Edward Jones Research Analyst Andy Pusateri says that if Dominion Resources, Inc. (D) follows through on plans to create an MLP in the first half of 2014 that it will generate higher cash flow. He says he expects Dominion to reduce taxes by putting mid-stream assets from its Blue Racer JV into an MLP. The ultimate result, he says, will be an increased dividend for Dominion shareholders.
“I would expect on the earnings call maybe a little more clarity around when they would file the S1 or when they would expect to IPO the MLP,” Pusateri says. “But I think that’s going to be important.”
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In addition, Pusateri says Dominion is one of few companies with exposure to the Cove Point LNG facility. He says the company is making progress toward getting approval to export to non-free trade agreement countries. Eventually, Pusateri says Dominion might drop Cove Point assets into an MLP, which would also likely lead to higher earnings and dividend growth.
“They have contracts, construction will begin this year,” Pusateri says. “And I think that we are still a few years out from an in-service date on Dominion, but I think as they kind of make the progress along the way they will start to get more and more credit for the ultimate exportation of this LNG.”
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