Exhibit 99.1
Unaudited Proforma Financial Information
In July 2020, Dominion Energy, Inc. and Dominion Energy Questar Corporation (collectively, Dominion Energy) entered into an agreement to sell substantially all of their gas transmission and storage operations assets, including Eastern Energy Gas Holdings, LLC f/k/a Dominion Energy Gas Holdings, LLC (Eastern Energy), to Berkshire Hathaway Energy Company (BHE). The agreement provided, among other items, that Dominion Energy would retain a 50% noncontrolling interest in Dominion Energy Cove Point LNG, LP (Cove Point). In October 2020, since approval of the transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Approval), was not obtained within 75 days following the date of the agreement, Dominion Energy delivered notice to BHE of their election to terminate the transaction with respect to Dominion Energy Questar Pipeline, LLC (Questar Pipeline) and related entities (the Questar Pipeline Group). A separate agreement was entered into between Dominion Energy and BHE in October 2020 for the Questar Pipeline Group, which is currently anticipated to close in early 2021 after receipt of HSR Approval. On November 1, 2020, Eastern Energy finalized a restructuring whereby Eastern Energy contributed Questar Pipeline and a 50% noncontrolling interest in Cove Point to Dominion Energy. This restructuring was accounted for by Eastern Energy as a reorganization of entities under common control. After such restructuring, Dominion Energy closed the transaction exclusive of the Questar Pipeline Group with BHE on November 1, 2020.
The following unaudited pro forma consolidated statements of income (loss) for the year ended December 31, 2019 and the six months ended June 30, 2020 have been prepared to give effect to the distributions of Questar Pipeline and a 50% noncontrolling interest in Cove Point as if they had occurred on January 1, 2019. The following unaudited pro forma consolidated balance sheet as of June 30, 2020, has been prepared to give effect to the distributions as if they had occurred on June 30, 2020.
The unaudited pro forma financial information was prepared utilizing our historical financial data derived from the interim consolidated financial statements included in our Quarterly Report on Form 10-Q filed with the SEC on August 5, 2020 and from the audited consolidated financial statements for the period ended December 31, 2019 included in our Annual Report on Form 10-K filed with the SEC on February 28, 2020. The pro forma adjustments are described in the notes to the unaudited pro forma information and are based upon available information and assumptions that we believe are reasonable.
The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of what our financial performance and financial position would have been had the transaction been completed on the dates assumed nor is such unaudited pro forma financial information necessarily indicative of the results to be expected in any future period.
EASTERN ENERGY GAS HOLDINGS, LLC
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2019
| Eastern Energy | Questar Pipeline (a) | Pro Forma Adjustments | Eastern Energy Pro Forma | |||||||||||||
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Operating Revenue | $ | 2,169 | $ | (244 | ) | $ | — | $ | 1,925 | |||||||
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Operating Expenses | ||||||||||||||||
Purchased gas | 7 | (3 | ) | — | 4 | |||||||||||
Other energy-related purchases | 2 | (2 | ) | — | — | |||||||||||
Other operations and maintenance: | ||||||||||||||||
Affiliated suppliers | 168 | (51 | ) | — | 117 | |||||||||||
Other | 556 | (7 | ) | — | 549 | |||||||||||
Depreciation and amortization | 367 | (51 | ) | — | 316 | |||||||||||
Other taxes | 154 | (8 | ) | — | 146 | |||||||||||
Impairment of assets and related charges | 13 | — | — | 13 | ||||||||||||
Gains on sales of assets | (2 | ) | — | — | (2 | ) | ||||||||||
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Total operating expenses | 1,265 | (122 | ) | — | 1,143 | |||||||||||
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Income from continuing operations | 904 | (122 | ) | — | 782 | |||||||||||
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Earnings from equity method investees | 43 | (3 | ) | — | 40 | |||||||||||
Other income | 166 | (1 | ) | — | 165 | |||||||||||
Interest and related charges | 311 | (19 | ) | — | 292 | |||||||||||
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Income from continuing operations before income tax expense | 802 | (107 | ) | — | 695 | |||||||||||
Income tax expense (benefit) | 101 | (148 | ) | — | (47 | ) | ||||||||||
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Net Income from Continuing Operations | 701 | 41 | — | 742 | ||||||||||||
Net Income from discontinued operations | 141 | — | — | 141 | ||||||||||||
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Net Income including noncontrolling interests | 842 | 41 | — | 883 | ||||||||||||
Noncontrolling interests | 121 | — | 235 | (b) | 356 | |||||||||||
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Net Income | $ | 721 | $ | 41 | $ | (235 | ) | $ | 527 | |||||||
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EASTERN ENERGY GAS HOLDINGS, LLC
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2020
| Eastern Energy | Questar Pipeline (a) | Pro Forma Adjustments | Eastern Energy Pro Forma | |||||||||||||
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Operating Revenue | $ | 1,066 | $ | (120 | ) | $ | — | $ | 946 | |||||||
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Operating Expenses | ||||||||||||||||
Purchased gas | 8 | (2 | ) | — | 6 | |||||||||||
Other energy-related purchases | 1 | (1 | ) | — | — | |||||||||||
Other operations and maintenance: | ||||||||||||||||
Affiliated suppliers | 79 | (20 | ) | — | 59 | |||||||||||
Other | 236 | (6 | ) | — | 230 | |||||||||||
Depreciation and amortization | 187 | (25 | ) | — | 162 | |||||||||||
Other taxes | 77 | (4 | ) | — | 73 | |||||||||||
Impairment of assets and other charges | 482 | — | — | 482 | ||||||||||||
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Total operating expenses | 1,070 | (58 | ) | — | 1,012 | |||||||||||
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Income (loss) from continuing operations | (4 | ) | (62 | ) | — | (66 | ) | |||||||||
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Earnings from equity method investees | 23 | (1 | ) | — | 22 | |||||||||||
Other income | 95 | — | — | 95 | ||||||||||||
Interest and related charges | 108 | (10 | ) | — | 98 | |||||||||||
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Income (loss) from continuing operations before income tax expense | 6 | (53 | ) | — | (47 | ) | ||||||||||
Income tax expense (benefit) | (30 | ) | (12 | ) | — | (42 | ) | |||||||||
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Net income (loss) including noncontrolling interests | 36 | (41 | ) | — | (5 | ) | ||||||||||
Noncontrolling interests | 65 | — | 130 | (b) | 195 | |||||||||||
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Net Income (Loss) | $ | (29 | ) | $ | (41 | ) | $ | (130 | ) | $ | (200 | ) | ||||
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EASTERN ENERGY GAS HOLDINGS, LLC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2020
| Eastern Energy | Questar Pipeline (a) | Pro Forma Adjustments | Eastern Energy Pro Forma | |||||||||||||
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ASSETS | ||||||||||||||||
Current Assets | ||||||||||||||||
Cash and cash equivalents | $ | 53 | $ | (9 | ) | $ | — | $ | 44 | |||||||
Customer receivables (less allowance for doubtful accounts of $5) | 151 | (13 | ) | — | 138 | |||||||||||
Other receivables | 12 | (1 | ) | — | 11 | |||||||||||
Affiliated receivables | 77 | (6 | ) | — | 71 | |||||||||||
Affiliated notes receivable | 263 | — | — | 263 | ||||||||||||
Inventories | 130 | (7 | ) | — | 123 | |||||||||||
Prepayments | 43 | (1 | ) | — | 42 | |||||||||||
Gas imbalances | 25 | (2 | ) | — | 23 | |||||||||||
Other | 23 | (6 | ) | — | 17 | |||||||||||
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Total current assets | 777 | (45 | ) | — | 732 | |||||||||||
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Investments | ||||||||||||||||
Affiliated notes receivable | 2,272 | — | — | 2,272 | ||||||||||||
Investment in equity method affiliates | 310 | (20 | ) | (16 | )(c) | 274 | ||||||||||
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Total investments | 2,582 | (20 | ) | (16 | ) | 2,546 | ||||||||||
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Property, Plant and Equipment | ||||||||||||||||
Property, plant and equipment | 14,899 | (1,902 | ) | 7 | (c) | 13,004 | ||||||||||
Accumulated depreciation and amortization | (3,695 | ) | 810 | (11 | )(c) | (2,896 | ) | |||||||||
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Total property, plant and equipment, net | 11,204 | (1,092 | ) | (4 | ) | 10,108 | ||||||||||
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Deferred Charges and Other Assets | ||||||||||||||||
Goodwill | 1,471 | — | (185 | )(d) | 1,286 | |||||||||||
Other | 1,107 | (38 | ) | 5 | 1,074 | |||||||||||
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Total deferred charges and other assets | 2,578 | (38 | ) | (180 | ) | 2,360 | ||||||||||
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Total assets | $ | 17,141 | $ | (1,195 | ) | $ | (200 | ) | $ | 15,746 | ||||||
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| Eastern Energy | Questar Pipeline (a) | Pro Forma Adjustments | Eastern Energy Pro Forma | |||||||||||||
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LIABILITIES AND EQUITY | ||||||||||||||||
Current Liabilities | ||||||||||||||||
Securities due within one year | $ | 1,200 | $ | — | $ | — | $ | 1,200 | ||||||||
Short-term debt | — | — | — | — | ||||||||||||
Accounts payable | 52 | (4 | ) | — | 48 | |||||||||||
Payables to affiliates | 159 | (31 | ) | — | 128 | |||||||||||
Affiliated current borrowings | 314 | — | — | 314 | ||||||||||||
Other | 382 | (26 | ) | — | 356 | |||||||||||
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Total current liabilities | 2,107 | (61 | ) | — | 2,046 | |||||||||||
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Long-Term Debt | ||||||||||||||||
Long-term debt | 4,324 | (425 | ) | — | 3,899 | |||||||||||
Finance leases | 5 | — | — | 5 | ||||||||||||
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Total long-term debt | 4,329 | (425 | ) | — | 3,904 | |||||||||||
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Deferred Credits and Other Liabilities | ||||||||||||||||
Deferred income taxes and investment tax credits | 1,156 | (80 | ) | — | 1,076 | |||||||||||
Other | 1,093 | (154 | ) | — | 939 | |||||||||||
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Total deferred credits and other liabilities | 2,249 | (234 | ) | — | 2,015 | |||||||||||
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Total liabilities | 8,685 | (720 | ) | — | 7,965 | |||||||||||
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Commitments and Contingencies | ||||||||||||||||
Equity | ||||||||||||||||
Membership interests | 7,352 | (475 | ) | (2,949 | ) | 3,928 | ||||||||||
Accumulated other comprehensive loss | (271 | ) | — | — | (271 | ) | ||||||||||
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Total members’ equity | 7,081 | (475 | ) | (2,949 | ) | 3,657 | ||||||||||
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Noncontrolling interests | 1,375 | — | 2,749 | (e) | 4,124 | |||||||||||
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Total equity | 8,456 | (475 | ) | (200 | ) | 7,781 | ||||||||||
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Total liabilities and equity | $ | 17,141 | $ | (1,195 | ) | $ | (200 | ) | $ | 15,746 | ||||||
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EASTERN ENERGY GAS HOLDINGS, LLC
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma consolidated financial statements included herein have been derived from the following historical financial statements:
| • | the audited historical financial statements of Eastern Energy for the year ended December 31, 2019; and |
| • | the unaudited interim financial statements of Eastern Energy as of and for the six months ended June 30, 2020. |
On November 1, 2020, Eastern Energy distributed all of the issued and outstanding membership interests of Questar Pipeline and a 50% noncontrolling interest in Cove Point. The pro forma adjustments have been prepared as if the dispositions of Questar Pipeline and a 50% noncontrolling interest in Cove Point occurred on January 1, 2019 in the case of the unaudited pro forma consolidated statements of income for the year ended December 31, 2019 and for the six months ended June 30, 2020, and on June 30, 2020 in the case of the unaudited pro forma consolidated balance sheet. The adjustments are based on currently available information and certain estimates and assumptions, and therefore the actual effects of these transactions will differ from the pro forma adjustments. However, management believes that the assumptions used provide a reasonable basis for presenting the significant effects of the transactions, and that the pro forma adjustments in the unaudited pro forma consolidated financial statements give appropriate effect to the assumptions. The effects on the unaudited pro forma consolidated financial statements of the transactions described above are more fully described in Note 3.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed in preparing the unaudited pro forma consolidated financial statements are those used by Eastern Energy as set forth in the audited historical financial statements and notes of Eastern Energy included in its Annual Report on Form 10-K for the year ended December 31, 2019, and in the unaudited historical interim financial statements and notes of Eastern Energy included in its Quarterly Report on Form 10-Q for the six months ended June 30, 2020.
NOTE 3. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS
The following transactions are directly attributable to Eastern Energy’s disposition of Questar Pipeline and Cove Point.
| (a) | Represents the distribution of Questar Pipeline to Dominion Energy. |
| (b) | Reflects the income attributable to the 50% noncontrolling interest of Cove Point retained by Dominion Energy. |
| (c) | Reflects purchase accounting adjustments from when Eastern Energy acquired Questar Pipeline, including value adjustments for equity method investments of $16 million and net PP&E of $(4) million that would be disposed of with Questar Pipeline. |
| (d) | Reflects allocated goodwill of $185 million from Eastern Energy associated with the disposal of Questar Pipeline. The allocated amount of goodwill was determined via a relative fair value approach. |
| (e) | Reflects the distribution of the 50% noncontrolling interest in Cove Point to Dominion Energy. |
