The energy unit of Berkshire Hathaway Inc. has signed an agreement to acquire a 50% stake in Dominion Energy Inc. in a US LNG exporter for which the investor led by Warren Buffet already has the exploitation rights.
Berkshire Hathaway Energy Co. (BHE) will own 75 percent of Cove Point LNG LP after the closing of the definitive agreement, with the remaining 25 percent retained by Brookfield Infrastructure Partners LP, according to a BHE press release this week. BHE’s interest in Cove Point is held by BHE subsidiary GT&S.
The transaction is expected to close by the end of the year, Dominion said separately. The purchase is valued at $3.5 billion, including proceeds from the transaction and proceeds from the termination of interest rate derivatives, it said in a filing with the US Securities and Exchange Commission (SEC).
“We are proud of our operations at Cove Point and are excited for this opportunity to increase our ownership in this world-class facility,” BHE GT&S President Paul Ruppert said in BHE’s announcement.
Last month, Buffett’s company also increased its common stock in Occidental Petroleum Corp. up to nearly 2.14 million for about $122.1 million. The purchase has increased the stake of Berkshire Hathaway Inc. in the top U.S. oil producer to 224,129,192 common units, according to an SEC disclosure on June 28. Berkshire now owns more than 25 percent of Occidental’s common stock, based on the reported 891,745,187 shares outstanding. in its earnings presentation on May 9.
Berkshire’s apparent confidence in the US energy industry comes amid a war-induced trade shift that has benefited the country’s oil and gas. US LNG exports rose nine percent to an average of 10.6 billion cubic feet per day in 2022 boosted by demand in Europe, the US Energy Information Administration (EIA) said in a report of June 30. US oil exports also rose 22 percent. to 3.6 million barrels per day (MMbpd), the highest since data collection began in 1920, according to a March 30 EIA report. Europe accounted for 42 percent, importing 1.51 Mbpd behind Asia and Oceania as the top destination for US crude.
“EU sanctions implemented in December 2022 banning all seaborne imports of Russian oil into Europe make demand for US crude likely to continue into 2023,” the EIA said.
In addition, the European Union, the Group of Seven and Australia agreed on February 4 to price caps of up to $100 a barrel for Russia’s refined oil products.
In response to the war that Russia launched in February 2022, the EU declared on 11 March of that year the phase-out of Russian fossil fuels by 2027 and on 18 May 2022 launched the so-called REPowerEU which describes strategies to achieve this goal.
Oil and gas prices also rose after the conflict. Brent, the global benchmark for spot prices, hit its highest annual average last year at $100.93 a barrel, while the international standard Henry Hub for natural gas averaged 6, $45 per million British thermal units, the highest in the US distribution center since 2008, according to US Energy Information. administration
BHE collected approximately $6.45 million in operating business income in the first quarter of 2023, up from $6.02 million in the first three months of 2022 and approximately $5.92 million in the corresponding period in 2021. the year before the war.
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