Yahoo Finance Dominion Resources (D) to Buy Carolina Gas Transmission - Analyst Blog
Dominion Resources, Inc. (D) has inked an agreement to acquire Carolina Gas Transmission Corp. (CGT) from SCANA Corp. (SCG). Upon customary approvals, the acquisition will likely be concluded in Jan 2015. Estimated value of the transaction is pegged at around $492.9 million.
Dominion Resources will utilize a combination of cash on hand and funds under the commercial paper program to finance the transaction.
Upon approvals from the boards of Dominion Resources and Dominion Midstream Partners, LP (DM), the company will integrate the acquired entity with Dominion Midstream Partners.
Cayce, SC-based CGT, a regulated subsidiary of SCANA Corporation, is an interstate natural gas transportation firm. It owns 1,500 miles of natural gas pipeline and operates in South Carolina and southeastern Georgia. The company provides natural gas to both wholesale and direct industrial customers.
The latest transaction would be accretive immediately upon closure and will impact Dominion Midstream’s distributed cash flow positively.
CGT’s well-positioned asset-base and lined up projects, including the Columbia to Eastover pipeline and the Edgemoor compressor station, will help Dominion Resources and Dominion Midstream Partners to expand their scale of operations. The company’s three under-development projects will increase the total system capacity to around 820 millions of cubic feet per day (MMcf/day) from the present capacity of about 700 MMcf/day.
According to a U.S. Energy Information Administration report published in Dec 2014, proved reserves for natural gas in the U.S. at the end of at Dec 31, 2013 had stood at 354 trillion cubic feet, up 9.7% year over year. The increase was driven by higher discoveries primarily from shale gas developments.
The latest transaction is expected to drive Dominion Resources’ future growth. Going forward, demand for midstream services will also rise as exploration and production companies deploy more resources to unlock the reserves. The company’s cash inflow will benefit as a result of more contracts.
Dominion Resources continues to invest substantially in expanding its assets under the natural gas operations. In Oct 2014, the company commenced construction activities for the Cove Point Liquefied Natural Gas Export project worth $3.4–$3.8 billion.
As of Sep 30, 2014, Dominion Resources had cash and cash equivalents of around $0.22 billion and an available credit facility of $1.84 billion. A stable liquidity profile supports the company’s systematic capital spending program.
Dominion Resources currently has a Zacks Rank #3 (Hold). A better-ranked stock in the sector is PG&E Corp. (PCG), carrying a Zacks Rank #1 (Strong Buy).
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DOMINION RES VA (D): Free Stock Analysis Report
SCANA CORP (SCG): Free Stock Analysis Report
PG&E CORP (PCG): Free Stock Analysis Report
DOMINION MIDSTR (DM): Free Stock Analysis Report
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