Dive Brief:
- Dominion Energy announced Thursday it had found a buyer for the end of its Blue Racer Midstream joint venture, and will sell its 50% interest to private equity firm First Reserve for up to $1.5 billion.
- Dominion revealed over the summer that it was looking to sell its non-core assets in order to raise $8 billion by 2020, as part of a balance sheet improvement effort.
- As part of its third-quarter earnings announcement, Dominion also gave an update on the Atlantic Coast Pipeline and its Supply Header project. The utility said that stop-work orders from the Federal Energy Regulatory Commission (FERC) and subsequent delays in construction raised cost estimates from a range of $6 billion to $6.5 billion, to an estimated $6.5 billion to $7 billion, excluding financing costs.
Dive Insight:
Dominion's efforts to improve its balance sheet received no help from FERC: delays on the Atlantic Coast Pipeline may have cost the utility $500 million. But after months of signaling it was considering a sale, the company found a buyer for Blue Racer.
The purchase price includes $1.2 billion of cash consideration and up to $300 million in earn-out payments. Dominion said they would be payable from 2019 through 2021,"based on Blue Racer Midstream's performance."
Blue Racer is a joint venture between Dominion and Caiman Energy II, focused on gas operations in the Utica and Marcellus shales. But Dominion said the JV no longer fit into its vision.
"This investment has become non-core to Dominion Energy as we continue to focus on regulated energy infrastructure," Dominion Chairman, President and CEO Thomas Farrell II said in a statement. He called the sale of Blue Racer "opportunistic based on a compelling valuation and transaction structure."
The utility company reported third-quarter earnings of $854 million, compared with $665 million for the same period in 2017.
As for Dominion's natural gas projects, the company says it is pursuing a phased in-service approach to the Atlantic Coast Pipeline, with a late 2019 in-service for key segments of the project "to meet peak winter demand in critically constrained regions." The related Supply Header project target in-service remains late 2019.
The pipeline is designed to deliver gas from West Virginia production to demand centers in Virginia and North Carolina. Duke Energy and Southern Co. are both part owners.
