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Dominion Energy to sell gas transmission, storage assets to Berkshire Hathaway Energy

Christian Fernsby |
Dominion Energy announced that it has executed a definitive agreement to sell substantially all of its Gas Transmission & Storage segment assets to an affiliate of Berkshire Hathaway Inc.

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The transaction is valued at $9.7 billion, including the assumption of $5.7 billion of existing indebtedness. 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 percent interest), legacy gathering and processing operations, farmout acreage, as well as a 25 percent 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.

Dominion Energy is revising its 2020 operating earnings guidance and it now expects 2020 operating earnings of $3.37 to $3.63 per share. The company's previous guidance was $4.25 to $4.60 per-share.

Dominion Energy expects 2021 operating earnings per share to grow around 10 to 11 percent over 2020, reflecting the full-year impact of planned share repurchases, and by about 6.5 percent annually starting in 2022, off a 2021 base. This represents a 1.5 percentage point, or approximately 30 percent, increase from previous long-term earnings per share growth guidance.

The company now expects to target an approximately 65 percent payout ratio to be effective upon completion of the transaction. This new payout ratio implies a 2021 dividend payment of around $2.50 per share.

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