Form 8-K Dominion Midstream Partn For: Sep 29

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported) September 29, 2015

Dominion Midstream Partners, LP

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware		001-36684		46-5135781
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

120 Tredegar Street Richmond, Virginia		23219
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code (804) 819-2000

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

---

Item 8.01

Other Events.

On April 1, 2015, Dominion Midstream Partners, LP (the “Partnership”) entered into a Purchase, Sale and Contribution Agreement (the “Contribution Agreement”) with Dominion Resources, Inc. (“Dominion”) and Dominion MLP Holding Company II, Inc. (“Holdco”), a wholly owned subsidiary of Dominion. Pursuant to the terms of the Contribution Agreement, Holdco sold and contributed to the Partnership and the Partnership purchased from Holdco all of the issued and outstanding membership interests of Dominion Carolina Gas Transmission, LLC (successor by statutory conversion to and formerly known as Carolina Gas Transmission Corporation) (“DCG”) (the “DCG Drop Down”).

Prior to the DCG Drop Down, on January 31, 2015, Dominion completed the acquisition of 100% of the equity interests of Carolina Gas Transmission Corporation from SCANA Corporation. The contribution of DCG by Dominion to Dominion Midstream is considered to be a reorganization of entities under common control. Transfers of net assets or exchanges of membership interests between entities under common control are accounted for as if the transfer occurred at the beginning of the period, and prior periods are retrospectively adjusted to furnish comparative information similar to the pooling method. As a result, the Partnership is providing consolidated financial statements to include its 100% interest in the financial results of DCG for the period from January 31, 2015 until March 31, 2015.

Attached hereto as Exhibit 99.1 are the retrospectively adjusted unaudited consolidated financial statements of the Partnership at March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014, which replace the Part I, Item 1. Financial Statements in the Partnership’s Quarterly Report for the quarterly period ended March 31, 2015 as filed with the Securities and Exchange Commission (the “SEC”) on May 5, 2015 (The “First Quarter 2015 Form 10-Q”). These unaudited consolidated financial statements give retrospective effect to the DCG Drop Down as though it had occurred on January 31, 2015. Attached hereto as Exhibit 99.2 is the retrospectively adjusted Management’s Discussion and Analysis of Financial Condition and Results of Operations, which relates to the updated unaudited consolidated financial statements and replaces Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the First Quarter 2015 Form 10-Q.

The information in this report should be read in conjunction with the other information included (but not replaced as described above) in the First Quarter 2015 Form 10-Q. More current information is contained in the Partnership’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 and the Partnership’s other filings with the SEC.

 

Item 9.01

Financial Statements and Exhibits.

 

99.1		Updated Financial Statements for the quarterly period ended March 31, 2015*
99.2		Updated Management’s Discussion and Analysis of Financial Condition and Results of Operations for the quarterly period ended March 31, 2015*

* Filed herewith.

---

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: September 29, 2015

Exhibit 99.1

GLOSSARY OF TERMS

The following abbreviations or acronyms used in this Form 8-K are defined below:

 

Abbreviation or Acronym		Definition
2005 Agreement		An agreement effective March 1, 2005, in which Cove Point entered into a new agreement with the Sierra Club and the Maryland Conservation Council, Inc.
Additional Return Distributions		The additional cash distribution equal to 3.0% of Cove Point’s Modified Net Operating Income in excess of $600 million distributed each year
AFUDC		Allowance for funds used during construction
ARO		Asset retirement obligation
Columbia to Eastover Project		Project to provide 15,800 Dths/day of firm transportation service from an existing interconnect with Southern Natural Gas Company, LLC in Aiken County, South Carolina and provide for a receipt point change of 2,200 Dths/day under an existing contract from an existing interconnect with Transco in Cherokee County, South Carolina for a total 18,000 Dths/day, to a new delivery point for the International Paper Company at its pulp and paper mill known as the Eastover Plant in Richland County, South Carolina
Cove Point		Dominion Cove Point LNG, LP
Cove Point Holdings		Cove Point GP Holding Company, LLC
Cove Point LNG Facility		An LNG import/regasification and storage facility located on the Chesapeake Bay in Lusby, Maryland owned by Cove Point
Cove Point Pipeline		An approximately 136-mile natural gas pipeline owned by Cove Point that connects the Cove Point LNG Facility to interstate natural gas pipelines
CPCN		Certificate of Public Convenience and Necessity
DCG		Dominion Carolina Gas Transmission, LLC (successor by statutory conversion to and formerly known as Carolina Gas Transmission Corporation)
DCG Acquisition		The acquisition of DCG by Dominion Midstream from Dominion on April 1, 2015
DCG Predecessor		Dominion as the predecessor for accounting purposes for the period from Dominion’s acquisition of DCG from SCANA on January 31, 2015 until the DCG Acquisition
DCPI		Dominion Cove Point, Inc.
Dominion		The legal entity, Dominion Resources, Inc., one or more of its consolidated subsidiaries (other than Dominion Midstream GP, LLC and its subsidiaries) or operating segments or the entirety of Dominion Resources, Inc. and its consolidated subsidiaries
Dominion Midstream		The legal entity, Dominion Midstream Partners, LP, one or more of its consolidated subsidiaries, Cove Point Holdings and DCG (beginning April 1, 2015), or the entirety of Dominion Midstream Partners, LP and its consolidated subsidiaries
Dominion Payroll		Dominion Payroll Company, Inc.
DRS		Dominion Resources Services, Inc.
Dth		Dekatherm
Edgemoor Project		Project to provide 45,000 Dths/day of firm transportation service from an existing interconnect with Transco in Cherokee County, South Carolina to customers in Calhoun and Lexington Counties, South Carolina
FERC		Federal Energy Regulatory Commission
GAAP		U.S. generally accepted accounting principles
IDR		Incentive distribution right
Import Shippers		The three LNG import shippers consisting of BP Energy Company, Shell NA LNG, Inc. and Statoil Natural Gas, LLC
Liquefaction Project		A natural gas liquefaction/export facility currently under construction by Cove Point
LNG		Liquefied natural gas
MLP		Master limited partnership, equivalent to publicly traded partnership
Modified Net Operating Income		Cove Point’s Net Operating Income plus any interest expense included in the computation of Net Operating Income
Net Operating Income		Cove Point’s gross revenues from operations minus its interest expense and operating expenses, but excluding depreciation and amortization, as determined for U.S. federal income tax purposes
NGA		Natural Gas Act of 1938, as amended
Offering		The initial public offering of common units of Dominion Midstream
Preferred Equity Interest		A perpetual, non-convertible preferred equity interest in Cove Point entitled to the Preferred Return Distributions and the Additional Return Distributions

 

1

---

Abbreviation or Acronym		Definition
Preferred Return Distributions		The first $50.0 million of annual cash distributions made by Cove Point
SCANA		SCANA Corporation
SEC		Securities and Exchange Commission
Storage Customers		The four local distribution companies that receive firm peaking services from Cove Point, consisting of: Atlanta Gas Light Company, Public Service Company of North Carolina, Incorporated, Virginia Natural Gas, Inc. and Washington Gas Light Company
Transco		Transcontinental Gas Pipe Line Company, LLC
U.S.		United States of America

 

2

---

ITEM 1. FINANCIAL STATEMENTS

DOMINION MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

		Three Months Ended March 31,
		2015				2014
						(Predecessor)
(millions, except per unit data)
Operating Revenue(1)		$	78.4			$	68.9
Operating Expenses
Purchased gas(1)			3.9				5.3
Other operations and maintenance:
Affiliated suppliers			4.8				2.0
Other			8.5				8.4
Depreciation and amortization			10.6				7.8
Other taxes			5.9				5.6
Total operating expenses			33.7				29.1
Income from operations			44.7				39.8
Other income			0.2				—
Income from operations including noncontrolling interest before income taxes			44.9				39.8
Income tax expense			2.1				15.2
Net Income including noncontrolling interest and DCG Predecessor		$	42.8			$	24.6
Less: Net income attributable to DCG Predecessor			2.3
Net income including noncontrolling interest		$	40.5
Less: Net income attributable to noncontrolling interest			28.7
Net income attributable to partners		$	11.8
Net income attributable to partners’ ownership interest
Common unitholders’ interest in net income		$	5.9
Subordinated unitholder’s interest in net income			5.9
Net income per limited partner unit (basic and diluted)
Common units		$	0.19
Subordinated units		$	0.19

(1)	See Note 13 for amounts attributable to related parties.

The accompanying notes are an integral part of Dominion Midstream’s Consolidated Financial Statements.

 

3

---

DOMINION MIDSTREAM PARTNERS, LP

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

		March 31, 2015				December 31, 2014
(millions)
ASSETS
Current Assets
Cash and cash equivalents		$	48.0			$	175.4
Customer and other receivables			28.9				19.9
Affiliated receivables			6.1				6.1
Prepayments			6.4				9.5
Materials and supplies			11.9				8.7
Regulatory assets			3.8				1.7
Other			3.0				4.7
Total current assets			108.1				226.0
Property, Plant and Equipment
Property, plant and equipment			2,847.5				2,203.1
Accumulated depreciation and amortization			(326.4	)			(231.2	)
Total property, plant and equipment, net			2,521.1				1,971.9
Deferred Charges and Other Assets
Goodwill			295.5				45.9
Intangible assets, net			15.9				12.1
Regulatory assets			2.6				2.5
Deferred income taxes			14.2				—
Other			0.3				—
Total deferred charges and other assets			328.5				60.5
Total assets		$	2,957.7			$	2,258.4

The accompanying notes are an integral part of Dominion Midstream’s Consolidated Financial Statements.

 

4

---

DOMINION MIDSTREAM PARTNERS, LP

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Unaudited)

 

		March 31, 2015				December 31, 2014
(millions)
LIABILITIES AND EQUITY AND PARTNERS’ CAPITAL
Current Liabilities
Accounts payable		$	106.4			$	3.3
Payables to affiliates			3.7				2.5
Accrued payroll and taxes			3.0				1.5
Regulatory liabilities			3.6				3.6
Deferred revenue			0.7				3.9
Natural gas imbalances(1)			5.9				2.7
CPCN obligation			7.9				7.9
Other(1)			15.0				6.4
Total current liabilities			146.2				31.8
Deferred Credits and Other Liabilities
Asset retirement obligations			12.6				0.3
Pension and other postretirement benefit liabilities(1)			4.6				4.4
Regulatory liabilities			71.8				33.5
CPCN obligation			36.2				36.2
Other			2.2				1.4
Total deferred credits and other liabilities			127.4				75.8
Total liabilities			273.6				107.6
Commitments and Contingencies (see Note 11)
Equity and Partners’ Capital
DCG predecessor equity			501.6				—
Common unitholders - public (20,132,377 units issued and outstanding)			396.4				395.4
Common unitholder - Dominion (11,847,789 units issued and outstanding)			214.2				213.7
Subordinated unitholder - Dominion (31,972,789 units issued and outstanding)			467.7				466.2
General Partner interest - Dominion (non-economic interest)			—				—
Total Dominion Midstream Partners, LP partners’ capital			1,579.9				1,075.3
Noncontrolling interest			1,104.2				1,075.5
Total equity and partners’ capital			2,684.1				2,150.8
Total liabilities and equity and partners’ capital		$	2,957.7			$	2,258.4

(1)	See Note 13 for amounts attributable to related parties.

The accompanying notes are an integral part of Dominion Midstream’s Consolidated Financial Statements.

 

5

---

DOMINION MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENT OF EQUITY AND PARTNERS’ CAPITAL

(Unaudited)

 

		Partnership
		DCG Predecessor Equity				Common Unitholders Public				Common Unitholder Dominion				Subordinated Unitholder Dominion				General Partner Dominion (non- economic interest)				Total Dominion Midstream Partners, LP Partners’ Equity and Capital				Noncontrolling interest				Total Equity and Partners’ Capital
(millions)
December 31, 2014		$	—			$	395.4			$	213.7			$	466.2			$	—			$	1,075.3			$	1,075.5			$	2,150.8
Net income including noncontrolling interest			—				3.7				2.2				5.9				—				11.8				28.7				40.5
DCG Acquisition:
Record Dominion’s net investment in DCG			497.0				—				—				—				—				497.0				—				497.0
Net income attributable to DCG Predecessor			2.3				—				—				—				—				2.3				—				2.3
Contribution from Dominion to DCG prior to DCG Acquisition			2.3				—				—				—				—				2.3				—				2.3
Distributions			—				(2.8	)			(1.7	)			(4.4	)			—				(8.9	)			—				(8.9	)
Unit awards (net of unearned compensation)			—				0.1				—				—				—				0.1				—				0.1
March 31, 2015		$	501.6			$	396.4			$	214.2			$	467.7			$	—			$	1,579.9			$	1,104.2			$	2,684.1

The accompanying notes are an integral part of Dominion Midstream’s Consolidated Financial Statements.

 

6

---

DOMINION MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		2015				2014
Three Months Ended March 31,						(Predecessor)
(millions)
Operating Activities
Net income including noncontrolling interest and DCG Predecessor		$	42.8			$	24.6
Adjustments to reconcile net income including noncontrolling interest and DCG Predecessor to net cash provided by operating activities:
Depreciation and amortization			10.6				7.8
Deferred income taxes			1.5				5.1
Other adjustments to income, net			1.0				—
Changes in:
Customer and other receivables			(2.4	)			—
Affiliated receivables			—				(0.8	)
Prepayments			3.2				2.9
Accounts payable			(0.5	)			(0.7	)
Payables to affiliates			1.3				2.5
Accrued payroll and taxes			0.8				10.9
Other operating assets and liabilities			(1.6	)			(3.3	)
Net cash provided by operating activities			56.7				49.0
Investing Activities
Plant construction and other property additions			(176.1	)			(76.2	)
Other			(0.3	)			(0.1	)
Net cash used in investing activities			(176.4	)			(76.3	)
Financing Activities
Contributions from Dominion			1.3				16.1
Distributions to common unitholders - public			(2.8	)			—
Distribution to common unitholder - Dominion			(1.7	)			—
Distribution to subordinated unitholder - Dominion			(4.4	)			—
Other			(0.1	)
Net cash provided by (used in) financing activities			(7.7	)			16.1
Decrease in cash and cash equivalents			(127.4	)			(11.2	)
Cash and cash equivalents at beginning of period			175.4				11.2
Cash and cash equivalents at end of period		$	48.0			$	—
Supplemental Cash Flow Information
Cash received during the period for income taxes		$	—			$	0.5
Significant noncash investing and financing activities:
Accrued capital expenditures			111.3				5.5
Predecessor investment in DCG			497.0				—
Equity contribution from Dominion to relieve payables to affiliates			1.0				20.0

The accompanying notes are an integral part of Dominion Midstream’s Consolidated Financial Statements.

 

7

---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Description of Business and Basis of Presentation

Description of Business

Dominion Midstream is a Delaware limited partnership formed on March 11, 2014 by Dominion MLP Holding Company, LLC and Dominion Midstream GP, LLC, both indirect wholly-owned subsidiaries of Dominion, to grow a portfolio of natural gas terminaling, processing, storage, transportation and related assets. On October 20, 2014, Dominion Midstream completed the Offering of 20,125,000 common units (including 2,625,000 common units issued pursuant to the exercise of the underwriters’ over-allotment option) representing limited partner interests. A registration statement on Form S-1, as amended through the time of its effectiveness, was filed by Dominion Midstream with the SEC and was declared effective on October 10, 2014.

Dominion Midstream acquired from Dominion the Preferred Equity Interest and non-economic general partner interest in Cove Point, the owner and operator of the Cove Point LNG Facility and the Cove Point Pipeline. The Preferred Equity Interest is a perpetual, non-convertible preferred equity interest entitled to Preferred Return Distributions so long as Cove Point has sufficient cash and undistributed Net Operating Income (determined on a cumulative basis from the closing of the Offering) from which to make Preferred Return Distributions. Preferred Return Distributions are made on a quarterly basis and are not cumulative. The Preferred Equity Interest is also entitled to the Additional Return Distributions.

On April 1, 2015, Dominion Midstream acquired from Dominion all issued and outstanding membership interests in DCG as described further in Note 2. DCG owns and operates nearly 1,500 miles of FERC-regulated open access, transportation-only interstate natural gas pipeline in South Carolina and southeastern Georgia.

Basis of Presentation

The contribution by Dominion to Dominion Midstream of the general partner interest in Cove Point and a portion of the Preferred Equity Interest is considered to be a reorganization of entities under common control. As a result, Dominion Midstream’s basis is equal to Dominion’s cost basis in the general partner interest in Cove Point and a portion of the Preferred Equity Interest. Dominion Midstream owns the general partner interest and controls Cove Point and therefore consolidates Cove Point. As such, Dominion Midstream’s investment in the Preferred Equity Interest and Cove Point’s preferred equity interest are eliminated in consolidation. Dominion’s retained common equity interest in Cove Point is reflected as noncontrolling interest.

The DCG Acquisition is considered to be a reorganization of entities under common control. As a result, Dominion Midstream’s basis in DCG is equal to Dominion’s cost basis in the assets and liabilities of DCG. On April 1, 2015, DCG became a wholly-owned subsidiary of Dominion Midstream and is therefore consolidated by Dominion Midstream. The accompanying financial statements and related notes have been retrospectively adjusted to include the historical results and financial position of DCG beginning January 31, 2015, the inception date of common control.

For the period prior to the closing of the Offering on October 20, 2014, the financial statements included in this Quarterly Report on Form 10-Q were derived from the financial statements and accounting records of Cove Point as our predecessor for accounting purposes. The financial statements were prepared using Dominion’s historical basis in the assets and liabilities of Cove Point and include all revenues, costs, assets and liabilities attributed to Cove Point. For the period subsequent to the closing of the Offering, the Consolidated Financial Statements represent the consolidated results of operations, financial position and cash flows of Dominion Midstream.

The financial statements for all periods presented include costs for certain general, administrative and corporate expenses assigned by DRS or Dominion Payroll to Dominion Midstream and Cove Point on the basis of direct and allocated methods in accordance with Dominion Midstream’s services agreements with DRS and Dominion Payroll and Cove Point’s services agreement with DRS. Where costs incurred cannot be determined by specific identification, the costs are allocated based on the proportional level of effort devoted by DRS or Dominion Payroll resources that is attributable to the entities, determined by reference to number of employees, salaries and wages and other similar measures for the relevant DRS department or Dominion Payroll. Management believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses are reasonable. Nevertheless, the Consolidated Financial Statements prior to the Offering may not include all of the actual expenses that would have been incurred had we been a stand-alone publicly traded partnership during the periods presented, and may not reflect our actual results of operations, financial position and cash flows had we been a stand-alone publicly traded partnership during the periods prior to the Offering.

 

8

---

Note 2. Acquisition

DCG

On April 1, 2015, Dominion Midstream entered into a Purchase, Sale and Contribution Agreement with Dominion pursuant to which Dominion Midstream purchased from Dominion all of the issued and outstanding membership interests of DCG in exchange for total consideration of approximately $500.8 million, as adjusted for working capital. Total consideration to Dominion consisted of the issuance of a two-year $300.8 million senior unsecured promissory note, as adjusted for working capital, payable to Dominion at an annual interest rate of 0.6%, and 5,112,139 unregistered common units, valued at $200.0 million, representing limited partner interests in Dominion Midstream, to Dominion. Interest on the note is payable quarterly, and all principal and accrued interest is due and payable at maturity on April 1, 2017, which under certain conditions can be extended at the option of Dominion Midstream to October 1, 2017. The number of units was based on the volume-weighted average trading price of Dominion Midstream’s common units for the 10 trading days prior to April 1, 2015, or $39.12 per unit. The DCG Acquisition supports the expansion of Dominion Midstream’s portfolio of natural gas terminaling, processing, storage, transportation and related assets.

The contribution of DCG by Dominion to Dominion Midstream is considered to be a reorganization of entities under common control. Accordingly, Dominion Midstream’s net investment in DCG will be recorded at Dominion’s historical cost of $501.6 million as of April 1, 2015. Common control began on January 31, 2015, concurrent with Dominion’s acquisition of DCG from SCANA, which was accounted for using the acquisition method of accounting. Accordingly, the Consolidated Financial Statements of Dominion Midstream reflect DCG’s financial results beginning January 31, 2015. The assets and liabilities of DCG are included in the Consolidated Balance Sheet at March 31, 2015.

In connection with the DCG Acquisition, Dominion Midstream entered into a registration rights agreement with Dominion pursuant to which Dominion Midstream must register the 5,112,139 common units issued to Dominion at its request, subject to certain terms and conditions. Additionally, at the time of Dominion’s acquisition of DCG, DCG entered into services agreements and an intercompany tax sharing agreement with Dominion as described in Note 13.

Note 3. Significant Accounting Policies

As permitted by the rules and regulations of the SEC, Dominion Midstream’s accompanying unaudited Consolidated Financial Statements exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with GAAP. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014.

In the opinion of management, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly Dominion Midstream’s financial position as of March 31, 2015, and its results of operations, cash flows and changes in equity for the three months ended March 31, 2015 and 2014. Such adjustments are normal and recurring in nature unless otherwise noted.

Dominion Midstream makes certain estimates and assumptions in preparing its Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates.

The results of operations for interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, purchased gas expenses and other factors.

Asset Retirement Obligations

Dominion Midstream recognizes AROs at fair value as incurred or when sufficient information becomes available to determine a reasonable estimate of the fair value of future retirement activities to be performed. These amounts are generally capitalized as costs of the related tangible long-lived assets. Since relevant market information is not available, fair value is estimated using discounted cash flow analyses. At least annually, Dominion Midstream evaluates the key assumptions underlying its AROs including estimates of the amounts and timing of future cash flows associated with retirement activities. AROs are adjusted when significant changes in these assumptions are identified. Dominion Midstream reports accretion of AROs and depreciation on asset retirement costs associated with its natural gas pipeline assets as an adjustment to the related regulatory liabilities when revenue is recoverable from customers for AROs.

 

9

---

Note 4. Net Income Per Limited Partner Unit

Net income per limited partner unit applicable to common and subordinated units is computed by dividing the respective limited partners’ interest in net income attributable to Dominion Midstream, after deducting any incentive distributions, by the weighted average number of common units and subordinated units outstanding. Because Dominion Midstream has more than one class of participating securities, the two-class method is used when calculating the net income per unit applicable to limited partners. The classes of participating securities include common units, subordinated units and IDRs.

Dominion Midstream’s net income is allocated to the limited partners in accordance with their respective partnership percentages, after giving effect to priority income allocations for incentive distributions, if any, to Dominion, the holder of the IDRs, pursuant to the partnership agreement. The distributions are declared and paid following the close of each quarter. Earnings in excess of distributions are allocated to the limited partners based on their respective ownership interests. Payments made to Dominion Midstream’s unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of earnings per limited partner unit.

Net income per limited partner unit is only calculated for the periods subsequent to the Offering as no units were outstanding prior to October 20, 2014. Diluted net income per limited partner unit is the same as basic net income per limited partner unit as there were no potentially dilutive common or subordinated units outstanding as of March 31, 2015.

The calculation of earnings per limited partner unit is as follows:

 

Three Months Ended March 31,		2015
(millions)
Net income attributable to partners		$	11.8
Less distributions declared on(1):
Incentive distribution holder rights(2)			—
Common unitholders			5.6
Subordinated unitholder			5.6
Total distributions declared			11.2
Undistributed earnings		$	0.6

(1)

On April 22, 2015, the Board of Directors of our general partner declared a quarterly cash distribution of $0.1750 per unit, totaling $12.1 million, for the three month period ending March 31, 2015. This distribution will be paid on May 15, 2015 to unitholders of record on May 5, 2015. The amount of distributions declared shown above is based on the units outstanding at March 31, 2015, and therefore excludes $0.9 million of distributions that will be paid on 5,112,139 common units issued to Dominion on April 1, 2015, in connection with the acquisition of DCG. See Note 2 for further information.

(2)	Dominion is a non-economic general partner that holds all of the IDRs.

 

Basic and diluted net income per limited partner unit		Common Units				Subordinated Units				Total
(millions, except for weighted average units and per unit data)
Distributions declared		$	5.6			$	5.6			$	11.2
Undistributed earnings			0.3				0.3				0.6
Net income attributable to partners		$	5.9			$	5.9			$	11.8
Weighted average units outstanding			31,980,110				31,972,789
Net income per limited partner unit		$	0.19			$	0.19

Note 5. Operating Revenue

Dominion Midstream’s operating revenue consists of the following:

 

		Three Months Ended March 31,
		2015				2014
(millions)
Gas transportation and storage		$	74.7			$	65.6
Other			3.7				3.3
Total operating revenue		$	78.4			$	68.9

 

10

---

Note 6. Property, Plant and Equipment

Major classes of property, plant and equipment and their respective balances for Dominion Midstream are as follows:

 

		March 31, 2015				December 31, 2014
(millions)
Storage		$	874.2			$	882.0
Transmission			664.2				323.9
Plant under construction			1,273.0				972.3
General and other			36.1				24.9
Total property, plant and equipment		$	2,847.5			$	2,203.1

The increase in property, plant and equipment is primarily related to the DCG Acquisition and capital expenditures for the Liquefaction Project.

During the three months ended March 31, 2015, Dominion Midstream capitalized interest costs and AFUDC of $0.2 million to property, plant and equipment. No such costs were capitalized in 2014.

Depreciation rates on utility property, plant and equipment are as follows:

 

		Three Months Ended March 31,
		2015				2014
(percent)
Storage			2.38				2.38
Transmission			2.28				2.82
General and other			7.60				2.49

Note 7. Goodwill and Intangible Assets

Goodwill

The changes in Dominion Midstream’s carrying amount and segment allocation of goodwill are presented below:

 

		Dominion Energy				Corporate and Other				Total
(millions)
Three Months Ended March 31, 2015
Beginning balance(1)		$	45.9			$	—			$	45.9
DCG Acquisition			249.6				—				249.6
Ending balance(1)		$	295.5			$	—			$	295.5

(1)	There are no accumulated impairment losses.

Other Intangible Assets

Dominion Midstream’s other intangible assets are subject to amortization over their estimated useful lives. Amortization expense for intangible assets was $0.3 million and $0.2 million for the three months ended March 31, 2015 and 2014, respectively. The increase in intangible assets is primarily due to software acquired in the DCG Acquisition. The acquired intangible assets have an estimated weighted-average amortization period of approximately 5 years. The components of intangible assets are as follows:

 

		March 31, 2015								December 31, 2014
		Gross Carrying Amount				Accumulated Amortization				Gross Carrying Amount				Accumulated Amortization
(millions)
Software and other		$	30.2			$	22.1			$	6.5			$	2.4
Licenses			11.0				3.2				11.0				3.0
Total		$	41.2			$	25.3			$	17.5			$	5.4

 

11

---

Note 8. Regulatory Assets and Liabilities

Regulatory assets and liabilities include the following:

 

		March 31, 2015				December 31, 2014
(millions)
Regulatory assets:
Unrecovered gas costs(1)		$	3.1			$	1.5
Other			0.7				0.2
Regulatory assets-current			3.8				1.7
Income taxes recoverable through future rates(2)			2.6				2.5
Regulatory assets-non-current			2.6				2.5
Total regulatory assets		$	6.4			$	4.2
Regulatory liabilities:
Overrecovered gas costs(1)		$	—			$	0.5
LNG cargo obligations(3)			—				3.0
Customer bankruptcy settlement(4)			2.9				—
Other			0.7				0.1
Regulatory liabilities-current			3.6				3.6
Provision for future cost of removal(5)			48.1				33.0
Customer bankruptcy settlement(4)			22.6				—
Other			1.1				0.5
Regulatory liabilities-non-current			71.8				33.5
Total regulatory liabilities		$	75.4			$	37.1

(1)	Reflects unrecovered/overrecovered gas costs, which are subject to annual filings with the FERC.

(2)	Amounts to be recovered through future rates to pay income taxes that become payable by unitholders when rate revenue is provided to recover AFUDC-equity when such amounts are recovered through book depreciation.

(3)	Reflects obligations to the Import Shippers for LNG cargo received. See Note 9 to the Consolidated Financial Statements in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014 for further information.

(4)	Represents the balance of proceeds from the monetization of a bankruptcy claim acquired as part of the DCG Acquisition, which is being amortized into operating revenue through February 2024.

(5)	Rates charged to customers include a provision for the cost of future activities to remove assets that are expected to be incurred at the time of retirement.

At March 31, 2015, approximately $3.8 million of regulatory assets represented past expenditures on which Dominion Midstream does not currently earn a return. These expenditures are expected to be recovered within one year.

Note 9. Regulatory Matters

The FERC regulates the transportation and sale for resale of natural gas in interstate commerce under the NGA and the Natural Gas Policy Act of 1978, as amended. Under the NGA, the FERC has authority over rates, terms and conditions of services performed by Cove Point and DCG. The FERC also has jurisdiction over siting, construction and operation of natural gas import facilities and interstate natural gas pipeline facilities.

There have been no significant developments regarding the regulatory matters disclosed in Note 9 to the Consolidated Financial Statements in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014.

During the second quarter of 2013, DCG executed binding precedent agreements for the approximately $35 million Edgemoor Project. The FERC approved the Edgemoor Project in February 2015 and construction commenced in March 2015. The project is expected to be placed into service in the fourth quarter of 2015.

In April 2014, DCG executed a binding precedent agreement for the approximately $35 million Columbia to Eastover Project.

In connection with Dominion’s acquisition of DCG on January 31, 2015, Dominion agreed to a rate moratorium which precludes DCG from filing a Section 4 NGA general rate case to establish base rates that would be effective prior to January 1, 2018.

 

12

---

Note 10. Asset Retirement Obligations

AROs represent obligations that result from laws, statutes, contracts and regulations related to the eventual retirement of certain of Dominion Midstream’s long-lived assets. Dominion Midstream’s AROs primarily represent the cost associated with the legal obligation to cap and purge underground transmission pipe and the interim retirement of natural gas transmission pipeline components.

The changes to AROs during 2014 and 2015 are as follows:

 

		Three Months Ended				Year Ended
		March 31, 2015				December 31, 2014
(millions)
Beginning balance(1)		$	0.4			$	0.4
DCG Acquisition			12.6				—
Obligations settled during the period			(0.2	)			—
Accretion			0.1				—
Ending balance(1)		$	12.9			$	0.4

(1)	Includes $0.1 million and $0.3 million reported in other current liabilities at December 31, 2014, and March 31, 2015, respectively.

Under the terms of the 2005 Agreement, Cove Point would be responsible for certain onshore and offshore site restoration activities at the Cove Point site only if it voluntarily tenders title according to the terms of this agreement. As Cove Point is permitted to operate the Cove Point LNG Facility for an indefinite time period and currently has no plans to voluntarily tender title, Cove Point does not have sufficient information to determine a reasonable range of settlement dates for decommissioning and therefore has not recorded an asset retirement obligation.

Note 11. Commitments and Contingencies

As a result of issues generated in the ordinary course of business, Dominion Midstream is involved in legal proceedings before various courts and is periodically subject to governmental examinations (including by the FERC), inquiries and investigations. Certain legal proceedings and governmental examinations involve demands for unspecified amounts of damages, are in an initial procedural phase, involve uncertainty as to the outcome of pending appeals or motions, or involve significant factual issues that need to be resolved, such that it is not possible for Dominion Midstream to estimate a range of possible loss. For such matters that Dominion Midstream cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the litigation or investigative processes such that Dominion Midstream is able to estimate a range of possible loss. For legal proceedings and governmental examinations for which Dominion Midstream is able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Estimated ranges of loss are inclusive of legal fees and net of any anticipated insurance recoveries. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any accrued liability is recorded on a gross basis with a receivable also recorded for any probable insurance recoveries. Any estimated range of possible loss may not represent Dominion Midstream’s maximum possible loss exposure. The circumstances of such legal proceedings and governmental examinations will change from time to time and actual results may vary significantly from the current estimate. Management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on Dominion Midstream’s financial position, liquidity or results of operations.

Cove Point Natural Heritage Trust

Under the terms of the 2005 Agreement, Cove Point is required to make an annual contribution to the Cove Point Natural Heritage Trust, an affiliated non-profit trust focused on the preservation and protection of ecologically sensitive sites at or near Cove Point, of $0.3 million for each year the facility is in operation. These annual payments are recorded in other operations and maintenance expense in the Consolidated Statements of Income. If Cove Point voluntarily tenders title according to the terms of this agreement, no contributions are required. There are no current plans to voluntarily tender title to the Cove Point site.

Surety Bonds

At March 31, 2015, Cove Point had purchased $10.8 million of surety bonds. Under the terms of surety bonds, Cove Point is obligated to indemnify the respective surety bond company for any amounts paid.

 

13

---

Lease Commitments

Dominion Midstream leases various facilities, vehicles and equipment under operating lease arrangements, the majority of which include terms of one year or less, require payments on a monthly or annual basis, and can be canceled at any time. Rental expense for Dominion Midstream totaled $0.7 million for the three months ended March 31, 2015. The majority of rent expense is included within other operations and maintenance expense in the Consolidated Statements of Income.

Note 12. Credit Risk

Credit risk is the risk of financial loss if counterparties fail to perform their contractual obligations. In order to minimize overall credit risk, credit policies are maintained, including the evaluation of counterparty financial condition. In addition, counterparties may make available collateral, including letters of credit, payment guarantees or cash deposits.

Dominion Midstream provides service to approximately seventy customers, including the Storage Customers, marketers or end users and the Import Shippers. The two largest customers comprised approximately 70% of the total transportation and storage revenues for the three months ended March 31, 2015, with Dominion Midstream’s largest customer representing approximately 59% of this amount.

For the three months ended March 31, 2014, Cove Point’s three largest customers comprised approximately 94% of the total transportation and storage revenues, with Cove Point’s largest customer representing approximately 73% of this amount.

Dominion Midstream maintains a provision for credit losses based on factors surrounding the credit risk of its customers, historical trends and other information. At March 31, 2015, the provision for credit losses was less than $0.1 million. Management believes, based on credit policies and the March 31, 2015 provision for credit losses, that it is unlikely that a material adverse effect on financial position, results of operations or cash flows would occur as a result of counterparty nonperformance.

Note 13. Related-Party Transactions

Dominion Midstream engages in related-party transactions primarily with other Dominion subsidiaries (affiliates). Dominion Midstream’s receivable and payable balances with affiliates are settled based on contractual terms or on a monthly basis, depending on the nature of the underlying transactions. Participation in certain Dominion benefit plans is described in Note 10 to the Consolidated Financial Statements in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014. At March 31, 2015 and December 31, 2014, amounts due to Dominion associated with these benefit plans were $4.6 million and $4.4 million, respectively, recorded in pension and other postretirement benefit liabilities in the Consolidated Balance Sheets. Transactions related to the DCG Acquisition are described in Note 2. A discussion of the remaining significant related party transactions follows.

Transactions with Affiliates

In connection with the Offering, our general partner entered into a services agreement with DRS. DRS provides administrative, management and other services to Dominion and its subsidiaries as a subsidiary service company. From time to time and at the option of our general partner, our general partner will request that DRS provide, and reimburse DRS for the cost of providing, such administrative, management and other services as it deems necessary or appropriate for our operations. We will reimburse our general partner and its affiliates for the associated costs of obtaining these services.

In connection with Dominion’s acquisition of DCG, DCG entered into services agreements beginning February 1, 2015 with DRS, for similar services as described above, and with Dominion Payroll, which provides human resources and operations services to Dominion and its subsidiaries as a subsidiary service company. Additionally, Dominion may seek reimbursement from DCG for costs incurred related to Dominion’s transition services agreement with SCANA to provide administrative functions related to DCG. During the three months ended March 31, 2015, Dominion did not seek reimbursement for any such costs.

Dominion Midstream provides transportation services to affiliates and affiliates provide goods and services to Dominion Midstream.

Affiliated transactions are presented below:

 

14

---

		Three Months Ended March 31,
		2015				2014
(millions)
Sales of natural gas transportation services to affiliates		$	0.7			$	0.8
Purchased gas from affiliates			0.2				0.2
Services provided by DRS and Dominion Payroll(1)(2)			5.5				3.3
Goods and services provided by affiliates to Dominion Midstream(1)			1.7				0.7

(1)	Includes $2.4 million and $2.0 million of capitalized expenditures for each of the three months in 2015 and 2014, respectively.

(2)

Dominion Midstream determined that neither it nor any of its consolidated entities is the most closely associated entity with DRS, an affiliated variable interest entity, and therefore none is the primary beneficiary. DRS provides accounting, legal, finance and certain administrative and technical services to all Dominion subsidiaries, including Dominion Midstream. Neither Dominion Midstream nor any of its consolidated subsidiaries has an obligation to absorb more than its allocated share of DRS costs. Dominion Midstream determined that neither it nor any of its consolidated entities is the most closely associated entity with Dominion Payroll, an affiliated variable interest entity, and therefore none is the primary beneficiary. Dominion Payroll provides human resources and operations services to certain Dominion subsidiaries, including Dominion Midstream. Neither Dominion Midstream nor any of its consolidated entities has an obligation to absorb more than its allocated share of Dominion Payroll costs.

Advance from Affiliate

An outstanding advance of $20.0 million previously received by Cove Point from an affiliate was converted to an equity contribution in March 2014.

Dominion Credit Facility

In connection with the Offering, Dominion Midstream entered into a credit facility with Dominion with a borrowing capacity of $300 million. The facility was undrawn at March 31, 2015. A summary of certain key terms of the credit facility with Dominion is included in Note 14 to the Consolidated Financial Statements in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014.

Income Taxes

Prior to the Offering, Cove Point participated in Dominion’s intercompany tax sharing agreement as described in Note 15 to the Consolidated Financial Statements in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014. Cove Point’s participation in this tax sharing agreement was terminated in 2014 in connection with the Offering.

At the time of the Offering, Cove Point settled net income taxes payable and deferred income taxes to Dominion of $147.9 million through equity contributions from Dominion. Prior to the Offering, Cove Point settled net income taxes payable to Dominion of $1.2 million through equity contributions from Dominion during the year ended December 31, 2014.

DCG participated in Dominion’s intercompany tax sharing agreement from February 1, 2015 through March 31, 2015. DCG’s participation in this tax sharing agreement was subsequently terminated in connection with the DCG Acquisition. At the time of the DCG Acquisition, DCG settled income taxes payable and net deferred income taxes of $13.4 million through an equity transaction with Dominion.

Natural Gas Imbalances

Dominion Midstream maintains natural gas imbalances with affiliates. The imbalances with affiliates are provided below:

 

		March 31, 2015				December 31, 2014
(millions)
Imbalances payable to affiliates		$	5.8			$	2.5

Right of First Offer

In connection with the Offering, Dominion Midstream entered into a right of first offer agreement with Dominion as described in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014. There have been no changes to this agreement.

 

15

---

Contributions from Dominion

In April 2015, Dominion contributed $205.2 million to Cove Point to fund capital expenditures related to the Liquefaction Project. In February 2015, Dominion contributed $1.3 million in cash to DCG to fund operations.

Transaction and transition costs incurred by the DCG Predecessor were attributed to Dominion Midstream and expensed in Operations and maintenance expense in the Consolidated Income Statement. At the time of the DCG Acquisition, Dominion Midstream settled amounts payable to Dominion of $1.0 million through equity contributions from Dominion.

Note 14. Income Taxes

Dominion Midstream is organized as an MLP, a pass-through entity for U.S. federal and state income tax purposes. Each unitholder is responsible for taking into account the unitholder’s respective share of Dominion Midstream’s items of taxable income, gain, loss and deduction in the preparation of income tax returns. Upon the closing of the Offering, Cove Point became a pass-through entity for U.S. federal and state income tax purposes.

Prior to the completion of the Offering, Cove Point was not treated as a partnership for U.S. federal and state income tax purposes. Its business activities were included in the consolidated U.S. federal and certain state income tax returns of Dominion or DCPI. DCG operated as a taxable corporation at the time of Dominion’s acquisition of DCG. In March 2015, DCG converted to a single member limited liability company and as a result, became a disregarded entity for income tax purposes and was treated as a taxable division of its corporate parent. Its business activities from January 31, 2015 through March 31, 2015, will be included in the consolidated U.S. federal and certain state income tax returns of Dominion. Effective with the DCG Acquisition, DCG is treated as a component of Dominion Midstream for income tax purposes.

During the periods in which Cove Point and DCG were included in the consolidated U.S. federal and certain state income tax returns of Dominion or DCPI, Dominion Midstream’s current income taxes were based on taxable income or loss, determined on a separate company basis, and, where applicable, settled in accordance with the principles of Dominion’s intercompany tax sharing agreement. The settlement of DCG’s federal and state income taxes payable and net deferred income taxes is reflected as an equity transaction in connection with the DCG Acquisition.

For the three months ended March 31, 2015 and 2014, the statutory U.S. federal income tax rate reconciles to the effective income tax rate as follows:

 

Three Months Ended March 31,		2015				2014
U.S. statutory rate			35.0	%			35.0	%
Partnership income not subject to income taxes(1)			(30.8	)			—
Increases resulting from:
State taxes, net of federal benefit(2)			0.4				3.2
Effective tax rate			4.6	%			38.2	%

(1)	Reflects the pass-through entity status of Dominion Midstream, including the operations of DCG subsequent to the DCG Acquisition, and Cove Point.

(2)	2015 amounts are attributable to the operations of DCG prior to the DCG Acquisition, and 2014 amounts are attributable to Cove Point.

See Note 15 to the Consolidated Financial Statements in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014 for additional information.

Note 15. Operating Segment

Dominion Midstream is organized primarily on the basis of products and services sold in the U.S. Dominion Energy, Dominion Midstream’s operating segment, consists of natural gas transportation, storage and regasification services.

Dominion Midstream also reports a Corporate and Other segment. The Corporate and Other segment primarily includes specific items attributable to Dominion Midstream’s operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance.

The following table presents segment information pertaining to Dominion Midstream’s operations:

 

16

---

		Dominion Energy				Corporate and Other				Total
(millions)
Three Months Ended March 31, 2015
Operating revenue		$	78.4			$	—			$	78.4
Net income including noncontrolling interest and DCG Predecessor			43.8				(1.0	)			42.8
Net income including noncontrolling interest			40.5				—				40.5
Net income attributable to partners			11.8				—				11.8
Three Months Ended March 31, 2014
Operating revenue		$	68.9			$	—			$	68.9
Net income including noncontrolling interest and DCG Predecessor			24.6				—				24.6

 

17

Exhibit 99.2

GLOSSARY OF TERMS

The following abbreviations or acronyms used in this Form 8-K are defined below:

 

Abbreviation or Acronym		Definition
Additional Return Distributions		The additional cash distribution equal to 3.0% of Cove Point’s Modified Net Operating Income in excess of $600 million distributed each year
Adjusted EBITDA		EBITDA after adjustment for EBITDA attributable to the DCG Predecessor and a noncontrolling interest in Cove Point held by Dominion subsequent to the Offering
CAA		Clean Air Act
Cove Point		Dominion Cove Point LNG, LP
Cove Point Holdings		Cove Point GP Holding Company, LLC
Cove Point LNG Facility		An LNG import/regasification and storage facility located on the Chesapeake Bay in Lusby, Maryland owned by Cove Point
Cove Point Pipeline		An approximately 136-mile natural gas pipeline owned by Cove Point that connects the Cove Point LNG Facility to interstate natural gas pipelines
DCG		Dominion Carolina Gas Transmission, LLC (successor by statutory conversion to and formerly known as Carolina Gas Transmission Corporation)
DCG Acquisition		The acquisition of DCG by Dominion Midstream from Dominion on April 1, 2015
DCG Predecessor		Dominion as the predecessor for accounting purposes for the period from Dominion’s acquisition of DCG from SCANA on January 31, 2015 until the DCG Acquisition
Dominion		The legal entity, Dominion Resources, Inc., one or more of its consolidated subsidiaries (other than Dominion Midstream GP, LLC and its subsidiaries) or operating segments or the entirety of Dominion Resources, Inc. and its consolidated subsidiaries
Dominion Midstream		The legal entity, Dominion Midstream Partners, LP, one or more of its consolidated subsidiaries, Cove Point Holdings and DCG (beginning April 1, 2015), or the entirety of Dominion Midstream Partners, LP and its consolidated subsidiaries
Dth		Dekatherm
EBITDA		Earnings before interest and associated charges, income tax expense, depreciation and amortization
Edgemoor Project		Project to provide 45,000 Dths/day of firm transportation service from an existing interconnect with Transco in Cherokee County, South Carolina to customers in Calhoun and Lexington Counties, South Carolina
EPA		Environmental Protection Agency
FERC		Federal Energy Regulatory Commission
GAAP		U.S. generally accepted accounting principles
GHG		Greenhouse gas
Import Shippers		The three LNG import shippers consisting of BP Energy Company, Shell NA LNG, Inc. and Statoil Natural Gas, LLC
Keys Energy Project		Project to provide 107,000 Dths/day of firm transportation service from Cove Point’s interconnect with Transco in Fairfax County, Virginia to Keys Energy Center, LLC’s power generating facility in Prince George’s County, Maryland
Liquefaction Project		A natural gas liquefaction/export facility currently under construction by Cove Point
LNG		Liquefied natural gas
MD&A		Management’s Discussion and Analysis of Financial Condition and Results of Operations
Modified Net Operating Income		Cove Point’s Net Operating Income plus any interest expense included in the computation of Net Operating Income
Net Operating Income		Cove Point’s gross revenues from operations minus its interest expense and operating expenses, but excluding depreciation and amortization, as determined for U.S. federal income tax purposes
Offering		The initial public offering of common units of Dominion Midstream
Preferred Equity Interest		A perpetual, non-convertible preferred equity interest in Cove Point entitled to the Preferred Return Distributions and the Additional Return Distributions
Preferred Return Distributions		The first $50.0 million of annual cash distributions made by Cove Point
SCANA		SCANA Corporation
St. Charles Transportation Project		Project to provide 132,000 Dths/day of firm transportation service from Cove Point’s interconnect with Transco in Fairfax County, Virginia to Competitive Power Venture Maryland, LLC’s power generating facility in Charles County, Maryland
Storage Customers		The four local distribution companies that receive firm peaking services from Cove Point, consisting of: Atlanta Gas Light Company, Public Service Company of North Carolina, Incorporated, Virginia Natural Gas, Inc. and Washington Gas Light Company
Transco		Transcontinental Gas Pipe Line Company, LLC
U.S.		United States of America

 

1

---

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MD&A discusses our results of operations and general financial condition. MD&A should be read in conjunction with the Consolidated Financial Statements.

Contents of MD&A

MD&A consists of the following information:

•

Forward-Looking Statements

•

How We Evaluate Our Operations

•

Factors Impacting Comparability of Our Financial Results

•

Accounting Matters

•

Results of Operations

•

Analysis of Consolidated Operations

•

Segment Results of Operations

•

Liquidity and Capital Resources

•

Future Issues and Other Matters

Forward-Looking Statements

This report contains statements concerning expectations, plans, objectives, future financial performance and other statements that are not historical facts. In most cases, the reader can identify these forward-looking statements by such words as “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “continue,” “target” or other similar words.

We make forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to differ materially from predicted results. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additionally, other factors may cause actual results to differ materially from those indicated in any forward-looking statement. These factors include but are not limited to:

 

•

Unusual weather conditions and their effect on energy sales to customers and energy commodity prices;

•

Extreme weather events and other natural disasters, including, but not limited to, hurricanes, high winds, severe storms, earthquakes, flooding and changes in water availability that can cause outages and property damage to facilities;

•

Federal, state and local legislative and regulatory developments, including changes in federal and state tax laws and regulations;

•

Changes to federal, state and local environmental laws and regulations, including those related to climate change, the tightening of emission or discharge limits for GHGs and other emissions, more extensive permitting requirements and the regulation of additional substances;

•

The cost of environmental compliance, including those costs related to climate change;

•

Changes in enforcement practices of regulators relating to environmental and safety standards and litigation exposure for remedial activities;

•

Changes in regulator implementation of environmental and safety standards and litigation exposure for remedial activities;

•

Difficulty in anticipating mitigation requirements associated with environmental and other regulatory approvals;

•

Fluctuations in energy-related commodity prices and the effect these could have on our earnings, liquidity position and the underlying value of our assets;

•

Counterparty credit and performance risk;

•

Employee workforce factors;

•

Risks of operating businesses in regulated industries that are subject to changing regulatory structures;

•

The ability to negotiate and consummate acquisitions from Dominion and third parties and the impacts of such acquisitions;

•

Receipt of approvals for, and timing of, closing dates for acquisitions;

•

The timing and execution of our growth strategy;

•

Political and economic conditions, including inflation and deflation;

•

Domestic terrorism and other threats to our physical and intangible assets, as well as threats to cybersecurity;

•

The timing and receipt of regulatory approvals necessary for planned construction or any future expansion projects, including the overall development of the Liquefaction Project, and compliance with conditions associated with such regulatory approvals;

•

Changes in demand for our services, including industrial, commercial and residential growth or decline in our service areas, changes in supplies of natural gas delivered to DCG’s pipeline systems, failure to maintain or replace customer

 

2

---

contracts on favorable terms, changes in customer growth or usage patterns, including as a result of energy conservation programs and the availability of energy efficient devices;

•

Additional competition in industries in which we operate;

•

Changes to regulated gas transportation rates collected by DCG;

•

Changes in operating, maintenance and construction costs;

•

Adverse outcomes in litigation matters or regulatory proceedings;

•

The impact of operational hazards, including adverse developments with respect to pipeline and plant safety or integrity, equipment loss, malfunction or failure, operator error, and other catastrophic events;

•

The inability to complete planned construction, conversion or expansion projects, including the Liquefaction Project, at all, or with the outcomes or within the terms and time frames initially anticipated;

•

Contractual arrangements to be entered into with or performed by our customers substantially in the future, including any revenues anticipated thereunder and any possibility of termination and inability to replace such contractual arrangements;

•

Capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms;

•

Fluctuations in interest rates and increases in our level of indebtedness;

•

Changes in availability and cost of capital;

•

Changes in financial or regulatory accounting principles or policies imposed by governing bodies; and

•

Conflicts of interest with Dominion and its affiliates.

Additionally, other risks that could cause actual results to differ from predicted results are referenced in Part II, Item 1A. Risk Factors, included in Dominion Midstream’s Quarterly Report on Form 10-Q for the three months ended March 31, 2015, as filed.

Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. We caution the reader not to place undue reliance on forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. We undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

How We Evaluate Our Operations

Dominion Midstream management uses a variety of financial metrics to analyze our performance. These metrics are significant factors in assessing our operating results and include: (1) EBITDA; (2) Adjusted EBITDA; and (3) distributable cash flow.

EBITDA, Adjusted EBITDA and Distributable Cash Flow

EBITDA represents net income including noncontrolling interest and DCG Predecessor before interest and related charges, income tax and depreciation and amortization. Adjusted EBITDA represents EBITDA after adjustment for the EBITDA attributable to the DCG Predecessor and a noncontrolling interest in Cove Point held by Dominion subsequent to the Offering. Subsequent to the DCG Acquisition, we define distributable cash flow as Adjusted EBITDA less maintenance capital expenditures, less interest expense and adjusted for known timing differences between cash and income. During the first quarter of 2015, the remaining net proceeds from the Offering were used to fund capital expenditures. As a result, the reconciliation of distributable cash flow no longer includes adjustments for expansion capital expenditures or the use of net proceeds from the Offering. The period presented reflects the adjustments described above.

Although we have not quantified Adjusted EBITDA and distributable cash flow for Cove Point as our Predecessor, we intend to use these metrics to analyze our performance. EBITDA, Adjusted EBITDA and distributable cash flow are used as supplemental financial measures by our management and by external users of our financial statements, such as investors and securities analysts, to assess:

•

The financial performance of our assets without regard to financing methods, capital structure or historical cost basis;

•

The ability of our assets to generate cash sufficient to pay interest on our indebtedness, if any, and to make distributions; and

•

Our operating performance and return on invested capital as compared to those of other publicly traded companies that own energy infrastructure assets, without regard to their financing methods and capital structure.

The GAAP measure most directly comparable to EBITDA and Adjusted EBITDA is net income, and the GAAP measure most directly comparable to distributable cash flow is net cash provided by operating activities. EBITDA, Adjusted EBITDA and distributable cash flow should not be considered alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA, Adjusted EBITDA and distributable cash flow exclude some, but not all, items that affect net income and operating income, and these

 

3

---

measures may vary among other companies. Therefore, EBITDA, Adjusted EBITDA and distributable cash flow as presented may not be comparable to similarly titled measures of other companies.

Factors Impacting Comparability of Our Financial Results

As of March 31, 2015, there have been no significant changes with regard to the factors impacting comparability of our financial results as disclosed in MD&A in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014. The factors disclosed included import contracts, the Liquefaction Project, income taxes and general and administrative expenses.

On April 1, 2015, Dominion Midstream entered into a Purchase, Sale and Contribution Agreement with Dominion pursuant to which Dominion Midstream purchased from Dominion all of the issued and outstanding membership interests of DCG in exchange for total consideration of approximately $500.8 million, as adjusted for working capital, as further described in Note 2, included in Exhibit 99.1 to this Current Report on Form 8-K. The sale of DCG from Dominion to Dominion Midstream is considered to be a reorganization of entities under common control. As a result, Dominion Midstream’s basis is equal to Dominion’s cost basis in the assets and liabilities of DCG. Subsequent to the transaction, Dominion Midstream owns 100% of the membership interests in DCG and therefore consolidates DCG.

Accounting Matters

Critical Accounting Policies and Estimates

As of March 31, 2015, there have been no significant changes to the critical accounting policies and estimates disclosed in MD&A in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014. The policies disclosed included the accounting for regulated operations, use of estimates in goodwill impairment testing and use of estimates in long-lived asset impairment testing.

Results of Operations

Presented below are selected amounts related to Dominion Midstream’s results of operations:

 

		First Quarter
		2015				2014				$ Change
(millions)
Operating revenue		$	78.4			$	68.9			$	9.5
Purchased gas			3.9				5.3				(1.4	)
Net revenue			74.5				63.6				10.9
Other operations and maintenance			13.3				10.4				2.9
Depreciation and amortization			10.6				7.8				2.8
Other taxes			5.9				5.6				0.3
Other income			0.2				—				0.2
Income tax expense			2.1				15.2				(13.1	)
Net income including noncontrolling interest and DCG Predecessor		$	42.8			$	24.6			$	18.2
Less: Net income attributable to DCG Predecessor			2.3
Net income including noncontrolling interest			40.5
Less: Net income attributable to noncontrolling interest			28.7
Net income attributable to partners		$	11.8
EBITDA		$	55.5			$	47.6			$	7.9
Adjusted EBITDA		$	11.8
Distributable cash flow		$	11.9

The following table presents a reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable GAAP financial measure for each year. The Adjusted EBITDA measure is not applicable to the period ended March 31, 2014.

 

4

---

		First Quarter
		2015				2014
(millions)
Adjustments to reconcile net income including noncontrolling interest and DCG Predecessor to EBITDA and Adjusted EBITDA:
Net income including noncontrolling interest and DCG Predecessor		$	42.8			$	24.6
Add:
Depreciation and amortization			10.6				7.8
Interest and related charges			—				—
Income tax expense			2.1				15.2
EBITDA		$	55.5			$	47.6
EBITDA attributable to DCG Predecessor			5.7
EBITDA attributable to noncontrolling interest			38.0
Adjusted EBITDA		$	11.8

The following table presents a reconciliation of distributable cash flow to the most directly comparable GAAP financial measure for the three month period ended March 31, 2015. This measure is not applicable to the three month period ended March 31, 2014.

 

		First Quarter 2015
(millions)
Adjustments to reconcile net cash provided by operating activities to distributable cash flow:
Net cash provided by operating activities		$	56.7
Less:
Cash attributable to noncontrolling interest(1)			35.5
Cash attributable to DCG Predecessor(2)			10.4
Other changes in working capital and noncash adjustments			1.0
Adjusted EBITDA			11.8
Adjustments to cash:
Plus:   Non-cash director compensation			0.1
Distributable cash flow		$	11.9

(1)

The Preferred Equity Interest is a perpetual, non-convertible preferred equity interest entitled to the Preferred Return Distributions. Any excess in cash available over the $50.0 million is attributable to the noncontrolling interest held by Dominion but not available for distribution until the distribution reserve has been fully funded.

(2)	Represents net cash provided by operating activities of DCG from January 31, 2015, the inception date of common control, through March 31, 2015, the date just prior to Dominion Midstream acquiring DCG.

Analysis of Consolidated Operations

Overview

Net revenue reflects operating revenue less purchased gas expense. Purchased gas expense includes the value of natural gas retained for use in routine operations and the cost of LNG cooling cargo purchases. Increases or decreases in purchased gas expenses are offset by corresponding increases or decreases in operating revenues and are thus financially neutral to Dominion Midstream. LNG cooling cargo purchases are required for Cove Point to maintain the cryogenic readiness of the Cove Point LNG Facility. Each year, one or two LNG cooling cargos are procured and billed to the Import Shippers pursuant to certain provisions in Cove Point’s FERC gas tariff.

An analysis of Dominion Midstream’s results of operations follows:

 

5

---

First Quarter 2015 vs. 2014

Net revenue increased 17% primarily related to increased transportation and storage revenue as a result of the DCG Acquisition. Cove Point did not receive any LNG cooling cargo in either period.

Other operations and maintenance increased 28%, primarily due to the DCG Acquisition ($3.8 million), increased corporate general and administrative costs associated with operating as a stand-alone publicly traded partnership ($0.7 million) and transition service costs associated with the DCG Acquisition ($1.0 million). This increase was partially offset by a decrease of $3.4 million in stakeholder outreach expenditures associated with the Liquefaction Project.

Depreciation and amortization increased 36%, primarily due to the DCG Acquisition ($1.3 million) and accelerated depreciation from 2015 asset retirements associated with the Liquefaction Project ($1.5 million).

Income tax expense decreased 86% as a result of Dominion Midstream’s treatment as a pass-through entity for federal and state income tax purposes effective October 20, 2014 ($15.2 million), partially offset by $2.1 million of income taxes attributable to the DCG Predecessor.

Segment Results of Operations

Presented below is a summary of contributions by Dominion Midstream’s operating segment to net income including noncontrolling interest and DCG Predecessor:

 

First Quarter		2015				2014				$ Change
(millions)
Dominion Energy		$	43.8			$	24.6			$	19.2
Corporate and Other			(1.0	)			—				(1.0	)
Consolidated		$	42.8			$	24.6			$	18.2

Dominion Energy

The following table summarizes, on an after-tax basis, the key factors impacting Dominion Energy’s contribution to net income including noncontrolling interest and DCG Predecessor. Subsequent to October 20, 2014, Dominion Midstream, as a pass-through entity, is generally not subject to income taxes.

 

		First Quarter 2015 vs. 2014 Increase/(Decrease)
(millions)
Stakeholder outreach expenses for the Liquefaction Project		$	2.1
Accelerated depreciation			(0.9	)
DCG Acquisition			3.3
Absence of income taxes subsequent to the Offering			15.2
Other			(0.5	)
Change in net income contribution		$	19.2

Corporate and Other

Corporate and Other includes items attributable to Dominion Midstream’s operating segment that are not included in profit measures evaluated by executive management in assessing segment performance or in allocating resources among the segments. Corporate and Other expenses increased $1.0 million during the three months ended March 31, 2015 due to transition service costs associated with the DCG Acquisition. There were no such items in the three month period ended March 31, 2014.

Liquidity and Capital Resources

Overview

Dominion Midstream’s ongoing principal sources of liquidity may include distributions received from Cove Point from our Preferred Equity Interest, cash generated from operations of DCG, borrowings under our credit facility with Dominion, and issuances of debt and equity securities. We believe that cash from these sources will be sufficient to pay distributions while continuing to meet our short-term working capital requirements and our long-term capital expenditure requirements. We expect to have sufficient distributable cash flow to pay the minimum quarterly distribution of $0.1750 per common unit and subordinated unit, which equates to $12.1 million per quarter, or $48.3 million per year in the aggregate, based on the number of common units and subordinated units outstanding at April 1, 2015. However, we do not have a legal or contractual

 

6

---

obligation to pay distributions quarterly or on any other basis or at the minimum quarterly distribution rate or at any other rate, and there is no guarantee that we will pay distributions to our unitholders in any quarter.

Outstanding Indebtedness

In connection with the Offering, Dominion Midstream entered into a $300 million credit facility with Dominion, allowing it to competitively pursue acquisitions and future organic growth opportunities or to otherwise meet its financial needs.

Dominion Midstream has no borrowings under the credit facility or any other indebtedness at March 31, 2015.

On April 1, 2015, in connection with the DCG Acquisition, Dominion Midstream issued a two-year, $300.8 million senior unsecured promissory note payable to Dominion, as adjusted for working capital, at an annual interest rate of 0.6%. Interest on the note is payable quarterly, and all principal and accrued interest is due and payable at maturity on April 1, 2017, which under certain conditions can be extended at the option of Dominion Midstream to October 1, 2017.

See Notes 2 and 13 to the Consolidated Financial Statements, included in Exhibit 99.1 to this Current Report on Form 8-K.

Capital Requirements

Capital Spending

Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations. As defined in our partnership agreement, our capital requirements consist of:

 

•

Maintenance capital expenditures used to maintain the long-term operating capacity and operating income of our pipelines and facilities. Examples include expenditures to refurbish and replace pipelines, terminals and storage facilities, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations; and

•

Expansion capital expenditures used to increase our operating capacity or operating income over the long term. Examples include the acquisition of equipment, the development of a new facility or the expansion of an existing facility.

For the three months ended March 31, 2015, Dominion Midstream paid total capital expenditures of $176.1 million (of which $2.4 million relates to DCG and was funded by Dominion), which included $5.1 million of maintenance capital expenditures funded by Dominion that related to the Cove Point LNG Facility, Cove Point Pipeline and DCG prior to the DCG Acquisition. Dominion has indicated that it intends to continue providing the funding necessary for such expenditures at Cove Point, but is under no obligation to do so.

Our significant capital projects, all of which are expansion projects, are described further below:

 

•

Total costs of developing the Liquefaction Project are estimated to be $3.4 billion to $3.8 billion, excluding financing costs. Through March 31, 2015, Cove Point incurred $1.2 billion of development and construction costs associated with the Liquefaction Project. We caused Cove Point to use the net proceeds contributed to it from the Offering to fund a portion of development and construction costs associated with the Liquefaction Project.

•

Total costs of the St. Charles Transportation Project and Keys Energy Project are estimated to be approximately $30 million and $40 million, respectively. Through March 31, 2015, we incurred approximately $2 million of costs associated with these projects. Service under each 20-year contract is expected to commence in June 2016 for the St. Charles Transportation Project and in March 2017 for the Keys Energy Project.

•

Total costs of the Edgemoor Project are estimated to be approximately $35 million. Through March 31, 2015, approximately $18 million of costs had been incurred. FERC approved the Edgemoor project in February 2015 and construction commenced in March 2015. The project is expected to be placed into service in the last quarter of 2015.

Dominion has indicated that it intends to provide the funding necessary for the remaining construction costs and other capital expenditures of Cove Point, including the Liquefaction Project, St. Charles Transportation Project and Keys Energy Project, but it is under no contractual obligation to do so and has not secured all of the funding necessary to cover these costs, as it intends to finance these costs as they are incurred using its consolidated operating cash flows in addition to proceeds from capital markets transactions. However, Dominion has entered into guarantee arrangements on behalf of Cove Point to facilitate the Liquefaction Project, including guarantees supporting the terminal services and transportation agreements as well as the

 

7

---

engineering, procurement and construction contract for the Liquefaction Project. Two of the guarantees have no stated limit, one guarantee has a $150 million limit, and one guarantee has a $1.75 billion aggregate limit with an annual draw limit of $175 million. In the event that Dominion does not satisfy its obligations under these guarantee arrangements or otherwise does not agree to provide the funding necessary for the remaining development costs and other capital expenditures of Cove Point, or is unable to obtain such funding in the amounts required or on terms acceptable to Dominion, Cove Point would require substantial external debt or equity financing to complete the construction of the Liquefaction Project, St. Charles Transportation Project and Keys Energy Project.

Distributions

Distributions are declared subsequent to quarter end. The table below summarizes the quarterly cash distributions declared during 2015.

 

Quarterly Period Ended

Total Quarterly Distribution (per unit)

Total Cash Distribution (in millions)

Date of Declaration

Date of Record

Date of Distribution

December 31, 2014

0.1389

(1)

$

8.9

January 23, 2015

February 3, 2015

February 13, 2015

March 31, 2015

0.1750

$

12.1

April 22, 2015

May 5, 2015

May 15, 2015

(1)	For the period subsequent to the Offering through December 31, 2014, the initial quarterly cash distribution was calculated as the minimum quarterly distribution of $0.1750 per unit prorated for the portion of the quarter subsequent to the Offering.

Cash Flows

A summary of cash flows for the periods indicated is presented below:

 

		Three Months Ended March 31,
		2015				2014
(millions)
Cash and cash equivalents at beginning of period		$	175.4			$	11.2
Cash flows provided by (used in):
Operating activities			56.7				49.0
Investing activities			(176.4	)			(76.3	)
Financing activities			(7.7	)			16.1
Net decrease in cash and cash equivalents			(127.4	)			(11.2	)
Cash and cash equivalents at end of period		$	48.0			$	—

Operating Cash Flows

In the first three months of 2015, net cash provided by Dominion Midstream’s operating activities increased by $7.7 million, primarily due to the DCG Acquisition, offset by net changes in working capital items, compared to the first three months of 2014.

Investing Cash Flows

In the first three months of 2015, net cash used in Dominion Midstream’s investing activities increased by $100.1 million, primarily due to higher expenditures for the Liquefaction Project, compared to the first three months of 2014.

Financing Cash Flows

In the first three months of 2015, net cash used by Dominion Midstream’s financing activities was $7.7 million compared to net cash provided by financing activities of $16.1 million in the first three months of 2014, primarily due to lower capital contributions from Dominion and the payment of quarterly distributions to unitholders.

Customer Concentration

Dominion Midstream provides service to approximately seventy customers, including the Storage Customers, marketers or end users and the Import Shippers. The two largest customers comprised approximately 70% of the total transportation and storage revenues for the three months ended March 31, 2015, with Dominion Midstream’s largest customer representing approximately 59% of this amount. For the three months ended March 31, 2014, Cove Point’s three largest customers comprised approximately 94% of the total transportation and storage revenues, with Cove Point’s largest customer representing

 

8

---

approximately 73% of this amount. See Note 12 to the Consolidated Financial Statements, included in Exhibit 99.1 to this Current Report on Form 8-K, for additional information.

Contractual Obligations

As of March 31, 2015, there have been no material changes outside the ordinary course of business to Dominion Midstream’s contractual obligations as disclosed in MD&A in the Dominion Midstream Annual Report on Form 10-K for the year ended December 31, 2014.

Off-Balance Sheet Arrangements

Other than the holding of surety bonds as discussed in Note 11 to the Consolidated Financial Statements, included in Exhibit 99.1 to this Current Report on Form 8-K, Dominion Midstream had no off-balance sheet arrangements at March 31, 2015.

Future Issues and Other Matters

The following discussion of future issues and other information includes current developments of previously disclosed matters and new issues arising during the period covered by, and subsequent to, the dates of the Consolidated Financial Statements that may impact Dominion Midstream’s future results of operations, financial condition and/or cash flows. This section should be read in conjunction with Item 1. Business and Future Issues and Other Matters in MD&A in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014.

Environmental Matters

Dominion Midstream is subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations. See Note 11 to the Consolidated Financial Statements, included in Exhibit 99.1 to this Current Report on Form 8-K, for additional information on various environmental matters.

Air

The CAA is a comprehensive program utilizing a broad range of regulatory tools to protect and preserve the nation’s air quality. At a minimum, delegated states are required to establish regulatory programs to address all requirements of the CAA. However, states may choose to develop regulatory programs that are more restrictive. Dominion Midstream’s facilities are subject to the CAA’s permitting and other requirements.

In January 2015, as part of its Climate Action Plan, the EPA announced plans to reduce methane emissions from the oil and gas sector including natural gas processing and transmission sources. The plan, which is expected to be proposed in summer 2015 and finalized in 2016, would impose regulations to reduce methane from new and modified sources at compressor stations. The EPA is also expected to develop control technology guidelines to reduce emissions of volatile organic compounds from existing sources in ozone nonattainment areas and the Northeast Ozone Transport Region (which includes states within which Dominion Midstream operates facilities). The proposed regulation is expected to rely on current industry voluntary reduction measures implemented through programs such as the EPA’s Natural Gas Star program and pipeline safety and natural gas infrastructure improvement programs. Until these regulations and guidelines are finalized, we are unable to predict future requirements or estimate compliance costs with certainty.

Legal Matters

See Item 3. Legal Proceedings in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014, and Notes 9 and 11 to the Consolidated Financial Statements, included in Exhibit 99.1 to this Current Report on Form 8-K and Part II, Item 1. Legal Proceedings, included in Dominion Midstream’s Quarterly Report on Form 10-Q for the three months ended March 31, 2015, as filed, for additional information on various legal matters.

Regulatory Matters

See Note 9 to the Consolidated Financial Statements in Dominion Midstream’s Annual Report on Form 10-K for the year ended December 31, 2014 and Note 9 to the Consolidated Financial Statements, included in Exhibit 99.1 to this Current Report on Form 8-K, for additional information on various regulatory matters.

 

9

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Dominion Resources, Inc. (D) PT Raised to $43 at BofA Securities
• Man Group PLC : Form 8.3 - Redrow plc
• GWM Holds Global Press Conference, Demonstrating Determination to Develop Globally