17 of which signed confidentiality agreements. Representatives of each of J.P. Morgan and TPH then reviewed with the Denbury board of directors their financial analyses of the proposed transaction at a 0.840 exchange ratio. The Denbury board of directors discussed at length the fact that the implied value per share reflected in the proposed exchange ratio was (i) above the comparable company trading analyses and (ii) above or at the high end of discounted cash flow analyses performed by each of the financial advisors. Moreover, the Denbury board of directors considered a forecast that assumed a one-year delay in realizing the potential volumes from the CCUS business and noted the negative impact such a delay would have on Denbury’s revenue and EBITDA, the ability to achieve positive free cash flow in the near term, and the associated potential impact on Denbury’s valuation. A representative of Vinson & Elkins then summarized for the Denbury board of directors the key areas of the Merger Agreement, noting that ExxonMobil had agreed that Denbury could terminate the Merger Agreement if presented with a superior proposal and had agreed to a reduced termination fee of 3% of equity value, or

 

69

$144 million. The representative of Vinson & Elkins also summarized for the Denbury board of directors the remaining open areas of the Merger Agreement including provisions related to regulatory approvals and potential adverse events affecting Denbury’s CCUS pipelines. The representative of Vinson & Elkins also noted for the Denbury board of directors that the merger consideration did not take into account the fact that ExxonMobil paid quarterly dividends. After lengthy discussion, the Denbury board of directors agreed to accept the proposed 0.840 exchange ratio but instructed management and the advisors to seek risk shifting concessions related to regulatory approval and to convey the Denbury board of directors’ view that a termination by ExxonMobil due to a specified pipeline event should require a termination fee of 5% of equity value. The Denbury board of directors further instructed management and the advisors to attempt to obtain an increase in the exchange ratio to account for ExxonMobil dividends paid while the transaction was pending.

On July 12, 2023, Mr. Kendall contacted Mr. Ammann and advised that the Denbury board of directors was prepared to agree to the 0.840 exchange ratio but required satisfactory resolution of certain Merger Agreement issues. Specifically, Mr. Kendall advised that with respect to regulatory approval, Denbury required a covenant that ExxonMobil would not acquire additional CCUS assets that could increase the risk of non-approval and provided Denbury with protection in the event approval under the HSR Act was not achieved. Mr. Kendall further advised that the Denbury board of directors was in conceptual agreement on the specified pipeline event termination right but would require a termination fee of 5% of the equity value of the transaction if ExxonMobil were to exercise that right. Lastly, Mr. Kendall advised that if the transaction was not closed by the payment of ExxonMobil’s third quarter 2023 dividend, the exchange ratio would increase to provide Denbury stockholders with the economic benefits of future dividends with a record date prior to closing. Shortly, thereafter, Vinson & Elkins sent a further revised draft of the Merger Agreement to Davis Polk consistent with Mr. Kendall’s stipulations.

On July 12, 2023, at a meeting via videoconference attended by members of ExxonMobil’s management, including Mr. van Veldhoven and Mr. Darling, representatives of ExxonMobil answered due diligence questions from representatives of Denbury, with the assistance of J.P. Morgan, TPH, PJT Partners and Vinson & Elkins, regarding ExxonMobil’s businesses, properties and financial results and condition.

Later that day, shortly before the scheduled Denbury board of directors meeting, representatives of Davis Polk contacted representatives of Vinson & Elkins and advised that ExxonMobil was unwilling to agree to limitations on its ability to make acquisitions, the proposed increase to the specified pipeline event termination fee or any adjustment to the exchange ratio for the payment of dividends in the interim period. Vinson & Elkins apprised Denbury management of ExxonMobil’s position.

Shortly thereafter, the Denbury board of directors met via videoconference with senior management and representatives of J.P. Morgan, TPH, PJT Partners and Vinson & Elkins. Representatives of J.P. Morgan, TPH and PJT Partners each reviewed with the Denbury board of directors their respective financial analyses regarding the transaction and the 0.840 exchange ratio, and, following discussion, each financial advisor advised the Denbury board of directors that, based on such analyses and if the Denbury board of directors so requested, it was prepared to render an opinion to the Denbury board of directors as to the fairness, from a financial point of view, to the holders of Denbury common stock, of the merger consideration to be paid to such holders in the potential transaction. Representatives of Vinson & Elkins presented materials summarizing the current draft of the Merger Agreement, supplemented by communications with Davis Polk throughout the day relating to key points of issue within the Merger Agreement. Namely, these included that ExxonMobil was unwilling to accept the exchange ratio adjustment for interim period dividends, the increased reverse termination fee or the antitrust-related interim covenant concepts in Vinson & Elkins’ latest draft. Vinson & Elkins advised that additional efforts to seek a termination right for Denbury in the event that antitrust approval had not been received within twelve months of the signing of the Merger Agreement was also rejected by ExxonMobil. The Denbury board of directors subsequently discussed potential counteroffers relating to the disputed terms of the Merger Agreement and asked members of Denbury’s senior management whether they believed that the operating covenants currently proposed would afford them enough flexibility to operate the business, focusing significantly on

 

70

Denbury’s CCUS operations. Denbury management responded that they believed they could continue to operate the business as planned, referencing ExxonMobil’s approval of, among other things, the capital expenditure schedule previously provided to Davis Polk, as well as the ability of Denbury to incur debt under the existing terms of its credit facility. Further discussion ensued among the Denbury board of directors regarding the merits of the transaction.

Following the Denbury board of directors meeting, Vinson & Elkins sent a revised Merger Agreement to Davis Polk with minor revisions to update the representations of Denbury to the date thereof.

The Merger Agreement was in substantially final form by the early morning of July 13, 2023, when the Denbury board of directors met via videoconference to consider approval of the Merger Agreement, with members of Denbury’s senior management and representatives of Vinson & Elkins, J.P. Morgan, TPH and PJT Partners in attendance. At such meeting, each of the financial advisors referred to the financial analyses reviewed with the Denbury board of directors at the July 12 Denbury board of directors meeting and rendered to the Denbury board of directors its oral opinion, which was subsequently confirmed by delivery of a written opinion, dated July 13, 2023, to the effect that, as of such date and based upon and subject to the assumptions, procedures, factors, qualifications and any limitations and other matters set forth in its written opinion, the merger consideration to be paid to the holders of Denbury common stock in the proposed merger was fair, from a financial point of view, to such holders. See section entitled “The Merger—Opinions of Denbury’s Financial Advisors” on page 86 for more information. Thereafter, after considering the proposed terms of the transaction with ExxonMobil, and taking into consideration the matters discussed during that meeting and prior meetings of the Denbury board of directors, including the factors described above and under the section entitled “The Merger—Recommendation of the Denbury Board of Directors and Reasons for the Merger,” the Denbury board of directors unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, were fair to and in the best interests of Denbury and its stockholders, (b) approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, (c) resolved to recommend approval and adoption of the Merger Agreement by the Denbury stockholders and (d) directed that the Merger Agreement be submitted to the Denbury stockholders for adoption at a meeting of such stockholders.

Shortly thereafter, the parties executed the Merger Agreement. Later that morning, prior to the opening of trading, ExxonMobil and Denbury issued a press release announcing the transaction.    

CERTAIN RELATIONSHIPS BETWEEN EXXONMOBIL AND DENBURY

ExxonMobil and Denbury, or their respective affiliates, are parties to certain commercial arrangements with one another, which are not material, individually or in the aggregate to ExxonMobil. Specifically, (i) Denbury Onshore LLC and ExxonMobil Oil Corporation are parties to that certain Agreement No. 109834_A effective June 1, 2017, as amended from time to time, pursuant to which, among other things, ExxonMobil has an obligation to purchase a pre-determined quantity of crude oil barrels from Denbury in exchange for a purchase fee and (ii) Denbury Onshore, LLC and ExxonMobil Gas and Power Marketing Company (a former division of ExxonMobil) are parties to that certain Carbon Dioxide Delivery and Balancing Agreement effective December 21, 2012, as amended from time to time, pursuant to which, among other things, Denbury has an obligation to take delivery of pre-determined volumes of carbon dioxide from ExxonMobil in exchange for a processing fee. The value of aforementioned commercial arrangements in the calendar year ended December 31, 2022, or the two prior calendar years, was less than 5% of Denbury’s revenues for the calendar year in which such transaction occurred. Except as described in this proxy statement/prospectus, there are and have been no past, present or proposed material contracts, arrangements, understandings, relationships, negotiations or transactions during the current fiscal years of ExxonMobil and Denbury or the five immediately preceding fiscal years of ExxonMobil and Denbury, between ExxonMobil or its affiliates, on the one hand, and Denbury or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer for or other acquisition of securities, the election of directors, or the sale or other transfer of a material amount of assets.

 

71

RECOMMENDATION OF THE DENBURY BOARD OF DIRECTORS AND REASONS FOR THE MERGER

By unanimous vote, the Denbury board of directors, at a meeting held on July 13, 2023, (a) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to and in the best interests of Denbury and its stockholders, (b) approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the requirements of the Delaware General Corporation Law (the “DGCL”) and (c) resolved (subject to certain exceptions set forth in the Merger Agreement) to recommend the approval and adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger, by the Denbury stockholders. The Denbury board of directors unanimously recommends that Denbury stockholders vote “FOR” the Merger Agreement Proposal, and “FOR” the Advisory Compensation Proposal.

In reaching its determinations and recommendations, the Denbury board of directors consulted extensively with company management and financial and legal advisors and considered a range of factors and scenarios, as discussed below. Factors that weighed in favor of the Merger include:

 

•

Best Alternative for Maximizing Stockholder Value After a Thorough Strategic Alternative Process. Beginning in early 2021, the Denbury board of directors and management evaluated a significant number of alternative scenarios and potential transactions. Following this evaluation, the Denbury board of directors determined that entering into the Merger Agreement with ExxonMobil provided a superior path for sustaining and enhancing stockholder value and mitigating risk compared to pursuing an alternative transaction.

 

•

Denbury contacted or was contacted by 28 potentially interested parties, including exploration and production companies, integrated oil and natural gas companies, industrial gas companies, renewable energy companies, investment firms and companies interested in pursuing midstream/CCUS opportunities, among others;

 

•

Denbury entered into confidentiality agreements with 17 potentially interested parties in connection with a potential transaction;

 

•

ExxonMobil was the only party to submit a written offer to acquire Denbury, and other interested parties indicated that they could not support an offer approaching or above Denbury’s recent share price;

 

•

The consideration to be paid to Denbury’s stockholders represented an approximately 2% premium to Denbury’s closing price as of July 12, 2023, the day before announcement, and an approximately 17% premium to the unaffected 10-day average closing price on August 16, 2022, the day before the publication of the first of several news stories speculating on the potential sale of Denbury;

 

•

During the period from August 16, 2022 through July 10, 2023, Denbury’s indexed average trading performance was up 10%, compared to 1% for selected oil companies and negative 51% for selected energy transition companies, leading the Denbury board of directors to conclude that Denbury’s stock price was affected by takeover speculation; and

 

•

The fact that Denbury’s stock increased by approximately 46% in the twelve months prior to signing, significantly outpacing all major indices.

As a result, the Denbury board of directors concluded, after discussion and analysis with its financial advisors and Denbury’s management, that it was unlikely that any other party would be prepared to pay a higher price to acquire Denbury.

 

72

•

Greater Stockholder Value and Return Potential. The Denbury board of directors assessed the value and nature of the consideration to be received in the Merger by Denbury stockholders, including:

 

•

The stock-for-stock merger enables Denbury stockholders to fully participate in the value and opportunities of ExxonMobil, including its worldwide asset portfolio, dividends, share repurchases, and expected future growth;

 

•

The consideration of ExxonMobil common stock to be paid to holders of Denbury common stock comes with a reliable and growing cash dividend by ExxonMobil (most recently declared at $0.91 per share quarterly (or $3.64 annualized)). ExxonMobil has a history of 40 consecutive years of annual dividend growth and has publicly-stated the importance ExxonMobil places on its dividend in making capital allocation decisions;

 

•

ExxonMobil’s most recently announced plan to repurchase up to approximately $50 billion of its stock from 2022 through 2024;

 

•

Based on the closing trading price of ExxonMobil common stock of $106.49 on July 12, 2023, the last trading day prior to public announcement of the Merger, the Merger Consideration represented an implied value of $89.45 per share of Denbury common stock;

 

•

While there is trading correlation between Denbury’s and ExxonMobil’s common stock, the stock-for-stock transaction mitigates the impact of oil price volatility between signing and closing; and

 

•

The Merger is structured as a stock-for-stock transaction and is intended to qualify as a tax-deferred “reorganization” within the meaning of Section 368(a) of the Code.

 

•

Risks Associated with Operating as a Standalone Business. The Denbury board of directors also considered the following risks inherent in maintaining the assets within the current or a somewhat larger standalone exploration, production and energy transition company, and determined that the ExxonMobil transaction eliminated, or significantly reduced, key risks including:

 

•

The execution risk (on both Denbury’s part and its counterparties’ part) of operating in a nascent industry, primarily related to the potential for the expected performance of the CCUS business to be delayed or not realized and the risk of cost overruns related to the development of Denbury’s CCUS infrastructure;

•

The risk that Denbury, as a smaller company in a dynamic and high growth potential CCUS industry with many competitors, has a higher cost of capital than larger producers and CCUS developers and may become less competitive, on a relative basis, given scale-related advantages available to larger companies;

 

•

The fact that as a smaller company, Denbury is required to provide letters of credit, bonds and/or insurance products to provide the financial assurances demanded by its customers and regulators, many of which are not clearly defined as to structure or cost and are dependent on the capacity and willingness of third parties to provide such support instruments;

 

•

The Denbury burden of complying with increasing regulation, including potential changes to tax law or policy;

 

•

Developing the CCUS business will require significant capital investments, which may be challenging in a high interest rate environment and would likely require Denbury, as a standalone company, to issue equity, equity-linked securities, or entering into joint venture arrangements that would be dilutive to existing stockholders; and

 

•

Denbury is reliant on its EOR business to provide cash flow that is deployed for its CCUS investments and pipeline infrastructure, and the performance of the EOR business is subject to commodity price fluctuations, and regulatory risks that can negatively impact the sustainability of future cash flows of the EOR business.

 

73

•

Superior Alternative to Continuing Denbury as an Independent, Standalone Company. The Denbury board of directors determined that entering into the Merger Agreement with ExxonMobil provided the best alternative to create stockholder value from the Denbury assets on a short-, intermediate- and long-term basis, including as compared to continued operations on a standalone basis in light of the compelling value proposition of the ExxonMobil transaction. In reaching this conclusion, the Denbury board of directors examined four separate commodity price assumptions as described in the section entitled “The Merger—Certain Denbury Unaudited Prospective Financial Information” beginning on page 79.

 

•

The Denbury board of directors considered management forecasts based on various other assumptions, including, but not limited to, assumptions regarding the continuing nature of ordinary course operations that may be subject to change. In this regard, the Denbury board of directors considered that the implied per share value of $89.45 was within or above the ranges of implied equity values per share of Denbury common stock indicated by the financial analyses conducted by each of J.P. Morgan, TPH and PJT Partners, which analyses are described in the section entitled “The Merger—Opinions of Denbury’s Financial Advisors” beginning on page 86.

 

•

The Denbury board of directors further considered management forecasts that assumed a one-year delay in realizing the potential volumes from the CCUS business and the negative impact of that delay on revenue, EBITDA, ability to achieve positive free cash flow in the near term, and the associated potential impact on Denbury’s valuation.

 

•

Benefits of ExxonMobil After the Merger: Greater Scale and Financial Strength. The Denbury board of directors believed that the company resulting from the acquisition of Denbury by ExxonMobil would be extremely well positioned, with a top-tier market capitalization, global footprint and significant ability to finance the future growth of the CCUS business and establish the leadership of the combined entity in energy transition, both in the United States and globally.

 

•

The global scale and diversified portfolio of ExxonMobil, including its Upstream, Product Solutions, and Low Carbon Solutions businesses, will be expected to reduce cash flow volatility and better support future strategic investments compared to Denbury on a standalone basis;

 

•

The combined company is expected to hold the largest and most developed CCUS transport, storage and long-term management offering in the United States;

 

•

ExxonMobil has a greater ability to fund the development of the CCUS business and maximize returns than Denbury on a standalone basis;

 

•

ExxonMobil’s resources and scale allows for greater opportunities to participate in other areas along the CCUS value chain than Denbury on a standalone basis;

 

•

By working for ExxonMobil, Denbury’s employees will be part of a larger, more diversified and better-capitalized company, resulting in career development and advancement opportunities; and

 

•

The Merger significantly improves a number of key financial metrics to Denbury shareholders on a pro forma basis, including as follows:

 

•

Shareholders who retain ExxonMobil stock will be entitled to receive future cash dividends declared by ExxonMobil;

 

•

ExxonMobil generated over 150 times the cash flow from operations Denbury generated for the twelve months ending March 31, 2023; and

 

•

Strong, stable balance sheet with approximately $30 billion of cash at the end of the second quarter 2023 is well-positioned to weather downturns in the commodity and economic cycles, while continuing to invest in projects with attractive returns including lower-emission business opportunities.

 

74

•

Receipt of Fairness Opinion from Financial Advisors. The Denbury board of directors considered the opinions it received from each of its three financial advisors, J.P. Morgan, TPH and PJT Partners:

 

•

the oral opinion of J.P. Morgan rendered to the Denbury board of directors on July 13, 2023, which opinion was subsequently confirmed by delivery to the Denbury board of directors of a written opinion dated as of the same date, to the effect that, as of such date and based upon and subject to the factors, assumptions, qualifications and any limitations set forth in J.P. Morgan’s written opinion, the Merger Consideration to be paid to the holders of the Denbury common stock in the proposed transaction was fair, from a financial point of view, to such holders, as more fully described below under the heading “The Merger—Opinions of Denbury’s Financial Advisors—Opinion of J.P. Morgan Securities LLC” beginning on page 86.

 

•

the opinion of TPH to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, factors considered and qualifications and limitations on the review undertaken by TPH, as set forth in such opinion and based upon other matters as TPH considered relevant, the Merger Consideration to be received by the holders of outstanding shares of Denbury common stock (other than ExxonMobil and its affiliates) in the proposed Merger pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described below under the heading “The Merger—Opinions of Denbury’s Financial Advisors—Opinion of TPH & Co.” beginning on page 91.

 

•

the oral opinion of PJT Partners rendered to the Denbury board of directors on July 13, 2023, subsequently confirmed in its written opinion dated July 13, 2023, that, as of the date thereof, and based upon and subject to, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated therein), the Merger Consideration to be received by the holders of shares of Denbury common stock in the Merger (other than the shares to be cancelled in accordance with the Merger Agreement and any shares held by any subsidiary of either Denbury or ExxonMobil (other than Merger Sub)) was fair to such holders from a financial point of view, as more fully described below under the heading “The Merger—Opinions of Denbury’s Financial Advisors—Opinion of PJT Partners LP” beginning on page 98. In this regard, the Denbury board of directors noted that PJT Partners compensation was fixed and not dependent on the consummation of the proposed Merger.

 

•

Synergies and Complementary Businesses. The complementary nature, quality and scale of assets of ExxonMobil and Denbury, including:

 

•

Denbury has the largest owned and operated dedicated CO2 pipeline network in the U.S. at approximately 1,300 miles, including nearly 925 miles of CO2 pipelines in Louisiana, Texas, and Mississippi – located within one of the largest U.S. markets for CO2 emissions, as well as 10 strategically located onshore sequestration sites. Denbury’s pipeline network is in close proximity to major emitters including ExxonMobil’s industrial locations and other third party customers. When combined with ExxonMobil’s Low Carbon Solutions business, Denbury’s business is expected to benefit Denbury stockholders by:

 

•

accelerating opportunities to deploy CCUS for ExxonMobil and third-party customers over the next decade and participating in multiple future lower-carbon value chains that potentially include CCUS, hydrogen, ammonia, biofuels, and direct air capture;

 

•

optimizing the combined company’s development plans to deliver greater economic efficiencies and positive energy transition outcomes. Once fully developed and optimized, the combination of assets and capabilities of Denbury and ExxonMobil has the potential to profitably reduce emissions by more than 100 million metric tons per year in one of the highest-emitting regions of the U.S.; and

 

75

•

in the communities and the environment in which Denbury and ExxonMobil operate, both Denbury and ExxonMobil share a dedication to building on their track record of corporate citizenship, safety excellence, sustainability and responsibility.

 

•

Combining the capabilities, expertise and assets of ExxonMobil and Denbury creates a compelling customer decarbonization proposition by integrating ExxonMobil’s technology, scale, and project execution with Denbury’s pipeline network and expertise in managing CO2.

 

•

Shared Goals of Lower Emissions and Core Values. ExxonMobil and Denbury share similar philosophies in regard to a lower carbon energy future, including:

 

•

Denbury’s assets are expected to help propel ExxonMobil toward the companies’ shared goal of a lower carbon energy future while also safely delivering higher returns;

 

•

While Denbury and ExxonMobil are both working to be industry leaders in the energy transition, ExxonMobil after the Merger will have greater scale and resources to respond to the evolving regulatory environment in the energy transition; and

 

•

ExxonMobil and Denbury share core values of integrity, collaboration, accountability and caring for people and the environment, and the combined workforce is expected to continue to increase efficiency and deliver stockholder value. The Merger Agreement includes provisions that should facilitate the retention of Denbury employees and enhance their ability to provide value for shareholders of the combined company.

 

•

Opportunity to Receive Alternative Acquisition Proposals and to Terminate the Merger in Order to Accept a Superior Proposal. The Denbury board of directors considered the terms of the Merger Agreement related to Denbury’s ability to respond to unsolicited acquisition proposals and determined that the provisions of the Merger Agreement would not deter or preclude any third party from making a competing proposal and that the Denbury board of directors would be able, under certain circumstances, to furnish information and enter into discussions and negotiations in connection with a competing proposal. In this regard, the Denbury board of directors considered that:

 

•

experience demonstrates that an executed Merger Agreement is not a deterrent to potential topping bids;

 

•

subject to compliance with the applicable provisions of the Merger Agreement, the Denbury board of directors may, before approval of the Merger with ExxonMobil by Denbury stockholders, change its recommendation to Denbury stockholders with respect to approval of the Merger if the Denbury board of directors determines in good faith, after consultation with its legal advisors, that failing to make a change in its recommendation would reasonably likely be inconsistent with the Denbury board of directors’ fiduciary duties;

 

•

subject to its compliance with the applicable provisions of the Merger Agreement, the Denbury board of directors may terminate the Merger agreement in order to enter into a superior proposal; and

 

•

the Denbury board of directors believed that the termination fee of $144 million, which equals approximately 3% of the aggregate equity value implied in the transaction, is reasonable in light of the circumstances and the overall terms of the Merger Agreement, generally lower than fees in comparable transactions, and would not discourage alternative acquisition proposals from credible third parties willing and able to make such proposals. Denbury would be required to pay the termination fee to ExxonMobil in certain circumstances, including if (i) ExxonMobil terminates the Merger Agreement in connection with a change in the Denbury board of directors’ recommendation to its stockholders with respect to approval of the Merger or (ii) Denbury terminates the Merger Agreement in order to enter into a definitive agreement with respect to a superior proposal.

 

•

Other Terms of the Merger Agreement. The Denbury board of directors reviewed and considered the terms of the Merger Agreement, taken as a whole, including the parties’ representations, warranties and

 

76

covenants, and the circumstances under which the Merger Agreement may be terminated, and concluded that such terms are reasonable and fair to Denbury. The Denbury board of directors also reviewed and considered the conditions to the completion of the Merger, including regulatory approvals, which it believes are likely to be satisfied on a timely basis. The Denbury board of directors noted in particular that the completion of the Merger is not subject to any financing condition or any condition based upon ExxonMobil shareholder approval, which enhances the likelihood that the Merger will be completed.

In the course of its deliberations, the Denbury board of directors also considered a variety of risks and other potentially negative factors, including the following:

 

•

Fixed Exchange Ratio; Modest Premium to Trading Price at Signing and Unaffected Trading Price. The Denbury board of directors considered that because the Merger Consideration is based on a fixed exchange ratio rather than a fixed value, Denbury stockholders will bear the risk of a decrease in the trading price of ExxonMobil common stock during the pendency of the Merger and the Merger Agreement does not provide Denbury with a collar or a value-based termination right. The Denbury board of directors also considered that the consideration to be paid to Denbury’s stockholders represented an approximately 2% premium to Denbury’s closing price as of July 12, 2023, the day before announcement, and an approximately 17% premium to the unaffected 10-day average closing price on August 16, 2022, the day before the publication of the first of several news stories speculating on the potential sale of Denbury.

 

•

Risks Associated with Regulatory Approval. The Merger is conditioned on the absence of an injunction prohibiting the consummation of the Merger, the expiration or termination of the waiting period under the HSR Act and the absence of a “burdensome condition” being imposed on ExxonMobil or its subsidiaries, including Denbury from and after closing. While each party is required to use reasonable best efforts to resist, defend against, lift or rescind the entry of any injunction or order prohibiting the parties from consummating the Merger, ExxonMobil is not obligated to accept or agree to certain divestiture or other remedies in obtaining regulatory approval nor is ExxonMobil obligated to compensate Denbury if regulatory approval of the Merger is not obtained.

 

•

Interim Operating Covenants. The Denbury board of directors considered the restrictions on the conduct of Denbury’s and its subsidiaries’ businesses during the period between the execution of the Merger Agreement and the completion of the Merger.

 

•

Risks Associated with the Pendency of the Merger. The risks and contingencies relating to the announcement and pendency of the Merger, including the potential for diversion of management and employee attention and the potential effect of the combination on the businesses of both companies and the restrictions on the conduct of Denbury’s business during the period between the execution of the Merger Agreement and the completion of the Merger.

 

•

Possible Failure to Integrate. The potential challenges and difficulties in integrating the operations of Denbury and ExxonMobil and the risk that operational efficiencies between the two companies, or other anticipated benefits of the Merger, might not be realized or might take longer to realize than expected.

 

•

Termination Fee. The Denbury board of directors considered that Denbury would be required to pay to ExxonMobil a termination fee of $144 million in the event Denbury were to terminate the Merger Agreement in order for Denbury to enter into a superior proposal, should one be made, or if the Merger Agreement were to be terminated by ExxonMobil in connection with a change in the Denbury board of directors’ recommendation to its stockholders with respect to adoption of the Merger Agreement.

 

•

Restrictions on Third-Party Discussions. The Denbury board of directors considered that the Merger Agreement required Denbury to terminate all discussions with potential alternative transaction counterparties while noting that Denbury would only have the right to respond to alternative proposals

 

77

that might be made by such parties pursuant to and in accordance with the applicable terms of the Merger Agreement.

 

•

Small Pro Forma Ownership. The Denbury board of directors considered that, based on the implied value of the Merger Consideration as of July 13, 2023, Denbury stockholders would only own approximately 1% of ExxonMobil after the Merger.

 

•

Other Risks. The Denbury board of directors considered risks of the type and nature described under the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” beginning on pages 40 and 30, respectively.

The Denbury board of directors believed that, overall, the potential benefits of the Merger to Denbury stockholders outweighed the potential risks and uncertainties of the Merger.

In addition, the Denbury board of directors was aware of and considered that Denbury’s directors and executive officers may have interests in the Merger that may be different from, or in addition to, their interests as stockholders of Denbury generally, as described below under the heading “Interests of Directors and Executive Officers of Denbury in the Merger” beginning on page 139.

The foregoing discussion of factors considered by the Denbury board of directors is not intended to be exhaustive, but it includes material factors considered by the Denbury board of directors. In light of the variety of factors considered in connection with its evaluation of the Merger, the Denbury board of directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations. Moreover, each member of the Denbury board of directors applied his or her own personal business judgment to the process and may have given different weight to different factors. The Denbury board of directors did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Denbury board of directors based its recommendation on the entirety of the information presented.

EXXONMOBIL’S REASONS FOR THE MERGER

ExxonMobil believes the Merger will create sustainable long-term value for its stockholders. Key strategic benefits to ExxonMobil include:

 

•

Advantaged Infrastructure. As a result of the Merger, ExxonMobil will own and operate the largest CO2 pipeline network in the U.S. at 1,300 miles, including nearly 925 miles of CO2 pipelines in Louisiana, Texas, and Mississippi, as well as 10 strategically located onshore sequestration sites. This advantaged CO2 infrastructure provides significant opportunities to expand and accelerate ExxonMobil’s low-carbon leadership and has the potential, once fully developed and optimized, to profitably reduce emissions by more than 100 million metric tons per year in one of the highest-emitting regions of the U.S. and in the most difficult to decarbonize sectors.

 

•

Technical Expertise. The Merger will give ExxonMobil access to Denbury’s technical capabilities and operating expertise. The breadth of Denbury’s network, and over 20 years of expertise managing CO2, when added to ExxonMobil’s technology, scale, project execution and decades of experience and capabilities in CCUS, underpins ExxonMobil’s commitment to low carbon value chains and gives ExxonMobil the opportunity to play an even greater leadership role in a thoughtful energy transition.

 

•

Transaction Synergies. ExxonMobil believes the Merger will create significant synergies that we expect will enable more than 100 million metric tons of emission reductions per year, driving strong growth and returns over time. Acquiring a cost-efficient transportation and storage system accelerates carbon capture and sequestration deployment for ExxonMobil and third-party customers over the next decade while reducing near-term capital outlay and enhancing storage capabilities and optionality.

 

•

Near-Term Optionality. The Merger will give ExxonMobil access to Denbury’s Gulf Coast and Rocky Mountain oil and natural gas operations, which consist of proved reserves totaling over 200 million

 

78

barrels of oil equivalent, with 47,000 oil-equivalent barrels per day of current production, providing immediate operating cash flow and near-term optionality for CO2 offtake and execution of the carbon capture and sequestration business.

CERTAIN DENBURY UNAUDITED PROSPECTIVE FINANCIAL INFORMATION

Denbury does not, as a matter of course, publicly disclose long-term consolidated forecasts as to future performance, earnings or other results given, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. In connection with Denbury’s board of directors’ consideration of the transaction, Denbury’s management prepared certain unaudited financial projections regarding Denbury’s future performance for the years 2023 through 2030 on a standalone basis without giving effect to the Merger (the “Denbury management forecast”), and provided the Denbury management forecast to the Denbury board of directors and to Denbury’s financial advisors for their use in connection with their financial analyses (see the sections described above in this proxy statement/prospectus entitled “The Merger—Opinions of Denbury’s Financial Advisors” beginning on page 86 of this proxy statement/prospectus). The Denbury management forecast is based upon the internal financial model that Denbury has historically used in connection with strategic planning.

The summaries of these projections are being included in this proxy statement/prospectus to give Denbury’s stockholders access to non-public information that was provided to the Denbury board of directors and Denbury’s financial advisors in the course of evaluating the proposed Merger, and are not intended to influence your decision whether to vote in favor of the Merger Agreement Proposal or any other proposal at the Special Meeting. The inclusion of this information should not be regarded as an indication that any of Denbury or its advisors or other representatives or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future performance or events, or that it should be construed as financial guidance, and such summary projections set forth below should not be relied on as such.

While presented with numeric specificity, the Denbury management forecast reflects numerous estimates and assumptions that are inherently uncertain and may be beyond the control of Denbury, including, among others, Denbury’s assumptions about energy markets, production and sales volume levels, levels of oil, natural-gas and NGL reserves, demand for carbon dioxide capture and sequestration, ability to obtain approvals from third parties, the nature, timing and economic aspects of carbon capture, use and storage arrangements in connection with carbon capture, operating results, operating costs, competitive conditions, technology, availability of capital resources, levels of capital expenditures, contractual obligations, supply and demand for, the price of, and the commercialization and transporting of oil, natural gas, carbon dioxide, NGLs and other products or services, geopolitical and regulatory risks, and other matters described in the sections entitled “Cautionary Statement Regarding Forward-Looking Statements”, “Where You Can Find More Information” and “Risk Factors”, beginning on pages 40, 177 and 30, respectively. The Denbury management forecast reflects both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Denbury can give no assurance that the Denbury management forecast and the underlying estimates and assumptions will be realized. In addition, since the Denbury management forecast covers multiple years, such information by its nature becomes more speculative with each successive year. This information constitutes “forward-looking statements” and actual results may differ materially and adversely from those projected.

The Denbury management forecast was not prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information. The prospective financial information included in this document has been prepared by, and is the responsibility of, Denbury’s management. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying prospective financial information and accordingly,

 

79

PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The reports of PricewaterhouseCoopers LLP, incorporated by reference into this proxy statement/prospectus, relate to Exxon’s and Denbury’s previously issued financial statements. They do not extend to the prospective financial information and should not be read to do so.

Furthermore, the Denbury management forecast does not take into account any circumstances or events occurring after the date it was prepared. Denbury can give no assurance that, had the Denbury management forecast been prepared as of the date of this proxy statement/prospectus, similar estimates and assumptions would be used. Except as required by applicable securities laws, Denbury does not intend to, and disclaims any obligation to, make publicly available any update or other revision to the Denbury management forecast to reflect circumstances existing since its preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error or to reflect changes in general economic or industry conditions. The Denbury management forecast does not take into account all the possible financial and other effects on Denbury of the Merger, the effect on Denbury of any business or strategic decision or action that has been or will be taken as a result of the Merger Agreement having been executed, or the effect of any business or strategic decisions or actions that would likely have been taken if the Merger Agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the Merger. Further, the Denbury management forecast does not take into account the effect on Denbury of any possible failure of the Merger to occur. None of Denbury or its affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any Denbury stockholder or other person regarding Denbury’s ultimate performance compared to the information contained in the Denbury management forecast or to the effect that the forecasted results will be achieved. The inclusion of the Denbury management forecast herein should not be deemed an admission or representation by Denbury or its advisors or any other person that it is viewed as material information of Denbury, particularly in light of the inherent risks and uncertainties associated with such forecasts.

In light of the foregoing, and considering that the Special Meeting will be held several months after the Denbury management forecast was prepared, as well as the uncertainties inherent in any forecasted information, Denbury stockholders are cautioned not to place undue reliance on such information, and Denbury urges all Denbury stockholders to review its most recent SEC filings for a description of its reported financial results. See “Where You Can Find More Information” beginning on page 177.

Certain Assumptions

In preparing the prospective financial and operating information for Denbury described below, the management team of Denbury used price assumptions based on oil and gas strip pricing as of July 10, 2023 (which we refer to as “Strip”), Wall Street consensus pricing as of July 10, 2023 (which we refer to as “Consensus”), and 3-year historical average spot pricing of $73.91/bbl and $4.23/MMBtu (which we refer to as the “3-Year Historical Spot Price Case”). Specifically, the Denbury management forecasts examined four sets of commodity price assumptions, including: (i) Strip pricing for the years 2023-2027 and flat oil and gas prices of $60/bbl and $4.00/MMBtu, respectively, for the years 2028 onward (which we refer to as “Strip Pricing Through 2027E Case”), (ii) Strip pricing for the years 2023-2025 and flat oil and gas prices of $65/bbl and $4.00/MMBtu, respectively, for the years 2026 onward (which we refer to as “Strip Pricing Through 2025E Case”), (iii) Consensus pricing as of July 10, 2023 for the years 2023-2025 and flat oil and gas prices of $82/bbl and $4.18/MMBtu, respectively, for the years 2026 onward (which we refer to as “Consensus Pricing Through 2025E Case”), and (iv) the 3-Year Historical Spot Price Case.

 

80

Additional detail about the specific commodity price assumptions underlying the Strip Pricing Through 2025E Case, Strip Pricing Through 2027E Case, Consensus Pricing Through 2025E Case and 3-Year Historical Spot Price Case commodity price decks is set forth in the tables below.

 

		Strip Pricing Through 2027E Case
		2023E				2024E				2025E				2026E				2027E				2028E				2029E				2030E
Commodity Prices
WTI oil ($/Bbl)		$	72.49			$	70.16			$	66.73			$	63.95			$	61.56			$	60.00			$	60.00			$	60.00
Henry Hub gas ($/MMBtu)		$	2.90			$	3.50			$	3.95			$	3.92			$	3.83			$	4.00			$	4.00			$	4.00
		Strip Pricing Through 2025E Case
		2023E				2024E				2025E				2026E				2027E				2028E				2029E				2030E
Commodity Prices
WTI oil ($/Bbl)		$	72.49			$	70.16			$	66.73			$	65.00			$	65.00			$	65.00			$	65.00			$	65.00
Henry Hub gas ($/MMBtu)		$	2.90			$	3.50			$	3.95			$	4.00			$	4.00			$	4.00			$	4.00			$	4.00
		Consensus Pricing Through 2025E Case
		2023E				2024E				2025E				2026E				2027E				2028E				2029E				2030E
Commodity Prices
WTI oil ($/Bbl)		$	76.10			$	79.00			$	82.00			$	82.00			$	82.00			$	82.00			$	82.00			$	82.00
Henry Hub gas ($/MMBtu)		$	2.80			$	3.60			$	4.18			$	4.18			$	4.18			$	4.18			$	4.18			$	4.18

 

		3-Year Historical Spot Price Case
		2023E				2024E				2025E				2026E				2027E				2028E				2029E				2030E
Commodity Prices
WTI oil ($/Bbl)		$	73.91			$	73.91			$	73.91			$	73.91			$	73.91			$	73.91			$	73.91			$	73.91
Henry Hub gas ($/MMBtu)		$	4.23			$	4.23			$	4.23			$	4.23			$	4.23			$	4.23			$	4.23			$	4.23

In addition to certain assumptions with respect to commodity prices, the Denbury management forecast is based on various other assumptions, including, but not limited to, assumptions regarding the continuing nature of ordinary course operations that may be subject to change. Specifically, the Denbury management forecast utilizes current cost estimates without the potential effects of future inflation and includes the effect of oil derivative positions that will settle in 2023 and 2024.

The following table summarizes the Denbury management forecast as of a July 10, 2023 valuation date for the fiscal years 2023 through 2030 ($ in millions):

 

Base Case
		2023E				2024E				2025E				2026E				2027E				2028E				2029E				2030E
Strip Pricing Through 2027E Case
Revenue		$	1,314			$	1,365			$	1,395			$	1,565			$	1,637			$	1,950			$	2,039			$	2,227
EBITDA(1)		$	552			$	620			$	626			$	751			$	770			$	986			$	1,054			$	1,194
Capital Expenditures(2)		$	(555	)		$	(748	)		$	(768	)		$	(512	)		$	(658	)		$	(369	)		$	(439	)		$	(245	)
Unlevered Free Cash Flow(3)(4)		$	(5	)		$	(167	)		$	(198	)		$	156			$	28			$	505			$	492			$	805
Strip Pricing Through 2025E Case
Revenue		$	1,314			$	1,365			$	1,395			$	1,583			$	1,698			$	2,045			$	2,130			$	2,314
EBITDA(1)		$	552			$	620			$	626			$	763			$	818			$	1,064			$	1,129			$	1,266
Capital Expenditures(2)		$	(555	)		$	(748	)		$	(768	)		$	(512	)		$	(658	)		$	(369	)		$	(439	)		$	(245	)
Unlevered Free Cash Flow(3)(5)		$	(5	)		$	(167	)		$	(200	)		$	163			$	65			$	565			$	550			$	858

 

81

Base Case
		2023E				2024E				2025E				2026E				2027E				2028E				2029E				2030E
Consensus Pricing Through 2025E Case
Revenue		$	1,332			$	1,518			$	1,680			$	1,876			$	1,999			$	2,368			$	2,441			$	2,612
EBITDA(1)		$	567			$	737			$	866			$	1,013			$	1,075			$	1,340			$	1,396			$	1,521
Capital Expenditures(2)		$	(555	)		$	(748	)		$	(768	)		$	(512	)		$	(658	)		$	(369	)		$	(439	)		$	(245	)
Unlevered Free Cash Flow(3)		$	9			$	(91	)		$	(11	)		$	355			$	260			$	769			$	743			$	1,037
3-Year Historical Spot Price Case
Revenue		$	1,323			$	1,432			$	1,529			$	1,737			$	1,856			$	2,214			$	2,293			$	2,470
EBITDA(1)		$	560			$	670			$	733			$	891			$	949			$	1,205			$	1,265			$	1,396
Capital Expenditures (2)		$	(555	)		$	(748	)		$	(768	)		$	(512	)		$	(658	)		$	(369	)		$	(439	)		$	(245	)
Unlevered Free Cash Flow(3)		$	2			$	(137	)		$	(115	)		$	261			$	165			$	668			$	647			$	948

 

(1)

EBITDA is defined as net income (loss) before interest expense; income taxes; depreciation, depletion and amortization; asset impairments; noncash fair value losses (gains) on commodity derivative instruments; stock-based compensation and certain other non-recurring items or items whose timing or amount cannot be reasonably estimated. EBITDA is a non-GAAP financial measure as it excludes amounts included in net income (loss), the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to net income (loss) or other measures derived in accordance with GAAP.

(2)	Includes estimated expenditures associated with asset retirement obligations, including plugging and abandonment costs.

(3)

Unlevered Free Cash Flow is defined as EBITDA less capital expenditures less cash income taxes and excludes the impact of share based compensation and certain other noncash items. Unlevered Free Cash Flow is a non-GAAP financial measure as it excludes amounts included in cash flow from operations, the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to cash flow from operations or other measures derived in accordance with GAAP.

(4)

For purposes of their respective fairness analyses, Denbury’s financial advisors used the following projected unlevered free cash flow amounts ($ in millions), which were derived from the Unlevered Free Cash Flow amounts set forth in the “Strip Pricing Through 2027E Case” portion of the table above by subtracting stock-based compensation and certain other items and which were approved by Denbury management for use by Denbury’s financial advisors in their respective fairness analyses: -$13 for the second half of 2023E, -$183 for 2024E, -$215 for 2025E, $140 for 2026E, $12 for 2027E, $486 for 2028E, $473 for 2029E and $786 for 2030E.

(5)

For purposes of their respective fairness analyses, Denbury’s financial advisors used the following projected unlevered free cash flow amounts ($ in millions), which were derived from the Unlevered Free Cash Flow amounts set forth in the “Strip Pricing Through 2025E Case” portion of the table above by subtracting stock-based compensation and certain other items and which were approved by Denbury management for use by Denbury’s financial advisors in their respective fairness analyses: -$13 for the second half of 2023E, -$183 for 2024E, -$216 for 2025E, $146 for 2026E, $49 for 2027E, $547 for 2028E, $531 for 2029E and $839 for 2030E.

 

82

Additionally, in connection with Denbury’s board of directors’ consideration of the transaction, Denbury management prepared projections for the Strip Pricing Through 2025E Case, Strip Pricing Through 2027E Case, Consensus Pricing Through 2025E Case and 3-Year Historical Spot Price Case that assumed a one-year delay in recognizing the volume from the CCUS business starting from year 2025E onwards (which we refer to as the “CCUS One-Year Delay Case”). The CCUS One-Year Delay Case was not used by any of Denbury’s financial advisors in the financial analyses underlying their fairness opinions. The following table summarizes the Denbury management forecast as of a July 10, 2023 valuation date for the fiscal years 2023 through 2030 ($ in millions) for the CCUS One-Year Delay Case:

 

CCUS One-Year Delay Case
		2023E				2024E				2025E				2026E				2027E				2028E				2029E				2030E
Strip Pricing Through 2027E Case
Revenue		$	1,314			$	1,365			$	1,301			$	1,258			$	1,545			$	1,682			$	1,899			$	1,987
EBITDA(1)		$	552			$	620			$	571			$	522			$	718			$	818			$	966			$	1,045
Capital Expenditures(2)		$	(555	)		$	(541	)		$	(533	)		$	(743	)		$	(514	)		$	(597	)		$	(397	)		$	(398	)
Unlevered Free Cash Flow(3)		$	(5	)		$	38			$	(2	)		$	(273	)		$	125			$	130			$	454			$	518
Strip Pricing Through 2025E Case
Revenue		$	1,314			$	1,365			$	1,301			$	1,276			$	1,606			$	1,777			$	1,991			$	2,075
EBITDA(1)		$	552			$	620			$	571			$	534			$	766			$	896			$	1,042			$	1,117
Capital Expenditures(2)		$	(555	)		$	(541	)		$	(533	)		$	(743	)		$	(514	)		$	(597	)		$	(397	)		$	(398	)
Unlevered Free Cash Flow(3)		$	(5	)		$	38			$	(4	)		$	(265	)		$	161			$	191			$	512			$	572
Consensus Pricing Through 2025E Case
Revenue		$	1,332			$	1,518			$	1,586			$	1,570			$	1,907			$	2,100			$	2,302			$	2,372
EBITDA(1)		$	567			$	738			$	811			$	784			$	1,023			$	1,173			$	1,308			$	1,371
Capital Expenditures(2)		$	(555	)		$	(541	)		$	(533	)		$	(743	)		$	(514	)		$	(597	)		$	(397	)		$	(398	)
Unlevered Free Cash Flow(3)		$	9			$	112			$	176			$	(67	)		$	356			$	398			$	706			$	754
3-Year Historical Spot Price Case
Revenue		$	1,323			$	1,432			$	1,435			$	1,430			$	1,764			$	1,946			$	2,154			$	2,231
EBITDA(1)		$	560			$	671			$	679			$	662			$	897			$	1,037			$	1,177			$	1,246
Capital Expenditures (2)		$	(555	)		$	(541	)		$	(533	)		$	(743	)		$	(514	)		$	(597	)		$	(397	)		$	(398	)
Unlevered Free Cash Flow(3)		$	2			$	67			$	74			$	(162	)		$	261			$	297			$	610			$	664

 

(1)

EBITDA is defined as net income (loss) before interest expense; income taxes; depreciation, depletion and amortization; asset impairments; noncash fair value losses (gains) on commodity derivative instruments; stock-based compensation and certain other non-recurring items or items whose timing or amount cannot be reasonably estimated. EBITDA is a non-GAAP financial measure as it excludes amounts included in net income (loss), the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to net income (loss) or other measures derived in accordance with GAAP.

(2)	Includes estimated expenditures associated with asset retirement obligations, including plugging and abandonment costs.

(3)

Unlevered Free Cash Flow is defined as EBITDA less capital expenditures less cash income taxes and excludes the impact of share based compensation and certain other noncash items. Unlevered Free Cash Flow is a non-GAAP financial measure as it excludes amounts included in cash flow from operations, the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to cash flow from operations or other measures derived in accordance with GAAP.

 

83

On June 30, 2023, Denbury had approximately $85 million of debt outstanding under its bank credit facility and Denbury management projected such outstanding debt to increase to approximately $150 million by the end of 2023, driven by an estimated $65 million cash payment for withholding taxes for shares anticipated to be surrendered to Denbury for post-emergence equity awards granted in December 2020 and scheduled to be delivered to the recipients in December 2023.

Denbury does not intend to update or otherwise revise the above unaudited financial and operating forecasts to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying such unaudited financial and operating forecasts are no longer appropriate, except as may be required by applicable law.

Important Information about the Unaudited Prospective Financial Information

The inclusion of the unaudited prospective financial information summarized above in “The Merger—Certain Denbury Unaudited Prospective Financial Information” beginning on page 79 of this proxy statement/prospectus (collectively, the “Unaudited Prospective Financial Information”) should not be regarded as an indication that any of Denbury, ExxonMobil, J.P. Morgan, TPH, PJT Partners, their respective advisors, or any of their respective affiliates, officers, directors, partners, advisors or other representatives or any other person considered, or now considers, those projections to be predictive of actual future performance or events, or that it should be construed as financial guidance, and the summary of the Unaudited Prospective Financial Information set forth above should not be relied on as such.

While presented with numeric specificity, the Unaudited Prospective Financial Information summarized above is subjective in many respects and reflects numerous estimates and assumptions made with respect to business, economic, market, competition, regulatory and financial conditions and matters specific to Denbury’s and ExxonMobil’s businesses that are inherently subject to significant uncertainties and contingencies, including risks and uncertainties described or incorporated by reference under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” beginning on pages 30 and 40, respectively, of this proxy statement/prospectus, all of which are difficult to predict and many of which are beyond the control of Denbury and ExxonMobil and will be beyond the control of the combined company. The Unaudited Prospective Financial Information reflects both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. There can be no assurance that the Unaudited Prospective Financial Information and the underlying estimates and assumptions will be realized and actual results will likely differ, and may differ materially, from those reflected in the Unaudited Prospective Financial Information, whether or not the Merger is completed.

The Unaudited Prospective Financial Information constitutes forward-looking statements. In addition, because the Unaudited Prospective Financial Information covers multiple years, such information by its nature becomes less predictive with each successive year. Actual results may differ materially from those set forth above, and important factors that may affect actual results and cause the Unaudited Prospective Financial Information to be inaccurate include, but are not limited to, risks and uncertainties relating to ExxonMobil’s and Denbury’s businesses, industry performance, the regulatory environment, general business and economic conditions and other matters described under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” beginning on pages 30 and 40, respectively, of this proxy statement/prospectus. As a result, the Unaudited Prospective Financial Information cannot be considered predictive of actual future operating results, and this information should not be relied on as such. Denbury stockholders and ExxonMobil shareholders are urged to review the SEC filings of Denbury and ExxonMobil for a description of risk factors with respect to the businesses of Denbury and ExxonMobil, as well as the risks and other factors described or incorporated by reference under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” beginning on pages 30 and 40, respectively, of this proxy statement/prospectus. See also “Where You Can Find More Information” beginning on page 177 of this proxy statement/prospectus. The Unaudited Prospective Financial Information includes certain non-GAAP financial measures.

 

84

The Unaudited Prospective Financial Information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with GAAP, published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. No independent registered public accounting firm has audited, reviewed, compiled, examined, applied or performed any procedures with respect to the Unaudited Prospective Financial Information contained herein, nor have they expressed nor do they express any opinion or any other form of assurance on such information or its achievability. The report of the respective independent registered public accounting firms of Denbury and ExxonMobil contained in their respective Annual Reports on Form 10-K for the year ended December 31, 2022, which have been filed with the SEC and are incorporated by reference into this proxy statement/prospectus, relate to historical financial information of Denbury and ExxonMobil, respectively, and such reports do not extend to the projections summarized above and should not be read to do so. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Denbury and ExxonMobil may not be comparable to similarly titled amounts used by other companies.

Furthermore, the Unaudited Prospective Financial Information does not take into account any circumstances or events occurring after the date it was prepared. There can be no assurance that, had the Unaudited Prospective Financial Information been prepared either as of the date of the Merger Agreement or as of the date of this proxy statement/prospectus, similar estimates and assumptions would be used. The Unaudited Prospective Financial Information does not take into account all the possible financial and other effects on Denbury or ExxonMobil of the Merger, the effect on Denbury or ExxonMobil of any business or strategic decision or action that has been or will be taken as a result of the Merger Agreement, or the effect of any business or strategic decisions or actions which would likely have been taken if the Merger Agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the Merger. Further, the Unaudited Prospective Financial Information does not take into account the effect on Denbury or ExxonMobil of any possible failure of the Merger to occur. None of Denbury, ExxonMobil or any of their respective affiliates, officers, directors, partners, advisors or other representatives has made, makes or is authorized in the future to make any representation to any Denbury stockholder or ExxonMobil shareholder or other person regarding Denbury’s or ExxonMobil’s ultimate performance compared to the information contained in the Unaudited Prospective Financial Information or that the forecasted results will be achieved. The inclusion of the Unaudited Prospective Financial Information herein should not be deemed an admission or representation by Denbury, ExxonMobil, their respective advisors or any other person that it is viewed as material information of Denbury or ExxonMobil, particularly in light of the inherent risks and uncertainties associated with such information. There can be no assurance that the projected results will be realized or that actual results will not be materially lower or higher than estimated, whether or not the Merger is completed. The summary of the Unaudited Prospective Financial Information included above is not being included to influence any Denbury stockholder’s decision on whether to vote in favor of the Merger or any other proposal to be considered at the Special Meeting, but is being provided solely because it was made available to the Denbury board of directors, Denbury, ExxonMobil and Denbury’s financial advisors, as applicable, in connection with the Merger.

READERS OF THIS PROXY STATEMENT/PROSPECTUS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION. DENBURY AND EXXONMOBIL DO NOT INTEND TO UPDATE OR OTHERWISE REVISE THE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE, EXCEPT AS MAY BE REQUIRED BY LAW.

 

85

OPINIONS OF DENBURY’S FINANCIAL ADVISORS

Opinion of J.P. Morgan Securities LLC

Pursuant to an engagement letter dated August 1, 2022, Denbury retained J.P. Morgan as a financial advisor in connection with a potential transaction (including the Merger). At the meeting of the Denbury board of directors on July 13, 2023, J.P. Morgan rendered its oral opinion to the Denbury board of directors, which was subsequently confirmed by delivery of a written opinion, dated July 13, 2023, to the effect that, as of such date and based upon and subject to the factors, assumptions, qualifications and any limitations set forth in its written opinion, the Merger Consideration to be paid to the holders of Denbury common stock in the Merger was fair, from a financial point of view, to such holders.

The full text of the written opinion of J.P. Morgan dated July 13, 2023, which sets forth, among other things, the assumptions made, matters considered and qualifications and any limitations on the opinion and the review undertaken by J.P. Morgan in connection with rendering its opinion, is attached as Annex B to this proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Denbury’s stockholders are urged to read the opinion carefully and in its entirety. J.P. Morgan’s opinion was addressed to the Denbury board of directors (in its capacity as such) in connection with and for the purposes of its evaluation of the Merger, was directed only to the Merger Consideration to be paid to the holders of Denbury common stock in the Merger and did not address any other aspect of the Merger or the other transactions contemplated by the Merger Agreement. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of Denbury as to how such stockholder should vote with respect to the Merger or any other matter.

In arriving at its opinion, J.P. Morgan, among other things:

 

•

reviewed the Merger Agreement;

 

•

reviewed certain publicly available business and financial information concerning Denbury and the industries in which it operates;

 

•

compared the financial and operating performance of Denbury with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of the Denbury common stock and ExxonMobil common stock and certain publicly traded securities of such other companies;

 

•

reviewed certain internal financial analyses and forecasts prepared by the management of Denbury relating to its business (including the financial projections identified to J.P. Morgan by Denbury as the “Strip Pricing through 2027E Base Case,” the “Strip Pricing through 2027E CCUS Delay Case,” the “Strip Pricing through 2025E Base Case,” the “Strip Pricing through 2025E CCUS Delay Case,” the “Consensus Pricing through 2025E Base Case,” the “Consensus Pricing through 2025E CCUS Delay Case,” the “3-Year Historical Spot Price Average Base Case” and the “3-Year Historical Spot Price Average CCUS Delay Case”); and

 

•

performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.

In addition, J.P. Morgan held discussions with certain members of the management of Denbury and ExxonMobil with respect to certain aspects of the Merger, and the past and current business operations of Denbury, the financial condition and future prospects and operations of Denbury, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by Denbury and

 

86

ExxonMobil or otherwise reviewed by or for J.P. Morgan. J.P. Morgan did not independently verify any such information or its accuracy or completeness and, pursuant to J.P. Morgan’s engagement letter with Denbury, J.P. Morgan did not assume any obligation to undertake any such independent verification. J.P. Morgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of Denbury or ExxonMobil under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of Denbury to which such analyses or forecasts relate. For purposes of J.P. Morgan’s opinion and financial analyses, the Denbury board of directors directed J.P. Morgan to use the “Strip Pricing through 2027E Base Case” and the “Strip Pricing through 2025E Base Case.” J.P. Morgan expresses no view as to such analyses or forecasts or the assumptions on which they were based or as to such direction by the Denbury board of directors. J.P. Morgan also assumed that the Merger and the other transactions contemplated by the Merger Agreement will qualify as a tax-free reorganization for United States federal income tax purposes, and will be consummated as described in the Merger Agreement. J.P. Morgan also assumed that the representations and warranties made by Denbury and ExxonMobil and Merger Sub in the Merger Agreement and the related agreements were and will be true and correct in all respects material to J.P. Morgan’s analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to Denbury with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on Denbury or on the contemplated benefits of the Merger.

J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s written opinion dated July 13, 2023, and that J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the Merger Consideration to be paid to the holders of Denbury common stock in the Merger, and J.P. Morgan has expressed no opinion as to the fairness of any consideration to be paid in connection with the Merger to the holders of any other class of securities, creditors or other constituencies of Denbury or as to the underlying decision by Denbury to engage in the Merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the Merger, or any class of such persons relative to the Merger Consideration to be paid to the holders of Denbury common stock in the Merger or with respect to the fairness of any such compensation. J.P. Morgan expressed no opinion as to the price at which Denbury common stock or ExxonMobil common stock will trade at any future time.

The terms of the Merger Agreement, including the Merger Consideration, were determined through arm’s length negotiations between Denbury and ExxonMobil, and the decision to enter into the Merger Agreement was solely that of the Denbury board of directors. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the Denbury board of directors in its evaluation of the Merger and should not be viewed as determinative of the views of the Denbury board of directors or management with respect to the Merger or the Merger Consideration.

In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodologies in rendering its opinion to the Denbury board of directors on July 13, 2023 and in the financial analyses presented to the Denbury board of directors on such date in connection with the rendering of such opinion. The following is a summary of the material financial analyses utilized by J.P. Morgan in connection with rendering its opinion to the Denbury board of directors and contained in the presentation delivered to the Denbury board of directors on such date in connection with the rendering of such opinion and does not purport to be a complete description of the analyses or data presented by J.P. Morgan. Certain of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must

 

87

be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s analyses.

Sum-of-the-Parts — Selected Public Trading Multiples

Using publicly available information, J.P. Morgan compared selected financial data of Denbury’s enhanced oil recovery (which we refer to as the “EOR”) business and carbon capture, use and storage (which we refer to as the “CCUS”) business with similar data for certain selected publicly traded companies engaged in businesses which J.P. Morgan judged, based on its experience and familiarity with the industries in which Denbury operates, to be sufficiently analogous to Denbury’s EOR business or CCUS business, as applicable. The companies selected by J.P. Morgan were:

EOR companies:

 

•

Berry Corporation

 

•

Chord Energy Corporation

 

•

Crescent Point Energy Corp.

 

•

California Resources Corporation

 

•

Northern Oil and Gas, Inc.

CCUS companies:

 

•

Aker Carbon Capture ASA

 

•

Ballard Power Systems Inc.

 

•

Bloom Energy Corporation

 

•

FuelCell Energy, Inc.

 

•

Plug Power Inc.

None of the selected companies reviewed is identical or directly comparable to Denbury’s EOR business or CCUS business, and certain of these companies may have characteristics that are materially different from those of Denbury’s EOR business or CCUS business. However, these companies were selected, among other reasons, because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered sufficiently similar in certain respects to Denbury’s EOR business or CCUS business. The analysis necessarily involves complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies differently than they would affect Denbury’s EOR business or CCUS business.

Using publicly available information as of July 12, 2023, J.P. Morgan calculated and compared:

 

•

the multiple of enterprise value (calculated as the market value of the company’s common stock on a fully diluted basis, plus debt and other adjustments, including non-controlling interests, less cash) to estimated EBITDA (calculated as earnings before interest, taxes, depreciation and amortization) for the fiscal year ending December 31, 2023 (which we refer to as “FYE 2023”) for each selected EOR company listed above and for Denbury; and

 

•

the multiple of enterprise value to estimated revenue for the fiscal year ending December 31, 2025 (which we refer to as “FYE 2025”) for each selected CCUS company listed above and for Denbury.

 

88

Based on the results of this analysis and other factors which J.P. Morgan considered appropriate based on its experience and professional judgment, J.P. Morgan selected multiple reference ranges of 3.50x – 4.50x for enterprise value to FYE 2023 EBITDA (for Denbury’s EOR business) and 1.50x – 2.75x for enterprise value to estimated revenue for the fiscal year ending December 31, 2026 (which we refer to as “FYE 2026”) (for Denbury’s CCUS business).

J.P. Morgan then calculated ranges of implied enterprise values of Denbury’s EOR business and Denbury’s CCUS business by applying the applicable multiple reference range to the FYE 2023 EBITDA of Denbury’s EOR business and to the FYE 2026 revenue of Denbury’s CCUS business, in each case, based on Denbury management’s “Strip Pricing through 2027E Base Case” and “Strip Pricing through 2025E Base Case,” as directed by Denbury management. After aggregating the ranges of implied enterprise values for Denbury’s EOR and CCUS businesses, the analysis indicated a range of implied equity values per share of Denbury common stock of $46.50 – $66.25 (in each case, rounded to the nearest $0.25 per share).

This range of implied equity values per share was compared to (i) the closing price per share of Denbury common stock of $78.90 on August 16, 2022 (the trading day before certain media outlets first reported that Denbury was exploring options, including putting itself up for sale), (ii) the closing price per share of Denbury common stock of $87.75 on July 12, 2023 and (iii) the implied value of the Merger Consideration of $89.45 per share of Denbury common stock. The implied value of the Merger Consideration of $89.45 as used throughout this summary of J.P. Morgan’s analyses was calculated by multiplying the exchange ratio of 0.840 of a share of ExxonMobil common stock by $106.49, the closing price per share of ExxonMobil common stock on July 12, 2023.

Sum-of-the-Parts — Discounted Cash Flow Analysis

J.P. Morgan conducted a sum-of-the-parts discounted cash flow analysis for the purpose of determining an implied equity value per share for Denbury common stock based on two commodity price and activity cases provided to J.P. Morgan by Denbury management (which cases we refer to herein as the “Strip Pricing through 2027E Base Case” and the “Strip Pricing through 2025E Base Case”) as directed by the Denbury board of directors.

J.P. Morgan calculated the unlevered free cash flows, as of June 30, 2023, that each of Denbury’s EOR and CCUS businesses was forecasted to generate during the second half of fiscal year 2023 through the end of fiscal year 2030, based upon each of the Strip Pricing through 2027E Base Case and the Strip Pricing through 2025E Base Case. J.P. Morgan also calculated a range of terminal asset values for each of these businesses at the end of the seven-and-a-half-year period ending 2030 by applying, at the direction of Denbury management, terminal value growth rates ranging from (4%) to (2%) in the case of Denbury’s EOR business, and from 4% to 6% in the case of Denbury’s CCUS business, to estimates of the terminal unlevered free cash flows of each such business.

For each of the Strip Pricing through 2027E Base Case and the Strip Pricing through 2025E Base Case, the unlevered free cash flows and the range of terminal asset values were then discounted to present values, as of June 30, 2023, using a range of discount rates from 8.75% to 10.75% for Denbury’s EOR business and 12.25% to 14.25% for Denbury’s CCUS business, which ranges were chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of Denbury’s EOR business and CCUS business, as applicable. After aggregating the discounted values for the EOR business and the CCUS business for each of the Strip Pricing through 2027E Base Case and the Strip Pricing through 2025E Base Case, subtracting from each such aggregated value Denbury’s estimated net debt of approximately $85 million as of June 30, 2023 and dividing the resultant values by 54.5 million fully diluted shares of Denbury common stock (as provided by Denbury management), the analysis indicated a range of implied equity values per share of Denbury common stock of $56.75 to $93.25 for the Strip Pricing through 2027E Base Case and a range of implied equity values per share of Denbury common stock of $62.25 to $101.00 for the Strip Pricing through 2025E Base Case (in each case, rounded to the nearest $0.25 per share). These ranges of implied equity values per share were compared to (i) the closing price per share

 

89

of Denbury common stock of $78.90 on August 16, 2022 (the trading day before certain media outlets first reported that Denbury was exploring options, including putting itself up for sale), (ii) the closing price per share of Denbury common stock of $87.75 on July 12, 2023 and (iii) the implied value of the Merger Consideration of $89.45 per share of Denbury common stock.

Historical Trading Range

For reference only and not as a component of its fairness analysis, J.P. Morgan reviewed the trading range for the Denbury common stock for the period beginning on September 21, 2020 (the date on which Denbury’s common stock began trading on the New York Stock Exchange after Denbury emerged from Chapter 11 proceedings) and ending on July 12, 2023, which range was $15.50 per share to $104.00 per share, and compared that range to (i) the closing price per share of Denbury common stock of $78.90 on August 16, 2022 (the trading day before certain media outlets first reported that Denbury was exploring options, including putting itself up for sale), (ii) the closing price per share of Denbury common stock of $87.75 on July 12, 2023 and (iii) the implied value of the Merger Consideration of $89.45 per share of Denbury common stock.

Analyst Price Target

For reference only and not as a component of its fairness analysis, J.P. Morgan reviewed certain publicly available equity research analyst price targets for the Denbury common stock available as of July 12, 2023, noted that the range of such price targets (discounted one year to the present at Denbury’s median cost of equity of 12.9%), was $64.75 to $124.00 per share and compared that range to (i) the closing price per share of Denbury common stock of $78.90 on August 16, 2022 (the trading day before certain media outlets first reported that Denbury was exploring options, including putting itself up for sale), (ii) the closing price per share of Denbury common stock of $87.75 on July 12, 2023 and (iii) the implied value of the Merger Consideration of $89.45 per share of Denbury common stock.

Miscellaneous

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of Denbury. The order of analyses described does not represent the relative importance or weight given to those analyses by J.P. Morgan. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion.

Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be acquired or sold. None of the selected companies reviewed as described in the above summary is identical to Denbury, and none of the selected transactions reviewed was identical to the proposed Merger. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of Denbury. The transactions selected were similarly

 

90

chosen because their participants, size and other factors, for purposes of J.P. Morgan’s analysis, may be considered similar to the proposed Merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to Denbury and the transactions compared to the proposed Merger.

As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. J.P. Morgan was selected to advise Denbury with respect to the Merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with Denbury and the industries in which it operates.

For services rendered in connection with the Merger and the delivery of its opinion, Denbury has agreed to pay J.P. Morgan a transaction fee, a portion of which became payable by Denbury to J.P. Morgan in connection with J.P. Morgan’s delivery of its opinion and the balance of which will become payable upon the closing of the Merger. In addition, Denbury has agreed to reimburse J.P. Morgan for its expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities arising out of J.P. Morgan’s engagement. During the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with Denbury and ExxonMobil, for which J.P. Morgan and its affiliates have received compensation of approximately $2.0 million and $1.5 million from Denbury and ExxonMobil, respectively. Such services during such period have included acting as joint lead arranger and joint lead bookrunner on a credit facility of Denbury in May 2022 and acting as joint lead arranger and joint bookrunner on a credit facility of ExxonMobil in August 2021. In addition, J.P. Morgan’s commercial banking affiliate is an agent bank and a lender under outstanding credit facilities of Denbury, for which it receives customary compensation or other financial benefits. In addition, J.P. Morgan and its affiliates hold, on a proprietary basis, less than 1% of the outstanding common stock of each of Denbury and ExxonMobil. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities or financial instruments (including derivatives, bank loans or other obligations) of Denbury or ExxonMobil for its own account or for the accounts of customers and, accordingly, J.P. Morgan may at any time hold long or short positions in such securities or other financial instruments.

Opinion of TPH & Co.

Introduction

Denbury retained TPH to act as Denbury’s financial advisor and provide an opinion in connection with the Merger. The Denbury board of directors instructed TPH to evaluate the fairness, from a financial point of view, to the holders of outstanding shares of Denbury common stock (other than ExxonMobil and its affiliates) of the Merger Consideration to be received by such holders pursuant to the Merger Agreement.

On July 13, 2023, at a meeting of the Denbury board of directors held to evaluate the Merger, TPH delivered an oral opinion to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, factors considered and qualifications and limitations on the review undertaken by TPH, as set forth in the written opinion delivered subsequently and based upon other matters as TPH considered relevant, the Merger Consideration to be received by the holders of outstanding shares of Denbury common stock (other than ExxonMobil and its affiliates) in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. TPH delivered its written opinion on July 13, 2023 to the Denbury board of directors.

The TPH opinion speaks only as of the date and the time TPH rendered it and not as of the time the Merger may be completed or any other time. The TPH opinion does not reflect changes that may occur or may have occurred after its delivery, which could significantly alter the value, facts or elements on which the opinion was based.

 

91

The full text of TPH’s written opinion, which describes, among other things, the assumptions made, procedures followed, factors considered and qualifications and limitations on the review TPH undertook, is attached as Annex C to this proxy statement/prospectus and is incorporated by reference in its entirety. The summary of TPH’s opinion set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. Denbury stockholders are encouraged to read the TPH opinion carefully in its entirety. TPH delivered its opinion for the information and assistance of the Denbury board of directors in connection with the Denbury board of directors’ consideration of the Merger, and TPH’s opinion does not address any other aspect of the Merger Agreement and does not constitute a recommendation as to how any stockholder of Denbury or ExxonMobil should vote with respect to the Merger or any other matter.

In connection with rendering its opinion, TPH, among other things:

 

•

reviewed certain publicly available financial statements and other publicly available business and financial information with respect to Denbury and ExxonMobil, including equity research analyst reports;

 

•

reviewed certain internal financial statements, analyses and forecasts and other internal financial information and operating data relating to the business of Denbury, in each case, prepared and approved for TPH’s use by Denbury management (including the financial projections identified to TPH by Denbury as a “Strip Pricing through 2027E Base Case,” a “Strip Pricing through 2027E CCUS Delay Case,” a “Strip Pricing through 2025E Base Case,” a “Strip Pricing through 2025E CCUS Delay Case,” a “Consensus Pricing through 2025E Base Case,” a “Consensus Pricing through 2025E CCUS Delay Case,” a “3-Year Historical Spot Price Average Base Case” and a “3-Year Historical Spot Price Average CCUS Delay Case”);

 

•

discussed the past and current business, operations, financial condition and prospects of Denbury and the combined company with senior members of Denbury management, the Denbury board of directors, and other representatives and advisors of Denbury;

 

•

discussed with senior members of Denbury management their assessment of the strategic rationale for, and the potential benefits of, the Merger;

 

•

compared the financial performance of Denbury with that of certain publicly-traded companies that TPH believed to be generally relevant;

 

•

compared the financial terms of the Merger with the publicly available financial terms of certain transactions that TPH believed to be generally relevant;

 

•

reviewed the historical trading prices and trading activity for Denbury’s common stock and compared such price and trading activity with that of securities of certain publicly-traded companies that TPH believed to be generally relevant;

 

•

participated in discussions among representatives of Denbury and ExxonMobil and their respective advisors;

 

•

took into account the results of its efforts on behalf of Denbury to solicit, at the direction of Denbury, indications of interest and proposals from third parties with respect to a potential acquisition of Denbury;

 

•

reviewed a draft of the Merger Agreement dated July 13, 2023; and

 

•

conducted such other financial studies, analyses and investigations, and considered such other factors, as it deemed appropriate.

For purposes of its opinion, TPH assumed and relied upon, without assuming any responsibility for independent verification, the accuracy and completeness of all of the financial, accounting, legal, tax, regulatory and other information provided to, discussed with or reviewed by TPH (including information that was available

 

92

from public sources) and further relied upon the assurances of Denbury management that Denbury management was not aware of any facts or circumstances that would make such information inaccurate or misleading in any material respect.

With respect to the forecasts prepared and approved for its use by Denbury management, TPH was advised by Denbury management and assumed, with the consent of the Denbury board of directors, that such forecasts were reasonably prepared on a basis reflecting the best currently available estimates and good faith judgments of Denbury management as to the future financial performance of Denbury and the other matters covered thereby, and TPH expressed no view as to the reasonableness of such forecasts or the assumptions on which they were based. For purposes of TPH’s opinion and financial analyses, the Denbury board of directors directed TPH to use the “Strip Pricing through 2027E Base Case” and the “Strip Pricing through 2025E Base Case.” In particular, the forecasts prepared and approved for the use of TPH by Denbury management reflect certain assumptions regarding the industries or areas in which Denbury operates that are subject to significant uncertainty and that, if different than assumed, could have a material impact on TPH’s analysis and opinion.

In arriving at its opinion, TPH did not make and was not provided with any independent valuation or appraisal of the assets or liabilities (including any contingent, derivative or off-balance-sheet assets or liabilities) of Denbury, ExxonMobil or any of their respective subsidiaries. TPH did not assume any obligation to conduct, nor did it conduct, any physical inspection of the properties or facilities of Denbury, ExxonMobil or any other party. In addition, TPH did not evaluate the solvency of any party to the Merger Agreement, or the impact of the Merger thereon, including under any applicable laws relating to bankruptcy, insolvency or similar matters.

TPH assumed that the final Merger Agreement (together with the exhibits and schedules thereto) would not differ from the draft of the Merger Agreement dated July 13, 2023 that was reviewed by it in any respect material to the analysis or opinion of TPH. TPH also assumed that (1) the representations and warranties of all parties to the Merger Agreement and all other related documents and instruments that are referred to therein were true and correct in all respects material to TPH’s analysis and opinion, (2) each party to the Merger Agreement and such other related documents and instruments would fully and timely perform all of the covenants and agreements required to be performed by such party in all respects material to TPH’s analysis and opinion, and (3) the Merger would be consummated in a timely manner in accordance with the terms set forth in the Merger Agreement and such other related documents and instruments, without any modification, amendment, waiver or delay that would be material to the analysis or opinion of TPH. In addition, TPH assumed that in connection with the receipt of all approvals and consents required in connection with the Merger, no delays, limitations, conditions or restrictions would be imposed that would be material to its analysis.

TPH’s opinion was necessarily based on economic, monetary, market and other conditions in effect on, and the information made available to TPH as of, July 13, 2023. TPH assumed no obligation to update, revise or reaffirm its opinion and expressly disclaimed any responsibility to do so based on circumstances, developments or events occurring, or of which TPH becomes aware, after the date on which its opinion was rendered.

The estimates contained in TPH’s analysis and the results from any particular analysis are not necessarily indicative of future results, which may be significantly more or less favorable than suggested by any analysis. In addition, analyses relating to the value of businesses or assets neither purport to be appraisals nor do they necessarily reflect the prices at which businesses or assets may actually be sold. Accordingly, TPH’s analysis and estimates are inherently subject to substantial uncertainty.

In arriving at its opinion, TPH did not attribute any particular weight to any particular analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. TPH employed several analytical methodologies in its analyses, and no one single method of analysis should be regarded as dispositive of TPH’s overall conclusion. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. Accordingly, TPH believes that its analyses must be considered as a whole and that selecting portions of its

 

93

analyses and of the factors considered by it, without considering all analyses and all factors in their entirety, could create a misleading or incomplete view of the evaluation process underlying its opinion. TPH’s conclusion, therefore, is based upon the application of TPH’s own experience and judgment to all analyses and factors considered by it, taken as a whole. TPH’s opinion was reviewed and approved by its fairness opinion committee.

TPH’s opinion addressed only the fairness, from a financial point of view, as of July 13, 2023, to the holders of Denbury common stock (other than ExxonMobil and its affiliates) of the Merger Consideration to be received by such holders in the Merger pursuant to the Merger Agreement. TPH was not asked to, nor did it, offer any opinion as to any other term of the Merger Agreement or any other document contemplated by or entered into in connection with the Merger Agreement, the form or structure of the Merger or the likely timeframe in which the Merger would be consummated. In addition, TPH expressed no opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any party to the Merger Agreement, or any class of such persons, whether relative to the Merger Consideration or otherwise. TPH expressed no opinion as to the fairness of the Merger to the holders of any other class of securities, creditors or other constituencies of Denbury, as to the underlying decision by Denbury to engage in the Merger or as to the relative merits of the Merger compared with any alternative transactions or business strategies. Nor did TPH express any opinion as to any tax or other consequences that may result from the transactions contemplated by the Merger Agreement or any other related document. TPH’s opinion did not address any legal, tax, regulatory or accounting matters, as to which TPH understood Denbury had received such advice as it deemed necessary from qualified professionals.

The data and analyses summarized below in this proxy statement/prospectus are from TPH’s presentation to the Denbury board of directors delivered on July 13, 2023. The analyses summarized below include information presented in tabular format. To fully understand the financial analyses performed, the tables must be considered together with the textual summary of the analyses and full text of TPH’s written opinion, which is included as Annex C of this proxy statement/prospectus.

Summary of TPH’s Analyses

Certain Financial Metrics

For purposes of the analyses described below, the following terms have the following meanings:

 

•

“EV” or “enterprise value” is calculated as the fully-diluted equity value of a company, plus book value of debt, any preferred equity and non-controlling interests, less cash and cash equivalents; and

 

•

“EBITDA” is calculated as earnings before interest, income taxes, depreciation, depletion and amortization expense.

Selected Public Companies Trading Analysis

TPH reviewed and analyzed certain financial information including valuation multiples related to Denbury’s EOR and CCUS businesses and selected companies with publicly traded equity securities and related operations, as applicable.

The financial information reviewed included:

 

•

for selected oil companies related to Denbury’s EOR operations, enterprise value as a multiple of estimated 2023 EBITDA, based on median research analysts’ consensus estimates per FactSet as of July 12, 2023 (which, for purposes of this section titled “— Opinion of TPH & Co., Denbury’s Financial Advisor,” we refer to as the “Wall Street consensus estimates”); and

 

•

for selected energy transition companies related to Denbury’s CCUS operations, enterprise value as a multiple of estimated 2025 revenue, based on Wall Street consensus estimates.

 

94

The companies included in the analysis and their relevant financial metrics reviewed were as follows:

Oil companies (which we refer to, collectively, as the “selected oil companies”):

 

Company		EV /2023E EBITDA3
Chord Energy Corporation1,2			4.1x
Crescent Point Energy Corp.1			3.5x
California Resources Corporation			3.9x
Callon Petroleum Company1			3.2x

 

1	Pro forma for announced transactions.

2	Metrics for Chord Energy Corporation shown adjusted to reflect E&P-only multiple.

3	Excludes the impact of investments in associates and affiliates.

Energy transition companies (which we refer to, collectively, as the “selected energy transition companies”):

 

Company		EV /2025E Revenue2
Aker Carbon Capture ASA1			1.6x
Ballard Power Systems Inc.			1.8x
Bloom Energy Corporation1			1.9x
FuelCell Energy, Inc.			2.8x
Plug Power Inc.			2.1x

 

1	Metrics reflect 100-day consensus window.

2	Excludes the impact of investments in associates and affiliates.

No selected oil company or group thereof is identical to Denbury’s EOR business, and no selected energy transition company or group thereof is identical to Denbury’s CCUS business. Accordingly, TPH believes that purely quantitative analyses are not, in isolation, determinative in the context of the Merger contemplated by the Merger Agreement and that qualitative judgments concerning differences between the financial and operating characteristics and prospects of (1) Denbury’s EOR business and the selected oil companies and (2) Denbury’s CCUS business and the selected energy transition companies that could affect the public trading values of each also are relevant.

Based on the ranges observed among the selected oil companies and the selected energy transition companies, TPH applied selected multiples ranging from (1) 3.00x to 4.00x to the estimated 2023 EBITDA of Denbury’s EOR business and (2) 1.50x to 3.00x to the estimated 2026 revenue of Denbury’s CCUS business to derive implied enterprise values for each such business, in each case based on the Strip Pricing through 2027E Base Case and the Strip Pricing through 2025E Base Case. TPH then added together the enterprise values of Denbury’s EOR and CCUS businesses, subtracted Denbury’s net debt (total debt minus cash and cash equivalents) therefrom, and divided the resulting equity values by the number of Denbury’s fully diluted shares outstanding as of July 12, 2023 to derive an implied per-share price for Denbury. TPH’s application of such ranges of multiples indicated the following implied reference range per share of Denbury common stock for both the Strip Pricing through 2027E Base Case and the Strip Pricing through 2025E Base Case:

 

Implied Per Share Reference Ranges for Denbury Common Stock
Strip Pricing through 2027E Base Case		Strip Pricing through 2025E Base Case
$40.90 – $62.41		$40.90 – $62.41

TPH compared this implied reference range to the implied value of the Merger Consideration of $89.45 per share of Denbury common stock. The implied value of the Merger Consideration of $89.45 as used throughout this summary was calculated by multiplying the exchange ratio of 0.840 of a share of ExxonMobil common stock by $106.49, the closing price per share of ExxonMobil common stock on July 12, 2023.

 

95

Discounted Cash Flow Analysis

TPH calculated the present value, as of June 30, 2023, of the standalone unlevered free cash flows expected to be generated by each of Denbury’s EOR and CCUS businesses, based on the Strip Pricing through 2027E Base Case and the Strip Pricing through 2025E Base Case. In performing its analysis with respect to Denbury’s EOR business, TPH applied unlevered discount rates ranging from 9.00% to 11.00%, in the case of Denbury’s EOR business, and 14.00% to 18.00%, in the case of Denbury’s CCUS business, to the (1) estimated unlevered free cash flows, utilizing a mid-year convention for discounting, and (2) estimated terminal value at the end of fiscal year 2029 of the applicable business. Such discount rates reflected estimates of the weighted average cost of capital for Denbury’s EOR and CCUS businesses, as applicable.

TPH calculated the terminal value of Denbury’s EOR business by applying EV/EBITDA multiples ranging from 3.00x to 4.00x to the estimated 2030 EBITDA of Denbury’s EOR business. It calculated the terminal value of Denbury’s CCUS business by applying EV/EBITDA multiples ranging from 8.00x to 10.00x to the estimated 2030 EBITDA of Denbury’s CCUS business. TPH determined this latter range of EV/EBITDA multiples with reference to the following EV to estimated 2023 EBITDA multiples, which TPH calculated for selected diversified midstream companies based on Wall Street consensus estimates:

 

Company		EV /2023E EBITDA
Energy Transfer LP			7.6x
EnLink Midstream LLC			8.4x
Enterprise Products Partners L.P.			9.4x
Kinder Morgan Inc			9.4x
Magellan Midstream Partners, L.P.1			10.6x
ONEOK, Inc.1			9.0x

 

1	Multiples as of May 12, 2023, the date prior to the announcement of the acquisition of Magellan Midstream Partners, L.P. by ONEOK, Inc.

No selected diversified midstream company or group thereof is identical to Denbury’s CCUS business. Accordingly, TPH believes that purely quantitative analyses are not, in isolation, determinative in the context of the Merger contemplated by the Merger Agreement and that qualitative judgements concerning differences between the financial and operating characteristics and prospects of Denbury’s CCUS business and the selected diversified midstream companies that could affect the public trading values of each also are relevant.

The resulting enterprise values of Denbury’s EOR and CCUS businesses were then summed together to yield a company-level enterprise value, which in turn was adjusted by subtracting Denbury’s net debt (total debt minus cash and cash equivalents) to calculate a range of company-level equity values for Denbury. Such resulting equity values were divided by the number of fully diluted shares outstanding for Denbury to derive an implied price per share for Denbury common stock. The discounted cash flow analysis for Denbury indicated the following implied reference ranges per share of Denbury common stock:

 

Implied Per Share Reference Ranges for Denbury Common Stock
Strip Pricing through 2027E Base Case		Strip Pricing through 2025E Base Case
$59.41 – $88.62		$63.26 – $93.66

TPH compared these implied reference ranges to the implied value of the Merger Consideration of $89.45 per share of Denbury common stock.

Summary of Additional Reference Data

In connection with conducting the analyses described above, TPH reviewed the following data, which were used for reference purposes only and were not used in TPH’s determination of the fairness, from a financial point

 

96