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Warren Buffett’s Berkshire Hathaway Energy Acquires $3.3 Billion Stake in LNG Terminal
08/02/2023
One of Warren Buffett's Berkshire Hathaway subsidiaries is set to raise its ownership in the Cove Point liquefied natural gas (LNG) export terminal located in Maryland. This comes after the company signed a substantial $3.3 billion agreement with Dominion Energy.
Under the agreement, Dominion Energy has agreed to sell its 50 percent noncontrolling limited partner interest in Cove Point LNG to Berkshire Hathaway Energy. Berkshire Hathaway Energy is the current operator of the facility and already holds a 100 percent general partner interest and a 25 percent limited partner interest.
Upon the completion of the deal, Berkshire Hathaway Energy will have a 75 percent limited partnership stake in Cove Point LNG, while a subsidiary of Brookfield Infrastructure Partners will retain the remaining 25 percent limited partnership interest in the terminal.
The newly acquired interest in Cove Point LNG will be held within BHE GT&S, which is a business unit of Berkshire Hathaway Energy.
Berkshire Hathaway Increases Cove Point LNG
- The $3.3 billion transaction will be funded through cash on hand, including proceeds from the liquidation of certain investments, according to Berkshire Hathaway.
- Dominion expects to receive approximately $200 million from the termination of interest-rate derivatives, as stated in a separate statement.
- In the previous year, the Cove Point LNG plant achieved a significant milestone by shipping its 300th cargo since commencing commercial liquefaction operations in April 2018.
- The facility comprises an LNG import and export terminal situated in Calvert County, Maryland, along with associated pipeline facilities.
- With a storage capacity of 14.6 billion cubic feet, the plant has a daily send out capacity of 1.8 bcf (billion cubic feet) or approximately 5.25 million tons of LNG per year from a single liquefaction unit.
Located in Lusby, Maryland, approximately 60 miles southeast of Washington DC, Cove Point LNG has secured long-term contracts with notable companies such as Tokyo Gas Co. and Sumitomo Corp.
In a separate statement, Dominion revealed its intention to utilize the proceeds from the transaction to repay debt. As part of its ongoing business review, Dominion has announced plans to hold an investor day in the third quarter to provide an updated strategic and financial outlook.
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Chevron Announces Intent to Divest Oil and Gas Properties in New Mexico and Texas
According to Reuters, Chevron has recently made additional assets available for acquisition in both New Mexico and Texas. As part of its strategy to streamline operations following significant shale acquisitions, Chevron is reportedly offering multiple oil and gas properties for sale in New Mexico and Texas. Marketing documents reviewed by Reuters reveal the company's intention to divest these assets. Despite its prominent position as the largest publicly-traded oil and gas producer and property owner with 2.2 million acres in the Permian Basin of West Texas and New Mexico, Chevron has been actively divesting properties in the region. This divestment aligns with Chevron's efforts to optimize its portfolio and focus on its core operations.
Civitas Makes $4.7B Entry into Permian Basin
Civitas Resources Expands into Denver-Julesburg Basin through $4.7B Cash and Stock Deals for NGP's Tap Rock and Hibernia. Civitas Resources has recently secured two definitive agreements to expand its presence in the Permian Basin's Midland and Delaware basins. The company will achieve this expansion through the acquisition of two private exploration and production companies, namely Hibernia Energy III LLC and Tap Rock Resources LLC. The total value of the deal, paid in both cash and stock, amounts to $4.7 billion. Both Hibernia Energy III LLC and Tap Rock Resources LLC are supported by NGP Energy Capital Management LLC. These acquisitions reflect the increasing demand for oil and gas reserves in the Permian Basin, with companies specializing in the region actively seeking new opportunities. Currently, Civitas Resources' primary production operations are focused in the Denver-Julesburg Basin (D-J Basin).
Kinetik Holdings recently announced a series of transactions in the energy sector. They struck a deal to buy Durango Permian infrastructure for $765 million. At the same time, they're selling their 16% share in the Gulf Coast Express Pipeline to ArcLight Capital Partners for $540 million. The total purchase cost includes $510 million in cash paid immediately and an additional $30 million that will be paid later, depending on whether they decide to expand further.
Recently, the Permian has seen significant acquisitions: Exxon Mobil purchased Pioneer Natural Resources for about $60 billion. Diamondback Energy's $26 billion deal to acquire Endeavor Energy Resources is currently on hold due to requests from the U.S. Federal Trade Commission. Occidental’s acquisition of CrownRock for $12 billion in the Midland.
EOG Resources is pushing boundaries in Ohio's Utica oil play and now drilling on the Sable pad, also located in Noble County. This site features the 3.7-mile lateral currently under construction. The company's first multi-well pads in the area Timberwolf and Xavier have each produced over 200,000 barrels of oil since their inception—Timberwolf in August and Xavier in October. A third site, the four-well White Rhino pad in Noble County, is also showing promising early results, according to Keith Trasko, EOG’s Senior Vice President of Exploration and Production, who noted the wells are performing as expected in their initial weeks.