Berkshire Hathaway Energy, a subsidiary of Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A, BRK.B), has entered into an agreement to buy Dominion Energy’s (NYSE:D) 50% limited partnership stake in the Cove Point liquefied natural gas (LNG) plant located in Lusby, Maryland. The deal, which is subject to regulatory approval, is valued at $3.3 billion and is expected to close by the end of this year.
Dominion is selling its Cove Point stake as it considers it to be a non-core business. The company believes that the sale of its Cove Point stake will allow it to focus on its state-regulated utility business. Dominion intends to use the sale proceeds to repay debt.
Berkshire’s Exposure to the Energy Sector
Upon completion of the deal, Berkshire Hathaway Energy, which already operates the facility, will own a 75% stake in Cove Point LNG. Meanwhile, a subsidiary of Brookfield Infrastructure Partners (NYSE:BIP) will hold the remaining 25% stake.
A Bloomberg report noted that the Cove deal will give Berkshire control of one of the seven LNG export facilities in the U.S. The deal comes at a time when the fuel has gained importance due to the Russia-Ukraine war. While natural gas prices have cooled down this year, they spiked last year when the Russia-Ukraine conflict significantly impacted supplies.
Buffett’s Berkshire has been increasing exposure to the energy sector and has spent billions in buying shares of Occidental Petroleum (NYSE:OXY). In fact, with its latest purchase in late June, Berkshire raised its stake in Occidental to 25.1% from 24.9%. Further, despite trimming the stake in Chevron (NYSE:CVX), the oil and gas giant was still the fifth-largest publicly-traded holding of Berkshire in Q1 2023.
Is BRK a Good Stock to Buy?
Wall Street has a Moderate Buy rating on Berkshire based on one bullish review. Berkshire’s class B shares have risen over 10% year-to-date.
