DTE Energy to Spin Off Gas Pipeline Business
NEW YORK (Reuters) — DTE Energy will spin off its gas pipeline business into a publicly-traded company, the Michigan utility said on Tuesday, a move that will increase its focus on providing power to consumers.
DTE Midstream will be separated by mid-2021, with ownership awarded to DTE Energy shareholders via a share dividend, a structure that would prevent tax liabilities, the Detroit-based firm said in a statement.
Investors welcomed the news, sending DTE Energy shares 2% higher.
DTE Midstream will generate around $700 million of earnings before interest, tax, depreciation and amortization (EBITDA) in 2020 and carry debt worth around four times that amount, according to a DTE presentation.
While DTE Energy CEO Jerry Norcia declined to give a valuation for DTE Midstream, a source familiar with the matter said the new company would likely be worth between $7.5 billion and $8 billion, including debt.
Once separated, DTE Energy would make 90% of its earnings from its regulated utility, up from 70%. The move allows it to raise capital investment to $17 billion over five years, which is important as DTE transitions towards cleaner generation sources, the statement added.
Utilities have shed non-regulated units in recent years as investors prefer the steady earnings performance of regulated power generation.
Activist investment firm Elliott Management Corp said in a statement it welcomed the announcement, adding it had been talking to DTE management for "several months." It did not disclose whether it owns shares in DTE Energy.
DTE Energy serves 2.2 million electricity customers and a further 1.3 million gas consumers in Michigan. DTE Midstream transports natural gas extracted from shale basins in Appalachia and Louisiana.
Related News
Related News
- Trump Aims to Revive 1,200-Mile Keystone XL Pipeline Despite Major Challenges
- ONEOK Agrees to Sell Interstate Gas Pipelines to DT Midstream for $1.2 Billion
- Energy Transfer Reaches FID on $2.7 Billion, 2.2 Bcf/d Permian Pipeline
- Boardwalk Approves 110-Mile, 1.16 Bcf/d Mississippi Kosci Junction Pipeline Project
- Kinder Morgan Approves $1.4 Billion Mississippi Crossing Project to Boost Southeast Gas Supply
- Tullow Oil on Track to Deliver $600 Million Free Cash Flow Over Next 2 Years
- GOP Lawmakers Slam New York for Blocking $500 Million Pipeline Project
- Enbridge Should Rethink Old, Troubled Line 5 Pipeline, IEEFA Says
- Energy Transfer Reaches FID on $2.7 Billion, 2.2 Bcf/d Permian Pipeline
- Polish Pipeline Operator Offers Firm Capacity to Transport Gas to Ukraine in 2025
Comments