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Berkshire goes all in in the energy market

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
The pandemic effects are starting to wear off for Berkshire

After the pandemic put a pause on mergers and acquisitions, every major company began to work on expanding and secure a spot in its field: Lululemon bought Mirror, Uber bought Postmates, and now, Berkshire Hathaway purchased Dominion Energy natural gas assets, in a $10 billion deal. 

After the deal closed, it became the most significant purchase that Berkshire made since its March collapse. For Dominion, this one is the move that helps its transition from a business focused on the gas transmission to a clean energy utility company. At the moment, Dominion is among the most important producers and transporters of energy in the States, and it provides either electricity or natural gas to more than 7 million customers.

Moreover, the Virginia-based company is looking to invest roughly $55 billion over the next 15 years in emission reduction technologies, including zero-carbon generation, renewable natural gas, and gas distribution line replacement, and energy storage.

Moreover, on Sunday, Dominion Energy and Duke Energy terminated their collaboration – Atlantic Coast Pipeline – a natural gas pipeline that should have gone across West Virginia, Virginia, and North Carolina. Environmental groups scrutinized the project, and the ongoing delays, litigation, and an increase in costs didn't do the project any favours.  

For Berkshire, the purchase increased its interstate natural transmission to 18% from what it originally had – 8%. The deal also brings 7,700 miles of transmission pipelines and natural gas storage, and 900 billion cubic feet of gas storage. Moreover, it will have a 50% operating interest in the Iroquois Gas Transmission System and a 25% operating interest in one of the liquid natural gas shipping facilities at Cove Point.  

The deal in currently under regulatory approval, but if everything goes according to the schedule, it will be closed in the last quarter of this year. 

Dominion Energy carries on with its gains. After Friday at the close it was higher by 0.41%; in today's pre-market, it rallied 0.37%. Unlike Dominion, Duke closed the Friday session lower by 0.11%, and today it lost more than 1%.

News, news, news! Keep up with what is happening on the market by checking our news dedicated section here!

Sources: cnbc.com, finance.yahoo.com, edition.cnn.com


This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.