Dominion Resources has agreed to acquire the US-based Questar for $4.4bn as part of its efforts to expand its natural gas operations beyond the mid-Atlantic into the Western states.
Dominion will also assume the debt of Questar.
With the acquisition, the new company would serve 2.5 million electric utility customers and 2.3 million gas utility customers in seven states.
Dominion said that the company will also operate over 15,500 miles of natural gas transmission, gathering and storage pipelines, and 24,300MW of generation.
Dominion Resources chairman, president and CEO Thomas Farrell II said: "This addition is well-aligned with Dominion’s existing strategic focus on core regulated energy infrastructure operations.
"Of note, Dominion Midstream investors will benefit from the addition of Questar, as it is expected to contribute more than $425m of EBITDA to Dominion’s inventory of top-quality, low-risk MLP-eligible assets, supporting Dominion Midstream’s targeted annual cash distribution growth rate of 22%."
Questar chairman, president and CEO Ron Jibson said: "Questar is excited to be joining the Dominion family of companies and serve as the hub of its Western operations."
Dominion proposes to fund the transaction using equity, mandatory convertibles and debt at the company, and equity at Dominion Midstream Partners.
The transaction is expected to conclude by the end of 2016.
Upon completion of the transaction, which is subject to regulatory approval, Questar will operate as the wholly-owned subsidiary of Dominion.
Questar serves nearly one million homes and businesses in Utah, Wyoming and Idaho and has about $4.2bn in assets.
The company’s assets include about 27,500 miles of gas distribution pipeline, 3,400 miles of gas transmission pipeline and 56 billion ft³ of working gas storage.
Image: The acquisition of Questar will enable Dominion to expand its natural gas operations. Photo: courtesy of Stuart Miles/FreeDigitalPhotos.net.
