Occidental recently announced that a wholly owned subsidiary has entered into a definitive purchase agreement to buy all the outstanding equity of Carbon Engineering Ltd. for total cash consideration of approximately $1.1 billion, to be made in three approximately equivalent annual payments, with the first at closing. This deal is expected to close before the end of 2023, subject to Canadian court reviews, Canadian and U.S. regulatory approvals, and other customary closing conditions.
Occidental was already working with Carbon Engineering on direct air capture (DAC) deployment since 2019. And acquiring Carbon Engineering aligns with Occidental’s integrated net-zero strategy. It provides Occidental, through its 1PointFive subsidiary, the opportunity to rapidly advance DAC technology breakthroughs and accelerate the deployment of DAC as a large-scale, cost-effective, global carbon removal solution. Carbon Engineering’s DAC-based climate solutions utilize standardized processes and proven industrial equipment.
Upon the closing of the deal, Carbon Engineering would become a wholly owned subsidiary of Oxy Low Carbon Ventures. And Carbon Engineering’s personnel will continue to drive ongoing DAC technology development efforts and work closely with the Occidental and 1PointFive teams to bring DAC solutions to market. Carbon Engineering’s research and development activities and Innovation Center will remain in Squamish, British Columbia.
1PointFive is building Stratos, which is the world’s largest DAC plant (expected to be commercially operational in mid-2025 in Ector County, Texas). And Occidental and Carbon Engineering are also adapting Stratos’ front-end engineering and design study for a DAC plant to be built at King Ranch in Kleberg County, which is part of the South Texas DAC Hub that was selected to receive a grant from the U.S. Department of Energy’s Office of Clean Energy Demonstrations.
KEY QUOTES:
“We expect the acquisition of Carbon Engineering to deliver our shareholders value through an improved drive for technology innovation and accelerated DAC cost reductions. The technology partnership also adds new revenue streams in the form of technology licensing and royalties. Importantly, the acquisition enables Occidental to catalyze broader development partnerships for DAC deployment in the most capital-efficient and valuable way.”
“We look forward to continuing our collaboration with the Carbon Engineering team, which has been a leader in pioneering and advancing DAC technology. Together, Occidental and Carbon Engineering can accelerate plans to globally deploy DAC technology at a climate-relevant scale and make DAC the preferred solution for businesses seeking to remove their hard-to-abate emissions.”
— Occidental President and CEO Vicki Hollub
“We have always believed that global partnerships and cross-industry collaboration would be required to deploy DAC infrastructure at the scale required to make a climate-relevant impact. Carbon Engineering and Occidental have been working increasingly close together for the past five years to address the CO2 problem, making Occidental a trusted and committed partner for this next chapter in Carbon Engineering’s journey. At the core of this deeper relationship is the commitment to invest in the development of our technology here in Canada, and the global reach to accelerate implementation of DAC-based climate solutions in the U.S. and around the world.”
— Carbon Engineering CEO Daniel Friedmann
