Dominion Energy announced today that it has agreed to sell substantially all of its Gas Transmission & Storage segment assets to Berkshire Hathaway Energy, in a deal valued at nearly $10 billion. The company said that this transaction represents a major step toward a strategic repositioning of the company towards refocusing on its state-regulated, sustainability-focused utility operations.
Following the sale, Dominion expects that up to 90 percent of its future operating earnings will come from its portfolio of best-in-class electric and natural gas state-regulated utility companies centered around five key states: Virginia, the Carolinas, Ohio, and Utah. Outside of these utility operations, Dominion’s remaining assets include primarily a 50 percent passive and unlevered interest in Cove Point — a bidirectional LNG facility in Maryland — and the company’s zero-carbon nuclear and solar contracted generation fleet, representing high-quality, long-term contracted, regulated-like assets with virtually no direct commodity exposure.
The gas transmission and storage assets being sold in the transaction include more than 7,700 miles of natural gas storage and transmission pipelines and about 900 billion cubic feet of gas storage. Assets covered by the sale 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 percent interest), legacy gathering and processing operations, farmout acreage, as well as a 25 percent operating interest in Cove Point.
The total value of the transaction is approximately $9.7 billion, including $4 billion cash, and $5.7 billion assumption of debt.
Thomas F. Farrell, II, Dominion Energy Chairman, President, and Chief Executive Officer, 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 Corporation and SCANA Corporation, 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 percent. 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.”
In another announcement that will move the company’s focus away from transmission operations, Dominion also reported today, along with Duke energy, the cancellation of the Atlantic Coast Pipeline. The project was cancelled due to ongoing delays and increasing cost uncertainty which threatened the economic viability of the project, according to the companies.