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Dominion Energy announces equity recapitalisation of Cove Point

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LNG Industry,

Dominion Energy, Inc. has entered into an agreement with Brookfield Super-Core Infrastructure Partners, in which the company will transfer a 25% non-controlling equity interest in Cove Point to Brookfield in exchange for cash consideration of just over US$2 billion, excluding working capital.

This comes as part of Dominion Energy’s previously communicated intention to establish a permanent capital structure for Cove Point. Brookfield Super-Core Infrastructure Partners is an infrastructure fund managed by Brookfield Asset Management Inc. (Brookfield).

Thomas F. Farrell, II, Chairman, President and Chief Executive Officer, said: “The agreement highlights the compelling intrinsic value of Cove Point and allows us to efficiently redeploy capital toward our robust regulated growth capital programs. We are very excited to have a highly respected infrastructure investor such as Brookfield as our partner in this world-class facility.”

Dominion Energy Cove Point LNG, LP (Cove Point) owns an LNG import, export and storage facility located on the western shore of the Chesapeake Bay in Lusby, Maryland, including a 136-mile pipeline that interconnects the facility with the interstate pipeline system. These assets provide liquefaction, gasification, transportation, storage and peaking gas supply services to customers in the US, India and Japan. Last year, the company completed a US$4.1 billion expansion to enable natural gas exports.

According to the statement, the transaction represents an implied enterprise value of US$8.22 billion, excluding working capital, and is supportive of the company’s existing operating earnings per share and earnings growth guidance. It is expected that proceeds will be used for general corporate purposes, including significantly reducing the annual common equity financing described at the company’s investor day in March 2019.

Upon transaction close, which is expected by the end of this year, Dominion Energy claims that it will retain full operational control of the facility and its services, with existing customers and employees unaffected by the recapitalisation agreement.

According to the statement, J.P. Morgan is acting as financial adviser to Dominion Energy, while McGuireWoods LLP served as legal counsel to Dominion Energy and Kirkland & Ellis LLP served as legal counsel to Brookfield.

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