Dominion closes on sale of majority of natural gas assets

Acquisition by Berkshire Hathaway Energy valued at $8B

Published November 2, 2020 by Sydney Lake

Richmond-based Dominion Energy Inc. announced Monday that it has closed on the sale of the majority of its gas transmission and storage assets to Berkshire Hathaway Energy (a Berkshire Hathaway Inc. affiliate) for approximately $2.7 billion in cash and the transfer of approximately $5.3 billion of related indebtedness.

In July following the cancelation of the Atlantic Coast Pipeline project, Dominion announced that it had entered into a definitive agreement to sell off its gas transmission and storage segment assets for $9.7 billion, including the assumption of $5.7 billion in existing debt to abandon the pipeline project. The 600-mile, $8 billion-plus natural gas pipeline was supposed to run from West Virginia through Virginia to eastern North Carolina.

The deal announced Monday includes more than 5,500 miles of interstate gas transmission pipelines, approximately 775 billion cubic feet (Bcf) of gas storage that the company operates and an operating 25% stake in the Cove Point gas liquefaction facility in Maryland.

The sale is expected to be complete in early 2021 following a Hart-Scott-Rodino clearance, which provides the Federal Trade Commission and Department of Justice information about large acquisitions prior to completion. Dominion has also received an approximate $1.3 billion cash payment in anticipation of the sale of the interests. It will transfer approximately $430 million of related debt to Berkshire Hathaway Energy upon closing.

Announced in 2014 and originally planned to begin transporting natural gas by late 2019, the Atlantic Coast Pipeline was delayed by legal proceedings and opposition from environmental groups and landowners in the pathway of the pipeline’s construction route. On June 15, the U.S. Supreme Court handed down a ruling that would have allowed the pipeline to cross under the Appalachian Trail, hailed by Dominion and Duke as a major victory toward completing the pipeline, which was identified by the Trump administration as a priority infrastructure project. Before announcing the project’s cancellation, Dominion and Duke Energy Corp. had hoped to put the pipeline into operation by 2022.

The transaction is expected to reduce Dominion Energy’s debt by $6 billion. The company also expects total share repurchases its common stock to be at least $3 billion.