These operations include approximately 267 billion cubic feet equivalent (Bcfe) of proved natural gas and oil reserves in western Canada as of Dec. 31, 2006, with 2006 average daily production of approximately 60 million cubic feet equivalent (MMcfe).
"This announcement represents another step toward achieving our goal of refocusing Dominion on the power generation and energy distribution, transmission, storage and retail businesses," said Chairman, President and CEO Thomas F. Farrell II. "When the transition is completed, the company's risk profile will be substantially reduced, earnings growth should be less volatile and our capital structure will be even stronger."
Dominion said previously it would pursue the disposition of all of its E&P operations except those in the Appalachian Basin. The company announced on April 30, 2007, that it had agreed to sell virtually all of its offshore E&P operations in the Gulf of Mexico for approximately $4.76 billion to Eni Petroleum Co. Inc., a subsidiary of Italian energy company Eni. It continues to pursue the disposition of its U.S. onshore E&P operations except those in the Appalachian Basin.
Closing of the sale of the Canadian operations is expected to occur by the end of June 2007, subject to customary closing conditions and adjustments.
Proceeds from the disposition of E&P assets as well as the planned sale of the company's Dominion Peoples and Dominion Hope natural gas distribution businesses would position the company to reduce debt -- including debt at its CNG subsidiary -- repurchase common shares and grow other Dominion businesses.
With all of the restructuring transactions not yet announced, several important pieces of financial information are not yet ready for disclosure. That includes total proceeds, applicable tax rate, targeted credit metrics in view of our anticipated lower risk profile and, ultimately, the amount of proceeds that will be available to repurchase shares of common stock.
"We continue to suggest that investors wait for all of these announcements before drawing any firm conclusions on how these transactions will affect Dominion's ongoing earnings power," Farrell said.
Scotia Waterous and Juniper Advisory LP are Dominion's financial advisers in the sale. Stikeman Elliott LLP is the company's legal adviser for the sale.
Dominion is one of the nation's largest producers of energy, with a portfolio of more than 26,500 megawatts of generation, about 6.5 trillion cubic feet equivalent of proved natural gas reserves and 7,800 miles of natural gas transmission pipeline. Dominion also owns and operates the nation's largest underground natural gas storage system with about 960 billion cubic feet of storage capacity and serves retail energy customers in 11 states.
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