Dominion Resources Inc'

1
Dominion Resources Inc.

• Diversified Utilities

Alana Skorniakoff Kristi Bruner Colin
Swanson Michael McNany
2
Background

• One of the largest energy providers in nation
• Based in Richmond, Virginia, with three
  additional facilities in Indiana, Illinois and
  Connecticut
• 13 companies within Dominion two electric, three
  gas, and eight other energy distribution companies

3
Current Events in DominionSale of Exploration
and Production

• Sold non-Appalachian EP properties to Linn
  Energy LLC
• Totaled 13.9 billion for 5.5 trillion cubic feet
  equivalent (Tcfe)
• 51 of capex was put towards EP in past years
• Focus on delivery of product vs. research and
  development

4
Utilities face Sustainable Controversies

• Sustainable business practices are working
  against utility companies producing
  environmentally degrading products
• Problems
• Research Development
• Implementing new methods
• Illiquid Assets

Sustainable Products
5
Commodity Price Sensitivity

• As commodity prices rally, utilities companies
  are forced to raise prices and often cut back
  production.
• Majority of the price sensitivity is passed on to
  the consumer, however companies must stay
  competitive
• Consumers face higher bills, and the percentage
  of defaulting bills often grow, forcing companies
  to adjust.

6
Utilities this year
Utilities struggle on the 1yr, primarily due to
high interest rates and unfavorable weather
conditions
7
Annual EPS and Net Sales
8
Volatility and Risk Measurement
Dominions price movement stays close with the
SP 500 index over the past 5 years. You can see
in early 2005 they underperformed by about 4pts,
versus a few months later in 2005, when D
outperformed by nearly 4pts. Volatility during
this time swings up. This trend is repeated later
in early 2007 with a price and volatility spike.
Overall Dominions tracking error stabilizes over
the first three years, and later price volatility
is likely to be related to unfavorable market
conditions and the SP500 Index performance
itself.
9
Market overview
Sector overview
10
Key Statistics
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Ratio Analysis
12
Dominion Resources Forecasted growth
13
Dominion and Competitors
Dominion has modest ROE vs. competitors, with
relatively low market to book value.
14
Ratio Conclusion

• Low ROE, expected in Diversified utilities
• Low ROA, expected in Diversified utilities
• Large Capital Expenditures (Capex)
• Expected Sales Growth
• Inventory turnover slightly lower than industry
  average
• Low P/E

15
Should We Invest?

• Mature Slow-growth Company, Defensively
  positioned
• Long-Term Investment Illiquid Assets
• Diversified Investment, Steady Growth
• Current Rating Hold Position
• Not a high-risk investment, looking for rapid
  growth?
• Dont Invest!