Consideration for the $1.725B deal included $823M in cash to Dominion Resources (NYSE:D), $167M of common units, and $300M of convertible preferred units. Dominion Midstream (NYSE:DM) also assumed Questar Pipeline's $435M in debt.
The deal is expected to be immediately accretive to DM's distributable cash flow per unit.
Dominion will use the cash and other money from related financing activities to pay down $1.2B of debt at the parent level.
Dominion Midstream (NYSE:DM) agrees to acquire Questar Pipeline from Dominion Resources (NYSE:D) for ~$1.725B, including debt.
DM says the dropdown deal will more than double its existing adjusted EBITDA, be immediately accretive to distributable cash flow, and support its plan to grow distributions to unitholders at a 22% compounded annual growth rate.
Questar Pipeline owns and operates FERC-regulated natural gas transmission and storage assets in Colorado, Utah and Wyoming.
To help fund the deal, DM launches a 12M-unit public offering, with an underwriters option to purchase up to an additional 1.8M common units.
Nuclear power will come to an end in the U.S. if the industry fails to obtain more government support, Carlyle Group predicts.
U.S. nuclear reactors need more subsidies to keep running, such as a federal carbon tax that would reward them for their zero-emissions power, according to Bob Mancini, co-head of Carlyle's power unit.
Mancini points to measures approved in New York as an example of the kind of help nuclear power plant owners will need to survive; in August, NY state regulators cleared ~$500M/year in subsidies as part of a clean energy plan to reduce greenhouse gas emissions.
The amount of electricity generated by U.S. nuclear reactors hit its lowest seasonal level since 2006, held down by malfunctions and closures tied to Hurricane Matthew as well as routine maintenance.
The outages mean natural gas use by generators likely will rise as grid operators rush to replace lost supplies at a time of unseasonably warm temperatures, which could boost power prices.
Among the plants shuttered was Dominion's (NYSE:D) Surry 2 nuclear power plant in Virginia, which closed due to a system error, and NextEra Energy's (NYSE:NEE) St. Lucie 2 reactor in Florida, which went offline as a safety measure ahead of the hurricane.
The closures come as 23 nuclear units, accounting for ~23% of total U.S. capacity, are scheduled to close to replace spent fuel rods in the three months through November.
Utilities shares (NYSEARCA:XLU) fell today for the ninth straight session, marking their longest losing streak since 2002 and deepening the recent slide in income producing investments as investors warily watch central banks and interest rates.
The S&P Utilities sector has dropped 7.5% in the nine days, including a 0.3% fall today, trimming its YTD gain to 8.9%; during the period, AES -10%, EXC -8.8%, PPL -8.8%, PCG -8.2%, ED -8%, EIX -7.6%, SO -7.4%, NEE -7.4%, SRE -7.1%, AEP -6.8%, D -6.7%, DUK -6.5%.
“Trees don’t grow to the sky,” says Fred Alger's Management's Brad Neuman, “It was almost like the market was waiting for an excuse” to send high-yielding stocks back toward their historical valuations, adding that such stocks could have further to fall.
Even after the recent decline in share prices, utilities had a 12-month trailing P/E ratio of 21.4 as of Tuesday, vs. 19.8 for the S&P; at the beginning of the year, utilities had a lower ratio than the broader market.
Duke Energy (NYSE:DUK) confirms it will sell some if its ownership stake in the Atlantic Coast Pipeline to Dominion Resources (NYSE:D) on Monday, when it closes its $4.9B acquisition of Piedmont Natural Resources.
The proposed deal cleared its final hurdle yesterday when the North Carolina Utilities Commission approved the transaction.
DUK has owned 40% of the proposed 600-mile pipeline, but under the deal that formed the joint venture in 2014, Dominion must be the largest owner; the original ownership breakdown was D with 45%, DUK with 40%, PNY at 10% and AGL Resources, which has since been bought by Southern Co., with 5%.
Dominion says it will follow through with a previously announced plan to purchase a 3% stake from DUK, which will then give it 48% of the project and DUK 47%.
Dominion Resources (D -0.4%) is maintained with an Outperform rating but with an $84 price target, raised from $80, and improved 2019 and 2020 earnings estimates at Barclays, reflecting an updated projected in-service date for the Atlantic Coast Pipeline.
Dominion now expects the pipeline to begin commercial operation in Q4 2019, a year later than original guidance, after ACP was forced to devise an alternate route to satisfy government concerns raised by the U.S. Forest Service, adding to an already an extensive FERC review process.
The company has said it expects construction to begin in Q3 2017, which Barclays believes still is overly optimistic and says it always had anticipated a delay at least to mid-2019.
The firm notes Dominion has indicated that it might increase the dividend growth rate to more than 8%/year starting in 2018.
The Atlantic Coast Pipeline joint venture says it signed a contract with Spring Ridge Constructors - comprised of Quanta Services (NYSE:PWR), Primoris Services (NASDAQ:PRIM) and others - as the lead construction contractor for the proposed $4.5B-$5B natural gas pipeline project.
Atlantic Coast Pipeline expects to receive a FERC certificate in late summer or fall 2017, with construction beginning shortly thereafter, and anticipates completing construction and bringing the pipeline into service in late 2019.
The pipeline is composed of Dominion (NYSE:D), Duke Energy (NYSE:DUK), Piedmont Natural Gas (NYSE:PNY) and Southern Co. (NYSE:SO)
Dominion Resources (D +0.5%) and Questar (STR +0.1%) say the Wyoming Public Service Commission has approved their merger, clearing the way to complete their combination by the close of business Friday.
The merger would create one of the largest U.S. integrated energy companies, serving 2.5M electric utility customers and 2.3M gas utility customers in seven states, and operate 14.4K miles of natural gas transmission, gathering and storage pipelines, one of the largest U.S. natural gas storage systems, and ~25.7K MW of electric generation.
Separately, Ohio's Public Utilities Commission vote to authorize Dominion to continue its Pipeline Infrastructure Replacement program and recover associated costs for another five-year period through 2021.
Dominion's (D +0.2%) natural gas and interstate transmission subsidiaries have locked out more than 900 employees in six states over what the company says is the union’s refusal to have its members vote on a tentative four-year contract.
The company says the lockout is effective for United Gas Workers Union Local 69 members working at Dominion Hope and Dominion Transmission in Ohio, Maryland, New York, Pennsylvania, Virginia and West Virginia.
The old contract expired in April, and the union overwhelmingly rejected Dominion's previous offer.
Dominion Resources (NYSE:D) -0.6% AH after announcing a public offering of 25M common units, with an underwriters option to purchase up to an additional 3M units.
Each unit will be worth $50 and will consist of a contract to purchase common stock in the future and two 1/40 undivided beneficial ownership interests in remarketable subordinated notes each worth $1,000.
Dominion says it plans to use the proceeds for general corporate purposes, including funding part of its merger with Questar (NYSE:STR).
Dominion Resources (D -0.4%) is downgraded to Equal Weight from Overweight with a $79 price target, trimmed from $82, at Morgan Stanley, which says shares are fairly valued on a more balanced risk/reward outlook.
Stanley says the primary drivers its downgrade are anticipated lower sales growth at the VEPCO regulated utility in light of recent data points, and lower commodity prices impacting profitability at the Millstone nuclear plant.
The firm adds that Dominion and Dominion Midstream Partners (DM +1.5%) are well positioned to benefit in the longer term from secular demand growth for Appalachian gas production, driven by favorable positioning in the Marcellus/Utica region.