Buffet Increases Bet On Energy Infrastructure; Berkshire Hathaway Takes Control Over Us LNG Facility
Berkshire Hathaway Energy has made an agreement to buy 50% stakes in the Cove Point liquified natural gas unit for $3.3 billion, all total in cash.
The stake was bought by Warren Buffet’s big energy and utility division from Dominion Energy and will henceforth enjoy a 75% limited partnership in the Cove Point LNG in Lusby, Maryland.
The remaining 25% will be owned by a subsidiary of Brookfield Infrastructure Partners.
The deal, which was published on Monday, is not as large for Berkshire; it develops a growing venture on energy infrastructure at the conglomerate while it gains control over the rare operational facilities in the United States that export LNG.
“It builds on their long-term theme of energy resources becoming more valuable and ownership of one of only a few US LNG exporters,”
Bill Stone, the Glenview Trust’s Chief Investment Officer and a shareholder for Berkshire, added.
The Cove Point LNG Terminal holds a storage capacity of 14.6 billion cubic feet and has a daily send-out capacity of 1.8 billion cubic feet.
The company also has long-term ties with Sumitomo Corp., which is a Japanese company that also has Buffett’s investments.
The very first stake was bought by Berkshire Hathaway at Dominion’s gas pipeline and storage facilities for $4 billion back in 2020.
Back in 2020, Berkshire had proposed spending about $ 4 billion to help produce more solar and wind power in Iowa. Alongside, the conglomerate has been majorly expanding its exposure towards two traditional energy companies, namely- Chevron and Occidental Petroleum.
“Buffett has liked pipelines for a long time, given their troll bridge-type revenues rather than pure commodity exposure, and this is likely similar,”
Stone added.
“Natural gas prices are down a ton, but I think most of these exporters work on long-term take or pay contracts.”
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