Dominion Agrees To Sell Offshore E&P Operations To Eni For Approximately $4.76 Billion

- Transaction part of previously announced strategic repositioning
- Process continues on pursuit of disposition of other E&P operations except Appalachian Basin
- Proceeds to be used for debt reduction, share buyback and business growth

RICHMOND, Va. – Dominion (NYSE: D) today announced that it has agreed to sell its offshore natural gas and oil exploration and production operations to Eni Petroleum Co. Inc., a subsidiary of Italian energy company Eni, for approximately $4.76 billion.

These operations include approximately 967 billion cubic feet equivalent of proved natural gas and oil reserves in the Gulf of Mexico shelf and deep water as of Dec. 31, 2006, with 2006 average daily production of approximately 503 million cubic feet equivalent.

"Today’s announcement is a significant step in Dominion’s previously announced strategic plan to refocus on the power generation and energy distribution, transmission, storage and retail businesses," said Chairman, President and CEO Thomas F. Farrell II. "Dominion has been extremely successful in the E&P business, but that success has not been fully reflected in our share price. Our plan is designed to realize the value of these assets for our shareholders."

The company continues to pursue the disposition of its U.S. onshore E&P operations, except those in the Appalachian Basin, as well as its E&P operations in western Canada. It expects to make further announcements in the near future.

With additional announcements yet to come, several important pieces of financial information are not yet ready for disclosure. That includes total proceeds, applicable tax rate, targeted credit metrics in view of recent legislative changes in Virginia and, ultimately, the amount of proceeds that will be available to repurchase shares of common stock.

"We suggest that investors wait for all of these announcements before drawing any firm conclusions on how these transactions will affect Dominion’s ongoing earnings power," Farrell said.

The sale of the offshore E&P assets to Eni is expected to close by early July 2007, subject to customary closing conditions and adjustments.

The company in March completed the sale of three natural gas-fired generating facilities. It also is in the process of selling its Dominion Peoples and Dominion Hope natural gas distribution companies, with closing targeted for the end of the second quarter, subject to the receipt of regulatory approvals.

Proceeds of the asset dispositions would position the company to reduce debt — including debt at its CNG subsidiary — repurchase common shares and grow other Dominion businesses.

Dominion announced last November that it would pursue the sale of most of its E&P assets as part of a strategic refocusing. The move is designed to enhance the long-term value of the company by realigning Dominion’s operations and risk profile more closely with the company’s peer investment group of utilities.

Dominion plans to retain its low-risk E&P operations in the Appalachian Basin because of their value to the company’s natural gas pipeline, storage and gathering businesses. The Appalachian properties account for approximately 15 percent of proved reserves and 8 percent of Dominion average daily production as of Dec. 31, 2006.  Production from these reserves is expected to contribute less than 5 percent of Dominion’s future consolidated operating earnings.

Including the Appalachian Basin E&P assets, Dominion expects its remaining businesses to grow consolidated operating earnings per share at an average annual rate of 4 percent to 6 percent. The company anticipates that the E&P disposition also will reduce the volatility of earnings.

Dominion is being advised in the sale by the investment banking firms of JPMorgan, Lehman Brothers and Juniper Advisory LP.  BakerBotts LLP and McGuireWoods LLP are the company’s legal advisers for the sale.

Dominion is one of the nation's largest producers of energy, with a portfolio of more than 26,300 megawatts of generation, about 6.5 trillion cubic feet equivalent of proved natural gas reserves and 7,800 miles of natural gas transmission pipeline. Dominion also owns and operates the nation's largest underground natural gas storage system with about 960 billion cubic feet of storage capacity and serves retail energy customers in 11 states. For more information about Dominion, visit the company's Web site at http://www.dom.com/.

This news release contains certain forward-looking statements including our projected future long-term operating earnings growth rates, components of our projected future earnings mix,and projected use of proceeds that are subject to various risks and uncertainties.  Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations may include factors that are beyond the company's ability to control or estimate precisely, such as fluctuations in energy-related commodity prices, including changes in the cost of fuel for our regulated electric business, the timing of the closing dates of acquisitions or divestitures (including our divestiture of The Peoples Natural Gas Company and Hope Gas, Inc. and any divestiture of our natural gas and oil assets), the amount of net proceeds received from any divestitures, additional risk exposure associated with the termination of business interruption and offshore property damage related to our exploration and production operations and our inability to replace such insurance on commercially reasonable terms, estimates of future market conditions, estimates of proved and unproved reserves, the company’s ability to meet its natural gas and oil production forecasts, the behavior of other market participants, and the effects of hurricanes on our operations, gas and oil production and realized prices. Other factors include, but are not limited to, weather conditions, governmental regulations, economic conditions in the company's service area, risks of operating businesses in regulated industries that are subject to changing regulatory structures, changes to regulated gas and electric rates collected by Dominion, risks associated with the realignment of our operating assets (including the potential dilutive effect on earnings in the near term, costs associated with any disposition of our exploration and production business and the redeployment of proceeds from any dispositions), changes to rating agency requirements and ratings, changing financial accounting standards, trading counter-party credit risks, risks related to energy trading and marketing, and other uncertainties. Other risk factors are detailed from time to time in Dominion’s most recent quarterly report on Form 10-Q or annual report on Form 10-K filed with the Securities & Exchange Commission.

This news release is not an offer to sell securities and we are not soliciting any offers to buy securities.

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