Dominion, Richmond, Va., (NYSE: D) plans to sell most of its E&P assets to focus on its power-related businesses. The market estimates the assets' value at between $10- and $15 billion.

The assets include properties in the deepwater Gulf of Mexico, West Texas, Midcontinent, Rockies and the Western Canadian Sedimentary Basin. Production is 1.2 billion cu. ft. of gas equivalent per day, with proved reserves of 5.5 trillion cu. ft. equivalent (76% gas).

Dominion will retain its Appalachian Basin properties as they fit with its gas pipeline, storage and gathering businesses. The Appalachian properties account for approximately 17% of proved reserves and 8% of Dominion's average daily production. They total 1.1 trillion cu. ft. equivalent of reserves.

Dominion president and chief executive Thomas F. Farrell says, "Our strategic review has determined that the best long-term course for Dominion is to place greater emphasis on our traditional utility businesses, which will account for about 64% of our income this year."

A formal sale process will begin in mid-February with closing expected by mid-2007. Dominion's E&P assets are managed by its Houston-based subsidiary, Dominion Exploration & Production Inc. Proceeds will be used to reduce debt, repurchase shares and acquire other assets.

JP Morgan, Lehman Brothers and Juniper Advisory LP are financial advisors to Dominion, and Merrill Lynch is advising Dominion on existing and future activities.

Standard & Poor's affirmed its BBB corporate credit rating on Dominion and revised its outlook on the company to Positive from Stable. The company had about $18.7 billion of debt, including off-balance-sheet obligations, as of Sept. 30.

S&P analyst Aneesh Prabhu says, "The positive outlook is premised on our expectation that management will have greater emphasis on low-risk businesses while deploying excess cash."

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