Berkshire Hathaway To Buy Gas Assets Of Dominion Energy In $9.7 Billion Deal (D, BRK.A, BRK.B)

By Amit Chowdhry ● July 5, 2020
  • Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) announced it will be buying the natural gas transmission and storage operations of Dominion Energy Inc (NYSE: D). These are the details.

Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) announced it will be buying the natural gas transmission and storage operations of Dominion Energy Inc (NYSE: D). Berkshire Hathaway is buying the natural gas transmission and storage network for $4 billion. And Berkshire is going to assume $5.7 billion of debt for a total enterprise value of $9.7 billion.

The assets include over 7,700 miles of natural gas transmission lines — which have about 20.8 billion cubic feet per day of transportation capacity, 900 billion cubic feet of operated natural gas storage, and 364 billion cubic feet of company-owned working storage capacity, and partial ownership of a liquefied natural gas export, import, and storage facility.

Berkshire Hathaway’s energy operations have grown to a $100.8 billion portfolio of locally managed businesses that share a vision of being the best energy company in serving our customers while delivering sustainable energy solutions. And these businesses deliver low-cost, safe, and reliable service each day to over 12 million electric and natural gas customers and end-users around the world.

With $3 billion in proceeds from the deal, Dominion Energy Inc (NYSE: D) will buy back shares in the company. Over 7 million customers in 20 states energize their homes and businesses with electricity or natural gas from Dominion Energy (NYSE: D). And the company is known for providing sustainable, reliable, affordable, and safe energy and is one of the nation’s largest producers and transporters of energy with over $100 billion of assets providing electric generation, transmission, and distribution as well as natural gas storage, transmission, distribution, and import/export services. Dominion is committed to achieving net-zero carbon dioxide and methane emissions from its power generation and gas infrastructure operations by 2050.

As part of the deal, Berkshire Hathaway Energy will acquire 100% of Dominion Energy Transmission, Questar Pipeline, and Carolina Gas Transmission along with 50% of Iroquois Gas Transmission System. This agreement does not include the acquisition of the Atlantic Coast Pipeline.

And the company will acquire 25% of Cove Point LNG – an LNG export, import, and storage facility in Maryland. Dominion Energy is going to continue to own 50% of Cove Point with Brookfield Asset Management continuing to own the remaining 25% share. And Berkshire Hathaway Energy will operate the Cove Point facility once the transaction closes. It’s worth mentioning that the Cove Point export terminal is one of only six LNG export facilities in the U.S.

This transaction is subject to regulatory approvals and is expected to close in the fourth quarter of 2020.

Key Quotes:

“Dominion Energy’s best-in-class gas transmission and storage business has been a major component of our success since we merged with Consolidated Natural Gas in 2000. Our talented employees maintain industry-leading operating, safety, and environmental standards to provide our customers with reliable, affordable, and safe service. They will be joining Berkshire Hathaway Energy, an excellent corporate citizen whose leadership and employees share our commitment to values-based service, safety, reliability, and community engagement.”

– Thomas F. Farrell, II, Dominion Energy chairman, president and CEO

“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.”

– Warren Buffett, chairman of Berkshire Hathaway

“This premier natural gas transmission and storage business has been operated and managed in a best-in-class manner. Acquiring this portfolio of natural gas assets considerably expands our company’s footprint in several Eastern and Western states as well as globally, increasing the market reach and diversity of Berkshire Hathaway Energy.”

– Bill Fehrman, Berkshire Hathaway Energy’s president and CEO

“We are honored to be gaining a wonderful group of employees with a wealth of experience that will continue to provide high-quality service for our customers and partners. We look forward to welcoming them to the team. We are fortunate Dominion Energy has entrusted us to preserve and build upon such a remarkable business that will allow Berkshire Hathaway Energy to add $9.7 billion in asset value to the portfolio that currently exceeds $100 billion.”

– Greg Abel, Berkshire Hathaway’s vice chairman, non-insurance operations, and Berkshire Hathaway Energy chairman