Dominion Energy Stock Falls 10% on $10B Natural Gas Assets Sale to Buffett’s Berkshire

Dominion Energy (NYSE:D) stock is taking a beating Monday after announcing the sale of its natural gas assets to Warren Buffett’ Berkshire Hathaway (NYSE:BRK.A,BRK.B).

Dominion Energy Stock Falls 10% on $10B Natural Gas Assets Sale to Buffett's Berkshire

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The sale has Dominion Energy offloading its gas transmission and storage assets to an affiliate of Berkshire Hathaway Energy. That includes over 7,700 miles of natural gas storage and transmission lines, as well as 900 billion cubic feet of gas storage.

The deal between the two companies is valued at $9.7 billion. However, this includes $5.7 billion of debt that Dominion Energy is transferring over to Berkshire Hathaway. This will have Buffett’s company paying roughly $4 billion in cash for the assets.

Dominion Energy already has plans for the money it will make from selling these assets. It’s looking to spend up to $3 billion of it on share repurchases. The company is expecting these share repurchases to take place in late 2020.

Dominion Energy is also providing a new update for 2020 that takes into account for the sale. This has it expecting earnings per share between $3.37 and $3.63. The previous EPS guidance was $4.25 to $4.60 per share. Wall Street’s estimate is for per-share earnings of $4.35 during the year.

To go along with the asset sale and guidance update, the company is also providing a new outlook for 2021 dividend guidance. This has it expecting its dividend to holders of Dominion Energy stock to come in around $2.50.

Dominion Energy and Berkshire Hathaway are expecting the deal to close during the fourth quarter of 2020. Before it can close, it will need Hart-Scott-Rodino clearance and approval from the U.S. Department of Energy.

D stock was down 9.8% and BRK.A Stock was up 2.3% as of Monday afternoon.

As of this writing, William White did not hold a position in any of the aforementioned securities.

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