Duke’s $6.7B Piedmont purchase digs heels deeper into gas
Duke Energy Corp. has become the latest electric utility to buy a natural gas company, giving the energy giant more growth opportunities than what it could do on its own, analysts said.
The nation’s largest electric company yesterday said it will buy Piedmont Natural Gas Company Inc. for a total enterprise value of $6.7 billion. The deal would give Duke 1 million additional natural gas customers in North and South Carolina as well as Tennessee, tripling the company’s number of customers from local distribution natural gas companies.
Based in Duke’s hometown of Charlotte, N.C., Piedmont Natural Gas has joint ventures that include a gas marketing company, a liquefied natural gas facility, underground storage, and planned or existing pipelines.
Duke and Piedmont also are involved in the proposed 500-mile Atlantic Coast pipeline, which would deliver gas from the Marcellus and Utica shale plays to North Carolina.
The combined company will have a new natural gas operations unit that will include the local distribution gas utilities and gas infrastructure investments.
“This transaction establishes a valuable natural gas platform — and will provide strong growth opportunities for years to come,” said Lynn Good, Duke’s CEO, on a conference call with analysts.
Good told investors yesterday that Piedmont already has its own growth plan. The combined company can leverage Duke’s marketing position in the Carolinas and the Midwest, she said. Duke serves North and South Carolina, Florida, Indiana, Kentucky and Ohio.
“We believe there will be additional opportunities to build on that and find additional infrastructure investments that will complement the business we’ve put together,” she said.
Duke has been pushing into the natural gas industry for more than a year. It teamed up with Dominion Resources Inc. last year to take the lead on the Atlantic Coast pipeline and has an interest in the proposed Sabal Trail pipeline, which would run into Florida.
Pipelines are a significant capital investment for utilities, which means they will earn a large return. Buying a natural gas company is no different in terms of providing future high-capital, high-growth investments, analysts say.