Berkshire Hathaway Increases Stake to 75% of Cove Point LNG, Buys Out Dominion Energy

Berkshire Hathaway Energy (BRK.A) (BRK.B) announced on Monday it had it agreed to acquire Dominion Energy’s (D) 50% stake in the Cove Point LNG plant in Maryland in a deal valued at $3.3 Billion. Berkshire Hathaway Energy (BRK.A) (BRK.B) currently operates the facility and owns a 25% limited partner interest in Cove Point LNG, will own a 75% stake after the deal closes, with Brookfield Infrastructure Partners (BIP) holding the remaining 25% interest.

Cove Point LNG

Robert Blue, Dominion’s chief executive, in a statement said Dominion considers Cove Point a “non-core” business, and selling it would free the Richmond, Virginia-based company to focus on state-regulated utility operations.

The company said it expects to use total after-tax proceeds of ~$3.3B to repay debt including the existing $2.3B term loan secured by its non-controlling interest in Cove Point.

“Further, this sale gives us the opportunity to reduce variable rate debt consistent with our goal of strengthening our balance sheet,” Blue added.

Stock Market Reaction

  • Dominion Energy Inc NYSE: D $51.285 -$0.955 (1.83%)
  • Berkshire Hathaway Inc. – Class B NYSE: BRK.B $341.76 +$0.86 (0.25%)
  • Berkshire Hathaway Inc. – Class A NYSE: BRK.A $520,432.00 -$1,188 (0.23%)
  • As of July 11, 2023 • 10:40 AM ET

Dominion had sold Berkshire Hathaway Energy a 25% operating stake in Cove Point in 2020, as part of an $8 billion deal to sell the majority of Dominion’s gas transmission and storage assets to Berkshire. Dominion abandoned its plans to build a controversial 600-mile, $8 billion-plus natural gas pipeline at the time.

The deal will give Berkshire control of one of just seven facilities currently operating in the U.S. that can export liquefied natural gas.

Cove Point is located in Lusby, Maryland, about 60 miles (97 km) southeast of Washington, D.C.

Berkshire Hathaway Energy said the facility has a storage capacity of 14.6 billion cubic feet, and provides liquefied natural gas to supplant coal-burning power plants and support energy needs in 28 countries.

McGuireWoods LLP provided legal counsel to Dominion, and the company’s financial advisers on the transaction were Mizuho Securities and RBC Capital Markets. The sale is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Act and a filing with the U.S. Department of Energy.

About Dominion

Employing more than 16,000 workers across 16 states, Dominion has about 7 million customers nationwide, including 2.4 million Virginians. Dominion reported $3.5 billion in operating earnings for 2022, up from $3.2 billion in 2021.

Source: Dominion Energy

From The TradersCommunity News Desk