Dominion Energy to sell 50% stake in Cove Point LNG to Berkshire Hathaway Energy

Dominion Energy has finalized an agreement to sell its 50% non-controlling limited partner interest in Cove Point LNG, LP to Berkshire Hathaway Energy (BHE) in a deal valued at $3.5 billion.

The Cove Point LNG terminal, located in Lusby, Maryland, is an LNG export facility in the continental United States and the first of its kind on the East Coast.

It boasts a substantial storage capacity of 14.6 billion cubic feet (BCF), with a daily dispatch capacity of 1.8 BCF. The terminal is directly linked to several prominent Mid-Atlantic gas transmission systems, including the Transcontinental Gas Pipeline, Columbia Gas Transmission, and Eastern Gas Transmission and Storage, via its dedicated pipeline.

Berkshire Hathaway Energy already operates the facility and possesses a 100% general partner and 25% limited partner interest. Pending necessary regulatory consents, the acquired interest will be placed under the management of BHE GT&S, LLC, a subsidiary of Berkshire Hathaway Energy.

Berkshire Hathaway Energy to acquires additional 50% stake in Cove Point LNG from Dominion Energy. Photo courtesy of Berkshire Hathaway Energy.

BHE GT&S is an interstate natural gas transmission and storage company based in Richmond, Virginia. The company operates 5,400 miles of transmission pipeline in the eastern US and provides LNG solutions via Cove Point LNG, Pivotal LNG, and other LNG processing and storage ventures.

Paul Ruppert — BHE GT&S president said: “We are proud of our operations at Cove Point and are excited for this opportunity to increase our ownership in these world-class facilities. The Cove Point team will continue to focus on providing safe, affordable and reliable service to its valued customers.”

The deal includes both transaction proceeds of $3.3 billion and an expected $0.2 billion from the termination of related interest rate derivatives. This figure amounts to approximately 10.8x the estimated 2025 EBITDA of $325 million for Dominion Energy’s 50% non-controlling interest in Cove Point.

Dominion Energy anticipates after-tax proceeds of around $3.3 billion from the transaction, which will be used to repay existing debt, including a $2.3 billion term loan secured by its noncontrolling interest in Cove Point. It estimates that the transaction will increase the company’s consolidated Funds From Operations (FFO) to debt ratio by roughly 0.7%.

As part of repaying the term loan, the company plans to unwind its related “floating-to-fixed” interest rate derivative, projected to result in proceeds to the company of around $200 million.

Robert M. Blue — Dominion Energy chair, president, and CEO said: “Since 2002, Cove Point has been an excellent service provider to its international and domestic customers – linking global gas supplies with American customers, and American gas supplies with customers around the world.

“However, this investment is non-core to Dominion Energy as we focus on our state-regulated utility operations.  The sale demonstrates our commitment to the company’s credit profile and represents an attractive exit from what has been an excellent investment for our shareholders.”

The sale is subject to typical closing conditions, including clearance under the Hart-Scott-Rodino Act and a filing with the U.S. Department of Energy.