Dominion Resource's Atlantic Coast Pipeline Faces Delays

Dominion Resources, Inc. D now expects the Atlantic Coast Pipeline (ACP) to start commercial operations in Q4:19, representing a 12-month delay from the original guidance.

Barclays’ Daniel Ford maintains an Overweight rating on the company, while raising the price target from $80 to $84.

ACP Delay

“Earlier this year, ACP filed an alternate route to satisfy concerns raised by the U.S. Forest Service. The re-routing contributed to what was already an extensive FERC review process,” Ford mentioned.

The analyst noted that the FERC scheduling order requires staff to complete the final EIS by June 30, 2017, while putting a 90-day deadline on the remaining federal authorizations, which takes the deadline for these authorizations to September 28, 2017.

Related Link: Dominion's Chief Nuclear Officer David Heacock To Retire, Names Daniel Stoddard To Replace

“D has said that it expects construction to begin 3Q17, which in our opinion is still overly optimistic. We had anticipated a delay and our previous estimates assumed a mid-2019 in-service date,” Ford stated.

While Cove Point was about 71 percent complete, the analyst pointed out that Dominion Resources had a history of on-time and on-budget project execution.

Dividend

The company has indicated that it might increase the dividend growth rate to more than 8 percent per year, starting in 2018.

“Reinvesting in new growth projects, parent debt de-levering, and share buybacks are also possible uses of funds,” Ford said.

The EPS estimates for 2019 and 2020 have been lowered to reflect the update guidance for the ACP.

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