trending Market Intelligence /marketintelligence/en/news-insights/trending/IILYtQXnyzbldugw3YA_ZA2 content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Dominion sale of 25% stake in LNG plant for $2B furthers plans to trim debt

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August

Dominion sale of 25% stake in LNG plant for $2B furthers plans to trim debt

A planned divestiture of a $2 billion stake in Dominion Energy Inc.'s Cove Point LNG terminal is a significant step toward drawing down Dominion's relatively high parent-level debt, analysts said.

The deal announced Oct. 21 calls for Dominion to sell a 25% noncontrolling equity stake in its Cove Point LNG export and import facility in Maryland to Brookfield Asset Management Inc. affiliate Brookfield Super-Core Infrastructure Partners LP. The agreement represented an implied enterprise value of $8.22 billion, excluding working capital, Dominion said in a news release.

"Management said the proceeds will reduce the equity financing required for regulated utility investments/renewables, so in theory this keeps equity investors happy while removing the overhang of a larger equity offering," CreditSights analysts said in an Oct. 21 note. They viewed the deal as positive.

The deal did not appear to affect Dominion's stock price, with share prices relatively flat in afternoon trading Oct. 21 and closing at $82.42, an increase of less than 1%.

Dominion said the transaction is expected to close by the end of the year. The company described it as part of an effort to "establish a permanent capital structure for Cove Point."

"The agreement highlights the compelling intrinsic value of Cove Point and allows us to efficiently redeploy capital toward our robust regulated growth capital programs," Thomas Farrell II, Dominion's chairman, president and CEO, said in a statement.

The company completed the $4.1 billion project to add the export function to the Cove Point LNG receiving terminal in 2018. It shipped the first LNG cargo from the facility in March of that year before entering commercial service a month later.

The sale of the equity stake to Brookfield followed other recent steps by Dominion to reduce its holding company debt and boost its near-term credit profile. The electricity and natural gas provider's holding company debt stood at about 31% Dominion's debt as of the second quarter, CreditSights said. Previous steps by Dominion included securing a $3 billion nonamortizing term loan for Cove Point in September 2018 and selling $2.5 billion in assets in 2018, which was the combined total of the company's divestment in Blue Racer Midstream LLC and its unloading of ownership in three merchant generation facilities.

But the latest deal also comes at a time when Dominion continues to face the potential for the cancellation of its costly Atlantic Coast gas pipeline project, which the analysts cautioned could hit Dominion's balance sheet if it happens. Project costs have been high, and the pipeline has faced intense opposition from environmental groups, with challenges during reviews by government agencies and in the courts.

If the pipeline project were canceled, Dominion would be on the hook for its 48% share of a $1.7 billion construction loan for the 600-mile, 1.5-Bcf/d pipeline project, which spans West Virginia, Virginia and North Carolina, CreditSights said. Analysts said that works out to about $820 million.

The pipeline developer saw a positive development earlier this month when the U.S. Supreme Court agreed to hear a case over whether an appeals court was right to block authorizations that would allow the pipeline to cross a national forest and underneath the Appalachian Trail. The Supreme Court is expected to hear the case early in 2020 and issue a ruling by July 2020.