SCANA Receives Regulatory Nod To Merge With Dominion Energy

The merger of SCANA Corporation (NYSE:SCG) with Dominion Energy, Inc. (NYSE:D) has recently been approved by the Georgia Public Service Commission. On February, the electric utility players received consent from the Federal Trade Commission (“FTC”).

Although the companies have made progress with the deal, they still await a green signal from the public service commissions of North Carolina and South Carolina. Also, the Nuclear Regulatory Commission, Federal Energy Regulatory Commission and shareholders of SCANA are required to authorize the merger.

SCANA and Dominion Energy are anticipating conclusion of the agreement by 2018-end.

In January, SCANA signed a merger deal with larger peer Dominion Energy. Per the accord, each stockholder of SCANA is likely to get 0.669 shares of Dominion Energy. Considering the assumption of huge debt load — $6.9 billion as of Dec 31, 2017 — of SCANA by the other company, the transaction is worth roughly $14.6 billion.

Post the completion of the deal, the merged entity will have a wide customer base of around 6.5 million. Together, the firms will be able to generate 31,400 megawatts electricity. Their combined power distribution lines will likely spread across 93,600 miles.

As of now, the price performances of SCANA and Dominion Energy are not impressive, although the stocks are poised to gain from the merger. Over the past year, shares of SCANA and Dominion fell 43.6% and 13.3% respectively, compared with the industry’s 5.9% decline.

Zacks Rank & Key Picks

SCANA has a Zacks Rank #4 (Sell), while Dominion Energy carries a Zacks Rank #3 (Hold).

A few better-ranked players in the energy space include W&T Offshore, Inc. (NYSE:WTI) , Pioneer Natural Resources Company (NYSE:D) and Concho Resources Inc. (NYSE:CXO) . W&T Offshore carries a Zacks Rank #2 (Buy), while Pioneer and Concho Resources sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Houston, TX, W&T Offshore is primarily an upstream energy player. It is expected to witness year-over-year earnings growth of 3.6% in 2018.

Headquartered in Irving, TX, Pioneer Natural Resources is an upstream energy firm. It has an average positive earnings surprise of 66.9% for the last four quarters.

Headquartered in Midland, TX, Concho is also an upstream energy company. It will likely see a year-over-year surge of 73.2% in 2018 earnings.

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