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Future Plans
Strategic Repositioning
Sale of most of their E&P Assets
• Sales process to be pursued to maximize value of E&P business
Proceeds would be used to reduce debt, repurchase shares, grow business
• Focus on generation, distribution, transmission, storage and retail businesses
• Long-term value targeted from lower risk profile, improved credit metrics
Dominion will pursue the sale of most of its oil and natural gas exploration and production assets to put additional focus on growing its electric generation and energy distribution, transmission, storage and retail businesses. The move is designed to enhance long-term value by realigning Dominion's operations and risk profile more closely with the company's peer investment group of utilities.
As part of the repositioning, Dominion would retain its low-risk Appalachian Basin properties because of their value to the company's natural gas pipeline, storage and gathering businesses. The Appalachian properties account for approximately 17 percent of proved reserves and 8 percent of Dominion's average daily production as of September 30, 2006. These reserves would produce less than 5 percent of Dominion's consolidated future operating earnings upon completion of any sale.
Proceeds from any sale would position Dominion to reduce debt, including debt at its CNG subsidiary, as well as to repurchase shares and/or to acquire assets that strengthen its remaining businesses. Following the sale, the remaining businesses should grow consolidated operating earnings at a rate of 4 to 6 percent annually while reducing the volatility of earnings.
Also following any sale, Dominion expects to maintain its existing targets for credit metrics. The company believes that this, combined with a lower business-risk profile, will enable it to maintain or improve its credit ratings at both Dominion and CNG.