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Warren Buffett’s Berkshire Hathaway makes its first big investment during the COVID-19 economic crisis by acquiring Dominion Energy’s natural gas transmission and storage assets through Berkshire Hathaway Energy Division.
It looks like the Oracle of Omaha Warren Buffett has found his next winner in this COVID-19 global economic crisis. Having stayed quiet for the last few months of the pandemic period, Buffett’s Berkshire Hathaway makes its largest acquisition deal in four years. Berkshire Hathaway announced the acquisition of Dominion Energy’s natural gas transmission and storage assets in a $10 billion deal. With this deal, Berkshire gets nearly 7700 miles of gas transmission and 900 billion cubic feet of gas storage. On Sunday, July 5, the company said that it has paid $4 billion in cash for the assets while assuming a debt of $5.4 billion from Dominion Energy.
Warren Buffett has been more of a mute spectator in the stock market rally after the March 2020 crash. In May, the company also announced that it is sitting on a $137 billion cash pile in its balance sheet. Investors had been eagerly waiting for the next big move from the stock-market tycoon.
Note that this investment comes from the books of Berkshire Hathaway Energy Division wherein the parent company holds a 91.1% stake. This is a big breakthrough for Dominion Energy that is transitioning to become a regulated clean energy business. Currently, Dominion is the largest producer and transporter of energy in the U.S. The Richmond-based company provides electricity and natural gas to 7 million customers across 20 states.
Berkshire Hathaway and Dominion Energy Deal
With this $10 billion deal, Berkshire Hathaway acquires complete ownership of Dominion Energy Transmission, Questar Pipeline and Carolina Gas Transmission. It also gets a 50% operating interest in Iroquois Gas Transmission System and a 25% operating interest in liquid natural gas shipping facility Cove Point.
Speaking about this new deal, Dominion CEO Thomas Farrell said in a statement:
“We offer an industry-leading clean-energy profile which includes a comprehensive net zero target by 2050 for both carbon and methane emissions as well as one of the nation’s largest zero-carbon electric generation and storage investment programs. Over the next 15 years we plan to invest up to $55 billion in emissions reduction technologies including zero-carbon generation and energy storage, gas distribution line replacement, and renewable natural gas.”
Warren Buffett, chairman of Berkshire Hathaway said:
“I admire Tom Farrell for his exceptional leadership across the energy industry as well as within Dominion Energy. We are very proud to be adding such a great portfolio of natural gas assets to our already strong energy business.”
In another development, Dominion and Duke canceled its plans for the Atlantic Coast Pipeline. The company said that “ongoing delays and increasing cost uncertainty which threatens the economic viability of the project.”