Berkshire Hathaway’s $137 billion war chest shrinks

Berkshire Hathaway

Berkshire Hathaway, whose chairman and CEO is Warren Buffett, is spending about US$10 billion in a deal for Dominion Energy’s natural gas transmission and storage network through Berkshire Hathaway Energy.

Berkshire Hathaway had a US$137 billion cash pile at the end of March and this is Warren Buffett ‘s first purchase since the coronavirus pandemic began. He sold all his stocks in the major US airlines in May due to the border closures caused by the coronavirus pandemic.

The deal by Berkshire Hathaway Energy announced by Berkshire Hathaway and Dominion Energy includes more than 7,700 miles (12,390 km) of natural gas transmission lines and 900 billion cubic feet of gas storage.

Berkshire Hathaway Energy is buying Dominion Energy Transmission, Questar Pipeline, Carolina Gas Transmission, 50% of the Iroquois Gas Transmission System and 25% of the Cove Point liquefied natural gas facility in Maryland.

Berkshire Hathaway Energy will also assume US$5.7 billion of debt, giving the transaction a US$9.7 billion enterprise value.

“We are very proud to be adding such a great portfolio of natural gas assets to our already strong energy business,” Warren Buffett said in the statement.

Dominion Energy and Duke Energy separately announced they would abandon their US$8 billion Atlantic Coast Pipeline, running under the Appalachian Trail and through West Virginia, Virginia and North Carolina. Dominion and Duke cited delays and uncertain costs, despite a favorable US Supreme Court decision last month, Reuters reported.

Dominion Energy is moving from being a gas transmission business to becoming a “pure-play” regulated clean energy utility company. The company, which has its headquartered in Richmond, Virginia, is one of the largest producers and transporters of energy in the US, providing electricity or natural gas to 7 million customers in 20 states.

“We offer an industry-leading clean-energy profile which includes a comprehensive net zero target by 2050 for both carbon and methane emissions as well as one of the nation’s largest zero-carbon electric generation and storage investment programs,” Dominion CEO Thomas Farrell said in a statement.

“Over the next 15 years we plan to invest up to $55 billion in emissions reduction technologies including zero-carbon generation and energy storage, gas distribution line replacement, and renewable natural gas.”

Berkshire Hathaway controls 91.1% of Berkshire Hathaway Energy, which owns MidAmerican Energy, NV Energy and PacifiCorp utilities. This is alongside natural gas pipelines, wind power assets and electricity businesses in the UK and Canada.

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