Dominion Resources Agrees to Acquire Questar, Adding to Its Natural Gas Portfolio

Richmond, Va.-based Dominion Resources announced on February 1 that it would add to its more than 12,000 miles of natural gas transmission, gathering, and storage pipeline, by acquiring Salt Lake City, Utah-headquartered Questar Corp.

The $4.4 billion deal would pay Questar shareholders $25 per share of common stock, a 30% premium to the company's volume-weighted average stock price of the last 20 trading days prior to the announcement. Dominion would also assume Questar's outstanding debt.

The combined company would serve about 2.5 million electric utility customers and 2.3 million gas utility customers in seven states. It would operate more than 15,500 miles of natural gas transmission, gathering, and storage pipelines, one of the nation's largest natural gas storage systems, and 24.3 GW of electric generation capacity.

"This addition is well-aligned with Dominion's existing strategic focus on core regulated energy infrastructure operations," said Thomas F. Farrell II, CEO of Dominion. "Questar boasts best-in-sector customer growth in states with strong pro-business credentials and constructive regulatory environments. These high-performing regulated assets will improve Dominion's balance between electric and gas operations and provide enhanced scale and diversification into Questar's regulatory jurisdictions."

The purchase of natural gas companies by utilities known primarily for their electric generation assets has become a trend recently. In August 2015, Southern Co. announced that it had agreed to acquire AGL Resources, the nation's largest natural gas-only distribution company. Two months later, Duke Energy announced that it would purchase Piedmont Natural Gas, a natural gas provider with more than a million customers in North Carolina, South Carolina, and Tennessee.

Questar's shareholders and the Federal Trade Commission must approve the Dominion deal. Filings must also be made with the Utah Public Service Commission, the Wyoming Public Service Commission, and the Idaho Public Utilities Commission.

"Questar is excited to be joining the Dominion family of companies and serve as the hub of its Western operations," said Ron Jibson, CEO of Questar. "Our similar cultures and commitment to customers, shareholders, communities and employees make this a win-win transaction."

In a separate deal, Dominion announced that it had committed about $1 billion to purchase three solar generating facilities in Utah. The sites-located in Beaver, Iron, and Millard counties-are all backed by long-term power purchase agreements with local electric utilities.

-Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)

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