Dominion to Vend Questar Pipelines to Southwest Gas

Dominion Energy (D), the American power and energy company, has inked a cash deal to sell Questar Pipelines to Southwest Gas Holdings Inc. (SWX) for $1.975 billion. The terms of the deal include the assumption of $430 million of Questar Pipelines debt.

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Questar Pipelines comprises FERC-regulated, long-term contracted, transportation and underground storage assets in Utah, Wyoming and Colorado, along with related services and processing entities.

The company is expected to use the proceeds of the deal for the reduction of parent-level debt, including the retirement of the 364-day term loan entered in July. Additionally, the proceeds are also likely to support the company’s regulated capital plan. Notably, the deal will not impact Dominion’s existing financial guidance.

The transaction, which awaits certain regulatory approvals, is expected to close in the fourth quarter of 2021. (See Dominion stock charts on TipRanks)

Dominion CEO Robert M. Blue said, “This transaction represents another significant step in our evolution as a company, allowing us to focus even more on fulfilling the energy needs of our utility customers and continuing growth of our clean-energy portfolio, including development of the largest offshore wind farm in North America.”

Recently, Morgan Stanley analyst Stephen Byrd reiterated a Hold rating on Dominion with a price target of $80 (9.9%upside potential).

Byrd expects Dominion to record EPS of $0.33 in the third quarter of 2021.

Overall, Dominion Energy shares have a Moderate Buy consensus rating based on 4 Buys and 3 Holds. The average Dominion Energy price target of $83.71 suggests upside potential of 15%.

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Dominion Energy is currently Positive, as the cumulative change in holdings across all 10 hedge funds that were active in the last quarter was an increase of 189,800 shares.