SOURCE: Sempra Energy

November 09, 2009 09:00 ET

Sempra Energy Third-Quarter Earnings Rise

SAN DIEGO, CA--(Marketwire - November 9, 2009) - Sempra Energy (NYSE: SRE) today reported that earnings increased in the third quarter 2009 to $317 million, or $1.27 per diluted share, from $308 million, or $1.24 per diluted share, in the third quarter 2008.

Earnings for the first nine months of 2009 were $831 million, or $3.37 per diluted share, up nearly 5 percent from $794 million, or $3.13 per diluted share, in the first nine months of last year.

"Our results through the first nine months of the year benefited from the solid performance of our California utilities and our commodities business, as well as continued progress in the build-out of our natural gas infrastructure projects," said Donald E. Felsinger, chairman and chief executive officer of Sempra Energy. "We remain on track to meet our 2009 financial targets."

OPERATING HIGHLIGHTS

San Diego Gas & Electric

Third-quarter earnings for San Diego Gas & Electric (SDG&E) were $108 million in 2009, compared with $123 million last year. Third-quarter 2008 results included $33 million in earnings from the retroactive application of SDG&E's rate case, approved in July 2008.

For the first nine months, SDG&E earnings rose to $277 million in 2009 from $258 million last year.

Southern California Gas Co.

Earnings for Southern California Gas Co. (SoCalGas) in the third quarter 2009 were $74 million, compared with $77 million in the third quarter 2008. Third-quarter 2008 results included $7 million in earnings from the retroactive application of SoCalGas' rate case, approved in July 2008.

For the nine-month period, SoCalGas' earnings increased to $198 million in 2009 from $190 million in 2008.

RBS Sempra Commodities

Earnings for Sempra Energy's commodity operations -- concentrated in the RBS Sempra Commodities joint venture -- were $75 million in the third quarter 2009, compared with a loss of $8 million in last year's third quarter, due primarily to improved performance in natural gas marketing. Results in last year's third quarter were negatively impacted by losses in power marketing caused by the steep decline in commodity prices during the quarter.

For the nine-month period, earnings from Sempra Energy's commodity operations increased to $274 million in 2009 from $181 million last year.

Last week, as part of its ongoing restructuring plan responding to increased government investment, The Royal Bank of Scotland (RBS) announced its intention to divest several of its assets, including its 51-percent stake in the RBS Sempra Commodities joint venture. RBS has told Sempra Energy that the bank will comply with the joint-venture agreement and execute the sale in an orderly manner to maximize the value of the business. RBS also said it is committed to maintaining the usual liquidity, credit and funding operations for the joint venture.

Sempra Generation

In the third quarter 2009, Sempra Generation's earnings were $43 million, compared with $94 million in the third quarter 2008. Sempra Generation benefited in last year's third quarter from $28 million of mark-to-market earnings on long-term contracts with RBS Sempra Commodities and other counterparties, as well as $8 million from a solar investment tax credit and more favorable market pricing.

For the first nine months of 2009, Sempra Generation earned $119 million, compared with $162 million in the same period a year ago.

In September, Sempra Generation announced it has become an equal partner with BP Wind Energy in the Fowler Ridge II Wind Farm project in Indiana, scheduled to commence operations in the fourth quarter 2009. The entire output of the 200-megawatt facility already has been sold under four, 20-year contracts.

Sempra Pipelines & Storage

Third-quarter 2009 earnings for Sempra Pipelines & Storage increased to $54 million from $34 million, due primarily to lower income taxes and increased contributions from the Rockies Express pipeline.

For the nine-month period, earnings for Sempra Pipelines & Storage were $64 million in 2009, compared with $84 million last year. In the second quarter 2009, Sempra Pipelines & Storage recorded an after-tax charge of $64 million for the write-off of some of its Louisiana natural gas storage assets.

Sempra LNG

Sempra LNG had a break-even third quarter 2009, compared with earnings of $4 million in the prior-year's quarter.

For the nine-month period, Sempra LNG had a net loss of $19 million in 2009, compared with a net loss of $33 million last year.

Internet Broadcast

Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. EST with senior management of the company. Access is available by logging onto the Web site at www.sempra.com. For those unable to log onto the live webcast, the teleconference will be available on replay a few hours after its conclusion by dialing (888) 203-1112 and entering the passcode 9848386.

Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2008 revenues of nearly $11 billion. The Sempra Energy companies' 13,600 employees serve more than 29 million consumers worldwide.

Complete financial tables, including income-statement information by business unit, are available on Sempra Energy's Web site at http://www.sempra.com/downloads/3Q2009.pdf.

This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by words like "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "would," "could," "should," or similar expressions, or discussions of strategies, plans or intentions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements. Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, including, among others: local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments; actions by the California Public Utilities Commission, California State Legislature, California Department of Water Resources, Federal Energy Regulatory Commission, Federal Reserve Board, and other regulatory and governmental bodies in the United States, the United Kingdom and other countries; capital market conditions and inflation, interest and exchange rates; energy and trading markets, including the timing and extent of changes and volatility in commodity prices; the availability of electric power, natural gas and liquefied natural gas; weather conditions and conservation efforts; war and terrorist attacks; business, regulatory, environmental and legal decisions and requirements; the status of deregulation of retail natural gas and electricity delivery; the timing and success of business development efforts; the resolution of litigation; and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the company. These risks and uncertainties are further discussed in the reports that Sempra Energy has filed with the Securities and Exchange Commission. These reports are available through the EDGAR system without charge at the SEC's Web site, www.sec.gov and on the company's Web site, at www.sempra.com.

Sempra Pipelines & Storage, Sempra Generation, Sempra LNG and RBS Commodities dba Sempra Energy Solutions and Sempra Energy Trading are not the same companies as the utility, San Diego Gas & Electric (SDG&E) or Southern California Gas Company (SoCalGas), and Sempra Pipelines & Storage, Sempra Generation, Sempra LNG and RBS Commodities dba Sempra Energy Solutions and Sempra Energy Trading are not regulated by the California Public Utilities Commission.


                              SEMPRA ENERGY
                                 Table A


              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                      Three months ended Nine months ended
                                          September 30,    September 30,
                                        ----------------  ----------------
(Dollars in millions, except per share
 amounts)                                 2009    2008*     2009    2008*
                                        -------  -------  -------  -------
                                                    (unaudited)
REVENUES
Sempra Utilities                        $ 1,424  $ 2,013  $ 4,382  $ 6,190
Sempra Global and parent                    429      679    1,268    2,275
                                        -------  -------  -------  -------
    Total revenues                        1,853    2,692    5,650    8,465

EXPENSES AND OTHER INCOME
Sempra Utilities:
    Cost of natural gas                    (208)    (689)    (997)  (2,708)
    Cost of electric fuel and purchased
     power                                 (208)    (311)    (508)    (694)
Sempra Global and parent:
    Cost of natural gas, electric fuel
     and purchased power                   (220)    (431)    (675)  (1,353)
    Other cost of sales                     (19)     (15)     (52)    (168)
Operation and maintenance                  (571)    (564)  (1,676)  (1,816)
Depreciation and amortization              (196)    (162)    (568)    (508)
Franchise fees and other taxes              (77)     (76)    (228)    (230)
Gains on sale of assets                       -        -        3      114
Write-off of long-lived assets                -        -     (132)       -
Equity earnings (losses):
    RBS Sempra Commodities LLP              105       (4)     384      142
    Other                                    18       14       27       29
Other income (expense), net                  24      (21)      97       30
Interest income                               5       12       16       36
Interest expense                            (96)     (67)    (257)    (165)
                                        -------  -------  -------  -------
Income before income taxes and equity
 earnings of certain unconsolidated
 subsidiaries                               410      378    1,084    1,174
Income tax expense                         (128)     (94)    (327)    (423)
Equity earnings, net of income tax           20       18       59       57
                                        -------  -------  -------  -------
Net income                                  302      302      816      808
(Earnings) losses attributable to
 noncontrolling interests                    17        8       22       (7)
Preferred dividends of subsidiaries          (2)      (2)      (7)      (7)
                                        -------  -------  -------  -------
Earnings                                $   317  $   308  $   831  $   794
                                        =======  =======  =======  =======

Basic earnings per common share         $  1.30  $  1.26  $  3.42  $  3.18
                                        =======  =======  =======  =======
Weighted-average number of shares
 outstanding, basic (thousands)         243,925  243,793  242,806  249,311
                                        =======  =======  =======  =======

Diluted earnings per common share       $  1.27  $  1.24  $  3.37  $  3.13
                                        =======  =======  =======  =======
Weighted-average number of shares
 outstanding, diluted (thousands)       248,461  247,904  246,875  253,407
                                        =======  =======  =======  =======
Dividends declared per share of common
 stock                                  $  0.39  $  0.35  $  1.17  $  1.02
                                        =======  =======  =======  =======

* As adjusted for the retrospective adoption of ASC 810 (SFAS 160).




                              SEMPRA ENERGY
                                 Table B

CONDENSED CONSOLIDATED BALANCE SHEETS

                                                September 30, December 31,
(Dollars in millions)                               2009          2008*
                                                ------------- -------------
                                                        (unaudited)
Assets
Current assets:
   Cash and cash equivalents                    $         756 $         331
   Short-term investments                                   -           176
   Restricted cash                                         27            27
   Accounts receivable, net                               744           981
   Due from unconsolidated affiliates                      19             4
   Income taxes receivable                                139           195
   Deferred income taxes                                  117            31
   Inventories                                            296           320
   Regulatory assets                                       48           121
   Fixed-price contracts and other derivatives            111           160
   Insurance receivable related to wildfire
    litigation                                            266             -
   Other                                                  173           130
                                                ------------- -------------
       Total current assets                             2,696         2,476
                                                ------------- -------------

Investments and other assets:
   Regulatory assets arising from fixed-price
    contracts and other derivatives                       232           264
   Regulatory assets arising from pension and
    other postretirement benefit obligations            1,218         1,188
   Other regulatory assets                                568           534
   Nuclear decommissioning trusts                         664           577
   Investment in RBS Sempra Commodities LLP             2,094         2,082
   Other investments                                    2,019         1,166
   Goodwill and other intangible assets                   527           539
   Sundry                                                 605           709
                                                ------------- -------------
       Total investments and other assets               7,927         7,059
                                                ------------- -------------
Property, plant and equipment, net                     17,772        16,865
                                                ------------- -------------
Total assets                                    $      28,395 $      26,400
                                                ============= =============

Liabilities and Equity
Current liabilities:
   Short-term debt                              $         851 $         503
   Accounts payable                                       581           856
   Due to unconsolidated affiliates                        16            38
   Dividends and interest payable                         209           156
   Accrued compensation and benefits                      221           280
   Regulatory balancing accounts, net                     605           335
   Current portion of long-term debt                      622           410
   Fixed-price contracts and other derivatives             99           180
   Customer deposits                                      145           170
   Reserve for wildfire litigation                        289             -
   Other                                                  672           684
                                                ------------- -------------
       Total current liabilities                        4,310         3,612
                                                ------------- -------------
Long-term debt                                          6,845         6,544
                                                ------------- -------------

Deferred credits and other liabilities:
   Due to unconsolidated affiliate                        102           102
   Customer advances for construction                     144           155
   Pension and other postretirement benefit
    obligations, net of plan assets                     1,518         1,487
   Deferred income taxes                                1,278           946
   Deferred investment tax credits                         54            57
   Regulatory liabilities arising from removal
    obligations                                         2,546         2,430
   Asset retirement obligations                         1,212         1,159
   Other regulatory liabilities                           202           219
   Fixed-price contracts and other derivatives            348           392
   Deferred credits and other                             774           909
                                                ------------- -------------
       Total deferred credits and other
        liabilities                                     8,178         7,856
                                                ------------- -------------
Preferred stock of subsidiary                              79            79
                                                ------------- -------------
Equity:
   Total Sempra Energy shareholders' equity             8,745         7,969
   Preferred stock of subsidiaries                        100           100
   Other noncontrolling interests                         138           240
                                                ------------- -------------
       Total equity                                     8,983         8,309
                                                ------------- -------------
Total liabilities and equity                    $      28,395 $      26,400
                                                ============= =============

* As adjusted for the retrospective adoption of ASC 810 (SFAS 160).



                              SEMPRA ENERGY
                                 Table C

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

                                                    Nine months ended
                                                      September 30,
                                                --------------------------
(Dollars in millions)                               2009          2008*
                                                ------------  ------------
                                                        (unaudited)
Cash Flows from Operating Activities:
Net income                                      $        816  $        808
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and amortization                          568           508
  Deferred income taxes and investment tax
   credits                                               181           165
  Equity earnings                                       (470)         (228)
  Gains on sale of assets                                 (3)         (114)
  Write-off of long-lived assets                         132             -
  Fixed-price contacts and other derivatives             (27)            -
  Other                                                   45            76
Net change in other working capital components           220          (408)
Distributions from RBS Sempra Commodities LLP            407            56
Changes in other assets                                   81            (3)
Changes in other liabilities                             (66)          (55)
                                                ------------  ------------
  Net cash provided by operating activities            1,884           805
                                                ------------  ------------

Cash Flows from Investing Activities:
Expenditures for property, plant and equipment        (1,371)       (1,541)
Proceeds from sale of assets, net of cash sold           179         2,071
Expenditures for investments                            (762)       (2,180)
Distributions from investments                            16            23
Purchases of nuclear decommissioning and other
 trust assets                                           (167)         (361)
Proceeds from sales by nuclear decommissioning
 and other trusts                                        155           350
Decrease in notes receivable from
 unconsolidated affiliate                                  -            60
Other                                                    (20)          (18)
                                                ------------  ------------
  Net cash used in investing activities               (1,970)       (1,596)
                                                ------------  ------------

Cash Flows from Financing Activities:
Common dividends paid                                   (255)         (252)
Preferred dividends paid by subsidiaries                  (7)           (7)
Issuances of common stock                                 52            17
Repurchases of common stock                                -        (1,002)
(Decrease) increase in short-term debt, net              (52)          985
Issuances of long-term debt                            1,181           650
Payments on long-term debt                              (325)          (75)
Purchase of noncontrolling interest                      (94)            -
Other                                                     11             5
                                                ------------  ------------
  Net cash provided by financing activities              511           321
                                                ------------  ------------

Increase (decrease) in cash and cash
 equivalents                                             425          (470)
Cash and cash equivalents, January 1                     331           668
                                                ------------  ------------
Cash and cash equivalents, September 30         $        756  $        198
                                                ============  ============

* As adjusted for the retrospective adoption of ASC 810 (SFAS 160).



                              SEMPRA ENERGY
                                 Table D


BUSINESS UNIT EARNINGS AND CAPITAL EXPENDITURES & INVESTMENTS (Unaudited)


                             Three months ended     Nine months ended
                                September 30,         September 30,
                              ----------------      ------------------
(Dollars in millions)          2009      2008        2009        2008
                              ------    ------      ------      ------

Earnings (Losses)
San Diego Gas & Electric      $  108    $  123      $  277      $  258
Southern California Gas           74        77         198         190
Sempra Commodities(1)             75        (8)        274         181
Sempra Generation                 43        94         119         162
Sempra Pipelines & Storage        54        34          64          84
Sempra LNG                         -         4         (19)        (33)
Parent & Other                   (37)      (16)        (82)        (48)
                              ------    ------      ------      ------
Earnings                      $  317    $  308      $  831      $  794
                              ======    ======      ======      ======

(1) Results for 2009 and the second and third quarters of 2008 include the
    company's portion of RBS Sempra Commodities' joint venture earnings and
    interest, income taxes, cost allocations and other items associated
    with the joint venture. Results for the first quarter of 2008 include
    100% of the commodities-marketing businesses. Both 2009 and 2008
    include the results of Sempra Rockies Marketing.

                              Three months ended     Nine months ended
                                September 30,          September 30,
                              ----------------      ------------------
(Dollars in millions)          2009      2008        2009        2008
                              ------    ------      ------      ------
Capital Expenditures and
 Investments(1)
  San Diego Gas & Electric    $  190    $  277 (2)  $  785 (2)  $  942 (2)
  Southern California Gas        109       108         336         350
  Sempra Commodities               -         -           -          37
  Sempra Generation              194         2         207          15
  Sempra Pipelines & Storage     395        43         723         345
  Sempra LNG                      88        61         230         310
  Parent & Other                   2       165 (2)       4         426 (2)
  Eliminations(2)                  -      (229)       (152)       (304)
                              ------    ------      ------      ------
  Consolidated Capital
   Expenditures and
   Investments                $  978    $  427      $2,133      $2,121
                              ======    ======      ======      ======

(1) Investments do not include the $1.6 billion contribution to RBS Sempra
    Commodities in the second quarter of 2008.

(2) During the nine months ended September 30, 2008, SDG&E and Parent &
    Other purchased $304 and $413, respectively, of SDG&E's industrial
    development bonds, including purchases and sales between the entities.
    As their cash flow needs changed, SDG&E purchased $68 of the bonds from
    Parent & Other during the three months ended September 30, 2008 and
    Parent & Other purchased $161 of the bonds from SDG&E in the same
    period. In the second quarter of 2009, SDG&E purchased $152 of the
    bonds from Parent & Other to facilitate their remarketing.




                              SEMPRA ENERGY
                                 Table E


OTHER OPERATING STATISTICS (Unaudited)


                                         Three months      Nine months
                                            ended             ended
                                        September 30,     September 30,
                                        ---------------   ---------------
SEMPRA UTILITIES                         2009    2008      2009    2008
                                        ------- -------   ------- -------

Revenues (Dollars in millions)
  SDG&E (excludes intercompany sales)   $   771 $   945   $ 2,130 $ 2,439
  SoCalGas (excludes intercompany
   sales)                               $   653 $ 1,068   $ 2,252 $ 3,751

Gas Sales (Bcf)                              61      63       272     288
Transportation and Exchange (Bcf)           170     171       421     445
                                        ------- -------   ------- -------
Total Deliveries (Bcf)                      231     234       693     733
                                        ------- -------   ------- -------

Total Gas Customers (Thousands)                             6,599   6,565

Electric Sales (Millions of kWhs)         4,636   4,716    12,768  13,012
Direct Access (Millions of kWhs)            800     781     2,290   2,296
                                        ------- -------   ------- -------
Total Deliveries (Millions of kWhs)       5,436   5,497    15,058  15,308
                                        ------- -------   ------- -------

Total Electric Customers (Thousands)                        1,377   1,370


SEMPRA GENERATION
                                        ======= =======   ======= =======
Power Sold (Millions of kWhs)             5,317   5,707    16,526  16,825


SEMPRA PIPELINES & STORAGE
(Represents 100% of the distribution operations of these subsidiaries,
although subsidiaries in Argentina, Chile and Peru are not 100% owned by
Sempra Energy. These subsidiaries are not consolidated within Sempra Energy
and the related investments are accounted for under the equity method).

Natural Gas Sales (Bcf)
  Argentina                                 101     102       249     254
  Mexico                                      5       4        14      14
  Mobile Gas                                  8       - *      24       - *
Natural Gas Customers (Thousands)
  Argentina                                                 1,702   1,658
  Mexico                                                       91      95
  Mobile Gas                                                   92       - *
Electric Sales (Millions of kWhs)
  Peru                                    1,378   1,347     4,151   4,063
  Chile                                     567     565     1,837   1,797
Electric Customers (Thousands)
  Peru                                                        856     829
  Chile                                                       574     559

* Mobile Gas was acquired in October 2008.




                              SEMPRA ENERGY
                           Table E (Continued)


SEMPRA COMMODITIES
The following information for the Sempra Commodities segment includes
information related to RBS Sempra Commodities LLP.  RBS Sempra Commodities
LLP acquired the commodity-marketing businesses of Sempra Energy on
April 1, 2008.  For the three and nine months ended September 30, 2009, the
Sempra Commodities segment is composed primarily of the company's equity
interest in RBS Sempra Commodities LLP, but also includes the results of
Sempra Rockies Marketing.  The margin and financial data below represent
the total results of RBS Sempra Commodities LLP as calculated under
International Financial Reporting Standards (IFRS).

RBS Sempra Commodities LLP
Operating Statistics
(in millions of US
 dollars)
                       Three             Three              Nine
                       months            months            months
RBS Sempra             ended             ended             ended
 Commodities LLP -    September         September         September
 Joint Venture level     30,               30,               30,
 margin*                2009              2008              2009
                      -------           -------           -------

Geographical:
  North America       $   100           $   (79)          $   572
  Europe/Asia             112               139               317
                      -------           -------           -------
    Total             $   212           $    60           $   889
                      =======           =======           =======

Product Line:
  Oil - Crude &
   Products           $    24           $    22           $   217
  Power                     8               (81)              195
  Natural Gas             103                57               248
  Metals                   86                62               221
  Other                    (9)                -                 8
                      -------           -------           -------
    Total             $   212           $    60           $   889
                      =======           =======           =======

Financial Information
(in millions of US dollars)

RBS Sempra              Three months      Three months      Nine months
 Commodities LLP           ended             ended             ended
                        September 30,     September 30,     September 30,
                            2009              2008              2009
                      ---------------- ----------------- ------------------
                       Joint             Joint             Joint
                      Venture  Sempra   Venture  Sempra   Venture  Sempra
                       Total   Share**   Total   Share**   Total   Share**
  Fee income and
   trading revenue,
   net of selling
   costs              $   212           $    60           $   889
  Operating and other
   expenses              (129)              (93)             (510)
                      -------           -------           -------
    Joint Venture
     distributable
     income           $    83           $   (33)          $   379
                      =======           =======           =======


  Preferred return on
   capital            $    85  $    61  $   131  $    60  $   246  $   180
  1st allocation -
   70% Sempra / 30%
   RBS***                  (2)      (1)    (103)     (71)     133       96
  2nd allocation -
   30% Sempra / 70%
   RBS                      -        -      (61)     (18)       -        -
                      -------  -------  -------  -------  -------  -------
    Distributable
     income           $    83  $    60  $   (33) $   (29) $   379  $   276
                      =======  =======  =======  =======  =======  =======

Sempra Commodities Earnings
                                Three             Three             Nine
                                months            months            months
                                ended             ended             ended
                              September         September         September
(in millions of US dollars)      30,               30,               30,
                                2009              2008              2009
                               -------           -------           -------
  Sempra share of
   distributable
   income - IFRS
   basis                       $    60           $   (29)          $   276
  U.S. GAAP
   conversion impact                45                25               108
                               -------           -------           -------
  Sempra equity
   earnings before
   income taxes -
   U.S. GAAP basis                 105                (4)              384
  Income tax expense               (30)                1              (106)
                               -------           -------           -------
  Sempra equity
   earnings from RBS
   Sempra Commodities
   LLP                              75                (3)              278
  Other segment
   activity                          -                (5)               (4)
                               -------           -------           -------
    Sempra Commodities
     earnings                  $    75           $    (8)          $   274
                               =======           =======           =======

*   Margin consists of operating revenues less cost of sales (primarily
    transportation and storage costs) reduced by certain
    transaction-related execution costs (primarily brokerage and other
    fees) and net interest income/expense.

**  After a 15% preferred return to Sempra and then a 15% return to RBS,
    Sempra receives 70% of the next $500 million and 30% of any remaining
    income on an annual basis.

*** Includes certain transition costs specifically allocated to Sempra and
    RBS.

Contact Information


  • Media Contact:
    Doug Kline
    Sempra Energy
    (877) 866-2066
    www.sempra.com

    Financial Contact:
    Glen Donovan
    Sempra Energy
    (877) 736-7727
    Email Contact