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Dominion Midstream signs agreement to acquire Questar Pipeline


2 November 2016

Dominion Midstream Partners has signed an agreement to acquire Questar Pipeline from Dominion Resources for a consideration of approximately $1.725bn.

The deal value also includes the indebtedness of Questar Pipeline.

The transaction is expected to close by 1 December.

This deal has been approved by the board of directors of Dominion, along with the board of directors and Conflicts Committee of Dominion Midstream GP, the general partner of Dominion Midstream.

"The capital generated from the Questar Pipeline dropdown will allow Dominion to pay down debt while supporting its earnings and dividend growth targets."

Dominion Midstream will assume Questar Pipeline's $435m of outstanding indebtedness.

A $300m term loan provided by a group of banks will enable Dominion Midstream to repay an existing term loan currently provided by Dominion.

Following completion, the acquisition of Questar Pipeline will be immediately accretive to Dominion Midstream's distributable cash flow.

Questar Pipeline owns and operates Federal Energy Regulatory Commission-regulated natural gas transmission and storage assets in Colorado, Utah and Wyoming.

Dominion intends to use proceeds from the Questar Pipeline dropdown into Dominion Midstream to retire outstanding debt.

Dominion chairman, president and chief executive officer and Dominion Midstream chairman and CEO Thomas F. Farrell II said: "Dominion Midstream's planned acquisition of Questar Pipeline and related financing have been anticipated as part of the financing structure of the Dominion-Questar Corporation combination since it was announced in February.

"The capital generated from the Questar Pipeline dropdown will allow Dominion to pay down debt while supporting its earnings and dividend growth targets.

"The dropdown will also provide Dominion Midstream with additional earnings to support its best-in-class growth rate, without another asset drop or additional equity, until the second half of 2018.

"This successful financing also validates our business plan for Dominion Midstream, which involves accessing the capital markets to fund the acquisition of midstream assets to support the partnership's stated intention to grow distributions by 22% per year."

The Dominion Midstream GP's Conflicts Committee was advised by Richards, Layton & Finger, P.A. and Evercore Group.

This deal is not subject to additional regulatory or other approvals.

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