Occidental Petroleum will buy Carbon Engineering Ltd., a company it has been closely working with for several years on direct air capture (DAC) technology, for $1.1 billion.

Occidental will pay Carbon Engineering three cash payments with the first at closing. The transaction is expected to close before the end of the year, subject to regulatory and judicial reviews in Canada and the U.S.

Occidental has worked with Carbon Engineering on DAC deployment since 2019. The company said the acquisition aligns with Occidental's integrated net-zero strategy. The transaction comes just days after Occidental subsidiary 1PointFive and another DAC-focused company landed $1.2 billion in funding from the U.S. Department of Energy.

The deal, announced in an Aug. 15 press release, also provides Occidental the opportunity to rapidly advance DAC technology breakthroughs and accelerate deployment of DAC as a large-scale, cost effective, global carbon removal solution.

"We expect the acquisition of Carbon Engineering to deliver our shareholders value through an improved drive for technology innovation and accelerated DAC cost reductions,” Occidental President and CEO Vicki Hollub said. “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," said Occidental President and CEO Vicki Hollub.

At closing, Carbon Engineering will become a wholly owned subsidiary of Oxy Low Carbon Ventures. Carbon Engineering's personnel will continue to drive ongoing DAC technology development efforts and work closely with the Occidental and 1PointFive, the company said.

Carbon Engineering's research and development activities and Innovation Center will remain in Squamish, British Columbia.

"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,” said Carbon Engineering CEO Daniel Friedmann. “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."

1PointFive is building Stratos, the world's largest DAC plant in Ector County, Texas. Occidental said the plant is expected to be commercially operational in mid-2025.

Occidental and Carbon Engineering are also adapting Stratos' FEED 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.

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