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Dominion Energy sells 25% interest in Cove Point LNG

Published by , Senior Editor
Tanks and Terminals,

Dominion Energy Inc. has entered into an agreement with Brookfield Super-Core Infrastructure Partners, an infrastructure fund managed by Brookfield Asset Management Inc. (Brookfield), in which the company will transfer a 25% non-controlling equity interest in Cove Point to Brookfield in exchange for cash consideration of just over US$2 billion, excluding working capital.

The announcement is part of Dominion Energy's previously communicated intention to establish a permanent capital structure for Cove Point.

Thomas F. Farrell, II, Chairman, President and CEO, said: "The agreement highlights the compelling intrinsic value of Cove Point and allows us to efficiently redeploy capital toward our robust regulated growth capital programmes. We are very excited to have a highly respected infrastructure investor such as Brookfield as our partner in this world-class facility."

Dominion Energy Cove Point LNG LP (Cove Point) owns an LNG import, export and storage facility located on the western shore of the Chesapeake Bay in Lusby, Maryland., including a 136 mile pipeline that interconnects the facility with the interstate pipeline system. These assets provide liquefaction, gasification, transportation, storage and peaking gas supply services to customers in the US, India and Japan. In 2018, the company completed a US$4.1 billion expansion to enable natural gas exports.

The transaction represents an implied enterprise value of US$8.22 billion, excluding working capital, and is supportive of the company's existing operating earnings per share and earnings growth guidance. Proceeds are expected to be used for general corporate purposes including significantly reducing the annual common equity financing described at the company's investor day in March 2019.

Upon transaction close, expected by the end of 2019, Dominion Energy will retain full operational control of the facility and its services, and existing customers and employees will be unaffected by this recapitalisation agreement.

J.P. Morgan is acting in the role of financial adviser to Dominion Energy.

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