The leaders of Dominion Energy Inc. have signed a deal to sell the company’s natural gas distribution business for $9.4 billion to Enbridge Inc., building on their recent $3.3 billion divestiture of Dominion’s stake in a liquefied natural gas venture.
Calgary-headquartered Enbridge also will take on $4.6 billion in debt linked to The East Ohio Gas Co., Questar Gas Co. and Public Service Co. of North Carolina Inc., the purchase of which will make Enbridge the largest gas utility in North America. Combined, the Dominion subsidiaries about to change hands have about 3 million customers in Ohio, North Carolina, Utah, Idaho and Wyoming. In 2022, they generated net profits of $697 million on revenues of more than $3.3 billion.
The all-cash deal is expected to close next year and needs various regulatory approvals.
“These businesses and employees have been an integral part of the Dominion Energy team which is why we approached this decision with careful and deliberate consideration,” Dominion Chairman, President and CEO Bob Blue said in a statement. “As one of the largest and most experienced operators of energy infrastructure assets in North America, Enbridge will be an outstanding steward of these businesses to the benefit of employees, customers, and communities alike.”
The planned sale will further focus Dominion on its regulated electric utilities and is the biggest transaction yet to flow from the broad business review Blue and his team launched last year, when they acknowledged that the Richmond-based company was “not performing as our investors expect.” The Dominion team recently wrapped up the sale of its 50% stake in Cove Point LNG to a unit of Berkshire Hathaway Energy and will use both the expected $8.7 billion in after-tax Enbridge proceeds and the $3.3 billion from Berkshire to pay down the company’s debts.
Enbridge executives expect the natural gas utilities to add about $2 billion to the company’s roughly $16 billion of adjusted EBITDA in 2025, the first full year they will be under the Enbridge umbrella. The three companies operate a combined 78,000 miles of distribution, transmission, gathering and storage pipelines as well as storage facilities with more than 62 Bcf of capacity.
Dominion shares (Ticker: D) were down nearly 2% to roughly $46 Sept. 6. Over the past six months, they have given up nearly 20% of their value, trimming the company’s market capitalization to about $38 billion.
