Dominion to Sell Natural Gas Unit; Q4 Earnings Disappoint

Dominion Energy (NYSE: D) has inked a $690 million deal to sell its West Virginia natural gas utility, named Hope Gas, Inc. (Dominion Energy West Virginia or DEWV), to Ullico Inc.’s infrastructure fund. 

DEWV is a gas utility that employs about 300 people and serves 111,000 West Virginia customers. It provides 3,200 miles of gas distribution pipelines and over 2,000 miles of gathering pipelines. 

The sale is likely to conclude later this year, pending Hart-Scott-Rodino Act clearance and Public Service Commission of West Virginia approval. 

Virginia-based Dominion is an American power and energy company that supplies electricity in parts of Virginia, North Carolina, and South Carolina. It also supplies natural gas to parts of Utah, West Virginia, Ohio, Pennsylvania, North Carolina, South Carolina, and Georgia. 

Post-Completion of the Sale

DEWV is likely to be integrated with Hearthstone Utilities, Inc. by Ullico. Hearthstone is a portfolio company operating gas utilities in Indiana, Maine, Montana, North Carolina, and Ohio. The company, serving over 80,000 customers, will move its headquarters to West Virginia. 

Remarkably, rates for customers will remain the same, post-completion of the deal. 

CEO’s Comments 

Dominion Energy CEO Robert M. Blue said, “For nearly 125 years, Dominion Energy West Virginia has provided reliable and affordable natural gas, safely, to the people and businesses of the Mountain State…DEWV is a valuable business with tremendous employees. The business and its people will fit extremely well with Ullico and Hearthstone’s commitment to safety and their mission to serve American workers and customers.” 

Earnings Numbers 

Dominion Energy posted disappointing fourth-quarter 2021 results, with both earnings and revenue missing expectations.

The company reported Q4 operating earnings of $0.90 per share, below the Street’s estimate of $0.92 per share. It reported earnings of $0.81 per share in the same quarter last year. Revenue for the quarter came in at $3.88 billion, falling short of the consensus estimate of $4.15 billion, but grew 10.2% year-over-year. 

For 2022, operating earnings are expected in the range of $3.95 to $4.25 per share, while for Q1 2022, earnings are likely to range between $1.10 and $1.25 per share. 

Wall Street’s Take 

The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 3 Buys, 4 Holds, and 1 Sell. The average Dominion Energy price target of $84.25 implies 6.5% upside potential. Shares have gained 13.5% over the past year. 

Bloggers Weigh In 

Bloggers seem enthused by the company’s recent restructuring moves.  TipRanks data shows that financial blogger opinions are 85% Bullish on D, compared to a sector average of 70%.

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