Summary
Dominion Energy, Inc. (D) announced significant strategic divestitures of its exploration and production (E&P) assets on June 1, 2007. The company is selling its E&P operations in the Alabama, Michigan, and Permian basins to L O & G Acquisition Corp., a subsidiary of Loews Corporation, for approximately $4.025 billion. Concurrently, Dominion is selling its E&P operations in the Gulf Coast, Rockies, South Louisiana, and San Juan basin to XTO Energy Inc. for approximately $2.5 billion. These divestitures are part of a broader plan to exit substantially all of its offshore and Canadian E&P operations, with prior announcements of sales to Eni Petroleum Co. Inc. and Paramount Energy Trust/Baytex Energy Trust. The net proceeds from these sales are earmarked for debt reduction, including at its Consolidated Natural Gas Company subsidiary, and for share repurchases. The transactions are expected to close in August 2007.
Key Highlights
- 1Divestiture of E&P assets in Alabama, Michigan, and Permian basins for approximately $4.025 billion to L O & G Acquisition Corp.
- 2Divestiture of E&P assets in Gulf Coast, Rockies, South Louisiana, and San Juan basins for approximately $2.5 billion to XTO Energy Inc.
- 3Transactions are part of a larger strategy to exit substantially all offshore and Canadian E&P operations.
- 4Total announced sale proceeds (including previous deals) approach $7.8 billion ($4.025B + $2.5B + $4.76B + $0.583B minus overlaps or pending confirmation).
- 5Net proceeds will be used to reduce debt and repurchase common stock.
- 6The June 1 dispositions are expected to result in initial pre-tax charges of approximately $311 million in Q2 2007, largely due to hedge accounting adjustments and termination of volumetric production payment agreements.
- 7The transactions are subject to customary closing conditions and are expected to close in August 2007.