Dominion Resources Inc. (NYSE: D) is making some big changes. The company wants to unload about 83% of its oil and gas production business. The reserves are in areas such as New Mexico, the Permian Basin in Texas, the Gulf of Mexico and Canada.
Such a deal will carry a heavy price -- the estimate is $15 billion or so. But of course there is a ton of cash in the private equity sector and it looks like Dominion will have no trouble finding buyers.
According to the Wall Street Journal, one group includes firms like Madison Dearborn Partners, Warburg Pincus, First Reserve and Carlyle Group. And it looks like Goldman Sachs (NYSE: GS0) and Morgan Stanley (NYSE: MS) will also join the party.
Aren't these companies arch enemies?
Yes they are. But big-time deals require teamwork. Besides, Dominion's assets are top-notch and should be a strong source of ongoing cash flow generation as well as tax benefits.
And the interest in Dominion is another sign that private equity thinks that over the new few years energy prices should increase.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
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