Breaking off another piece of its prized exploration and production (E&P) business, Dominion on Tuesday agreed to sell its Canadian properties to a combo of Calgary-based energy trusts, Paramount Energy Trust and Baytex Energy Trust, for US$583 million.
Dominion's Canadian properties at the end of 2006 held 267 Bcfe of proved natural gas and oil reserves in Western Canada with average production of 60 MMcfe/d. The sale is expected to be completed by the end of June.
"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 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 last year announced it would sell its profitable North American-based E&P operations, except those in the Appalachian Basin, so that it could focus on its utility business (see Daily GPI, Nov. 2, 2006). In late April, the company sold its offshore E&P business to a subsidiary of Italy's Eni SpA for $4.76 billion (see Daily GPI, May 1).
Proceeds from the sale of the E&P business, as well as the planned sale of the company's Dominion Peoples and Dominion Hope natural gas distribution businesses, are expected to position the company to reduce debt, including debt at its CNG subsidiary, and allow it to repurchase common shares and grow other Dominion business units.
With all of the restructuring transactions still to be announced, several important pieces of financial information are not yet ready for disclosure, Dominion said. Financial data still to be disclosed include total proceeds, applicable tax rate, targeted credit metrics in view of Dominion's 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.
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