SOURCE: Sempra Energy

February 24, 2009 09:00 ET

Sempra Energy Earnings per Share Rise 6.5 Percent in 2008

Company Reaffirms 2009 Earnings-per-Share Outlook of $4.35 per Share to $4.60 per Share

SAN DIEGO, CA--(Marketwire - February 24, 2009) - Sempra Energy (NYSE: SRE) today reported net income of $1.11 billion, or $4.43 per diluted share, up 6.5 percent per share from 2007 net income of $1.10 billion, or $4.16 per diluted share.

Fourth-quarter 2008 net income rose to $319 million, or $1.30 per diluted share, from $289 million, or $1.10 per diluted share in 2007.

"Despite the challenging economic environment, our businesses have excelled and we've achieved major milestones in our long-term strategy," said Donald E. Felsinger, chairman and chief executive officer of Sempra Energy. "We launched operations at our Mexican liquefied natural gas terminal, completed our commodities joint venture and added new Gulf Coast natural gas assets with the acquisition of EnergySouth. We also received state regulatory approval on San Diego Gas & Electric's Sunrise Powerlink transmission line and both of our utilities' rate cases. Additionally, we completed a $1 billion share-repurchase program, increased our dividend and maintained a strong balance sheet."

SUBSIDIARY OPERATING RESULTS

San Diego Gas & Electric

San Diego Gas & Electric (SDG&E) recorded net income of $339 million in 2008, up from $283 million in 2007. SDG&E's fourth-quarter 2008 net income was $81 million, compared with $47 million in the year-ago quarter, due primarily to higher operating margin and a lower tax rate.

In December 2008, the California Public Utilities Commission approved SDG&E's application to build the $1.9 billion, 500-kilovolt Sunrise Powerlink transmission-line project. Pre-construction activities on the project have begun, with completion of the power line expected in 2012.

"After three years of thorough regulatory review, we are pleased that the Sunrise Powerlink project is moving forward," said Felsinger. "California policymakers have set aggressive environmental goals for the state's utilities, mandating a significant increase in renewable energy and reduction in greenhouse-gas emissions over the next decade. The Sunrise Powerlink will help SDG&E meet these environmental mandates, while increasing system reliability."

Southern California Gas Co.

In 2008, Southern California Gas Co. (SoCalGas) net income increased to $244 million from $230 million. Fourth-quarter net income for SoCalGas was $54 million in 2008, compared with $58 million in 2007.

RBS Sempra Commodities

Sempra Energy generated net income of $345 million from its commodity operations in the full-year 2008, including nine months of net income from its equity share of the RBS Sempra Commodities joint venture, and $164 million in the fourth quarter 2008. In 2007, Sempra Commodities earned $499 million in net income and $186 million in fourth-quarter net income. Results for 2007 represented 100 percent of the earnings from the commodities-marketing business prior to the formation of RBS Sempra Commodities. In the fourth quarter 2008, RBS Sempra Commodities performed well in all of its major product segments, led by crude oil and petroleum products.

Sempra Generation

Sempra Generation's net income rose to $222 million in 2008 from $162 million in 2007. In the fourth quarter 2008, Sempra Generation's net income increased to $60 million from $40 million in the same quarter of 2007, due primarily to lower income-tax expense.

In December 2008, Sempra Generation completed its first solar-power project. The 10-megawatt facility, located outside of Las Vegas, is the largest thin-film solar generating plant in North America.

Sempra Pipelines & Storage

Sempra Pipelines & Storage earned $106 million in 2008 net income, up from $64 million in 2007. In the fourth quarter 2008, Sempra Pipelines & Storage had net income of $22 million, compared with $14 million in the prior year's quarter, due primarily to the operation of the western portion of the Rockies Express Pipeline and the company's Mexico pipelines.

Sempra LNG

In 2008, Sempra LNG recorded a net loss of $46 million, unchanged from 2007. For the fourth quarter 2008, Sempra LNG had a net loss of $13 million, compared with a net loss of $19 million in the same period of 2007, due primarily to a tax benefit related to currency and inflation adjustments.

2009 Outlook

Sempra Energy today reaffirmed its previous earnings-per-share outlook for 2009 of a range of $4.35 per share to $4.60 per share.

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 passcode 2137643.

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 about 24 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/4Q2008.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 Sempra Commodities 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 Sempra Commodities are not regulated by the California Public Utilities Commission.

                               SEMPRA ENERGY
                                  Table A


STATEMENTS OF CONSOLIDATED INCOME


                                 Three months ended       Years ended
                                    December 31,          December 31,
(Dollars in millions, except    --------------------  --------------------
 per share amounts)               2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
                                     (unaudited)
Revenues
Sempra Utilities                $   1,782  $   1,859  $   7,972  $   7,053
Sempra Global and parent              511      1,251      2,786      4,385
                                ---------  ---------  ---------  ---------
  Total revenues                    2,293      3,110     10,758     11,438
                                ---------  ---------  ---------  ---------

Expenses and Other Income
Sempra Utilities:
  Cost of natural gas                (536)      (721)    (3,244)    (2,763)
  Cost of electric fuel and
   purchased power                   (206)      (203)      (900)      (699)
Sempra Global and parent:
  Cost of natural gas, electric
   fuel and purchased power          (318)      (357)    (1,671)    (1,302)
  Other cost of sales                 (14)      (192)      (182)      (988)
Operation and maintenance            (720)      (892)    (2,536)    (3,032)
Depreciation and amortization        (179)      (172)      (687)      (686)
Franchise fees and other taxes        (82)       (74)      (312)      (295)
Gains on sale of assets                 -          -        114          6
Equity earnings (losses):
  RBS Sempra Commodities LLP          241          -        383          -
  Other                                 8          2         37         (9)
Other income (expense), net           (77)        18        (54)        90
Interest income                         9         10         45         72
Interest expense                      (88)       (68)      (253)      (272)
Preferred dividends of
 subsidiaries                          (3)        (3)       (10)       (10)
                                ---------  ---------  ---------  ---------
Income from continuing
 operations before income taxes
 and equity earnings of
 certain unconsolidated
 subsidiaries                         328        458      1,488      1,550
Income tax expense                    (15)      (183)      (438)      (524)
Equity earnings, net of income
 tax                                    6         13         63         99
                                ---------  ---------  ---------  ---------
Income from continuing
 operations                           319        288      1,113      1,125
Discontinued operations, net of
 income tax                             -          1          -        (26)
                                ---------  ---------  ---------  ---------
Net income                      $     319  $     289  $   1,113  $   1,099
                                =========  =========  =========  =========

Basic earnings per share:
  Income from continuing
   operations                   $    1.32  $    1.12  $    4.50  $    4.34
  Discontinued operations, net
   of income tax                        -          -          -      (0.10)
                                ---------  ---------  ---------  ---------
  Net income                    $    1.32  $    1.12  $    4.50  $    4.24
                                =========  =========  =========  =========
Weighted-average number of
 shares outstanding (thousands)   241,660    257,864    247,387    259,269
                                =========  =========  =========  =========

Diluted earnings per share:
  Income from continuing
   operations                   $    1.30  $    1.10  $    4.43  $    4.26
  Discontinued operations, net
   of income tax                        -          -          -      (0.10)
                                ---------  ---------  ---------  ---------
  Net income                    $    1.30  $    1.10  $    4.43  $    4.16
                                =========  =========  =========  =========
Weighted-average number of
 shares outstanding (thousands)   244,531    262,839    251,159    264,004
                                =========  =========  =========  =========
Dividends declared per share of
 common stock                   $    0.35  $    0.31  $    1.37  $    1.24
                                =========  =========  =========  =========





                               SEMPRA ENERGY
                                  Table B


CONSOLIDATED BALANCE SHEETS
                                                December 31, December 31,
(Dollars in millions)                               2008         2007
                                                ------------ ------------

Assets
Current assets:
   Cash and cash equivalents                    $        331 $        668
   Short-term investments                                176            -
   Restricted cash                                        27            1
   Accounts receivable, net                              981        1,074
   Income taxes receivable                               195           99
   Deferred income taxes                                  31          247
   Trading-related receivables and deposits, net           -        2,719 *
   Derivative trading instruments                          -        2,170 *
   Commodities owned                                       -        2,231
   Inventories                                           320          224
   Regulatory assets                                     121          106
   Fixed-price contracts and other derivatives           160           28 *
   Other                                                 134          397
                                                ------------ ------------
       Total current assets                            2,476        9,964
                                                ------------ ------------

Investments and other assets:
   Regulatory assets arising from fixed-price
    contracts and other derivatives                      264          309
   Regulatory assets arising from pension and
    other postretirement benefit obligations           1,188          162
   Other regulatory assets                               534          460
   Nuclear decommissioning trusts                        577          739
   Investment in RBS Sempra Commodities LLP            2,082            -
   Other investments                                   1,166        1,243
   Goodwill and intangible assets                        539          179
   Sundry                                                709          777
                                                ------------ ------------
       Total investments and other assets              7,059        3,869
                                                ------------ ------------
Property, plant and equipment, net                    16,865       14,884
                                                ------------ ------------
Total assets                                    $     26,400 $     28,717
                                                ============ ============

Liabilities and Shareholders' Equity
Current liabilities:
   Short-term debt                              $        503 $      1,064
   Accounts payable                                      856        1,563
   Due to unconsolidated affiliates                       38           60
   Trading-related payables                                -        2,265 *
   Derivative trading instruments                          -        1,672 *
   Commodities sold with agreement to repurchase           -          500
   Dividends and interest payable                        156          145
   Accrued compensation and benefits                     280          265
   Regulatory balancing accounts, net                    335          481
   Current portion of long-term debt                     410            7
   Fixed-price contracts and other derivatives           180           53 *
   Customer deposits                                     170          143
   Other                                                 684          802
                                                ------------ ------------
       Total current liabilities                       3,612        9,020
                                                ------------ ------------
Long-term debt                                         6,544        4,553
                                                ------------ ------------

Deferred credits and other liabilities:
   Due to unconsolidated affiliate                       102          102
   Customer advances for construction                    155          153
   Pension and other postretirement benefit
    obligations, net of plan assets                    1,487          434
   Deferred income taxes                                 946          531
   Deferred investment tax credits                        57           61
   Regulatory liabilities arising from removal
    obligations                                        2,430        2,522
   Asset retirement obligations                        1,159        1,129
   Other regulatory liabilities                          219          265
   Fixed-price contracts and other derivatives           392          332
   Deferred credits and other                            909          949
                                                ------------ ------------
       Total deferred credits and other
        liabilities                                    7,856        6,478
                                                ------------ ------------
Preferred stock of subsidiaries                          179          179
                                                ------------ ------------
Minority interests                                       240          148
                                                ------------ ------------
Shareholders' equity                                   7,969        8,339
                                                ------------ ------------
Total liabilities and shareholders' equity      $     26,400 $     28,717
                                                ============ ============

* December 31, 2007 amounts have been reclassified due to the adoption of
  FASB Staff Position FIN 39-1.





                               SEMPRA ENERGY
                                  Table C


CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                                                          Years ended
                                                          December 31,
                                                      --------------------
(Dollars in millions)                                   2008       2007
                                                      ---------  ---------

Cash Flows from Operating Activities:
Net income                                            $   1,113  $   1,099
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Discontinued operations                                    --         26
  Depreciation and amortization                             687        686
  Gains on sale of assets, net                             (114)        (6)
  Deferred income taxes and investment tax credits          324        149
  Noncash rate-reduction bond expense                        --         55
  Equity earnings                                          (483)       (90)
  Other                                                     141         46
Net changes in other working capital components            (483)        25
Distributions from RBS Sempra Commodities LLP                85         --
Changes in other assets                                     (15)        22
Changes in other liabilities                                (74)        79
                                                      ---------  ---------
  Net cash provided by continuing operations              1,181      2,091
  Net cash used in discontinued operations                    -         (3)
                                                      ---------  ---------
  Net cash provided by operating activities               1,181      2,088
                                                      ---------  ---------

Cash Flows from Investing Activities:
Expenditures for property, plant and equipment           (2,061)    (2,011)
Proceeds from sale of assets from continuing
 operations, net of cash sold                             2,295        103
Expenditures for investments and acquisition of
 business, net of cash acquired                          (2,675)      (121)
Distributions from investments                               34         18
Purchases of nuclear decommissioning and other trust
 assets                                                    (485)      (646)
Proceeds from sales by nuclear decommissioning and
 other trusts                                               469        613
Decrease in notes receivable from unconsolidated
 affiliates                                                  60         --
Other                                                       (23)       (29)
                                                      ---------  ---------
  Net cash used in investing activities                  (2,386)    (2,073)
                                                      ---------  ---------

Cash Flows from Financing Activities:
Common dividends paid                                      (339)      (316)
Issuances of common stock                                    18         40
Repurchases of common stock                              (1,018)      (185)
Issuance of long-term debt                                1,706        404
Payments on long-term debt                                  (79)    (1,072)
Increase in short-term debt, net                            564        812
Other                                                        16         21
                                                      ---------  ---------
  Net cash provided by (used in) financing activities       868       (296)
                                                      ---------  ---------

Decrease in cash and cash equivalents                      (337)      (281)
Cash and cash equivalents, January 1                        668        920
Cash assumed in connection with FIN 46(R) initial
 consolidation                                                -         29
                                                      ---------  ---------
Cash and cash equivalents, December 31                $     331  $     668
                                                      =========  =========





                               SEMPRA ENERGY
                                  Table D


BUSINESS UNIT EARNINGS AND CAPITAL EXPENDITURES & INVESTMENTS


                                 Three months ended       Years ended
                                    December 31,          December 31,
                                --------------------  --------------------
(Dollars in millions)            2008          2007    2008          2007
                                -------      -------  -------      -------
                                    (unaudited)
Net Income (Loss)
San Diego Gas & Electric        $    81      $    47  $   339      $   283
Southern California Gas              54           58      244          230
Sempra Commodities(1)               164          186      345          499
Sempra Generation                    60           40      222          162
Sempra Pipelines & Storage           22           14      106           64
Sempra LNG                          (13)         (19)     (46)         (46)
Parent & Other                      (49)         (38)     (97)         (67)
                                -------      -------  -------      -------
Continuing Operations               319          288    1,113        1,125
Discontinued Operations, Net of
 Income Tax                           -            1        -          (26)
                                -------      -------  -------      -------
Consolidated Net Income         $   319      $   289  $ 1,113      $ 1,099
                                =======      =======  =======      =======

(1) Includes the company's portion of RBS Sempra Commodities' joint venture
    earnings since the formation of the joint venture on April 1, 2008, and
    100% of the commodities-marketing businesses prior to April 1, 2008.
    Also includes the operating results of Sempra Rockies Marketing, as
    well as interest, income taxes, cost allocations and other items
    associated with the joint venture.

                                 Three months ended       Years ended
                                    December 31,          December 31,
                                --------------------  --------------------
(Dollars in millions)            2008          2007    2008          2007
                                -------      -------  -------      -------
                                    (unaudited)
Capital Expenditures and
 Investments(1)
San Diego Gas & Electric        $   430  (2) $   235  $ 1,372  (2) $   714
Southern California Gas             104          157      454          457
Sempra Commodities                    -           15       37           64
Sempra Generation                    44            5       59           13
Sempra Pipelines & Storage(3)       564          187      909          367
Sempra LNG                           55          152      365          498
Parent & Other                      229  (2)       7      655  (2)      19
Eliminations                       (411) (4)       -     (715) (4)       -
                                -------      -------  -------      -------
Consolidated Capital
 Expenditures and Investments   $ 1,015      $   758  $ 3,136      $ 2,132
                                =======      =======  =======      =======

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

(2) Purchases of industrial development bonds for SDG&E and Parent & Other
    were $184 and $227, respectively, in the three months ended December
    31, 2008 and $488 and $640, respectively, for year ended December 31,
    2008.

(3) Amounts for the three months and the year ended December 31, 2008
    include $495 for the acquisition of EnergySouth, which is net of cash
    acquired.

(4) Represents purchases and sales of industrial development bonds between
    SDG&E and Parent & Other.





                               SEMPRA ENERGY
                                  Table E

OTHER OPERATING STATISTICS (Unaudited)


                                           Three months
                                              ended         Years ended
                                           December 31,     December 31,
                                          --------------- -----------------
SEMPRA UTILITIES                           2008    2007    2008      2007
                                          ------- ------- -------   -------

Revenues (Dollars in millions)
    SDG&E (excludes intercompany sales)   $   801 $   765 $ 3,240   $ 2,839
    SoCalGas (excludes intercompany
     sales)                               $   981 $ 1,094 $ 4,732   $ 4,214

Gas Sales (Bcf)                               103     114     391       404
Transportation and Exchange (Bcf)             156     145     601       566
                                          ------- ------- -------   -------
Total Deliveries (Bcf)                        259     259     992       970
                                          ------- ------- -------   -------

Total Gas Customers (Thousands)                             6,575     6,531

Electric Sales (Millions of kWhs)           4,386   4,198  17,398    17,045
Direct Access (Millions of kWhs)              939     819   3,235     3,220
                                          ------- ------- -------   -------
Total Deliveries (Millions of kWhs)         5,325   5,017  20,633    20,265
                                          ------- ------- -------   -------

Total Electric Customers (Thousands)                        1,372     1,365


SEMPRA GENERATION
                                          ======= ======= =======   =======
Power Sold (Millions of kWhs)               5,903   5,613  22,728    20,856

SEMPRA PIPELINES & STORAGE

(Represents 100% of these subsidiaries, although only the Mexican
 subsidiaries are 100% owned by Sempra Energy.)
                                          ======= ======= =======   =======
Natural Gas Sales (Bcf)
    Argentina                                  78      79     332       320
    Mexico                                     11      11      47        46
    Chile                                       -       -       -         1
Natural Gas Customers (Thousands)
    Argentina                                               1,670     1,603
    Mexico                                                     95        96
    Chile                                                       - *      39
Electric Sales (Millions of kWhs)
    Peru                                    1,352   1,278   5,415     5,078
    Chile                                     620     632   2,417     2,500
Electric Customers (Thousands)
    Peru                                                      837       809
    Chile                                                     562       549

* The decrease from 2007 is due to the sale of interests in certain South
  American operations in the fourth quarter of 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 commodities-marketing businesses of Sempra Energy on
April 1, 2008. For the three and nine months ended December 31, 2008,
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          Nine
                                              months ended   months ended
RBS Sempra Commodities LLP - Joint Venture    December 31,   December 31,
 level margin*                                    2008           2008
                                              -------------  -------------

Geographical:
  North America                               $         373  $         816
  Europe/Asia                                           340            603
                                              -------------  -------------
    Total                                     $         713  $       1,419
                                              =============  =============

Product Line:
  Natural Gas                                 $         171  $         534
  Oil - Crude & Products                                243            357
  Metals                                                149            253
  Power                                                 129            222
  Other                                                  21             53
                                              -------------  -------------
    Total                                     $         713  $       1,419
                                              =============  =============

* 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.

Financial Information
(in millions of US dollars)

RBS Sempra Commodities LLP                         Three months ended
                                                    December 31, 2008
                                              ----------------------------
                                               Joint Venture     Sempra
                                                  Total          Share**
  Fee income and trading revenue, net of
   selling costs                              $         713
  Operating and other expenses                         (339)
                                              -------------
   Joint Venture distributable income         $         374
                                              =============


  Preferred return on capital                 $         103  $          61
  1st allocation - 70% Sempra / 30% RBS***              271            192
  2nd allocation - 30% Sempra / 70% RBS                   -              -
                                              -------------  -------------
   Distributable income                       $         374  $         253
                                              =============  =============

                                                    Nine months ended
                                                    December 31, 2008
                                              ----------------------------
                                               Joint Venture     Sempra
                                                  Total          Share**
  Fee income and trading revenue, net of
   selling costs                              $       1,419
  Operating and other expenses                         (744)
                                              -------------
   Joint Venture distributable income         $         675
                                              =============


  Preferred return on capital                 $         382  $         181
  1st allocation - 70% Sempra / 30% RBS***              293            208
  2nd allocation - 30% Sempra / 70% RBS                   -              -
                                              -------------  -------------
   Distributable income                       $         675  $         389
                                              =============  =============

Sempra Earnings from RBS Sempra Commodities
 LLP
                                                  Three          Nine
                                              months ended   months ended
                                               December 31,   December 31,
(in millions of US dollars)                        2008           2008
                                              -------------  -------------
  Sempra share of distributable income - IFRS
   basis                                      $         253  $         389
  U.S. GAAP conversion impact                           (12)            (6)
                                              -------------  -------------
  Sempra equity earnings - U.S. GAAP basis              241            383
  Income tax expense                                    (79)          (131)
                                              -------------  -------------
   Sempra equity earnings from RBS Sempra
    Commodities LLP                           $         162  $         252
                                              =============  =============

**  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