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Dominion Buying Carolina Gas Transmission

Dominion Resources Inc. is buying Carolina Gas Transmission (CGT) from SCANA Corp. for $492.9 million. CGT owns and operates nearly 1,500 miles of federally regulated interstate natural gas pipeline in South Carolina and southeastern Georgia.

The company said it expects to contribute CGT into Dominion Midstream for a combination of debt and units by mid-year 2015. Through subsidiaries, Dominion owns a 68.5% limited partner interest in Dominion Midstream, in addition to its general partner, and all associated incentive distribution rights. The contribution of CGT is expected to be immediately accretive to Dominion Midstream distributed cash flow per unit.

"This is a compelling strategic opportunity for Dominion and Dominion Midstream that both supports our targeted growth rates and demonstrates our ability to deliver value-accretive M&A for our share- and unit-holders," said Dominion CEO Thomas F. Farrell. "Carolina Gas Transmission is a great fit for our well-run, regulated natural gas businesses as we expand our operations into the Southeast."

CGT was formed through the 2006 merger of SCANA subsidiaries SCG Pipeline and South Carolina Pipeline Corp. (see Daily GPI, Nov. 2, 2006). South Carolina Pipeline was an intrastate pipeline company that purchased, transported and sold gas to distribution companies, municipalities and industrial customers. SCG Pipeline was an interstate pipeline that transported gas in Georgia and South Carolina.

Closing is expected in January after antitrust clearance. No debt assumption is involved in the transaction, which is expected to be immediately accretive to Dominion operating earnings per share.

Dominion is offering continued employment for CGT's 120-person workforce. In addition, the company has committed to an extended period of rate stability for current CGT customers.

Dominion has 10,900 miles of natural gas transmission, gathering and storage pipeline. It operates one of the nation's largest natural gas storage systems with 947 Bcf of capacity and serves utility and retail energy customers in 10 states. Dominion Midstream was formed in March to initially own all of the outstanding preferred equity interests in Dominion Cove Point LNG LP, which owns liquefied natural gas import, storage, regasification and transportation assets.

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