Dominion Agrees To Sell Mid-Continent E&P Operations For $2.05 Billion
Sale includes approximately 780 billion cubic
feet equivalent of proved reserves
All E&P operations being
divested now sold or under agreement
Mid-Continent sale to be completed by end of third quarter 2007
RICHMOND, Va. – Dominion (NYSE: D) today announced
that it has agreed to sell its natural gas and oil exploration and production
operations in the Mid-Continent Basin to Linn Energy, LLC (Nasdaq: LINE)
for $2.05 billion. These operations include approximately 780 billion cubic
feet equivalent (Bcfe) of reserves as of Dec. 31, 2006.
With today's announcement, Dominion now has sold
or agreed to sell all of the E&P operations that it plans to divest. The
company is retaining its Appalachian E&P operations and approximately 1
trillion cubic feet equivalent (Tcfe) of reserves – primarily natural
gas – because of their
strategic fit with the rest of the company.
Sale of the Mid-Continent operations,
which are primarily in Oklahoma, is expected to close by the end of the third
quarter 2007, subject to customary closing conditions and adjustments. All
other previously announced E&P
sales have closed or are scheduled to close by that time.
"Today’s
announcement is the final transaction needed to complete our transition into
a company more focused on energy infrastructure businesses," said
Chairman, President and CEO Thomas F. Farrell II. "We excel in those
businesses and believe that Dominion has the right mix of high-quality assets,
growth opportunities and people to prosper in today’s environment and
serve our customers and shareholders well."
Dominion announced last November
that it would pursue the sale of most of its E&P assets as part of a strategic
repositioning. The move is designed to enhance the long-term value of the company
by realigning Dominion’s
operations and risk profile more closely with the company’s peer investment
group of utilities. Dominion will focus on power generation and electricity
and natural gas distribution, transmission, storage and retail businesses.
Farrell
noted the factors favoring the company include the strength and diversity of
the Virginia economy, the stability and incentives provided by the new Virginia
hybrid regulatory model, superior growth opportunities in Dominion’s
pipeline and storage business, and improving conditions in markets served by
its merchant power fleet.
"There is no other company in our industry that
can match our assets, people and opportunities," Farrell said.
Dominion
is being advised in the sale by the investment banking firms of JPMorgan, Lehman
Brothers and Juniper Advisory LP. BakerBotts LLP and McGuireWoods LLP are the
company’s legal advisers for the sale.
Dominion is one of the nation's
largest producers of energy, with a portfolio of more than 26,500 megawatts
of power generation. It also owns and operates 7,800 miles of natural gas transmission
pipeline as well as the nation's largest underground natural gas storage system,
with about 960 billion cubic feet of storage capacity. It serves retail energy
customers in 11 states. For more information about Dominion, visit the company's
Web site at http://www.dom.com.
This
news release contains certain forward-looking statements, including projected
closing dates for divestitures and growth factors related to Dominion's business
strategy, that are subject to various risks and uncertainties. These risks
and uncertainties and other factors that could cause our actual results to
differ materially from management's projections, forecasts, estimates and expectations
and other risk factors are detailed from time to time in Dominion's most-recent
quarterly report on Form 10-Q or annual report on Form 10-K filed with the
Securities and Exchange Commission.
