8-KAcquisitions & DispositionsExhibits & Filings

DOMINION ENERGY, INC 8-K Report, Acquisition Completed (Jul 9, 2007)

Filed July 9, 2007For Securities:D

Summary

Dominion Resources, Inc. (now Dominion Energy) filed an 8-K on July 9, 2007, to report the completion of significant asset dispositions. The company completed the sale of substantially all of its offshore oil and natural gas exploration and production (E&P) operations to Eni Petroleum Co. Inc. for approximately $4.73 billion on July 2, 2007. This transaction is part of a larger strategy announced in November 2006 to divest most of its E&P assets, excluding those in the Appalachian Basin. In addition to the offshore sale, Dominion has either completed or entered into agreements to sell other E&P operations in various basins, including Canadian, Alabama, Michigan, Permian, Gulf Coast, Rockies, South Louisiana, San Juan, and Mid-Continent. The company anticipates using the after-tax proceeds to reduce outstanding debt by $3.2 billion to $3.5 billion and to repurchase shares of its common stock. The filing also includes pro forma financial statements reflecting the impact of these dispositions on the company's financial position and results of operations.

Key Highlights

  • 1Dominion completed the sale of substantially all of its offshore oil and gas E&P operations to Eni Petroleum for approximately $4.73 billion on July 2, 2007.
  • 2This offshore sale is part of a broader divestiture strategy of non-Appalachian E&P assets, which began in November 2006.
  • 3Several other E&P asset sales have been completed or are under agreement, totaling billions in expected proceeds.
  • 4The company plans to use the net proceeds from these dispositions primarily to reduce debt by $3.2 billion to $3.5 billion.
  • 5Remaining proceeds will be used for repurchasing shares of Dominion's common stock.
  • 6Pro forma financial statements are provided to illustrate the impact of these dispositions on the company's balance sheet and income statements as of March 31, 2007, and for the periods ended March 31, 2007, and December 31, 2006.
  • 7The company anticipates a pre-tax gain of approximately $4.0 billion to $4.5 billion from the disposition of non-Appalachian E&P operations.

Frequently Asked Questions

Dominion Energy is selling substantially all of its oil and natural gas exploration and production (E&P) operations and assets, with the exception of those located in the Appalachian Basin. This includes offshore Gulf of Mexico operations, Canadian operations, and operations in various onshore basins such as Alabama, Michigan, Permian, Gulf Coast, Rockies, South Louisiana, San Juan, and Mid-Continent.

The company has completed or entered into agreements for the sale of these E&P operations, generating significant proceeds. For instance, the sale to Eni Petroleum was for approximately $4.73 billion. The total expected proceeds from all planned dispositions are substantial, enabling significant debt reduction and share repurchases.

Dominion plans to use the after-tax proceeds from these dispositions primarily to reduce its outstanding debt by an estimated $3.2 billion to $3.5 billion. Any remaining net proceeds will be used for repurchasing shares of its common stock.

The pro forma financial statements illustrate that the dispositions significantly reduce the company's assets (particularly property, plant, and equipment related to E&P) and liabilities (through debt reduction). The income statements show a reduction in operating revenue and expenses associated with the divested E&P segment, resulting in a lower, but presumably more focused, income from continuing operations. The company expects to recognize a substantial pre-tax gain on these sales.