LNG

Dominion Energy, the US company that started the Cove Point LNG export plant in Maryland and now focused on renewables, has closed the sale for around US$6.6 billion of the Ohio natural gas utility, East Ohio Gas Co, to Canadian pipelines and energy company Enbridge Inc.

Occidental Petroleum, the Houston-based company with US oil and gas assets and Warren Buffett as a main shareholder as well as owning oil and natural gas stakes in Algeria, Oman and the United Arab Emirates, has agreed to buy US Permian Basin-focused energy producer CrownRock in a cash and stock deal valued at $12 billion including debt.

Enbridge Inc, the Canadian-based pipeline and energy company, has agreed to acquire three natural gas businesses from US utility and renewables-focused Dominion Energy in transactions valued at US$14 billion (C$19Bln) to create the largest North American gas utility franchise.

The Berkshire Hathaway Energy group of US investor Warren Buffett has acquired the 50 percent of the Cove Point LNG plant in Maryland it didn’t already own for $3.3 billion from US utility Dominion Energy.

Dominion had a 50 percent non-controlling limited partner interest in Cove Point LNG and this is now owned by Berkshire Hathaway Energy, which already operates the facility.

Berkshire Hathaway Energy confirmed the acquisition for $3.3Bln and said it would now own a 75 percent limited partnership stake in Cove Point LNG LP.

It added that a subsidiary of Brookfield Infrastructure Partners, the Canadian equity fund, owns the remaining 25 percent limited partnership interest in the Cove Point business.

Berkshire Hathaway Energy holds the Cove Point stake in the BHE Gas Transmission and Storage (BHE GT&S) unit, an interstate natural gas transmission and storage company headquartered in Richmond, Virginia and with operations in 10 states.

Dominion valuation

Dominion said its own total transaction value was in fact $3.5Bln inclusive of transaction proceeds of $3.3Bln and expected proceeds from the termination of related interest rate derivatives of $200 million.

“Since 2002, Cove Point has been an excellent service provider to its international and domestic customers - linking global gas supplies with American customers, and American gas supplies with customers around the world,” said Robert M. Blue, Dominion President and Chief Executive.

“However, this investment is non-core to Dominion Energy as we focus on our state-regulated utility operations,” CEO Blue added.

“The sale demonstrates our commitment to the company's credit profile and represents an attractive exit from what has been an excellent investment for our shareholders,” Blue stated.

Cove Point produces around 5.2 million tonnes per annum from a single Train and has tolling agreements with Gas Authority of India and Sumitomo Corp. and Tokyo Gas of Japan.

Earlier deal

Buffett's company agreed to acquire its initial Cove Point stake in July 2020. That deal between Dominion and Berkshire Hathaway was valued at $9.7Bln and included gas transmission and gas storage assets as well as the Cove Point stake. It also gave the Buffett company operatorship of the LNG export plant.

Buffett's company said at the time it was acquiring the Cove Point plant as it was one of only a limited number of such LNG export facilities in the US.

When agreeing to buy the Cove Point stake in July 2020 Buffett was also concluding his first big acquisition since 2015 and it happened to be in the natural gas and LNG business.

Buffett's BHE GT&S currently operates around 5,500 miles of transmission lines in the eastern US and 756 billion cubic feet of total natural gas storage, with 420 Bcf of working gas capacity. 

BHE GT&S also provides LNG solutions through another of its units called Pivotal LNG and other processing and storage ventures.

A US company backed by Japanese utility and LNG importer Tokyo Gas is in talks with US natural gas producer Rockcliff Energy as a possible buyer of the company from private equity firm Quantum Energy Partners for around $4.5 billion.

The transaction, which is being talked about by US investment bankers, would be another move by a Japanese company to secure natural gas assets.

This follows renewed concerns in Japan about its future energy resources since the Russian invasion of Ukraine and has led Japan’s state banking and energy agencies to support new moves by companies to expand the nation’s foreign resources base.

Tokyo Gas Natural Resources, based in Houston, Texas, is 70 percent owned by Tokyo Gas and with the balance held by Castleton Commodities International (CCI).

Tokyo Gas started acquiring its stake in CCI in May 2017 because of its natural gas assets in Louisiana and Texas, including the Haynesville shale play.

The Haynesville shale lies under parts of three southern states, including East Texas, northwest Louisiana and southwest Arkansas.

Previous deals

CCI had also previously purchased the Carthage upstream and midstream assets in East Texas from subsidiaries of the former Anadarko Petroleum Corp. for over $1 billion.

CCI subsequently combined the acquired assets with the company's existing East Texas upstream assets.

Tokyo Gas currently has volume and tolling agreements with the Cameron LNG plant in Louisiana and the Cove Point project in Maryland and is said to be considering other deals with US export projects under development in Texas and Louisiana.

Japan's Economy, Trade and Industry Minister (METI) recently oversaw deals by Japanese companies, including JERA Co Inc., the largest LNG importer, to secure future LNG supplies from Oman.

Japan had been so keen to secure enough LNG supplies during the Northern Hemisphere winter season that it asked state-run banking agencies to financially back utilities and trading companies to buy spot cargoes even at elevated prices.

The Japan Bank for International Cooperation and another state body, JOGMEC, which recently changed its name to the Japan Organization for Metals and Energy Security, have also increased their backing for energy asset transactions and are encouraging Japan's banking sector to do the same..

Warren Buffett, one of America’s most followed investors, has taken his stake in Occidental Petroleum to more than 19 percent, in a varied portfolio of energy shares and stakes acquired by the man known as the “Oracle of Omaha”.

Gas Authority of India (GAIL), the nation’s main natural gas pipeline operator and a leading LNG importer with US volumes from Cove Point in Maryland and also contracted from Russia’s Gazprom, reported record results and aimed to tie-up more gas supplies under contract to cover growing demand.

Blackstone Inc., a private equity fund based in New York, has purchased a 49 percent stake in the US Elba Island LNG export plant in Georgia where Shell is the only customers.

Dominion Energy, a shareholder in the Cove Point LNG export plant in Maryland supplying Asia and Europe, has closed the sale of Questar Pipelines to Southwest Gas Holdings Inc. in a transaction valued at almost $2 billion, including the assumption of $430M of existing debt.

Southwest Gas Holdings Inc. is rejecting continued attempts by activist investor Carl Icahn to buy up outstanding stock for $75 per share, calling the move opportunistic and not in the best interest of shareholders.