Dominion Announces Volumetric Production Payment Transaction with Goldman Sachs
HOUSTON - Dominion Exploration & Production, Inc. (Dominion
E&P), a subsidiary of Dominion (NYSE: D), announced today an agreement for
a volumetric production payment (VPP) with an affiliate of The Goldman Sachs
Group, Inc. (NYSE: GS). Under the terms of the agreement, Dominion will receive
$413 million in cash for the sale of a fixed-term overriding royalty interest
in more than 1,600 producing natural gas wells located in Pennsylvania, West
Virginia, Texas, Oklahoma and offshore Louisiana. Dominion will retain its control
of the properties and rights to future development drilling, as well as production
above the VPP volumes, for the remaining life of the properties.
This VPP transaction will allow Goldman to receive 82.7 billion
cubic feet of natural gas over the next four years. Goldman's natural gas production
will be delivered to multiple pooling points in various states at an initial
rate in excess of 100 million cubic feet per day, declining to approximately
37 million cubic feet per day at the end of the four-year period.
Duane Radtke, president and chief executive officer of Dominion
E&P, said: "This VPP transaction allows us to monetize a portion of
our reserves while retaining our control and our rights to operate the properties
and manage future development drilling. It also provides a stable and predictable
supply of natural gas to Goldman from our long-lived gas production. We are
very pleased to enter into this VPP transaction with Goldman's commercial and
commodity teams."
The VPP transaction will reduce Dominion's natural gas reserves
by 82.7 billion cubic feet. Dominion will recognize revenue from the transaction
as natural gas is produced and delivered at approximately $5 per mcf (thousand
cubic feet). Dominion will continue to incur the operating costs on the properties
related to the VPP.
Dominion is one of the nation's largest producers of energy,
with a portfolio consisting of more than 24,000 megawatts of generation, 6.4
trillion cubic feet equivalent of natural gas reserves, 7,900 miles of natural
gas transmission pipeline and more than 960 billion cubic feet of storage capacity.
Dominion E&P is one of the largest independent natural gas and oil exploration
and production companies in North America with daily production of nearly 1.3
billion cubic feet of natural gas equivalent. Dominion E&P operates in several
major producing basins in the lower 48 states, plus the outer continental shelf,
deepwater areas of the Gulf of Mexico, and western Canada. Dominion also serves
five million retail energy customers in nine states. Additional information
about Dominion is available on the Internet at www.dom.com.
