Dominion Energy to Sell Gas Transmission, Storage Assets

On July 5, Dominion Energy (Richmond, Va.) announced that it had executed a definitive agreement to sell substantially all of its Gas Transmission & Storage segment assets to an affiliate of Berkshire Hathaway Inc. (Des Moines, Iowa) in a transaction valued at $9.7 billion, including the assumption of $5.7 billion of existing indebtedness.

Thomas F. Farrell, II, Dominion Energy chairman, president, and CEO, said, “Today’s announcement further reflects Dominion Energy’s focus on its premier state-regulated, sustainability-focused utilities that operate in some of the most attractive regions in the country.

“Over the past several years the company has taken a series of steps—including mergers with Questar Corp. and SCANA Corp., and the divestiture of Blue Racer Midstream and merchant generation assets—to increase materially the state-regulated nature of our profile, enhance the customer experience, strengthen our balance sheet, and improve transparency and predictability. Our mission over that period has remained the same: providing round-the-clock affordable and sustainable energy, world-class customer service, and meaningful community engagement.

“We offer an industry-leading clean-energy profile which includes a comprehensive net zero target by 2050 for both carbon and methane emissions as well as one of the nation’s largest zero-carbon electric generation and storage investment programs. Over the next 15 years we plan to invest up to $55 billion in emissions reduction technologies including zero-carbon generation and energy storage, gas distribution line replacement, and renewable natural gas. In addition, between 2018 and 2025 we expect to retire more than four gigawatts of coal- and oil-fired electric generation.

“This narrowing of focus will also allow us to increase our long-term earnings growth rate guidance by around 30%. Our rebased dividend policy better reflects our revised operating and financial strengths, aligns with our best-in-class industry peers, and allows us to grow our dividend much more rapidly than before.

“This transaction represents another significant step in our evolution as a company, allowing us to focus even more on fulfilling utility customer needs and positioning us for a bright and increasingly sustainable future.”

Warren Buffett, chairman of Berkshire Hathaway, said: “I admire Tom Farrell for his exceptional leadership across the energy industry as well as within Dominion Energy. We are very proud to be adding such a great portfolio of natural gas assets to our already strong energy business.”

Dominion Energy has executed a definitive agreement to sell gas transmission and storage assets, including more than 7700 miles of natural gas storage and transmission pipelines and about 900 Bcf of gas storage that the company currently operates, to an affiliate of Berkshire Hathaway Energy in a transaction valued at approximately $9.7 billion, including the assumption of about $5.7 billion of existing indebtedness which will reduce Dominion Energy’s total leverage. The buyer will also make a cash payment of approximately $4 billion to Dominion Energy upon closing.

Assets covered by the sale agreement include the company’s ownership interests in Dominion Energy Transmission, Questar Pipeline (including Overthrust and White River Hub), Carolina Gas Transmission, Iroquois Gas Transmission System (50% interest), legacy gathering and processing operations, farmout acreage, as well as a 25% operating interest in Cove Point. These assets will be reclassified as discontinued operations for GAAP reporting and excluded from operating earnings for full-year 2020. The company’s interest in the Atlantic Coast Pipeline is not included in the transaction.

The transaction is expected to close during the fourth quarter. It requires Hart-Scott-Rodino clearance as well as approval from the U.S. Department of Energy.
Existing Dominion Energy Gas Holdings (DEGH) and Questar Pipeline as well as Iroquois Gas Transmission unconsolidated indebtedness will convey to the buyer.

SOURCE: The Weekly Propane Newsletter, July 9, 2020. Weekly Propane Newsletter subscribers receive all the latest posted and spot prices from major terminals and refineries around the U.S. delivered to inboxes every week. Receive a center spread of posted prices with hundreds of postings updated each week, along with market analysis, insightful commentary, and much more not found elsewhere.