Dominion Resources, Inc.
) announced its intention to divest three fossil fuel fired power
stations with a combined generation capacity of 4,118 megawatts
(MW). The company will utilize the proceeds from sale of these
assets to expand its regulated business operations and lower its
debt levels. The assets sales are expected to be completed in the
first six months of 2013.
The stations which are going to be divested are Brayton Point Power
Station, a 1,536 MW power station in Somerset, Massachusetts;
Kincaid Power Station, a 1,158 MW power station in Kincaid, Ill and
Elwood Power Station, a 1,424 MW power station in Illinois.
We believe the company will not find it difficult to find buyers
for these fossil fired stations as all of these are well maintained
and fitted with emissions controls equipment as per the new federal
Dominion has been working on the development of a few new projects
and we believe the sale proceeds from these assets will allow the
company to fund as well as complete development projects on time.
The company has started constructing a 1,329 MW, gas-fired power
station in Warren County, Virginia, scheduled for completion in
late 2014. The company intends to file regulatory applications in
the fourth quarter of 2012 for its next gas-fired generating
facility, in Brunswick County, Virginia, which is expected to come
online in 2016.
The company's outstanding long-term debt at the end of the second
quarter 2012 was $17 billion, down from $17.4 billion at prior-year
quarter end. The debt-to-capital ratio of the company at the end of
the second quarter was 58.2%, higher than the peer group average of
40.4%. So, the freed up capital from the asset sale will help
Dominion to reduce its debts and at the same time lower the
The company expects full year 2012 earnings per share between $3.10
and $3.35 per share. The Zacks Consensus Estimate for 2012 is
currently at $3.17 per share.
Dominion Resources retains a Zacks #3 Rank which translates into a
short-term Hold rating. The company primarily competes with
American Electric Power Co.
Richmond, Virginia based Dominion Resources Inc., together with its
subsidiaries, engages in producing and transporting energy in the
U.S. The company was founded in 1909 and has 15,800 employees.
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