RICHMOND, Va. – Dominion Energy announced that it is selling substantially all of its gas transmission and storage segment assets to Berkshire Hathaway Energy.
According to a press release, the transaction is valued at $9.7 billion, including the assumption of $5.7 billion of existing debt.
Thomas F. Farrell, II, Dominion Energy chairman, president, and chief executive officer, released the following statement:
“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%. 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.”Dominion Energy Chairman, President and Chief Executive Officer Thomas F. Farrell II
Warren Buffett, chairman of Berkshire Hathaway, also commented on the transaction.
“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,” said Buffett.
Dominion elaborated on the agreement, which involves selling gas transmission and storage assets—including more than 7,700 miles of natural gas storage and transmission pipelines and about 900 billion cubic feet of gas storage that the company currently operates. Berkshire Hathaway Energy will make a cash payment of approximately $4 billion to Dominion Energy upon closing.
“Dominion Energy’s best-in-class gas transmission and storage business has been a major component of our success. Our talented employees set the standard for industry operating, environmental and safety performance and provide our customers with reliable, affordable, and safe service. They will be joining another of the foremost corporate organizations in Berkshire Hathaway Energy which has agreed to provide significant protections for existing employees and to honor existing union commitments,” said Farrell.
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, the release explains. 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, according to Dominion. It requires Hart-Scott-Rodino clearance, as well as approval from the U.S. Department of Energy.
As for the usage of proceeds, the Dominion Energy Board of Directors has authorized the repurchase of common shares using after-tax adjusted transaction proceeds, which the company estimates could total approximately $3 billion, the release states. This new authority has immediate effect, and material repurchases are planned for late 2020 following transaction closing. Share repurchases are subject to market conditions, applicable securities laws and other factors.