Is There an Oncor Performance in Berkshire’s Future?

(BRK.A), (BRK.B)

Berkshire Hathaway’s Berkshire Hathaway Energy (BHE) has been aggressively expanding its assets with $15 billion in recent acquisitions. Now, the company could be one of the bidders for Energy Future Holdings’ Oncor.

Berkshire and several of the energy companies, including NextEra Energy, signed confidentiality agreements for the purpose of exploring the acquisition of Oncor.

What is Oncor?

Oncor is a regulated electric transmission and distribution service provider that serves 10 million customers across Texas. The company has the largest distribution and transmission system in Texas; with approximately 119,000 miles of lines and more than 3 million meters across the state.

Oncor is owned by a limited number of investors, including majority owner, Energy Future Holdings Corp.

What’s the price?

Oncor is estimated to be worth than $17.5 billion, which puts it in line with Warren Buffett’s goals to acquire more “elephants” in the $20 billion range.

In June, Buffett noted that Berkshire had already poured $15 billion into acquiring energy companies and he declared “There’s another $15 billion ready to go, as far as I’m concerned.”

Oncor fits the bill

Transmission lines have been high on BHE’s list of late. In April, the company made a $2.9 billion purchase of Canadian company AltaLink from SNC-Lavalin Group Inc. (TSX:SNC).

A Growing Energy Portfolio

Berkshire Hathaway Energy currently has $70 billion in assets, including one of the largest portfolios of renewable energy in the world.

Total revenues in 2013 were $12.6 billion, with the total generation capacity owned and contracted exceeding 34,000 MW. 25% of this energy was produced from renewable or noncarbon sources.

Berkshire Hathaway Energy’s combined subsidiaries provide energy to 8.4 million customers and end-users.

With Berkshire’s over $60 billion in cash just waiting to be deployed, there could be an Oncor performance in Berkshire’s future.

© 2014 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.